The Best Money Advice You Will Ever Receive: 4 Rules From the Top Financial Minds In The World

Mel Robbins (00:21:19):

Oh, wow. Okay. So what are the four things that we all need to go through?

 

Ramit Sethi (00:21:24):

Everybody needs these four numbers. These are all part of my conscious spending plan. The first is your fixed costs. Okay. So that would include your rent or mortgage, your utilities, car payment, gas, insurance, anything that's fixed, even groceries every month, that goes there.

 

Mel Robbins (00:21:41):

And what about the minimum debt payment or is that part of another category?

 

Ramit Sethi (00:21:45):

Yeah, that counts there. Exactly. Thank you.

 

Mel Robbins (00:21:47):

Okay.

 

Ramit Sethi (00:21:48):

And that number, you should try to get it between 50 to 60% of your take home pay.

 

Mel Robbins (00:21:55):

Okay.

 

Ramit Sethi (00:21:57):

Let me run through these all and then I'll tell you what they mean. 50 to 60% of your take home pay for fixed costs. Next up, your savings. How much money are you saving every month? This should be roughly five to 10% of your take home. And savings would be an emergency fund or money you don't need for at least one to five years, things like a down payment for a house, et cetera. Next up would be investments. Roughly five to 10% of take home, although I like to see it higher because investing early in life pays dividends later.

 

Mel Robbins (00:22:34):

Okay.

 

Ramit Sethi (00:22:35):

And then finally-

 

Mel Robbins (00:22:35):

Little shame for Mel Robbins. Did not invest early in life. Just wanted to acknowledge that when you said that because people say that, and I'm like, I didn't do that. Okay.

 

Ramit Sethi (00:22:44):

Well, I wish I started deadlifting when I was 13 years old, but I didn't even know what that was. So we all start from the place we start at.

 

Mel Robbins (00:22:50):

That's true.

 

Ramit Sethi (00:22:51):

Okay. The last category is my favorite one of all. It's guilt free spending. This is 20 to 35% of take home pay.

 

Mel Robbins (00:23:01):

What?

 

Ramit Sethi (00:23:02):

Yeah, that's right. Desserts. Mel, go get them. Beautiful cashmere coat. That's for me. Go get them. You want to get roller skates. You want to go to your gym, 20 to 35% of take home. Now, let me tell you why I love this and why I'm getting excited about four numbers. Okay. So many of us shrink our lives and we agonize over some stupid $5 purchase. You really think coffee is going to change your life? It's irrelevant. It does not matter how much coffee you buy. So please stop thinking about that. The same people who ag, and I go, "Oh, I'm so overwhelmed. I don't know anything." I go, "What's your savings rate?" They go, "What's that? How much are you investing?" "Well, I try, but I don't really know. "Okay, how are you supposed to feel not overwhelmed if you don't know any key numbers?

 

(00:23:48):

So know the four numbers and you will suddenly feel totally in control. Some of you aren't going to be able to hit these numbers. That's okay. At least we can work with it. We got the puzzle pieces on the table. Now we can start assembling your rich life.

 

Mel Robbins (00:24:03):

Wow. Okay. I think I can do this. So you just carve out some time on the weekend and get your arms around these four things.

 

Ramit Sethi (00:24:12):

Yeah. Which should take 15 minutes. Do not overthink it.

 

Mel Robbins (00:24:15):

It's going to take me a while. Really? It takes 15 minutes?

 

Ramit Sethi (00:24:18):

Yeah. Here's what people do.

 

Mel Robbins (00:24:19):

How do you do it?

 

Ramit Sethi (00:24:20):

Because the biggest challenge is people don't have the right logins. So their logins are spread all. They got their Fidelity account or some old 401k or whatever. So I would recommend breaking it up into two days. The first day is just get all your stuff assembled.

 

Mel Robbins (00:24:35):

Love

 

Ramit Sethi (00:24:36):

It. It's like cleaning the garage. And then the second day, 15 minutes and done. Do not overthink it.

 

Mel Robbins (00:24:41):

Okay.

 

Ramit Sethi (00:24:41):

We're going for approximate numbers. That's it.

 

Mel Robbins (00:24:44):

I love you. I love you, love you, love you. You have that, what is it? The 85% rule? Get 85% of this right. You're good.

 

Ramit Sethi (00:24:52):

Yeah, get on with your life. You don't need to sit there and optimize everything. It's a waste of time.

 

Mel Robbins (00:24:56):

And I also love this because it can feel so insurmountable when you've made major financial mistakes in your life, that this gives you a place to start that you can then start to get better from. And I just actually had a huge wake-up moment. The fact that I can't answer those numbers like that at this stage in my life, for me, it used to be because of fear and shame and how bad the numbers were. I used to be one of those people that the bills would arrive and I would just not open them.

 

Ramit Sethi (00:25:32):

Yeah, common.

 

Mel Robbins (00:25:33):

And because it was confronting to see the debt and confronting to see how much I had spent because I was basically shopping to escape my life with money that I didn't have. And then you'd open up the bills and be like, " I don't have that money. "And so it used to be that, but I think now that I've paid off all the debt and I have savings and I've maniacally saving, I don't look at it at all still.

 

Ramit Sethi (00:26:05):

Okay.

Mel Robbins (00:26:52):

"This is so important. If you just heard Ramit say," I'm bad with money, "I want you to pay attention loud and clear because he's absolutely right. Or if you say something like, " I don't understand. "It's overwhelming.

 

Ramit Sethi (00:27:13):

Yeah. I'm not good with math.

 

Mel Robbins (00:27:14):

I'm not good with math. What are other things that your students say, Ramit, that really crystallize a terrible psychology around money?

 

Ramit Sethi (00:27:22):

My family's never been good with money. We're all bad. I'm never going to get out of this debt. We always fight about money and I'm just an overspender.

 

Mel Robbins (00:27:33):

Or my husband took care of the finances.

 

Ramit Sethi (00:27:38):

Oh, classic. Oh, that drives me insane. Hold on. I'm getting mad, but I'm getting mad at multiple things right now, so let me take them each in turn. Okay. First off, what you said about not opening envelopes is totally common, but what I do want and what I do for myself is I spend one hour per month on my finances. That's it. Just one hour. I review the CSP, my wife and I talk about money.

 

Mel Robbins (00:28:03):

Hold on. The CSP was that conscious spending plan of the four things.

 

Ramit Sethi (00:28:07):

Correct. So all those things, when you have money carved out for guilt-free spending, it is literally defined so that if you want to eat and get an extra cheesecake or you want to go to the movies, you don't have to feel guilty because you know my debt is being paid off, my rent or mortgage is being covered. I'm even saving money. I'm not trying to save money just like I don't try to brush my teeth. It is happening automatically. It's even better than brushing. If you're listening, I hope that's a sense of relief that you don't have to feel bad about having debt. You do not have to track a gajillion numbers that you don't even care about. You do, and I would highly encourage you to focus on four key numbers that will totally transform your life.

 

Mel Robbins (00:28:55):

Holy cow.

(00:29:54):

They feel like a necessity. They are not. Fixed budget, very black and white. It is the thing Things you must pay and cannot live without. That's bucket one. Bucket two, savings. That's your emergency fund. Plus the money that you may need in the next one to five years if you've got some big goals like wanting to make a down payment for an apartment or a house. Bucket number three, investments. That means long-term investings, retirement, 401k, IRA, brokerage accounts. And by the way, if you're thinking, Mel, I can barely pay my bills. I can't even think about savings. The next expert that you're going to meet is going to teach you amazing rule around how you can start saving now. Even if you're living paycheck to paycheck or working an hourly job, this is a genius trick you're going to love. And that fourth bucket, guilt-free spending.

 

(00:30:47):

This is money set aside to enjoy your life so that while you're working hard to pay off your bills, to put away savings, you're not depriving and punishing yourself. This is the bucket that allows you to buy those glass containers on Amazon if it makes you happy. Because I remember when my husband and I were nearly a million dollars in debt. It was all one big glob of shame and stress. I felt like I couldn't spend money on anything and I mean anything, even on things that brought me joy. The fact is that if I had had a clear plan, if I had made a minimum payment, if I had gotten my life in order faster by having a target that I could hit, understanding how long it was going to take, I would have seen that I had an extra 20 to 50 bucks every month to work with, money that I could use to go to the movies or go get a latte with the friend or take the kids to the half day admissions day at the zoo in Boston.

 

(00:31:51):

But I lived in such a state of overwhelm because I didn't understand that there were these four buckets. So every single dollar felt like life or death and that it had to go towards paying off debt. I felt like I had to say no to everyone and everything, including myself, because my only priority was debt, debt, debt. God, I wish I had had this framework back then. Because if I had had these four buckets, these four numbers, I would've had a very clear picture of the debt I was in, a realistic plan and timeframe for paying it off and a way to build a life and small pockets of money to still enjoy my life at the same time. Because when you're in a situation of crushing debt, you start to believe that unless you get to a zero balance, you don't deserve to spend money on anything else.

 

(00:32:44):

And that's the trap. And that's why I love this framework because when you've made major financial mistakes like my husband and I have, money feels impossible. And the second rule gives you a place to start and a way to take control step by step by step.

(00:33:45):

They have been printed in 21 languages, and he has made a career out of helping millions of people just like you and me get out of debt, build real wealth, and stop making the mistakes that are holding you back. And here's why I love David. I love David because he has this way of just meeting you where you are. And although a lot of you want savings advice, you also find yourself feeling like you have no money to save because you're barely getting by. And right now, everything costs more. Just think about the price of gas and how that's rippling through the price of groceries or buying the small luxuries like a plane ticket or trying to do something fun over the weekend. Buying a house right now probably feels completely out of reach. If you're falling behind or if there are people in your life who are struggling, what I love about David Bach in this third rule that you're about to learn is that he makes savings feel possible even when you're starting from what feels like an impossible place.

 

(00:34:46):

He is going to show you how small daily savings can accumulate into millions of dollars over time. Yes, millions. And he will also explain why it's never too late to start or to catch up. And one thing I want to just set up before we jump into this moment from his appearance on the Mel Robbin podcast. As he's talking, I want you to imagine that David Bach is holding $10,000 in cash in his hand because he is. He brought $10,000 in cash to the studio. So let's take a listen to David Bach when he was on the Mel Robbins podcast and shared rule number three and this incredible advice.

Mel Robbins (00:36:02):

Wait, seven out of 10 people in the United States live paycheck to paycheck?

 

David Bach (00:36:05):

Stop for a moment and take that in, because that means if you're driving down a street and there's 10 houses, seven of those 10 are living paycheck to paycheck. So if you're living paycheck to paycheck, if you've got credit card debt, you maybe have student loans and you don't have hope. I promise you, you will see the light at the end of the tunnel. Compound interest is the eighth miracle of the world. That's what Einstein said. So I actually brought a prop for us.

 

Mel Robbins (00:36:28):

Okay.

 

David Bach (00:36:29):

Okay. Went to the bank yesterday, kind of shocked them.

 

Mel Robbins (00:36:33):

Wow. How much money is that?

 

David Bach (00:36:35):

For those of you who are listening and you can't see me, how much money would you guess that is, by the way?

 

Mel Robbins (00:36:42):

Are those-

 

David Bach (00:36:43):

This is real money.

 

Mel Robbins (00:36:44):

That's real money. I have no idea how much money. I mean, I don't know. That's a couple thousand dollars.

 

David Bach (00:36:48):

So interestingly, so I'm holding $10,000.

 

Mel Robbins (00:36:50):

You're holding $10,000?

 

David Bach (00:36:52):

It's $10,000 in real cash. This is a very important amount of money I'm holding here for many reasons that people will probably understand. When we've done surveys and we have asked people, how much money would change your life? The number one answer has been $10,000, which is fascinating. It's not 100,000, it's not a million, it's 10,000. And usually the reason is it would help them either pay off their credit card debt or give them enough financial freedom to leave their job or in a relationship they don't want to stay in.

 

Mel Robbins (00:37:24):

Got it. So $10,000 buys freedom from a job or a relationship.

 

David Bach (00:37:29):

For many people buys freedom. Now here's the really interesting question.

 

Mel Robbins (00:37:31):

Okay.

 

David Bach (00:37:32):

How much money does it take to blow $10,000 in a year a day?

 

Mel Robbins (00:37:39):

I don't know.

 

David Bach (00:37:40):

How much money do you have to spend a day to blow $10,000? So I'm holding a brick here of 10 grand.

 

Mel Robbins (00:37:45):

Okay.

 

David Bach (00:37:46):

A lot of people would like this brick.

 

Mel Robbins (00:37:48):

Yes.

 

David Bach (00:37:49):

It's $27.40 a day.

 

Mel Robbins (00:37:52):

Wait a minute.

 

David Bach (00:37:54):

$27.40 a day

 

Mel Robbins (00:37:56):

Is 10 grand.

 

David Bach (00:37:59):

Okay. Now what happens, Mel, if you invest $27 and 40 cents a day? This explains compound interest. And if you invest $27 and 40 cents a day and you're in your 20s and you do this for 40 years at a 10% rate of return, which is what the stock market has averaged for a hundred years, you use that fund I told you about, the VTI fund. You'd have $4,424,000.

 

Mel Robbins (00:38:27):

Say that again.

 

David Bach (00:38:29):

If you invested $27.40 a day, which comes up to $10,000 a year, in 40 years, you'd have $4,424,000. That's a fortune. Now the question is, are there people who are blowing $27.40 a day on stupid shit?

 

Mel Robbins (00:38:49):

Yes.

 

David Bach (00:38:50):

Yes.

 

Mel Robbins (00:38:50):

Every one of us.

 

David Bach (00:38:52):

Well, probably there are people listening, they're like, "I'm not. " But there are people, there are a lot of us doing it because everything's so expensive now. It takes nothing to blow $27.40 a day.

 

Mel Robbins (00:39:02):

Now, give me examples of how you can find that money because I think when you feel having been somebody that not only was in paycheck to paycheck for decade, but then was in a situation where I had no money and was in massive amounts of debt, but when you're in paycheck to paycheck, where can you find the 20? Give me some examples of where it's hidden.

 

David Bach (00:39:24):

You've got to go through your lifestyle. I mean, everything today is about convenience, right? So people are getting food delivered to them every single day. They're not really paying attention to what that's costing. People are taking Ubers every single day. I mean, you got to look at your own lifestyle. Everybody's got something that they're wasting small amounts of money on. People don't think like, if I spend $5 a day on something, that's $150 a month. That's well over $1,000 a year. It's five bucks. But if you're spending, again, $27.40, it's 10 grand. I've done podcasts in the past where I've talked about a hundred day savings challenge.

 

Mel Robbins (00:40:04):

All right, let's do a hundred day savings challenge. What is that?

 

David Bach (00:40:06):

The hundred day financial challenge that I have for people is this, especially people who do not have $1,000 in savings because there's a lot of people who don't have $1,000 in savings. So for a hundred days, save $10 a day.

 

Mel Robbins (00:40:23):

Where am I putting it in a savings account?

 

David Bach (00:40:25):

Literally, you could just start off by putting it in a jar in your house, but you could put it in a savings account. Save like my grandmother where she put the money in a coffee can. Save it for 100 days. And what- Pick anything. It could be a dollar just to prove to yourself.

 

Mel Robbins (00:40:39):

I actually like the idea of putting it in a jar because you can see it. And then you're like, oh, I'm doing it.

 

David Bach (00:40:44):

Yeah. So go and think about your life and see, am I wasting $27 a day, $27.40 a day on something?

 

Mel Robbins (00:40:54):

I guarantee you I am because I guarantee you there are subscriptions I don't even know about that are draining out of my bank account every month that probably add up to $27 a day.

 

David Bach (00:41:05):

So I'll tell you a classic story.This is a really funny story actually. One of my first book signings that I did for the Automatic Millionaire was in New York City at Barnes & Noble. So I do the book event and then I take questions from my audience. And this woman stands up and she's like, "David, I love you. I've read all your books. I've read Smart Women Finish Rich, Smart Couples Finish Rich. I got the finisher's workbook and I'm going to get the automatic millionaire." And she says, "But you haven't written the book that I need." And I go, "Oh, well, all my book titles for the most part have come from readers. What do you need?" And she goes, "I need start late, finish rich." And the room cracked up. And I'm like, "Okay, I hadn't thought about that, but how old are you? " And she says, I think she was in her 50s.

 

(00:41:51):

And I said, "Okay, well, let me ask you a question." I can go, "Are you married?" She said, "Yes, I am." I said, "So my question to you would be, could you save $20 a day? More than what you're saving, could you save $20 any more?" She's like, "Yeah, I could." I said, "Could your husband save $20 a day?" She goes, "I would make them." Everybody laugh, right? I go, "All right, so that's a lot of money actually. That's $40 a day between the two of you. If you just put that in, I gave her an example of a mutual fund and invested that for the next 15 years, here's what it could be worth." And the answer is it could be worth close to a half a million dollars.

 

Mel Robbins (00:42:27):

Wow.

 

David Bach (00:42:28):

And she's like, "Okay, so you're telling me that I could catch up a little bit, right?" I go, "Let's just play this out. At 65, is it better to have a half a million dollars or have nothing?" She's like, "It's much better to have half a million dollars." I said, "Great. So start with the $20 a day." She's like, "Okay, I can do that. " Because that's the whole thing. You got to figure out what can you do. Some people who are listening to me right now can do more than $20 a day.

 

Mel Robbins (00:42:55):

Yes.

 

David Bach (00:42:56):

You got to come up with what can you do. But here's a big thing. Your 50s are a beautiful time to save and invest and catch up.

(00:43:50):

And that question is going to be, Mel, how do I possibly automate savings when I am paycheck to paycheck? He said $20 a day. I can't do $20 a day. When I just do the advice of Tiffany Aliche, when I divide what I have into these four buckets, you know what I got, Mel, for savings? I got pocket change. What do I do when I just have pocket change left after my fixed costs? Great question. David Bach has a recommendation. So here he is explaining that you and I live in what's called the automatic economy. Basically, if you don't have a plan for your pocket change, someone else is going to steal it. And he's also going to recommend some savings apps that weren't even around a decade ago when my husband and I were crawling out of debt, living paycheck to paycheck. These are savings apps that can help you start saving automatically today.

 

(00:44:43):

Even if you're talking about nickels, quarters or a dollar, and David Bach will tell you, just taking control of that tiny amount of change in your pocket, it will immediately make you feel better and more in control about your money. So let's take a listen to David Bach explaining what is the automatic economy that we're living in and how do you start automatically saving when you're struggling to make the ends meet? Let's take a listen to David's appearance on the Mel Robbins podcast.

 

David Bach (00:45:17):

So let me tell you what's really going on in this economy, because this is probably the most important thing you're going to hear in this podcast.

 

Mel Robbins (00:45:22):

Okay.

 

David Bach (00:45:23):

We are living in what I call now an automatic economy.

 

Mel Robbins (00:45:27):

Automatic economy.

 

David Bach (00:45:27):

Automatic economy.

 

Mel Robbins (00:45:28):

Okay.

 

David Bach (00:45:29):

An automatic economy either makes you rich or it keeps you poor. And there are a lot of people, Mel, right now, becoming rich. In fact, we're going into a decade where I believe more wealth will be created in the next decade than in any time in our lifetime.

 

Mel Robbins (00:45:44):

Really?

 

David Bach (00:45:45):

100%. There's two escalators to wealth in America because the system's rigged. You need to hear this, especially young people. There's two escalators to wealth. They are real estate and stocks. You have to own real estate and you have to own stocks. And this market's now more rigged than it's ever been. And when I say rigged, what I mean is everything in our country is designed for those two asset classes to go higher. All the tax laws, all the incentives, all the opportunities that exist are for investors. If you're not an investor, you are being left behind faster than you've ever been left behind. Anyone who's in their 20s today can start investing their change.

 

Mel Robbins (00:46:31):

That's true.

 

David Bach (00:46:31):

You can start investing literally today. You can open an app like Acorns and be investing your change. Every time you spend money, you can be investing a dollar at a time in diversified portfolios. You can click a button at almost no cost. And that was not true 20 years ago. 20 years ago was hard to sometimes become an investor with a small amount of money. Today with technology, the whole playing field's been democratized.

 

Mel Robbins (00:46:55):

What are some of the biggest mistakes that people make when it comes to money that keep them stuck?

 

David Bach (00:47:03):

Okay. Number one, when it comes to money, you either have a plan for your money or someone else has a plan for your money. Oh, what do you mean? Let that sit for a second. Either you have a plan for your money or someone else has a plan for your money. Lots of people have a plan for your money. The automatic economy is driven by your phone. Okay. That phone that we hold all day long is a money magnet. Think about that as a money magnet. What do I mean by that? That means this tool is either helping you build wealth or it's taking wealth away from you.

 

Mel Robbins (00:47:40):

Oh, hold on. So the phone is either helping you build wealth

 

David Bach (00:47:43):

Or it's taking money away from you. And by the way, in both cases, it's automatic. So what's happening today, there's never been greater technology ever in the history of our lifetime to separate you from your wealth. But nobody wants to separate you mail from your wealth once. They want to separate you from your wealth for your lifetime. They call it the lifetime value of a customer.

 

Mel Robbins (00:48:02):

Okay.

 

David Bach (00:48:03):

So when I bring you into whatever I'm selling you, I don't want you to buy from me once. I want you to buy from me on a subscription level. I want you to be paying me whether everybody, think of it, Netflix, the gym, every single service, your vitamins, your creams, your lotions and your potions. Everyone's got you signed up to pay them automatically. If you go through, open up your credit cards or one of your people in your office already told me they did this, use a system like Monarch or YNAB. These are different software systems where you can track all of your expenses and you can see who are you paying monthly. People have lost touch with how many people are attached to their paychecks.

(00:49:46):

This is a huge wake-up call, but I also love that he gave you practical strategies for how to start saving now and why it matters. So daily choices, they set you up for a better future. So here's your simple question. For the next week, just notice your small spending. The subscriptions you forgot about, delivery fees, convenience spending, like getting Uber Eats instead of walking or driving to pick up your takeout, those little, "Ah, it's only ah." Then choose one tiny action, cancel one subscription or download the app like Acorns. In fact, there's a couple sponsors that offer free apps that help you identify subscriptions and cancel them. I mean, anything that helps you take control, stop somebody from just draining the money from your paycheck and build a little breathing worm, even if it's $5, even if it's a dollar today, it sets you on the right track to save more.

 

(00:50:50):

And then you can accumulate compound interest, which is how you can grow your savings easily, effectively, and automatically. So David just gave you the eighth wonder of the world, which is compound interest. He also gave you kind of a cold bucket of water in the face about the importance of really getting a handle on who's taking your money because you live in the automatic economy. He also gave you strategies to start saving pennies on the dollar every day. Tiffany gave you the budget. She gave you the question, "Do I need to earn more or do I have a spending problem?" Ramit gave you the four buckets, but here's the thing, I realize we have to go a layer deeper because you just got the tactics and the math and the buckets and exactly what to do. Now we got to change the way you think about your life and you think about money.

 

(00:51:46):

We got to change your mindset. And that's why I wanted to introduce you to Morgan Housel. Now, when Morgan Housel appeared on the Mel Robbins podcast, there were so many listeners from around the world that wrote in saying, "I am forever changed." And I can tell you, Morgan is unlike any other expert we've ever had on the Mel Robbins podcast. Morgan Housel is the best selling author of the psychology of money and one of the most trusted financial thinkers in the world. His insights are really profound because it's not about what to do with your money. It shifts entirely how you view the role that money plays in creating a fulfilling life. So let's take a listen to New York Times bestselling author of The Psychology of Money, Morgan Housel, when he appeared on the Mel Robbins podcast and taught us how to shift our mindsets and your expectations and how that helps you take control of your financial life.

(00:53:39):

How can I become a better parent, a better spouse, a better friend, a better worker? That's hard to wrap your head around. Will Smith had this great, I thought he was so astute and profound. He wrote this in his biography. He said when he was depressed and poor, he could tell himself, "If only I had more money, all my problems would go away." And that gave him hope. I just need to go out and make more money. And once I have more money, all of my depression, all of my doubts will go away. And then he became rich and he was still depressed. And then he said he lost hope because he couldn't say if only I had more money. And so we chase money because it's so easy to wrap our heads around and we chase it with the idea that it's a solution to all of our problems.

 

(00:54:16):

Even if it can solve some problems, but not the biggest ones, the hole that you're trying to fill, the psychological hole that you're trying to fill is probably not going to be filled with money.

 

Mel Robbins (00:54:26):

So the takeaway that I've got from what you just shared, which is much deeper, is to ask yourself is, what is the hole that money is trying to fill for me? Yes. And are there things that I can do right now in terms of redefining what it means in my 20s or my 60s to be a good friend or to have a good life or to take better care of myself that don't involve hitting myself over the head about my financial life?

 

Morgan Housel (00:54:54):

Exactly. That's it.

 

Mel Robbins (00:54:55):

Got it.

 

Morgan Housel (00:54:56):

The first step is realizing that a lot of your money woes and a lot of what you're feeling in terms of falling behind and a lot of your gap between what you have and what you want is solely a factor of your expectations. Because I think the pull is so profound in our heads that if only I had more money, these problems would go away. It seems like, how could that not be true? And I think the people who have experienced it would say, no, it can be true, just much less than you thought.

 

Mel Robbins (00:55:24):

What if you don't think you're good with money though? Because for a long time I had a story in my head, I'm just not good with money. I'm bad with money. And let's say you're somebody who's gone through a divorce, you're financially wrecked, you gave all the power to your partner, now you're starting over. Can anyone get good with money for real?

 

Morgan Housel (00:55:44):

You can if you want to. And I think the people who say, "I'm not good with money don't want to be. " They use that as their excuse to say-

 

Mel Robbins (00:55:52):

Come on now. Really?

 

Morgan Housel (00:55:53):

I think that they use that as their excuse. This is not a difficult thing to wrap your head around. This is very basic arithmetic. Spend less money than you make, save the difference, be patient.That's it. This is what we're talking about. You can explain this to a five-year-old. And so if you're saying, "I'm not good with money," you're making a choice to not get better.

 

Mel Robbins (00:56:11):

Wow.

(00:57:14):

You now have a roadmap for exactly what to do to start spending less money than you make, saving the difference and being patient. That is the advice that has been around since the beginning of time. It's boring and it works. You can get good with money. You can do this and you've invested all this time to listen up until this point so I know you want to. And I hope you heard the last thing he said because he just put into words something that most of us never realize that we're doing, that you turn money into a scoreboard for a good life. When money becomes a scoreboard, you can never win because there's always someone with more money. So here's the takeaway. Your money stress isn't only about what you have. It is about the gap between what you have and where you are right now and what you think you should have compared to other people.

 

(00:58:11):

If you don't define what a happy, content life is for you right now, your brain will turn money and chasing money and buying things into something that you will never actually reach because you will keep moving the goalpost. You will keep feeling behind. You will keep seeing everyone else and everything that they have as more, better, something that you're missing. And you'll keep chasing a number instead of starting where you are, doing the three simple things that you've just learned that you need to do, and then following this fourth rule and flipping your mind around money and use the money that you have to start building a life that you're proud of where you are.

(00:59:19):

Enough for me is a thousand dollars saved over the next six months. Enough for me is contributing to retirement or opening up one of those apps and starting to save change. Enough for me is I can take my kids on a trip this weekend without guilt. Enough for me is I can buy myself something without guilt because I know where my money is. Enough for me is following the advice on this podcast and giving myself a pat on the back because I, for the first time in years, sat down on a Saturday or a Sunday and spent half the day following all this expert advice and now I actually feel a lot better. Once you define enough based on where you are, money stops being a measure of your worth and it becomes what it was always supposed to be, a tool, a tool for peace, for options, a tool that gives you back time, a tool for the people you love.

 

(01:00:25):

And because of everything that you've learned in this episode from these four amazing financial experts, that's what you can achieve. And I want to make sure that you have all of these takeaways at your fingertips that our extraordinary experts taught you today. So let's just go through them. First, rule number one, you cannot change what you will not look at. So start taking control by following Tiffany Aliche's guidance on creating a money list. It will help you understand where your money is going and I want you to be honest with yourself, whether you have a I don't make enough money or if your problem is I'll spend too much money. Second, the second rule came from Ramit, know your four buckets. He taught you about the numbers, these four buckets that money fall into, and that simplifying your money into these four buckets is the fastest way to stop guessing, to be intentional, and to feel in control of what you got.

 

(01:01:33):

And those four buckets are very simple, fixed costs, savings, investments, and guilt-free spending. And third, David Bach taught you about the eighth wonder of the world, compound interest, and how tiny daily automatic choices create massive outcomes in the future. He also taught you about the fact that you live in the automatic economy, which is why you need a plan, because if you don't have a plan for your money, someone else is going to have a plan for stealing your money, and you don't need a perfect plan. You need a consistent one. Whether you're starting to save a dollar a day, $5 a day, $10 a day, $20 a day, it doesn't matter. The amount isn't the point, the habit is. And I loved his specific recommendations on how you can achieve this regardless of how little or much you make and make it automatic. And the fourth rule, define enough for yourself, because if you don't, you will chase money forever and you will never have enough.

 

(01:02:41):

Comparing yourself to others, chasing money, chasing things that you need to buy, it steals your happiness and it keeps you feeling overwhelmed, stuck, and dissatisfied. If you can learn how to be content and happy where you are by defining what enough is for you right now, you create happiness and control starting today. And if you need more support, I'm going to remind you that the links to all four of these incredible episodes with these world-renowned experts are linked right in the show notes, along with all the resources we discuss in this episode. I promise you, they are so worth your time no matter what your relationship with money is, no matter what your balances are in the bank, how long it's been since you've opened up the banking app or never at all, regardless of what you're dealing with, these experts are here to help you feel more powerful and in control and to give you the step-by-step plan to build the life you want using money as a tool.

 

(01:03:44):

And if no one else has told you this today, as your friend, I wanted to be sure to tell you that I love you and I believe in you, and I believe in your ability to create a better life. And there's no doubt in my mind that if you take absolutely everything that you learned today, these four rules from these amazing world-renowned experts, and you put it into practice like for real, not for money's sake, but for your sake. For a more meaningful life's sake, I promise you you can do this and you will start feeling better the second you do. Alrighty. I'll see you in the very next episode. I'll be waiting for you there the moment you hit play. Alrighty. And thank you for watching all the way to the end on YouTube. Thank you for being generous with sharing this link with your family members, anybody in your life who needs to take control of their money.

 

(01:04:39):

When you share this episode with people that you care about, you're giving them a free gift. This could literally be the lifeline that changes the trajectory of their life. How cool is that? And I know you want to know, okay, what should you watch next? In just a second, I am going to tee up Morgan Hausel's episode because the mindset thing will really help you feel motivated to do the tactical steps that Tiffany, Ramit, and David walk you through. But first, if that subscribe button is lit up, would you please hit it? It means you're not subscribed. And my goal is that 50% of people who watch this channel here on YouTube and watch the Mel Robbins podcast, you're subscribers. This is a personal ask for me. It is the best way that you can support your friend Mel Robbins and my team and these world-renowned experts who show up here for free to help you create a better life.

 

(01:05:27):

Thank you for doing that. I truly mean it. Thank you. It means a lot to us and it's the free fastest way to say thank you. So let's start with Morgan Hausel's episode, and I will welcome you in the moment you hit play.