anything goes with emma chamberlain - our relationship with money, a talk with paula pant [video]

Episode Date: February 29, 2024

[video available on spotify] today we're going to talk about money. paula pant is a financial journalist and the brains behind afford anything. the afford anything blog, newsletter, podcast, and online community are popular resources for practical advice and inspirational stories all in the world of money, finances, investing, and real estate. the world of money and finances is so confusing, but paula is here to help us understand and to empower us to not be afraid of money. let's bring in paula. Learn more about your ad choices. Visit podcastchoices.com/adchoices

I remember growing up, there was a saying, there's three things you don't talk about. Religion, politics, and money. But it is kind of true. It's like, if you want to start an argument, bring up one of those three things. Oh, there you go. Now you have an argument.

Enjoy, but today we're going to talk about one of those three, money. A topic that is very uncomfortable for me, but we're gonna be talking to Ms. Paula Pant today. Paula is a financial journalist in the brains behind Afford Anything. The Afford Anything blog, newsletter, podcast, and online community are popular resources

for practical advice and inspirational stories all in the world of money, finances, investing, real estate, it's all happening. Paula's main goal is to empower everyone, everyone, no matter who you are, to sort of grab your finances by the reins, okay? And to master it. I think a lot of people, even myself included when I was younger, felt like, oh, I will never make enough money. Like, I just, it's, especially if you didn't grow up with money, you know, you can fall into a trap of feeling like, well, I'll never make money. Especially if you didn't grow up with money, you can fall into a trap of feeling like, well, I'll never make money. It's just impossible. The world of money in finances

is so confusing and it seems to be its whole own language at times. that doesn't make you feel any better either, right? But Paula is here to help us understand and to empower us to not be afraid of money, to not be afraid of our finances, and to be smart, but to also enjoy life. She's not going to come on here here and say pinch all the pennies She was here to say Emma if you want that Prada bag and it's really gonna make you happy Figure out how to get that Prada bag. You know what I mean? Okay. Let's bring in Paula everybody Were you sort of

financially savvy As a kid like you know those kids who are like, actually I kind of did this, like I used to sell things at school, like I'd sell little erasers that my mom would buy me. Oh, you were super entrepreneurial right from the start. I guess. And so like my mom would buy me these erasers

that were like collectible and then I'd go to school and sell them. And then I'd pocket that money and my mom didn't know, which is actually like so. That's like being entrepreneurial in like the worst way, like being kind of sneaky. But anyway, I didn't know any better, it's fine. But were you like that? Like were you financially savvy as a kid? Because that was the only example of me being financially savvy. I loved shopping. So yeah, I maybe had a little entrepreneurial streak, but then I would... It did to shopping even when I was a kid.

What about you? Okay, so first of all, I'm going to challenge... We'll come back to this later, but I'm going to challenge the idea that loving shopping means that you're not financially savvy. I love that. I want to challenge that. Okay, great. We'll get back to that in a second, but first, to answer your question.

So, sometimes you can do the right things for the wrong reason, right? So you can have these habits that appear as though they're really healthy, but they're coming from an unhealthy place. And that was me when I was a kid. I was really, really anxious, just super anxious. And I, coming from a place of scarcity, believed that there would never be enough. And so I clutched onto every penny I hoarded, not because, oh, look at me, I'm a good saver, but because I was terrified that I would run out of money.

So it was doing the right thing for the wrong reason. And when we get down to the root of money, right, a lot of people make the mistake of believing that money is tactical. Like, you know, you just do X, do Y, do Z, or hire it out, right? People make that mistake all the time. The reality is, most people know the basics of what to do, but we get it in our own way because money truly is behavioral. It's all about unpacking that psychology. And at the root of it, everyone is either money anxious, money obsessed, or money avoidant. Most things that people do, most behaviors,

boil down to one of those three things, anxious, obsessed, avoidant. Interesting, so you were anxious. I was super anxious. Do you feel like over time, how has your relationship to money evolved personally? I was anxious because I never believed that I had the ability to make a lot of money. I knew I had like no aptitude for STEM, for science, tech, engineering, math.

I'd zero aptitude like biology, chemistry, image of math class in general. I was bad at it. And I knew that all of the highest paying professions seemed to be in the STEM fields, right? And so I was like, well, what, you know, I'm not good at any of that. What can I do? And I had this fear that I would never make money. And so through high school, through college,

through my early 20s, because of that fear and because of that lack of confidence, I clutched onto every penny. And it was only as I got older and actually started making good money that I realized like I have the ability to make money. I have the capacity to make money. The more I grew in confidence in knowing that even if I spend every dime that I make, that's fine because I'm able to go out and make more as long as I'm healthy.

As long as I have the health to work, I have the talent and the skill and the ability to make more. And the moment that I started believing that, I allowed myself to begin spending. And so if you look at my actual like dollars and cents, it looks as though my relationship with money, like, you know, it looks as though I've quote unquote gotten worse with money. But if you look at my personal like balance sheet, what you would see on the surface is that right now I'm

spending a lot more. So it looks like I'm quote unquote bad with it, when in reality, I'm actually better with it now because it's coming from a healthier place. I think that is a common misconception is like, it's easy to figure out how to be good at money or good with money. It's just don't spend it. Like spend the least amount of it possible, right? I think that that's the common belief, but it's sort of a simple bandaid

that you can just slap on the problem and whatever. So, what is a healthy... Yeah. Like... A healthy relationship with money? Yeah. Yeah. Like a healthy relationship with money? Yeah. Yeah. First of all, to explain a little bit more of why, like, just don't spend is actually

an unhealthy attitude. First of all, it's incredibly reductive, right? If we were to take that to its logical extreme, we'd be Ebenezer Scrooge, right? Ebenezer Scrooge is the perfect example of a guy who lives in abject poverty despite the fact that he is one of the wealthiest people in his neighborhood. No one wants to be Ebenezer Scrooge and I think nobody would argue that Ebenezer Scrooge is good with money. Then on the flip side, you've got Montgomery Burns from The Simpsons. He has a lot of money. He spends a lot of money. He lives in that big mansion, but he is obsessed with it.

He's obsessed with making more and he's obsessed with money for its own sake. And so he's also an example of someone who's not good with money. He's successful at accumulating it, but he's not successful at translating his money into an expression of his values. To be good with money means that you are using money as a physical manifestation of your values, right? So whatever it is that you value, that you prioritize, maybe you prioritize travel and adventure, right? Underneath what is travel?

Travel is a form of adventure and exploration. So maybe what you, the value that you have is adventure and exploration. And the expression of that value is through travel. That's how you use your money in that particular case to express those values. Maybe the value that you have is generosity, right? And so you, you know, you spend your money supporting friends, supporting family. And that can sometimes, you know, you got to be careful because that might tip into enabling, right? You know, you don't, so there's a whole lot there to do it well, but maybe that's how

you express that value. But if you're just clutching onto money, if you're just not spending it, then you're divorcing yourself from the way that you can use your money to be an expression of your deepest priorities. You know, I think a lot of people, their goal in life is to make as much money as possible. Like I know growing up, that was my goal, right? I was like, why would I, what other goal is there? Again, it was sort of this obvious goal.

Like I just need to make as much money as possible. And I was not factoring in sort of why. But you know what I mean? Like if you're spending all your time making money and you make a lot of it, but you have no time to do anything else with it, then what's I guess the point? I mean, how do you think balance is best found in that way between, you know, sort of making enough money that you can survive comfortably and then also spend on things kind of that are enjoyable for

you, you know? So let's zoom out a little and talk about limited resources, right? Because money and time are both limited resources. And so when we're talking about how do you balance how much money you make versus how much time you have, what we're really asking, if you go one step above that, is, hey, I have these very, very limited resources, time, money, energy, attention, those are all of the limitations that I have. Now, inside of those limitations, I can exchange one for the other. So I can exchange time for money or I can exchange money for time.

Exchanging time for money is having a job, exchanging money for time is hiring somebody to mow your lawn. So within the scope of how much, right now at this current moment, how much abundance do I have in each of those categories? How abundant am I in time? How abundant am I in money? You know, typically where you are within that is going to determine, you know, if you have a lot of time on your hands, but you don't have a lot of money. All right. Then you're going to be hustling a little bit.

If you've got a lot of money, but you feel a little bit strapped for time. All right. It's time to start outsourcing a bit bit. If you've got a lot of money, but you feel a little bit strapped for time, all right, it's time to start outsourcing a bit more, hiring assistance, hiring help who can take some of the workload off your plate. And so that exchange, if we look at the pool of like, these are my limited resources, then it just becomes a question of, how do I trade one limited resource for another? Because ultimately, it's a time and money balance. And that really one of the best uses of money is to trade that money for time because ultimately, money is renewable. We can always make more. Whereas time is non-renewable. And once it's gone, it's gone. So time is far more valuable. You talked about there's this idea

around work that people dislike their work and do it only for money, right? That can sometimes be like the knee-jerk reaction to the idea of work. But I know, I listened to your interview with your mom. You and your mom are both workaholics, right? Yes. Self-described workaholics. Yes. Right? So, and I know that you're not doing that to put groceries on the table. Right?

You're not doing that because you're stressed about the cost of bananas. You know, you love what you do. Yeah. And you've, you have been creating videos for years and you do it because you love art. You love creation. You love video as an expression. So there's a certain thing that happens when your work, like your dad said, it hits that flow state.

Yes. Right? Yep. And, and though to the extent that you can, you can direct your energy towards doing work that is not just like drudgery for the sake of earning a dollar. Sometimes there's an era in your life when you have to, right? Like you do what you got to do in that moment. But in terms of the long game, the big picture, if your work can be the type of thing where

you are creating something of value that you are putting out into the world, the more you do that, the more richly you'll be rewarded. I do have a question for you about your job journey. You were more in a nine to five and then eventually broke out of that. Tell me about that journey, your journey through jobs over the years. Yeah, totally. Well, so I straight out of college, I went to work for a newspaper. I was a newspaper reporter and this was back in the days.

I'm dating myself a bit, but this was back when Craigslist first started and classified ad revenue was going away. So this was in the days when everyone in the newspaper world was panicking because those classified ads used to be like such a big source of income. And so I would go to these journalism conferences and everyone was like, the internet killed all the jobs. People were so pessimistic. And then I would go to content creator conferences and they were like, the internet created so many jobs. Totally, totally. Right? Yes.

And everyone was super optimistic. And it was really hard for me to understand, like people who are trained in journalism are really, in my opinion, like some of the best qualified content creators because, right? Yes. And yet no one was doing it. Yeah.

Like so many journalists were just stuck in this, like, well, I need to keep applying for jobs. And no one was just making that pivot to being like, I can be my own boss. Right? I'm just the one who decided that rather than, going for job interviews, I was just gonna make the pivot to doing my own thing.

You know? And so, and what's beautiful about living in, in the era of the internet, right, is that anyone can do that. Yeah. Like the gatekeepers have gone away and there are low barriers to entry to starting your own business. And so, you know, it used to be that if you wanted to start a business, you needed a brick and mortar retail location.

Like you needed a high cost of capital and it was so shut out for most people. Yep. And now anyone with a smartphone can make something. Yeah. You know? Do you feel like your journey from being, you know, anxious about money as a child to then, you know, going into the work world in a very traditional way, to then being like, I need to get creative right now.

I have to figure something out. Oh wait, I figured something out. Did that journey sort of enlighten others on what you had discovered? What came first? Was your fascination around money? Did that come first? Or was it your experience in the workforce?

Was that what made you? Yeah, well, I think there were a couple of things that were happening in tandem. So I'm an immigrant. I was born in Kathmandu, Nepal. I was two months old when I came to the US. And so my parents, when I was a little kid, a lot of the things that most people's parents do before they're born, like I watched my parents

as brand new immigrants go through all of these milestones that most people tend to do when they're in their teens or early twenties, right? They bought their first car. They bought like a tiny little starter home. My dad didn't open his first retirement account until he was 50, 50. And so I watched them be very, very frugal out of necessity just because they were getting a late start in life.

You know, they like when you earn in Nepalese rupees, it doesn't translate to anything when you translate that to US dollars. But they were doing all of the right things, right? They were clipping coupons. We never went to restaurants. I think because I saw frugality, but I also saw its limitations. You know, yes, like I saw that frugality would help you survive, you know, but it would keep you off the streets, but it would never help you get ahead. And the way that I like to say that now is you can't shrink your way to greatness, you know, frugality is, if you think of it as sports, frugality is playing defense, but entrepreneurship

is playing offense or investing is playing offense, right? And in a good sports game, you've got to do both. But that understanding came later. It came, it started with me being in high school, realizing that my parents were doing all the right things and they were really frugal, but we still weren't really getting ahead. And I also, I went to an all girls Catholic school. And so I would see these other kids at school and they were doing what I considered rich kid stuff,

which like, you know, like eating a Panera bread. I thought that was a rich kid thing to do. You know, I was like, I can't imagine having $14 to spend on a kale and strawberry salad. That was my definition at that time of what a rich person was. But I saw these other kids at high school who had that kind of money. And I was like, I don't, what is it that they're doing that we're not? And then I started reading books and I started learning about it. And I was like, oh, okay, the difference is investing.

Talk about sort of your slogan, right? Like, tell me the story of this slogan. You can afford anything, but not everything. When did this sort of message come into your brain and dig into it? Yeah, absolutely. So, this happened at the time that I quit my newspaper job. I'd saved up about $25,000, which was all the money that I had in the entire world.

It was a $700 ticket to Cairo, one way. So I flew to Egypt on a one-way ticket, and for the next 27 months, I lived out of a backpack and just traveled mostly sticking to countries where the dollar exchange rate really worked in my favor. So I spent six weeks in Egypt. I spent about a month in Laos. I spent a month in Cambodia. I lived on a budget of around $1,000 a month, and I was able to do that first by being in

countries like Laos and Cambodia, right? Countries where the dollar goes a lot further. And second, I wasn't like traveling around doing touristy. I was like, I'd go to one location. So I was minimizing transit cost. And then I would just stay in that one location in a guest house, like eating the same food that locals eat, like just living like a local.

And at that time, I was like reading books. I would write the occasional freelance article. But I was mostly just there to experience the culture and to have that adventure. And so many of my friends back at home said, oh, I would love to do that. I would love to travel Southeast Asia, but I can't afford it. And I heard that over and over and over. And I knew that these were friends who lived in apartments, like luxury apartments with stainless steel appliances, right? And they would go to the bars and spend $14 on a cocktail, right? Or there'd be a concert in town where concert tickets were $100 and they would go. And so I saw them, they would

spend their money in these ways and then they would turn around and say, I'd love to travel, but I can't afford it. And so here's the thing, if you sit down and again, remember how I said money is an expression of your values, if you really ponder like what do I value and you decide that wanting to maximize your life at home is what you value. And so you make the conscious decision that the creature comforts of having a luxury apartment, having the $14 martini, having the $100 concert ticket, you decide that that is genuinely what you value and you prioritize that above and beyond anything else,

including travel, I applaud that. That's great because that is conscious, thoughtful, deliberate spending. But if that's the case, then the way to express that is not, I can't afford to travel. The way to express that is, I choose not to. It's not a priority. So what about your acronym, FIRE?

Ah, yes. Dig into FIRE for me too. You have to lay the groundwork here and then we can really dig in. Okay, perfect, perfect. So there is a movement online called the FIRE movement. And so FIRE stands for Financial Independence Retire Early. And I have my own different acronym for fire. And my personal acronym for it is Financial Psychology, Investing, Real Estate Entrepreneurship. So let's talk

about both of those. Yes. So first, the general online acronym of fire, Financial Independence, retire early. Financial independence is the point at which you no longer have to trade time for money. So it's the point at which you have enough residual income typically through investments that you have enough. So if you think about Taylor Swift, if she decided to stop working today, she could easily live for the rest of her life. She doesn't have to go on the Ares tour or put out a new album for the sake of putting groceries on the table.

She's fine for the rest of her life. Warren Buffett, same thing, fine for the rest of his life. So a lot of these people who we typically think of as quote unquote wealthy in a traditional sense are financially independent. They're not working because they have to, they're working because they want to, right? And so financial independence is anyone who has enough money to do that, right?

On a smaller scale, it's the person who works as a registered nurse, but saves 30% of her income and invests it in index funds as a registered nurse, but saves 30% of her income and invests it in index funds and does that for 15 years. And eventually the money that she has built up in her portfolio is enough that it's pretty much gonna match what she was spending as a registered nurse. And so she's like, cool, I've got enough, right? That's financial independence.

Now the other side of the fire acronym, retire early, I don't actually like those two being like conflated into one thing. So a lot of people are drawn to the fire movement because they're like, oh, once I have enough, I can retire. So like that registered nurse who doesn't, maybe doesn't like her job is like, once I have enough money that it's matching what I make

in my day to day life, I can then retire. But the problem is, when we conflate those ideas together, we end up with a bunch of problems. First of all, retirement is one of many options. You could choose to retire, you could choose to change careers, you could choose to do, to retire, you could choose to change careers, you could choose to do anything. Why would you make one of the many possible choices?

Why would you confuse that with the idea of having that freedom in the first place? Yeah, it does kind of take away the freedom. It's like, what if you want to go and maybe get a job that doesn't pay a lot, but you enjoy it. Exactly. That's not retiring technically. Exactly.

So it's like this idea that now you need to move to the Florida Keys, like the second. I don't even, it's like, yeah. Exactly. I so what about yours? All right. So my fire acronym is financial psychology, investing, real estate and entrepreneurship. And if you can master all of those, then you've got the building blocks of good overall financial wellness. So financial psychology is the first piece, it's the foundational piece, and it's, I would argue, the most important piece.

Because money is not tactical, it's behavioral. And to get to the root of why we behave the way we do with money, we need to understand our own inner psychology. I mentioned earlier, people tend to fall into one of three categories. They're either anxious, they're avoidant, or they're obsessed. If you're obsessed with money, we see these people who like they blow it to show it, right? They're all flash, no cash, and they really conflate their self-worth with their net worth.

Money avoidant tend to be people who have really internalized the notion that rich people are greedy or money corrupts. Or the idea I'd rather be happy than rich, as though they're mutually exclusive, as though you can't be both at the same time Totally right, so they've really internalized these ideas and they've internalized this notion like look if rich people are evil Well, I don't want to be evil, so I'm just never gonna be rich Right and by doing so you sabotage your own success, even at a subconscious

level, you hold yourself back. Because why would you ever want to be rich or successful or powerful if you deep down believe that rich, successful, powerful people are evil or bad or greedy? Yeah. So like people who have really internalized that those scripts tend to be money avoidant. And then you've got then people who are money anxious. And that can either be because you don't have enough. And so you're anxious about, you know, like as I described myself when I was younger, or it could be because you have a lot.

And so now you're worried that you're going to lose it. You're worried it's going to get stolen. You're worried that people are gonna lose it, you're worried it's gonna get stolen, you're worried that people are gonna use you for it. So like, either way, regardless of whether it's due to scarcity or due to abundance, you are living in the state of hypervigilance. So then what is the happy state? You know, like what is the healthy state?

Because when you were just describing this, I actually think I'm a voidant, weirdly. Like I'm always like, yeah, it's weird. I've always been sort of a void in about it. Or no, actually, that's not true. I was anxious as a kid, and then I think now I'm a void in. Like I just don't wanna see it.

I wanna believe it. It's weird. I wonder if that's because, and I don't mean to like play armchair psychologist. No, I love this, we're good. Get into it. But I wonder if that's because, you know, when you were a kid, you didn't have a whole lot.

And now you have significantly more, you know, you have probably more than you ever, the 12 year old version of yourself would not have imagined where you are today. And so I'm guessing there's probably some imposter syndrome. For sure. Right? There's probably some sense of, wait,

do I even deserve this? Because Yes. And how did this happen? And there are all these other people who you see working so much harder for so much less. Yes. Right? And so, and so all of that then ends up turning into avoidance because deep down you don't feel like you really deserve it in the first place. That's absolutely spot on. Yeah. So what is the like happy, like what's the happy medium? Cause I mean, or is it always, is the relationship with money always one of those three that's a little bit faulty? I mean, what is the, is there even a name for, for a balanced relationship with money?

Right. Like a healthy relationship. I would say it's a lifelong practice. Like, you know, in the way that a relationship between a couple, you're never done. Like with your spouse, your partner, your boyfriend, girlfriend, husband, wife, like you're never like, okay, our relationship is healthy forever. Like that's, that's not a thing, you know, because you, the two of you are dynamic and the two of you are always changing.

And so you constantly have to be working on your relationship. And the way that you do that oftentimes is just by observing what's coming up within you and then asking yourself, wait a minute, let's unpack that. Like what's behind that? And so I think the relationship with money, a relationship that a person has with money is similar to that in that you're never done having a healthy relationship with money because your relationship with money is very much a reflection. It's a projection of all of the gunk and the noise that is inside of you, right? Getting projected onto money. It's like your relationship with yourself.

If you've got a really healthy relationship with yourself, that's likely gonna translate into a very, very healthy relationship with money. But if there are parts of yourself that are suffering from trauma or from damage or from just feelings of brokenness or insecurity or inadequacy, that's gonna translate into your relationship with money.

So what about investing? Yeah. The eye. The eye of your fire. Okay, so eye. So we'll kind of take these together, the ire. Yes, yes, yes. The ire of fire.

We'll take these together because when we talk, so investing real estate entrepreneurship, right? As an entrepreneur, if you run your own business, you are investing money into that business, but you're doing so in a much more active way, right? Versus as an investor who's investing passively into things that you don't actually have any day-to-day involvement in. If you buy a share of Coca-Cola stock, right? If you don't work for the Coca-Cola company, you have no day-to-day involvement in it. You just bought some stock on the public market and that's that. So traditional public markets

investing is very passive, whereas if we go to the other side of ire, entrepreneurship is very, very active. Owning real estate is sort of a hybrid between the two. So it's kind of fitting that the R falls into the middle. And so if you think of ire, you can sort of see it as a spectrum of moving from passive to active, right? Where public markets investing, buying stocks, buying bonds, things like that, that's the most passive. Building your own business, that's the most active. And that gradient in between, that's building your own business, that's the most active. And that gradient in between, that's how you move along the passive to active continuum.

So it's almost like those are sort of the main ways to get to a point where you're financially independent. It's like, is it a combination of investing real estate in entrepreneurship? Is it choosing just one? Like, like, is there sort of no rules? Like, if you were to be giving advice to the average person, what would that advice be? So remember how with the financial independence, retire early, the FI is really the heart of it.

And the retire early is like one of many options. The same thing is true in my acronym of fire. The R and the E, the real estate and entrepreneurship, those are options, you don't have to do it. If you want to find, if you don't, don't. I guess it's like if it aligns with your values, ultimately, fair, fair, sure. Exactly, exactly.

If it aligns with your interest and values, cool. If not, you don't need it. The fundamentally all you need is that, again, with mine, just like the other, just the F and the I, you need to understand your own financial psychology. And you need to, at a minimum, you need to invest for retirement. Right? So you'll need a four, if you live in the US, a 401k or a 403b or an IRA, you'll need some type of an account or just a taxable brokerage account. Yeah.

Right? But you need some type of an account where you can make investments in, you know, you can buy into a broad market index fund. That's basically a big basket that tracks all of the publicly traded stocks. Get an account, buy a broad market index fund, hold it for the next 40 years, and you'll keep contributing to it every month, and you'll be golden. Wow. Yeah.

There it is. Yeah. It's very, very simple. I know. My dad is so, he's always said, Emma, you have to invest. This is all it is. And I'm like, it's so daunting. It's so daunting. Like I'm like, it's so daunting. It's so daunting. Like I'm so overwhelmed by,

because I wanna understand it and I don't. Like I, and it's, and that's kind of my fault. You know what I mean? I think a lot of young people especially are like, I'll figure that out later. But I do think that from everyone who has more life experience than me, the advice is to invest.

Yeah. It's like that is the best thing that you can do. All right. I'm going to make it really simple. Yeah, please, please, please, please. So I think, unfortunately, there are a lot of people who get paid to make it sound more complicated than it is, right? Because if you can scare people into thinking

that it's complicated, then people are going to throw up their hands and be like, let me just pay you to handle it. So there's a whole financial industry out there that has a vested interest in making it feel scary and feel complicated. It's actually not. So first of all, I threw out a bunch of letters and numbers, 401k, 403b,

blah, blah, blah, blah, IRA, right? Those are all just different types of accounts. And what is an account? Think of when you go to the bar, right? When you go to the bar, there are, there's a pint glass, which typically holds beer. There's a martini glass, which typically holds vodka, you know, there's a shot glass, which might hold whiskey, it might hold tequila, it might hold gin. But just because a particular vessel is designed to have a particular substance in it, you don't have to put that substance in it if you don't want to.

You can take a champagne flute and put water in it or coffee. You can put anything you want in a champagne flute and put water in it or coffee or you can you can put anything you want in a champagne flute. It's just that because a champagne flute so often contains champagne, a lot of people will conflate the two. So when we talk about these various accounts, right, there's 401ks, 43Bs, IRAs, blah, blah, blah, blah, blah, blah, blah, blah, blah, those accounts are just vessels that Those accounts are just the glasses that hold the substance. And then when we talk about various investments, right?

We talk about stocks or bonds or CDs or money market, those are the substances that go inside of the vessels. So sometimes I'll hear people say, oh, I don't wanna open a 401K because I don't trust the stock market. Well, a 401k is just an account. The stock market or stocks are a particular type of substance. So you can open a 401k, you can open an account and you don't need to necessarily have stocks in there.

I recommend that you do and we can talk about why later, but you don't necessarily have to have stocks in there if you don't want to. So that's the first thing to understand is just the distinction between the vessel, the pint glass, and the beer that goes inside of it. So to invest, first just get a glass. I don't even care which one just to start. You just need an account. Yeah. Get something. Start with something. All right. And then fundamentally, stocks and bonds, right? Those are the two big types of publicly traded investments.

And a stock is just a piece of ownership in a company. Yep. Right. And you don't, the good news is you don't have to choose which companies are going to be winners or losers because there are these indexes and an index is just a bunch of stocks that are all traded together. The biggest one in the United States, the biggest one is called the S&P 500 and that is 500 companies, 500 of the biggest companies in the US.

And so if all you do is get an S&P 500 index fund, right? Get that, get a total bond market index fund, boom. It's as simple as that. There's also one that's called a total stock market index fund, just get that, right? Interesting, so it's almost like, yeah, there are gonna be some people who are really into investing and they're tracking the patterns of this and that and this and that and trying to invest in the most fruitful way, the way that's going to be explosive or something like that.

But you don't necessarily need to do that. You can just invest in the S&P 500 and be like, I'm good. Is that the vibe? Well, actually, what's interesting is that the data shows that people who try to beat the index don't. Really? Yeah. Yeah.

Really? Statistically speaking, the laziest approach is actually the most profitable. What a treat that is. Right. Wow. Yeah. And it goes against our nature, like in almost any other field in in art in science in

Technology in anything else in in athletics. Yeah in anything else that we do The more we try the better results we get right Investing is the one area where the more you try, the worse results you get. Statistically speaking, if you try to beat the index, you don't. Most people who try to beat the index end up underperforming, which is just a fancy way of saying doing worse. Most people who try to beat the index end up doing worse over time. Now, sometimes you'll see headlines where so and so beat the, they beat

the total stock market for the last five years. Big freaking whoop. Five years in the span of a human lifetime is a blink of an eye. Almost nobody can consistently over 40 years or 50 years reliably beat the index. And so your best bet is actually the simplest and laziest one, which is you just stick with, I mean, if you want to keep it really simple, just get two indexes, get a total stock market index, get a total bond market index, have a combination of both,

put them in one of the vessels. Ideally, you would put it in a tax-advantaged vessel, which is just a vessel that gives you a tax break. So put it in one of those vessels and you're good. And the most important thing is just that you keep contributing regularly. So with every paycheck, just keep putting money in. And so where most people go wrong is most people try to time the market. So they'll say, oh, you know, this is happening.

You know, there's a recession going on or I'm worried that there might be a recession coming up. There's a pandemic happening right now. Like people are looking around at all of these big geopolitical events and they're trying to make guesses about what might happen in the future and they're trying to time the market. That's a mistake. Don't do any of that. The people

who are the most successful just routinely put in exactly the same amount of money with every single paycheck. And so imagine that you get paid once every two weeks, right? And we'll say with every paycheck you put in X amount of money. Maybe it's 100, maybe it's 500, maybe it's a thousand, whatever you can afford. Yep. Right? If you're putting in the same, we'll say just 500. If you're putting in the same $500 per paycheck, then naturally, whenever the stock

market is expensive, meaning when stocks are high, right? Naturally, that same $500 is going to buy fewer shares because stocks are expensive. If you're putting in that same $500 every two weeks, every paycheck, then naturally, when stocks are low, that same $500 is going to buy more. By virtue of putting in the same fixed amount of money with every paycheck, you inherently, automatically end up buying more stocks when they're cheap and fewer stocks when they're expensive. So I guess that's sort of the most practical piece of advice for the average person.

It's like anyone can benefit from investing in this simple way. But I guess my question is like, what about people who are, let's say, in student debt? Or maybe people who they are living paycheck to paycheck, they don't have that extra $50. What's your advice for those people to get out of that period into have that surplus? So it's like, how do you get there? Yeah, totally So if you're living paycheck to paycheck

Then start with 1% now 1% means $10 for every thousand dollars that you make. Mm-hmm. So if you make $3,000 a month, right start with 30 bucks a month Right and so this month if you if you if your income is $3,000 a month, this month, my challenge to you is to set aside 30 bucks and to put the, those 30 dollars into a Roth IRA, which is one of the many types of accounts, right? Do that this month. Next month, do one more percent, so $60. And if you just continually do that, start with 1% and then increase by an additional 1% every month.

And do that for somewhere between 6 to 12 months. By virtue of doing that, then within 6 months to a year, you'll be saving between 6 to 12% of your income. Right? And but it's going to be gradual, right? It's going to start with 1% this month and it's going to be 2% next month and it's going to be 3% the month after that. And then the question is, all right, how do I either cut my expenses by $50 a month or how do I increase my income by $50 a month?

Right. Right? Yep. Right. Yep. And so every month you're solving for that. But of course in a given month, you're never going to cut exactly 50 or earn exactly 50. Totally. Right.

But what that does is like, if you stay on that trajectory, if your goal each month, we'll say you make 5,000 a month, your goal each month is just to increase it by an extra 50 bucks a month. Yeah. Then even if one month it's 30 and the next month it's 70 and the next month it's 45. Yeah. You're still kind of hugging to that 50 bucks a month and you're still increasing over time. Yeah. So it's almost like it's sort of, it motivates you to sort of, I don't know, like you can get really creative to make that 50 dollars, for example.

Right. Like if you're like, oh, I want to go out and make an extra $50, you know, it'll sort of give you a reason to do that that you wouldn't else otherwise, you know what I mean? Do. What is your advice for people who sort of maybe have a mentality where they're like, I can't.

You know, like people who are like, I can't make money. Like I don't attract money, I don't make money. This is my life. There's no getting out of it. There's no turning it around. This is just my deck of cards. What are your thoughts on that? You know, the story that you tell yourself, right?

Your money story that you tell yourself is the single biggest predictor of your financial future. If you tell yourself the story that you just described, then that story becomes a self-fulfilling prophecy. A large part of that is because the story that you just described is a story where your, what's called your locus of control is outside of yourself. Locust just means location, right? So where you locate the source of control, the source of power, if you locate that into

the external world and you say, the external world is broken, which it is, that's true. But if you put all of your, if you give that all of your power and you don't see the power inside of yourself, then, then you do end up stuck. But so what you need to do is change that story and flip that script. That's why financial psychology is the single most important. Like your financial mindset is the single most important thing. Because when you flip that script and you put your locus of control internally and you say, you know what? Yeah, it's true that the world is broken

and it's true that my childhood sucked. And it's true that, you know, like X and Y and Z, those things are all true. We're not invalidating any of that. But I also have these advantages. I have this power. Like there are so many things that I can do. All right, and like once you flip the script

and start telling yourself a more empowering story, then the question, it changes from I can't to how can I? And if every time you find yourself thinking, I can't, you flip that script and ask, how can I and if every time you find yourself thinking I can't you flip that script and ask how can I? You start seeing the world in different ways It is almost like our ultimate goal in life is to survive right in a big part of that is Money so a lot of us. I think fallen to this A lot of us, I think, fall into this routine that everyone else did, the traditional sort of path of like, you go to college and you get this job

and you do this and you do that. It is so hard because it's so easy to just sort of fall into this stereotypical routine. Right, the prescribed path. But then there's also this desire to do on the other hand, completely reject the original structure. It's like, you know, or the expected structure, which is also bad because you don't want to completely reject because that might be a great path for you. It's also like some people might, this is very Gen Z, but young people might be like,

well, I don't want to to college because I wanna be entrepreneurial and it's not as entrepreneurial to go to college. You know what I'm saying? Or young people might be like, I don't wanna get married because everybody gets married and I'm not, I'm not gonna sort of succumb to the man. You know, like, there's this sort of desire to do that rebellion.

I feel like my generation is definitely in a phase of rebellion. What's interesting about rebellion is that you're still shackled by expectation within rebellion. Absolutely. It's so ironic. Yeah, exactly.

It's like, if you're doing something because it's contrary to what's expected, you're still doing it because it's expected. You're still going by a book. Yeah. You know what I mean? You're maybe not going by it's expected. You're still going by a book. Yeah. You know what I mean? You're maybe not going by the book, but you're still going by a book. Yeah, exactly.

So you're not a free thinker as you feel. Exactly. Exactly. Like true freedom is doing something in a vacuum of what's expected, right? You're doing it because it's what feels most true to you. You're neither doing it because it's expected, nor are you not doing it as a reactionary, like anti-measure, right?

Either way, I think the common thread that both of those share is that they're not, and I know this is a very overused word, but they're not authentic, meaning they're not coming from the quiet inside of you. And so I think follow your curiosity. Like that's what I would say to people is like, it's hard, people say follow your passion,

but sometimes it's hard to know what you're passionate about. Yes, totally. But follow your curiosity. Yeah. What are you curious about? Do you think anyone can find fulfillment in their career? I do, I do. I see, I agree too.

I mean, but then it's also like, I think about certain jobs that I feel like nobody would wanna do, like even being a garbage man. You know, like it smells bad, you know, it's, but it's like maybe there are some people who genuinely love that. They love that they see the same people every day. They, like, I guess my question is, is that realistic?

Like, is that a realistic goal for humanity that everyone can find fulfillment in their job in one way or another? Yeah. I think it's essential to find fulfillment in your career because your career is where you spend, you know, at least 40 hours of your week. Right? And so that's a huge, huge chunk of your time, of your waking life.

Now there are a couple of things that I would say. One is there's a distinction between a temporary job that you might have for a moment versus a 40-year career over the span of your lifetime. So I worked a bunch of food service jobs when I was in high school and college, right? Those jobs, for me, they were never going to be my career, right? But those were jobs, like there's a distinction between a job that you do temporarily. And when I say temporarily, it might be for a few years, but there's a distinction between a job

that you do temporarily for a brief era in your life versus what you do long-term, right? So that's one difference. The other thing is there are a lot of people. So for me, I worked food service and I was like, this is not my path. There are a lot of people who go into food service and they're like, wow, I'm actually, I'm really into this. And I think I want to go further in this. And I think I'd like to,

I'm starting out as a bar back, but I would love to one day be a bartender. And then eventually, I would love to open my own bar. Or I'm starting out just like as a food runner, but I would love to one day eventually become a sous chef and then maybe become a chef. Yeah. Which by the way, there's actually research. There's a book called The Millionaire Next Door. The average millionaire in the United States, first of all, four out of five millionaires in the US are first generation millionaires. So they did not come from, they did not come from

money. They are the first generation in their family to be millionaires of the four out of five millionaires in the US who fit that category. The bulk of them are not only are they entrepreneurs, but they're entrepreneurs in what are known as like kind of boring professions. So totally janitorial services. Yeah. Right. Because there's not a lot of competition there. It's not glamorous. Yep. And because of the fact that it's not glamorous, you can really grow something big. What would you say if there were a course in high school for kids? Like what is the most valuable information? Obviously at school, you can only fit in so much.

So if you had to fit three smaller topics into a course for high schoolers about being financially literate, what would you teach? And like what would be those three smaller topics? The first thing I would say is, What would you teach? What would be those three smaller topics? The first thing I would say is, going back to what I said earlier, money is a physical representation of your values.

To figure out how you want to spend your money, first you need to figure out what your values are. What that means is that you might not be doing the same things that everybody else is. It's like, be weird. And what that means is that you might not be doing the same things that everybody else is. Right? It's like, be weird. You know, be weird because we live in the society where we're taught that you should spend on X, Y and Z just because that's what everybody else is doing. People feel this pressure, like you said earlier, to you get the fancy car, you get the fancy

home, you spend your money on appointments, like you get brows and lashes and nails, right? And you do it just because everybody else's and you feel like it's expected of you. But if you can shed that and really ask yourself, like, do I care about my hair and my nails? And maybe like, I know you, you came to the conclusion, you do care about your nails,

you don't care about your hair, right? Yes, yes, yes, yes, yes. So like, that's an example of being really, really clear about what you care about your nails and what you don't care about your hair. So you're gonna spend time and money on your nails and you're not gonna spend any time or money on your hair, and you take that and you make that bigger,

you apply that to everything in life. Do you really care about a fancy car? And some people do. Some people are obsessed with cars. Totally. And they read car magazines and they, you know, like, and that's their thing. Yep.

And other people, it's like, if you lived alone on a deserted island and nobody saw what you drove. That's a great test. Yeah. Yes. Exactly. It's like the deserted island test. We what you drove? That's a great test. Yeah, exactly. It's like the deserted island test.

We need to trademark that. Exactly. It's so good. Okay, so what else would you teach high schoolers? Like two more, two more, like is it investing? Is it like the basics of investing or do you think that's something that kids can go and learn on their own? What else?

All of the information that I said earlier about, open an account, get a total stock market index fund and a total bond market index fund, have a mix of the two, put money in it every month routinely with every paycheck, and you're good. It does not have to be any more complicated than that. That's very step-by-step. It's very actionable. It's very tactical. That's great and it's important

But I literally can and just did say that in 30 seconds. Yeah, right? What influences whether or not you're actually going to do that is Unpacking the money stories that you tell yourself. Mm-hmm. There's so many get rich quick schemes out there like tick-tock is the worst There's so many get rich quick schemes out there like TikTok is the worst space to learn about money Yeah, right, but like why do people fall prey to get rich quick schemes? It's because a lot of times the that slow and steady You know gradual incremental like just put money in with every paycheck and don't touch it It feels so passive. Yeah, right that people are like, I feel like I should be doing more.

I feel like I should be taking action. So yeah, you can teach the tactics, but most people get in their own way and most people get in their own way because they have some type of a story that they're telling themselves, the story that they should be doing more, the story that they should be responding to broader economic news, the story that they should be trying to time the market. They have all of these myths and misconceptions and those pull them off of that track and create all of this unnecessary complexity and actually

end up doing way more damage. Yeah. So I guess it's like, I'm thinking about it now, and it's so true. A lot of people say, oh, like why didn't they teach us how to do this, this, or that with money in school? And that's somewhat true. Like I think there is some value to like maybe a semester

of learning how to do, learning how to invest, learning how to do various things like that. I do think that's helpful, but I think you make a great point that none of that matters unless you understand the psychology of it. It just doesn't even matter. And I do think it's true that you can easily go out and learn the technical side of things, you know, like how things

work. What do you recommend, like for young people who are coming into maybe a bit of their own money for the first time? What's your recommendation for young people and how to learn? Because I think there is something hard to grasp about money for some reason, like how these things work. It's all a whole new language. What's the easiest way to understand it properly?

Like is it reading a book? Is it, what is it? So here's what I would say. So if you're young, if you're 22, you've just graduated from college, you've got your first, like, steady paycheck for the first time in your life, right? First of all, know that it's not that complicated, but there are vested interests that want you to think it's complicated

because they make money if you get overwhelmed. Yep. Second, if you have a job that has a 401k or a 403b and there's some type of an employer match, get the full employer match. I don't care if you're in debt. I don't care about any... Get the full employer match because that employer match is part of your page. It truly is yours.

You're earning that money and you're just... If you're not getting the full employer match, you are not getting a portion of the money that you've earned in your job. You are entitled to that money. That is part of your compensation. So you're just forgoing part of your compensation, forgoing part of your paycheck by not getting that. So get the full employer match. Number three, just stick with broad market index funds. So to keep it super simple,

total stock market, total bond market, right? Get just those two. Your age minus 10 is the percentage that you put in the total bond market and the rest you put in the total stock market. There it is. Yeah, and then just put money in from your paycheck every single month.

So it's super simple. You have to put money in from your paycheck every single month. So it's super simple. You have to get in there. Yeah. You kind of have to get in there. Yeah. It's almost like that's the only way to learn in a lot of ways. Like you do have to, you can't run away from it.

I've been known to run away from it. Yeah. Like I, yeah. Avoidance, that money avoidance. I really do. I run away from it. And I've never been aware of That piece that it's because I'm avoid it like I didn't know why I've always been like I don't want to see it I don't want to know like I wouldn't recommend that like I don't recommend that you know what I mean

I don't think that's good. I don't like the disconnect I have in a way But for some reason for me mentally I feel mentally healthier not seeing it and not knowing what's happening and knowing that I'm living far below my means so that I don't have to look ever again. You know? Right. But that's not, I don't know, but I don't know if that's healthy necessarily because it's like I should just be involved. But there's something in me where I'm like, I don't want to see, I don't want to know. Yeah. Like as long something in me where I'm like, ah, I don't wanna see, I don't wanna know. Yeah.

Like, as long as I know that I'm living far below, what, like, you know, in a very safe area where there's, that's fine, then I don't, I don't know, you know? Yeah, so let me ask. So we've talked earlier about that internalized imposter syndrome, right? Where it's like, wait a minute, I've never had anything even close to this before.

Do you think there's an element of you that, you know, we're often taught like either you work for joy or you work for money. You can't do both. Is there an element of you that like, if you saw how richly you were getting rewarded for the work that you do, do you think that it would take away from? Yes. Actually, yes. I think like, there's still a lot of guilt, I think too. Like I feel guilty. I'm like, fuck. You know, like I feel bad. Let's dig into that.

Yeah. Right? You, how old were you when you started making YouTube videos? 16. Okay. And you, I'm imagining the first week, the first month that you made videos, how much did you make doing that? Zero.

Okay. And did you love it? I did. And did you want to keep doing it? And did you ever imagine, I mean, did you think realistically that you would be here? No. Okay. And so fast forward to today.

Do you love it just as much? I don't know. Hmm. Okay. Do you see yourself continuing to do this 50 years from now? No. Ooh. Interesting.

Actually, maybe, actually maybe. Hmm. Okay. But maybe not. I like the act of making videos. That I would do forever. Yeah. Putting them on the internet is a different thing. Ah. Right. So like being on the internet I think is where. So that's actually what it is.

I'm realizing it's not about creating a YouTube video. I love doing that. It's about the internet's involvement. It's about being a public figure. I think I have a really hard time with that. And as your, your status as a public figure grew, the money grew in lockstep with that. The more of a public figure you became,

the bigger the money grew. So I wonder if there's an element where you associate the money that you have with the public figure element of your job. That is true. I've had a very hard time with being a public figure. I mean, I don't think I'm necessarily built for it. I do think that there are some people who are

just naturally a thicker skin, naturally, like enjoy the attention more than me. I do enjoy the attention to an extent. I mean, it's sometimes it can be so nice. I appreciate it, but I mean, sometimes it can be so nice. Like I appreciate it, but I don't need it. You know, like it doesn't feed me, ultimately. I don't, I could go without it.

I could go without being a public figure. And I actually have moments all the time where I'm like, I kind of wish I went and did something else that wasn't in the public eye, but maybe gave me the same fulfillment as what I do now. It's very, like I definitely have my fair share of existential crisis, crises, but I do think that that's also inevitable.

Like I bet, I don't, but it's like, but here I am. And it is great in a lot of ways. So, you know, and I think fixing that relationship with whether it's me being in the public eye or, you know, the money of it all, like I think fixing that would allow me to just sit in it and maybe even enjoy it. But I have yet to crack that code. So here's what I'm hearing is there's a craft that you love, which is making videos, right? And then there's this other thing that came along with it, which is being in the public eye,

that you accept as part of your existence, but you don't necessarily love. Yeah. And being in the public eye is also the piece of it that's in lockstep with money. Yes. And so... Yes.

And so I, my guess is that the moment that you'll start to actually pay attention to your money is when you make peace with the fact that you're in the public eye. Yes, wow, that's actually very true. I'm now realizing how connected that is because I'm afraid, like, I have this, I have this like deep visceral fear

when it comes to being in the public eye. And it's so like, it's almost like because I can't handle that, I almost don't really believe that maybe my financial success is, I'm like, this is gonna go away because I know I can't handle being in the public eye for much longer. Like, does that make sense? So it's like, I think gonna go away because I know I can't handle being in the public eye for much longer. Like, does that make sense?

So it's like, I think that could be what it is. It's like, I'm not even gonna look because this is not gonna last. Because I'm gonna be, I am not strong enough to be here. Like, I will, I will eventually crumble. But also, no, I won't. Like, a lot of it is all like subconscious sort of little chatter that if I were to truly address, I'm like, no, I've made it this far. I'm going to be fine, you know?

So it's interesting. It's very rare these days that, you know, with my podcast and with all these things that I realize something new about myself that I've never even touched on in that, I have never. So what a treat. Because I really, I'm not avoided with almost anything in my life, except for that. Beautiful. Oh my God, this is amazing. Is there any other advice or anything? I feel like we've covered everything in the whole world at this point. The core message is to have a healthy relationship with money in the same way that you would have a relationship with a lover or with a parent or a child or with yourself.

Amen. That's the message. Oh, love it. Thank you so much. That was so great.