Modern Wisdom - #065 - Chris Hutchins - The Basics Of Money Management

Episode Date: April 18, 2019

Chris Hutchins is the CEO of HelloGrove.com, former Entrepreneur In Residence at Google Ventures and a serial money-optimiser. Effective money management is something which everyone should know but no one is taught. Chris has spent a large portion of his career trying to educate people to be skillful with their finances and today we get to learn many of his favourite tips. Extra Stuff Follow Chris On Twitter - https://twitter.com/hutchins Chris's Website - https://chrishutchins.com/ Check out everything I recommend from books to products and help support the podcast at no extra cost to you by shopping through this link - https://www.amazon.co.uk/shop/modernwisdom - Get in touch. Join the discussion with me and other like minded listeners in the episode comments on the MW YouTube Channel or message me... Instagram: https://www.instagram.com/chriswillx Twitter: https://www.twitter.com/chriswillx YouTube: https://www.youtube.com/ModernWisdomPodcast Email: https://www.chriswillx.com/contact Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello there friends. Before we get into today's episode, I wanted to give a big thank you to everyone who has supported the podcast over the last couple of weeks. Earlier this week, the episode with James Clear landed the show in the Top 50 Podcasts worldwide, which was a lovely thing to wake up to on Tuesday morning. So thank you very much for sharing it. The feedback I've had over the last few episodes has been so fantastic and Yeah, I Have to pinch myself every day to realize that I actually get to share oxygen or bandwidth sometimes With literally some of the cleverest people on the planet with that in mind

I thought I would give you a quick rundown of some of the upcoming guests So on Monday, Professor David Sinclair from Harvard Medical School, one of Time Magazine's 50 most influential health professionals on the planet, talking about whether or not a human can live to be a thousand years old. Rachel Kleinfeld, who advises the UK and US government on how to govern correctly. Tim Briggs from We Dominate Nutrition, Dom McGregor, COO of Social Chain is back again, Theo and Eve from the Social Minds podcast, George McGill, Innovation Lead at Media Chain. But today we're talking all things money management with Chris Hutchins, who is the CEO and founder

of Grove. He started a company called Milk, which got acquired by Google in 2012, and then he spent most of his time at Google as a partner, helping startups and investing in early stage companies. So this guy knows what he's talking about. I really enjoyed the conversation. I can't wait to have him back on as well. Please welcome Chris Hutchins. I'm not sure if I can do it. Mr. Chris Hutchins, how are you? I'm great, how are you?

Welcome to the show, man. Thank you. Very, very happy to be here. Very, very happy to have you on. We're talking all things money today, right? Yes, yeah, it's been like the obsession of my life. Well, I think it's the obsession of a lot of people's lives, right? Yeah, yeah, I mean, it's something that causes more stress than anything else for most people.

Yeah, I couldn't agree more. So for the listeners who don't know who you are, could you give us a bit of a background? Sure. Where do I begin? You know, the whole my whole life I've been obsessed with money, but more professionally, I spent the last, you know, 10 years in startup land. I got my first job at a college thinking I should go into investment banking and management consulting and ultimately got laid off, which gave me this opportunity to take what you know Isn't very common in America, but effectively was like a gap year later in life where I took seven months with my now wife and we traveled Came back in about

2011 and was like this is the industry I'm gonna work in and have been working in Silicon Valley for tech companies starting tech companies sold a company to Google, spent some time at Google investing in startups and have basically lived my entire last decade in immersed in Silicon Valley. That must be pretty crazy. It seems like such a fussed paste

very quickly moving environment. It is definitely that. It is a wild place to be. Companies are growing. I look back to, I tried to pick the hottest company to work at when I first got back from my trip. And it was a company called Simple Geo that ended up not working out.

And my wife took a job at a company that neither one of us were all that convinced at the time, you know, would be the biggest company, you know, possible. And, you know, now it's, it grew into Lyft and she's been at Lyft for nine years. And so it's one of those kind of crazy adventures where you never know what's going to happen, you know, it might be six people in a small room that, you know, now is a 5,000 person company. Yeah, totally. I was reading an article recently about the electric scooter, birds, and is it lime? Is it lime scooters? Bird has them, lime, spin, scoot, lift has them. Who is getting into as well, right?

They're trying to buy someone and they've already, I think, do they know? Yeah, they bought a company called Jump that has bikes, and I don't know what their scooter plan is, but it's, yeah, it's crazy. You know, I was in LA this weekend, and there were so many scooters everywhere. It was crazy. Yeah, I went to LA last summer, and I couldn't, I was like,

what is this a trend that no one's told me about? Like, why is everyone whizzing around on electric scooters? But I was reading, I think it's towards the back end of last year, that the valuation on those companies went like 500 million, 1 billion, 10 billion, like month on month on month. I think that was what happened with Bird or something like that. It's been really, really crazy. So bird and lime and yeah, it's kind of wild kind of wild. Um, I don't even know how

to think about it. But this must be maybe not to that kind of degree, but these crazy takeoffs must kind of be tannipenny and, and Silicon Valley. There's always someone on the up and someone on the down and yeah, I mean, I spent about three years at Google Ventures investing in companies and, you know, we probably invested in 300 companies in the time I was there. And, you know, every week, month, it's, you know, a different trend, you know, one month, it's, you know, we've got to invest in all, there was four companies at one point in time that help you sell a used car.

And it was like the hottest market every room was investing in companies that help you sell a used car. And, you know, now I don't think any of those companies are around, maybe one of them is, but it was such a frenzy for a very short period of time, it was pretty crazy. Where are those signals coming from? You know, this weird hype cycle of fear of missing out and things happening at the same time and people getting scared and you know

people seeing big markets and opportunities and not knowing how it'll evolve and all that that comes from everywhere but yeah it's pretty pretty crazy. Yeah it must be it must have been a bit of a baptism of fire working in that particular department at Google. Yeah it was awesome like you know you just get to intimately see all the crazy stuff that's happening and, you know, I can't imagine anything better than, you know, getting that exposure, especially, I didn't know I wanted to start a company

after that, but, you know, that was, you know, great exposure to all the ups and downs of entrepreneurial life before you leave to go take on that job again. Yeah, it's like a 1.6 bar pressure washer hose straight to the face of like high volume startups, right? Yeah, I mean, where else do you get to learn about? I must have seen 1,000 pitches and we did a few hundred investments.

It's just crazy, you know, you get to see it all. So if you were to pick out some of the elements of good pitches, is there any, any things that stood out that you thought I need to, when I'm considering doing my own stuff, are there any principles from that that you thought was super good? Yeah, I mean, I think something sometimes people overlook is that, you know, VCs aren't necessarily, like the details of the numbers at the early stage are secondary to the person in the room. And so, you know, the whole thing starts with like,

is this a person that can achieve this wild ambitious thing? And when that wild ambitious thing is so far away and so big, it's less about you showing that here's how step by step the numbers work over the next 10 years. Because none of that is ever going to actually be true. It's more, is this the person that cares about this enough to deal with all the crap that comes with starting a company? Do they care about this industry enough,

the problem they're solving enough, can they hire the right people, can they build the right team? And it really comes down to the founders. And if you can buy into the founders, and they're not building something in a tiny marketplace, and you have either the reason to believe that they could build the product or they've already demonstrated they can build it.

Like, you know, a lot of the other or they've already demonstrated they can build it. A lot of the other stuff is much less important at the early stage. Yeah, so enough caffeine before you go in, like the right level of caffeine concentration in your blood. Yeah, you've got to be excited. If that doesn't shine through, you have bigger problems. You have to be passionate. I always tell people, like the number one skill of a founder is storytelling.

It's not. There's all these other things that matter, but if you can't walk into a room and tell a story that gets people excited, you won't have the opportunity to talk about your management skills or your product skills or your marketing skills. Yeah, you got to get yourself through the door first. Steve Bartlett, the CEO of Social Chain over here in the UK, which is a big social media agency. Pretty much one of the main reasons why that company UK, which is a big social media agency. Pretty much one of the main reasons why that company has been successful is because of Steve's personality, that they, the guys at social chain, and one of my buddies, Peter, was like one of

the first 10 employees and this company's massive now. They've got offices in New York, and they're expanding all over the world, and they did Manchester United's marketing campaign and etc etc. One of the main areas of their marketing strategy is Get Steve in front of a big crowd of people and then someone spend a lot of time on his LinkedIn as soon as it finishes because like that's what happens. You put him in a room and he just, people just gravitate towards him. And he seems to have that allure and that energy that sells people, especially when you think about a company like that. And a lot of the listeners maybe working in digital marketing, social media marketing, or an easy side hustle at the moment because I still

don't think it's a saturated market for small businesses is to start doing social media consulting. Like if you're like a gen wire and you've grown up on social media, you understand how it works, but there are within a 20 mile radius of where you live right now, there's probably a hundred coffee shops and cafes and sandwich bars and all the rest of it who don't even have like a Google or yell listing like they won't exist online And you know a common side hustle for those people is to is to be able to get into this and for Steve to set himself apart and to Really convince the old guard of marketing that social is a way to go and they should strongly consider portioning off a lot of their income, a lot of their marketing budget towards that is just him selling how excited he gets

about social media. He's like a young Gary Vaynerchuk from the UK. But less swearing. That's amazing. He's like, let's swearing. Gary is just such an intense personality. I owe a lot to him for pushing me. I've known him for easily over 10 years,

but yeah, like some people just have that ability to captivate an audience at any point in time and can do a lot of good with it. That's fantastic. So we wanted to talk a little bit. We had a lot of requests for advice for people's personal finances. And I think that as exciting as it is,

I do wanna hear some more stories from Google. I think we'll come back to that in a bit. But a lot of people, I certainly didn't learn basics of anything to do with how I manage my own finances. I didn't understand, before I went to uni, I didn't understand what an asset or a liability was. I didn't understand how a mortgage worked or anything like that.

So do you have some principles that you stick to for your personal finances? Yeah, and first off, you're not alone, right? Whether it's a UK or the US, or probably anywhere else. It doesn't seem like anyone's getting taught these principles in school. And there was a world that my parents kind of grew up around,

but maybe didn't grow up in, where, you know, you work for a company for 30 years, and that company takes care of you for the rest of your life, and, you know, they pay for everything later. And that's great, but it doesn't happen for us now. And with so many people being, you know, freelancers and self-employed, and, youemployed and the average time I think people I know change jobs is like three or four years, not 30 or 40 years. So we don't build up a pool of retirement assets or pensions tied to a company that's enough to sustain us, so we kind of really have to figure it out on our own.

Education just hasn't caught up, so it's kind of frustrating for a lot of people. I couldn't agree more. The only reason that I mean, anyway, slightly capable with my finances is because I've got two business partners who are fantastic and there's been like a trickle-down effect. I've been kind of begging in the gutter, like just desperately trying to glean any last little second nuance of understanding about how to organize my money. And then, you know, the fact that I've managed to not bankrupt myself is probably a testament to their abilities.

Yep. That makes sense. So with regards to where people should start, or how they should consider or look at their own personal finances, where do we begin? Man, so, I have a typical, like, how do you think about this, where do you begin concept, which is, step one is just start to take ownership of what you're thinking about, learn the concept of assets and liabilities, and summarize where you're at. First thing I think everyone should start to do is just understand where they're starting from. Make a list of all the accounts they have, make a list of the ones that have positive balances, whether that's brokerage or a savings account or an investment retirement account,

and then also look at anything that falls into the debt camp, whether it's a credit card or a mortgage or a loan, when you add up all the positives and subtract everything else, you end up with your net worth, which I think is something that a lot of people have never taken the time to look at, but it's kind of like a core thing to start with when you're trying to figure out where you're going. Yeah, what's my current worth at? Yeah, and then in accounting terms, we'd say like make your balance sheet and income statement, which scares people. So we'll avoid those for the rest of this conversation. But the other one is just to figure out like how much are you spending and saving.

You know, there's a lot of ways to do that. Some people are really diligent and they say, I put everything on one credit card and so you could just go look and say, well, this is how much I spend and some people aren't. And they might need to, and so you could just go look and say, well, this is how much I spend. And some people aren't, and they might need to use a, you know, software to track it, or, you know, a spreadsheet. There's a great app called Line App, you know, no affiliation to them, but ynab.com, you stands for You Need a Budget.

It's a great, like, tool that you can use to kind of forecast out, you know, we're spending, and, you know and they take this idea that I think is really meaningful of allocating your spending in advance, which forces you to prioritize what you care about. An interesting thing I learned was I really value experiences and trying new things and whether that's going to some kind of show or taking a class, but when I looked at my spending last year, I realized that it made up like less than 1% of all my spending. And so my wife and I were like, well, this isn't makes sense. Like if this is a thing we care about a lot, why are we spending more money on all these other categories?

So I tell people like step one is really just figure out where you're at. What is your total, you know, some of all of your assets minus your debt, and then what are you able to save or spend each month? So you can take what you earn, you can take what you spend, and kind of look at the difference, and that kind of ultimately ends up being how much you can save each month. Yeah, I've seen a number of adverts for online banking facilities that will break down your spending across multiple different areas. So it's like this much on leisure and this much on food and drink

and this much on coffee or whatever it is that coffee probably actually makes a perfect proportion of a lot of people's yearly spending. I'm gonna guess in Silicon Valley, it'll be like 20%. Yeah, I mean, it depends. If you're gonna start up, you probably get free coffee.

But if you're a freelancer, you probably get free coffee, but if you're a freelancer, you probably, coffee is your price of office space. Well, it's your life split, isn't it? Yeah. Yeah, so, you know, that's a first step, is just where are you at? Because to kind of think about anything down the road, you need to really figure out where you're at.

You know, I always think like a good second step from figure out where you're at, but then it's like, let's build a kind of an initial foundation So the the first thing that I think everyone should probably do is put aside some type of emergency fund You know if you have a really really stable job working for the government Maybe it doesn't have to be that big. Maybe it's you know two three months of income if you are freelancing and you never know where your next job is coming from Maybe it should be six or even 12 months. But set aside some money that you can be ready

to whether whatever unexpected expense or situation comes across because the last thing you wanna have to do is have a situation arise and sell a retirement portfolio or borrow money. And I always tell people that I'd recommend putting it sell retirement portfolio or borrow money. And I always tell people that I'd recommend putting it in a high-yield savings account or something that earns some interest because if you leave it

at a checking account at the bank, it probably won't earn enough interest. I agree. You started up a website, right? Just after 2008, that was, I guess, would have been similar to the nightmare scenario that we're talking about here if you get laid off. Yeah, so I started this thing called laid off camp and we did events around the country

trying to help people figure out what to do after the 2008 financial crisis. And, you know, I was fortunate that I had saved up a little money, so when I needed to, you know, supplant my income with something I had it. But, you know, one of the reasons a lot of people came to the event was they were like, I, I don't have any money. Like, and so we had, they, can I learn how to free my aunt's, how to start a company, how to get a job? Because, you know, they didn't set aside an emergency fund. Yeah. Have any of the, any or many of the guys and girls who you met at those events, have they gone on to do any cool stuff? Or do you keep in contact with any of the people

who you met then? Yeah, it was really funny. We're talking about at my current startup, a bunch of different tactics for growth. And my co-founder handed me a book and he was like, you should read this book, it's amazing. And I looked at the author and I was like, man, that name's so familiar.

And I was like, oh my God, this is this guy that got laid off. And he helped organize the laid off camp in LA. And he went on to become a well-known person in the gross community and write a book and all this stuff. And I shot him a note and I was like, this is so wild, congratulations, all that kind of stuff. So yeah, definitely. I keep randomly seeing people from that stage of my life

go on to do amazing things. That's so cool. It's brilliant to turn around a stick aand-big-middle finger up at people that laid you off by becoming ridiculously successful. Yeah, I mean, you know, I think about that all the time. Yeah, we mean the co-hosts on the show all self-employed or to one degree or another. And there's, I think, making it on your own or going for it on your own is a really cool idea for a lot of people, but the reality can be quite cutthroat. I'm going to guess in Silicon Valley, that's like the tip of the spear for people in cutthroat industries going off on their own.

Yeah, I mean, it's this thing that almost maybe has become too sexy, right? Like everyone wants to go start a company and sometimes I meet people that, you know, they just feel like it's the thing they have to do and they haven't even thought about it. They're just like, I gotta start a company. That's what everyone does.

And I'm like, well, you don't have to start a company. Like, there are a lot of other options, but everyone's like, I just wanna start a like, I gotta start a company. That's what everyone does. And I'm like, well, you don't have to start a company. Like, there are a lot of other options, but everyone's like, I just want to start a company. I want to start a company. So it is kind of funny that, you know, I see that happening, you know, wildly all over the place. Do you think that that byproduct of people being kind of disenchanted or disenfranchised with their current work? Like, if you have a normal job where you don't feel like you have a lot of meaning, I was listening to Johann Harry's book Lost Connections, which is about the causes of depression. And in that, you cite a statistic that says 20% of Americans are actively unhappy at their job, actively unengaged,

Americans are actively unhappy at their job, actively unengaged, a further 60% are indifferent and only 20% are actively engaged. And when you think that you're spending, you know, between 35 and maybe 50, 60 hours a week doing this particular thing and it forms the basis for who you are, right? Like when you meet someone, the questions you ask is like, what's your name, where are you from, and what do you do? It's like your name and what you do, there might as well be the same thing, right? And time, my name's Chris, I'm a club promoter, blah, blah, blah, whatever it might be.

And I think that people being so unhappy with that leads them to kind of maybe knee jerk in the opposite direction and go, right, well, what's the exact opposite of what I'm doing now? Because if I'm unhappy doing this, then the right thing must be complete opposite. I start a company. Yeah. It's funny. It's kind of been this weird shift where I'm not convinced that 30 years ago, people

thought about it like that, right? Like, you know, it seemed like everyone I've talked to, you know, that's been in the workforce for 20, 30 years, the idea is like, you work to live. And, you know, now there's this mind shift of like, no, no, no, I have a lot of freedom and responsibility over what I do. I'm gonna live to work. And, you know, I wanna be fulfilled every day of my life.

And, you know, that sometimes has a problem with personal finance because, you know, if you're like, oh, I don't love this job, so I shouldn't do it. It's my life. And that sometimes has a problem with personal finance because if you're like, I don't love this job, so I shouldn't do it. It's like, okay, that might be true, but you also need to be able to provide for your family. You need to save for the future. I meet people in their 30s,

and sometimes I'm like, hey, how long do you want to live? How long do you think you're going to live? And they're like, I don't know, 100. And I'm like, okay, well, you know that if you're, you know, 30 right now, and you're gonna work to your 65 and then live to 100, like, in the next 35 years, you have to save enough money to live for 35 more years.

Like, so, you know, like, it's crazy that, you know, you end up needing to save like, you know, almost as many years as you work, you need to save for. And a lot of people are like, well, when I retire, that's when I'm in a travel. I'm like, okay, well, your expenses are gonna go up, so you need to save even more. So it's just, I think people need to find a balance

of working to, everyone should try to be fulfilled in their work and do something they're excited about, but not lose sight of the fact that they also probably have some responsibilities to themselves, to their family, that sometimes I think might come in the way of trying to find the dream job, which I worry that there isn't really ever the dream job. Yeah, the analogy of it being too sexy of an idea. Like it is the hot new girl at school that like everybody wants to be going out with, you are totally right.

So we've talked about understanding our current capital worth. We've spoken about trying to forecast as well. Look at where we're at now and then also forecast that forwards, how much money have we got coming in, how much money have we got going out? What would you advise for people who were thinking, right, okay, I've got myself to that stage,

what comes next? Yeah, so the two big things I think they come next are, like, make sure you don't have any high interest debt. It's amazing how often I find people that have the means to pay off high interest debt, but just haven't for reasons that they never did the math. People don't think about finances like spreadsheets or like I would.

So I went in and looked at the situation. I was like, you have credit card debt. It's a 22% interest. You have the money to pay it off. Why aren't you paying it off? And the answer's sometimes is like, well, I didn't want to dip into my savings. And I'd say, well, is your savings earning 22%?

And they're like, no, no, no, it's earning 1%. I'm like, well, then you should definitely, definitely like pay off your 22% debt to with your interest savings, it's only earning 1%. But, you know, it's not something that people always think about. So, like a big thing. So set aside some money in case something happens, pay off high interest debt, whether that's credit cards, personal loans, that kind of stuff.

And then the other is make sure you dial up retirement contributions. You can't wait till you're retired to get the tax benefits of a lot of different retirement contributions. And so, whether that's pensions in the UK, 401Ks in the US, you know, I think in Australia, you get superannuation and your company does it all for you, which is great. But, you know, here, if you don't put money in, in one year, you can't get that credit for the next year.

Like, you're capped each year at how much money you can set aside for retirement tax-free. So, you know, encourage people to sure that they do that early because you can't play catch up like you might wish you could later. Like overpayments or whatever. Can you briefly, because the only time that I've heard 401k mentioned is in diehard 4.0. Like that's like the only time I've ever heard it mention. Can you, for the Brits that are listening? Can you briefly explain what it is or how it works?

Yeah. For one case, right? Yeah, I just lost audio for one second. I was like, when you said that one word. Yeah, so in the US, we have this system where you can put aside a certain amount of money each year. You can choose whether you want to pay the taxes now and never again or not now and when you retire. So, you know, in the US, you're allowed to contribute

personally tax-free up to, it keeps changing every year, but about $19,000 a year. And so, you have, their employer sponsored plans, so that, you know, if you're self-employed, there's a whole different system. And if you work in a government entity, there's yet another different system. If you work for an educational, like a teacher, there's a different system. But the most common one for working at private companies is a 401k, and it's just an account

that you can put money in, invest those funds in mutual funds, whatever, whether it's stocks or bonds or real estate. And at the end, the most common one is you put your money in tax-free while you're working. And then you earn all the capital gains and interest over time. And then when you retire, you only pay taxes when you take the money out. And presumably, the idea would be that when you're working, you're in a higher tax bracket than when you're not working.

So you get both the benefits of being able to invest your money before you pay the taxes and not paying hopefully lower taxes when you take it out. Oh, yeah. Awesome. That's a really, really good setup. I don't fully understand how the UK pension scheme works. It's not a million miles away from that, but I don't know about the caps, I don't know about the 19,000.

What's mad though, like you think, like even if you take 19,000, if that's the maximum that you can save, if you don't have surplus income on top of what you're earning per year, except for that for a retirement fund, and we roll forward the 35 years to earn 70 years of living analogy that you used earlier on.

$19,000 a year is like, you're going to have to really get up towards that, right? Yeah, so there's some interesting things about compound interest. The best example I have is, if you had two friends and one of them was saving $3,000 a year from 25 to 35 and then stopped. They just saved $3,000 a year for 10 years. And then you've got another friend that saved $3,000 a year starting when they were 35 all the way till 70. And so they're saving for 35 years and the other person saving for 10 years. And so they're saving for 35 years and the other person saving for 10 years You know the first person's ended up contributing 30,000 dollars to their savings the next person contributed 105

But if those accounts grew at 7% a year the friend that put in the 30,000 in for only 10 years would have more money than the person who put in 3,000 dollars a year for 35 years so money than the person who put in $3,000 a year for 35 years. So, the math, it ends up that that money can grow so much more because the interest is growing for longer and you started it earlier. So I would say, if you put in $19,000 a year for 30 years, you're going to end up with a lot more than 30 times 19,000. But if you wait till you're five years from retirement to start saving, you don't have the time to benefit from all that compound interest. Yeah, I get that completely.

So would you recommend or how much do you tend to recommend to people to try and have multiple revenues of multiple income streams. Yeah, so, I think I might deviate from the zeitgeist of internet money hackers that are like, find your side hustle, find your multiple streams of income by rental properties. I have two income streams, right? I have a job and I have an investment portfolio.

And in that investment portfolio, I might invest in stocks, I might invest in reat funds, which are effectively investing in a fund that holds a bunch of pieces of a bunch of companies that own property and they all rent them out. I've chosen to say, instead of me managing a rental property, instead of me managing owning a small piece of 10 different startups, I'm going to invest in a diverse portfolio with a bunch of index funds that invest in all of those things.

So sure, you could say I have, a thousands of income streams because I'm invested in a thousands of companies, but effectively I have an investment portfolio and a job. I'm not personally trying to do anything else, running a company has enough work for me that I'm not trying to have seven side hustles. But yeah, I mean.

It's a balance, I suppose, between the time that you have available. And also, how much money you want. Like, if money's not big deal to you, then just do your minimum effective dose to live, and then spend the rest of your time chilling out. Yeah, so I always say, like, step one is figure out where you're at, step two is kind of build your foundation,

but then step three is like, actually make a plan, right? So what are your goals? If your goal is to own a Ferrari, well, you might need to save more money. But if your goal is just to live a comfortable life with your family, and the extra money that you could save might prevent you from spending time with them, you might not actually want to go get that side hustle.

Yes, yeah. So I always say, what do you want? How do you want to retire really early? Do you want to buy a home like you know? Do you want to start a company? Do you want to pay for your kids to go to a private university? Like what's the most important thing to you and when you prioritize those things and kind of figure out what they involve? Like that's when you can make real decisions, but if you've never really thought That's when you can make real decisions. But if you've never really thought about it, sometimes I see people spending money

when they haven't realized that they care about things more than spending, right? You mentioned coffee. Let's say you go buy your $5 latte every morning, sum that up over the year and you're like, wow, that's actually, you know, it could have been a couple thousand dollars maybe. Yeah.

But if you ask the someone, say, hey, is that coffee, does that get you ask the someone, say, hey, you know, do you, is that coffee? Does that get you through the day enough that it's worth, you know, you know, over a decade or so, being able to save up your part of your kids' education? And someone might say, oh my gosh, when I think about it like that, no. But before I hadn't made any plans, and so I wasn't thinking about it in any way. And I think that's where it gets really tough as if people aren't thinking through all these things in advance. I couldn't agree more so my business partner Darren and the guys in the office that are listening right now will know what I'm going to say but Darren's ethos is always that if

you times any number by 52 it becomes fucking massive and it's like when we're looking at our set of company accounts and we're like oh well we could we could chip this off here or we could knock a couple of hours off there. And at the time, it doesn't really feel like that big of a deal. But like if we can save five quid across four shifts on one particular club night, £2,000 a year, at the end of the year, there is £1,000 more because we knocked four by £5 off a couple of shifts once a week and you're like, holy fucking shit, that's so much money. I know that that's literally the most basic of maths, it's 20 times 50, but it's just so much money. Yeah, it's really easy to think.

You know, we think about that, you know, how much money do we want to spend? We provide lunches at the office and we were like, well, you know, when we were small, it didn't really matter whether we went to a place and it was, you know, 10 bucks or 12 bucks, like, or eight bucks, it didn't matter. But we're like, wow, when you multiply five lunches a day by 20 employees by, you know, 50, you know, five days a week times, you know, 52 weeks, like all of a sudden, you're like, wow, if we can cut a dollar per lunch off, we save a lot of money. Yeah, you're giving my business partner an aneurysm now at the moment with him hearing those figures. So in terms of, we've spoken about the fact that generating extra streams of revenue might not be something that's for everyone, but I'm going to guess that dialing down your spending, or at least not

having a frivolous spending is a principle that most people probably should and could stick to. Have you got any sort of hacks or principles that you like to use when it comes to tightening the sort of belt buckle, so to speak? when it comes to tightening the sort of belt buckle, so to speak. Yeah, I mean, I would say it's not necessarily all of the spending, right? It's not, I wouldn't say frivolous spending, well frivolous by nature, probably, you know,

that word might imply that it's not necessary, but there are some people that if you look at, you know, if you've already figured out what you need to save and you're already on track what you need to save and you're already on track for it, what you might be able to do by saving another $1,000 a year might not be worth it. You might say, for me to cut another $3,000 out might mean I can't take another vacation and what would I get from saving $3,000 more dollars a year? Maybe what that gets me is like, you know,

slightly better lifestyle and retirement, but if I've already saved enough to live the lifestyle I want in retirement, maybe the best thing is to keep spending the money on travel. Yeah. But if I have to make an app on the process, right? Exactly. If you haven't figured that out, you know,

for most people, they haven't figured that out. For most people, they're probably not saving as much as they should. And so, you know, broadly speaking, yes, it's like very common that I talk to people and a good thing for them to do is to spend less money. I just don't want to make the blanket statement because for some people, you know, keeping their current level of spending or potentially even increasing it. You know, I'm so frugal with money that I have friends that are like, you realize if you just die and have all this money,

but you've never spent it, you wouldn't have lived a good life. Why don't you live a little? Why don't you get the nice entree instead of split it with your wife because you don't want to spend the extra 20 bucks? I couldn't agree more. I'm just this crazy optimizer that, you know, probably could afford to not optimize as much and, you know, optimized for convenience.

And so, even though we can bring dogs to work, I finally buckled down and hired someone to come walk our dog during the day because, you know, I could just get so much more done when I'm not thinking about having to leave and take the dog out and schedule meetings around it. So it's just hard when my brain is just wired so much differently to save every dollar. Yeah, I get that.

And also, having you dog in the office is gonna be like, yeah, it might be distracting but it's fun. Like it's nice to have dogs around, right? They're morale. Good little furry bell of morale. Though at some point you're like, oh wow, we have so many people that work here.

Maybe the problem is we can't have a dog in the office every day because people are allergic. All these things when you're a small company that you don't think about, now you become a big company and you're like, well, you have 30 people. Maybe someone's actually allergic to dogs, so we can't have a dog in office.

Oh, man. Don't hide them. If someone, if just they're not allowed, they have to sit in their own cubicle over the far side and everyone else can play with the dog. That's how I think it would work. But yeah, I totally get what you mean. I think I'm wired a similar way to yourself. I remember a couple of years ago in as like two in the morning after I'd finished

work at one of our club nights, it's 2 a.m. and I'm looking at the difference between like the value yogurt and like the finest yogurt. And I'm like having an existential crisis about which of these yogurt do I get the value? Oh, I mean, it's 20, 25 pens more to get the other one. Stopped and kind of checked myself. And I was like, what on earth are you doing?

Like just pay 25 pens. Like you work so much, just put the 25 pens you're gonna get into your basket and get out. It's two, two a.m. But yeah, people tend to be wide in one of two ways. I think you've got the ones who are maybe on our side fighting about the yogurt and then you've got some people, maybe could do with tightening up a little bit. Yep. Yeah. I am the same way. And it's my people are, I think I'm crazy, but,

you know, I've got like 15 different credit cards and I decide which one and, you know, to use based on whether it earns more points on certain things. Wow. That is, okay, yeah, that's, that's another level. So I wanted to, I wanted to move on to the company that you're right now. I wanted you to give us a little bit of background about that and and tell us what's going on. Yeah, so I just dropped my phone. Yeah, so right now I left Google about two years ago to start a company called Grove. And what we realized was no matter how much I wanted people to build cash flow models for themselves and forecast out all of their spending, the reality is many people are

get enough overwhelmed with personal finance that they're not going to do their own financial planning without some help. And the industry has evolved to a place where the only support is for people who already have a million dollars. That's the industry is like, well, manage your money, but only if you have a lot. And if you don't have a lot, maybe we'll work with you, but we're going to charge you a few thousand dollars a year. And everyone doing this is old school and prints out 100-page documents. And so the vision was how do you build a company that uses enough technology to make financial planners efficient enough that when someone says, I want help, I want to figure out what I should be doing with my money, I want to organize things, I want to talk to someone

about my goals so that we can put together a plan and make sure I'm on track. We can offer that to you for less than half the cost of the the rest of the industry because they're still doing in-person meetings and having you write things on pieces of paper and scanning them in. So we built our own technology stack that lets our team of financial planners work with people at much less cost than a traditional financial planner. Yeah, it blows my mind that that isn't more common. Like it's absolutely blows my mind. Like everyone, you've already said,

most people don't have a natural ability, unless you are my business partner, but he's a freak of nature. And he was he was born like with a laptop building spreadsheets. If you're not if you're not wired like him or yourself, like, why do you learn this stuff from? Like, you have to be deep down in the medium archives or living on Reddit or like God knows where to be able to get this. So the fact that you can't, and you are right as well, like you think financial planner, you're like, oh my God,

Valour, curtains, and a Montblanc pen, and a Chesterfield red sofa and a smoking jacket and oak everywhere in this huge big building. You do, you think like, oh, it's built for millionaires. Yep. So, I always say, like, if you don't have a million dollars or you don't want to spend thousands of dollars a year and you don't want to learn it yourself, you're kind of out of luck. Like, there isn't really a good alternative. So that was why we started the company. We thought that there should be an alternative,

there should be a company out there built from the ground up with, you know, the responsibilities of putting a customer's interest in first. I don't know how this is in the UK, but in the US, there's this rule called the fiduciary rule. And you know, it doesn't, it's not a mandate. So the fiduciary responsibility means you're required

to act in your customer's best interest. Uh-huh. I've heard of that on movies before. Yeah, it is not required that financial advisors in the US be fiduciaries. So nine out of 10 financial advisors in the US are not required or do not hold themselves to a standard of acting in their customers best interest at all times.

But who's best interest in the acting in? Uh, often the companies, so it's totally legal in the US to be a financial advisor and recommend products that cost twice as much as other products. And you make the money that's the difference. Totally fine. And that's how the industry's evolved. So when we started the company, we're like, well, we're not gonna do that.

So we decided we're gonna be fiduciaries. We're gonna always act in our customers' best interests. We're not gonna make money selling other products like most of the people in the industry do. And that's rare, unfortunately, but it's kind of what we believe in. That is so, I'd love to find out anyone who knows whether or not this is the same in the UK, please do drop me a message and let me know. Because if it's, if that is the same

in the UK, that is such a stupid loophole. Like, yeah, they, they tried to pass the law in the US last year or the year before and it didn't get anywhere. And it was going to require that anyone that helps people with their retirement plans is required to act in their clients best interests. The problem is there's like 20 giant institutions in the US that would just go out of business instantly because their entire business is selling people things that don't meet that level of responsibility. This is like big companies, big financial institutions, like one's, you know, like the entire business is built on selling life insurance policies.

It's hard for you. This is blowing my mind. Like, it sounds to me like the financial services equivalent of medical and farmer companies advertising on TV. Like, that, that, like, you do not necessarily need this particular thing, but we're gonna force it down to your neck in any case. Like, that's how it seems to me. We don't have that in the UK.

We don't have the big farmer advertising stuff on there. And I'm really, really hoping that we don't have financial advisors that are able to give advice. That's like just stiffing people. And get paid for it. It's hot. I'm really, It's totally legal for me to say, pay me and I will give you advice, but I'll turn around and sell you something

that you might not need. It has to be, I forgot what the exact term is, it has to be like, directionally right. So if you tell me that you want to invest in the stock market, I can't sell you a bond. Right, yeah. But if you say you wanna take a long term risk and that's aligned with stock market, I can't sell you a bond. But if you say you want to take a long-term risk and that's aligned with stock market, I can say my company offers a fund that is not very different from the fund that has no

fees and our fund takes 2% of your money every year, that's totally fine. As long as it's directly, it can't be the wrong type of investment. So it's crazy. One, I keep hearing that states might start trying to pass these laws themselves because they can't get it passed at the federal level. Yeah. But yeah, it's unfortunate. It's just a byproduct of being a huge big new country, I suppose, isn't it?

There's a lot of problems for trying to get that sort of stuff passed. But you know, that's scary. When you think that that could be, it's not going to be mine because my mum and dad are both British. Well, that could be someone's mum and dad. That could be their retirement fund. That could have been them working that way. It usually is. And I think I'm going to go in with my paycheck and I'm going to speak to this guy and he's going to be

Charming and then he's going to give me this Information that's going to completely screw me over. So I mean was there not was there no one tighten up after 2008 with stuff like that? They tighten the companies tightened up to make sure the banks didn't lose more money But yeah, no, I just I pulled a. It says currently advisors in the UK are bound by the FCA's conduct of business rules, but have no formal legal duty to act in the best interest of the clients at all times. That was my quick 10 second research. Well, it's happening in the US, it makes me think it very well might be happening

here. So if you're using a financial advisor for the love of God, please double check what they're suggesting that you do. Is there any, I'm going to guess that you will be an anomaly in the industry with having this fiduciary kind of commitment? Yeah, so still the good news is like one in 10 advisors in the US do take on a fiduciary kind of commitment. Yeah, so still the good news is like one in 10 advisors in the US do take on a fiduciary responsibility of their clients at all times. In the US, it's often called a fee-only advisor, meaning we only make money from the fees our clients pay us.

It's actually pretty easy. In the US, if you just ask any of your financial advisors, they are you a fiduciary, you get one of two answers. Yes, or you get this weird answer that's like, we really care about our class. But there's a John Oliver who does a show on HBO, get all about finance and retirement plans and the fiduciary responsibility that's quite funny,

digging into how crazy it is and how possible it is for people to say they're acting your best interest but not. So I would say if you're ever going to hire someone to help you with money, just dig into this and really understand the legal obligations they're taking on. And I would encourage people that if your financial advisor is not taking on a responsibility to legally act in your best interest.

And I don't mean like I care about you. I mean, legally, if you ever determine that I sold you something that wasn't in your best interest, like there is a legal responsibility I have and you can fight that. Yeah, yeah, I mean, that's the first thing you gotta ask. Surely, like, are you gonna be the guy who takes my money or are you gonna be the guy that makes me money? Like, that's the first thing you gotta ask, surely. Like, are you gonna be the guy who takes my money

or are you gonna be the guy that makes me money? Like, that's the thing. But you would be surprised at how good a salesman can answer the question of, are you acting in my best interest? Slippery and sneaky answer. Yeah, it's unfortunate. I wish there was just like a, like a health score,

you know, you walk into a restaurant and you're like, oh, you have a D? I don't wanna eat here. But like, you know, you walk into a restaurant and you're like, oh, you have a D? I don't want to eat here, but like, you know, there's no Imagine if every financial advisor just had to like put a red X on their forehead if they didn't act in your best interest to be great That would be much easier. There's a speaking of the Hygiene ratings. There is a subway right in the middle of Newcastle, which scored as zero stars out of five food hygiene Writing for anyone for anyone who's eaten at this subway on the bottom of Collingwood Street,

it is my belief, I don't wanna get sued here, but it is my belief that upon one of their most recent food hygiene checks, they got zero stars out of five. I mean, I don't even know how that's possible. Yeah, I don't know. Yeah, but that's the food equivalent of the financial service manager who's just taking your money.

So one thing that I did know is very briefly before we go on your medium, you were talking about hacking a peloton bike thing and for the listeners who don't know peloton's kind of like a live guided cycle workout that you do at home and there's a screen and there's like a train. It's kind of like spinning class,

but you don't actually have the person there in front of you, right? Yeah, yeah, it's like doing soul cycle or something like that in your living room. And, you know, I'd all be in an entrepreneur, you don't have a lot of time, working all the time. So I didn't have, you know, I wasn't taking the time to go to a fitness class and everyone, you know, I wasn't taking taking the time to go to a fitness class. And

everyone, you know, who was talking about Peloton, these bikes are beautiful, but you can actually get all their classes on the app for, you know, way less expensively than buying this $2,000 bike. And so I went on the adventure of buying a spin bike and, you know, attaching a couple different Bluetooth trackers to it and mounting an iPhone to it and you know Connecting it with AirPlay so I could watch the course class on my TV and the irony behind this whole thing Which I feel guilty about is that a friend of mine who had a peloton moved and sold me it used and I got to say as much as I Want to be like the man of the people and say, you know, build it yourself, the real thing is so good. And so I'm not sure I can tell you to pay full price

because it's so expensive, but, you know, it's like, there are, you could find 10 smartphones that tell you they do every single feature, the same as another one. But at the end of the day, I still have an iPhone. So, you know, it's one of those things. It's, when you stuck between a rock and a hard place and the thing is as well, the degree of satisfaction

that you will get from being so frugal, like the inherent joy of blasting the system and being like, no, no, fuck you, like mine cost $175 and yours was 2000. It's gonna be worth a lot, but you think like, the real thing's just nice and it's there and it's ready. Yeah, I don't think I realized. And so what I would say is if I hadn't realized how driven I am by competition, the one thing

building your own Peloton won't let you do is it won't log your, you know, your workouts in the app because the bike is not actually connected to Peloton. Yes. So one time I was staying at a hotel that had a Peloton and I got on a ride and I saw it real time like my friend's stats versus mine and I got on a ride, and I saw real time, like my friend's stats versus mine, and I was like, man, in that one bike ride, he was like a little bit better,

and I was like, I'm gonna do the same thing tomorrow morning, I'm gonna destroy him, like I am just like, like, out cycle him. And that moment, I was like, oh my gosh, I think I burned 20% more calories in a workout, knowing that I was trying to beat my friend than I did before. And I was like, I will pay for something that allows me to get 20% more workout in the

same time. But I have friends that like, they have a real peloton and they're like, oh, I don't like riding with friends. I don't like the competition. I'm like, oh, you should definitely make a fake one. It's like, I've got this fake one at home. I've got this one that I've already built. It's like, I've got old Bluetooth and there's airplay

and all this sort of stuff. So I think what a nice concluding note there is that we can say save money, but save money in the right place and not in the... Yeah, make sure that the places you're saving money are driven by what you care about. And so there are people that might have spent a lot of money on fitness,

but it's really important to them. And that's fine. The reality is if fitness is more important to you than where that money could go, that might not be a bad use of it. But if you haven't figured out whether, you need that money to do something more important three years, five years, ten

years, whether it's buy a home or start a family, it's really hard to make those decisions. The unfortunate thing is the best way to do it is to build a cash flow model for the future of your life and run a bunch of simulations, which effectively is the software we've built for our advisors. There's a basic way to like at least evaluate your goals and think about them and if you wanna take it to the next step, think about working with someone who can help do it for you if you're not gonna go build the models yourself.

Yeah, I mean, building financial forecasting models does sound like for me the least fun afternoon in the world, but obviously for me it sounds like an adventure. That's heaven for you. You're just bathing in financial forecast models and exxl sheets fall from the sky. So finally one thing I wanted to finish on Chris other any resources or blogs or websites that are accessible to the avatar of the lay person that you think would be good for people to check on or have you got any resources that you guys offer? Yeah, I mean, you know, we have a service that you're welcome to check out if you're based in the

US at hellogrove.com. You know, there's a bunch of good books, you know, that just talk about the basics and honestly, you know, your personality, you know, the style you're interested in, it almost doesn't matter. Find the book that speaks to you the most, find the blog that speaks to you the most. If you're really into retiring early, it might be Mr. Money Mustache. There's a movie coming out later this year called Plane

with Fire that kind of really dives into the movement of people trying to retire early and seek financial independence. Ultimately, what matters is that you're excited and motivated by it. Instead of picking a resource that I think is really good, I'll say, pick whatever resource speaks to you. But I will say, take a look at the book Happy Money, which is kind of like a psychological evaluation of ways to spend money that actually increase your happiness. And it's shocking how much just reading this quick, like, you know, it seems like a hundred

page book might change your perspective on spending and focus you on like, how can you make sure that you're using money to fulfill your life and not just to perpetuate things that you're doing for no reason? That's an awesome idea. I love that. money to fulfill your life and not just to perpetuate things that you're doing for no reason. That's an awesome idea. I love that. I'm going to guess that that will have been one of the spurring on moments for yourself when it came to looking at the experiences in life and then realizing that it was like

1% of your annual spending. Yeah, yeah, it's just, you know, you identify these things that can actually bring fulfillment to life, which as you mentioned earlier is what we're all seeking. And so if someone's going to go do hundreds and hundreds of hours of research on how you can apply your money towards fulfilling your life, like, yeah, I'd rather read the book then go do the research myself. Couldn't agree more. So Chris, before you go, can you tell the listeners whether they can find you online, whether

they can learn more about yourself? Yeah, I'm Chris Hutchins.com is my personal site Hutchins on Twitter and and then Grove is just hellogrove.com. Amazing. It's been an absolute blast. Thank you very much. Yeah, thanks so much. you