Muscle for Life with Mike Matthews - My Top 5 Takeaways from The Millionaire Next Door by Thomas J. Stanley

Episode Date: August 16, 2019

“Can you recommend a book for…?” “What are you reading right now?” “What are your favorite books?” I get asked those types of questions a lot and, as an avid reader and all-around bibliophile, I’m always happy to oblige. I also like to encourage people to read as much as possible because knowledge benefits you much like compound interest. The more you learn, the more you know; the more you know, the more you can do; the more you can do, the more opportunities you have to succeed. On the flip side, I also believe there’s little hope for people who aren’t perpetual learners. Life is overwhelmingly complex and chaotic, and it slowly suffocates and devours the lazy and ignorant. So, if you’re a bookworm on the lookout for good reads, or if you’d like to get into the habit of reading, this book club for you. The idea here is simple: Every month, I’ll share a book that I’ve particularly liked, why I liked it, and several of my key takeaways from it. I’ll also keep things short and sweet so you can quickly decide whether the book is likely to be up your alley or not. Alright, let’s get to the takeaways. Want to be notified when my next book recommendation goes live? Hop on my email list and you’ll get each new installment delivered directly to your inbox. Click here: https://www.legionathletics.com/signup/

Hey, Mike here. And if you like what I'm doing on the podcast and elsewhere, and if you want to help me help more people get into the best shape of their lives, please consider checking out my VIP one-on-one coaching service where we can help you get in the best shape of your life. My team and I have helped people of all ages, circumstances, and needs. So no matter how complicated or maybe even hopeless you might think your situation is, we will figure it out and we will get you results. Every diet and every training program is 100% custom. We provide daily workout logs and do weekly accountability calls. Our clients get priority email service and discounts on supplements and other products, and the list of benefits goes on and on. So to learn more, head over to www.legionathletics.com slash coaching. That's legionathletics.com slash coaching and schedule your free consultation call. I should also mention that there is usually a wait list and new slots do fill up very quickly. So do not wait. If this sounds even remotely interesting to you, go ahead and schedule your call now. Again, that URL is legionathletics.com slash coaching. Hey, this is Mike from Muscle for Life, and I'm often asked

about books. People ask me for book recommendations on various topics. They ask me what book I am currently reading and what books I have recently read and what my favorite books are and so forth. And as an avid reader, I am always happy to oblige and get some book recommendations in return as well. I also just like to encourage people to read as much as possible because I think that knowledge benefits you much like compound interest benefits your bank account in that the more you learn, the more you know, and the more you learn, the more you know, and the more you know, the more you can do, and the more you can do, the more opportunities you have to succeed. And on the flip side, I also believe that there is little hope for people who aren't perpetual learners. I know that might sound a little bit pessimistic or cynical to you, but let's face it, life is overwhelmingly complex and chaotic. And if we

look around, we can find plenty of evidence that it simply suffocates and devours the lazy and ignorant. So if you are a bookworm and you're on the lookout for good reads, or if you'd like to just get into the habit of reading more, then this book club is for you. The idea is very simple. Every week, I'm going to share a book that I've particularly liked, and I'm going to tell you why I liked it and give you several of my key takeaways from it. I'm also going to keep these episodes short and sweet so you can quickly decide whether or not a book is likely to be up your alley or not. Okay, so let's get to the featured book, which is The Millionaire Next Door by Thomas J. Stanley. Now, in many ways, finances are like fitness. Many people out there are in a bad way

and are doing nothing about it. Many people who are trying to do something about it, who are trying to improve their circumstances, are doing the wrong things. Many of the social norms are just completely dysfunctional. And many of the mainstream experts and gurus are just professional liars. Now, there are some positive correlations too, like most people really only need to understand and apply the fundamentals to achieve their goals. And those fundamentals are very simple, very straightforward and surefire. They work every time for everyone. You also don't have to be perfect, whether it's finances or fitness that we're talking about. You just got to be mostly right most of the time.

That's enough. That gets the job done. Both of these things can positively impact every other aspect of your life. It's never too late to get on the right path. That's also something that fitness and finance have in common. And a bit of discipline and diligence now pay huge dividends in the future. And I'd even go as far as saying that after your health and your relationships, getting your finances in order is the highest leverage action you can take to improve yourself because with it comes more self-esteem and self-efficacy

and self-reliance, not to mention a sense of freedom and stability and overall sense of well-being. And while money may not be able to ultimately buy happiness, it sure can buy some peace of mind and the opportunity to go out there and find and pursue what does make you happy. Furthermore, like eating well and exercising, following a sensible financial regimen is downright counter-cultural at this point. It is a personal revolution against the system. And you know what I'm talking about? I'm talking about our modern clown world that has been engineered by psychotic pedophiles. I mean, people who have worked very hard to produce hordes of docile disease,, and dysfunctional wage slaves saddled with crushing debts who are just smart enough to push the buttons and pull the levers, but too stupid

to question why, let alone blaze their own trails. And these kingmakers have done a pretty damn good job, if you ask me. For example, ponder the following statistics that I took from various surveys and studies conducted by financial institutions. Two-thirds of Americans would struggle to scrounge up $1,000 in an emergency. Just 46% of Americans have a rainy day fund. 56% of Americans have less than $10,000 saved for retirement. And that number includes 33% who have nothing saved as well as 23% who have little saved. Only 24% of millennials demonstrate basic financial literacy. Americans are collectively carrying over $1 trillion in credit card debt. About 77 million Americans or about 35% of American adults with a credit file have debt

in collections. 47% of Americans who have credit cards don't pay off their balance in full each month and nearly one-third of them make minimum payments every month. 26% of Americans have made a delinquent payment and 56% of payment delinquencies were due to overspending on non-essential items. All right, so consider that scene and then ponder this question. Did it all just happen through coincidence and circumstance or was it made to happen? And not made in the sense of the dreadlord Rothschild forcing people to sign their lives over to the banks, advertisers, and retailers, but in a sense of people in positions of power creating a complex and interconnected social

system that is explicitly designed to encourage the behaviors that have produced the disastrous disastrous results that we see all around us. Anyway, regardless of how we got here, we can now do as our master's command. We can go earn and spend and then borrow so we can spend even more. And then we can suffer the consequences of mounting distress and despair, or we can defy the now you're supposed tos and follow the advice in The Millionaire Next Door and reap the considerable material, psychological, and emotional rewards of financial independence. And contrary to common belief, we don't have to come from money or earn hundreds of thousands of dollars a year to get there. In fact, the author discovered that while many children of wealthy parents and high earners do have more shiny objects than those who are less well-off, they're also often a paycheck or three away from financial ruin. And as far as

earnings go, while your ability to increase your net worth definitely goes up as you make more money, you can absolutely retire rich on a lifetime of modest earnings. All righty, let's get to the takeaways. So here's the first one. Quote, affluent people typically follow a lifestyle conducive to accumulating money. In the course of our investigations, we discovered seven common denominators among those who successfully build wealth. They live well below their means. They allocate their time, energy, and money efficiently in ways conducive to building wealth. They believe that financial independence is more important than displaying high social status. Their parents

did not provide economic outpatient care. Their adult children are economically self-sufficient. They are proficient in targeting market opportunities. They chose the right occupation. And if you're wondering what economic outpatient care is, don't worry, I'll get to that in a couple minutes. So my note on this takeaway is that it basically summarizes the author's main findings and recommendations. And as with fitness, it's mostly the fundamentals that matter the most. No surprise. The things that most people don't want to do consistently. So with diet and exercise, that's, of course, energy balance and resistance training, regular resistance training.

And with money, it's budgeting and investing. And in fact, if you get into just those two habits alone, budgeting and investing, and if you get into them in the most basic of ways, you are all but guaranteed to achieve significant financial fitness, so to speak, in your lifetime. If you can routinely spend 10 to 20% less than you earn and invest the surplus in safe, appreciating assets like mutual funds or real estate, you can be rich. End of story. Now, the rub, of course, is how long it takes and what you have to sacrifice to get to the finish line.

to get to the finish line. In fitness, you can build an outstanding body in just a few years, but it takes most people a couple decades to achieve true financial independence, which is a seven-figure net worth for most people. Now, some people find that discouraging even to think about. I, however, say who cares because of just how bad the alternative is. The negative ramifications of financial failure and ruination are so many and so penetrating and pervasive that it is really worth avoiding at all costs, like drug addiction or alcoholism. Hey, quickly, before we carry on, if you are liking my podcast, would you please help spread the word about it? Because no amount of marketing or advertising gimmicks can match the power of word of mouth. So if you are enjoying this episode and you think of someone else who

might enjoy it as well, please do tell them about it. It really helps me. And if you are going to post about it on social media, definitely tag me so I can say thank you. You can find me on Instagram at Muscle for Life Fitness, Twitter at Muscle for Life, and Facebook at Muscle for Life Fitness. All right, my next takeaway here, number two is, quote, PAWS, P-A-W-S, and I'll get to what that is in a second, allocate nearly twice the number of hours per month to planning their financial investments as UAWs, I don't know how to say it, UAWs do. And my note here is, first, let's just clarify. So in the book, Stanley refers to prodigious accumulators of wealth, pause, P-A-W-S, and under accumulators of wealth, UAWs, UAWs? Probably not, UAWs. So if you want to know which one you are, Stanley gives a formula

for first determining what your net worth should be. And that is multiply your age by your realized pre-tax annual household income. And if you're not sure what that is, just Google it. From all sources except inheritances, and then divide that number by 10. And that number is a net worth that Stanley considers least twice that amount, Stanley says. And if it is below the number that you just calculated, you are an UAW. You're a UAW to one degree or another. If you missed it by a little bit, it's not too bad. If you missed it by a lot, you're pretty bad by his standards. So for example, just to put numbers to this, if Bill is 45 years old and makes $150,000 a year before taxes, an average net worth by Stanley's standards would be $675,000, right? So we have his age, 45, multiplied by his income divided by 10. Now, a prodigious number would start at $1,350,000 and an underachieving net worth would be anything

less than $675,000. Now, the purpose of the book is to help more people become Paws and save them from the trials and tribulations associated with being a UAW. Now, as for the takeaway regarding the time allocated to financial planning, while PAWS spend nearly double the amount of time than UAWs, it's still only 8.4 hours per month on average, which anyone can do. 8.4 hours per month on average, which anyone can do. Yes, just a couple hours per week of your time and energy is all that's needed to make you rich. Statistically speaking, you don't need to put more time than that into it if you use that time effectively. And if you're ready to start doing

that, I recommend you read The Millionaire Next Door, of course. And then I recommend you read a couple books on investing that will ensure you don't make the big mistakes that many people make and ensure that you invest your money in a way that is highly likely to appreciate significantly over your lifetime. And those books are The Little Book of Common Sense Investing. That's the first one. The second book is The Boglehead's Guide to the Three Fund Portfolio. Sounds silly, but it's a great book. Bogleheads are fans of John or Jack, as he's often referred to, Bogle, who is generally considered one of the

best investors of all time. He founded a company that you may have heard of called Vanguard, and he is big on low-cost, simple investing philosophies. And those philosophies have caught on at large. And now you have a lot of people out there who call themselves Bogleheads. So again, the book title is The Bogleheads Guide to the Three Fund Portfolio. The third and final book I recommend you read on investing is just called The Intelligent Investor. It's a doorstopper. It's big, it's dry, but fantastic information.

And it has stood the test of time and it will do you well. So if you just read those three books and then apply what you've learned in the same way that you apply what you know about how to eat and exercise, you will quickly leapfrog ahead of most people in the game of money making and money accumulation specifically. Okay. Takeaway number three, quote, what can you give your children to enhance the probability that they will become economically productive adults? In addition to an education, create an environment that honors independent thoughts and deeds, cherishes individual achievements and rewards responsibility and leadership. Yes, the best things in life are often free. Teach your own to live on their own. It's much less costly financially, and in the long run, it is in the best interests of both the children and their parents. So my note here is Stanley

dedicates two entire chapters to the many perils of providing economic outpatient care, as he calls it, to children in the form of cash, gifts, securities, real estate, and other private assets. And in short, what the data shows is doing that is one of the easiest ways to encourage kids to become weak, lazy, entitled brats who lack ambition, drive, and discipline, and who depend wholly on familial subsidies to fuel their ever-increasing need for more and more conspicuous consumption. And having grown up around a number of kids who came from some money, I have seen this firsthand a number of times. And one for one, if I look back in my life, the most broken people I've actually gotten to know, I'm sure I've come across people who are more broken, but I didn't really know it. So the people I've really come to know who were just broken. One for one, these people had wealthy or high earning parents who taught them early on that they could have anything they wanted, not through production and prudence, but parental patronage instead. Now, many of these

guys and gals are in their 30s and even 40s, and in all cases, but one that I can think of, there's one exception here. Each of these people are in varying degrees of failure in more or less every aspect of their lives. But they do drive some fancy cars. And also, as someone with kids and with a substantial and rising income and net worth, I plan on avoiding this gigantic pitfall by doing everything I can to help my children become independent, resilient, and conscientious adults. And while they will certainly enjoy a privileged upbringing to some degree, I mean, you can't get away from it. They are not going to ride my financial coattails into the lap of luxury. They are going to learn how to provide for themselves. And if they are going to become rich, it's going to be on their own merits. All right, next takeaway. Quote,

those parents who provide certain forms of EOC have significantly less wealth than those parents within the same age income and occupational cohorts whose adult children are economically independent. And my note here is a family welfare department not only harms the receivers, but the givers as well. And while many parents may happily dilute and dissolve their net worth for their kids, what happens if the well finally runs dry? And that does happen. Well, both of the parties are destroyed and I've seen this happen as well. I've seen it happen several times. I've seen people earning seven figures per year, doling out substantial sums to their kids so they can have it all without

having to work jobs they quote unquote don't like. And then suddenly find themselves financially overstretched and overwhelmed. And the aftermath of these situations was always ugly for everyone involved. And so I consider it a point of personal responsibility as a parent to ensure my kids do not need my financial support as adults. And I also see it as a point of personal pride to not accept any financial support from my parents beyond a couple business loans along the way of building my businesses. And I should mention, those are loans that I could have gotten from banks. The banks wanted to lend me the money, but I figured I might as well offer the interest to my dad. If I'm going to pay interest, I'd rather pay it to my dad than Chase or some other bank. I like you, Chase, but I like my dad more. Sorry. And those are also loans that I did promptly repay with interest. All right, the next and final takeaway quote, paws need to achieve to create wealth, to become financially independent, to build something from scratch. UAWs more often

need to display a high status lifestyle. And my note here is most wealthy people get much more pleasure from owning substantial amounts of appreciable assets than from showing off how many knickknacks they can buy. And some of these people do indeed have nice things. Sometimes they drive nice cars. Sometimes they have nice watches or nice suits or handbags or whatever, but they still are generally frugal relative to their incomes. And they do believe that this is the key to achieving financial independence. They also typically ignore the Joneses and eschew the display of high status trappings and trinkets like clothing, jewelry, accessories, cars, and so forth. The data in this book also shows the people who peacock the most

tend to do so at the expense of their net worth. They are often worth a lot less money than you would think from the outside looking in. So keep that in mind when you are sizing up the beautiful people of Instagram or considering saving and investing less so you can buy more bric-a-brac. Hey, Mike here. And if you like what I'm doing on the podcast and elsewhere, and if you want to help me help more people get into the best shape of their lives, please consider checking out my VIP one-on-one coaching service where we can help you get in the best shape of your life. My team and I have

helped people of all ages, circumstances, and needs. So no matter how complicated or maybe even hopeless you might think your situation is, we will figure it out and we will get you results. Every diet and every training program is 100% custom. We provide daily workout logs and do weekly accountability calls. Our clients get priority email service and discounts on supplements and other products, and the list of benefits goes on and on. So to learn more, head over to www.legionathletics.com slash coaching. That's legionathletics.com slash coaching and schedule your free consultation call. I should also mention that there is usually a wait list and new slots do fill up very quickly.

So do not wait if this sounds even remotely interesting to you. Go ahead and schedule your call now. Again, that URL is legionathletics.com slash coaching.