On Purpose with Jay Shetty - 8 Ways We Waste Money and 8 Ways to Manage it Better

Episode Date: May 3, 2019

This week, we're talking money.Do you feel you manage your money well or is there room for improvement? Whether it's skipping the Starbucks in the morning or learning how to invest, there are many ways to go about it.Listen to my 8 practical tips to help you save money and all the habits you can implement in order to improve your relationship with money.See omnystudio.com/listener for privacy information.

I am Yom Le Van Zant and I'll be your host for The R Spot. Each week listeners will call me live to discuss their relationship issues. Nothing will tear a relationship down faster than two people with no vision. There's y'all are just floppin' around like fish out of water. Mommy, daddy, your ex, I'll be talking about those things and so much more. Check out the R-Spawn on the iHeart video app Apple Podcasts or wherever you listen to podcasts. Hi, I'm Brendan Francis Nunehm, I'm a journalist, a wanderer, and a bit of a bond

for Von, but mostly a human just trying to figure out what it's all about. And not lost is my new podcast about all those things. It's a travel show where each week I go with a friend to a new place and to really understand it, try to get invited to a local's house for dinner where kind of trying to get invited to a dinner party, it doesn't always work out. Ooh, I have to get back to you.

Listen to not lost on the iHeart radio app or wherever you get your podcasts. When my daughter ran off to hop trains, I was terrified I'd never see her again. So I followed her into the train yard. This is what it sounds like inside the box car. And into the city of the rails. There I found a surprising world so brutal and beautiful that it changed me. But the rails do that to everyone. There is another world out there, and if you want to play with the devil, you're going to find them there in the rail yard.

Undenail Morton, come with me to find out what waits for us and the city of the rails. Listen to City of the Rails, on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts. Or, cityoftherails.com. Money can't buy you happiness, but poverty can't buy us anything. Hello everyone, welcome back to On Purpose. I am so happy, so grateful that you're here every single week to learn, to grow, to make a difference in your life and in the lives of others. We're building a conscious community of change makers.

All of you want to change your own life and change the lives of others and make impact in this world. You're definitely in exactly the right place. Thank you for sharing your insights, your takeaways, the principles you're learning from these episodes on Instagram, on Twitter, on Facebook. I'm always looking out to learn from what you're learning. And make sure you've subscribed and rated this podcast. We now have thousands of five star reviews, which means so, so much to me. And today's episode is going to be incredible. It's going to be super tactical, practical,

and applicable to each and every one of our lives. Because it's all about the eight ways we waste money and eight ways to manage it better. Now I know what you're thinking. Don't turn off right now. We've all wasted money. Me too, in my life, I know what you're thinking. Don't turn off right now. We've all wasted money. Me too, in my life, I've made so many bad money decisions. And that's why I thought it was important

to put this at the forefront of our minds. The incredible thing is, I'm sure you've got something lying around in your house, maybe an object, maybe an item of clothing, maybe a gadget, maybe some sort of tech that cost a lot of money. And it's still sitting there gathering dust. You've never worn it, you've never used it. You couldn't return it for whatever reason, and you look at it, and it pains you as to how much money was wasted on it. It might even be an embarrassing piece of clothing that once upon a time you thought was the coolest thing to have and now you wouldn't even get near. The truth is we all have money habits, good or bad.

We all have money habits. We all have a relationship with money. What we feel about money, what we think about money builds our relationship with money. If our belief is always, I don't have enough. Or if our belief is always, I'm always struggling for money, that becomes our relationship with money, just as we have a relationship with other people.

And so today, I want to share with you the eight ways we all manage to waste money and eight things we can actually do about it. Now, I want you to think about this. I'm asking you this question, do you feel you manage your money well or is there room for improvement? And I want you to think about it. Yes or no, do you manage your money well or is there room for improvement? Now the truth is there's room for improvement for each and every one of us. So what I'm about to share with you is based on research from the financially successful

and the financially weak. You will be able to spot, learn and grow based on the numbers and statistics I share, where your biggest money weaknesses are and how you can transform them into your strengths. I want this to be super reflective, introspective, and a safe space for you to really think about your money challenges. See, it's hard to talk about money. You can't just bring it up with

a friend, and if you are, it's just maybe complaining, it's not getting good advice. So, here are eight principles that I think will make a big difference. Now, number one, this is super, super, super important. It took me years to start thinking in this way and I wish I started a lot earlier. Make sure you save before you spend not the other way around. Make sure you save before you spend not the other way around. When you get your

paycheck what's the first thing you think of? Now for most of us it's knowing that thing we want to buy maybe want to go for a weekend away maybe we've got a evening out planned maybe we've got dinner planned and every month with spending before we save. Knowing how much you want to save every month and making that the first decision with your paycheck is the most proactive and powerful thing you can do for a financially successful future. And this was the quote from Warren Buffett,

do not save what is left after spending. Spend what is left after saving. I'll repeat that from Warren Buffett. Do not save what is left after spending. Spend what is left after saving. It sounds so basic. It sounds so obvious, but so many of us don't do it. It's something that so many of us ignore because we think, yeah, I'm going to have something left at the end of the day. And I'll save whatever I save after I've spent what I need for the month. Even if you think it's a small, insignificant amount, everything adds up over years, everything adds up. It all makes a difference. People who are happy with their money habits save 20% of their net income.

That's one thing to think about. Are you saving 20% of your net income up to 20%. You may have started by saving 5%. You may have started by saving 10%. You may have started by saving 15%. But the people who are extremely happy with their money habits are saving 20% of their net income. And 80% is being spent. Really think about your finances and see how that number works for you. Again, it's something to work towards. This is an ideal, it's not where you need to be right now. It's something that we're working towards.

There was a time in my life where I was working and I was saving far less than that, probably 1% of my net income. And so there were times in my life where it just wasn't possible, things were harder, things were tougher, but I always knew I was working towards that. So a business insider wrote this great piece about how you can build a million dollar retirement account by the age of 65. And for simplicity, all the calculations assume a 12% annual return and don't take taxes into account.

But starting age 20, you want to daily save $2 a day. That's $61 a month and that's $730 a year. Then at 25, you want to save $3.57 a day and monthly savings of $109 and then yearly saving of $1,304. It's small amounts. At 30 you want to start saving $6.35 a day. At 35 you want to save $11.35 a day.

At 40 you want to save $20.55 a day. At 45 you want to save $38 a day. At 50 you want to save $38 a day. At 50, you want to save $73, 49 a day. And at 55, you want to save $156, 12 every single day. And if you think about it, it's natural in that time for your salary to rise. It's natural for that time for your business to grow. So this becomes very normal to exponentially start increasing the amount that you're saving. Test

it out, think about it, and go and search it online and you'll find the graphic that I'm talking about. It doesn't matter how much you save, just that you start doing it. You start the process. Because even if you right now think, oh, it's only roughly three pounds a day. It's only three dollars a day. That's not a lot of money. Even if I saved $30 a month, what, you know, how would that make any impact? You know, over the year, that's not a lot of money. Right, how's that gonna make a big difference in my life?

Well, listen to this about what it can do the other way around. One of the biggest ways we waste money, one of the biggest ways that we spend money before saving it is random coffees add up. How many of us are waiting in queues or maybe now you're cool and you have the app and you order your Starbucks in advance, how many of us are wasting a significant amount of money daily on coffees.

Now listen to this really, really carefully. Millennials are spending more money on coffee than their retirement plans. Now listen to this. According to reports from ACON's money matters, 41% of nearly 2000 millennials surveyed admitted to spending more on their morning brew than contributing to... And it's not just coffee where us millennials are making poor financial decisions. The survey says that just 5% of young millennials are saving at all. And according to the report, the average American spends approximately $1,100 a year or $3 a day on coffee. Just think about that. Just the expense of $3 a day on coffee in a year would be $1,100.

Now I'm not telling you to give up your coffee. The point I'm trying to make is saving $3 a day is impactful. A good way to learn about a place is to talk to the people that live there. There's just this sexy vibe in Montreal, this pulse, this energy. What has been seen as a very snotty city? People call it Bosedangeless. New Orleans is a town that never forgets its pay. A great way to get to know a place is to get invited to a dinner party. Hi, I'm Brendan Francis Newton and not lost as my new travel podcast where a friend and I go places, see the sights and try to finagle our way into a dinner party. We're kind of trying to get invited to a dinner party.

It doesn't always work out. I would love that, but I have like a Cholala who is aggressive towards strangers. I love the dogs. We learn about the places we're visiting, yes, but we also learn about ourselves. I don't spend as much time thinking about how I'm gonna die alone when I'm traveling,

but I get to travel with someone I love. Oh, see, I love you too. And also, we get to eat as much... I love you too. Life's a lot of therapy goes behind that. You're so white, I love it. Listen to Not Lost on the iHeart Radio App or wherever you get your podcasts. I'm Danny Shapiro, host of Family Secrets.

It's hard to believe we're entering our eighth season. And yet, we're constantly discovering new secrets. The depths of them, the variety of them continues to be astonishing. I can't wait to share ten incredible stories with you, stories of tenacity, resilience, and the profoundly necessary excavation of long-held family secrets. When I realized this is not just happening to me, this is who and what I am. I needed her to help me. Something was gnawing at me that I couldn't put my finger on,

that I just felt somehow that there was a piece missing. Why not restart? Look at all the things that were going wrong. I hope you'll join me and my extraordinary guests for this new season of Family Secrets. Listen to season eight of Family Secrets on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Not too long ago, in the heart of the Amazon rainforest,

this explorer stumbled upon something that would change his life. I saw it and I saw, oh wow, this is a very unusual situation. It was cacao. The tree that gives us chocolate. But this cacao was unlike anything experts had seen, or tasted. I've never wanted us to have a gun bite. I mean, you saw this tax of cash in our office.

Chocolate sort of forms this vortex. It sucks you in. It's like I can be the queen of wild chocolate. We're all lost. It was madness. It was a game changer. People quit their jobs. They left their lives behind so they could search for more of this stuff. I wanted to tell their stories so I followed them deep into the jungle and it wasn't always pretty.

Basically this like disgruntled guy and his family surrounded the building armed with machetes. And we've heard all sorts of things that you know, somebody got shot over this. Sometimes I think, oh, all this for a damn bar of chocolate. Listen to obsessions, wild chocolate, on the I Heart Radio app, Apple Podcasts, or wherever you get your podcast.

How amazing would it be to have an extra $1,100 at the end of the year if you just saved $3 a day? So don't think about saving big or saving small. Too many people say to themselves, I'll save when I make more money. When I'm making a bigger salary, that's when I'll save more money. It doesn't work like that. When you save the little you have, you will save when you have more. When we take care of what we're given, we get more to take care of. When we're grateful for what we have, we receive more to be grateful for. So principle number one is do not save what is left after spending spend what is left after saving. That's point number one point number two. This can be a challenging one and I've often really struggled with one.

But people are happy with their money habits are spending no more than 25% on rent. Now if you live in a big city I know how tough this is. When I first moved to New York, I was probably spending over 50% of my net income on rent. It was an extortionate amount. So, I've been in that position where I've been way off this number. I was double this number. But again, it's something to work towards. One of the things we can recognize, and I do believe this is important, we need to live in places and spaces that are inspiring. But that doesn't mean that we're living in our dream home on day one. It could mean that we get a smaller place, but actually have access to purchase

more things that make us excited in this space. It could be possible that you're able to create an environment inside the space that's inspiring enough lifting. So I know that this number isn't going to be a number that we're going to get too straight away. It's taken me a long time to get to this number, but I would say that it's something to aim for. It's an ideal. So many of us are spending an extortionate amount on rent, and I get it. It's just the way the market is, but it's something to think about. It's something to be aware of. Ask yourself, is the space right now making a big difference to your emotional mental health? If it is incredible, but if it's causing you pain financially and that's creating more stress

and more anxiety, think about that balance. So I've been in places sometimes where the space I've lived in has been good for my mental health and even though it's expensive, I'm okay with it. But there have been times when actually that balance is tipped and now that financial commitment creates an anxiety and a stress and a pressure. No way you are on that spectrum.

Remember, these are averages and ideals but everyone is different, and I want you to find the one that works for you. That was point number two. Now, point number three. People who are happy with their money habits spend no more than 15% on food. Now, I've got to throw something out here.

I truly believe that your health and wellness is one of the biggest investments that you can make. Your health and wellness based on your food, what you put into your body, your exercise, your activity, your movement, this is one of the best paying investments. It's one of the best focuses for your long term growth. And remember this, wellness can be expensive, but it's a lot cheaper than illness. And investment in your wellbeing is far more important. If you don't spend money on your wellness, you'll have to spend money on your illness. Now, food is actually becoming a big cost point for so many people because we're eating out. And eating out isn't necessarily the most healthiest way of eating either, so it's still a place that we can cut our cost.

The average spending on eating out from millennials age 25 to 34, is around $3,500. Right? Under 25, are spending around $2,362 a year on eating out. Gen X actually spend a lot more, 4,249, age 35 to 44, and those age 45 to 54 are spending about just over $4,000. The theme here is still critical. If you're spending money on healthy, organic produce

that's having a big impact on your mental and physical health, that's amazing. That's the best investment you can make. It's something that I remember learning for my mom. We didn't have a lot growing up, but my mom would always tell me, do not compromise on eating healthy food, do not compromise on your health. And I think those values have really stayed with me and made a big difference. So even at times when I was struggling financially or things weren't going in the right

direction, my health was something I tried to never compromise on because your health is the only way anything else is going to happen. Make sure you focus on spending that money on the right type of food. If you're eating out fast food every day, junk food, any sort of food that's been sitting around for days reheated, that's not the kind of food you want to be consuming. Remember, wellness can be expensive, but it's a lot cheaper than illness. Point number four, spend no more than 10% on entertainment. The research shows that financially successful people spend no more than 10% of their net income on entertainment. And that's because

of point number eight, which I'll share with you shortly. Point number five is spend no more than 5% on vacations. Now again, if your vacations are your way of growing, your way of learning, your way of feeling like you're experiencing life, that's amazing. But there are so many great deals out there. There are so many great ways of saving money out there on incredible experiences. So definitely think about how you can save in other areas. If this is an area you want to increase, you may say to me,

Jay, I really want to travel. I really want to explore the world. Well, then this is something worth saving for. This is something worth putting money aside for. Now, the sixth one is not necessarily a money habit, but it's something that I think will affect your money mindset. This one is give a few hours a week of your time in charity. It may be one hour, it may be three hours, it may be five hours, and you may be saying,

Jay, I could be spending that time making more money. Well, actually investing this time will give you more gratitude, it'll give you more perspective, it will boost your mental health, it'll give you lots more confidence, it will uncover your passions, potentially your purpose, giving your time and more importantly, your energy and your skills to serve others in need can potentially be the best investment of your life. When we invest our time and energy in helping others, we uncover our skills, we uncover our strengths, we uncover our passions. That's how I found mine. When I was organizing events to share wisdom with people, when I was organizing food distribution programs to serve people who are homeless and didn't have access to food or young children

who didn't have access to education, I started to uncover my passion. We find ourselves when we lose ourselves in the service of others is what Gandhi said. I'll repeat that. We find ourselves when we lose ourselves in the service of others. This can be an incredible mindset tip to change our

money mindset, to grow our money mindset and to uncover strengths, skills and service opportunities that will help us in the long run. In the 1680s, a feisty opera singer burned down a nunnery and stole away with her secret lover. In 1810, a pirate queen negotiated her cruiseway to total freedom, with all their loot. During World War II, a flirtatious gambling double agent helped keep D-Day a secret from the Germans. What do these stories have in common? They're all about real women who were left out of your history books. If you're tired of missing out, check out the Womanica podcast, a daily women's history podcast highlighting women you may not have heard of, but definitely should know about.

I'm your host, Jenny Kaplan, and for me, diving into these stories is the best part of my day. I learned something new about women from around the world and leafyling amazed, inspired, and sometimes shocked. Listen on the I Heart Radio app, Apple podcasts, or wherever you get your podcasts. Hi, I'm David Eagleman. I have a new podcast called Inner Cosmos on I Heart. I'm a neuroscientist and an author at Stanford University, and I've spent my career exploring the three-pound universe in our heads.

On my new podcast, I'm going to explore the relationship between our brains and our experiences by tackling unusual questions so we can better understand our lives and our realities. Like, does time really run in slow motion when you're in a car accident? Or can we create new senses for humans? Or what does dreaming have to do with the rotation of the planet?

So join me weekly to uncover how your brain steers your behavior, your perception, and your reality. Listen to Intercosmos with David Eagleman on the I Heart Radio app Apple Podcasts or wherever you get your podcasts. This is what it sounds like inside the box card. I'm journalist and I'm Morton in my podcast City of the Rails. I plunge into the dark world of America's railroads, searching for my daughter Ruby, who ran off to hop train. I'm just like stuck on this train, not where I'm gonna end up, and I jump.

Following my daughter, I found a secret city of unforgettable characters living outside society, off the grid and on the edge. I was in love with a lifestyle and the freedom this community. No one understands who we truly are. The Rails made me question everything I knew about motherhood, history, and the thing we call the American Dream. It's the last vestige of American freedom.

Everything about it is extreme. You're either going to die, or you can have this incredible rebirth and really understand who you are. Come with me to find out what waits for us in the city of the rails. Listen to city of the rails on the I Heart Radio app, Apple Podcasts or wherever you get your podcasts,

or cityoftherails.com. Number seven, this is really, really important. Don't gamble. 77% of those who struggle financially are gambling. The truth is, statistics show poor people gamble much more than others. Multiple studies show, including from Florida Family Policy Council, as well as University of Buffalo Research Institute on Addictions, that very low income households have an almost 100% higher rate of gambling than the general population. They tend to use a lot of much more, go to casinos a little more frequently, and wage your money in other ways. The rate of addiction to gambling is so much higher.

Now, it's obvious why the desire to get out of pain quickly, the desire for an instant relief, the desire for a quick breakthrough, but the truth is what it's slowly doing is making you poorer and poorer and poorer. What it's slowly doing is taking away your wealth. It's not a good financial investment. And gambling has been shown to be addictive just like taking drugs. And 7% of people feel that they want to stop gambling or taking part in

the lottery. But it should be a lot higher. Because that same addictive, drug-like feeling is making you do it again and again and again despite the fact that you're losing again and again and again. It's only a path to losing more and more wealth, mental stability and confidence. It doesn't come with anything. Now, it may give you a try, it may give you a group of people that like to do the same thing. Apart from that false sense of community, it can be an extremely damaging thing for your family, for your children, for so many people around you. 77% of those who struggle financially are gambling. Stop that habit, start investing.

Now, one of the biggest reasons why people struggle to invest in that scenario is a lack of role models. Now, one of the biggest reasons why people struggle to invest in that scenario is a lack of role models. That's one of the biggest reasons why the people who gamble keep gambling. So all of us, this applies to all of us. Even if you're sitting here listening to Jay, I don't gamble. This is something for you as well. We have to start finding role models who use their money well.

Guess what? There's plenty of rich people who've gone completely bankrupt and broke as well because they spent it all on penthouses, parties, cars, and all the rest of it, right? There's plenty of stories of people who are multi-millionaires who wasted it all. This is not about spending time with rich people. This isn't about spending time with people

who drive fancy cars. This is about spending time with people who have positive money habits. Just as if you want to be mindful, meditative, balanced, and centered, you have to spend time with people who operate on a higher frequency. If you want to manage money effectively, you have to spend time with people who spend money wisely. If you want to spend your money well, spend your time with people who spend money well. If you want to invest your money well, invest

your time with those who invest money well. You may not have money to invest yet, but you have time and energy to invest and where you place that can make a huge difference. And that's why point number eight, the last one that I waited to share with you is so, so powerful. The people who are happy with their financial and money habits spend 10 to 25% of their net income on personal growth, books, courses, coaching programs, mentoring, training, skills. This is what the financially happy and successful are spending their money on. They did this on the way up and they've maintained it.

And 69% of people who struggle financially are bad communic communicators have low emotional intelligence and a bad persuasion and negotiation. These again are great skills of people who are going to be happy with their money habits. So investing 10 to 25% of your net income on personal growth, on education, however you see it, can help you continue to grow your financial goals. And see, here's the thing. I'm really clear about this. Money can't buy you happiness,

but poverty can't buy us anything. Right? Money can't buy us happiness, but poverty can't buy us anything. And therefore, it's important that we have our finances in order. They aren't the be all and end all of everything. Finances will not buy you meaning. Finances will not buy you purpose. But they give you a strong

foundation to move forward on. And that doesn't mean you have to be a millionaire or a billionaire. It just means being good with your money. And this is the important consideration that the financially happy and financially successful make. They are spending more time on reading, listening to audiobooks, reading education related material, more on personal development, the biographies of successful people, surroundings themselves by those role models. It's so, so significant. So I just want to give you a quick recap on my eight ways to manage money better. Number one, make sure you save before you spend not the other way around. Remember Warren Buffett, do not save what is left after spending, spend what is left after saving. Watch those little expenses like coffees and day-to-day

tickets. The number two piece of advice is spend no more than 25% on rent. Remember I said that's an ideal, that's a metric, I was double that at one point in my life, it's something to aim towards. Number three, no more than 15% on food with the caviar. Wellness can be expensive, but it's a lot cheaper than illness. Your health and wellness is probably the best investment you can make. Physical and mental. Trust me on that one. Number four, spend no more than 10% on entertainment because of point number eight. Number five, spend no more on 5% on vacations. But if you want experiences and exploring, save for this. Number six, five hours of your time every week to give to charity for growth, for gratitude, for perspective.

Number seven, don't gamble, it's addictive, it can take you down the wrong road. And number eight, 10% to 25% of your net income on personal growth, courses, coaching, and ways to make yourself better. Why? Because that's going to help you grow every other area of your life, that includes going to the gym.

That includes having a therapist, includes having a coach, includes being a part of a community. That's helping you grow. That has to be a huge priority for every single one of us. And these things are so easy to forget. We get so lost and dealing with our money seems scary. We get scared of thinking about money. We get scared of looking at money. It can be a point of anxiety for all of us, but it has to stop being anxiety and start being a priority. Move your money mindset from anxiety to priority

with these eight principles today. Share the ones that really stuck out for you. Test them this week, test them this month, test them this year, feel the difference in your life when you start taking a control of your financial situation. I really, really hope that this has been useful.

I really hope it's been practical and applicable to each and every one of you. There are so many great books out there as well. Go and find the ones that make a big difference in your life and figure out how you can build this foundation. Thank you so much for listening to this episode of On Purpose. Make sure you share it, share what you've learned, share what made you grow and share what

you're experimenting with. Remember, these are ideas that I want you to experiment with, play with and learn from. This is your journey. I'm just facilitating it. I'm helping you grow. Thank you for trusting me. Thanks for being here. I'm so, so grateful.

I'll see you very, very soon on the next episode of On Purpose. Thank you so much for listening through to the end of that episode. I hope you're going to share this all across social media. Let people know that you're subscribed to on purpose. Let me know. Post it. Tell me what a difference it's making in your life.

I would love to see your thoughts. I can't wait for this incredibly conscious community we're creating of purposeful people. You're now a part of the tribe, a part of the squad. Thank you for being here. I can't wait to share the next episode with you. The world of chocolate has been turned upside down. A very unusual situation. You saw the stacks of cash in our office. Chocolate comes from the cacao tree, and recently, Variety's cacao, thought to have been lost centuries ago, were rediscovered in the Amazon. There is no chocolate on Earth like this.

Now some chocolate makers are racing deep into the jungle to find the next game-changing chocolate. And I'm coming along. OK, that was a very large crack it up. Listen to obsessions while chocolate. On the iHeartRadio app, Apple Podcasts, or wherever you get your podcast. The therapy for Black Girls podcast

is your space to explore mental health, personal development, and all of the small decisions we can make to become the best possible versions of ourselves. I'm your host, Dr. Joy Harden Bradford, a licensed psychologist in Atlanta, Georgia, and I can't wait for you to join the conversation every Wednesday. Listen to the Therapy for Black Girls podcast on the iHort Radio app, Apple podcast, or wherever you get your podcast. Take good care. Our 20s are often seen as this golden decade. Our time to be carefree, make mistakes, and figure out our lives. But what can psychology teach us about this

time? I'm Jemma Speg, the host of the Psychology of your 20s. Each week, we take a deep dive into a unique aspect of our 20s, from career anxiety, mental health, heartbreak, money, and much more to explore the science behind our experiences. The Psychology of your 20s hosted by me, Gemma Speg. Listen now on the iHeart Radio app Apple Podcast or wherever you get your podcasts. Gemma Speg. Listen now on the iHeartRadio AMP Apple Podcast or wherever you get your podcasts.