Rich Habits Podcast - 66: The Financial Playbook for Recent Graduates

Episode Date: May 27, 2024

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share their financial playbook for recent graduates. How to retire a multi-millionaire, excel in your career, and get across the finish line. ---Skip the waitlist and invest in blue-chip art for the very first time by signing up for Masterworks: https://www.masterworks.art/richhabitsPurchase shares in great masterpieces from artists like Pablo Picasso, Banksy, Andy Warhol, and more.See important Masterworks disclosures: https://www.masterworks.com/cd---Subscribe to the Rich Habits Newsletter, ⁠click here!⁠Join us for an Options Trading Webinar, ⁠click here!⁠---⭐ Download our FREE Budgeting Template – ⁠⁠⁠click here⁠⁠⁠⭐ Earn 5.1% on your savings with a High-Yield Cash Account – ⁠⁠⁠click here⁠⁠⁠⭐ Trade stocks, options, music royalties and crypto on Public – ⁠⁠⁠click here⁠⁠⁠⭐ Get a $35 bonus when you start saving & investing with Acorns – ⁠click here⁠⭐ Automatically buy stock where you shop with Grifin – ⁠⁠⁠click here⁠⁠⁠⭐ Protect your family with term life insurance from Suriance – ⁠⁠⁠click here⁠⁠⁠⭐ Use code “Spotify” for 15% off our 4-module video course – ⁠⁠⁠click here⁠⁠⁠⭐ Optimize your portfolio with Seeking Alpha – ⁠⁠⁠click here⁠⁠⁠---👤 Explore everything Austin does – ⁠⁠⁠click here⁠⁠⁠👤 Explore everything Robert does – ⁠⁠⁠click here⁠⁠⁠❓ Ask us questions for our Q&A episodes – @richhabitspodcast on Instagram📬 Inquire about working together – [e-mail]---Hankwitz Group LLC has an existing business relationship with NEOS Investment Management LLC. The opinions expressed are those of the author, and the author owns several NEOS ETFs.

Hey everyone and welcome to the Rich Habits Podcast, a top 10 business podcast on Spotify. My name is Austin Hankwitz and I'm joined by my co-host Robert Croke. Robert is a seasoned entrepreneur in his 50s with more than 300 million in lifetime revenues under his belt and I'm an entrepreneur in my late 20s with a background in finance and economics. Since quitting my full-time job in corporate finance a few years ago, I've built a seven-figure media business and actively advise some of the most well-known fintech companies around the world. As the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset. However, we try and bring you two unique perspectives, one from an

industry veteran, which is Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. Robert, this is going to be a fun episode. What are we going to be talking about? Yeah, in this episode of the Rich Habits podcast, we're going to be sharing the financial playbook for all of you recent high school and college graduate. what's out there. I know there's a ton of you listening right now that know someone, whether it's your neighbor, your cousin, your niece, your nephew, or even your own children that just graduated from high school or college and have no idea what to do with their career and their finances. And we're going to cover all of that today. So send them this episode because we're going to teach them how to

retire a multimillionaire, how to increase their net worth during their defining decade, as well as offer some career advice, no matter what line of work they look to. be in and what career path they take. Robert, this episode is going to be everything I wish I knew at 18 and 22 years old. It's going to be a game changer for a lot of you. And by the way, happy Memorial Day to everyone as well. We want to sincerely thank all of our veterans for their service and their sacrifice. We would not be here as a country without you. Also, summer is officially here. I hope you guys have your summer plans figured out or you're out by the barbecue. Maybe you buy a pool right now listening to the show. Don't forget to come back

every week during the summer because we're not taking any days off. There's no summer vacation here for the Rich Habits podcast. Now, Robert, I'm pumped because now that I'm six years out of college, I have so much to share about going from a negative net worth at 22 to a net worth millionaire now at 28. So let's jump into the show. Yeah, number one, your recent graduate heading into your defining decade, and what does that mean? Congrats. You've graduated high school or college, and you're entering your defining decade.

The reason why we call it the defining decade is because the decisions you make in your 20s are going to have lasting effects throughout the rest of your life, financially, career-wise, relationally, and everything in between. No one fresh out of high school or college knows what they want to do for the rest of their life, nor should you. And if someone tells you that you should know, don't listen to them, listen to your gut, and just do your thing. Trust me, everyone thinks they've got it figured out at 16, 18, 19,

20. You don't. Our lives go in seasons and you should not beat yourself up for trying to figure it out by the time you're 21. We want to see you have a plan. But trust me, you're going to want to let your life kind of open up to you and really kind of display and figure it out as you go. And we're going to give you the playbook of how to do it right. And speaking of defining decade, Robert, highly recommend everyone who is in their 20s to read the book, The Defining Decade while your 20s matter and how to make the most of them now by Dr. Meg J. So go check that out. But to Robert's point, you don't need to know what you want to do for the rest of your life to set yourself up for financial freedom. You just need to know what not to do. So now let's get into this playbook, Robert.

The defining decade in our humble opinions can be broken out into two separate categories, what to do and what not to do. Financially speaking, let's start with a few action items you should do immediately, no matter your situation. Action item number one. Open a Roth IRA on Fidelity, Charles Schwab, M1 Finance, or wherever you want. You literally go to Google and you type in Open Roth IRA. IRA stands for individual retirement account. It might say that instead, but that's the same thing.

Open the account and deposit money into it. This can be $20, $50, $100. It doesn't matter. You're young. you might not have that much and that's okay. But what matters is that you're actually depositing money into the account and you're investing the money that you deposited into the S&P 500, aka the letters V-O-O-O in the search bar. If you're unfamiliar, the S&P 500 is financial jargon talk for the 500 largest, most profitable companies that operate in the United States.

Their stocks tend to go up about 10 to 12 percent per year, which means your investments will as well. So by investing $100 per month into this fund from, let's call it, $22 to $67, $100 a month, that's it. You're going to retire with $2.3 million of tax-free money waiting for you to enjoy in retirement. Congrats. You're now a multimillionaire, and that's only from $100 a month. Imagine if you made it $200, $300, $400, right? We're going to get into that and the fun stuff there. But that is the first action item anyone listening right now can take to ensure financial freedom

in retirement. The second action item, Robert, is to build your base as quickly as possible, which means having $50 to $100,000 invested into the stock market. Now, before you throw up in your mouth a little bit, because you're just thinking about, oh my God, how am I going to get $100,000? That's insane. Just hear us out, right? We're not saying that you have to have $100,000 in cash, and that's on top of the Roth IRA money or any other money you already have. We want you to have between $50,000 to $100,000 invested total across everything as soon as possible. And if you're looking for a time frame on this, before 30 years old, so before your 30th birthday is a really good sort of time horizon you can give yourself.

Call it eight years or so, right? And here's how you're going to do it. You're young and you have all the time in the world. So don't waste it by going out and partying every weekend with fake friends because you're not going to be friends with these people in five years, 10 years, 10 years. Anyway, don't waste your money on them now. Instead, learn the side hustles or go get a side job that's going to allow you to earn an extra few hundred bucks or maybe even an extra $1,000 a month to start building your base with. This is a long-term game.

We're talking five, seven, eight years here, right? But what we always say is the number one key to success with building your base is by investing early and often, Robert. I love this breakdown, Austin. and it really just covers everything that we talk about on a regular basis and getting to people to understand, stay away from FOMO, implement delayed gratification, and really understand that the earlier you set yourself up and let compound interest do its job through this basket of ETFs and doing this Roth IRA, the better off you're going to be in the long run because so many people do it the opposite. They sit there and they spend beyond their means, they live beyond their

means all through their 20s and 30s. They wake up in their 40, 43 years old and they're like, oh, shit, I don't have anything saved towards retirement. Then they're playing catch up. So I love this strategy. And speaking of ETFs, let's take a moment to talk about some of the funds we personally like a lot. This episode of the Rich Habits podcast is brought to you by NEOS investments. Nios offers ETFs that aim to offer monthly income while providing portfolio exposure across equities, fixed income and cash alternatives like T-bills. Their ETFs may be interesting for folks looking to generate passive income inside their investment portfolio.

They even offer ETFs that provide exposure to the S&P 500 index or the NASDAQ 100 index, while aiming to offer high monthly income beyond what investors would receive from plain exposure to the index. Their funds may serve as a compelling income-focused alternative or complement to many the investments already in many investor portfolios. So if you're listening and you're a recent graduate looking to add passive income focused ETFs to your portfolio, consider learning more about Nios's ETFs at NiosFunds.com. And as with all investments, investors should carefully consider their investment objectives, risks, charges, and expenses of Nios exchange-to-rated funds before investing.

To obtain a prospectus containing this and other important information, please visit Niosfunds.com. please read the prospectus carefully before you invest. NEOS ETFs are distributed by Foreside Fund Services LLC, and investment in NEOS ETFs involves risk, including possible loss of principle. The equity securities purchased by the funds may involve large price swings and potential for loss. A fund's income may decline when yields fall,

and fixed income securities will decline in value because of an increase in interest rates. You know, Robert, we talk about Nios funds all the time, and I just talked about V-O-O, right? The ETF people need to be buying to track the performance of the S&P 500. But maybe if you're someone who wants a little bit more passive income inside of your portfolio, like Robert and I prefer SPYI could be a cool compliment or alternative to that. It's totally up to you.

We love NEOS investments. We love their ETFs and we are super proud that they are sponsors of the show. So let's now flip the switch, things not to do during your defining decade. This is the critical, critical points we want to make for everyone listening. And remember, this is for graduates. So share it with a cousin, share it with a niece, share it with a son or a daughter, because this is going to be so important to help them figure it out along the way. So here we go. Number one, do not go into high interest credit card debt.

Let me say it again. Do not go into high interest credit card debt. This is a crutch a lot of my personal friends used to supplement their lifestyles. I see it every single day. I personally know people in their 30s, 20s who have $8,000, even $20,000 of credit card debt, constantly holding them back from building wealth. You know, and you look at it at first, these people really never had the intention of going into credit card debt, but fell victim to it after getting the FOMO from living in a cool town like Nashville or Miami

or even here in St. Petersburg. And this debt is bad and will continue to ruin you financially if you're not ahead of it. on top of it. Now remember, we don't think credit cards are bad. We're not saying that credit card debt is bad and carrying a balance is worse. If you manage your credit properly, it can be a great wealth-building tool, but most people don't do that. That is why you need to look at the snowball method or some of these other methods to make sure to get it paid off as soon as possible. Number two, don't fall victim to the decades-old American dream myth that owning a single-family home is a great investment. We're not saying don't buy real estate. We're saying, though, that in your

20s, you should house hack. We talk about this all the time. There's a mortgage out there called the Fannie Mae 5% mortgage where you can buy up the four doors, $1.3 million to buy a duplex, a quadplex, or a triplex. Very, very simple here. In the main perspective, we want you to understand is that for your first property, we don't think it should be a single family home because you're tying up too much of your money, that down payment and the closing cost and too much of your credit. So in our opinion, you'd be better off to find a duplex in your hometown, price between 3 and 500K, maybe something that you can afford. Put down that 5%. It might be 20k and get that up and running. Then you can live in one unit. You rent out the other unit so they're paying part of your

mortgage, if not all of your mortgage. And this will really set you up because not only are they paying down the mortgage for you, but you get the tax benefits and the capital appreciation, which is incredible. And this single move can put you so far ahead of your peer group in the early stages and really build your wealth early on. So this is what we believe is a great strategy for those just starting out in real estate. And you know, Robert, a lot of people listen to Dave Ramsey and what he has to say about going out and making sure your first home, you go buy it out, you put as much down as possible, then you spend $2,000, $300,000 of your hard-earned money over the next decade, paying it off, tying up all of that money inside of this single-family home, which isn't producing any income for you.

We're instead telling you to go a different route, something where you can still live, but also a way that's going to produce income for you, not only while you live in it, but this could even be thought of Robert as a stepping stone to building out a larger real estate portfolio throughout your life. I mean, in your 20s, if you go out, for example, I have a friend named John Erringman. He's also a content creator, Johnny Finance. He lives in Cincinnati, Ohio, Robert. And I think when he was 24 or 25 years old, he bought a duplex. It was about a quarter million dollars.

He lived in one half. He did it with low interest rates during COVID. And he ran it out the other half. Well, now, you know, he's gotten married. He wants to upgrade his lifestyle a little bit. He's making a little bit more money. And so he has completely moved out of that first duplex. He now has two units, right?

Both sides of the duplex that are paying him money, covers more than the more. You've seen the capital appreciation, to your point, the tax write-offs, all the cool stuff that comes with that. And now he's ready to start upgrading his lifestyle a little bit and go into that next duplex or single-family home. Now that he has something that's working for him with his money and paying him every single month. So that's the kind of mindset shift we want people to make. It's like you can either put all this money into a single family home and live there, which is cool, or you can still live somewhere and have that same place pay you. We want to always be thinking about ways to make money with our money and putting our money.

to work. Yeah, that's a great analogy. And my issue is that Dave Ramsey's math just ain't math. We use that term all the time and it just isn't because we always talk about velocity of your money. And if I can make over here 10, 11, 12, 15% with my money and over here I can get a mortgage for 5 or 6% even right now 7%. I'm still going to have the positive arbitrage over here. So for me, I am never paying down a low interest mortgage. And for so many people that bought homes during COVID for the two, three, four percent mortgage, that's even worse advice. Because if you're sitting on a three or four percent mortgage, which we may never see those rates again, and you can go over here in the VOOs that we talk about in the SPYIs and the QQs, if you can go over there and make 10, 12, 15

percent, all of that positive arbitrage is going to you and not someone else, because what most people don't understand, sounds cool to say you own a home, sounds cool to say you have all the equity in the home. But guess what? You can't do anything with that. equity. So it's an opportunity cost that's just sitting there doing nothing. Now, is it accumulating? Sure. That is true. But if you take that same opportunity cost with that money and get it working in the markets, you're going to be so much further along in your financial journey. That's why we always say when you're first getting started, please house hack first because it gets you into real estate without tying yourself up and really locking you down and not being able to make moves. So that's why we like

hacking first. And there are so many duplexes, triplexes, even a quadplex if you want to go that big, but start with a duplex. There's so many out there again that are between this $300,000 and $500,000 range. You go put $20,000, $25,000 down in a couple years when you can afford that or maybe even in your late 20s, who knows what your plan is. But that's going to be a stepping stone for you to now build out a real estate portfolio that's going to be paying you for the rest of your life. The rest of your life, Robert. All right, Robert, let's move on to point number two, the middle. stage. You're finally starting to hit stride in your career, no matter what line of work you're in. You got the job you're happy with, or maybe you even started the company that you've been dreaming

of for years. Now, it's go time. So starting with some financial action items related to your career that you can do right now. The first one is everyone should be contributing to their 401k up to the match so they can receive the free money that comes with the match, right? We always say up to the match no matter what it's invested into because that's free money the contribution will come out of your paycheck before you even see it making it sort of like this forced savings account that will pay you dividends in the future when i was 22 23 24 years old working my 9 to 5 job i was like man i really don't want to contribute to my 401k this is like an extra 300 bucks a month but i guess i should do it right i guess i should and when i finally left that job robert i had 20 grand dude i had 20 grand in there and just like

two and a half years. It was insane. So I think that's an awesome financial action item everyone can do right now in their career. The second financial action item everyone can do right now as well is not to make the mistake of having too much money withheld from your paychecks every pay cycle. Let me say that again. Don't make the mistake of having too much money withheld for taxes during your pay cycle. You do not want a massive tax refund in April. You don't want that. People make this mistake all the time because they think they're doing something right by having the government pay them back a bunch of money at the end of the year. No, that's not the case. The government is holding on to this extra tax money that you earned throughout the year and they're not paying you

at dime and interest to hold on to it. We want that money in our pockets working for us, invested. We want that to be used toward building our base. Now that I've shared a couple of my favorite financial action items as it relates to people's careers, Robert, I want you to share some highlights regarding hiring and firing people as you've run businesses with hundreds of employees throughout your long career. I would say first and foremost, the most important thing for everyone listening and everyone you share this episode with is to understand one thing. You have to remember that your boss might be acting like your friend, giving you all the high fives in the beginning. Everything is going great.

But that can turn on a dime and you can find yourself unemployed overnight. If the economy turns bad or the company has financial issues, who knows? So it's always so important for you to keep your eye on the prize and the prize is you. You see it all the time where people talk about every six months. Put yourself out there. See what you can do internally to see if you can move up in the company. Put offers out there externally and see if you can find other better opportunities. Because we always hear the story.

and we see the memes about it that if you, something happened to you, your company would replace you in 48 hours and move on from your job. So it's so, so important for you to always understand and know your worth and always be accelerating your job, whether that's increasing your skill sets, keeping up to date in your skill sets. Something that's been going around a lot lately is AI is not going to take your job. The person that's better at AI than you is going to take your job. And this really illustrates what it means to stay on top of your skill sets. Because if you do and you can fill those positions within your company or a new company because you're ahead of the curve when it comes to skill sets, you're always going to have upward momentum in your salary and in your compensation packages.

This is so, so critical. Too many people stay loyal to companies that are not loyal to them. And I don't want you to fall victim of it because of the fact is the other. upside is just not going to be there for you long term unless you're with a startup that's going to give you a piece of the company because at the end of the day, they would fire you or replace you in a second for a better offer and you need to be looking the same way. I completely agree with this advice, Robert, 100%. The play devil's advocate, a piece of advice I got from one of my old bosses when I worked at this multi-billion dollar healthcare company. He was about 10 years older than me. So he was kind of

where I wanted to be in 10 years. And the advice he gave me was, to find someone at your job, if it's a boss, a mentor, whatever, and ride their coat tails. What he said was, for example, his mentor was about 15 to 20 years older than him. He was a decision maker, right? He was a hot shot and he was rocking and rolling. And so he said, let me work as much as I can around this guy. So if he jumps to a new job, he's going to see me as invaluable and ask me to come with him. And that's exactly what happened. So he was this analyst for, you know, one of these C-suite decision makers.

I think it was at Humana. And then the guy at Humana became the CEO of the company I worked for and pulled the analyst with him and then gave him a VP role right off the bat. And so he was sort of riding this guy's coattails from one job to another. And I totally agree. Your job, you know, these companies, they're ruthless. If they got to do layoffs, if they got to do budget cuts, like, you're on the chop block, time to go.

I can give you all some stories about that, especially with my girlfriend. But I do highly want to encourage people to find that version of themselves. that they want to be in that 10 or 15 year period. And if it's with a boss in or out of your department, a mentor, maybe they don't even work at your company, but kind of put yourself around them a little bit more. And if they do job hop to another company, let them know, hey, I'd love to come work with you at this new opportunity. Now, speaking of that, Robert, the second thing I want to mention, too, just to really lay in your point here, company is going to get rid of you so quick. You can even blink. I mean, my girlfriend was working for a company back in 2022, and she was rocking and rolling,

five-star performance reviews. Everything was going great. And then she randomly got called in on a Thursday, right? Whatever it was. And the CEO and the head of HR were there. And he just said, sorry, we got to lay you off. We're doing budget cuts. You and the whole other marketing team are gone. We don't have money for you anymore. Thanks so much for your time. See you later by. Here's, you know, three weeks or four weeks of severance. Good luck. And this was after you're doing great. We can't wait to promote you. We love you. You're awesome. And it's like, sorry, see you later by. Right. So just want to really nail on this point to your kind of perspective here, Robert is that you should always be sharpening your skill sets, keep your resume up to date. And

this sort of second point really leans into that, which is networking. Right. Networking is not just a meme we hear in college and high school and after, right? I can say with certainty that my business has grown tremendously over the last two or three years because of networking. Now, when you're employed and you're working out at a company, networking might mean attending maybe some mentorship programs or different workshops around town for me. for example. I worked at a healthcare company, so there was sort of this mentorship program called leadership healthcare. We'd meet every other week. We'd all go get coffee and lunch and I'd get to network with people there. It was an awesome opportunity. I met a lot of friends. Maybe that is even taking some

competitors out to lunch. You want to be friendly here. This isn't like business. Networking is being personable and just making new friends that also happen to work in the same field or industry as you. So when I was working up my corporate job, I was always meeting people for lunch, for coffee, you know, beers after work, whatever it was, not just to learn about, again, their job, but about them as a person. And here's what I would do. This is the hack. Make an Excel spreadsheet with a couple columns. The first one should be the person's name. The second one should be where they work. The third one should be where you guys met for drinks or breakfast or whatever it was. And the fourth one should be something interesting that they were working on that you can follow up about in, let's call

it three or six months when you want to reopen that door for a conversation, right? Oh, you know, last time we talked to you were working on this project about ABC XYZ. How'd that go, by the way? Did you able, you know, were you able to hit that deadline or do whatever you wanted? Wow, Austin, thanks so much for remembering. Yeah, dude, I was able to do that. You want to go get beers and talk about it? Sure, right? That's kind of what we're talking about here with networking. It's not just adding someone on LinkedIn. Networking is being personable. But speaking of adding people on LinkedIn, Robert, we talk about all the time the cold DM effect, right? People write off how powerful a cold DM can be sometimes.

And even on LinkedIn, right, especially if it's just really somewhat random, sending them a cold DM can turn into a coffee chat one morning that could turn into a job opportunity the next. It really is so powerful of a technique. So I'm going to give you a wrinkle on your hack that has been just incredible for me for the past 25 years. Whenever I go to a networking event and I meet someone and we meet like 30 people in a 24-hour period and everyone's like yeah let's exchange numbers and you leave and you can't remember who they were or how you met them or why here's what i do when i meet them and i get their phone number

then i immediately when i'm talking throughout i take notes that they don't know i'm taking of what they're doing what they're working on what they're excited about and then i take a selfie with them and i make that the profile pick because then i can remember in the contact who they are what they look like so I have the recollection, that has just completely been game-changing for me over the last 25 years. And another thing I do is I have an assistant who will find out their birthday through whatever channels, whether it's LinkedIn or whatever. And then we have an automated birthday card system that goes out to everyone in my contacts, all of like the top 100.

People are blown away when someone as busy as me sends them a birthday or a Christmas card that's not pre-stamped. and she just gets them all together and I sign them. Just such an incredible hack. And it's those little tiny things that set you apart that might help you get that next VP role, get that advancement in the job because you're personable and people see that you're out there hustling and putting in the work. We all hear the term, your one meeting, your one event, your one email away from a totally different life. And it is totally true. You know, something else, Robert, as we're just kind of jamming here, that I think is really important.

is know how to send a really good email to. Know how to articulate your thoughts via email. That is such an underrated superpower. Another underrated superpower was my old boss. And there's Canva. There's a lot of other things today. But back in 2017, 2018, there was only PowerPoint, right? And this guy was a killer at PowerPoint.

So figure out your superpower. Figure out your superpower as a recent college or high school graduate and lean in on it. Because I promise you, if you are really good at one thing or another and your boss or peers can see that, they're going to absolutely favor you when it comes to you starting that next project or giving you the promotion or whatever that might be. So it is, man, God, what a fun episode this has become. There's the oldest term in the book. And I don't know for the youth out there if they've ever heard this, but it is absolutely true and somewhat annoying. The squeaky wheel gets the grease. So when you're in that big corporation and you're trying to show people that you have initiative and

drive and hustle, that squeaky wheel kind of analogy, really does work. So let's get into point number three. You have the playbook. Now it's time to execute and retire a multi-millionaire. So we're going to lay the groundwork. Things are rolling along nicely, but there's going to be countless distractions that will delay and get in the way of you retiring a multi-millionaire. Do these two things religiously and you'll be just fine. So let's get into number one. Build and stick to the honest budget. This is exactly what it sounds like. You need to know how much money is entering and exiting your bank account every single month, where the wiggle room is, and then automate your investing as much as possible so you can stay consistent.

You hear us talk about this all the time, but so many people, even in their 30s, 40s, 50s, and 60s do not do this. They leave investing to hapestance and they don't automate it. Kind of like that 401k that comes out of your paycheck, the more you automate money away from you that you're getting active in getting that velocity on your money, the better off you're going to be. And something else, too, as people are building their honest budget, obviously we have a budget template in the show notes below that you can go download and use. But a couple other of our favorites, you know, we really, really like co-pilot. A co-pilot is an awesome application. It's not free, you know, go pay the 20 bucks, whatever it is for it. But it is so worth it because

it allows you to see all the different spending categories that a normal person out there your age would have, you can in real time that will look at your, you know, debit card or credit card, whatever's hooked up to it and it will automatically siphon and categorize things that you're spending in real time. So in case you forget something like just it does it for you automatically. But I remember Robert, when I was 23, 24 years old, 22, right? And I was, I was making my salary. And I was like, okay, I've got this money. Like, how am I going to spend it? How do I, what's going on? How do I do this? There's a sense of relief. You can't even feel like you got to raise after you sit down and you open up your bank account you open up your credit card

statement you open up everything that you spend money through and you look down and you write it all out in paper on a yellow pad or a notebook whatever you have or written it up in your in your excel workbook here but you feel like you got to raise and you have the sense of relief and clarity because you're like okay i can do this i've got 4500 that comes in every month or 3200 that comes in every month and i got to pay this rent i understand my fixed costs and my variable cost. I know how I can find wiggle room here. I don't need to go buy those shoes because what I really want to do is put it here. Oh, yeah, I can go upgrade to this now because I've been saving for the last couple of weeks or months or whatever it is. It is a relief. So once you create this honest budget,

and Robert, tell people why we actually call it the honest budget. Yeah, I think we coined that phrase maybe a year ago and we should trademark it and we definitely need to because I see people's budgets it's by the dozens every single month for people that I'm trying to help with their financial education. And it's remarkable how many people say, yes, my budget is complete. And then I look at the budget and I'm like, I don't see anything for the dog treats. What about the nails? What about the haircuts? What about the weekend trip to the farmer's market where you paid cash for the cool flowers and the granola bars? People leave out so many pieces of their budget. So we just changed it a little bit to the honest budget because the more you lie to yourself and the more you lie to us, the people

that are trying to help you, the worse off you're going to be. And that is the origin of the honest budget and why it's so important. So now before we jump into the second action item to retire a multimillionaire, we have to talk about the market volatility that comes with it. Market volatility likely isn't going anywhere. However, you can still diversify a portion of your overall portfolio with historically risk-reducing assets like contemporary art. And you won't find a better opportunity than with our sponsors at Masterworks. Masterworks is the first art investment platform that buys blue-chip paintings, securitizes them, and allows you to invest in shares.

This is ill-liquid, albeit speculative, asset with a high floor and ceiling, and the billionaires know it. Asset managers know it as well. Even the biggest banks in the world collect it. Now you can get in from the palm. of your hand. There are over 930,000 users that have joined the Masterworks platform, and this includes some pro athletes, some small business owners, and all without any art knowledge. Because since inception, they've had 21 exits, each of them individually delivering a profit to their investors.

Not counting works that they're still holding, they've distributed over $55 million back to their investors in the form of proceeds. And when you're offering work from artists like Picasso, Bosque, yacht and Banksy shares can run out in a hurry. But in honor of the relationship we have with them, Rich Habits podcast listeners can still skip the wait list and start investing today by going to Masterworks.com slash rich habits. Masterworks.com slash rich habits. And as with any investment, past performance is not indicative of future returns. Investing involves a risk. Important regulation aid disclosures can be found at masterworks.com slash CD. And the reason why Robert and I really like Masterworks, even if you're in your 20s and you're building your base, right? Once you hit that 50,000,

$70,000, $100,000 of money total invested, it's like, wait a second, I want to diversify a little bit. I mean, I've got, I think now, a couple thousand dollars into the Masterworks platform via the Basquiat paintings that I've invested into. So, you know, Masterworks, in our opinion, is not just a way to diversify, but it's a way to kind of hedge your portfolio against some volatility that comes with becoming a multi-millionaire. Yeah, I love it. And we talk about diversity all the time. And you know, a lot of the fake gurus out there are going to tell you to go all in on one thing, you know, whether it's real estate because they're selling you a real estate course or whatever it may be. And we just don't agree with that. We think that you should always have diversity, especially after building your base, because it puts you

in a position that if one sector goes down the toilet for a while, you are not going to get wrecked in these investments. And that's why we love diversity. Okay, let's talk about point number two. Increase your velocity with money as you earn more throughout your life and career. Think about investing as a percent of your total income versus a flat dollar amount. Do your very best to not let lifestyle creep continually eat away your opportunity, stealing from what you can afford to put away monthly. This is so critical to understand because this is why we want everyone to know their debt to income ratio.

We want to see that 15, maybe 20 percent of your net monthly income going towards your savings and investment. But if you don't know what that is and you go, oh, I'll put away 100 a month, 200 a month, 500 a month. And that might be way below the amount we'd like to see monthly based on your income. This will kill your lifetime ability to earn and build your wealth. So it's very important to know what that is. And that's why we want to go as a percentage of total income, not a flat dollar amount monthly. Especially as you mature in your 20s and in your 30s and throughout your career, right? Like, we don't want you to stick to, you know, it's cool to start your Roth IRA with 20 bucks. It's all you got. That's fine. Like, get started. We're here for that.

But as you turn 28 or 32 or 36, right, and you're making 80, 90, $150,000 a year because you're smart and you're college educated or, you know, you're a hustler and you're making more money. Don't stick to $100 a month. Don't stick to $200 bucks a month, right? Really scale that up with your income, right? So again, be thinking about investing as a percent of take-home pay, not flat dollar amount. That's our biggest takeaway for becoming a multi-millionaire throughout your life is do not let lifestyle creep. You say, oh, wait a second, I just got a raise, Robert. I'm going to go buy a newer car. And with this new car money that I could have put to investing, I'm going to have a higher monthly payment on my depreciating asset. Or I'm going to go

finance a new kitchen for the house because I think it's good and I want to do this and now I've got to pay it off for the next 10 years. Or I want to go do this or that? No, no, no. Those things can happen we're not saying not to do those things but what we're saying is you should have a plan for those things they should not be impulse emotion driven decisions what you should be doing is as you make more money throughout your career you should take a percentage of that extra money you're making and invest it toward your future that's how you will retire a multi multi multi multi millionaire throughout your lifetime yeah lifestyle creep happens every single day and you don't even realize it right in front of you it's this vaporous matter every single day

You're looking at your checking account. You got that $800, the $2,600, the $5,900 bucks sitting there. And you think, oh, I can go ahead and click this little button and that $200, that $800 item can just show up tomorrow. Guess what? That's lifestyle creep. It might not seem like it because you think lifestyle creep only means buying the new car, buying the new house. But guess what? Buying the new iPhone when your one-year-old model is fine is lifestyle creep as well.

That is why we always preach to have your money spoken. for and make sure you always have velocity on your money because if you don't, you will always live beyond your means and you won't get to the place you want to have a comfortable retirement. Mike drop. Boom. Grads, we are so very proud of you and we cannot wait to see what incredible adults you turn into over the coming years and decades. Send us a photo of you at your graduation via email at rich habits podcast at gmail.com and we'll pick five of you and we'll send you $100 to get started on your investing journey. This goes for parents too and you must actually be in the picture,

which means no Googling fake grad picks to try and scam us out of our generosity here. We want to help the youth. We want to help the youth get invested. So leave the money to them. But Robert, what a great episode. We're so excited for our grads to be now hitting the workforce. They're excited as well at Imagine. And don't forget, we've got a couple things coming up. First one is the Rich Habits newsletter. If you're a recent graduate, you want to stay up to date on personal finance, business, investing, things like that. Very picture-focused newsletter. Head on over to the description in the show notes below.

There's going to be a link to subscribe to the newsletter. We already have 40 plus thousand of you that read that every single Thursday. Secondly, we have a Options Trading webinar with our friends at public.com taking place on June 4 at 4 p.m. Eastern Time. We have limited seats. So if you've not yet, check that out. Go register. It's completely free.

It's going to be a blast. We're going to learn about long calls, long calls. long puts, call debit spreads, all the fun stuff that you don't know and I don't know either. We're going to learn together. It's going to be a lot of fun, Robert. And finally, again, if someone sent you this podcast episode, send it to a friend. If you're listening right now as a graduate and you care about your best friend and you're like, I want my boys or all my girls.

I want my friends to be wealthy. Send this episode to them because this is as straight up as it's going to get. We told you what to do. We gave you the playbook, the action items, the 1, 2, 3, ABC. Send this to them on Apple, on Spotify. YouTube, wherever you're listening or watching right now, share this episode with them, say, I care about you in your financial future. You got to do these things with me or hold me accountable, right? Go find yourself an accountabilla buddy. I love it. I hope you just made that up.

Yeah, I think about it all the time for this episode. It gives me goosebumps because I think back in the day when me and two of my friends all made the same amount of money, we were like 19 years old, we worked at the same company, yet they never had any money and I always had money. And then I equate it to the days of now, the modern era, where you go out with your buddies and they're always sucking drinks off of you and getting you to pay for their lunch and saying, I'll Venmo you back and they never do. Share this episode with them because if you help them with their financial literacy and you get them rolling and dough like you are, then you won't have to worry about them mooching off you anymore and it'll put you in a better position. Yeah, that reminds me,

Robert. I've got two, three friends here in Nashville that like every month we just like, all right, boys, how much are we invest in the markets this week? What are we investing in? Who's excited about this? Right. Oh, nice. Dude, you just hit, you know, 40 grand in your Roth diarrhea. It's so exciting. Or, oh, your brokerage account just hit $1,000, dude. I'm so excited for you. Or, oh, you paid off the credit card. Congrats, man. Find your circle. And make this episode be, you know, finding that circle. Send it to your friends like, all right, guys, we're graduated. Time to focus on getting a bag, baby. 2024 year, getting a bag for these college and high school grads. Could be more excited. Everyone, thanks so much for hanging out with us on this episode of the Rich Habits podcast.

As always, leave us a five-star review. Have an awesome long weekend. And we will see you next Monday. Thank you.