The Personal Finance Podcast - The Millionaire Money Rules (Get to $1M Faster!)

Starting point is 00:00:00 On this episode of the Personal Finance Podcast, the millionaire money moves that you need to know. What's up, everybody, and welcome to the personal finance podcast. I'm your host, Andrew, founder of MasterMoney.com. And today on the Personal Finance Podcast, we're going to be diving into the millionaire money moves. You need to know to get to $1 million faster. If you guys have any questions, make sure you join the Master Money newsletter by going to mastermoney.co slash newsletter. And don't forget to follow us on Apple Podcasts, Spotify, YouTube or whatever podcast player, you love listening to this podcast on. Now, my passion

Starting point is 00:00:49 and my goal is to teach as many people as possible how to become millionaires. And we have said this a few different times that I want to create a million millionaires just from our financial education. And I think one of the most important things that you can do is understand some of the things that are truly going to move the needle for you. And that is the reason why we have this episode today is we want to teach you the millionaire money rules that can drastically change your finances. That's what each and every single one of us wants to do. And so I'm really excited to dive deep into this episode.

Starting point is 00:01:23 I'm excited to go further with you guys on this one. So without further ado, let's get into it. Millionaire money rule number one is to spend only on your values and do not compromise. Now the goal when it comes to learning how to spend money is not to spend as little as humanly possible. People who spend as little as humanly possible who don't decide what to do with those extra dollars typically are not that happy. But instead, we want to make sure that we are spending aggressively on the things that we absolutely love to spend money on and cutting out everything else we don't like to spend money on. Now, you may be saying to yourself, well, I don't like paying my electric bill. Do you like having the lights on? Do you like

Starting point is 00:02:08 have an air conditioning? Do you like to have, you know, warmth coming into your house during the winter? Sure you do. So you absolutely value something like that. Or you may be saying, well, I don't like paying my rent. Well, I think you really do value having a roof over your head. And so it's really comes down to some of the things that you truly, truly value, but cutting out those things that you absolutely hate. So for example, a lot of people will go out and they will begin to buy the bigger house, but they don't really have a reason why they're buying the bigger house. They just feel as though, oh, I want some more space. Maybe when I have more room for activities, more room to place your drum set. But in reality, what you do need to realize is you have to have reasoning behind that.

Starting point is 00:02:49 Or some people go out and they spend more on the car they think they're supposed to have. Maybe you're driving a 10-year-old car and people have told you, oh, why don't you go and upgrade that car. It's looking a little old and so you feel as though, well, maybe this is just what I'm supposed to do. And so you go and upgrade that vehicle. But instead, someone with a millionaire mentality, they're going to go out and they're going to decide, no, I want to spend more on the things that I value. So I personally don't care a ton about what car I drive. I drive a 2018 F-150 currently. And for me, I am completely happy with that vehicle. And I don't want a luxury vehicle. I don't want some fancy vehicle. I would rather spend those dollars on other things. I would rather

Starting point is 00:03:32 spend those dollars on things like convenience. I would rather spend those dollars on things that I truly value. And so for me specifically, spending more on cars just does not make sense. For you, you may absolutely love spending money on cars, but you want to cut back and maybe you live in a smaller square footage house. Or maybe you live in an apartment that isn't in the high rise, but it isn't just a normal standard apartment somewhere else, or maybe it's a duplex. And so you feel as though, you know, you're willing to make the trade-off because you love cars. Maybe you're a person who absolutely loves to travel and all you want to do is travel and spend more money on travel and less on everything else. And you are willing to actually live in a sprinter van in order to be able

Starting point is 00:04:14 to travel. That is another example of someone who is spending more on their values and less on the things that they don't really care about. I want you to lavishly spend on stuff you love. This is how you find fulfillment, and this is how you find enjoyment with your money. Let me give you some other examples here. Another example of something that I truly value is reducing risk for my family. I like to make sure that my family doesn't have a ton of risk on hand when it comes to financial circumstances. And so that is why I like to build up cash in my emergency fund. That is why I like to have cash on hand and invest dollars into my taxable brokerage so that I have flexibility with some dollars. And so that I have flexibility with some

Starting point is 00:04:54 when I need it. That's why I like to invest in the proper insurances to make those insurances are in place so that if anything were to ever happen, we are protected. And I think that is some of the things where people need to reframe the way that they think about what they are spending their money on based on their values. Now, for a lot of you, there are some value-based thing that I think a lot of people overlap with. It's going to be things like convenience where if you feel as though, hey, I would rather, you know, as my income increases, I'm making more money, I would rather somebody else do the lawn care, or I'd rather have somebody else clean my pool, or I'd rather have somebody else clean my home once a month. These are all wonderful things to consider, especially

Starting point is 00:05:37 as you begin to get busier. Or maybe you really do value that travel. I think that's something most listeners that I have talked to really do value is travel, having that convenience in place, but you could care less about some other things. And so I think, you know, understanding what you value is super important. Here's what I would recommend for many people out there. If you've never done this exercise before, take a piece of paper out and draw a line down the middle and rank in order the things that you actually value versus the things that you spend money on currently that you don't value. So what could be some of those things that you spend money on currently that you don't value? Maybe every single time you go to the store like Target or Marshalls or T.J. Max and you know who you are,

Starting point is 00:06:18 you go into those stores and you walk out with 10 different things that you didn't plan on buying. Well, that could add up to $100 every single time you do something like that. And when that happens, $100 could be going towards something you actually value. Maybe you are high on your list right now as you want to get a brand new pair of sunglasses. Or maybe high on your list right now is you want to get a really nice winter coat. Well, if that's the case, then redirecting that $100 towards the thing that you actually want would be beneficial for you. or maybe you are really stressed out because you're in debt and you want to redirect those dollars towards your debt. That's another really beneficial thing that you could be looking at.

Starting point is 00:06:55 I don't want you to feel deprived with your money. A lot of people feel deprived with their money because they direct their dollars towards the wrong place. So learning the skill of spending means understanding everything in your values column and understanding that everything not in your values column needs to get cut out. Stop spending money on crap you don't care about. Stop spending money on crap you don't care about to impress. people you don't even like. That is a big, big thing I see time and time again. Just because your neighbor's got a new car or just because your neighbor got a new lawnmower or just because your neighbor got new landscape lighting in doesn't mean you need to get those things if you do not evaluate. If it's not

Starting point is 00:07:36 something you truly want, then you need to understand that and you need to understand how to get over the hurdle of thinking that you actually want it and not allowing yourself a cooling off period. And that's a big key. If you've never done a cooling off period before, it's typically, hey, 24 hours for anything, you know, between $100 to $500. If it's above $500, wait at least a week. And if it's above $1,000, wait at least a month before you make that purchase to ensure that it is something that you actually want. So I think for many of you out there, making sure that you are spending on your values is going to be number one. Number two is avoiding debt like the plague. Now, there is good debt, sure, and there is bad debt. But for most

Starting point is 00:08:16 people out there, debt has a very strong way of stealing away your financial future. And if you feel as though, you are currently in credit card debt, or you are currently have a personal loan on hand, or you currently have a he lock that you utilized for, you know, home repair or something like that. Well, we need to make sure that we get a debt paydown plan going. We need to understand how to get rid of this debt because debt, especially high interest debt, any debt above a 6% to 7% interest rate, is a pants on fire emergency. This is going to eat into your ability to build wealth. This is going to steal and rob some of your income from you where you can't take those extra dollars and put them towards your financial freedom. Instead, you are having to pay the debt company in order to be able

Starting point is 00:09:01 to make ends meet. You have to go to work every single day. Be at a job you don't really enjoy. Drive all the way back home. Get everything ready for the next day at work. Drive through traffic to all these different things you don't want to do. Just to be. be able to pay your debt. The borrower is a slave to the lender. And this is true because in many scenarios, you have to go to work so that you can make your debt payments. If that's you, I don't want you to have to do that anymore. And so making sure that you have a plan in place on first how to manage your current debt and how to get that debt paid down. And secondarily, how to avoid debt in the future is going to be really, really important. This is why students in Master Money Academy,

Starting point is 00:09:44 one of the first things we tell you to do is if you are in high interest debt, send me your list of high interest debts and I literally give them a debt paydown plan inside Master Money Academy. And this is because I want you to have a foundation in place that allows you to be successful with your money and on track to becoming a millionaire. And if you will never be on track to becoming a millionaire if you're carrying credit card debt or personal loan debt, and you are not having a plan in place to pay that off. And so debt can rob you of your wealth building ability. and I do not want that to happen.

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Starting point is 00:13:57 the Wayfair app for all things home. That's W-A-Y-F-A-I-R dot com. Wayfair, every style, every home. Let's say, for example, that you put $10,000 on a credit card and it has a 24% interest rate. This is a really common interest rate right now. Again, I see tons of different debt paydown plans. Many people who have a credit card are right in the 24% interest rate range. Some of them are even higher. Some are as high as 27%. I have seen some in the 30% range.

Starting point is 00:14:32 And so I see this every single day in Master Money Academy where people are paying this month. Well, at a 24% interest rate, you are paying roughly 2%%%. 2% per month in interest on this dollars, okay? So in the first month alone, if you have a $10,000 balance, you're going to have about $200 worth of interest that you are going to be paying on top of trying to pay back those dollars. So if you pay $250 per month, only about $50 worth of that is going to the actual debt.

Starting point is 00:15:03 And I think most people don't realize that this is what is happening. The majority of the payment that you are paying towards credit card debt, is not going towards that debt if you were only making minimum payments. So this means that you could be sitting in the credit card company $250, and your credit card debt only goes down $9,950. Now, let's say, for example, you can't make the payment on your credit card debt, and somehow you've just decided, well, I'm not going to pay this. At a $10,000 balance with a 24% interest rate,

Starting point is 00:15:32 this would grow to roughly $20,400 in just three years. So if you bought $10,000 worth of just random stuff, all of a sudden, that is going to be $20,400 that you are going to owe on your credit card. This is why credit card debt is so destructive to your finances because you are working and you are grinding and you are on this hamster wheel only to pay off a micro portion of what you are actually trying to pay off. And instead, you are spending all of your time working your butt off, giving the credit card company hundreds, if not thousands of dollars, and they are only putting a small portion of it

Starting point is 00:16:14 towards your principal. My friends, do not do this. Do not allow credit card debt to make you build wealth in the wrong direction. Do not start going backwards. Instead, getting chunks of money and putting it towards your debt is really, really important. Now, one thing I would tell you to do is you can also make micro payments. This is one of my favorite strategies when it comes to debt is throwing small amounts of money at your credit card debt. So let's say, for example, you forgo a $10 coffee. Well, instead, take the $10 that you would have spent on that coffee, send it towards your debt. Make debt payments every single day in addition to your normal debt payments. And all of a sudden, you're going to be chipping away at the old block and slowly just hacking away. Let's say, for example, you see your debt

Starting point is 00:16:54 as a giant log, for example, and you've got your axe in place, which is what you are throwing towards that debt. And every single time that you decide, I'm going to make a micro payment towards that debt, you're taking a swing of the axe into that branch of that tree. And you're trying to knock this tree down so you don't have to worry about debt anymore. And every single extra payment that you throw out that debt, boom, you're taking another swing of the axe towards that tree. And you're chipping away. And you're chipping away. And you're chipping away. And eventually that tree is going to come tumbling down. And it is going to be completely gone. And you will not have to worry about debt anymore. And I,

Starting point is 00:17:31 promise you that and that's why it is so impribly important again if you want a debt paydown plan in master money academy you can join master money academy uh by checking the link down below in the show notes millionaire rule number three is to invest as much as you can every single month so there's no magic millionaire investment but we can use math to figure out how long it's going to take you before you can become a millionaire if one person invests five hundred dollars every single month and another person $3,000 every single month, the second person has an enormous advantage in comparison to the person who is only investing $500 every single month. Why? Because increasing the amount that you are contributing to your investment accounts is going to accelerate your path to growth, especially when

Starting point is 00:18:18 you are in the early years. If you haven't gotten to your first 100K or your first 200K yet, this can be a dramatic impact on your wealth building ability if you are trying to build a million dollar portfolio. And so when I think about building out that million dollar portfolio, one of the first things I teach people to do is to tell them to put as much as you possibly can into the market as early as you possibly can. Because the more dollars you can get invested, the faster those dollars can begin to compound and the faster your dollars can work so much harder than you ever can. And so think of each and every single dollar as an employee. If you can get those employees to start to work for you, the more employees that are working

Starting point is 00:19:00 for you, the more revenue they can generate, the more profit they can generate for your portfolio. And so I want you to think about, hey, how can I get more employees into my brokerage account or my portfolio so that I can start to really get more production going inside my portfolio? Recently, last night, in fact, I did a presentation for a friend of mine, teaching them how to build out their portfolio with the portfolio pyramid. And this is something that is a reminder for a lot of you out there. When you are thinking through your foundation, just simplifying your foundation and focusing on your income so you can get as much money as possible into your first 100K and 200K is really, really

Starting point is 00:19:40 important. And then every single time that you get a raise, take a portion of that raise and put it towards your investment. Every single time you get a bonus, take a portion of that bonus, a chunk of that bonus, and put it towards your investments. every single time that you pay off debt, take what you were putting towards that debt and put it towards your investments,

Starting point is 00:19:59 at least a portion of it, so that you can start to grow the amount that you're investing. Every time you increase your income with a side hustle, take a portion of that side hustle and throw it towards your investment, or every time you eliminate an expense, instead of leaving it in your checking account and it disappears into the abyss,

Starting point is 00:20:15 why don't we just put and redirect those dollars towards our investment accounts? Because you want to ask yourself, How much can I redirect towards investing today? That's our ultimate goal is to get bigger chunks and redirect those chunks into investing. One of the things I do with a lot of coaching clients too is I will go with them. We'll sit down and we will do a spending audit. I have this beautifully built out spreadsheet that gives a spending audit.

Starting point is 00:20:41 And basically what we do is we take everyone's transactions. We put it into this spreadsheet and we will literally do it for you. Our team does it for you. They take your transactions. They put it into this spreadsheet. and then we go through there every single transaction and we say, hey, is this something that you want to hang on to or is this something that we can cut out? And then all of a sudden, you'll see the amount that they can invest start to and begin to grow. Because when we start to cut out expenses that are recurring or when we start to cut out expenses that they don't really value anymore, you start to see that number balloon. And if you can get the 10 to 15% in reduced expenses, you can take that 15% of your income and put it towards investments. That is a huge impact. For most people, it's a multi-million. dollar impact just by doing something like that. And so that's why I think for many of you, it is really important that you understand how to direct your dollars towards the things.

Starting point is 00:21:32 Again, coming back to number one, that you actually value. That is why it is at number one, because when you redirect your dollars, you understand where your dollars are going, it'll tell you so much more. Now, you don't have to be someone who is thinking about, oh, how do I do this all the time? No, you can do this with constraints. My co-host on our other show called your next dollar. Ryan Sterling does this all the time. Setting up constraints or setting up parameters is something where you can easily be able to redirect your dollars without having to budget every single light at them if you don't want to. And I think that's super, super important for a lot of folks out there is having the ability to be able to have these constraints and these

Starting point is 00:22:09 parameters in place so that you know how much you're investing every single month. And then automatically just automating those dollars every single time that you feel as though you've saved money you know, somewhere, then increasing the amount that you're automating to your investments is all you have to do, then you don't have to think about it anymore. You won't even notice the difference. And instead, those dollars are just going towards something else that's actually valuable to you. So really, really important stuff here as we keep going through this. All right. Number four is let's use broad-based index funds and ETFs. So when we're investing, using broad-based index funds and ETFs is a proven way to build generational wealth,

Starting point is 00:22:46 especially if you want to become a millionaire. You don't need to know which stock is going to tend you don't need to predict the next recession. You don't need to even know what the Fed is going to do every single month. But for most people, broad diversification into things like index funds and ETFs are the way to go. If you don't know what an index fund in an ETF is, I want you to think of it like a basket, okay? And in this basket, you're going to put all the best companies, all the best stocks in the U.S. stock market inside of this one specific basket.

Starting point is 00:23:11 Or let's say if, for example, you're investing into a dividend DTF. We'll imagine some of the top dividend companies all inside of the market. of this one basket and then you can just buy the basket instead of having to buy these dividend companies individually. That's exactly how an index fund and ETF works. It's basically something that pulls all the best investments together based on what you are trying to accomplish and puts them into one fund. And inside that fund, then you can buy that fund and have a big diversified portfolio of a bunch of different companies depending on what type of index fund and ETF you invest in. But the key here is not trying to find all those individual companies and individual winners,

Starting point is 00:23:49 you could just buy the basket. Ward Buffett explains it like this. Instead of trying to find the needle in a haystack, why not just buy the entire haystack? That's what index funds do, which is why he invests his family's money into the S&P 500 index fund. So then what happens is that your job becomes much simpler where you're not searching for the perfect stock. You're not searching for the perfect investment that's going to go up 200%. Instead, you just buy consistently, you stay simplified with your index and ETF portfolio. Then you, you're not. You're just, you're going to go up 200%. Instead, you just buy consistently. then you stay diversified and you leave it alone. You just automatically continue to invest every single month.

Starting point is 00:24:26 Your biggest advantage in reality is not the performance of the fund. It's your behavior. And so if you can automate this, you remove your wheelpower from the equation. And if you can get those dollars into index funds at ETFs, and you're proven long term. Just go look and research the historic returns of something like an S&P 500 index fund or something like VTI. Do your own research.

Starting point is 00:24:46 And you can see how those have performed over the, course of the last 10, 15, 20, 30 years. I use a 10% rate of return a lot of times when I use examples. And in fact, that has been low in comparison to what those have returned over the course of the last decade or so. Now, the past is not indicative of the future results that could be happening. But at the same time, it's all we have to go on. It's what we do our research on is past results. And so that's why I love broad base index funds and ETFs. Number five is your income is gasoline on the fire. This is money rule number five.

Starting point is 00:25:20 There are two parts to the wealth building equation. There is cutting back expenses and there is increasing your income. And there's how much you keep and there's how much you earn. The cool thing about this is, you can absolutely control your spending and you can begin to cut back your spending

Starting point is 00:25:35 if you feel as though you're overspending. But there's only so much that you can cut back, but your income has infinite potential. It can grow as much as you can, can possibly grow it. And that is what I want to remind each and every single one of you that increasing your income can dramatically supercharge your path to getting to your first million dollars and then getting to become a multi-millionaire, which most people want to become multi-millionaires, because that allows you to live off of your portfolio. And I want each and every single one of you

Starting point is 00:26:07 to become multi-millionaires. So if you can increase your income, say, by $20,000 and invest most of that increase, suddenly you're investing in additional $1,000 to $1,500 every single month. And if you do that several times throughout your career, you'll be able to change the math dramatically on how much wealth you can absolutely build. If you're investing over $1,000 per month, you will become a multimillionaire at some point in time, and you just have to focus on a couple of different things. Focus one on developing really valuable skills in the marketplace that you are currently in.

Starting point is 00:26:41 if there are skills that you feel as though you are lacking in, develop those skills, spend money to develop those skills, get coaching, make sure that you are doing the right things so that you know what to do next. It is really, really important. Listen, I always have coaches. I have coaches that are helping me constantly. Right now I have three different coaches for three various things. And I think one of the most valuable ways that you can spend your dollars is on coaches to help you through the process. Okay. Number two is learning how to negotiate your salary. understanding how to negotiate your salary and under putting a system together to develop salary negotiation, I think is super, super important. If you haven't done this before, we have multiple

Starting point is 00:27:20 episodes teaching you exactly how to do this. Make sure you check those out. We will link them down below in the show notes as well. Also, if your employer does not have opportunities for you to make more money, changing employers can't allow you to earn more. It has been proven over and over and over again that if you change employers, studies show that most people make 14% more by jumping ship to another employer. Again, making sure that your boss knows that you want the promotion, making sure that your boss understands that you want those promotions, and then communicating on how you can get those promotions is super important. Now, some other things that you can do is develop side hustles. We have a full series on side hustles that can turn into a full-time

Starting point is 00:27:57 income. We will link a couple of those down below as well, so you can check them out. But those are going to help you increase your income in ways that you can build outside hustles that can turn into a full-time income. I think that is the way to do it. Number six is controlling the million dollar money decisions. People love to obsess over $5 purchases or $10 purchases, but they ignore the things that really have the major impact when it comes to building wealth. These are what I call million dollar money decisions. Now, I did an entire episode. on this that we can link up down below in the show notes. But I want you to think about some of these million dollar money decisions on how they can impact your money. Because the reason why these are

Starting point is 00:28:39 so impactful is one, they are way more expensive than your pittily little $5 or $10 coffee that you get every single day. Stop focusing on stuff like that when you haven't taken care of the big stuff yet. Sure, death by a thousand cuts can absolutely sink your finances. But until you get the big stuff right, that stuff is going to matter dramatically less. So folks who are, worried or fighting, maybe you're in a relationship and you're fighting about the daily coffee or the daily Amazon runs that are coming to your front door and you're sitting in a house right now that is 50% of your income. Well, that's the real reason why you are not financially ahead. My relationship with money has changed a lot over the years. Early on, I thought building wealth was

Starting point is 00:29:24 about making more money. Now, I know it's really about having clarity when you know exactly where your money is going and whether you're on track, you make better decisions. That's one of the reasons I love Monarch. It's the personal finance app that tracks everything from your accounts and investments to your savings goals and spending so you can see your entire financial picture in one place. One habit that's made a huge difference for me is my five minute drill every single morning. I open Monarch, check my spending, investments, cash flow, and net worth, and I'm done in just a few minutes. It gives me confidence that nothing is slipping through the cracks. I also love the AI weekly recap because it'll flag spending changes, upcoming expenses, or shifts in my net worth

Starting point is 00:30:08 before they become a problem. Instead of reacting after the fact, I can make adjustments early. It really feels like having a financial advisor in your pocket. Write your own money story with Monarch. Use code PFP at Monarch.com to get your first year of Monarch core half off at just $50. That's 50% off your first year at monarch.com with code PFP. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it.

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Starting point is 00:31:44 Housing is the most important. It's probably the biggest money line item for most people out there. If your rent or your mortgage costs more than 30% of your income, you are over spending on housing. If you start to creep up towards 33 or 35%, I can probably tell you pretty quickly that you're financially stressed. And that, my friends,

Starting point is 00:32:04 is the number one area that you need to begin looking at. Reducing the amount that you're spending on housing down to 29, 28, 27% is super important. I like to keep my housing costs 20% or less. That is my goal usually. And that is really because I understand how impactful this can actually be.

Starting point is 00:32:23 Now, that is not something that every single person can do, but it is something that you should think about as you begin to progress on your wealth building journey. It's something to work towards. Now, if your housing cost is above that, we need to figure out exactly either how you're going to increase your income and or how you are going to fix that situation, which we can talk more about. Two, cars. Cars are the number one thing that you can just do some of the dumbest stuff with. It's a depreciating asset. It goes down in value over time. and people are buying cars and just recycling the payments over and over and over again. They have a massive impact on wealth and the opportunity cost based on your car payment if you just get a new car every three, four, five years is millions of dollars. Multi-million dollars is how much you're spending an extra instead of just driving the car longer. And if you drive the car longer, you're saving yourself millions and millions of dollars. Three, food's a big one for a lot of folks because they feel as that they don't spend as much on food as they actually do. once they start tracking how much they spend on food,

Starting point is 00:33:25 they are shocked over and over and over again. I have plenty of coaching clients, plenty of people in Master Money Academy who begin to track their food and then realize pretty quickly, wow, my grocery bill is high. Or wow, the amount of spending, eating out is really, really high. So that's another big one.

Starting point is 00:33:40 Child care. Not much you can do about this one because if you have to go to work and you have to make sure that your kids are taken care of it in an environment that is actually fit to take care of your child, this is not something you want to skimp out on whatsoever. So child care is a big one for a lot of folks in their budget and line item.

Starting point is 00:33:57 Just know that this is a temporary time frame and it's okay if you are in a season of life where you have a lot of child care costs coming in and you can't invest as much as you possibly want to. But don't start going into debt if you have child care on hand. Instead, you got to figure out some other solutions based on that. Fees is another big one. So investment fees are huge. A 1% fee alone can be multi-million dollar impact on your portfolio. So you need to understand the impact of fees. and make sure that you know exactly what is going on there.

Starting point is 00:34:26 Credit score is another one. If you have a poor credit score, it will cause you to have higher interest rates. Those higher interest rates over the course of your lifetime is a multi-million dollar decision. So making sure you have a decent credit score is all really, really important. So the millionaire rule here is to be relaxed about smaller purchases

Starting point is 00:34:43 until you have these big ticket items done. Now again, if you are buying just a bunch of random stuff that's adding up to $100 every single day, then sure, you're killing yourself by a death by 1,000 cuts. But if you really aren't spending much and you're like, I don't even want to buy myself my weekly coffee because I'm so stressed out about money, we'll look at some of the big stuff first

Starting point is 00:35:06 and make sure you're taking to account those things first. Number seven is to give every single dollar a purpose. So you may be seeing a trend here. When we're thinking about our spending and we're thinking about aligning with our values, we also want to make sure we know when a dollar touches our hands, when a dollar touches our checking account,

Starting point is 00:35:28 we know where those dollars are going. Now, this doesn't mean that you have to track every single penny that comes in because if you have automation systems set up, then you can do some really cool things with your money. But you should know what your money is supposed to accomplish and you should know if it's automated, where is it going to go?

Starting point is 00:35:46 Is it going to go into my savings buckets? Is it going to go into my money? investment accounts, is it going to go into my spending account so I can blow it on my brand new golf club or my brand new running shoes or my brand new yoga mat or my brand new whatever else you like to buy? Or is it going to my giving fund? Is it going to paying down debt? What is this dollar intended to do? Once that dollar comes into your ecosystem, you want to have a plan on how to move it around. And so if you don't know where your money goes at the end of the month, if you ask yourself, I have no idea where my money goes at the end of every single month.

Starting point is 00:36:21 This is a huge reason why. You need to have an understanding of where your dollars are going. And again, it doesn't take a lot of time when you have automation. We are in the age of AI, guys. We are in the age of AI. You do not have to track every single cent manually unless you like to do that. You can instead move money around automatically. And so it's not as hard as it used to be to be able to track that money.

Starting point is 00:36:43 If you use something like Monarch Money, for example, it's going to track a lot of this for you so you can redirect where those dollars are going and have an understanding of where those dollars are going. There's all kinds of tools out there that can help you with this, but you need to understand exactly where your money is going and build the systems to make it work. Number eight is to build money routines that fit your money personality. So we recently just did an episode and got so many amazing emails, so many amazing comments in this episode talking about the type A money personality versus the type B money personality. The type A money personality

Starting point is 00:37:15 likes to really get their hands into some spreadsheets. They love to budget. They love to do all those different types of things. Whereas the type B money personality would rather go do other things and not really have to think about their money all the time, but they'd rather just automate everything. So understanding which money personality you have, type A or type B, is really important.

Starting point is 00:37:37 And then once you can identify that, you can then make sure that you fit money routines that are going to fit your lifestyle. You might want to check your finances for five minutes every single morning to make sure you're on top of everything. Or you may want to have a weekly 20 minute money meeting. Maybe you want to review your net worth on a monthly basis

Starting point is 00:37:55 or you want to automate every single investment on payday. Having the correct money routines and framing them around your money personality is something you must do. Because the goal is to turn managing your money into something that is a routine rather than just some sort of constant distraction that you do at random times. If you have a routine in place, it takes six, significantly less time. It takes significantly less work because you know what you're going to do each and every single time. And it takes significantly less brain power. So let me give you an example of a money

Starting point is 00:38:25 routine that I have. Okay. One of the things that I do is I check my automations on a monthly basis. So typically, I run through my money routine on my automations. It takes me about 10 minutes every single month. And I just ensure that everything is taken care of. Another thing that I do is every single Friday, I actually go and pay off my credit cards on a weekly basis. I just double check, make sure those credit cards are paid off. I just like to have them paid off on a weekly basis. It keeps me on top of stuff. And so I will do that on every Friday. So there's little many money routines that fit what I want to do in my money personality. If you're in a season where you want to figure out exactly where every single dollar is going, I recommend doing a money routine like the five minutes drill where every single

Starting point is 00:39:01 day for five minutes. Maybe you do it at your lunch break from 12 o'clock to 1205, you categorize all your transactions in Monarch money so you know exactly where they're going. Or you categorize all your transactions in your spreadsheet so you know where they're going. That, my friends, is a really important thing that you can do to stay on top of your money. It takes you five minutes a day where you don't really have to think about it. In fact, once you get the hang of it and you get it all set up, it takes less than five minutes a day, honestly. And so really good systems are going to beat your financial willpower. And so you want to make sure you have the right systems in place.

Starting point is 00:39:31 Millionaire money rule number nine is to protect your wealth. So this means you're protecting your wealth with a couple of different things. One, cash emergency funds. Two, sinking funds. And three, the right insurance. So the emergency fund ultimately, we want to make sure that we have enough for six months of expenses. This is going to make sure that it protects you from any genuine, unexpected expense you have. We have covered the emergency fund many times in the show.

Starting point is 00:39:56 If you want to check out our episode on it, it is called the 136 method. Secondly, though, is sinking funds. We have been building sinking funds a lot more into plans. In Master Money Academy, we've been building sinking funds a lot more into my personal plan. And it's something I have been doing for years and years and years. where I will have a car repair sinking fund, or I will have a home repair sinking fund, or a travel sinking fund.

Starting point is 00:40:17 This just allows me to take care of some of the recurring expenses that I know we're going to pop up randomly all the time. It reduces stress, reduces anxiety when it comes to some of this stuff. And it doesn't mean you have to send a lot of money to these sinking funds, but it is something that allows you to send, you know, small amounts of money over time to a lot of these different sinking funds to allow you to just have these things build up slowly over time so that if a car repair pops up,

Starting point is 00:40:41 You've got your $800 to $1,000 right there. You can take care of it, boom, not have to worry about it whatsoever. So sinking funds of the second one. And third is the big one, insurance. Making sure that you have the proper insurance based on your income, based on your situation, based on your liability and the amount of liability that you have within your life is really, really important. Insurance is not something like an investment.

Starting point is 00:41:05 It is not something for you to think about in terms of wealth building. No insurance is there to protect. it is there to mitigate risk. That is what insurance is there to do. So health insurance, every single person listening should have health insurance. Auto insurance, if you drive a vehicle, you absolutely should have auto insurance. For example, my brother-in-law just got hit by someone who had no auto insurance and that person is in big, big trouble. Homeowners are renters insurance. You should have homeowners insurance even if that home is paid off. Okay. If you rent, having renter's insurance is really, really important.

Starting point is 00:41:39 Four is disability insurance. If you feel as though you becoming disabled could cause a lot of problems within your house or your family, then you need to look at disability insurance. Term life insurance is another big one. Policy genius is where I get mine. And term life insurance is a big one for a lot of folks out there, especially if you have people who depend on your income. If you have people who depend on your income, you need term life insurance.

Starting point is 00:42:01 So that's kids, that's a spouse, that's a business partner, those types of folks. And then umbrella liability coverage. This is something I have added to my arsenal as of recently. An umbrella coverage is important for a lot of folks out there. It is pretty inexpensive and it is something that you could get as your income increases. If you have a net worth that is rising, you have a couple hundred grand and or a million dollar plus net worth. Then looking into umbrella insurance, I think is super important because one event could cause that to wipe out your entire net worth. And you do not want that to happen.

Starting point is 00:42:33 All right. Millionaire money rule number 10. this is the last one, is your net worth is the scorecard, not your income. Now, we want to increase our income, obviously. That is the fuel to the fire, but this might be one of the most important money rules and one of the most misconstrued rules, is that income makes you look rich, but your net worth is what makes you wealthy. Someone earning $400,000 per year can still have almost nothing because they spend every single dollar. Whereas someone earning $120,000 per year, but saves and invest $20,000 plus, thousand dollars per month, they are going to become wealthy in comparison to the person who is earning

Starting point is 00:43:09 $400,000 per year. Now your net worth is simple. It's your assets minus your liabilities. That is what your net worth is. And if you track this regularly, maybe monthly, maybe quarterly, depending on what you specifically want to be doing, you can really watch the trend and watch this thing grow. I love when we start to work with folks and they're tracking their net worth on their balance sheet and they're doing some really cool stuff with it. Watching their investments grow, watching their net worth grow over time by just some of the tweaks that we make is so, so cool. It's one of my favorite things to watch. So making sure you track your net worth is super powerful. You can do this in Monarch Money. There's free tools like Empower, which we will link up down below as well that you can check

Starting point is 00:43:46 out if you want to use Empower to track your net worth. That's a great place to do it. I did that for years. But the goal is to build a pile of assets so large that your money starts doing more work than you ever could. It can work so much harder than you ever can. So these are the 10 millionaire money rules that I want you to know. But if you guys have any questions, please reach out to me. And let me know down below in the comments, you know, some of the millionaire money rules that you feel as though are part of what you are currently doing. I would love to hear some of those as well.

Starting point is 00:44:16 Also, if you want to work with me one-on-one with one-on-one coaching, we are taking a small handful of people in for one-on-one coaching. You can reach out to me, Andrew at mastermoney.com. And if you want to build a DIY investment portfolio that allows you to retire early and achieve financial freedom, then join Master Money Academy. Master Money Academy is the place where we teach you how to invest your dollars, how to build out the foundation, how to invest your dollars, how to build a portfolio that works for you so that you can retire early if you want to. So would love to have you inside Master Money Academy. We do so many different cool things in there,

Starting point is 00:44:53 about to go on a live coaching call, a live group coaching call with the folks inside of Master Money Academy here shortly. You get weekly live coaching calls with. me. It is a really great place to be. Also, if you're in debt, we do debt paydown plans. I help audit your finances if you want me to. So there's a lot of cool things that we do inside Master Money Academy. But the goal is to teach you how to build a DIY investment portfolio so that you can achieve financial freedom. So I'd love to see you inside Master Money Academy if that is something that you're interested in. All right, thank you guys so much for being here. I truly appreciate each and every single one of you. And we will see you on the next episode.

The Personal Finance Podcast - The Millionaire Money Rules (Get to $1M Faster!)

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