The Rachel Cruze Show - 5 Uncomfortable Truths I’ve Learned About Money

Episode Date: September 25, 2024

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Well, hey you guys. So today I'm going to be leaning into Big Sister Rachel mode, you know, working in the personal finance space for 15 years now, which is crazy. I have learned my share of valuable lessons when it comes to money. And some of these, I had to learn the hard way. Some I've witnessed other people learn the hard way. But regardless, it's some things that I think you should know. So here are five uncomfortable truths that I have learned about money. So be sure to stick around because that number five is one that I have struggled to accept in the past. And I'll be curious your thoughts on. All right, you guys, let's go for it. Uncomfortable truth number one. Just because you make more doesn't mean you'll instantly have margin and relief.

So this sounds, you know, like, wait, what, Rachel? But shouldn't I always want to make more money? It will help always. Here's the deal. I talk to people every single day on the Ramsey show, and they have all different kinds of income levels. And most of them are still struggling with money. And again, some of these people are making $200,000 a year and they're still living paycheck-to-payee. But then we talked to people who are making, you know, 40, 50, 60, and they don't have debt. They have a fully funded emergency fund. They're putting money in retirement. And they're doing so well financially.

And actually, net worth-wise, have more money than the person that's making $200,000 in debt and living paycheck-to-paycheck. So what this all comes down to you guys is your habits and your behavior when it comes to money. And more money doesn't mean more money, meaning if you have more money, if you're in a bad habit cycle, you're going to end up just spending more money. You're going to keep getting your same result regardless of what your income is, where if you have really healthy money habits and your income grows, and you actually can use that extra income to help you and to say, hey, I can actually use this to save and to give and to spend on purpose where you actually have control over it versus when

you're in the habit of not controlling your money. And if you guys need help in this area, this idea of, okay, how can I get control of my money? Make sure to check out Every Dollar. This is our budgeting app that is absolutely incredible. It's one that I use every single day. It helps track your spending. You're able to plan out what's going on in your life and your money. And again, it is so, so helpful. So go to Everydollar.com slash Rachel and get started for free today. Uncomfortable truth. Number two, invest early or as soon as possible. So this is something that pays off really big at the end of your life in a sense where you actually have to see the power of compound interest. So when you start early and you're not distracted by like,

oh my gosh, I just want to live my best life and I want to spend every dime that I make. I want to invest in things like crypto and all this stuff that's not really proven. When you do all of that and you fall around, you're missing out on compound interest. And the magic of compound interest is the earlier you start, the better off you're going to be. So I say that throughout your entire life, you're going to see this. So if you can start at 25 investing into a Roth IRA or, you know, your 401k at work, that's incredible because over time, you're going to make so much money off of those investments versus if you're starting in your 40s or your 50s. But listen, if you are in your 40s and 50s and you're not investing a lot right now, get in a position where you can, you know,

the idea of paying off debt and having an emergency fund first is really key. But regardless of what age you are, investing should be a goal that you're working towards. And the truth is, the earlier you start, the better off you're going to be. But we don't have a time machine. We can't go back in time, sadly. But hear me loud and clear, especially if you're in your 20s, be investing. All right, the uncomfortable truth. Number three is just because you have it doesn't mean you have to spend it.

So the other day I came across this guy on social media telling a story that, that he regrets some of the choices that he has made in this area. So basically the idea was that he got his first sales bonus, which was like, I think like $60,000 or something. And he went and spent it on a car that was $80,000. So he like overshot, overspent what he even made to buy a car. And he looks back and he was like, man, if I had just invested that, where would I be now?

And he like did all the numbers and stuff. It was just crazy. So what he was meaning by all of this point is that sometimes we spend money And just because we have it, you spend money on stuff that doesn't really progress your life, right? It doesn't really create this progress that you want, not just with your money, but also with your joy and happiness. So many studies have come out that experiences and time with people you love brings more joy than buying materialistic items. So even the way we spend our money could change. But again, just because you have it doesn't mean you have to spend it.

I mean, there's a really beautiful, you know, road of investing or saving and putting it away for the future, that's okay. That actually, if you did that, you know, in your 20s, by the time you're 40, you're still going to want to spend money and it just would have grown and you would have spent it on something different and probably something more meaningful even later in your life, right? So pausing, you know, the idea that just because you have it doesn't mean that you have to spend it. It's so true, you guys.

It really is. And it kind of remakes you think some of your spending choices. Right, uncomfortable truth. Number four is life is fragile, and that will cost you. So I don't want to be a Debbie Downer here, but being in this industry for so long, I mean, we have heard every story you could imagine. So again, this could be, you know, medical debt. This could be a freak accident.

There was a death, and the person who died didn't have life insurance. So now their spouse is trying to figure out the money stuff or even infertility bills that have stacked up. I mean, like, all of it, we just hear all of this sadness. around life and the thing about money is it is so correlated to our life. When there's obstacles going on, for the most part, you know, having money available is really important. It's not the only thing and it doesn't at all ensure that nothing bad is going to happen in your life. That's not what I'm saying, but it does create a buffer to give you some options and sometimes to kind of bring some

peace to a situation because, again, life is so fragile and we see that constantly. And so it can feel like, gosh, we're just invincible and we're doing great. You know, I have no debt. I have an emergency fund. Everything's fine. And the truth is life is life insurance, having life insurance, car insurance, home, auto, flood insurance, like all of that. I know that sounds like, oh my gosh, Rachel, it just sounds like a lot and I don't know, I don't know. But it is worth setting your life up well financially because when something happens and it's going to, again, having a level of pad under your life financially, it is a gift. It's a gift in those seasons for sure because, man, anything can happen.

And also, I will say it over and over again, just because you set everything upright financially doesn't mean that, again, you're somehow blocked from the tragedies of life. They are still going to happen, right? I mean, you hear about people that run a marathon, and then they die of a heart attack. You're like, what? They were so healthy, right? So there's stuff that is completely out of our control. But getting yourself in a position and your family in a position that is wise financially

is really crucial when those hard times hit. So again, if you need things like insurance, make sure to check out our insurance checkup. I'll leave a link below. If you need some motivation when it comes, maybe to budgeting or not spending everything you make, make sure to check out all of our content online with tons of free resources to be able to help you guys when it comes to this because there are some truths around money that are uncomfortable, not fun, but it is what it is. All right, uncomfortable truth.

Number five is that you really can change your family tree with the financial decisions that you make. and that is okay to own that truth. So here's what I mean. If you are a kid who has benefited positively because of your parents' financial decisions, that is okay. Or maybe you are a parent that is wrestling

whether to give your kids more than you had growing up. That's okay. So listen, here's the truth. I used to be like a little defensive when people were like, oh my gosh, you're Dave Ramsey's daughter. Of course you've done well. I'm like, what?

No, I work. You know? And I have to pay my bills. And what are you talking about? Here's the truth, you guys. We teach you to get out of debt, get an emergency fund, invest, save up for your kids' college, pay your house off early. When you do all of those things, I would say, you know, on average, that whole babysat

process is going to probably take 15 years or so, 13 years on average to get out of consumer debt all the way up to paying your house off, right? So it's a decade plus. But when you do that, financially speaking, it's going to free up a ton. And you are going to end up having disposable income. you then can use to say, hey, I do want to bless the next generation. So whether that is paying for college, you know, whether that is setting them up well, and whatever way you think is good for them while still giving them dignity, that is a beautiful thing. And again, it's a very fine balance because

we want our kids to have work ethic. We want them to know that they can bring value into the world. And we want them to know how to budget and how to delay gratification and all of that is so great. But there's also a beauty in saying, gosh, if you financially are able to do something for your kids to give them kind of a leg up, that's also not a bad thing. I mean, I look back on my family's story and I was born the year they filed bankruptcy. It was a very painful journey for them. So that was throughout my whole childhood, on and on. Well, yes, at the end of, you know, when I'm 18, my parents did pay for my college. And so starting out not having student loan debt to pay back is beyond a gift.

It is huge. But it was a leg up that I had that was able to, again, propel me more into the real world where I could start investing in doing things versus having to pay backwards, something like student loan debt. So I don't want people to be embarrassed. And some people think, well, that's so entitled and that's so terrible and all that. I want to change that perspective to say, gosh, what you're doing today can give your kids a really beautiful leg up that, again, not that they're never going to have struggles, but you're

helping them get to a place where they're able to really springboard into their lives in a really beautiful way. And I think at that point, it continues to magnify, meaning like the people that they're going to be able to give to and to help, that is going to be magnified. All the good parts of what you're instilling in your kids, their character is going to be magnified through this process. So, again, changing your family tree. This is part of it. And that's the financial side, obviously we're talking about. But there's also changing your family tree in how you handle money and the knowledge behind that. So maybe you grew up with a really scarcity mindset household,

and that's how you grew up. You can give your kids a totally different outlook. You can change your family tree by viewing money totally differently, that it's not our identity, and that, yeah, we have the ability to make some money, and that's great, and there's an abundance mindset there, and you're not stressed or scared constantly by it. That's freedom and above itself,

just the mindset that you get to change within your family. So whether it's dollar amounts or mindset, that changing your family tree around this topic where this is a blessing, not a curse, is such a gift, such a gift. All right, you guys, some of the uncomfortable truths that are real, very, very real, but I think important to face. Now, I mentioned Dave earlier in this. So I have another episode with him in it. And this is eight things that you should do differently with your money in 2024. It was one of my most popular episodes this year, so make sure to check it out. All right, you guys, remember to take control of your money and create a life you love.