The Rachel Cruze Show - Lessons for Building Wealth From Scratch

Episode Date: August 28, 2023

Money goals require planning, taking on side hustles, and thinking differently about how you spend. In this episode, you’ll learn how to create a budget from scratch, what side hustles you could try (and which ones you should avoid), and how Rachel advises people on major purchases.   What you get in this episode:  How to Create a Budget From Scratch The Best (and Worst) Side Hustles Ranked Advising People on Major Purchases   Helpful Resources:  ·      Christian Healthcare Ministries  ·      Op Games ·      EveryDollar Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programming. Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programming you are viewing: Christian Healthcare Ministries and Op Games. Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

What's the biggest new side hustle? Apparently it pays $100 an hour. So today I want to talk to you about what this job is and also some other popular side hustles to boost your income. Hey guys, welcome to this episode of the Rachel Cruise Show podcast. I'm so glad that you're here. So in this episode, we're going to talk about lessons for building wealth from scratch. That's right.

You guys, sit me what you're currently saving for or wanting to pay. purchase, and I'm going to give you advice on if it's wise to purchase that right now or not, and why. Then I'll go over some of the top side hustles from this year and rank them. Are they worth your time and efforts? And I'll let you know. But first, let's go over how to build a budget from scratch. Take a listen.

All right, I talk a lot about the importance of budgeting, but I thought it would be fun to make a budget from scratch for anyone who is brand new to budgeting. And even if you've been budgeting a while, stick around because you might see, there's some tweaking that I could do to mine. So hopefully that will be helpful to you. All right, I'll show you how to create all the categories that you need, decide what to prioritize and how to plug in your numbers.

And by the end, you'll have the tools and the knowledge you need to start making real progress in your financial journey. So let's start with step one, and that is gathering all your numbers. Okay, this is going to be a lot of work, you guys, but it is worth it. So I want you to figure out, first and foremost, your total income for one month by adding up all the money that's coming into your account.

So if you only work one job and you're on a regular salary, then you might just have that one stream of income and it stays the same month to month. But if you're married, maybe you have a side hustle or you're a single parent and you have funds coming in from somewhere else, make sure you get the exact total income hitting your account. And if you get paid by the,

hour and your paychecks can vary, then I'd recommend just looking at your last three paychecks and saying if that's kind of like the average of what you work and just averaging those numbers, or you can just take the smaller number and make your budget from that. And then if you make more money throughout the month, then you can adjust your numbers when the money comes in. All right, you have to keep in mind, though, that the numbers will vary. People live in different parts of the country. Some of you live in the cities.

Some of you live more in the suburbs or a rural area. some of you work different jobs some of you are married some of you are single everyone's story is different so remember that and also giving is one of the things that we need to add in there as well so this could either be tithing or giving to a local charity so your income is first you want to take about 10% of that and give so that's your first step the second step is to set aside your four walls so these are the first four things that you want to pay for these are the things that you need to survive these are not wants, these are needs. So this is food, shelter, utilities, and transportation. So you want to look back on those categories. And again, look at the past maybe three months and

kind of average out what you've spent on food, what you've spent on your rent or your mortgage, your utilities, your transportation, like your gas and your car. But keep in mind, you can always adjust and shift these numbers around. And every dollar makes that easy. But the more accurate that you can figure out, okay, here's what I spend on food at the grocery store, the better it's going to be for your budget. Now, the numbers that you're pulling from the last three months were three months of your life that you are not budgeting. So you could even say, hey, if I'm going to do this on purpose, I actually could probably spend a little less at the grocery store if I knew I only had this amount of money to spend. So again, your budget does help you trim some areas,

because when you're not budgeting, you're just spending with no boundaries or no limits. So that is a pro when it comes to budgeting as it helps you. kind of trim that number down. All right. Step number three when it comes to your budget is to look at some of your other monthly expenses. So if you have debt, that's going to be your next priority. You want to make sure that you are current on all of your debt. And then I do want you to start working to pay off your debt. And we teach the debt snowball and that's where you list out all of your debts smallest to largest, regardless of the interest rate, pay minimum payments on everything, and attack the smallest debt first. And that extra money is going to come from things.

like your grocery store trips, when you were like, hey, squeeze some of that money down, like wherever you can find margin, you want to throw that extra margin at your debt. So after you're looking at your debt and you have at least your minimum payment being paid, then you want to look at what I call membership charges, or these are things that are very consistent in your budget. So gym membership, streaming services, subscriptions, even your monthly Amazon Prime charge, like, these are great places to start. And while you're taking inventory of all of those kind of miscellaneous.

charges, ask yourself if you can eliminate any of these. It can feel really good when you cut some these out of your life and you get more money back. All right, after the membership round up, account for every other expense that may vary month to month that you need to prepare for. So think about, you know, getting your hair done. If you get it done every other month, then divide the cost of what it takes to do your hair in half so that you're saving a little bit per month. So when it comes to get your hair done, you have the money to do it. Or maybe you take your car to get an oil change every four months, then divide that by four and add that number to your monthly budget. And when you feel like you've covered all your bases, then I still like to add in a

miscellaneous category for a little cushion because, listen, unexpected things are going to pop up in life with your kids. Stuff is going to happen and you need a place to pool from in your budget and the miscellaneous category is the best catch-all category. Step number four when it comes to your budget is saving money. So if you're on baby, step one, and that's saving it, thousand dollars this is where this comes in you're going to see all the things that you've cut out of your budget take that extra money to save that thousand dollars now if you're out of debt and you're saving up your your emergency fund for baby step three your fully funded emergency fund then again the savings goes into that and you say okay let's put all of our money we can to save up

three to six months of expenses finally step number five is to make sure that you end with a zero based budget. So this means your income coming in, minus all of your expenses, including some giving and saving, should equal zero. So every single dollar has a job. When you put your income, when it hits your account, you're able to say, okay, this is exactly where every single dollar is going. And it's great because sometimes, again, you can go category to category and say, okay, you know, I have to shrink this category to get to zero. Or maybe you had extra. That's always a gift. When you do your every dollar budget, you're like, oh, I have some extra. You're like, I have some extra up here, then let's put it somewhere. So again, it takes a little bit of time to get that zero at the

bottom. Now, this is not zero in your checking account. Okay, this is zero on your budget, that your income minus all those expenses, giving and saving, equal zero. So every dollar has a name. And don't be surprised if this takes you a few months to get the hang of it. Usually it's about 90 days. It's three months to get your budget to work. So give it time, have an open mind, and keep adjusting those categories as needed. So once you do this, you guys, and you get the hang of it, you're going to really feel what it means to be in control of your money. And I'm telling you, even if it's hard, keep at it because you're going to learn some really valuable stuff as you work this budgeting process. So I want you to download the every dollar app, browse around it, and look and just see, okay, you know, what's in this, what does it look like? Plug some numbers in and actually start getting a handle on taking your income and using it to the best of your ability.

what I want for you. You work hard to get money in your bank account. You work hard for your income, and you want it to go as far as possible, and a budget helps you do that. All right, some side hustles are low effort, high reward. Others, not so much. CNBC just shared an article saying that an AI-based job is the biggest new side hustle. Apparently, it pays $100 an hour. So immediately, I'm wondering if this is too good to be true, but it sounds like at the least it's worth investigating. So today I want to talk to you about what this job is and also some other popular side hustles that might be interesting to you. I'm going to be ranking them based on two things. First and foremost, how easy is it to start? And number two, how much would you make? And I'll give it an overall score on how much I would

recommend based on that information. So according to the article that I mentioned earlier, many companies are trying to compete with their competitors by producing tons of content on websites and social media in order to fast-track growth of their brand. And leaders started to give regular keynote presentations or webinars to their employees internally in addition to presenting at large conferences. So this trend has created an opportunity

for more written content on behalf of the company like blog posts, newsletters, social media shares, LinkedIn updates, But doing this is extremely time-consuming for corporate leaders, and it really isn't realistic. So this new side hustle is called an AI content assistant. So this person would put the audio from a company's very important speech into a transcription service so that the content can be packaged by chat, GPT, and shared on all sorts of platforms. It says you can literally copy and paste in a transcript.

and say, turn this into a 700-word blog article that has five tips. And then the assistant would take the transcription, put it into JAT-G-T, give it a prompt, and then proofread the result when it's done. So apparently the paycheck can fall anywhere from $20 an hour to $100 an hour. It says it takes about a week to learn the ropes and understand how the digital service works, but you can access online tutorials to help you. And once you gain experience working with sites like Upwork and Fiverr, then you can add that skill to your LinkedIn skills so other companies can request your services. Plus, experts say the need for this job isn't going away anytime soon.

So I'm going to rate this site hustle on a scale of one to 10 based on the two things that we mentioned before, how easy it is to get started and would it be worth it? So I'm going to give this, gosh, you guys, I mean, I'm going to say an eight. Like some people are really mad at AI, but I'm like, listen, if you can make that and actually do the work and understand it, and it takes about a week to understand it, that's a pretty good gig. But I don't give it a 10 out of 10 just because it gets me a little nervous. I don't know. There's like a 20% of me that's like what is all of this. Okay, here are some other unexpected side hustles.

Ready for this? A free website called inbox dollars pays you to watch short video clips. So this includes everything from movie previews to brownie recipes to the latest Kardashian recap. And all you have to do is watch the video clips and answer a series of questions afterwards. So, yeah, sign me up. This is great. Now, I don't think that it's something that could ever replace a full-time job. But while you're relaxing on the couch and just scrolling on your phone already,

might as well just make a few bucks. you know? And it says that the company has already paid out over $56 million to its users. So anyone can sign up as soon as they want. So yeah, I give this, I mean, I think a 10 out of 10, right? I mean, if you're going to be watching videos on Instagram, I might as well watch some other videos and rate them. Get paid for it. Next up is a mock juror. So a mock juror reviews the evidence and renders a decision to help lawyers prepare for real cases. participation usually requires a full day cooped up in a hotel conference room. You can sign up through sites like e-jury or online verdict.

It pays anywhere from 5 to 60 an hour. And you have to be a U.S. citizen over the age of 18 and don't have any past felony convictions in order to do this. Yeah, so I mean, I don't know if I would take away if you have like a full-time job to take a full day from your job to do this. So this is a hard side hustle because, again, it takes a lot. lot of time. But if you have flexibility in your job and you can get more on that $60 an hour rate, heck yeah, I'd do it. So yeah, I'm going to say, I'm going to say 8 out of 10.

Next is drop shipping. This job allows you to sell product online while not having to own or operate a physical location. So you can start drop shipping for a low cost of $100. Reason for this is that because you aren't required to have inventory before selling. It relies more on third-party suppliers to handle the inventory warehousing and order fulfillment. It says that you can make anywhere between $1,000, $3,000 a month if you work 10 to 15 hours a week. Pros are less upfront capital required, easy to start, low overhead, flexible location, and a wide selection of products to sell. The cons is low profit margins depending on how niche that product is that you're selling.

also supplier errors and no control over supply change. Oh man, I don't know why this one makes me more nervous. There's a lot out of your control here. I mean, it pays great, obviously. So I guess if this is a thing that you're like really research and you feel good about it, but I'd say for the majority of people, this is a hard one just to kind of like plug into it. So I'm going to give this a lower rating of like four out of ten.

Again, if you have a thing that you're like, oh, yeah, this is easy to do, you could go for it. But it seems like a lot on the line. line of things that you can't control. This next one immediately catches my attention. It's a mystery shopper. Yep. Have you ever worked retail, and you probably had a manager threatened this to make sure that you go above and beyond in customer service?

Well, companies want to know that their employees are being helpful to every customer all the time. But the most important leaders of the company can't just pull like an undercover boss situation. So they create a little spy to come in. That's where you could come in. When you sign up to be a mystery shopper, you go and shop at a store, interact with a rep, either online or over the phone, and then rate your overall experience. According to ZipRecruiter, the average pay for a mystery shopper in the state of Tennessee is $17 an hour. The only catch is that apparently this job is at a high risk for scam. So make sure that you never give out personal information or bank account details to a random internet source without officially setting up your employment and getting started with this work. Okay, the Mr. Shopper, I'm going to go five out of ten. I'm like 50-50 comfortable in this.

Again, there's a lot to kind of sort through. It's a lot of effort on your ends in the sense of like going. You're going to have to maybe do some work after the experience and all of it. I just think you could find something more for 17 an hour that, again, it's kind of more on your terms. It's my gut reaction. All right. Next is selling thrift store fines online. So this article suggests selling specialty or novelty items on eBay.

if you have a good eye for antique fines. Now, this is one that can be time-consuming if you don't already have a natural knack for thrift shopping. But someone on our team actually has a friend who buys and resells all her estate sale fines as her primary source of income, which is really impressive. So again, from designer jeans to collectible sportswear to retro fashion trends that are becoming popular again,

it's definitely a place where you can make some money. And if this sounds a little too far-fetched for you, you could still make it a habit of cleaning out your closet and posting a handful of items on Poshmark or a website like that to be able to bring in some money. And brands like Madewell, free people, Target, Anthropology, American Eagle, do really well on resale apps. And you can make anywhere from $20 to $100 on items

that are gently used. This might not be the most consistent side gig, but it's a decent passive income strategy. So if you're someone that does this pretty consistently already, I'm going to give it a 9 out of 10. Yeah, make some money. Sell your stuff. It's great. All right, this is a rapid fire round. My team and I found the most popular side hustles. And I'm going to give you my quick thoughts if I agree with this list based on how easy it is to start and how much money you make. All right, first up, freelance work.

So this can make you a lot depending on the service. If it's photography, it could make you a lot of money. So, yeah, I mean, if you have you a lot of money. So, yeah, I mean, if you have a skill that you're able to freelance, I'm going to give this a 10 out of 10. Do it. You can make a lot of money. And you already have the skills. It's great.

Next is ride sharing, you know, Uber, Lyft, and it's really easy to start anywhere from $14 to $23 an hour. And yeah, I mean, I think this is a great one. I'm going to say 10 out of 10. There's so many Uber drivers out there that I've talked to and they're like, yeah, this is my side hustle. For some people, it's their primary source of income. You got a car, make some money. Next, starting a blog. So this is really easy to start, but it's more of a long-term.

game to make money. This is a harder one. I'm going to say, I'm going to say three out of 10. If you need a quick side hustle for so quick money, again, this is a lot of efforts to build a brand, basically, that other companies then would pay to advertise on your blog. So more of a long-term play. Next, take online surveys. So you can make anywhere from a dollar to $20 per survey. And again, another article that I found on this says the average survey is $26.14 cents that people make on average by doing this. So, yeah, I'm going to go 10 out of 10. You got a computer? Got your mind. Do it. Next, renting out your home. So Airbnb or VRBO, it's really easy to apply for, pretty easy to start. On average, you can make about $208 a night on

Airbnb. And you can choose the calendar and how often you rent it out. And Airbnb and VRBO do take a small fee for each reservation. It's anywhere from 3 to 8% on average. Yeah, I'm going to say this is like a five out of ten because I think for half the people out there watching, and they're like, no, sorry, no one's touching my house. So I'm not doing that. And then for another half of you guys, you're like, yeah, if I'm out of town, I'll pay for someone to stay at our house. And I'm going to use that money to pay for the vacation we're on, right? I mean, like people use it as a great gig.

So if it's good for you, then I think it's a great option. Next is a personal assistant. The national average is $22 an hour for being a personal assistant. And you can use sites like ZipRecruiter to help you find a job. job. I love this one. I'm going to say nine out of ten because if you're naturally really good at helping people staying organized, this could be a great option. And flexible hours, you know, you can maybe even take on one or two, three clients at a time. Next is proofreading. You can make as low as $12 an hour as high as $30 an hour. You need a laptop or a desktop

computer, reliable Internet, Microsoft Word, to get started. I'm going to say six out of ten on this one, you have to be actually really good at this or people aren't going to hire you. So if you have a knack for proofreading and English and all that, do it. Dog sitting. If you love dogs, this is great, right? Co-workers, friends, family, if they need your help, you are there. You can make anywhere from $20 to $30 a day or $45 to $75 a night or even $250 to $400 a week. Again, this varies, spending on your area, state by state, all of it. But, I mean, if you have the ability to do this, I think it's a great gig, 10 out of 10 for me. babysitting. So when doing research, this one was all over the board because it all depends on where you live.

However, the national average today is $17.95 an hour, which is awesome. So if you're in a great area and you have some families that you know, absolutely. Take a night or two. Babysit makes it money. 10 out of 10. tutoring online, the national average is $18.46 an hour. So if you have a certain subject that you love, then I definitely recommend this one. It's going to be a little bit harder. I'm going to say five out of ten because you actually have to have the knowledge in a specific subject to do this and do it well. So it's not for everybody, but I think it's great. Okay, so based on that entire list, I'm going to say freelance work would probably be my favorite because it's a skill you already know, you already have, and you can be.

make a lot of money doing that skill elsewhere. So that's what I would say. Two thumbs up for that one. But there's a lot of great options out there, you guys. And let me know in the comments, which side hustle really surprised you most and maybe one that we didn't mention on here because this is a place that a lot of people can make income, especially if you're getting out of debt or building up an emergency fund. This is a great way to boost your income.

So one of my favorite things to do is chat with you guys on social media. I love hearing your questions and talking through real. life money decisions that you're making. So today, I want to respond to a few of them. I posted a little question box on my Instagram story a few weeks ago. You can find me at Rachel Cruz, by the way, if you're not following. And I asked what major purchases or investments you guys were saving for right now. And the responses were fascinating. So I'm going to share some of those and give my feedback. If I think it's a wise purchase, if I feel like you should hold off, I'm going to give you all my thoughts. And remember, to keep in mind that circumstances may vary. So when it comes to

personal finance, my advice tends to stay the same because of what I teach with the baby steps and what I've consistently seen proven about money over the years. But it can definitely depend on unique factors like debt, kids, investments, homeownership, all the things. So if all of those details are included here, I'll factor that into. But I'm curious about, whether you agree on my takes. So let's just check out the first one, should we? The first one says, I am saving up for a new car. My current car is six years old. Nothing wrong, but don't want to deal with future problems. Okay, so here's the thing. If it's a six-year-old car, it should be able to last you longer, much longer than six years. I mean, cars now are lasting like a really

long time, over 200,000 miles, right? So in my head, I wouldn't, be saving for something actively that doesn't really have an issue. I think if the car really starts having problems, then it's like, okay, maybe let's look around, see what money we need to save for it. I like the prepping. I appreciate that, but it still feels a little early on in it. So maybe save for something in the nearer future would be probably my advice. All right, next is buying a spare room bed, frame, sheets, etc., for family visiting and using our emergency. fun for it. Oh, no. No, don't use your emergency fund for that. It's not an emergency. You can tell them, thank you so much for coming to town. They have a great air mattress for you because we are saving up

for specifically a bed in a frame and sheets and all the things for this room, but we don't have the money right now. So next time you come, we'll probably have it. And it's very exciting. But no, I would not use my emergency fund for this. So what else said, not investing and instead investing in crypto. No. You guys, crypto has proven itself not to be a great long-term investment as of now. I mean, it is still so volatile. People lost so much money in this over a year ago. So listen, put your money and invest your money in something that has a long track record.

Crypto does not. If you do crypto, it needs to be a very small percentage of your net worth. But I definitely would not exclusively invest in crypto. So I'm going to say no on that one. Saving for a custom magenta pink Steinway Grand Piano. Oh my gosh. Okay, so for some context, I did a little looking into this, and this could cost anywhere from $100,000 and even some are up to $200,000.

So I'm going to say, if you're out of debt, having an order to spend your funding retirement, and this is what your thing is that you're working to save towards, because who knows why? You know what, that's not mine to judge. So go for it. As long as you pay you with cash, sure, if that's what you want to do, I'm great with it.

Don't go into debt for it. And also, you know, you can, could probably use that money elsewhere, but if that's what you choose to spend your money on, no shame in your game. Next up, we're saving for Disneyland, a vacation home, and the kids' college funds all at once. Yeah, I mean, I would say so. I would probably put the vacation home on pause until your primary residence is paid off and then own a second property after that. But yeah, I mean, saving for Disneyland and for kids college, I think, yeah, you're going to be doing all of that while saving for, again, big person.

like kids college. So yeah, thank you're doing great. I'm a law student going to work for a big law firm, saving for a fancy purse for work so that I fit in. Oh, man. Okay, listen, I love a good bag. I think it's great. But also, when you start to get in the habit of saying, oh gosh, I need certain items in order to be okay with myself in a certain environment, then you start to lean on that stuff and that can be a really dangerous path. So I'm not. mad at bags. I'm not mad at a nice designer bag, but it's all about your motivation and your why. And if it's just to fit in, I would probably kind of challenge you on that one. Next is saving for a beaver fur coat, $8,500. You know, again, there are items out there that for some people,

it's ridiculous. For some people, it's amazing. And depending on, you know, your debt level, okay, you're debt free. I want you debt free with an emergency fund. You're doing all the smart stuff. And this is the thing that you've been wanting and you pay for it with cash. Go for it. Small home for my in-laws since they need to live with us due to not having a nest egg. Oh, this is a really tough one. There are a lot of parents now that are coming and moving back in with their kids because they have not planned for it. So listen, if you have the margin and you're able to help and there's not like this deep obligation and it's what you should, genuinely want to do, then again, I want you to be able to do that and help the people around you

that you love. But if it's out of this need of feeling guilt and you're doing it out of those kind of emotions, again, I would press pause and say, okay, what is our place? Like, where do we need to step in and when is it okay for us to take care of ourselves? So make sure you're taking care of your family first before you go and extend and help others. Next is saving to repurchase a pair of sneakers that I sold when I was on Baby Step 2. I like that. I think that's great. Yeah. If you're Baby Step 4 and on and you want some shoes that you used to have, get it. I think it's great. Saving for an adoption while working through Baby Step 2.

Yep, I love this. I think, you know, when you're planning for a family and for kids, this is something that we want you to be able to do regardless of where you are financially. And so we always say, hey, if you're on Baby Step 2, and let's say you actually do get pregnant and you're starting a family, we say pause it at snowball and save up some money. But as you're working through the adoption process while doing it, Yeah, it would take you longer to get out of debt, but if that's a goal to have kids through the adoption process, and that's how you want to start your family, I'd say that's great. Next is investing $500 a month in mutual funds so that I can pay for my dream car in cash.

Okay, I think that's awesome. I will say if you are saving for things five years or less, I would just put it in a high-yield savings account. The market is kind of up and down so you may lose some money right when you want to pull the money out to buy the car. but if it's a dream car that's going to take you 10 years to save for and you want to put it in mutual funds, great. Next, I'm not currently dating anyone, but I'm saving for a future wedding one day because weddings are stressful. Very true, yes. But I would say if it's something that's not coming in the near future, I would put your money towards things happening in your life currently today. So again, I love the idea of planning for it. But also, when it actually becomes a reality,

I think you'll be at the bandwidth to be able to say, hey, I'm going to pay for it then. start saving for it then. Or maybe you have some money saved, but you earmark it and use it as you please throughout the years, too, if that doesn't happen. So I like the idea that you're planning, but I would put it towards more money happening and stuff in your life right now. Saving to enroll in a $20,000 real estate course so I can sell real estate. Hmm.

Okay. If you're doing just like residential real estate, even commercial real estate, I don't think cost $20,000 to do that. So unless it's a very very. specialized certification on something very specific, maybe, but you might be falling for a scam. Just say that out loud. Next is saving for a wedding. Target goal is $20,000, which is expensive since our combined income is $70,000.

Yeah, it is, but hey, if you got some time, try to do it, get some side hustles. But listen, if you don't get the 20,000, then just lower the expectations of the wedding and still pay with cash. Don't go into debt for it. Next is saving to be debt-free. I fall behind during the pandemic. And now I'm getting back on track. So great. I love it.

Love it, love it, love it. All right, you guys, I love hearing what you're doing in your life, but there were like literally hundreds more of these responses. So I'm dying to know some of the thoughts on the savings goals that I just talked about. So drop a comment below and tell me what your favorite savings goal was and whether or not you'd spend money on that. Same thing. Let me know about the piano. That was the one that sticks out the most to me.

Very expensive piano. I love hearing from you guys. It's so fun doing those question boxes on Instagram because you guys show up, give us good content, and it's fun to hear what you are looking at to purchase. So thanks, you guys, for participating. And thank you all for listening to this episode. If you have a friend who you know would love this,

please share it. It is so helpful to get the word out and leave a review if you can. again, it helps us out so much and helps more people see this show. All right, you guys, thanks again for listening. And remember to take control of your money and create a life you love.