Young and Profiting with Hala Taha - Mike Michalowicz: Stop Living Paycheck-to-Paycheck and Build Lasting Wealth in 2026 | Finance | YAPLive | E386

Episode Date: February 16, 2026

Entrepreneurs often believe their financial stress will disappear with the next big contract, launch, or raise. But Mike Michalowicz has seen hundreds of high-earning founders and employees still living paycheck-to-paycheck. The problem isn’t income; it’s behavior. Now on Spotify video! In this episode, Mike returns to break down the core principles behind his latest book, The Money Habit, revealing the psychology behind why we overspend and how small changes can create massive long-term wealth. He also shares his practical personal finance system to increase savings, eliminate debt, and achieve true financial freedom. In this episode, Hala and Mike will discuss: (00:00) Introduction (03:48) Mike’s Latest Book, The Money Habit (11:14) Cash Confidence and Financial Independence (17:14) Saving for Big Life Expenses (21:24) Why Traditional Budgeting Fails (24:10) Behavioral Psychology Behind Money Decisions (30:48) The Paycheck-to-Paycheck Money Cycle (37:36) The 6 Essential Money Account System (45:21) The Four Financial Seasons (54:02) Smart Debt Elimination Strategies (57:42) Money Habit Advice for Entrepreneurs Mike Michalowicz is an entrepreneur, bestselling author, and speaker specializing in small business growth strategies. He has built and sold multiple multi-million dollar companies and is the host of the podcast Becoming Self-Made. His latest book, The Money Habit, translates his business finance principles into a practical personal finance system designed to help individuals build stronger money habits and work toward financial freedom. Sponsored By: Indeed - Get a $75 sponsored job credit to boost your job's visibility at Indeed.com/profiting Shopify - Start your $1/month trial at Shopify.com/profiting Spectrum Business - Keep your business connected seamlessly with fast, reliable Internet, Advanced WiFi, Phone, TV, and Mobile services. Visit https://spectrum.com/Business to learn more. Northwest Registered Agent - Build your brand and get your complete business identity in just 10 clicks and 10 minutes at northwestregisteredagent.com/paidyap Framer - Publish beautiful and production-ready websites. Go to Framer.com/profiting and get 30% off their Framer Pro annual plan Quo - Run your business communications the smart way. Try Quo for free, plus get 20% off your first 6 months when you go to quo.com/profiting Working Genius - Take the assessment and discover your natural gifts and thrive at work. Go to workinggenius.com and get 20% off with code PROFITING Experian - Manage and cancel your unwanted subscriptions and reduce your bills. Get started now with the Experian App and let your Big Financial Friend do the work for you. See experian.com for details Huel -  Get all the daily nutrients you need. Grab Huel today and get 15% OFF with my code PROFITING at huel.com/PROFITING Resources Mentioned: Mike’s Website: mikemotorbike.com  Mike’s Book, Profit First: bit.ly/-ProfitF1st  Mike’s Book, The Money Habit: bit.ly/MonyHabit  Mike’s Podcast, Becoming Self-Made: bit.ly/BSM-apple  YAP E219 with Mike Michalowicz: youngandprofiting.co/E219   Hala’s Speech at MIT: bit.ly/HTMITKN  Active Deals - youngandprofiting.com/deals  Key YAP Links Reviews - ratethispodcast.com/yap YouTube - youtube.com/c/YoungandProfiting Newsletter - youngandprofiting.co/newsletter  LinkedIn - linkedin.com/in/htaha/ Instagram - instagram.com/yapwithhala/ Social + Podcast Services: yapmedia.com Transcripts - youngandprofiting.com/episodes-new  Entrepreneurship, Entrepreneurship Podcast, Business, Business Podcast, Self Improvement, Self-Improvement, Personal Development, Starting a Business, Strategy, Investing, Sales, Selling, Psychology, Productivity, Entrepreneurs, AI, Artificial Intelligence, Marketing, Negotiation, Money, Finance, Side Hustle, Startup, Career, Leadership, Mindset, Growth Mindset, Wealth, Stock Market, Scalability, Investment, Risk Management, Financial Planning, Business Coaching, Finance Podcast

The number one desire people have is if I could just win the lottery, I could just get a big chunk of money. But then people come upon this money, and they don't have experience controlling that money, and they blow it. Yeah, fam, today we're welcoming back Mike McCallowice. He teaches everyday people how to finally stop worrying about money and build a system around their natural behaviors so they can break the paycheck-to-paycheck cycle

and build real cash confidence, as he calls it. I did research around lotteries, and the average payout is $2 million. Do you know if you make an average salary of $50,000, thousand dollars a year for 40 years that's exactly two million dollars and the average worker at least in today's society works about 40 years everyone is already a millionaire like you've already won the lottery debt is a big problem for people how to pay down your debt what not to do what to do what's your thoughts about that if you have a lot of debt sort your debt out by the amounts due and if you can

wipe out some early debts that's a beautiful thing because you'll believe truly that you can wipe out debt but if you continue that pattern when we have a certain life standard It is very hard to reverse that. And so we will go to extreme measures to keep it and sometimes illogical. The better move is not to gain the things you can't really afford yet. It's to slowly build toward it. The most predictable expense for everyone is an unpredictable event. We all need an emergency account because I can guarantee something unexpected is going to happen.

What's the number one thing that people can do in the new year to optimize their money habits? I think the first thing is to realize that... Yeah. Today we're welcoming back somebody who needs no introduction, Mike McCallowicz. You know him from Profit First, Clockwork, and all the frameworks that have truly transformed how entrepreneurs run their businesses. And if you want Mike's full origin story, the rise, the fall, the rebuilding, and everything you need to know about the profit first framework for businesses, which we follow

here at Yap Media, we're replaying his very first Yap interview this Friday. And by the way, guys, that conversation changed my life and the way that I run my business. So I highly recommend it. If you don't know about the profit-first framework, it will change your business. But today is all about his newest book, The Money Habit, which is about personal finances, and it might be his most important book yet, because he teaches everyday people how to finally stop worrying about money and build a system around their natural behaviors so they can break the paycheck-to-paycheck cycle and build real cash confidence, as he calls it. So let's jump right into this conversation. Mike, welcome to Young and Profiting Podcast. It is awesome to be here with you.

Do you know the last time I saw you was in Massachusetts at Gathering of Titans? Oh, my God. I can't believe that. I forgot that we met in person over there. I totally forgot that. I just felt like I was so familiar with you because of all the times I've interviewed you, but I totally forgot that we met in person. You rock the show.

So that group, just to give you a little bit of sense, that is an entrepreneurial group that I joined in 2000, 2001. And the idea was it was 80 entrepreneurs came together to learn from each other. but to really be the next level entrepreneurs. And out of that group came, 1-800 Got Junk was there, that's Brian Scudemore, the co-founder of Bert Spees,

all these massive companies. And we bring in expert speakers to share on topics. And there we are, and I'm like, here she comes, and you freaking rocked it. Oh my God, I can't believe you reminded me of that.

That was such a big event for me at the time. It was at MIT, and it was like such a big deal. We'll replay that on the podcast just because you mentioned that. I'm going to replay my speech. Yeah. And we're also going to replay my first interview with you because I first interviewed you like.

Pre-beard, I think. I think so. It was like three, four years ago. Yeah, maybe. And we talked all about your come-up story. We talked about profit first, which is a classic. So we're going to replay that on the podcast this Friday after this gets released so everybody can get your background. Thank you.

But you're back with another book called The Money Habit. Yeah. So curious to understand what was the genesis of this book. You've written several finance books. What's different about this one? and why did you decide to write it? So I got this call from this guy, Tommy Mello, and he owns a garage door repair service.

He used profit first, made his business permanently profitable, and he calls, he says, I have another problem that presented itself. Because my book is very profitable, but he goes, my employees are struggling financially. And so what they do is they say, hey, can I borrow some money or can I get a raise when it's a little bit early to get a raise yet again? Because I want to accommodate them. They're great workers because I can't afford to do this.

My business will go under. He's like, I need to teach them profit first for their personal finances. I'm like, oh, okay. I said, how many employees do you have, like, you know, five or six? He goes, no, no, I have 900. And I go, pardon me what? He goes, 900. So it's a national brand.

And this is a systemic problem. I think it's Henry David Thoreau, who said, the mass of humanity lives their lives in quiet desperation. Now, that's not the exact phrase, but that's basically it. Well, the quiet desperation is most people are not making enough money or don't have enough control of their money to feel comfortable. And so there's constant ringing in the back of our heads worrying about money. And that's what Tommy was sharing with me.

And I've lived through it myself. So I said, this is the time I finally write this book. And so that was about three, maybe four years ago, started doing my analysis and research, deployed it for his company and others and said, my gosh, we have it. So it's basically it's profit first, but it's translated to personal finance. Yeah, and profit first is amazing. I mean, we use that strategy at my company. Yeah, media.

Yes. We do. Yeah, I can't wait to kind of, you know, unpack all this and see how I can use it for myself because Prophet First really is like a business focused framework. And this is more for personal. So talk to us about this company with 900 employees. You saw a couple patterns coming out of this company. Like, even when they got more money, they still didn't feel like they were like their lifestyle

basically just caught up with them. Talk to us about that. Yeah. So I interviewed people who were making. very modest salaries to people who grown through these organizations, and we're making what most people consider a significant salary. So to give context, the average American worker makes $50,000 a year. That's the average income for the entirety of the United States. So if anyone listening right now makes more than $50,000, you are greater than average. That's the middle

point. And there's employees that were making well more than that. And they were struggling just as deeply as people that were at perhaps just a starting salary. And I said, how can this be? Because the number one desire people have is if I could just win the lottery, you know, if I could just get a big chunk of money, or we observe someone else. You're like, oh, she's got a nice car and she has all these successful things. If I had that money, I would have the life that I've always dreamed of. But then people come upon this money and they don't have experience controlling that money

and they blow it. So there's this belief that if I just get more, I would. finally arrive. But you don't have the context of managing that money. And so it just collapses. There's a behavioral theory called Parkinson's Law. It basically states as a resource expands its availability, we consume more. The more time we're given to do something, the longer it takes. The bigger the closet in our home, the more stuff we have that fills up the closet. And the more money we have, the more we spend. So what the understanding I came across was, I need to give people control and authority over the money they have, regardless of how much it is. And once you

you have control and understanding of it, then you can direct it to what you want. Then adding more money helps. But if you try to make more before you can control more, you're in trouble. Yeah. I learned that collectively, out of these 900 employees, they saved like $280,000. Yeah. It wasn't it of 900. That was out of 25 people. Oh, okay. So we started with a batch group. So there was 900 that we served, but they said, let's just try this out. So we said 25 employees go over this process for six months, and collectively they saved a quarter million dollars. Now, these were people, so you think about that, that's $10,000 per person in additional savings. These were people that were living check by check by check. And so, and they didn't get a single dime in an increase

in salary to do this. They simply asserted control over it. The interesting thing is Parkinson's law, I shared, teaches us that the more money we have, the more we spend. The reason we spend more is most people have a primary checking account. So for me personally in the past, my money would come into one account, all my money, and then I'd say, oh, I need to spend it on the next thing. I need to buy a piece of furniture for the home or something like that. But I was falling victim to this thing called the primacy effect. And the primacy effect is whatever is our immediate need, is our primary need, and we disregard the future. So I have a mortgage payment coming up or rent, or I said buy groceries, but I don't think about that when I need a new piece of furniture,

because that furniture cracked or broke. And I look at my account and say, I have enough money to buy the furniture, but there wouldn't be enough to then pay the rent. Yeah. And then panic ensues. So what we did is we put people's money into buckets. And we also did it at their bank. This is the other little trick.

It's called behavioral intercept. And when you want to do something with consistency, don't try to change who you are using willpower. Instead, look what you're already doing and set the system where you already go. Most people log into their bank account, see how much money they have, and if they see they have enough money to cover that furniture, they buy it. So he said, keep going to your bank account, but we're going to step an account that says furniture. We're going to set an account that says groceries, and we're going to carve out

that money when it comes in to each account accordingly. And now when I'm looking to buy furniture, I look at the furniture account, and if there's not enough money there, can't spend it. Yeah. So that's the concept of channeling your habits instead of changing them, right? Exactly. So most of us are told to try to change who we are. So traditional personal finance is one of two methods. Deprive yourself of a lifestyle of comfort today so you can live one tomorrow. So live in deprivation. Humans can't do that for a sustained period. We become resentful. Like if you love, I love chocolate chip cookies. If I don't eat chocolate chip cookies and I see one laying out, I will try to use willpower, but there will be a moment I fatigue. And the longer I go

without a chocolate chip cookie, the more I'll desire it. So the longer it sits there, the more I'll desire. And tests prove this out. They did a test with children. where they said, they put a little treat down and said, if you don't eat this, you'll get two of these treats when I come back, the researcher said that, and left the room. And you watch these children like shaking and sitting on their hands and doing all these things not to do it.

And they couldn't stop and they ate the treat, even though a bigger treat was coming if they simply resisted. That's true, not just for children. It's true for adults. Yet most personal finance principles tell us deprive yourself. So that works for very few people. The other one is to use budgeting systems or technology or something that is outside your normal pathway.

So don't look at your bank account. Instead, set this other system to do things. And those can work, but it requires you to change your habits. It's very difficult for humans to change. So what I argue is don't change who you are, channel who you are. If you log into your bank account, the budget needs to be at the bank level, and we need to set these accounts there because now you don't have to change the thing about yourself.

You continue your behavior, but the system is showing you what's available for what purpose. And I feel like the dream out. of all this is to have something you call cash confidence. What is cash confidence to you? Yeah. So I think most people are pursuing financial freedom. And I think that's a great aspiration, but I think there's a step before it. So financial freedom is where I don't worry about money. I decide, you know, I want to go to the Caribbean, it's getting a little cold here in the winter. Let me hop on a jet, maybe my own jet, and go to the Caribbean, and I don't have to worry about a single dime. That's what financial freedom is. I can do what I want at the

whim of a thought, and I don't have to worry about the cost. that's a great aspiration. I think there's a step before that. I call it financial independence. Financial independence is where I'm not beholden to my money. That I have control over it. It doesn't have control over me. And I know we can achieve financial independence

at any level of income. What you need to do is have cash control. What cash control is, is an awareness of what money's available for what purpose. I believe, even at $50,000 a year, you can go to the Caribbean on a private jet if you're willing to wait about 200,000 years. we can start allocating, you know, a dollar a week or whatever it is to ultimately get there.

At least you'll have an understanding that you can't do it now, but if you keep saving, keep saving, maybe you can do it in a long period of time, and maybe you say that's such a long wait, 200,000 years, it's not worth it. But that is cash control, because now you see what money is available for what purpose, and you can make controlling decisions around that. So you may not be able to live financial freedom yet, we start with cash control. Once you've cash control, you've the ability to decide, you know what, I'm going to live a little more, I'm going to go out to dinner less, for example.

And that $100 I'm spending going out to dinner every week, I'm going to allocate that toward these trips I want to go on or whatever. That's cash control. Yeah, fam, you just realized your business needs to hire somebody yesterday. How do you find great candidates fast? Easy. Use Indeed. When it comes to hiring, Indeed is all you need.

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most people are, the average person makes $2 million in their lifetime. Yeah. And when you think of $2 million, like that's a huge lump sum of money. That's like winning the lottery. Can you imagine that? Yeah. So what kind of identity shifts happen when you start to realize that in your lifetime, you could make $2 million?

It's fascinating. So I survey audiences teaching this now. I teach profit first a lot, but also teach the money habit. And I said, who here, honestly, would be really thrilled to win the lottery. And almost all the hands go up. And me too. I'd love to win the lottery. It's great. Well, I did research around lotteries, and the average payout is $2 million. So there's these grand bucket winners we hear about that wins $600 million or something crazy. But the average win is $2 million. And most people take an installment plan. And that can be 20, sometimes 40, years. So most people are going to get $2 million if you win the lottery and you're going to get over up to 40 years. Do you know if you make an average salary of $50,000 a year for 40 years,

that's exactly $2 million. And the average worker, at least in today's society, works about 40 years. We start in our 20s. We end in our 60s. And maybe that's going to change. But everyone is already a millionaire. Like, you've already won the lottery. That's what we have to be aware of. The thing we need to do is assert control over it. And that's what we're not doing. We're hoping to make money. Well, you've already made it. We've got to control it. And that payment is installment plan is coming in. Yeah. And for our young improfitors listening, I think our average income across the board is like 150 or something from my listeners. Yeah, so it's $4 million or $5 million. Yeah. I think people aren't considering that.

Yeah. We're just saying, I'm not making enough now. Well, that's the primacy effect kicking in. Mm-hmm. We've got to assert control over what we have. And there's this freedom once you do. Yeah. So you were mentioning how, you know, even if you're not making a ton of money, you can still save for for big purchases. You talk about saving for, I think, your son's wedding, you saved like $36,000. How did you save for that? And what can people learn from that? There are some events, I think, that are very predictable in lives.

People will get married, people will die. And there's costs with that, funerals and stuff. There's different things that happen. Emergencies will happen. In fact, the most predictable thing in life is there will be something unexpected. So something that's predictable is unpredictable. And I have three children. I'm like, likely they're all going to get married at some point.

So my wife and I talked about it. We said, we're going to start saving money for this. So we started saving when our children were born saying the average marrying age at the point was 27 years old. And coincidentally, my son, my oldest son who got married got married at 29. So it was pretty close. And we started saving. And we didn't save at the same rate. It wasn't like we're going to save, you know, $1,000 a month every month.

We started saving this $10. What's called behavioral momentum. Once you start doing something, even in small pieces, you start becoming wired to repeat that. That's how our brain works. Kind of like exercise. I think the biggest, excuse me, the biggest mistake that people make with exercise is saying, I got to start working out. I'm going to work out an hour at the gym every day. I'm going to go for everyone. No, just day one, buy a set of sneakers or something and put them on. Day two, put on your gym clothes and walk down a gym and walk back. Like start off very small. And then day three is go for a little walk and stretch. And you slowly build your way up and you start wiring. This is who I am.

So the first thing is an identity shift, then a behavioral shift. So we just wanted to have an identity shift for ourselves that we're going to save for our children's weddings. As our income increased, because we do so on a percentage basis, automatically the percentage stayed the same, but the dollar amount increased because it was the same piece of a bigger pie. By the time my son was 25, we had $50,000 saved up, and we said, okay, that's the number. And for every one of our kids, we have $50,000. And if one of my kids is watching right now, that's not married, I'm not, this is supposed to be a single. secret, so it's no longer a secret. When my son got married, we told him, when he was about to get married, we said we have a check for $50,000 we like to give to you. Now, here's what it is. It's for your

wedding, or if you decide to have a lower budget wedding, the remaining check is for you. They found a way to have a wedding for $100 people for $14,000. They rented a whole restaurant. It was on a lakefront. It was amazing. But they were searching and navigate a deal. At the end of the wedding, my wife went up, my wife and I went up to our son Tyler and said, here's a check for 36,000, the difference. And he's sitting there, he's handshaking. He's like, I've never had this much money in my life. So much so that his wife, Cora, they didn't deposit. Like a month later, I'm like, this check hasn't cleared. What happened? Like, we don't think we can deposit a check this big. I'm like, trust me, you can. You can. And they finally did. It was, it was such a great gift of ours.

But there was also no cost to me, my wife. The money's already been allocated. So my wife and I are still living our life standard. We're still living the way we want to live. It didn't feel like we had to take a chunk out of our life to give to them. It was something we'd built for. Yeah, that's so beautiful and so smart. And I'm sure, you know, putting aside 10 bucks a month, 100 bucks a month, it probably didn't feel like anything. And you would have just wasted that on some other junk, you know? So it's good to just kind of put it aside and maybe even pretend like it's not even there. I remember looking, this was back 20 years ago. So this is like around 2000. I said, what's the, average cost per plate for a wedding.

I remember it was $70 at the time. A standard wedding, every guest, you had to pay $70 to feed them, plus additional costs. Every time I started putting $70 away, and it was $70 a week, I'm like, one more guests at the table. I love that.

Yeah, it felt so good. Yeah. And then I asked myself, once we had 200 guests covered, that was $14,000, I then said, okay, what's a band cost? And a band would cost $10,000 or whatever it was. I said, okay, we got the drummer.

Once I hit $2,000, we got the drummer. Now we got the bassist, the lead singer, you know? And so it's important to put these little milestones so we feel that we experience the progress. Yeah. Yeah. That's a really beautiful story and like awesome that you did that for your kids. Okay. So let's talk about why traditional budgeting doesn't fail. So like you budgeted for this wedding and you set it aside. What was different about what you did there versus traditional budgets? Right. Traditional budgets usually have a common pot at the bank. So it's a separate documentation, usually a spreadsheet that says, I'm going to save X number of dollars for this wedding,

say $50,000 and so forth. And then we have a singular pot where the money's stored. Maybe it's in a money market or some form of investment, which is fantastic. Here's the problem. We have to enforce willpower not to take from it. And we will justify taking from it. We'll resolve, I should say, the cognitive dissidents that we have when we take the money by giving some form of justification.

So let's say in my pot, I have $200,000, $50,000 for one kid's wedding, $10,000 for auto repairs and home maintenance, some different things. And now something comes up and my roof is leaking. And so I've got to replace the roof. And I'm like, well, I got a pot here of $200,000. Yeah, some is for the wedding. But the wedding's like you're not going to happen. And I'll start justifying it and I'll replace that roof. And now I'm back to square one.

Conversely, and we actually have an account called The Roof. because roofs need to be repaired or replaced in its entirety usually every 25 years. So we have a 25-year vision for it. And to replace our roof, we're thinking it's going to be a big budget, so we have that dollar amount set aside. If my roof is leaking and I want to replace it and there's not enough money in the roof account, I can still take it from my son's wedding account, but I can no longer subconsciously ignore that.

I have to say myself, I just stole from my son's wedding. So now a subconscious behavior becomes a conscious awareness. It's a much more disciplined when I'm conscious aware that I'm stealing for something as opposed to a common pot. Yeah, you realize that like some other goal is not happening. Yeah, you can't deny it anymore. Yeah. Yeah. And it's okay.

Sometimes you may choose to do that, I can no longer deny it. Yeah. There's another thing is if you have multiple people involved in the finances. So we have, my wife and I both manage our finances, it used to be, I was the primary lead and my wife was secondary. you'd ask almost like permission saying, hey, I'm thinking about going out with friends. Do you mind if I go out? Do we have enough money? With the accounts divided up as we have them, she's logs in the bank and says, yeah, there's enough money. Her name's Krista. The Krista Fun account. I have a Mike Fun account. She doesn't have to ask me. So there used to be this weird parent-child

relationship. I'd say, no, you can't go out. Or here's your lollipop. You can go out. It's like bizarre. It's kind of creepy. And now we're a team looking at the account. And there's not enough money in the account. There's a conversation about it. We see we can't do it. this now. Do we decide to override the system or not? That's how it works. Yeah. I know that you mentioned there's a bunch of behavioral things that humans just are, you know, likely to do if you have one big bucket of money and you don't split it out. So let's talk about those. You've got one of them you mentioned, but I'd love for you to go deeper on it. You call it Parkinson's Law. Yeah. So Parkinson's Law is based upon a theory by this guy North Coat Parkinson from the 1950s, and he observed something really

interesting, and we already alluded to it, is that when a resource expands in availability, we consume more. The classic economics curve says that demand dictates supply. So the more people want your podcast, the more you're going to produce podcasts. The more people want a sponsor show, the more you're going to charge for it. And he argued that is true in a certain number of economic cases financially, but in most cases, humans behave in the reverse. It's not demand dictating supply, it's supply dictating demand. And the class example is with, well, you can do with soda cans, a hundred years ago or 200

years ago, when soda came out, soda cans were what we consider like almost a shot glass. Like, it was a small little can. Then they got these, I think they're 16 ounces or something. But I don't know if you've seen cans recently. It's like a- They're huge. It's a freaking bazooka. You could kill someone with this thing. It's crazy. And the thing is human behavior hasn't changed. The container dictates consumption. We used to drink that small shot. We used to drink a full can. we are now drinking this full container. And societally, the caloric intake is massive, and our waste lines are expanding massively as a society.

The interesting thing about Parkinson, he said, if we simply went back to those shot glasses, you won't drink the whole can. You won't get multiple shot glasses. You'll finish off the shot glass, and you're done. So the container dictates the supply. When it comes to our finances, if you've one bank account,

that is your shotgun bazooka of a container. We need multiple small shot glasses, and you'll just take that little shot. That's what Parkinson teaches us. That makes sense. And then there's loss aversion. Yeah. Loss aversion is so interesting. Loss of version is once we possess something, we'll go to extremes to retain it, even though it's illogical, but we won't go to the same extremes to gain it. So we'll do more to retain

than we will to gain. Class example, you drove up in a nice car. I was admiring your car. Oh, thank you. Yeah, I love it. Hot pink Porsche or purply pink. Purplely pink porch. It's gorgeous. And so as Porsche pulls up, and a Porsche will be a dream car for me, I do have another address. car I love, but if I bought that Porsche, I would put it into my garage and save it, but say I, and drive around and showed off and polish it, if I didn't have enough money saved and couldn't pay for it and the dealer calls me and says, we're going to call the claim the car back and take the slips back, I will maybe take a second job, maybe I'll drop insurance, maybe I'll stop

driving, I'll just keep in my garage because it's my baby now. But here's the thing. I'll do extraordinary things to retain it, second job, drop the insurance, but I won't do those things to get in the first place. That's loss aversion. When we have a certain life standard, it is very hard to reverse that. So now I live in my new, beautiful home, I'm not going to lose that. And so we will go to extreme measures to keep it, and sometimes illogical. I'll take on debt. I'll borrow money. I'll ask my parents, they're going to just lend me a little of cash. I'll ring up the credit cards, and it will crush us. But we wouldn't do those things to gain it in the first place. We have to realize this is wired into us. And with an awareness, you have some control and authority over it.

the better move is not to gain the things you can't really afford yet. It's to slowly build toward it and have a cushion that when perhaps your income drops that you can sustain because you have some kind of savings. Because you will logically try to retain something you have that you can't afford. So don't try to grow your lifestyle very quickly, which most people try to do, to pace with their income. As your income creases, build a cushion for yourself as you're moving along. Let your life increase. That's our natural tendency. We want better and better.

But save a cushion so that if you ever have a dip, you can sustain that for a extended period. Is there some sort of rule like I should be able to pay for this 10 times or like, is there some rule that we could follow? Generally, the optimal rule is minimally three months of full life expenses covered. So wherever your life expenses are that you have is sitting in savings ready to spend minimally. Six months is ideal. Here's what the research indicates.

If I save for three months, I'll live in the loss of version state usually for about one to one and a half months, about half that time span and start saying, my gosh, I'm eating the savings. Then we'll start adjusting our lifestyle. So that remaining one and a half months of cash I have will stretch for another three or four months. So three months of savings can usually last six months. Six months of savings can usually last a year to a year and a half. Today's a much more volatile economy. I'm encouraging people have six months of full expense savings minimally so that you can sustain if you go into a debt.

That's good advice. Okay. The transgressive motive. What is that about? Yeah, so we have a natural tendency to rebel. So if, listen, if you came in here and tell me, this is how absurd it's to be. Yeah. I'm like, oh, huh, it's so good to see you.

By the way, the way you dress, you could be a little more professional wearing a suit. In your mind, you'd be like, who the F for you? Now, you will say to my head, oh, thanks for the advice. That was very kind of you. But inside we rebel, if you said to me like, Mike, what are you doing? Like, this is the worst outfit ever. Like, Mr. Paley White is wearing this? Like, you're reflecting.

Why don't you wear a better collar for yourself? I was like, oh, that's so great. In my head, I'm like, what a total pain in the butt you are? We rebel against advice, and we rebel against any authority asserted to us. I was saying with businesses, if you as an owner tell your business employees to comply, they will seek to defy. So when we're given instructions, we resist. So when we are put in constraints and budgets do this inherently, we often resist. many budgets I've seen systems will have categories like things like maybe tithing are in there so basically what those budgets are saying is we don't know if you tithe but that's a common thing to do you should be tithing well actually I don't tithe and I see that and I'm like what are you

doing telling me the tithe and a subconscious rebellion kicks in saying I don't know if the system's for me or I start to push it away so budgets have implicit or not implicit but suggested compliance, and then therefore I'll defy. So just be aware of that rebellion that's inside. The best system to build is a system that you create for yourself. So I tell myself, you know, I shouldn't dress like this. I should have colors a little more complimentary and make me a little less pale. If I said to myself, I'm like, that's a good idea because I said it myself. So build a system around your own desires and interests. So when I read the money habit, I don't have any suggested accounts. I have ways to observe your own behavior so you can create

your own accounts and your own budget effectively. That makes sense. So I know one of the things that happens, especially for people who are living paycheck to paycheck, is this panic at the end of the month. Like you get your paycheck and it's a high. And then 10 days before the month ends, you're in a panic because you can't afford all your things. What is happening in that payday high to panic cycle?

Totally. This is rooted on, I think, the most important principle that the entire book is based on. By the way, in the book, I don't talk about the behavioral principle. Like, that's not important. I just talk about the applications. I touched on one a little bit. But this is based upon what's called optimal faraging theory. So before humankind was the modern humankind was the Neanderthal.

And we were hunters and gatherers. Now, here's what the Neanderthals didn't do. I wouldn't say, hey, I'm hungry. Let's go get steak. Ugh. No, I'd say, we hungry. We go hunt Willie mammoth. And you and I are out there.

Or, you know, we hungry. Let's go gather berries and stuff. You didn't go for a small portion. just to satiate, you went for the big hunt. And the reason you went for the big hunt is there's a massive caloric burn. If we're out gathering, we're putting ourselves at risk. There could be saber-toothed tigers or whatever's out there coming after us, so we have to protect, gather, we're putting the rest of the community at risk.

We have to come back. If we're going out for the hunt, we're racing and chasing, a big caloric burn. So you go on a massive hunt. When you capture the food, say we go for a loy mammoth and we capture this beast and kill it, now we're at risk because the food will perish. We have this massive beast, but we know if we don't eat it now, it's going to rot away. So what you do is you start burying some of the food, you smoke the food, but we also know there's a very short period before it rots. So you go into a gluttonous state.

You start consuming an over-cleric intake. Eat, eat, eat. Then the very last phase was now there's no food left. You start eating what's been stored. And when that's gone, we better go and hunt again sooner. We're going to starve to death. That's called optimal farging theory. capture in mass, preserve what you can, and if you can't preserve it, consume it fast because you need those calories, and when the food's gone, going to hunt again.

Fast forward to modern humankind. We still live by that law exactly. Now, the massive hunt is a paycheck. The paycheck comes in once every two weeks. For some people weekly, some people even once a month, but once every two weeks is the most frequent. Do you know the optimal payroll that people should receive is three times a day? If I paid you in the morning again in the afternoon and one more time in the evening, you would actually manage your money better. that's absurd and no employer can afford to do that because there's costs associated with that. So you get it once every two weeks. We just capture the woolly mammoth. Our wiring is now, there's two things you can do. Preserve it, but there's not many ways to preserve it. You can put it a bank account, but it's rotting away. It's sitting there or consume it. And since the monies is sitting there, the essence, the feeling is consume, consume, this is rotting away. Some people preserve it by putting in a 401k. When something's inaccessible, then we'd actually don't worry about it.

Yeah. So the money goes in the 401K, it's preserved. So our mind is wired. Once it's smoked or buried, it's okay. But when the money's seeing the checking count, it's like, this is going to go away. I better consume it while I have it because it's gone. We prove that to be true because by a week or two, it is gone. And we prove it's rotting away.

So then we go into, oh my gosh, I don't have enough calories. I need to go on a hunt again. And we go into this panic state toward the very end. And we go in the hunt again. So what do we do? We have to improve the preservation mechanisms. We need little 401. What happens is when we get the hunt to kill, paycheck comes in, we carve it up very quickly into

different accounts. Those accounts are effectively smoking or burying that woolly mammoth pieces of it. And we put into different accounts. It actually satiates us and give us comfort. We say, oh, okay, I put some money in the mortgage. The mortgage is covered. I'll have to worry about that. And it actually takes away that stress of, I need to consume it now or it's going to go away.

Then you start consuming in a more optimal way because the money starts dripping to you from these different accounts. you use it more prudently, and we repeat this process over and over. Yeah, that's really interesting. As you are talking, one of the things that I think about for myself, as I've become more successful and make more money, I'm an entrepreneur, a lot of entrepreneurs are tuning in. When I get a lot of money, the first thing I think about is I got to spend this or else they're going to tax me on it.

Totally. That's part of optimal farging theory. Yeah. Yeah. I'm afraid. And so, by the way, taxes will come. We're told in our business, if you spend the money on different expenses, you can reduce your taxes. Some of that's prudent, for sure. Like, I hope your vehicle or some of your vehicles are

actually going through the business to reduce your tax consequence. Some of it just can't legally be done. And yet entrepreneurs still say if I just simply spend or find a way to spend, and it actually compromises other elements of our life. Yeah. Here's the most crazy thing, and this isn't profit first. We encourage people to step a tax account. So money comes in, and money goes into this tax account. And then when tax time comes, we pay from that account. What's so interesting is it reduces that sense of loss aversion because the money's already been allocated to it. One of the most crazy things, Hala, is every quarter, when I wrote profit first, I was expecting people to say, hey, I have more profit than ever before. Thanks for writing this book.

I actually get people writing, calling me, and sometimes showing me in my office, which don't need to do that, but some people do. It's saying, I just paid my taxes. The company paid it. I feel so good. And it's like, why is this? I'm like, oh, because of loss aversion. So that car that's in the garage we're talking about, that if I can't pay it, I will drop the insurance or can't afford it.

I'll take a second job. When it comes to taxes, if I put taxes in a tax account and never came into my own pocket, I don't feel like it's being taken from me. A quick analogy is if I sit in here and I said, hey, holl, this was awesome. Here's $100. This thanks for doing this. It may feel awkward. I gave you $100, but you're like, oh, well, $100, thanks, Mike.

If I gave you $200 and say, hey, thanks for this. But, oh, oh, by the way, I need $100 back. You'd like, hold on, you just give me $100 and you're taking something back. Now it's, like, super weird. Yeah. And that's what taxes feel like. I just earn money and the government takes it back for me. Yeah.

But if I never give you that second hundred in the first place and just give it to the government, it doesn't feel as painful. Yeah. And that's exactly what we did. I remember when we implemented profit first, one of the things that we changed is whenever I get my sponsorship money, now it gets sent in like two buckets. One is like my money and one is tax. And then we just split it 50-50.

And, you know, if there's stuff I don't owe, it's just like kind of like a bonus at the end of the year. And I love that. I suspect it reduced the pain. It does. It does. Yeah. It does to a degree. I know it's there, though, you know.

I've had people, yeah, you know it's there, but it does reduce some of the pain. Yeah. And I've noticed some people, like, say their tax bills, $100,000 and they saved $110,000, there's $10,000 extra. They feel like they're getting a bonus. Exactly. It feels like a bonus. That's a good thing. So, probably, it's a shell game.

And logically, it's a shell game. But it's actually a behavioral management system. And that's what people don't understand. Yeah. And it prevents you from, like, realizing, like, at some point, oh, my God, I didn't save money or I didn't put money aside or spending what you actually don't have because that money eventually won't be yours, right? So you break down six accounts. Income, needs, wants, dreams, fix future, and emergency. Do you want to explain each one? Sure. It's based upon Maslow's hierarchy of needs.

So Maslow identified that you and I have basic physiological needs to survive. We need to be breathing air right now, drinking water, eating food. So like if someone came running in and threw a bag over my head, it's plastic and starts choking me out, interview's over. I'm struggling to get out of this thing because my life's in jeopardy. And what Maselot pointed is no matter what state we're in, if the foundational needs aren't being met, we have to revert to it. But once they're adequately met, we move to the next level, which is safety needs, shelter, and so forth, and then belonging to be part of a community, just like you have here, and then ultimately self-esteem or self-actualization, I should say, is the highest. Well, when it comes to survivability, we need those physiological needs. We need to eat, we need food, we need water, we need shelter. So that's what the needs account is. The income account, which is the first account, which is the first

account is simply a depository account. Money flows in there. It's deposits of your household income. If you're the sole breadwinner, it's the money you're earning. If you have collective earners, it's the collective money that's being contributed to the household. That's our starting pot. But historically, that's just the one big pot, and we know the danger of that. That's a woolly mammoth, and it's rotting away. So we need to carve it up. The first account we carve to support our basic needs. And in my book, I identified based upon your income level. If you're a young but profitable person making $100,000 more $1,000 a year, the percentage you put toward needs may be less than if you're making $50,000 a year. If you're making $50,000 a year, 80% of your money may be going to

support your core needs to live in the United States. But if you're making $100,000 a year, maybe it's only 60% or 50%. Core needs are like groceries, you know, shelter, rent, exactly. like, once is I want to eat out. And some people will conflate the two. They'll say, well, I need to eat out. So, yeah. So always, if you don't know which level it's in, it's always the higher level. I know someone that has multiple homes.

I say, well, I have these homes, so I have to pay the mortgage. I need a mortgage. I'm like, it's a basic level need for all humans to have three homes. You're like, no. I'm like, okay, that's beyond it. We all need a home of some sort. So you have to differentiate those two. And if you don't know, it's a higher level.

So wants are the mini luxury. dreams are the bigger luxuries. So dream may be, you know, I need to eat food, I want to eat out, I would love, I dream about having a personal chef. Like that's kind of how you differentiate this stuff. Usually dreams are a longer-term savings once or usually some of you spend on a weekly or monthly basis, and needs are usually more of a daily basis, basically. Yeah. Fixer future is this. Most people that start this system and most people in the United States are in debt.

So a fixed account is that we're allocating money intentionally. to get down unsecured debt. So credit cards, anything that's not asset-based. But a loan for a house, generally houses, not all, but generally a house will appreciate over time. There's value in that. I believe taking a mortgage or some kind of loan is appropriate for it. When it comes to a car, yes, most cars depreciate, but it sustains its value over a period of time, and we do need that for transportation. I think that's appropriate. But other things like credit card loans and so forth, they're unsecured. We need to get rid of that. It's a big burden. and there's no value.

You can't say, well, can I sell my credit card debt to someone else? Maybe I'll give me some money for it? No, but you can sell your car to someone else or your house. So, well, if you have credit card debt, we're going to have a fixed account to pay for that. Once your unsecured debt is addressed, we're going to move to a future account. This is reserving not for retirement necessarily, but some future event of significance. Do you have children? Not yet, no, yeah.

Okay. So I got three kids. I remember my wife and I, when they were approaching her 18th birthday saying, we want to take them to Disney. And we want to go large because it's the last time they're going to be home before they're out of the house. And so we started allocating money for that. That was a future saving. So that's something big for the future event. Some people are saving for some form of retirement, which I'm not a fan necessarily of fully retiring.

Really? Yeah. I've been talking to a lot of people that have been there. So I'm in my 50s now, my early 50s. I've been talking to people in their 60s and 70s who've retired, and it ain't easy necessarily. And the general feedback is perhaps slow down the pace. But if it's your passion, stick with it to the very end, is what I'm hearing. The last account is emergency.

The most predictable expense for everyone is an unpredictable event. I can guarantee it's going to happen. A health crisis, an accident, the boiler is going to blow in the house, which recently did our house. And so we all need an emergency account because I can guarantee something unexpected is going to happen. Yeah. And the emergency account is that different than the six?

six months of savings? Yeah, six months of savings is for an extended period without income. An emergency is where there's a surge demand while you're still earning an income. And I just can't tell what it is. And in the book, based upon your income level, 50,000, 100,000, I have all the way up to millions and earnings, and your season. Like, some people are recovering from debt. Some people are looking to secure their future more and more. Some people are saying, listen, I want to live large now because of whatever.

And I am kind of living in that moment right now. I just want to kind of live big, and we're doing it. We're doing some amazing things. You have to identify the season you're in matches your income, and there's different percentages I suggest. Yeah. Yeah, bam, starting a business is, of course, exciting. As entrepreneurs, we love to build, create, invent. But entrepreneurship can be overwhelming, especially in the beginning when you're first

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activate balance. Yeah. Talk to us about each one and how you can tell if you're in each bucket. Yeah. And they're rooted in behavioral psychology. Okay. So when I was interviewing people for this, I worked with collectively either directly or through group coaching about 1,000 employees of different companies and hundreds and hundreds of entrepreneurs. And I'd ask them about their situation. The majority, I would say upwards of 70 percent, have debt of some sort. That's not secured debt. Like it's credit cards or whatever. Loans from family and friends.

Student loan debt is- Oh my gosh. Yeah. That was the most common. It's maddening. And they would say, I have debt. There's a behavioral phenomenon that if I, you say, I have something, it's a possessive state, it actually becomes you. So if you say I have a purple

Porsche, it's your possession. It's actually part of your identity. If I say I have debt, that's part of my identity, it's part of who I am. And when it's part of your identity, it becomes a permanence. And that's the dangerous part. So when people say I have debt, that they are also saying I'm always in debt. It's very hard to eradicate. So I said, okay, that's not a good word. We need to put the word recover. So if I'm in a recovery state, that means an active move toward improvement. The other thing is seasons are not permanent. So I said, oh, recovery season is a positive temporal state. That's so smart. Yeah. So when I say, oh, you don't have debt, you're in recovery season. How long is this season going to last? It's like, oh, that's right. There's a time frame to it.

So that's why those terms exist. Seasons are recovery coming out debt. The next one is funding. Funding is where we're intentionally saving more than we're spending of our income to prepare for some kind of future experience. Activate is where we're spending more than we're actively earning, so we're actually downing our money savings with intentionality because perhaps we want to live larger in the moment. And listen, that's appropriate at all stages. Or maybe you're starting a business.

Does that count? Yeah, that totally counts. Okay. Yeah, like that's a life dream. I want to do this. Or I want to, I just want to take a year off and rediscover who I am or anything. So that's a form of activation. Then the final stage is, or season is balanced.

Balance is where I'm actively trying to live in the now, but also preparing for some future events. The interesting thing about seasons, though, is you can choose the season you're in and move through them quickly. So in nature, seasons usually are three months in the northeast at least. You know, you have winter, spring, summer, fall, and they go in rotation. In our business finances, they can ping pong around. And that's like, oh, that doesn't happen in nature until I realized it did. I was just in Australia a couple weeks ago. Here, winter's kicking off.

They're in the middle of summer, and within a 24-hour flight, I came back to New Jersey to temperatures in the low 20s. And I'm like, oh, I just left temperatures in the mid-70s to come to the 20s, and it happened like this. Also, listen, you can be home,

and it's the middle of January where we hit sometimes the single digits, and it's like a 70-degree day in New Jersey, and then it drops back down. So seasons can ping-pong around very quickly, even in nature, but in our personal finances, they absolutely can ping pong around, and they don't go in sequence. You can move from Activate, maybe back to recovery, to balance, to fund, and it jumps around. Yeah, that makes a lot of sense. Let's try to apply these seasons to real life,

okay? Okay, yeah. So if you get a $5,000 work bonus, how should somebody in each financial season treat that money? So if you're in recovery, fund, activate balance, how does that get treated differently. Yeah. So if you're in the recovery stage and you're actually getting out debt, you could use a portion, but don't use all of it, to reduce your debt in one big tranche. In a case like that, there's two kind of psychologies. BF. Skinner did research around operating conditioning and basically said, if we get early wins in our life, we're more likely to sustain that behavior. So if you have a small debt or two and you can wipe them out with that 5,000 or a portion of it and you haven't wiped out any debt yet, it's actually smart to do that

because you'll believe you can wipe out debt faster. It's operating conditioning. But it's not logically optimal. The optimal debt is the most expensive debt. So whoever has the highest interest rate. So if you're already working on your debt and you get a chunk of money, go after the high interest rate debt, because that will give you the most long-term relief.

It's the smartest move. But save a portion of it. I usually suggest 10% to maybe 20% to reward yourself. Because if we deprive ourselves or rewards, then we become cynical of a system and we're less likely to sustain it. So I'm saying if there's a cost to sustain it. So I'm saying if there's a cookie on the table and some of that can satiate this demands, you have, slice that cookie, not in half, slice off a small piece for you very quickly.

Give it to the other people. But give yourself some of that treat, too. That makes sense. Yeah. If you're in the fund season, similar method, a big chunk of it goes toward whatever that future savings event is, but a little bit should go toward the now, also to have that reward. If you are in the activate season, you may choose to activate all of it. Activate is a unique season in that we're intentionally downplaying our savings, and we're going into its intentionality knowing that we don't need to save more for a period of time.

So saving any of that may actually not serve you well. So if you're in the Activate season, you get $5,000, this may be your moment to live large or to extend that activate period and using that capacity. If you're in the balance period, someone goes toward the future, somebody goes toward the current, and you kind of split it in a half. Yeah. I'd love to hear your perspective more on retirement because a lot of entrepreneurs tuning in, we're like, responsible. responsible for our own retirement. When you work in corporate, you just have a 401k, you kind of just put money in it. And that's sort of taken care of. And as entrepreneurs, it's really all on us. And some of us are making a lot of money and kind of are even me. Like I think about my

retirement and it feels really abstract because I'm making a lot of money. And I'm like, well, I don't need to worry about that because I'm making so much money. But I do need to worry about it. So how do you think about it? I'll give you some more modern teachings that people are sharing, and I'll give you a perspective that I haven't heard anyone share. Okay. So one is when you hit retirement age, your health span will perhaps be on a decline compared to where you are now. So if you're in your 20 or 30s, you're at the optimal in health.

When you get your 50s, I don't care what you do for exercise and stuff. Things start aching and hurting. It just does. Trust me, it's coming. It's coming. And once you're in 60s and 70s and perhaps 80s, you may start a decline, and you can't be as active. And it's a shame that people are saving for their 70s and 80s to do always amazing things, but they're not physically capable. Now, listen, technology is coming about and all

these things with AI and medicine research. That may change. So this is just what I see in the current state, but it may change. So actually, leveraging more of that money for the now may be better. Yeah. The second component, which we already talked about, is people that go into this kind of full stop generally seem to resent the fact they went to a full stop. They've lost meaning and purpose, and that becomes a big emotional cost. So even if they have their health, even if they have their funds to live a new way without purpose, it becomes fleeting and it's like, is this all there is? And that's actually anguish you're living under. Here's the thing I haven't heard anyone talk about in this context. It was fascinating. I was talking as, as listen to one guy, he says,

photograph every single day of what you're doing and maybe even record a quick note about it. So 365 photographs for the entire year. And he goes, what would be so interesting is it's the ultimate form of memory. When you look back at those photos, you'll remember what you did, and you'll start seeing what a rich life you lived. So if you preserve what you've done, it expands your memories. I believe, and I'm starting to feel this, at the end of life, what's going to be most important is all the things remembered. And right now, when you're in your 20s and 30s, it would be a shame if you forgot all the great things you did. You know, I look back to like my college days. I'm like, I remember the two epic parties that were the best parties ever.

I remember a couple of friends I had that were extraordinary friends. But I don't remember the day-to-day stuff. But I do remember it was fun back then. I wish I preserved it. So I actively take pictures on my phone every single day now. And we'll get a picture when we wrap up here. And I'll look back and say, oh, remember this with Holla? It was the phone.

We're talking about her purple Porsche. We went for a ride in it. And it was, like, I'll just remember. I love this. Yeah. I remember the things that happened. And it makes the current moment richer because you remember the past. Mm-hmm.

And it prevents, like, recency bias, even like with friends and memories and because you just really remember everything that happened all year. 100%. Yeah. It's not ever forgotten. Yeah. So debt is a big problem for people.

And I know you give some advice in terms of how to, you know, pay down your debt, what not to do, what to do. What's your thoughts about that? Yeah. So a common technique we talked about is based upon BF Skinner's work is this concept of paying off your lowest debts first to form the neural wiring to continue a behavior. And that's absolutely a smart idea in the beginning. So if you have a lot of debt, sort your debt out by the amounts due. And if you can wipe out some early debts, that's a beautiful thing because you'll believe truly that you can wipe out debt. But if you continue that pattern, you may not be optimizing. And if you have very

expensive debt, high interest rate debt, that can crush you. There's another form of debt. I've never heard anyone to talk about. It's called consequence. Okay. I had a lot of loan from a friend of mine for $30,000 at zero interest rate. But he was a friend of mine. And so I put zero interest. This is a very inexpensive debt. I can take my time paying this back. And he called up. He's like, dude, where's the money I gave you? It had high consequence. His name is Chris. And over time, it almost costs us our relationship because I wasn't paying it back. I said, oh my gosh, there's another form of interest. There's the consequence of the relationship. And that could have been the most costly loan that I wasn't paying back and could have burned me long

term. So rate by the percentage due, but also what's the consequence to your life? Will a lawsuit come about? Will you lose a friend over this? So consider that. Start off with a couple early wins, but then very quickly sort out your debt by the highest interest rate and the highest consequence. When you have high consequence, high interest, tackle that. When you've high consequence but lower interest, that still is extremely important and often it's disregarded. Actually do that next and then target the rest of the stuff. If you have debt, should you also be saving, Or should you just be focusing on your debt? Great question.

I still save. But I saved at a lower rate for sure because I'm targeting my debt. But I'm still saving because I want that behavioral mechanism in place. There was a saying from a, I think it was Ramit Seiti, who's a very popular personal finance expert, great friend. And he said, I think it was him. He says the new form of discipline is automation. Automate the process. So when money comes in, automatically save and you will maintain that discipline.

also according to Parkinson's law, if you save before you receive the money, so like a 401k, you will adjust your lifestyle because there's a smaller closet to store your stuff in, you'll adjust your lifestyle to live within that container. So if you can, save before you see it. And if you have an employer, you tell them, I want my paycheck in two forms. One is to my primary checking. I also have this other checking account. Can you carve out 20% of my paycheck to go there?

You will adjust off your primary, that second one have hidden away. It's your magical kind of hidden 401k without. being a 401k. And I remember when I was in corporate, the system, like, allows you to just do that really easily. Yeah. And I'm a small business owner. I got six employees at one of my businesses. We can do it.

Yeah. You just got to ask. Yeah. Yeah. And also, like, certain bank accounts let you do it. I know Relay is a bank account that lets you, like, set up different accounts. I use Monarch money and I can set up different, like, little accounts. So, yeah.

So, yeah. So, relay is for a business owner. So if you're an entrepreneur, use Relay. I'll give you a little plug here, banklike mike.com. It's the bank I use for my business finances. And if you have a personal checking account, really doesn't do personal, you can go to Dream First Bank. I set up a link called Profitfirst. Bank.

So you can go to Profit First. Bank if you want to do the personal accounting or banking. Yeah. Oh, I know that you've got a flight to cash. So I want to be respectful over time. I'm kidding. I'll take an Uber in a Porsche. But leave us with some advice in terms of like what's the number one thing that people can do in the new year to

optimize their money habits. Yeah, I think the first thing is to realize that people do want you to be wealthy. Like you, everyone watching this, the people around you want to be wealthy. Now, no one says, like, I wish you were a wrench. But when it comes to participating in life itself, if you are worried about money, you're not fully there. The analogy I use as a doctor. Imagine, you know, I'm having a heart attack or something. You rush me to the hospital.

I guess it's at the hospital and two doctors come out. Dr. One comes out and says, I'm really poor. I have no money. I'm actually desperate. I need patients. In fact, I'll do 50% off. You're ready to proceed. Dr. 2, she comes out and says, I'm very rich. I'm very wealthy. I charge a premium for what I do because I'm the best at this. I have all the time in the world to take care of you, and this is the exact procedure I do. Do you want to work with me? And by the way, I charge 10 times more than Dr. 1. I'll choose Dr. 2. Yeah. I want someone who's wildly confident because they're taking care of me. When it comes to relationships, I want someone that's fully present in my life.

I want friends who are really there. And if they are worried about their finances and struggling, there's this ringing in their head that's constantly playing out and they can't be present. So no one's going to say, yeah, I wish you were rich. I wish you had more money. People would say, no, if we're friends, I want you to be fully my friend and fully present.

So it's ironic. The world wants you to be wealthy. They just don't use those words. So that's the takeaway I want. The method I want you to use to start achieving financial independence is real simple. Right now, think about the thing you worry or wonder about most financial every single day. Do you worry if you can pay groceries? Some of us do. Do you worry if you can pay the rent or the mortgage on your apartment? Or do you wonder if you can go on a big vacation this year?

I don't know what it is. But what's the one thing that you think about most? Whatever that thing is, set up one additional account at your bank, or one of the banks we suggested, but at your bank, set one account and give it that name. So if I worry about if I can afford my mortgage, I'll say, I will set up an account, a new account that says mortgage. And say my mortgage is, just for easy numbers, $4,000 a month. What I'll do is every paycheck, say, comes weekly, I'll take $1,000 and transfer it to the mortgage account to assure that my mortgage is cared for. Now, here's the magic of the system. You've guaranteed that your biggest financial worry or wonder is taken care of. It will reduce it. But the real magic is not that. It's in what's left over. You'll see,

oh, I don't have as much money as I thought. I have to adjust the rest of my lifestyle. It will force you to start taking balance and accounting for your priorities without compromising the rest of your life. That's a real simple way to get started. You don't have to do all six accounts, not yet, start with one account that you worry or wonder about most. Yeah, I'm somebody who, like, hates finances. I'm the type of person that's like, let me just make as much money as possible, so I never have to worry about this. But your stuff is always so easy to understand, and I always leave these conversations being like, I got to do this. Like, immediately, it's going to make me feel better. And it's not scary. Like, all your suggestions are so

easy to implement and what you do for entrepreneurs, what you've done with profit first, and what you're doing now with the money habit for just everybody in the world is just awesome. I'm so excited to put this to work. That means the world to me. And one last thought is you said, you know, you're not really excited about numbers or the finances. Yeah, not really. Yeah. I found there's a word for it. It's called human being. You are so human. That's so normal. I'm not into numbers. People come to me and said, oh, were you an accounting major? No. Do you love numbers? No, I suck at them, actually. That's why I built these systems, something that's really simple, that works for people who care

about living life, that want to maybe earn as much money as possible, but don't want to do all the management. The system manages it for you. Yeah, I can't wait to put it into practice. Where can everybody learn more about you and everything you do? Where can people grab the money of it? The best site to go to is Mikemoterbike.com. It's Mike McAllowicz.

Nongues about nickname from grade school, because it rhymed, Mikemotorbike. And then I'm really proud of a podcast I started. It's called Becoming Self-Made. And I'm studying the journey of these wildly successful entrepreneurs. I want to get you on the show. Oh, I love that. I met with the Savannah Banana's owners. I met with Don Miller, a mutual friend of ours, Amy Porterfield, 1-800 got junk,

the founder of 100. And I found what is their story to success. But the most interesting thing is not success porn. Like, here's all the things they achieved. We talk about what's the struggle they still feel today that they started off with. And it's unbelievable how much these entrepreneurs still struggle with what we would consider the basics that they should be over. I think it's a very empowering. What a cool concept.

Yeah, it's really interesting. And people get super real. It's a little bit of an Oprah moment at times. So that's called becoming self-made. Amazing. I'll stick all those links in the show notes. Thank you. Thank you so much for your time.

It was such an awesome conversation as always. It's amazing. Thanks for letting me come to your studio. Of course. It was so great having Mike back on the show. He keeps raising the bar on how we understand money. And this conversation hit especially deep because it revealed how much of our financial life comes down to behavior and not income. Mike reminded us that most people don't struggle because they're not earning enough,

but because their system is working against human nature and human psychology. And the moment that you flip the system, everything else will follow. One of the biggest takeaways is the power of separating your money into purpose-based accounts. Now with his profit for a system, you do this for your business. But now with the money habit, he's suggesting you do this for your personal. life as well, and I love it. Instead of one giant pot that fuels impulse decisions and panics, you create smaller shot glass accounts to give you instant clarity. They turn vague intentions into visible choices and goals, and they help you stay in control without relying on your willpower.

I am so inspired to go into my bank account and create little buckets for all of the different goals that I have and all the intentions that I have with my money. Mike also showed us the importance of momentum. You don't transform your financial life through massive, rigid sacrifices. You do it through small wins that rewire your identity, like saving $10 a month or wiping out your smallest debt first. That steady psychological lift is what makes your habit stick. And lastly, I loved his idea of financial seasons, recovery, fund, activate, and balance. Each season demands a different strategy. When you label your season, you finally understand which actions support your goals and which habits pull you backwards.

It takes shame out of money and replaces it with intention. So if you're in activate mode, you can feel free to spend without any of that guilt. And if you're in recovery, you know that your intention is to pay down your debt. This episode is a reminder that you already have the potential to build cash confidence. The moment you match your system to the way that your brain naturally operates, you stop surviving on payday highs and start building a life where money supports your goals instead of stealing your peace. All right, yeah, fam, if this conversation with Mike McKeown,

It sparked a new way of thinking about your money. Send it to somebody who needs this conversation. We all know at least one person who could use more clarity around their cash. And if you're feeling this live energy, show us some love. Drop as a five-star review on Apple Podcasts and leave a comment telling me what resonated with you the most. And remember, you can watch all of these in-person interviews on Spotify video and YouTube. And make sure you follow and subscribe so you stay tapped into every conversation as it happens. You can also find me on Instagram at Yap with Hala or LinkedIn.

Just search Hala Taha. And a huge shout out to my amazing YAP team for pulling off yet another powerful live recording. Appreciate you guys so much. Shout out to Shamm Fricon Joshua on the guest outreach team. And also shout out to Bryce at Record ATX for helping us with this live recording. This is your host, Halataha, aka the podcast princess, signing off.