Episode #18 – Confident Money Moves Begin With Knowing Your Numbers (Real-Life Examples)

Welcome to the Millennial Money Moves Podcast. On this episode, we’re diving into a couple real life examples of financial planning.
I think when doing your finances on your own, it’s overwhelming and you’re not really sure what can give you a good leg up and how to tackle that.
So my hope for this episode, as you can see the starting point for any financial planning is understanding your numbers, and then where do we go from here? Hope you enjoy.
This content is purely educational and does not intend to be financial advice or financial planning. Please consult your professional financial advisor, or a tax professional to receive tailored advice to your personal situation.
Babin Wealth Management is not responsible for action taken by listeners based on educational content provided. If you would like to receive personal financial advice, please reach out to Babin Wealth Management directly at babinwealth.com.
Let’s make moves. Welcome back to another episode of the Millennial Money Moves Podcast. I am your host, Sean Babin.
Blake Bandani joining me in the co-host seat. Apologize for the couple of week break there, but you know, I think our new pace is probably two episodes a month. That’s kind of what I think we’re going with.
Blake’s been going at an incredible rate with his work, and you know, we’re gearing up over here for our busy season, our busy push towards the end of the year. So for you listening out there, we appreciate you. We haven’t forgot about you.
We’re excited to be back. And yeah, look out for us probably two to three times a month now instead of probably every week.
So I just wanted to raise the white flag there and say, yeah, we haven’t totally surrendered, but we’re kind of easing back just as our workloads have increased.
And I would add, Sean, to our listeners, we appreciate you. If you want to pay our salaries, we’ll do this every day for you guys. So please let us know if you can replace our income.
Yeah.
And hey, how would that work out if we were professional podcasters and we didn’t actually have any more money moves to talk about, especially in today’s conversation. We’re going to have real life examples, hopefully.
So hey, lightbulbs on work life balance. How do you get podcasts with working hard without that? That might be an episode down the road.
So yeah.
And I think in what we’re talking about too, like education, like as things shift, like in economics, financial markets, just the world, we’ll definitely bring those up and talk about it.
But I think what you and I have learned is week to week, one for our schedule is a little tough. And two, like, shit, man, you start running out of things to talk about. And having to be more organic with what’s going on today is a lot more fun.
I get jealous of the guys who run those sports podcasts. And every weekend or every week, it’s teed up what you talk about. You just highlight what just happened on Thursday night.
Like Mac Jones, they take the Niners to the Super Bowl.
Mac Jones take the Niners to the Super Bowl. We won’t get into that.
But to your point, Sean, and to our listeners, I just want to say we started this because not only the experience we have in the financial industry, but we wanted to kind of bring what we see back to you that maybe don’t see this every day.
So I hope that message is still clear across the different episodes.
We’re not trying to show how smart we are, but we just wanted to kind of bring it to a level of people in our age group of what we see every day being entrenched in the financial industry, right?
Yeah, exactly. And like peel back the onion. I think our industry is, and a lot of industries are, like you don’t know what you don’t know.
If you’re an engineer doing your thing or running a salon, whatever you’re doing, and it’s not in finance, then how would you know?
So that’s what I was really hopeful with this podcast, is peel back the onion, expose the industry where some pitfalls are, and hopefully just get you motivated to make a move or two to help your money situation out, and take this free advice and run
with it, and realize at a point for you, maybe I shouldn’t be doing this on my own. Maybe I should bring a pro in to at least look at my situation and see where I can better myself for my family, and what is my trajectory that I’m on, and how can I
Exactly.
And to that point, I think what we’re doing today is really along the lines. I think we’ve given a lot of good nuggets. Obviously, we’ve gotten the insight of an actual professional advisor here with you, Sean, and always appreciate your free game.
But I think it’s easy to talk about, hey, you should do this, or watch out for this, and these are the keys, which are great. And I shouldn’t say easy, but just great topics.
But me, personally, I always like to kind of relate what I’m learning to a real life example, right? And really apply it. So I think today, what we really want to talk through is, you know, we’ve given some great nuggets.
But you know, Sean, you’ve had some of these type of scenarios actually happen in your real world in what you do every day.
So I think it’d be important for the listeners out there to truly understand how does this correlate to real life, all the stuff we’re talking about, especially about good habits, saving, etc. Right?
So like, how does this actually apply in real life? So really, what we’re excited to talk about today are some real life examples.
Yeah, I wanted to bring a couple case studies.
Love it.
To the fold and just go through like, what kind of give you a glimpse into what financial planning is. And you’ll see it’s a lot of generating info from people and then like what to do with this information going forward.
But, you know, not obviously going to use real names and ages and things like that.
But I do have a lot of good real information on a couple of case studies where one, I’ll show you where it worked out well for these people, where they took the advice and were making progress.
And then another one where, you know, it just kind of, you know, the people really didn’t take the advice, haven’t really changed their life much, and they’re still kind of doing what they’re doing.
I wanted to show you, like, it’s not always, you know, roses over here because it’s, it all depends on how motivated you are to get your finances in order. Like, that’s the toughest part for me.
And I’ve said that many times on the podcast and it’s just, you have to be motivated to want to do this. Like, when I’m telling you that you’re spending too much money and, you know, on the Zoom call, you’re like, yeah, I hear it. I hear that.
And, you know, and I give you, like, here’s the fix. Well, if you just don’t change anything, then nothing’s going to change. And so I’ll kind of show you exactly what that goes through.
So I love it.
And I’m a good news first, bad news second. So let’s show the successful example of like, you know, how they approached you, kind of the breakdown you gave and kind of the steps that you created for them to really create that successful game plan.
Let’s do it, man. So this is Mr. and Mrs.
Client. Mr. Client is 36 years old.
Ms. Client is 32. They don’t have any kids.
Their goals are to build up a savings bucket because they currently don’t have one. They would like to start a family in the next year too. They’d like to buy a home one day.
And then they really want to feel like they’re not living paycheck to paycheck. So that’s the goals. Like that’s what we’re talking about.
Seems like a pretty common goal for many 35, 36, and 32-year-olds, you know?
Absolutely.
I felt this was perfect because tons of people out there are struggling with those same four goals right there.
100%.
So, asset-wise, they both have a 401k. Mr.’s 401k has about 230,000. Mrs.’s 401k has about 145, and they’re both contributing 6% pre-tax to these 401ks and getting a 3% employer match.
Pretty common. They don’t have any emergency savings, and that was definitely important to them. So, the next thing we do is we’re diving into income and expenses.
So, when I get a goals list like that, hey, we don’t have any savings, we’d like some, one day we’d like to buy a home. So, where my mind is going is, how are we going to generate this cash?
Why haven’t you been able to save before me, and what am I going to generate? You know, what are we going to, how are we going to fix this? How am I going to get you to save what we need to, to one, build up an emergency savings bucket?
And again, a good rule of thumb for that. I use six to three months of covered fixed expenses, and some people will do six to 12. I think having 12 months of fixed expenses and cash is a lot of cash, as you’ll kind of see, I can show you.
But again, each planner will tell you their own thing. So, I like to shoot for that three to six month target, because again, if you have zero in there, well, then three months is at least better than no months.
And so, that’s kind of what we’re aiming for.
And it sounded pretty straightforward, but just to clarify that the concept is, if you were to lose your income flow, you lost your job, both of you, can you replace three to six months of your steady expenses each month through this little savings
account that you may have put together? Is that fair to say?
Exactly. Yes. It’s the worst case scenario.
That’s that emergency scenario.
Perfect.
You walk in to work tomorrow and, hey, our company just declared bankruptcy. We’re letting you guys go. Shoot.
Okay. Now, I got to go find a job. We all know how hard it is to find a job.
It takes three to six months.
Please.
So, having this built up is important. It’s also important for just life expenses. What about health scares or health situations where you got to fork over medical bills?
Homeowners, this is a huge thing. They’ve got to have some type of savings that isn’t a key lock to be able to pay for AC going out, home repairs. We could talk about that all day.
Owning a home myself, everything comes in three. So, something will break, and then two more things will break, and now then about $6,000, $7,000 because just out of nowhere, something went wrong with the house.
So, those are other good purposes to have this. So, yeah, that is important. So, whenever somebody comes in the front door and they don’t have any savings, or they have some and it’s a little, but I need you to have, we got to get more, it’s okay.
What are we going? What are we going to do? So, the first thing we uncover is income.
So, what are you bringing home? Second is what are you spending? And that’s what we’re going to dive into.
So, this first example, listeners, listen to how I go through just this budgeting exercise because this is absolutely something you can do for yourself.
That’s the point of this first example is just getting your numbers right, understanding how much you’re bringing home, where this money is going, and then how can we start saving for these different goals?
Because every month, we only bring home so much money. It’d be great if you have that commission job, and you can grind, and you can close a big deal, and all of a sudden, your income goes up tremendously. That is great.
But most of us, we’re fixed incomes each month. And how do we squeeze more out of that to put ourselves in a better place financially in the future than just spending everything we make?
And I think a lot of us feel, I hear that from a lot of my clients is, how do I get to a point where I feel like I’m not living paycheck to paycheck?
Well, it’s understanding where your money is going and having a nice buffer of cash behind you to kind of let your shoulders drop a little and be like, you know what?
If something did come up today that we were as unexpected, we have the money to cover that.
And I think that will help you tremendously by not feeling overwhelmed and feel like, each paycheck, you’re seeing it come in and then immediately go out the back.
Exactly right. So what do you got?
All right. So on the income side, Mr. Client, again, he’s 36 years old, makes about $80,000 a year.
Ms. Client, she’s 32, and she makes $110,000 a year. So they’re bringing in a total gross income of $190,000.
Pretty solid.
Pretty solid.
So for a gross number, I’m sorry, a net number, so when you’re taking out 401k contributions, taxes, health insurance, dental, all that fun stuff, I just take typically, in the state of Arizona, clients, I do 65% of your gross, and that’s your net.
Now again, you live in California, that’s probably going to go from 65 to 60. You know, you don’t have health insurance, blah, blah, blah, whatever. So we’re just going to use 65%.
So their monthly take home after taxes, insurance, and 401k, is let’s call it $10,000. That sounds great. That sounds like…
Sounds really strong, dude…
.
a really strong amount of money to bring home. So great. That’s our starting line.
We know where your income is. So now we’re going to do an income statement. Where’s all this money going?
So I start with the big three. We’re talking mortgages and or rent, and a car number one and car number two, for typically for married people or a couple. So we outline those for them.
This person’s rent is $3,000 a month. A member that one of their goals was to own a home. Car number one costs 800 bucks a month.
Car number two, 650 bucks a month.
Is that insurance note, etc., or just the note?
That’s just the note. So that’s a really good question. The insurance falls under just that total fixed expenses.
Okay, cool.
Fixed expenses.
So those are just the notes. That’s just what they’re paying.
Yep. Three, eight, six. Okay.
So what we do with this number is I want people, and this is good financial planning rule with them, the combination between your cars and rent and mortgage should be under 45% of your monthly take home.
Does that make sense?
So if you add up your rent and or mortgage payment plus your car payments, I want that total to be under 45% of your monthly net income.
Got it.
So these people, this client’s total is 4,450 a month.
There you go.
43% of their monthly take home.
So that’s great. They’re right underneath that amount. And that 45%, that’s just like when we look at healthy spendings.
People talk about their house poor or whatnot. It’s because their rent or mortgage is 5,000 a month in this scenario. And between their mortgage payment, rent, cars, half of their income every month is going towards that.
And that leaves them very little for kind of everything else.
Fair enough.
So we’ve got kind of the, like I said, I always start with the big ticket items, rent and mortgage and cars, you know, or if there’s anything else like, you know, private school and stuff like that for kids. But this was their big ones.
And then they had an additional and fixed expenses. So fixed expenses like Blake kind of mentioned. So things that are coming out of your checking account every month, whether you want it to or not.
So we’re talking maybe any insurance premiums, we’re talking auto insurance, we’re talking gym memberships, subscriptions, subscriptions is huge probably. You know, any debt payments, like you got to make that payment every month.
That’s part of those fixed expenses that you add up on top of kind of the cars and the rent. So this client had an additional fixed expenses of $1,500 a month. So remember, I know this is tough probably for this amount.
$10,000 a month is what their net income was. We’ve just taken out $4,500 for the cars and the rent. They have an additional fixed expenses of $1,500 a month.
So what’s left over after that is what we have available for variable expenses and pretty much anything else for this month duration. And so these clients have a little over $4,000. It’s $4,350 to spend on whatever they want this month.
I mean, that sounds very nice.
So for them not to have savings, I mean, what’s going on?
Exactly. So that’s the whole point. It’s looking at this.
I mean, like, wait, you have over $1,000 a month or a week. Sorry, $1,000 a week in disposable income that you get to do whatever with it. Now we got to look under the hood and we got to see what’s going on.
So with these people, one, they had no systematic savings set up off the top. This is where we add it to. So after we find out how much you can spend a month, this is where we say, OK, well, $500 of this or $1,000 is going into savings right away.
And so now you really should only have about $3,300 a month to spend on all the other fun stuff. But that’s the biggest miss for these people. And we’ll get to the fixes, is most people don’t.
Most people save at the end of the month. And we all know, if that’s the case, we’re going to spend everything we got. So some big issues with spending style for these clients was Amazon, number one, shopping at Whole Foods.
Again, I’m not saying Whole Foods is bad. Like me and Megan shop at Whole Foods. But if you’re not saving and you’re not doing anything and you’re spending a ton of money at Whole Foods, is that something we could cut and change?
Could you shop at Fry’s or Kroger or wherever else? Eating out was a big one. They’re eating out.
It’s just them two, so they’re eating out three to four times a week. Dude, I can’t even go to lunch with the three of us and spend under 80 bucks. And we’re not even drinking.
That’s not even cocktails or anything. Maybe one beer. Lunch is like a dinner now.
It’s like 60 to 80 bucks depending on where you go just for lunch. Throw dinner in the mix. You’re talking 120.
If you guys are having fun having a couple of drinks and an appetizer, that’s an easy 150 bucks after tip. Coffee was actually a surprising big one for these clients. So think about that.
So let’s say you go to Starbucks four times a week. You’re spending seven bucks each person. So 14 times four is what you’re spending each week.
So 50, sorry, I can’t do mental math. 56 bucks a week times four weeks, you spend 225 bucks a week or a month in coffee. Do you know how much a bag of grounds costs at Costco?
I don’t know Costco, but I usually buy, I don’t know, 10, 12 bucks and it lasts me two weeks.
Yeah, you can get a Costco size bag for $18.99.
And that lasts two months?
Yeah.
And so we just saved you $200 a month by just saying, dude, stop going to Starbucks every morning and make your own coffee.
Maybe a Friday Starbucks run, treat yourself for a long week, but like every day, I think to your point, I mean, there’s ways to save.
And it doesn’t feel like a lot for that maybe one month, but you put that over 12 months span, that’s a significant amount in a year.
Yeah. And I always loved the coffee exam because it’s so easy and stupid. But people say like, but you know, it’s only 200, you know, but I only save 200 bucks.
Well, that’s just a starting point. And again, you’re telling me your goals are to save money. You need to build up money.
You need a savings money, and I’m showing you how to save money.
And if you can’t let coffee go, like go into Starbucks four times a week, go, then we got bigger problems because the next things are these clients, they love vacations, they love traveling.
So they’re buying plane tickets, they’re hotels, rental cars.
You know, if you do that three times a year, maybe once a quarter, well, those are those months when that American Express or any credit card that you use, you know, let’s say you’re spending two grand a month on it typically, but then you plan that
vacation. Well, now you’ve just spent five grand on it, six grand on it. And now you’re reeling for the next couple of months to help pay that off and where there goes all your savings.
Right.
That’s how you continually have no money just on vacations alone, even though people tell me, well, we only do two or three vacations a year. Okay. Well, what is it you’re spending?
Oh, you’re spending $5,000 on a weekend vacation or a three or four day vacation. Your cash flow can’t support that each month. So you’re using the next month’s cash flow to help pay it off and the next month’s cash flow to help pay it off.
The next month’s cash flow to help pay it off. And then by the time it’s paid off, you go do it again.
Right where you started.
And you’re just continually, yes, you’re having a good time.
So to your point, I mean, I think everyone here is just like, yeah, yeah, spend less, save more. But it’s like, it’s not just that easy.
Like I know it’s tough, but it can have huge effects if you can get diligent with it and really train yourself to do it. So I guess after kind of going through all this and showing them, I mean, how did it flip to success?
Or what was your discussion with them?
Yeah, so with budgeting, I’ve realized we’ve got to take baby steps.
Right.
Because like you just said, yes, Sean, I get it. We got to spend less, blah, blah, blah, save more kind of thing.
Yeah, in one year, out the other.
In the one year, out the other. And so what I’ve discovered that I have to do with people is we literally have to give them a weekly budget amount.
So for these people, for example, remember, let’s just say they had 4,000 in disposable income after all their fixed expenses to spend each month. That’s great. So almost a thousand bucks a week.
But I wanted them to start saving a thousand dollars a month. So what we did was we took a thousand off that variable expense amount. So now they’ve got about 3,300.
You know what they can spend in that month. Divided it by four. It’s about 825, 825 bucks.
I said, this is your weekly budget, allotted amount. So we would, you know, have a fun Excel sheet or budget worksheet.
And I would say at the you can do Sunday to Sunday, whatever you want, Monday to Sunday, however that works for you, your budget between all your credit cards and all the spending for that week is 825 dollars. And that’s what they did.
And that’s what they got disciplined with it. No one wants to do it at first. No one wants to face their spending.
No one wants to start saying no to things. But I’ve done it for myself personally.
And it’s fascinating where your mind goes when you start seeing your numbers each week and you start seeing like every time you pull up that Amazon cart, you know, you say, I don’t really don’t need this at this moment.
Maybe we’ll see what we get to at the end of the month. And you kind of start delaying that instant gratification. And you do that on Amazon five to six times a month, and you save four or five hundred bucks because of that.
Yeah.
Now that money is being put back into your pocket.
So with these clients, that’s what we did. We started saving a thousand bucks a month right off the top. And then we started doing weekly budgeting, and their budget was eight hundred and twenty-five dollars.
So, you know, how that works is they have homework each week. They’ve got to send me the budget and see what they did. And then we can kind of adjust from there.
Have you overspent? Well, then the next week, you got to underspend. If you underspend, great.
You can spend a little bit more that month. But what turns it into is a game with yourself. How much can I underspend each week, then each month?
And then we put that additional savings into their savings account after that. But that’s the whole point, is knowing where the numbers go with everybody.
It’s fascinating where, yes, even if you set up that thousand bucks a month, you can still do better. You can still do more if you want to play that game with yourself.
And it’s all proportional. You don’t need to have to sit here listening, saying, I don’t have 4,000 of disposable income. You don’t need that.
It could be 1,000 a month. It could be 500. It’s all proportionate, right?
Bro, wait till the next example.
The next example is the extreme example in the opposite way.
Let’s hear it. Break it down. But no, before we close the loop on that, how quickly were they able to start saving, and how quickly do you think they got to this 3 to 6 month emergency savings just by doing this 1,000 a month?
Like baby steps. So does it take a year? Does it take a couple of years?
Yeah, it takes about a year.
So in a year, they would have saved $12,000.
For sure.
That was about almost 4 months. That was about 4 months of emergency savings. So they’re in a great place.
But just do that for one more year, and then we get to move on to the next another year. And that’s the thing. It’s like, that’s how slow time is.
And I think that’s why people struggle with this, because you can only save so much each month. Trust me, it kills me too, because it’s like, you don’t want time to fly, but you want money to keep coming in.
Exactly.
And it’s such a weird thing. And so I’m telling you, like, yeah, in a year from now, it’ll be great. Well, you go, you know what?
Screw that. Like, that’s so far out there. Like, I want that car or that trip or that, you know, new home renovation or that cool thing at Costco.
I want it now.
Exactly.
But it takes a year to just get that emergency savings right. Well, then the next year, we’re focusing on, OK, you want to buy a house one day? Well, that’s going to cost you maybe 100 grand.
So now we really got to figure out if we can even do more than a thousand bucks a month. Is that a thousand bucks a month? Holy smokes.
It’s going to take us a long time to get to 100 grand. If that is a goal for you. And if you really want to work your ass off for the next five years to build some type of, you know, down payment for a home.
And those are the sacrifices you have to make. And it’s life, man. And it sucks, though.
And it sucks going, okay, well, I’m going to put my life on hold for five years so I can buy a home. Well, maybe we won’t do that. And those are decisions we all have.
All right, next quick case. This is in the exact opposite side. So this is a couple who makes a ton of money and still cannot, and still has nothing to show.
Let’s hear it.
So I’ll preference this with this, the wife, she started, she’s a stay-at-home mom.
The husband was working a really hard sales job, grinding, grinding, grinding, and then out of nowhere, started making crazy commissions because of the work that he put in and the deals that he started closing.
Before this, before this, they were grinding that life was tough. Now, he’s making over a million dollars a year, and they’re wondering what to do with this wealth.
Well, they’re doing it all backwards, and I want to show you, like you said, it doesn’t matter if you’re making 150 grand jointly or a million dollars a year jointly.
It’s the problems, the money problems that you have, you just inflate with making more, inflate with making less. So, let’s break this down. Again, I call them Mr.
and Mrs. Rich. They’re rich, right?
They’re making a bunch of money. Goals were build up a safety net, start investing as much as possible, help their kids out, reduce taxes, create wealth. Mr.
Rich is 42, Ms. Rich is 39. Their kids are 7 and 5 years old.
Their only liquid asset is Mr. Rich has a 401k. It’s got about 270,000.
Remember, he wasn’t making a million dollars a year for the last decade. It’s really only the last 2 to 3 years. But that’s his income, million bucks a year.
She’s a stay-at-home mom. Monthly take home after taxes earns 401k, $50,000. If you make a million dollars a year, your pre-tax income is $83,000 a month.
That’s insane. Net to them, $50,000. Okay, well, where’s this going?
Same, same thing. Same thing of we need to outline your expenses to figure out how much we can trim from and how much we can put away for you. Well, let’s take a look.
$19,000 a month. The first thing that they did when they started making a million dollars a year wasn’t to stay in that house that they had.
Upgrade, baby.
It was to upgrade and not upgrade a little bit, upgrade a lot of it.
They wanted to live next to Devin Booker.
They did. So they went and bought, you know, a $4 million home and have a $19,000 a month mortgage. They’ve got three cars, one’s $1,800 a month.
The other’s $1,500 a month. And car number three is $1,200 a month.
Five grand in cars. Okay.
So they’re big ticket items. Remember, I talk about big ticket items. House and cars.
Those are typically the most expensive monthly payments for most of us. Mortgage and rent and or rent and the cars. Big ticket items account for $23,500 a month.
Or 47% of their monthly take home. So they’re over that 45% number. Not a lot, but they’re still over it.
They’re fixed expenses. Again, we’re talking memberships. We’re talking insurance, pools, private school.
For these people, it was private school, landscaping, pool maintenance. Their fixed expenses were $10,000 a month. Gyms, they had meal plans.
They had all kinds of stuff that was just on like autopilot, getting deducted from their checking accounts. Car detailing, that was one. I was like, great, like, Jesus.
But still, look what’s left over. You still have, after all of that, they still have $16,500 a month.
Disposable income.
That’s over $4,000 a week to spend. So where was this going?
I feel like you have to try to blow that money.
And that’s exactly what it was, man. Like, it was flying first class on every trip. It was staying at Five Star, everything.
It was…
Michelin star restaurants for dinner.
Not even that, you know. Basically, imagine if anytime you wanted to spend money, you could or you did. So anytime you wanted something on Amazon, you bought it, no matter what the price was.
Anytime you wanted to go to Target, you went there. You got it. Anytime you wanted to go to Costco, and as you’re walking the aisle, you’re like, you know what?
We do need a new dish set. We do need this. It’s literally just accumulating crap, and that’s how you can quickly spend 16,000 bucks a month.
So again, we identify all this. I say, okay, one, we’ve got too expensive of a home. Well, we can’t do too much about that now.
What’s done is done. So again, it’s how do we limit some of those fixed costs? Can we reduce the monthly meal plan service that you have, like little things?
And what’s crazy is when you’re dealing with numbers this big, when you look at like a $500 a month meal service, you’re like, okay, well, we could cut that, but it really doesn’t get us to where we’re going.
You have to stack those kind of savings on top of each other, on top of each other. And like, okay, can you do your own landscaping? Can you do your own pool?
Okay, well, maybe cutting all that, that still only saves us like three grand a month. You have to dive into the other stuff.
It’s never typically there’s some fixed expenses that you can cut that might save you a little bit, but you’re always looking at them like, okay, well, what’s the point in cutting my Hulu account for 22 bucks a month when I’m trying to really need to
save 500 or 600 bucks a month. So it comes down to really that variable expenses. Like where are you just letting yourself go? And like it’s the Amazons, it’s the, like I said, Whole Foods, great.
Shop there if you can. And if you love it, if that’s where you go and you got everything, like fine. But just understand, Kroger can save you probably 20% every month and is that worth it to you?
You know, do you have to fly first class or stay in a five-star hotel? Do you need all these things every month?
And it’s the mental warfare that you play with yourself, especially watching these people really, they just started making money and they’re already at this point where we need, like you needed to bring them back.
They needed to slowly inflate their lives into this spending versus like immediately do it. And so I’ll be candid, like I haven’t gotten anywhere with these clients. You know, we’ve got them to max out a backdoor Roth, twice, so that’s $14,000 each.
And that’s it. And they’re making $50,000 a month. And I wanted to share that story because it’s just on an insane level.
And I know the listeners are probably like, well, I don’t care. I’m not making a million bucks.
But I wanted people to hear like, exactly, even just because people are making a lot of money, doesn’t mean they’re doing the right things with their money. And read a really good book to read is called The Psychology of Money.
And some of my favorite points in that book are like wealth, rich. People that are rich, you see it. You see the car.
You see the house. It’s all things. That’s what rich is.
Like it’s things. Wealth is something you do not see. That’s what’s in the bank accounts.
That’s what’s behind the scenes. That’s an emotional feeling too. The wealthy are wealthy and you don’t really know it.
Another good example is that the millionaire next door, the people who live within their means, save what they should and spend the money on the fun things like the memories, the trips, the travel, because they have the money and they work their
asses off to get there. Not the rich people who appear to be wealthy, but probably aren’t.
Right.
And that’s where I’m trying to get everybody to is that wealthy side, creating wealthy habits, paying yourself first, knowing where your money goes, and watching that money grow over time.
Last thing I wanted to share before we run here is another awesome graphic of, again, the reason I have a job and the power of compounding, because this is what we’re trying to get to is, okay, once that emergency bucket is saved, there is in a good
place, when you don’t have anything else, meaning no debts or whatever, like the next step is investing, putting that money to work for you. So this is what kills me with these, even these, you know, these rich clients is, imagine if we could just
start putting 10, $15,000 a month away. And get that money compounding and growing over time. So for the listeners out there, we’re looking at a graph that shows the magic of compounding.
So this is from 1975, August of 1975 through August of 2025, oh, you know, 50 year period. Had you invested $10,000 50 years ago, at month in the S&P 500, that money would have grown to almost $4 million.
This is just putting 10 grand in and letting it do nothing. Just $10,000 invested for 50 years, it grows to 3.9 million. That’s insane for 50 years.
Look at what happens if you invested $10,000 10 years ago. Your money only grew to $39,000. And then $10,000 20 years ago, $10,000 30 years ago, almost $300,000, $10,000 40 years ago, $1.1 million.
But that additional 10-year period for a total of 50, you go from $1.1 million to $4 million.
And that’s the message, right? Because someone could look at it and say, well, of course, for 50 years, I put 10K a month times 50 years. That is already bigger than just doing that for 10 years.
Fair, but look at from 40 years of doing this versus 50 years, just a 10-year difference.
Yep, because what happens in that last decade is that $2 million is what it is. Compounds are doubles again and 2 goes to 4.
Bingo, dude.
Versus 3 goes to 600K, then 600K goes to 1.2. Well, then all of a sudden, you get into these large numbers, because again, your money should be doubling every decade.
That’s my hope for all my clients is every 7 to 10 years, if the market’s doing well, your money should be doubling in that 7 to 10 year time frame. So when you get to that million and a million doubles to 2, and then 2 doubles to 4, oh my God.
But you don’t see it early on in life. You don’t see it when you have 100 grand or 200 grand. You really start seeing it when the millions come.
But anyways, I wanted to show this because even if you just threw 10 grand or 15 grand or 50 grand into an investment account and just be like, look, I just need to get this well started. I need to start doing something, letting it grow for me.
Here’s what the possibility of a guy that can turn into over 20, 30, 40, 50 years later on down the line.
And even getting back to your examples, I think to me, what I got from it, from my underlining message, if you create strong habits early on, which hand up, I’ve gone better. We’re not all very good at that early on. It’s just what it is.
You’re young and dumb, and you want to go party.
But the sooner you can create these strong habits, I can promise you, as you continue in your field, you start working harder, you get more expertise, you’re going to level up your income and how far you get in within your specific industry.
If you’ve created good foundation of budgeting, and you continue to level up in your career, and you keep making more and more income, but you’re keeping to those consistent foundation of budgeting, it’s going to be exponentially a better outcome for
you because you’ve already learned how to budget. To your example, you went in and they did okay, and then they, boom, they did something right, and now they’re making a million a year. We got to go. They didn’t have a strong foundation, right?
But to someone that’s already built this with making only 200,000, okay, now the wife’s gotten a degree, and now they’re making half a million.
Well, they’re sticking to the principles that they had when they were only making 200, but their income’s 500. Can you imagine how successful you can be?
So it’s all about starting, again, retirement, start now, but also just building that foundation. And even if it’s a little bit, just creating these strong habits are only going to help you as you get older in life.
Dude, that was so well said, because that’s exactly what happened with the couple that just started making a million, like millions, a million dollars a year.
We’re millionaires. Let’s do what millionaires do. What do you know?
Be smart.
And I don’t know where that like, it must, I’m not sure I didn’t dive into a full psychology session with them or therapy session with them. If it was pressure on each other, pressure from family or it couldn’t have been for family.
Just pressure in life, social pressure of being like, you know what, we deserve this. Like, I think that’s where it comes from is you start making really good money and you also, time is fleeting and life is short.
And so you start going with like, okay, we, you know, we want a better home for the kids. We want a better home. We want nicer, better things, which I get, I get, and that’s all great.
But for them, it was like, it was like the winning the lottery situation. Like anyone out there, if you ever won the lottery, do not change your life for the first year.
You just take the winnings, you keep your job, and you figure out with the people around you, what can you afford? How long can this money last? What should we be doing with it?
That’s what I wish this couple would have done. Like, is it smart for us to buy this $4 million home, Sean? Or should we just continue to rent?
Because that’s what they were doing prior. And like, let this, and let’s build up a huge bucket of wealth. And then maybe, like again, you have this balance.
But when you do these big money moves blindly, like we’ve talked about in prior episodes, where you just go buy that car, and now all of a sudden, you’ve got a $1,500 a month payment, or you go buy that house, and now you’ve got a $12,000 a month
mortgage, and you didn’t know, like, what that’s really going to set you back or forward, or what the case might be. Like, that’s what I want, everybody. Like, that’s what I’m here for, everybody. Don’t walk through life in your finances blindly.
Have a partner. Have a guidepost, even if it’s just your family or somebody you trust that’s really good with money. Run these situations by them, because more times than not, they’re not going to be like, you know what?
You should go buy that $4 million. Let’s slow down. Like, what do you really need?
What’s really going on?
Exactly. No, I love it.
The only people, you know, you go buy homes that expensive when you’ve got a million or two in the bank. Like, not when you have a zero in the bank, but in it’s your cash flow every month that has to continue to pay for it.
Anyways, you can tell that one kind of resin still hits home with me. I love it.
It just kills me when people with that kind of I will call that like they absolutely grind work their ass off and find that fortune and have that kind of money that is absolutely life-changing but it’s not changing their life. Does that make sense?
Oh, Bosch mom. I love that. I would say though, there’s a reason why athletes majority of them become broke, right?
They’re not used to that type of income. Obviously, there’s a lot of factors to it. But those athletes that you hear about, I think it’s like who did I?
Devontae Smith on the Eagles, even Jalen Hurts. They don’t have some lavish house. They’re just sitting.
Or even Gronkowski. He never spent an NFL check.
He could.
He could. But he just… Hey, can you imagine the discipline to do that, but what that’s going to pay off for Gronkowski in the end?
Right? It’s insane.
And their careers, you know, if you get 10 years in the league like that, you’re great. And so you literally need to save everything for 10 years so you can enjoy the next 60 years of your life. Most of us are planning for 30 to 25 year retirement.
Theirs are 50 years long. Yes, they make a lot of money, but you need to have a lot of money to guarantee that you’re not going to need money for that long of a time.
So you’re right. Not for long, Sean. Not for long.
Not for long, man.
Yeah. That’s a great case study. Like what are those 30 for 30s like, you know, the athletes go broke.
It’s wild. Yep.
I love it, though, man. Sean, I love always appreciate the game. To your point, to all our listeners, I know the case studies when you’re listening to it, the underlying message is, you know, create those habits.
If you’re having issues today, come talk to my man Sean.
He’ll talk you through it. Appreciate it, buddy. Enjoy the rest of the week.
You too, baby.
We’ll see you guys soon.