The Wealth Creation Formula with Grant Cardone

0:02Who's ready to rock today, Fire Nation? JLD here and welcome to Entrepreneurs on fire brought Brought to you by the HubSpot Podcast Network, the ideal destination for business professionals with great shows like Business Made Simple. Today, we'll be breaking down the wealth creation formula. To drop these value bombs, I brought Grant Cardone into EO Fire Studios. Grant is the bestselling author of The 10X Rule and If You're Not First, You're Last, as well as a sales trainer, speaker, and entrepreneur who has worked in real estate in the auto industry. He's a real estate mogul with over a$4 billion portfolio of multifamily properties, and he built it from scratch.

0:35Moreover, he was named the number one marketer to watch in 2017 by Forbes Magazine. In today's foundation, we'll talk about the wealth creation formula. We'll talk about three phases to building wealth, the nine-step formula for increasing your family's income and net worth, and so much more. And a big thank you for sponsoring today's episode goes to Grant and our sponsors. Business Made Simple, hosted by Donald Miller, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Business Made Simple takes the mystery out of growing your business. join my friend Donna Miller each week as he shares value bombs on topics like the secret to making better marketing decisions.

1:12Listen to Business Made Simple wherever you get your podcasts. Ever thought of giving a TEDx talk? It's one of the most powerful ways to share your message with the world and four-time TEDx speaker Taylor Conroy from Thought Leader can help you get there. Visit thought-leader.com slash fire to join Taylor's free training where he teaches you how to land a TEDx talk and spread your message to millions. Grant, it's great to chat. It's been a minute. And I want to dive into the wealth creation formula because, man, that's what you're all about right now. But first and foremost, what's new in your world on the fun and family side?

1:53You know, my family, I just spent a week with these guys. We're all hanging out. We just did a big event for our church. There's nothing better, John Lee, as you know, and spending time with people you love, friends, family. I got two beautiful daughters that are growing up and my wife. And we're just trying to make the world a better place for us and for our friends and for anybody that will listen to us. Well, Grant, you and I have actually known each other now for a decade. I mean, 10 years of bumping into each other at conferences and having you on the show and being on your show and just having a blast.

2:28And I will say, brother, you're an inspiration on a lot of levels. And one of those is family. and something I don't know if you know yet, but I'm welcoming my first child, a son into the world, November 11th. Oh man, congratulations. So excited. And just to see how you do it and how you do it right with the girls and having them part of your life, part of your world is really inspiring to me. So thank you for that. And thank you for what you've created in the world, including this wealth creation formula. So what the heck is this all about? First of all, I want to just say congratulations about your son.

3:02Yes. And that's going to be an amazing, amazing thing for you. Thank you. For you and your wife. And I thought having kids was going to distract me from my, you know, building my dream and my businesses. And I was wrong about that because it was not a distraction at all. It was actually it lit up my creativity and my commitment and my. I saw your drive just increase. Dude, it 100 percent increased my drive. It was crazy. It was like I have more energy now that I have these kids and a sense of duty, too. Like, OK, I got to build something that not takes care of them, but that gives them kind of a bar, you know, to look to move higher and also something they could be proud of.

3:50So I know that's going to happen for you, too. I love that, my man. I'm excited. And that's probably part of the reason why you did this wealth creation formula. So let's hear more about it. Yeah. So the wealth creation form is wealth. Wealth comes from the word health. It does not come from the word money. And, you know, to me, it's I've spent, I don't know, 45, 50 years now studying wealth when I was watching my mom struggle after my dad died. She was a single mother with no income. And so she was having to save money and protect it and conserve it and, you know, clip coupons and all the things that people do to try to survive.

4:29And that was very painful for me to watch at the age of 10 and again at 12 and 15. And really, most of my young life, I watched my mom suffer around the fear of money. And so I've always been interested in it. I thought you know I had this idea this private kind of secret that I was gonna get rich one day and that my life would be different didn't know how didn't know what that meant blah blah blah so I've been studying money for a long time read books that some helped me some hurt me I went to school borrowed money to go to college to get an accounting degree to learn about money learn nothing there about money.

5:08And since the 2008 collapse, really, some of the ideas that I had, I realized were in my way. And that wealthy people were not using the ideas that I had been using to build a business and to get a job and to save money. So the wealth creation formula is about first undoing some of the traps and the indoctrination that most of us have been negatively impacted by. I think the first four chapters just cover undoing people's traps like the job hate, piggy bank trap, the plastic trap, higher education, Millionaire Next Door. You probably read that book. That book almost cost me$5 billion because I bought it, dude.

5:57I was like, okay, I'm going to save all my money. I'm going to drink coffee at home and I'm never going to buy a new car and I'm going to be the millionaire next door. And that would have kept me from really creating the financial life that I've created. And I think it keeps a lot of people from creating the life that they want. Grant, I want to talk about that because man, I cannot picture you as a millionaire next door. You'd be the weirdest millionaire neighbor. I don't even like you'd come out and like your robe and like get a newspaper. It just wouldn't fit. I'd be an alcoholic, bro. You would.

6:28But I want to talk about that mindset, you know, about going from middle class to wealthy? Because I think, unfortunately, a lot of even the listeners of this show, but more so just the general population, their dream is to join the 1%, which the 1%, by the way, that's$400 ,000 a year. I mean, I've made that in minutes. You've made millions in minutes. I mean, now you have the portfolio of over$5 billion. So let's talk about the mindset. Let's talk about going from middle class to actual wealth, to being actually wealthy? I think you're making a great point. It's not to diminish anybody's dreams or their status, but the middle class is a mythology.

7:12It was completely created. Nobody really knows what it means. If you look it up in the dictionary or in any kind of finance terms, it's going to suggest that anybody that makes somewhere between$45 ,000 and probably$125 ,000 a year is middle class. But if you talk to anybody that lives in Los Angeles or Boston, New York City, Chicago, Miami, Orlando, Puerto Rico, dude, that's making$45 ,000, you're poor. You're not middle class. You're trapped by debt. You probably don't own a home. You don't have any savings. it's it's not freedom okay and and you can talk you know enough millionaires to know that most millionaires are actually concerned about their money and so the first thing we're trying to i'm trying to do is explain to people look if you have 35 years left to live and only a million dollars you literally have to live off of 30 000 bucks a year dang 2 800 a month and the average rent in this country is two grand so you don't have mood you don't have money for your kids you don't have money for your parents.

8:20You don't have money for car payments,$770. So you have 30 bucks left after your rent and your car payment. I mean, Fire Nation, I hope these real numbers are a little bit of a wake up call about what dream are you building? Is it that false dream of becoming a million next door is going to solve all your problems? Or is it, hey, let's get audacious. Let's set some big goals and let's create something amazing. And Fire Nation, we have so much more to talk about as soon as we get back from thanking our sponsors. Fire Nation, the holidays are near and I know you're rocking your year-end goals, it's crunch time.

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10:40Zip Recruiter.com slash fire. Again, that's ziprecruiter.com slash F-I-R-E. ZipRecruiter, the smartest way to hire. Do you have a message inside that you know is meant to be shared with the world? Giving a TEDx talk is one of the most powerful ways to share your message with the world and Thought Leader can help you get there. Thought Leader is a speaker coaching company that has helped over 550 and counting coaches, speakers, entrepreneurs, authors, and experts land TEDx talks. Thought Leader is not affiliated with TED or TEDx, but they're able to get these results because their founder, Taylor Conroy, is a four-time TEDx speaker himself and past EO Fire guest.

11:18You might be thinking a TEDx talk sounds great, but where do you start? Taylor has put together a free training that is going to teach you how to land a TEDx talk in as little as 90 days. Join Taylor to learn exactly what TEDx organizers are looking for in their speakers, how to write a talk that goes viral once it goes online, and more. Visit thought-leader.com slash fire. Join Taylor for his free training and get your message out of your head, out of your heart, and out into the world where it belongs. That's thought-leader.com slash fire. Now, Grant, there are three phases of building wealth.

11:54Let's talk about those now. Well, the first phase is, you know, I need a job and I want to earn income. The second phase is I don't want to earn income anymore. I want my investments to pay me income, passive income. By the way, everybody should have as a target passive income greater than earned. That's what all the wealthy people do. They don't actually even want phase one. They don't want earned income. They want passive income that they don't work for. Copyrights, trademarks, music rights, movie rights, book rights, something where you wake up every morning, no matter where you live or what you're doing, you still get paid passive.

12:32And the third phase is, hey, I have money invested in assets and those assets are going up in value and those assets are going up in value. But I go from being worth a million to 10 million to 100 million to a billion dollars. But none of that money is taxed the way the tax code is. So the first phase is earned income and taxes. Second phase is investment income and very low taxes. And the third one is I'm creating wealth and there's no taxes. Fire Nation, you can see why these are three phases of building wealth at, you know, best case scenario, most people will be stuck in phase one for the rest of their lives.

13:11And as people, they get to phase two. And then of course, phase three, that's where the true wealth is created. And like, what exactly does that look like when you're living that life? Like, let's give an example, Grant, of living phase three. Phase three is where you don't really get to see anything. It's a network driven kind of thing. It's it's you can't spend it. You could borrow against it. Right. So this is where, you know, your company valuation, you own some stock in your company, some idea you created or or, you know, your music portfolio is now you went from being a hustling artist, you know, doing gigs to now you got an endorsement deal.

13:57and then you got a music deal and somebody bought the rights to your music for$300 million. Or you kept the rights to your music and you went to the bank and said, I want to borrow against that$300 million. This is where total freedom exists, man, where it's like, you know, it's a bit of a, you're not working anymore. You're manipulating really the value. It's a bit of a magic act where the work, the first phase is where you dig a ditch, somebody pays you. You fly a plane, somebody pays you. You clean tables, somebody pays you. And, you know, they're only going to pay you so much money to fly a plane or to pick up dishes.

14:49and then you're going to be pissed off because they won't give you a raise. And the second phase is, okay, I'm going to own the restaurant, right? Or I'm going to build a franchise. And then the third phase is I'm going to go raise money from Wall Street. And I can just tell you the second, third phase, bro, is where the freedom is. And this is what we're talking about economies of scale. Like in phase one, you can only scale your skills, your knowledge, your expertise on that flying of a plane so much. There's only so much somebody can pay for that single one flight. So we're talking economies of scale when we move into phase two and phase three.

15:25And that kind of moves me into the nine step formula that you've created for increasing our family's income and net worth. Tell us more. You brought up a very good thing about the millionaire trap, right? I think all this happens for your listener. You're like, man, I want to do all this stuff that John Lee and Grant are talking about. this starts with having the right target you cannot come up with these solutions if you're just trying to get a job that pays 250 grand a year which could sound a lot like a lot of money if you're making 50 but really every all this starts with the target I want wealth freedom that should be everybody's target not a certain number the million dollars is not wealth freedom right so it'd be like i want wealth freedom then you ask yourself okay what number would create wealth freedom i think personally think that number is probably in the 10 million dollar number and then then what i would do is i would actually do the math on 10 million dollars you know if i got 10 million people to give me one dollar i would have 10 million dollars um or i could sell one million books for 10 dollars and i would have 10 million dollars or I could, you know, maybe consult somehow a million people that gave me$10 and not write a book and I would have$10 million.

16:49But you got to do the math on the target. And I think most people, John Lee, they're actually getting their targets. Most people achieve their targets. And the target they set was pay my bills, take care of my kids, you know, buy a house and have a little money left over. And guess what? That's what you end up getting. So the game starts with this. You've got to have a big target to start because small target, medium-sized target, or big target, they're all work, but only one of them pays off. So the first thing we've got to do is have the right target. Second thing is we've got to do math, simple math.

17:25How many different ways and routes do you have to$10 million? dollars and it starts with one customer 10 customers 100 customers thousand customers and then just change the price you need to sell to a thousand customers 10 000 customers 100 000 customers if 100 000 people give me 10 i have 10 million dollars i think that's right no no if 100 000 people give me 100 i have 10 million dollars so the question now is john lee dumas could i get and i you're you're you're a perfect example of somebody that's proven this can happen can I get 100 ,000 people out of 8 billion people on this planet to give me$100?

18:07Yes. Yeah. Now I got to get to know the people. But what most people do is they start with, I got to get a job. I got to get a gift. I got to get a talent. I got to learn how to do something. I got to write a book. I got to build a program. I got to create something. I got to build an app. No, dude, you need to do the math first. Do the math and follow the math. Don't follow your passion. Fire Nation, these are wise words from somebody who's been there, done that, and continuing to do this on a massive level. Grant, I remember having you on the show all about the 10X rule. You blew Fire Nation's mind back then.

18:42Then we had you on for If You're Not First, You're Last. Now you have something special for Fire Nation, for the world that you're excited about. Give us the final words on this. Look, wealth is attainable to anyone. I've said this before if you wanted to become a billionaire you could period full stop Okay, anyone can I don't care where you live Color your skin your age male female whatever your disabilities are Everybody's got disabilities by the way the ability to imagine is probably the greatest handicap that people have And if you want to kill a big thought share it with small people So I would tell everybody, man,$10 million, not even a problem.

19:27Anybody can pull off$10 million. The question is, can you put a brick on the board? Create income, increase the income, okay? Then put some money away. Start investing in other assets. But, you know, if the game is just to have a job and do a little better, you're not going to worry about a wealth creation formula because you're just going to be satisfied with getting by. So my encouragement to everybody, and particularly for those people out there that might be listening right now, saying, I don't need all that money. I don't need, you know, a big house. I don't need a boat. I don't need this or that.

20:07Is there a chance that you're saying no to stuff that you haven't even experienced? you know you're saying no to a possibility that maybe you're just checking out on because you haven't you know you're saying no to it because you don't know how to get there and you're saying i don't need all that because the truth is the people that you love the most need you to be wealthy they need you to be healthy they need you to be prosperous they need you to be not just happy but also fed and taken care of and your future secured. So for all the people out there, last thing I'll say, John Lee, do miss is all the people out there that will hear this and then say, money won't make you happy.

20:54I'm not talking about happiness here. I'm talking about creating wealth and wealth will not make you happy. Poverty won't make you happy either. Just getting by won't make you happy. wealth will at least give you some options when you're not happy. Grant, where can Fire Nation go to make sure they're consuming this content? You can grab the book at grantcardone.com forward slash wealth. Is it? I'm not sure. It's a pre-order. We're in a pre-order status right now. You get two for one, so you can give it to a friend and I sign a copy. So I would love for them to do that. But look, man, 90 % of what I do, as you know, is free on the internet.

21:31You can find everything I do on the internet somewhere under my name. Fire Nation, you're the average of the five people you spend the most time with. You've been hanging out with GC and JLD today, so keep up. JLD! Holla! Grant, thank you for sharing your truth, brother, with Fire Nation. For that, we salute you, and I'll catch you on the flip side. Hey, Fire Nation, a huge thank you to our sponsors and Grant for sponsoring today's episode. And Fire Nation, are you ready to rock your very own podcast? Check out our free podcasting course where I will teach you how to create and launch your podcast for free, freepodcastcourse.com.

22:04I'll catch you there or on the flip side. Business Made Simple, hosted by Donald Miller, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Business Made Simple takes the mystery out of growing your business. Join my friend, Donald Miller, each week as he shares value bombs on topics like the secret to making better marketing decisions. Listen to Business Made Simple wherever you get your podcasts. Ever thought of giving a TEDx talk? It's one of the most powerful ways to share your message with the world. And four-time TEDx speaker Taylor Conroy from Thought Leader can help you get there.

22:41Visit thought-leader.com to join Taylor's free training where he teaches you how to land a TEDx talk and spread your message to millions.