122: How to Build Wealth Without Obsessing Over Money

0:00Rinse takes your laundry and hand delivers it to your door. expertly cleaned and folded. So you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you. Like tea time you. Mmm. Or this tea time you. Or even this tea time you. So did you hear about Dave? Or even tea time, tea time, tea time you. Mmm. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. When it comes to what your family eats and drinks, you know your choices matter. You're the expert because you know what fits your life. And getting it right starts with good information.

0:42That's why America's beverage companies are sharing more information about our ingredients at GoodToKnowFacts.org. No spin, no judgments, just the facts straight from the experts for more than 140 beverage ingredients. Visit GoodToKnowFacts.org. Hey everyone, and welcome back to the Rich Habits Podcast, a top five business podcast on Spotify brought to you by Public.com. My name is Austin Hankwitz, and I'm joined by my co-host, Robert Croak. Robert is a seasoned entrepreneur in his late 50s with lifetime revenues of over 300 million, and I'm an entrepreneur in my late 20s with a background in finance and economics.

1:22Since quitting my full-time job in corporate finance a few years ago, I've built a seven-figure media business and actively advise some of the most well-known fintech companies around the world. As the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset. However, we try and bring you two unique perspectives, one from an industry veteran, which is Robert, and the other, myself, someone who's still in the process of building wealth and figuring it all out. So Robert, what are we going to be talking about in today's episode? In this episode of the Rich Habits podcast, we're going to share five quick but impactful strategies that will help each and every one of you continue to build wealth without obsessing over money along the way.

2:05We want everyone, of course, to reach and achieve their financial goals, enabling a graceful retirement, but we also want to ensure you're enjoying yourself along the way. I'm right there with you. I think a lot of people believe that if you're a millionaire, you know some sort of secret strategy or you obsess over something money related, or you're maybe even considered a money obsessive expert, right? But that's not always the case. This episode is going to help every one of you listening understand that retiring wealthy and becoming rich doesn't always happen because you're a money genius. These goals can be achieved by implementing very simple strategies throughout your life that can help you stay on course and be consistent, but most importantly, not having to obsess over money to actually achieve that goal.

2:54So let's dig into the first quick but simple strategy to retire wealthy without obsessing over money, and that is living below your means. We made this strategy the first call out because without implementing this on a daily, weekly, and monthly basis, none of the other strategies will work. So hear me out. If you're making$100 ,000 a year and you're spending $120 ,000 a year, your biggest problem is the person in the mirror. It's not the economy, it's not the unemployment rate. It's not the president. It's not your salary. It's not your boss. It is you. Living below your means is exactly that.

3:27Every month you're spending less than you make. So for example, the median household income in America right now on an annualized basis is$78 ,000 or about$6 ,500 a month. That means your living expenses, your debt repayment, vacation budget, your tuition, every single thing that you are paying for has to be within that$6 ,500 a month spending limit. People get themselves in trouble when they borrow too much. They have the kitchen remodeled, they get the car payment, they have the student loans, and the lifestyle inflation takes hold of their finances and they find themselves now spending$7 ,000,$8 ,000,$9 ,000 a month and they try and make up the difference with credit cards.

4:10That is a recipe for disaster. I definitely see this more than I don't. It is a daily occurrence when I'm talking to people from the Rich Habits Network or in my DMs or any of that. And I just think it's so important for people to understand is if you want to be on track for financial freedom and retirement, not only do you need to live below your means on a monthly basis, but you need to carve out that 15 % of your monthly take-home pay for investing. So in this example of what Austin alluded to and illustrated, that would be$975 a month that you would set aside for saving and investing. And too many people have problems with this because of lifestyle creep.

4:51And it really comes down to if you're having trouble living below your means, you have to audit and do that honest budget we talk about. Create those sinking funds or even pause your investing long enough to pay off the high interest debt. Because remember, we always say you can't outinvest high interest debt. And so many people live beyond their means for years and decades. And that's why they fall so far behind in building for retirement. So the easiest way to build wealth throughout your life without obsessing over money is to simply live below your means. Yeah, 100%. So let's get to number two.

5:28And I think this one is very important as well. And we talk about this all the time. and that is investing early and diversifying. You hear us talking about investing early all the time and letting compound interest work its magic. So that means start now. If you're someone who's in their 20s, 30s, or 40s, you're still early. So let's get you rocking and rolling as soon as possible and get you up and running so you don't kick the can down the road forever and hope that there's gonna be some magical windfall to save you in retirement. So what does it mean to invest early and often In our opinion, it means buying the S &P 500 and the NASDAQ 100.

6:08The S &P 500, in case you're new around here, simply means you're investing in the 500 largest, most profitable companies in the United States. And the NASDAQ 100 are the 100 largest companies listed on the NASDAQ exchange. So what we're getting at here is to learn how important it is to have equity in growing profitable businesses for the long-term wealth building in your portfolios. Well, it's not just that, but right, also the diversification that comes along the way. We love seeing people getting that first$100 ,000 invested. On average, it takes about seven years to get your first$100 ,000 saved and invested in the markets in these index funds and ETFs.

6:48But once you accomplish that, it's now time to start diversifying into other asset classes. Think real estate, cryptocurrency, precious metals, or maybe even cash flowing businesses. The thing here to remember, though, is to not overcomplicate your investing. Don't have to obsess over the new trade, the next big thing, what someone just said on CNBC and got to find the big, my gosh, I heard this company is going to go 20x into the future penny stock, whatever. Don't overcomplicate it. Get your money in the index funds and ETFs we talk about. Then diversify with solid asset classes and you are off to the races for long-term wealth building.

7:26And whatever you do, please, please do not go all in on one stock, one crypto, one business. I hear so many of the fake gurus every single week talking about the new latest and greatest shiny ball syndrome thing that they're investing in and you should too. And guess what? We are here to help you build rich habits. And those habits keep you wealthy over time because sometimes it's easy to make money, but it's not easy to keep it and build off of it. So please make sure you really, really consider and take notice of being diversified because it's so important because that way you can withstand any market condition because you have diversification across multiple sectors, making it so much easier for you to build and keep your wealth.

8:15Well, speaking of building wealth, that brings us to point number three, which is automating your finances. This is a favorite of Robert and I's because we think it's one of the easiest ways to not obsess over something. You just automate it away. Well, what does automating look like for us? In our opinion, automating means we're not only automating our monthly expenses like our credit card auto pay, utilities auto pay, phone bill auto pay, but we're also automating our investing via public.com's investment plans. More and more of these online brokers are now allowing you to build a auto-invest plan or some sort of automated strategy to contribute toward on a weekly, bi-weekly, monthly basis.

8:57And if yours doesn't offer that, go check out public.com's investment plans. Doesn't matter who you use. What matters most is that you are automating your investing. And automating your investing does not only allow you to check the box of not obsessing over money, but it also accomplishes three things. One, it takes emotion out of the equation. Chances are, if you see a big red day or a green day, you're either going to get fearful or greedy. So by automating your investing process, this takes emotion out of everything. The second thing is you're never going to forget to actually invest on any given month.

9:30I can't tell you, Robert, how many times I'm thinking, yeah, I put a couple hundred bucks in that stock a couple months ago. And then I look back, I'm like, oh, I forgot to do that. And so by having an investment plan and automating that strategy, you'll never forget to invest. And the third thing that happens when you automate your investing is if you do it correctly, it begins to feel effortless and like you're just making free money. When it feels like it's coming out every single time, just get it out of my bank account and get it into the markets. I don't even want to see it. That is a really good feeling.

10:00Yeah, this really brings up something that I talk about all the time, and that is making your money work as hard for you as you work to get it. So many people get their money deposited in their checking account every two weeks or once a month, and then it just sits there. And what happens when money sits around and it's not spoken for is you spend it on frivolous things or things you don't need because it seems like it's available cash because you don't have your investments automated. And another pro tip, and this can happen with a lot of different bills, is if you automate your monthly payment, like I do with Verizon, I save money on my bill every single month.

10:37It's not a lot, but it's still meaningful to me every single month because I have my bill on auto pay, making it much easier. So this is a great section and really speaks to something we talk about all the time. And that is making sure that you're always investing automatically because it prevents emotion and prevents you from trying to time the market. So I think this one is mission critical And that leads us into number four, which I think is really important and something that isn't talked about enough. And that is limiting financial noise. So what does that mean? It means avoid obsessively chasing trends and checking the headline news because that is a recipe for disaster.

11:20Now, you listen to the Rich Habits podcast, which means you're someone who likes to keep tabs on their investments and what's going on in the markets. And that's OK. But don't go overboard. I see this all the time because the biggest takeaway from this strategy is to not have knee-jerk reactions. You guys hear me talk about it, and it's because of so many of you. You see a headline, and you don't even flush out if the headline is real. Is it clickbait? What's happening? And you have a knee-jerk reaction. So, for example, if you were someone that was terrified about the Trump tariff tantrum and sold everything when stocks were down 20 % because CNBC said sell, sell, sell, We're talking to you.

12:00So many of you do this all the time. You wreck your account by trying to time the market and sell on these crazy headlines. And we just want to make sure that you understand that you cannot build wealth over the long term. And it really limits your financial success if you let this noise get in the way. So keep tabs on why your portfolio might be moving one way or another. If it's a trade deal, lower inflation, earning results, but be very calculated. And most importantly, be slow to react when it comes to making these trade decisions around what you're doing next with your portfolio. Because right now it's so easy to get emotional.

12:42There's a lot of fear in the markets. There's a lot of uncertainty. But I promise you, if you stay steadfast and stick with the plan, you will be much, much wealthier and a lot less stressed if you stick with the plan. One of my favorite things to do, Robert, is whenever I'm reviewing my investments, I don't look and try and feel as if my investments are doing good or bad on a daily or even weekly basis. I'm looking quarterly and semi-annually. Right. So am I on a quarterly or even semi-annual basis trending in the right direction with the stock market, preferably outperforming the stock market?

13:19Right. So what that could mean for some of you listening is you got a habit of opening up that public account or that blossom or whatever you're looking at to check all your investments. And you're like, oh, I'm down today. Oh, I'm up today. Oh, I'm down today. Oh, I'm back up today. Chill out. We don't need any of that stuff. Right. Limit the financial noise. If you are someone who likes to check your accounts and be really on top of things, I'm right there with you. I do the same thing. But to Robert's point, be slow to react. Measure twice, cut once. Make sure that you are not someone who is consistently trading or getting in and out of deals or taking these headline news and making all these big inferences about it.

13:57By limiting your financial noise, you will be able to live a life that's great and not have to obsess over money along the way. The best performing accounts are of two types of people, dead people and people that forgot their password. And this is really a great illustration because the less you do many times in your financial journey, once you've got your plan and your strategy, the better off you are many, many times. And that really leads us into point number five today, and that is cultivating contentment. Practice gratitude and define what is enough. I want to say that again. Practice gratitude and define what is enough.

14:36There's a lot of us out there who are always looking for the next big thing. But remember this. Wealth grows faster when you're not constantly chasing more. That is a mind blowing statement. And I definitely need to get that into my daily musings more often. There's no truer statement because we live in a comparison-based world with nonstop highlights of people's lives every time we're on Instagram and TikTok. And I feel like this is the crux of people living beyond their means and letting lifestyle creep get in the way and ruining their chances for financial freedom. So I think it's so important to keep it in perspective because you all feel like you have to live this life that your peers feel you should have instead of living what is authentic to you and important to you.

15:22Because not everybody wants a private jet and a big yacht. Some people just want a cool farm and a nice garden or a painting room or something like that in their house so they can live authentic to themselves. So I think it's very important. And I really love this section of this podcast because too many people get caught up in what people think they should be living like and not what they really want to live like. Couldn't agree more. And I think something that really helped me be content with my life, right? I don't have a flashy mansion. I drive a Toyota. I don't live a lavish lifestyle despite having a very successful business.

16:00And what helped me feel so content with what I have is that realizing that my identity is not money. My identity are my friends, the time I get to spend with my family, and how I make people feel. Money only solves money problems. And the more you make, the faster you're going to learn this rule. Money is not going to solve your relationship with your spouse. More money will not make you more fit or healthy. You have to actually go do those things and put in the work. Money can't do that for you. So by understanding that money only solves money problems, you will realize that, wow, maybe I should be content with what I have.

16:36But I've always said this to myself, right? And this is more of a Gary Vee mantra from back in like 2016 or 17. If my loved ones didn't die today in a horrible car accident, no matter how bad my day felt in the moment, I had a pretty good day. I remember this the first time I implemented this strategy. I was in a car wash and I paid for the$20 car wash in college. college money i mean i'm over here making it nine dollars an hour right so 20 bucks i'm working hard for it so i pay for the 20 car wash in college and it was one of those car washes where two lanes like get together and the guy in front of me like took my wash if that makes sense and so i didn't get the 20 car wash that i paid for i got the rinky dink six dollar wash and i was like oh my gosh i can be so mad about this and like oh my gosh this is a day ruining thing i can't believe i just bought this guy's car wash then i was like well you know what my parents didn't die today and I got a pretty good relationship with my sister, I had a pretty good day.

17:27If this guy taking my car wash was the worst thing that happened to me today, I had a pretty good day. And like just being able to take that mindset and implement it everywhere else in your life, especially as it relates to how much money you have, what is enough to you and your family, the experiences you wanna have as a human being, it makes all of this so much easier. We hope that these five quick but intuitive strategies help you understand how to build wealth over a long period of time without obsessing over money. Yeah, I really love it. And I enjoyed the point about the car wash because we can't always control what happens to us throughout the day, but we can control how we react.

18:07Someone actually said to me this morning at Home Depot, they're like, you look like the busiest guy on earth. You're in here all the time for all your real estate, but you always seem happy and you're so nice to all of us. That's why we enjoy waiting on you and helping you. And I'm like, well, what options do I have? Because at the end of the day, too many people harbor anger, harbor stress and frustration with their day, like the car wash story. But you have a choice to not let that affect your day or not let it affect your entire day in maybe just a few minutes. So I love that mindset. And I love that story about the car wash to help everyone keep things in perspective throughout their day.

18:45And that's why we call this the Rich Habits Podcast, business, finance, and mindset. Having mindset and having the right mindset is how you build real wealth, generational wealth over a long period of time. Now, before we jump into our episode's Q &A section, which by the way, if you want to ask us a question, you can DM us on Instagram at richhabitspodcast, or you can email us at richhabitspodcast at gmail.com. Let's take a moment to hear from this episode's sponsor, public.com. If you're looking for an online brokerage platform that was actually built during this century, cough, cough, Vanguard, what are you doing?

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20:00Paid for by public investing, full disclosures, and podcast description. So our first question comes from Bridget on Instagram. Bridget says, hi there. I listened to your podcast today for the first time and it's definitely not gonna be my last time. Let's go, Bridget. Welcome to the Rich Habits listenership community. You're joined by over 100 ,000 other weekly listeners that we are super grateful to have. Bridget says, I'm 64 and I'm planning to retire within the next year. My assets are in wealth management by Fidelity and 401k investments. They're 60 % bonds and 40 % stocks. Is this an appropriate ratio for my age and my retirement expectations?

20:39My wealth manager thinks that I should move 15 % into bonds and 85 % into stocks. I do not feel comfortable with 85 % in stocks. So that's why I'm asking for a second opinion. Robert, you want to kick this one off? Yes, I want to say congrats, Bridget. I agree. I love the ratio of 15 % to 85%. And keep in mind that 85 % isn't going to be in some random stocks, I hope. It's going to be in the tried and true stuff and in the funds that we talk about, like the S &P 500, the NASDAQ 100. Maybe he's going to sprinkle in some individual stocks as well. But that's going to be bundled in that 85%. And I love it way better than you have in 60 % in bonds.

21:23I just feel that is way too risk off. And you're just going to leave too much money on the table. So in my opinion, I don't know who this person is, but I give them kudos of moving that around and giving you a better allocation overall. That's my take. Yeah, I'm right there with you. I think that, you know, someone that's entering 65, we've all heard of the Trinity Study. The Trinity Study is a research paper that was published by Trinity University that essentially outlines the 4 % rule. The 4 % rule is this. Assuming you have 40 % of your portfolio invested in bonds and 60 % of your portfolio invested in stocks, you can withdraw 4 % of your total portfolio balance every single year for 30 years and theoretically never run out of money.

22:10So that's the 4 % rule. That's a 60-40 split stocks to bonds, right? 60 % stocks, 40 % bonds. You have 60 % bonds, 40 % stocks. So even more conservative. I agree with Robert and your financial advisor. If you don't feel comfortable with 85, that's fine. Maybe you make it 60-40, like how it kind of says supposed to be anyway. But you flip the 60-40. So it's 60 % stocks, 40 % bonds. But I agree, you're 64. You've got 20 more good years ahead of you of investing. There's no reason, in my humble opinion, to be so risk-off right now. But I agree you should have some bonds, but not so much. I couldn't agree more.

22:45You have the total ability to change it to whatever you want. but I definitely agree with Austin 100%. You got to lower down the ratio of bonds to stocks. So our next question comes from Alex on Instagram as well. Alex says, Hey Austin and Robert, I've been listening for one and a half years now and I love the show. My fiance and I are starting a consulting business based on the expertise that she has in her field. She's going to be meeting with the client while I will be utilizing the customer relationship management software to create a good system to track documents, billing, and more. What are some pitfalls and things to keep in mind when starting a consulting business of this nature?

23:24So I have a consulting business. It's a media consulting business. And a couple pitfalls. I'll give you three. The first one is tracking your cash flow. So for example, I've got clients that pay on a net 30, which means after I deliver the services, they pay me 30 days after I deliver the services. Notice, 30 days after I deliver the services, not 30 days after the contract is signed. Those are two different things. Again, cash flow. You got to understand some clients are net 30, others are net 45, others are net 60. If you do not track your cash flow when specific amounts of money are supposed to hit your bank account, when other specific amounts of money are supposed to leave your bank account from expenses or payroll or whatever, you will find yourself in a cash flow crunch.

24:08and that is no fun and that forces people to make the mistake of going into credit card debt or taking out business loans and things that aren't necessary, especially for a consulting business. You don't have any overhead. So one is cashflow. Two, invoicing. Make sure that you automate the invoicing process and automate the reminder process on getting these invoices paid. If that is with Intuit QuickBooks, if that is on Stripe, if that is just sending an email and making sure you've got calendar reminders to make sure, hey, just let you know this invoice is due in 10 days. Like invoicing, I feel like is a very hard part of the business because sometimes we forget, right?

24:43You send an invoice and then you're like, oh, they're supposed to pay me in 30 days and it's been 35 days, but I haven't talked to them a month. Like, where's my money? Like the whole invoicing process, make sure that that's optimized. And then three, taxes. Make sure that you are incorporated correctly. Make sure that you have both yourself and your fiance on payroll via gusto, or maybe you're taking owner's distributions, or you're doing something in a way to optimize for taxes and taking advantage of all the write-offs that are afforded to you as a business owner. I'll let Robert talk more about those write-offs, but those are my quick three pitfalls to make sure that you're taking into account as you start this consulting business.

25:20Yeah. And I would just want to piggyback that a little bit and say, make sure you have good contracts because there's nothing worse and it can be consulting. It can be services based is when you do the work and then that net 30 comes up and it's time to get paid. and they say, ah, it didn't move the needle enough for us or you didn't do a good enough job. We don't like it. It didn't work for us. So they try not to pay you. So good contracts. I always say that whoever has the best paperwork in the end always wins. And it's very, very true. And then when it comes to write-offs, make sure you get with your accountant, get with a lawyer if you have a good business lawyer that can help you, and just really understand what can you do against the work and against the expenses to get you those write-offs.

26:04It could be if you're working out of the house that you write off the space in your house. It could be you can use miles on your car because you're going to meetings. You can have meals as a write-off, internet. There's a lot of different things that people leave on the table because it all comes down to it's not what you make, it's what you keep. And by utilizing all of those write-offs, it'll put you in a better situation to make more money and keep it in your pocket and not somebody else's. And something else I'll mention too, talking about taxes, make those quarterly estimates. If you don't, the IRS is going to penalize you.