125: The Habits That Made Our First $1M

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0:57Hey everyone and welcome back to the Rich Habits Podcast, a top five business podcast on Spotify brought to you by public.com. Today's episode shares the habits that we've relied on throughout our lives to grow our net worth into the millions. My name is Austin Hankwitz and I'm joined by my co-host Robert Croak. Robert is a seasoned entrepreneur with lifetime revenues of over $300 million, and I'm a multimillionaire in my late 20s with a background in finance and economics. As the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset.

1:31So Robert, what are we going to be talking about in today's episode? Before we dig in, I want to share a really special announcement. Many of you may not have heard yet, but we are introducing our new Friday episodes. Friday, August 1st is our inaugural episode and we couldn't be more excited. These new Friday episodes are all about the stock market, the economic news, the biggest headlines and happenings that happened the week prior. So Monday through Thursday, Monday through Friday, we'll be breaking down all that fun stuff. Be sure to tune in to these new Friday episodes starting August 1st.

2:05And if you're a solopreneur, a side hustler, an entrepreneur, small business owner, and you have a question about earning more money or something to do with your business, these episodes are focused on answering those types of questions. So be sure to send us an email at richhabitspodcast at gmail.com or DM us on Instagram at richhabitspodcast. Now, Robert, let's dig into this episode. In this week's episode of the Rich Habits Podcast, we're going to explain the three habits we've used throughout our careers to build our own net worths into the millions, and most importantly, keep it there. A lot of people figure out how to make money through brute force, but don't implement simple rich habits to either make it easier on themselves or to ensure they keep growing their net worth over time.

2:50This episode, I think, is going to be really impactful for a lot of you listening because we recently conducted a poll inside of the Rich Habits Network, which is our community for our biggest fans, link in the show notes below. And it came back stating that 84 % of those participants, which were a couple hundred inside the Rich Habits Network that filled it out, claim to have already built their base, right? So 84 % of those people have already invested at least$100 ,000 into the markets, and now they're working toward becoming millionaires. So this episode is for the person who already has your accounts, you've already got your investments, your strategies, right?

3:29Like you are doing the things strategically, but you might need some additional guidance as it relates to rich habits that will allow you to, over time, reach that millionaire status. So let's kick this off with our first habit that allowed Robert and I to become millionaires, which was meticulously tracking your earnings, your spending, your savings, and your investments. Robert says it best, what doesn't get tracked gets spent. So if you're someone who has already built their base, now you're trying to go from a couple hundred thousand to a couple million or more, you might feel like it's time to take your foot off the gas and coast.

4:06Yes, you're right. Building wealth is now a lot easier because you're making 10 or 15 or 20 % on your money in the stock market. And if you have$100 ,000,$200 ,000,$300 ,000, you're now making tens of thousands a year of portfolio income. So your money is working harder for you compared to only having maybe a couple thousand or 10, 20 ,000 invested. But that same intensity and focus that you had to develop to get you to where you are today needs to be implemented until you reach that$1 million. dollars. For example, I have a Google Sheet workbook that tracks every single month's worth of earnings, expenses, savings, and investments for me back until like 2021, right before I was a millionaire.

4:45And it broke down all of that stuff. That's the level of tracking that I'm talking about that is going to propel you into millionaire status. The income that you make, of course, is important. And my income skyrocketed over the last several years. But if I spent everything I made, I would have never had money to save and invest. And so what we're trying to say is income's important. You can make$10 million a year, but if you aren't tracking that income, if you aren't tracking your expenses, tracking your savings, tracking your investments, you're still going to be broke. It doesn't matter how many millions you might make with your income.

5:17Broke people react, wealthy people forecast. We want you to be a wealthy person that is forecasting into the future. This is so critical because people figure out how to make money all the time. But what we see day in and day out in the DMs, our emails and the Rich Habits Network is people that haven't figured out how to get ahead. They live beyond their means. They let lifestyle creep happen. And it's because they're not meticulously tracking their earnings and their spending. One of my favorite things to say to the masses that listen is you either have an income problem, a spending problem, or both.

5:52And many times people will still make six figures, multiple six figures, but live paycheck to paycheck because they're not meticulously tracking their earning and their expenses. And when I started early on in my journey, I noticed that none of my friends, this was when I was like 21 or 22, every paycheck I put aside$25 every single week,$25 went into my mass financial mutual fund account back then. And they were all like, what are you doing? And I'm like, I am putting this away for a rainy day later on. And I did that meticulously, probably not as much as Austin does, but I definitely tracked my expenses.

6:30I was very, very aware of where my money was going. And that allowed me to build wealth much earlier than anyone I hung around with. And by 24 years old, I had already reached millionaire status. And it was just fantastic to be setting myself up that way so early on. and all of you can do the same if you follow these strategies and habits that we're laying out today. So let's jump into rich habit number two that allowed us to become millionaires and get that first million dollars and that is drifting through life. So many people don't have a plan early on so they drift through their lives, especially in their 20s and 30s and never take the time to learn and initiate the rich habits needed to even get started on building wealth, let alone actually achieve it.

7:20And I think this is the biggest hurdle most people need to overcome in order to get on track and not sit on the sidelines. Austin and I realized early on in our careers that everything around us was built by people no smarter than us. People just like us were building all these great things and we started happening to life and not the other way around. We began implementing the mindset that can change what we don't like and we can mold our surroundings to what we prefer and our daily lives can become our dream lives. So we very, very much have free will in this situation. And in my opinion, there really are three keys to leading a great life.

8:01Knowing what you want, figuring out how to get it. And number three, which is most important, working to keep it, working very hard to keep it. And that is so, so incredibly important in your journey. You know, it takes a lot of, for some people, counseling, a lot of therapy, a lot of conversations to figure out what drifting through life means and doesn't mean to you. I know a lot of people have different relationships with money. If it is you didn't have it all growing up or you had a lot of it growing up or you don't feel like you deserve it or maybe you feel as if I deserve this money, why can't I earn it?

8:38Right. There's a lot of different relationships people have with money. But I think the most important thing to consider when it comes to drifting through life is what Robert alluded to in the beginning, which was that we started happening to life, not the other way around. So if you are someone, which again, you've built your base, you're working, you're moving in the right direction. But if you're someone who wants to become a millionaire or a multimillionaire, you have to happen to your life. It is no longer going through the motions, graduating high school, going to college, showing up to class, graduating, going to my nine to five job, being told what to do every day.

9:14Then I'll get that promotion. Then I'll make this money. Then we go on a vacation. That is the drifting through life that we're trying to encourage you to begin happening to. You need to have a plan. And it's not always a plan of monetary or, you know, relationship. Like it can be a plan of anything you want, but ensuring that you understand. understand like you lock in and you understand you have the mindset of this is my life right think about it like this if your life was a movie right now and there were a hundred people watching up until this point what would they be screaming at their television for you to go do because it's so obvious is it to go see your parents is it to go get that job is it to go try that new thing like what is that obvious thing that people would just be screaming telling their television oh why doesn't they why don't they go do that they should go do that right that's the type of drifting through life, we want you to understand that like you need to have this mindset of I have free will.

10:07Life comes from me. I make my decisions. I know where I'm going. We don't walk and think like we used to. We have dreams and goals and aspirations now. Like that is what I'm building for my family, for my legacy, right? Having that type of mentality is how you will go from a couple hundred thousand to a couple million over the course of your career because the people that don't have that mentality, life happens to them and then they make excuses as to why they you know got shorted or you know something bad happened to them we can't control what happens to us but we can control how we react to it there's a winner's mentality and a loser's mentality and loser mentality is things happen to them they get festered up they have all these you know feelings and they get so upset and they come up with excuses as to why they can't achieve things because all this stuff keeps happening to them where winners the same things happen to them they feel those things they get upset But then they say, okay, nobody cares.

11:01I gotta go do this anyway, right? I still gotta go do this thing because that is what I am here on this earth to do. I think that is so incredibly impactful. The movie analogy reminds me of a commercial when I was in college and it said, it was a Navy commercial. I think it was Army or Navy. And it said, if someone wrote a book about your life, would anyone read it? And it really spoke to me because I never wanted to lead a life of mediocrity and not becoming something that I felt I was capable of doing. So I think it's just really, really impactful for people to understand what's important to them.

11:36What is their life? What does it look like in their own minds and in their own hearts? So I love that takeaway. And walk us through the next one because this one is really, really cool and thought-provoking as well. Well, when it comes to leading a life of mediocrity, I think something people fall victim to is the imposter syndrome, right? That also has to do with drifting through life. Oh, that person can follow their dreams because they came from this type of family or, you know, their cousin hooked them up with this idea or, you know, they went to this specific school or they're, you know, friends with these specific types of people.

12:13But I don't have that. I never had that. That's not who I am. Right. I have that imposter syndrome of I don't deserve this. That's not who I am. I can't achieve that. And when it comes to drifting through life, imposter syndrome happens to all of us. Obviously, happened to Robert, happened to me, happened to anyone successful. It's like, whoa, wait a second. Like, what am I doing here? Am I really a millionaire making these decisions and building this thing? Like the Rich Habits podcast hit number one on Spotify's business chart after like nine months. Like, whoa, we have a bigger podcast than these people?

12:42Like, that's crazy. But like, you get over that and you realize you deserve to be here. You worked hard to be here, right? So like ensuring that you have that positive relationship. And again, counseling therapy, there's a lot of stuff that goes into that. But the mindset of I am, I will, I can, I can do that positive mindset, everything around you was built by people that are just like you. And anything you want to do, you absolutely can do. You just don't know how to do it yet. If you can realize that you can do anything, you just don't know how to do it yet. Like the world is yours for the taking.

13:14Mm-mm-mm. Love it. So let's now jump to our third rich habit that allowed Robert and I to become millionaires, which is practicing frugality and being really intentional with our money. This one sort of goes back to the first point about sort of tracking your spending and your earnings and your savings and investments, but it's now more focused on keeping your money, right? Let's say you're someone that you're into year three, year five, year seven, and you're really close to becoming a millionaire, or you are a newly minted millionaire, which I'm sure a lot of you are now. After the stock market's hitting all-time highs and things of that nature listening to our show, having a lot of money doesn't mean you need to spend a lot of money.

13:48I have millions of dollars. Robert has millions of dollars, but we don't spend millions of dollars. Now, don't get me wrong. I did just spend$90 ,000 buying my dream boat. And I've always dreamt of having a boat. I saved up nine months for it and I paid for it in cash, right? So it was like very much a smart financial decision while I also invested a couple hundred thousand dollars throughout that same period of time. So I wasn't silly about it. But I guess what I'm trying to say here is once you have money, You shouldn't just spend it because you have it. You should spend it because what you're spending it on makes you happy.

14:19And the best way to keep that money is to ensure that you remain frugal throughout your life. And notice we said frugal. We didn't say cheap. Make sure you're not spending hundreds or even thousands of dollars each month on something that doesn't make you happy. I do not go out and buy shoes every month. Some people are shoe, we actually got a question, I think, on Thursday from a guy that sold his 49 pair shoe collection to pay off some debt, I think it was, right? So it's like there are people out there that love shoes, they love purses, maybe it's watches, maybe things that like that's their thing and they love buying it.

14:49It just makes them so happy, but they can't afford it or they just do it because everyone else tells them that's what they feel like they should be doing. I had that conversation with myself years ago. What is something that I enjoy spending money on? For me, that's good food. I just spent like$450 on a dinner with Robert last week when he was in town and it was awesome. And I love eating awesome food and having great conversations with people I love. And so like that to me is what I want to spend money on. So I guess the whole point of this habit is being frugal, understanding the difference between living on less than you make, being frugal versus just being cheap, but also being intentional with your money once you have it.

15:25You have money. Doesn't mean you should go just spend it all. I want to really illustrate what I think most people get backwards. And they think that rich people spend crazy amounts of money all the time. And it really is incorrect. I have found in my many, many years on this planet that broke people spend money without even thinking about it. Whereas the wealthiest people I know are very intentional with their spending because they understand the opportunity cost of spending it. Like Austin alluded to buying shoes all the time. I know so many people that when the money is sitting in their accounts, they just feel they should just go spend it because it's sitting there.

16:01Whereas wealthy people always have a target. They have something they're working towards. They're making their money work as hard for them as they work to get it. And that is why the name of this podcast is Rich Habits, because we are here to help you all learn those habits that have made me very wealthy, Austin very wealthy, and that we've learned along the way from other wealthy friends and business associates, It's because it's so important. And I think that's why you see these stats all the time that, you know, these athletes and musicians that get these multimillion dollar signing bonuses end up broken a couple of years because they don't have the knowledge and the rich habits built in to be able to understand how to create wealth from that influx of money.

16:45And it's the same thing with lottery winners. As soon as they win the lottery, they go broke within two or three years because they never learned how to build from it and keep wealth. And that is why this episode is really, in my opinion, very impactful for people that are in the middle. You've had some success, you've made decent money, you've built your base, and now it is time to double down and really get moving so you make sure you can retire gracefully. So to summarize, you need to meticulously track your money, right? You've done that for a while now. That's how you got your first hundred thousand invested.

17:21It's time to continue keeping that same focus and determination until you hit one million. Number two, you need to take control of your life. Stop drifting through life. Stop letting life happen to you. You go start happening to life itself. And then finally, once you do reach this milestone of becoming a millionaire, you need to continue practicing frugality, being intentional with your money as you are right now. Do those three things and wealth is inevitable. So now before we jump to our Q &A section of this episode. Want to give a quick shout out to this episode sponsor, Public.com. Public.com is the investing platform for those who actually take it seriously.

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18:36Let me say that again. 1 % match on all IRA deposits, transfers, and 401k rollovers. Fund your account in five minutes or less at public.com. forward slash rich habits paid for by public investing full disclosure in the podcast description so let's kick off this q a with brad r brad says hello austin and robert i love listening to your podcast and appreciate all you both do a little bit about myself my name's brad i recently turned 34 i'm living in a moderately expensive cost of living area in the midwest not married don't have any kids but i do work in health care and i have a well-paying job of about$175 ,000 a year.

19:14I currently have$240 ,000 invested in my 403B,$46 ,000 in my Roth IRA, $50 ,000 in a brokerage account,$25 ,000 in Bitcoin, and a few thousand invested in a health savings account. Like you guys say, I max out my Roth IRA every year and I invest into my 403B. Thankfully, my employer offers decent investment options, so I do not have to get stuck in target date funds. I own a home and my monthly mortgage payment is about$1 ,400. I still owe$165 ,000 on that mortgage and if I were to sell it, I could probably get$420 ,000. The interest rate is 2.5%. So here's my question. It's been a goal and honestly a dream of mine to someday have a summer lake house or a cabin somewhere that I can spend my weekends at.

19:59I'm not in a rush to make a hasty decision on this goal, but I want to understand how to approach this idea. I want to stay consistent in my investing in the hopes of someday having the option to retire early, but I also have that mindset of wanting to enjoy life and do things while I'm still young and can afford it. How can I get to a point either now or down the road where this dream can become a reality and it still makes sense financially? Thanks in advance, Brad. Robert, you want to kick this one off? I would love to. Brad, you are crushing it. 34 years old, you have all your bases covered.

20:31you've already built a considerable net worth for 34 years old. Just, I want to say congrats. Everyone just really needs to put the work in and get to where you are at that age. So here is my takeaway from this. Don't take your foot off the gas. You can start earmarking money to go towards this dream house, this lake house. And I love that idea. I'm looking for a lake house myself right now. I've owned them in the past, but the number one thing you want to do is not take your foot off the gas and go backwards financially. A lot of people say, oh, I want to buy this lake house in three years. They start earmarking a thousand dollars a month or$500 a month for the lake house, but then they just put it in a savings account.

21:11And that doesn't make sense to me. I would put aside an account that could be a traditional brokerage account. It could be a high yield savings account or something where you're still earning on your money, but you are earmarking that money to go towards whatever the budget is and the down payment you'll need to buy that dream lake house. I love the concept. I'm doing the same thing right now, but just make sure that the money is actively earning because let's say you set it for two, three, four years down the road or longer. If it's two years or less, I would do high yield savings. And if it's over two years and more like three, five or seven years, I would definitely get that in one of your accounts, preferably making real money through some low cost ETFs or stocks or whatever it is you're investing in because you want to make sure you're optimizing the earnings along the way while still earmarking it for this purchase.

22:03I like that answer a lot. So Brad, here's my framework. Your net worth, if I did my math right, is somewhere around$650 ,000. You make$175 ,000 a year pre-tax, which means post-tax you're probably close to about$140 ,000 and you should be investing 15 % to 20 % of that per year like clockwork. So let's call it$20 ,000 to$30 ,000 of that$140 ,000. that you earn post-tax is getting invested every single year. In my opinion, if you are consistently investing that 15 to 20 % of your take-home pay, if that is maxing out the Roth IRA, beefing up the 403B because you have autonomy there, if it's the brokerage account, right?

22:44The bridge account, if it's maybe some Bitcoin, right? But like, if you are consistently investing 15, 20, maybe even 25, because you're a psycho, right? That'd be awesome. Percent of your take-home pay toward your retirement investing and you're doing that consistently and you can afford a monthly mortgage payment of a house like this and you can afford to like save for a down payment, go for it. If you can check the boxes, do the, hey, I'm doing it, right? I'm investing, I'm not in debt, I'm making sure I'm working toward an awesome big retirement, I'm making all this money and I can also afford a$2 ,000,$2 ,200 a month payment for a cabin on a lake or something.

23:21If you can afford to do both, then you're good to go. So like what Robert said, Make sure you save up for a decent down payment, 10, 15, 20%, preferably 20-ish, closer to that because interest rates are kind of high and you get rid of PMI. But then also you're at this point now where it's like, cool, your net worth is$650 ,000. You are probably five to seven years away from becoming a millionaire, right? Just consistently investing this$20 ,000,$30 ,000, $40 ,000 a year like you are. This lake house or cabin will appreciate in value as has your primary residence. So let's call it by 40 or 45 years old here, you are a millionaire and you've got this awesome lake house and you're consistently still investing, you will have so much money.

23:58By the time you're in your late 50s and early 60s, you won't even know what to do with it. So Brad, that's my framework, ensuring that you can consistently continue to invest and hit these saving and investing goals on an annual basis, as well as saving and spending for a lake house. If you can do both of those things, then you can afford the lake house, right? That's how I'm Now, on the flip side, maybe affording the lake house at$2 ,000 or$2 ,200 a month for the mortgage means that$12 ,000 a year that you love to spend on that big, lavish vacation with your friends or wherever that money was going to before, you got to have those trade-offs.

24:34This comes back to the intention now that we talked about. But that's what money is. Money is making decisions that make you happy. And if a lake house makes you more happy than maybe going on a big vacation once a year or twice a year, then that's the decision you're making. So our next question comes from Tyler L. Tyler says, hey guys, I've been listening to the show for a few weeks now and I love the content. You've helped me figure out what to do with my investments within my Roth and my 401k, so I really appreciate it. I'm curious to get your thoughts on this. I have a good amount of restricted stock units from my employer.

25:04I've been previously selling them as they vest on a quarterly basis for the last three years and then using that money to pay off my high interest debt. I've got most of my high interest debt paid off. I've got 7 ,000 left on a car at 2 % interest and my wife's student loans total about$60 ,000, but that's low interest as well. So what do I do with these RSUs? Every quarter, I get about$4 ,000 to$5 ,000 deposited into my checking account, and then I figure out what to do from there. My initial thoughts were to use this money to max out my Roth IRA, but would be curious to hear what you guys recommend instead.