150: Build Wealth Without Counting Every Dollar

0:19Hey everyone and welcome back to the Rich Habits Podcast, a Top 10 Business Podcast on Spotify brought to you by public.com. By the end of this episode, you'll know exactly how to build wealth without tracking every transaction or feeling guilty about your spending. My name is Austin Hankwitz. 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.

0:56So Robert, what are we talking about in today's episode? In this episode of the Rich Habits Podcast, we're talking about why traditional budgeting doesn't work for most people and what to do instead. We're breaking down how to build wealth without spreadsheets, without tracking every transaction, and without the psychological burden of traditional budgeting. We're talking about automation, reverse budgeting, and designing a system that works on autopilot. According to a study by U.S. Bank, only 41 % of Americans use a budget. And of those people that do budget, 73 % say they've failed at it within the first year.

1:32And that's a massive failure rate. The reason being is traditional budgeting is exhausting. The average person who budgets spends 5 to 10 hours per month tracking and categorizing their transactions. And this could be problematic because everyday people are spending more time tracking their spending versus learning ways to make more money. By the end of the week, most people describe themselves as mentally exhausted from managing and tracking their money, which leads to worse decision making and eventually abandoning the habit itself. Most people don't need to track every dollar. They need a protocol that automates the important stuff and lets them allocate the rest without detailed day-to-day monitoring.

2:12They need what we call an anti-budget. So Robert, let's talk about the anti-budget framework. We're going to lay out specific steps on how to build one of these, but before we do that, we think we should set the table as to what the anti-budget is and what it is not. The anti-budget is based on one simple principle. Automate your savings and investments first, then spend the rest guilt-free. Traditional budgeting says you should track everything, you should optimize everything, and control everything. We think traditional budgeting is cool. I do traditional budgeting. Robert is traditional budgeting, but we know that that doesn't work for everyone.

2:46And so if it hasn't worked for you in the past and you're still struggling with budgeting, maybe today's episode is for you. The anti-budget says automate the important stuff and ignore the rest. Here's how it works. Every time you get paid, money automatically flows to the right places before you can even touch it. Savings, investments, retirement, debt payments, things like that. It's all automatic. Then what's left over in your checking account is your spending money. You can spend this however you want. There's no tracking. There's no guilt in what you spend it on. There's no spreadsheets.

3:16You just you spend the money that's left over. This is called reverse budgeting or pay yourself first budgeting. So, Robert, let's walk our listeners through how to set up an anti-budget in four simple steps. Yes. Step one is calculate your savings rate. The first step in building an anti-budget is deciding on a savings rate. This is the percentage of income that automatically gets saved and invested. The average American only saves 4 % of their income and that's nowhere near enough to build wealth. We recommend here at the Rich Habits Network and Rich Habits Podcast to save 15 to 20 % of your take-home pay if you ever plan to retire with dignity in the future.

3:58And the earlier you start doing that, the better. And here's the kicker. Fidelity conducted a study and found that millionaires in their 60s and 70s had average savings rates of 23 % throughout their careers. Not the 4 % like average Americans, but 23%. So aim to be like them. Higher savings rates directly correlate with faster wealth accumulation and earlier financial freedom. Remember, we don't wanna see anyone on our watch becoming Walmart greeters at 70 years old. We're just not here for that. So this episode is all about getting you to understand your options. And studies show that people who increase their savings rate by 1 % per year, don't even notice the lifestyle impact, but the compounding effect is massive.

4:45A 1 % increase on a$70 ,000 yearly salary is$700 a year, and over 30 years at an 8 % return, that single 1 % increase becomes$87 ,000 more towards retirement for you. The key is starting where your income and expenses currently allow, then systematically increasing it as you earn more money throughout your career. I love this 1 % example, Robert, because if I was a listener right now and someone's telling me to go save 15 to 20 % of my monthly take-home pay, I'd be like, y 'all are crazy. Get out of here. I'm not doing that. But if you had the mentality of, okay, 1%, I can save 1 % more, just 1 % more, right?

5:23Just that 1 % more every single, if it's maybe every quarter, you try and save 1 % more every six months or even every year if you got to go that slow, but get up to that 15, 20, 25 % savings rate because that's what's going to allow you to retire with dignity. Now let's move on to step two, which is building your automation system. Step one was figuring out what your savings rate is. Now we got to actually figure out what to do with that savings. You need to have money automatically flow to the right places the day after you get paid. Not a week later, not two weeks later, not seven days, one day after, money's gone.

5:59Here's the setup. First, open separate accounts for different purposes. The existing checking account that you have that your employer just paid into, this can be for what's spending after everything's said and done. That's like your little spending account. But you need to open a high-yield savings account for your emergency fund. Just boom, automate it away. A brokerage account for your investments on public. Boom, automate that away. Have that 401k at your employer so you can have that taken out of your paycheck before you even see it. Don't keep everything in one checking account. You will not be able to tell what's for spending, what's for saving.

6:30It's going to get messy. You're going to spend stuff on accident. you're going to over save and get discouraged. Separate accounts create clarity. I've got a bunch of separate accounts. Robert does as well. Now you need to set up those transfers for the day after your payday. So if you get paid on the 15th and the 1st, on the 16th and the 2nd, you send it off to that account. I personally do this myself. I get paid on the 15th and the 1st, more specifically in the beginning of the month is where I get paid most of my money. And right after it hits my account, I automatically take 33 % and I put it in a high yield savings account for taxes.

7:02And then I take a percentage and I automatically put it toward my bridge account on public. Like that is just automations that happen already for me. And I do it every single time without fail. Now here's what that could look like for you. Your 401k contribution is already going to be taken out of your paycheck, assuming you're contributing up to the match. So that's cool and taken care of. Now, also assuming maybe you've already built your emergency fund of three to six months of expenses, you're now going to transfer maybe that monthly, you know, 575, 600 or bucks, whatever it is, to your Roth IRA.

7:32So you're maxing that out every year, right? That's an automated transfer. Then maybe another 5 % goes to a brokerage account on public, your bridge account, and you're now investing to retire early. After these automations have been done, the transfers are complete. What's left in your checking account is your guilt-free spending money for that month. And automate your bills. Please, please, please rent, utilities, insurance, subscriptions all on auto pay. You never have to think about them. They just happen and you track them on a spending calendar. You know exactly how much is coming out and on what day.

8:06This takes all the stress out of your monthly bills and ensures you don't make late payments because remember, want to keep that credit going in the right direction as well. So here's what you're left with. All your wealth building is automated. All your bills are automated. And the money you see in your checking account is money you can spend guilt-free, no stress, no anxiety. So if you want that$14 avocado toast, go for it because you've set everything else and you're in the right place for your wealth building strategies. That's what's so important too is people, and again, I think we talked about this on a recent episode and I suffer from this.

8:41I've got friends that suffer from this, which is like, I need to save and invest every single dollar I can find in my budget, right? But if you are following this anti-budget of a savings rate of 15, 20, 25%, like you're good. You don't have to go save every single dime. You can go enjoy a little bit of your life, right? And so that's what's so cool about the anti-budget is because you kind of pay yourself first. Everything's set in stone. You're good to go. And then with what's left over, you can say, yeah, I'm going to get the new pair of shoes. I want to go to that concert. I want to go out with the buddies.

9:10Like I've got X amount of hundreds or thousands of dollars left over my budget to go spend on that. Now, Robert, speaking of investing, right, if you're making these transfers on a biweekly basis, you need to be making them to an investing platform for those who take investing seriously, which is public.com. On public, you can build a multi-asset portfolio of stocks, bonds, crypto options, and now generated assets, which allow you to turn any idea into an investable index using AI. And it all starts with your prompt from renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20 % year over year, you can literally type any prompt and let the AI do the work.

9:52It screens thousands of stocks, builds a one-of-a-kind index, and lets you backtest it against the S &P 500, all with just a few clicks. Generated assets can be thought of as ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. So go to public.com forward slash rich habits and earn an uncapped 1 % bonus when you transfer over your portfolio. That's public.com slash rich habits. Paid for by public investing, full disclosure in the podcast description. All right, Robert. So now that we've talked about finding and calculating what that savings rate is and then building the automation system, let's now walk through step three, which is creating those spending guardrails.

10:37So with that guilt-free spending you're doing, it's not getting out of control. Traditional budgets set very strict limits. They say, hey, you can spend$252 at the restaurants this month, or you can only spend$400 this on groceries or$800 on transportation, whatever it might be, right? The anti-budget uses guardrails, not strict limits. When we say guardrails, you can think of these as simple rules that keep you from going off the rails without really micromanaging every single dollar. So the first example is the 24 hour rule for purchases over$100. So maybe you're like, listen, Austin Robert, I found this awesome coffee maker.

11:13It's 212 bucks and I love it. I can't wait to use it. Perfect. You probably will like it, but give yourself 24 hours of just some, some downtime here to really come to terms with that decision, right? Sleep on the decision before you go make it. And sometimes depending on what that initial exciting item or thing you were trying to buy is, you might not want it after even just 24 hours. So give yourself a 24-hour shot clock before you make a big purchase. Another one is the subscription audit rule. Every quarter, review your subscriptions and then cancel what you're not using. This happens four times a year, not every month.

11:48So hey, springtime, going to go through my subscriptions. Oh, I haven't used that one in a while. I haven't watched Disney Plus in two months. Why do I still have that? I don't check in on my ESPN app as much as I thought I would. Let me get rid of that, right? Audit your subscriptions often enough where they make an impact, but not so often where you feel like you're micromanaging your life. I like the 24 hour rule. And a lot of people don't know this on these higher ticket purchases or impulse purchases. If you do let it sit, put it in the cart. Think about it, but put it in the website's cart because most of these websites are going to have a drip campaign within 24 to 48 hours.

12:23They're going to send you a discount code to get you back to buy that item. So if you do decide, make sure you wait that 24 to 48 hours, get the discount, then at least the impulse purchase is much more affordable. So a couple that I like is every time you go shopping, have a real and clean list of what you plan to purchase, whether it's groceries or your target run or whatever it is. And this will prevent impulse buying and also prevent you from forgetting important things. Then you go back without a list and buy seven more items you don't really need. So I hope you like this list of our ideas.

12:57Maybe you can add some to your own list of what to do because these aren't restrictive budgets. These are simple rules that prevent stupid spending decisions without requiring constant monitoring. So Austin, let's get into step number four, the guilt-free spending account. One of the most powerful aspects of the anti-budget is guilt-free spending. Once savings and investments are automated, whatever remains is available for spending without the psychological burden and all the stress of it. When people feel guilty about purchases, they're actually more likely to engage in binge spending later on.

13:34And for example, we found a study that dieters who broke their diet were 47 % more likely to completely abandon it and start binge eating, which is a huge number. And the same psychology applies to budgets. One failure often triggers a complete breakdown of the budget and actually following through. So the anti-budget eliminates this. Once high priority financial goals are automated, the remaining money has psychological clearance for spending and no stress. Now, Robert, we just spent a whole episode talking about an anti-budget, which is like it's similar to a budget in the sense that you're doing all the right things, but you've got a little bit more fluidity, some flexibility on this spending account with what's left over.

14:16Before we wrap it up, I think we need to address and answer the question as to when people actually need a real budget, right? Not just this anti-budget fluid kind of, you know, strategy. Unfortunately, about 65 % of Americans live paycheck to paycheck. And for people in this situation, there might not be positive cash flow to automate away to, you know, your investing account, your emergency fund, your brokerage on public. When 100 % of your income is going towards survival, automation is not the solution yet. But you listen to the Rich Habits podcast, so our goal is to obviously help empower you to take control of your money and stop living paycheck to paycheck.

14:52A study in the Journal of Financial Planning found that people who track their expenses extensively for two to three months identify an average of$400 to$600 per month in spending leaks that they were not aware of. So if you're living paycheck to paycheck, join me in the new year here in January for No Spend January. I'm going to do it. I'm so excited. It is going to be an awesome time for all of us. And we'll do these little weekly check-ins if y 'all want, but it's going to be an awesome opportunity to audit your spending down to the bare bones. Figure out what you really need to spend money on every single, no eating out.

15:31There's no buying things for fun. There's like literally try to spend as little money as you can in January. I do this every year. It helps reset my spending habits and it helps me understand how little I can live off of if something bad happened, right? So just understanding what that baseline is, how low it can go really, really helps people move in the right direction, especially if they're living paycheck to paycheck. And by the end of it, you're like, whoa, I did find 500 bucks. How fun is this? But if you're not living paycheck to paycheck, consider graduating to the anti-budget framework we just talked about in this episode.

16:05I love how tactical this episode was, but also it brings in mindset because I think a lot of this, when you think about finding four or five, six,$700 a month, I always hear so many people think that wealthy people don't budget because they have all this money and they just spend frivolously. And I think it's actually the opposite in society. The people that I come across and I meet and I work with all have budgets of different styles. And that's why this episode to me is very important because I want to get everyone out there that might be struggling a little bit, living paycheck to paycheck or taking on a side hustle to make ends meet, to understand that if you do budget and you figure this all out, even if it's the anti-budget, you will find extra money and help you get back on track financially.

16:52Because traditional budgeting works for some people. If you love spreadsheets, it's tracking every dollar makes you feel in control. Keep doing that. But for most people, it's miserable and it's unsustainable. That's why I'm a little loose with my budgeting as well. I have it all dialed in, but I don't track every little dollar. But for people that might be in a tighter situation, I think it's important to do that and look at both strategies, the anti-budget and the honest budget, because the anti-budget is different. It automates what matters and ignores the rest. It focuses your energy on high-impact decisions like your savings rate, your income growth, and your investment strategy.

17:31So automate your savings, automate your investments, automate your bills, set simple guardrails to prevent impulse decisions, then spend the rest guilt-free and focus on increasing your income. I love this episode. I really, really appreciate this because at the end of the day, you're either someone that's a money nerd that likes to track all this stuff or you're someone that's a little bit more fluid. and not everyone is happy being a money nerd. But if you are more on that fluid side, right, the anti-budget, as long as you are doing what Robert said here by focusing your energy on high-impact decisions, right, that savings rate, you're investing, all the stuff they're paying off high interest at, those high-impact decisions, you are going to trend in the right direction regardless.

18:13Now, of course, you can optimize for every dollar like we, of course, encourage people to do here, but we know it's not for everyone. But maybe the anti-budget is for you. Yeah, we talked about this last night in the Rich Habits Network, that sometimes people spend so much time tracking every dollar that they lose track of the fact that they need to be growing their income and their revenue sources as well. And I really think it's important for people to understand both sides. Yes, we want you budgeting. Yes, we want you tracking your money and automating. But we also want to make sure you're focusing on learning and financial education and growing your income streams as well along the way because it makes it all a lot easier.

18:51Now, Robert, before we jump into the Q &A section of this episode, which, of course, if you have a question to ask us, email us at richhabitspodcast at gmail.com or DM us on Instagram at richhabitspodcast. Or you could join the Rich Habits Network, seven-day free trial link in the show notes below. And always get your questions answered via our two-hour weekly live streams we host over there. But before we jump into that, got to give a shout out to this episode's sponsor, Neos Investments. Nios offers ETFs that seek high levels of monthly income with a keen focus on tax efficiency, while also providing core portfolio exposure across equities, fixed income, real estate, cryptocurrency, and cash alternatives like treasury bills.

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20:54So they're coming out with these new ETFs all the time that, again, serve as compliments to an existing well-diversified portfolio. I love what they've got going on over there. We're going to have to have Garrett and Troy back on the show here very soon. All right, Robert, let's now jump to our first question. This one was emailed to us at richhabitspodcast at gmail.com by Rustam G. Rustam says, hello, Austin and Robert. I love the podcast. I've been listening since the beginning and I really appreciate the practical, no-nonsense advice you two share. Quick background on me. We're an immigrant family from Uzbekistan, ages 41 and 36, with four kids under 18.

21:30We rent in Austin, Texas, and both work remotely in IT as W-2 employees. Our household income just crossed$200 ,000 this year. We've invested roughly$55 ,000 in ETFs and a few individual stocks,$25 ,000 in a private multifamily deal projected to return 19 % annually between now and 2027. We currently have$20 ,000 in savings, earmarked toward a future home purchase. This, though, does include our emergency fund. We also have$13 ,000 in a car loan at 9 % interest that we're aggressively paying down and a very small $3 ,000 student loan at 0%. So here's my question. If you are a financially disciplined immigrant family with strong credit, stable income, four kids, and a 20-year time horizon, what would you stop doing immediately to help accelerate wealth building?

22:21As a follow-up, do you think that we should prioritize buying a primary residence or an investment property in this stage? Thank you. Robert, what a really cool question from Roostom. Yeah, I would say this is a great question, and I like how he phrased it because of the fact of what would I stop doing? How do we fix this? And it starts with, again, building your base. At 41 and 36 years old with four kids, you need to get that base built up. You have a family. You have all of these responsibilities. And right now, you just don't have enough base. And I don't want to see you all over the place in real estate and here and there and everything else.

22:56I would stockpile as much money as I could every single month into the ETFs you talk about and get that built up. First, I wouldn't be doing any other real estate deals or investing deals. And then secondarily, the only thing I would do is take that money that you said you have 20K in savings. I would make sure that's in high yield savings. And I would separate that money if you're going to buy the primary home in the next two, three years from your emergency fund. because the emergency fund should not be blended with investing dollars. So that's what I would do. Increase the ETFs, get that built up to 100K first, get your savings built up in your high-yield savings so you have three, four, five months of your bills because you have a family set aside in a high-yield savings account and then have a separate account for the savings for the house coming in the future.

23:49I don't think you're in a situation yet to be looking at additional real estate investing just yet. I would get the base built, do the separation between the emergency and the home funds and move on from there. That's a great breakdown. I would stop my, and Robert kind of alluded to this, my excitement of new opportunities. Oh, I've got this cool multifamily deal. Oh, I want to go buy a house. Or if I were you, I would lock in in 2026 on getting as much money after tax dollars invested into the stock market across a Roth IRA. maybe your 401k but especially that bridge account right because here's the deal you're 41 years old and i know you guys haven't been making that much money for a long time 200k last year or so you've been starting to make this much money which is great we're talking about 13 to 14 000 hitting your checking account every single month you got four kids so your family is six i'd imagine you could probably live in austin texas on about 10 000 a month right that sounds pretty reasonable so you now have$3 ,000 to$4 ,000 every single month that you and your wife need to lock in on piling into these accounts.

24:56So what would I stop doing is I'd stop looking around at all these different opportunities and I would lock in on getting hundreds of thousands of dollars invested into the markets between my wife and myself before the age of 45. Give yourself a couple years to accomplish this, right? You're at 55 ,000 right now. What's it gonna take to get to 250? Figure out what that number is that's gonna really make you feel good because let's talk about that for a second, Robert. Let's assume our friend here has$250 ,000 invested into the markets at 45 and they contribute nothing more, right? From 45 to 67 when they're ready to retire.

25:29We're talking about$1.8 million, assuming you don't give any more money to the markets. It's just that 250 and it grows for you for this 22 year period of time. $1.8 million is what you would have in retirement. Of course, you're going to contribute over time more. You're going to be multi multi millionaire if you play your cards right. But the big thing I'm trying to have you understand is it seems like you're all over the place on what you're excited about. And you kind of have all these different financial goals. And it's good to have goals. But it's more impactful if you have one thing, you focus on it for a prolonged period of time, and then you move on to the next thing.