Don’t Make These Mistakes With Your Money | Lewis Howes

0:00Hi, my name is Lewis Howes and welcome to the Daily Motivation Show.

0:08I have a brand new book called Make Money Easy. And if you're looking to create more financial freedom in your life, you want abundance in your life, and you want to stop making money hard in your life, but you want to make it easier, you want to make it flow, you want to feel abundant, then make sure to go to makemoneyeasybook.com right now and get yourself a copy. I really think this is going to help you transform your relationship with money this moment moving forward. We have some big guests and content coming up. Make sure you're following and stay tuned to this episode of The Daily Motivation Show.

0:49You've heard this when you get on an airplane. The first things they tell you during the safety demonstration is to put your own mask on first. You don't put it on someone else and then go unconscious. You put it on yourself, right? And this seems so simple. We've heard this over and over again in different parts of our life We've heard this analogy a billion times, but it's so important and it's extremely important when it comes to finances But most people don't think that way and a lot of us want to pay others first or give that gift to our partner or buy that new pair of shoes for a friend or whatever it might be And i'm not saying you have to give that up completely But what I am saying is you want to make sure that your cup is filled before pouring anything into someone else's and you need to be setting aside some percentage of every dollar you make into your savings or investments to really set yourself up for the future.

1:38And that's why what we say, pay yourself first, what that means here. So you really want to pay yourself first. And you always have to be prepared for an emergency situation. Anything can happen. For example, your business might get shut down unexpectedly. You may need to cover an expensive medical bill and the list goes on and on. So how much money should you be putting away? Well, a financial expert and friend of mine and 10-time New York Times bestselling author, David Bach, he makes it pretty simple in his explanation. First, we need to make a promise to ourselves to become financially selfish and focus on our own financial goals before anyone else's.

2:14The calculation David uses for setting aside savings is one hour of whatever it is we earn per day. So if you earn$100 over the course of a 10-hour a workday, you would set aside$10. Shark Tank investor and serial entrepreneur Kevin O 'Leary says we should set aside 10 % of every single penny we make. No questions asked. Now, my personal advice here is the same advice I give to people who tell me they're trying to build a business or achieve a big time goal is you can go as slow as you want, but just don't stop. Do whatever you can when it comes to savings, but make a commitment to stick to it.

2:54So if you need to start small, that's fine. Just do slow, slow, slow, but just don't stop. Don't give a little here and then stop doing it for years. Just keep going. Another mentor, Tony Robbins says to think of your savings like a tax that we have no control over being charged for. So think of money like it's gone forever. This type of money that you're going to save, it's locked away. It's gone forever. It's a tax. It's got to go out every single month like a tax would. And whatever it takes, just make sure to make a plan and stick with it. Try to automate some of these things if you can. And remember that if you don't pay yourself first, it'll be almost impossible to show up for other people the way you want to.

3:34Living within your means is something that is so important but often overlooked today. And you could blame the Instagram lifestyle or society's obsession with material things or whatever else. But the truth is, it's always been a problem overspending and not really managing your expenses. And people who aren't used to having money will oftentimes spend way too much the second they get in their hands. And you see a lot of this with pro athletes and celebrities, but it happens all the time with a lot of people as well. And who can really blame them? You know, when you get a lot of money coming in, you're like, oh, this is cool.

4:07I want to spend it. You know, this is something that is exciting. But this stuff wasn't taught to us in school and we aren't Given the tools, we need to know how to prepare for taxes, how to avoid credit card debt, how to properly invest our money. So it's no wonder it's such a big challenge and issue. So living within your means means to set up a budget and to stick with it. Whether you make$30 ,000 a year or$3 million, learning to manage your expenses and know exactly how much you're able to spend and where you can spend, it is a cornerstone of building long-term wealth. billionaire and legendary investor Ray Dalio.

4:44We had him on the show and he said that the first step to controlling your expenses and budgeting is to figure out how much you currently have saved and how long those savings can last if you lost all of your sources of income. Then figure out how much you want to grow that amount by. So let's say if you have three months worth of money saved up and you want two years worth of it, then you just calculate how much you need to set aside per paycheck or per month to reach that goal. Make this easy on yourself. Budgeting doesn't have to be this overly complex thing, but you just gotta be aware of where your money's at.

5:21We're so lucky today to have these incredible tools out there, our apps, that can make budgeting even simpler for us. And there's services that can help you automatically set aside certain portions of your paycheck to go into savings or other accounts. This is easier than ever today, guys. that can also help you figure out exactly where you're spending your money. And most are pretty cheap too, or if not free apps. And if you're able to have stuff working for you in the background or automatically without you having to see it, then that's one of the easiest ways to make this change. The quicker you can automate these things, the better.

5:55Surround yourself with people or a mentor who can really help you start learning the language, the conversation of money. And you'll need to pick up on their mindset, how they approach investing, wealth building, and more. Money is going to be something we have to deal with for as long as we live. It's a lifelong journey. So it's a skill worth mastering. And the sooner you learn it, the easier it is. And even if you don't have access to a mentor in the real world where you can call or meet in person, you can obviously start following people online who can start teaching you what they know about building wealth.

6:29There's books, there's courses, there's YouTube videos, podcasts, blogs, you know, all these different channels on the topic. So there's no excuse for you to be uninformed if you have the initiative to educate yourself. You've just got to be willing to put yourself out there, to do the research, to study, to learn, and find the right people that resonate with you. So the most important thing here is to be realistic about your current situation, where you are right now with money. And you don't have to be ashamed about where you're at. When I had nothing and I didn't have the knowledge, it was a stressful situation, but we all are at different seasons of life.

7:02So there's no reason to be ashamed about where you're at, but you do want to take inventory and start investing and learning these habits and these skills. And you can always make more money later, and I hope you do, but you'll only be hurting yourself if your spending habits are not in line with how much you currently are making and how much you currently have. The worst exchange in the world is trading time for money. And obviously, if you're trading time for money and you're not maximizing that money, that's one of the worst things. You really want to maximize the money you're making and figure out how to multiply that money in different ways.

7:37Even when I was doing something I loved, playing professional football, I wasn't making a lot of money. I was doing the thing I loved, but I wasn't optimizing the money I was making. I was trading my time to play professional football. I was trading my time for dollars, and that was great, but I wasn't optimizing it to go to the next level. I wasn't using that money to multiply for me. You got to find ways to multiply the money that you have. So no matter how much you're making or how little you're making, hourly wages will always have a ceiling on how much you can earn because you can only ever be in one place at one time.

8:12So even though I was playing football and I was getting paid for that, it was limited to what I could make. So even if you're the highest paid consultant in your industry, you might be making a lot of money currently, which is great. But if you want to build long-term wealth, then you need to make sure you're generating passive income with that money that you're making, or at least moving towards it. And that's the key. I want you moving toward this. And this is the kind of money that you can multiply while you sleep. And I know many of you might be thinking, but Lewis, I don't even have enough money right now to invest in real estate or buy a franchise or any other investments when you hear the words passive income.

8:50But there are other ways to make your money multiply, even if you aren't in the position to invest in those higher ticket assets like real estate right now. And one is looking into stocks, bonds, IRAs, index funds, mutual funds, and even a 401k. Now, some people might agree with some of these things and others might disagree, but you can really double down into these once you have your savings situated. So the savings first is key. These don't require a huge amount of money upfront and they compound over time. So just like savings, the most important thing to remember when trying to make your money multiply is to be consistent.

9:28That's the key.

9:46Thank you so much for listening to today's episode of The Daily Motivation, and I hope you have an amazing rest of your day. If you enjoyed this episode, make sure to click the link in the description that will take you to the full episode of our main podcast on the School of Greatness. And if you are loving the daily motivation, please follow us over on Apple Podcasts and Spotify and leave us a review over on Apple Podcasts right now. And if you want more exclusive content and ad-free listening experience, make sure to subscribe to our Greatness Plus channel on Apple Podcast right now. And if you want to get even more inspiration from our world-class guests and learn how to improve your life and take it to the next level, then make sure to sign up for the Greatness newsletter and get it delivered right to your inbox over at greatness.com slash newsletter.

10:36Again, have an amazing day and I'll see you tomorrow with another episode of the Daily Motivation Show.

10:48Thank you.