AAR10 - Financial Goals for Beginners

0:00I remember starting my first business. I had no clue what I was doing. I just knew I had an idea and I didn't want to be that guy who talked about it forever but never actually did anything about it. So I went for it. And honestly, that one decision taught me more than I could have ever learned sitting on the sidelines. If you've got something like that sitting in the back of your head, my best advice, start. The timing is never going to be perfect. Summer's packed, fall gets busy, winter's coming soon, and before you know it, another year has gone by and that idea is still just an idea. Shopify makes it a whole lot easier to take the leap.

0:29They've got thousands of templates, so you don't need to know how to code or design. Just point, click, and your storefront looks professional from day one. Once customers start finding you, Shopify's checkout saves their info so they can buy with one click. And when you hit a wall, their built-in AI assistant sidekick has answers on the spot. No waiting, no digging. All you need is the idea. Shopify handles the rest. If you're serious about hearing your first, start your free trial at Shopify.com slash beginners today. You heard that right. Start your free trial today at Shopify.com slash beginners.

1:03That's Shopify.com slash beginners. Support comes from Wise, the smart way to manage the currencies you need around the globe. Fed up with losing out to hidden fees when you send money abroad with your everyday bank? Choose the smart way, Wise. You can count on the exchange rate you'd usually find on Google. No unwelcome surprises. Plus, ditch that where's my money feeling. Most transfers arrive in under 20 seconds. Join millions saving billions on hidden fees. Be smart, get wise. Download the Wise app today. T's and C's apply.

1:50Andrew Sather:hey everyone welcome back to at any rate my name is evan ray and we're here to help you make sustainable financial changes without breaking a sweat and today please welcome our resident beginner turned expert andrew sather good morning andrew good morning it's great to be back what's going on. Heck yeah. Not too much. So, you know, this podcast is intended to mostly focus towards beginners, you know, people starting off on their financial journey, people trying to dive down the rabbit hole of finances, you know, grasp why it's so life-changing, why it's so effectual of almost a hobby for them to have or something to focus on, keep in the back of their mind.

2:30Andrew Sather:In your mind, what do you see as a beginner in finance? You've talked about the awakening, right? I think anybody who hasn't had the awakening would be a beginner. And we all wish we had that sooner. For me, it was really a flip. And I don't know if that's relatable to other people. But I went from being completely blind to realizing, okay, this is something I have to really be intentional about. I always had this assumption, get the degree, get the job, the money will take care of itself. Turns out the money comes with a job itself and realizing that and getting ahead of that. I think it was a little discouraging at first because it's like, man, what have I been doing this whole time?

3:19But you can start to see it as a way to empower yourself. and it gives a sort of, I don't know if upward mobility is the right word, but this idea that you can do more with a little. And that to me is very encouraging. You don't have to be doctor, lawyer, entrepreneur to make significant wealth where you're having this kind of independence where you can make choices now that are enabled because you're good with your money. So to me, There's a little bit of the discouragement, but then also the hope on the other side once you've started to go down the path.

3:58Andrew Sather:I absolutely love that. I know for a fact, because obviously I've been there and you've been there too, that beginners are strongly discouraged by the fear of what they don't know, the fear of diving into finances. And then for people like us who are in the space, the idea of compounding is great. You'd let your money sit there and build, and it's going to build more and more quickly, even if you're only contributing to it. the same amount as you did before because it's compounding on previous returns. And for us, that sounds great. That sounds powerful. But I know and can imagine that for a beginner stepping in when they hear, oh, well, just even a couple of years makes a massive difference.

4:33Andrew Sather:And they think, well, I've been waiting 15 years to get into this because I've been putting it off since I started working. That's extremely scary. But like you said, making even small movements whenever you're able to is going to build up and make a massive change. It factually may not make as massive a change as it would have if you had started early, but that's not something you can change. Now, all you can change is going forwards, taking action for yourself to build things for yourself. And something I also try to remind myself is that a lot, if not most people out there, never even start down this journey.

5:11Andrew Sather:They live in fear of it the whole time. They live in confusion of it the whole time. and they go into retirement and finish their lives never having dove into this whatsoever. And so that's more motivating for me that even if I'm taking small steps in this direction, even if those steps are really scary and they do feel small and meaningless up front, I know that I'm taking steps that have been too scary for other people to even take on whatsoever. Now, Andrew, is there ever a time in your life that you've felt embarrassed for starting on something late? Would that even maybe be finances? Ooh, just going to flip it on me and think about my life.

5:52I've got to take a seat, lay back, reflect on my journey.

6:02For me, something that's been, it's not so much about starting late, but it's about making mistakes and then feeling like the progress is lost. that whole concept of two steps forward, three steps back. I've definitely seen that in my life. And I wonder if there are similar fears that can come in addition to that. When you feel like you are now behind where you should have been, then that timeline's compressed or you just wonder. For me, it's like the wondering of how much better could my life have been if I didn't make that mistake. And I wonder if there's some similarities there to also feeling like starting late with your finances.

6:50Because the compounding, if you start late on your journey compared to somebody who started earlier, you just have less of a compounding window, right? There's other benefits to having a financial awakening, to managing your money well, to investing and saving as much as you can that don't necessarily need to happen with a long compounding window. So I'd be curious to flip it on you. What are some of those benefits? If your compounding window is short, what are some of the benefits to still going along with this? Even if you feel like I started too late, it's there's no point kind of thing.

7:34Andrew Sather:yeah a few things come to mind the first the first thing is that even in a shorter period of time you know if we're still talking 5 10 15 years or something compounding still has a significant effect and I mean even for me I didn't I didn't really start saving any any consistent portion of my income until maybe three and a half years ago or something like that and even over quote unquote just three and a half years I've earned a significant amount of money just from compounding money that I was able to save along that period of time. Has it you know doubled my wealth or anything like that? No but even earning a significant portion of your wealth back you know let's say maybe 30 to 40 percent of what I've invested is probably what I've gained returns from from compounding over that shorter period of time.

8:24Andrew Sather:Even a shorter period of time can can earn you a ton of money and a ton of wealth that you wouldn't have had otherwise. You know, it may not be as exciting as being a millionaire or doubling your wealth in five years or something like that, but that is money that you wouldn't have had otherwise. And I think that people tend to have sort of a, sort of a binary view of things that they don't understand or don't think are that important where it's just an on or off of either you aren't investing and aren't building a ton of wealth or you are investing and you're just rocketing your wealth up, you know, 10X in your wealth and having millions and millions of dollars behind you.

9:00Andrew Sather:In reality, there's a ton of gray area in between there that is still really, really good. Still, you know, 5 % returns are infinitely better than 0 % returns. And so even earning some of that wealth back for quote unquote free, it still takes time and effort to keep up with it. But just building that money through other avenues, you wouldn't have had access to otherwise, like the stock market or something is hugely powerful. And then the other thing that comes to mind is, I feel like our timeframes for investing are often longer than we see them as. And what I mean by that is we feel like, oh, I'm only 15 years from retirement or something like that.

9:40Andrew Sather:15 years is still a long time for things to compound. So even even if you're 50 before you start doing this, 55 before you start doing this, you still have, in terms of compounding, a significant amount of time for it to compound. Not to mention that once you reach retirement, assuming you're able to have more wealth sitting there than you're pulling out on a regular basis, you can still continue to compound in retirement. It may be slowed significantly because you're pulling some of that money out, but it's not like your life or financial workings or decisions just end when you hit retirement age.

10:14Andrew Sather:You're still a person. You still have wealth behind you. You can still invest that, grow it. Even if it's just in a high-old savings account or something, you can still grow your wealth in retirement. And I feel like a lot of us in the finance world see retirement as some sort of a stopping point. You invest until you hit 65 and bang, that's the end goal and you better be where you want to be once you hit it. But that's not realistic for a lot of people. And I feel like that's a very unnecessary, unnecessarily stressful mindset when you realize there's still a ton of life to be lived after that and still a ton of financial decisions to be made after that.

10:47That is actually very encouraging in that you have a financial awakening. Hopefully you are being a little more responsible. Maybe if frugal, frugality is maybe not your thing. Maybe you're just better at managing and maybe looking towards the future and sacrificing a little in the present to look towards the future. To your point, you can continue to do that through retirement. And maybe now you're collecting social security and you can continue to make those decisions that are helping push along your compounding goal. I love that. That's a completely different way to look at it. But it's okay.

11:23You don't get where you think you wanted to go. Just adjust and your life will be better 15 years from now, the fact that you'll have more options to adjust into in 15 years if you start compounding now, I think that's a really cool idea. I don't hear that much.

11:43Andrew Sather:No, sadly, I mean, so much out there in the finance world or in any world, really, but you know, in this case, in the finance world, there's so much comparison out there. There's so much, so much gloating of what somebody else's situation is, you absorbing that content, and you inherently thinking, well, if I'm not there, then too bad. Like, for example, with us buying a house currently, again, I'll have an episode coming out once we close. I'm not coming out with it beforehand. We're currently going through the process of getting a house, and it's so easy to say, oh, you know, we love this house.

12:14Andrew Sather:It's gorgeous, blah, blah, blah. And then you look at a creator online, and you're like, they're my same age, and their house is freaking drop-dead gorgeous, five times the size of ours and everything. And it's easy to say, well, you know, what am I doing wrong? Why haven't I hit that? it's just people live different lives people have different ups and downs and comparing somebody else's life to your own is never going to get you in the right place it's going to it's going to give you unrealistic expectations and so much of it is just filled with toxicity where the whole goal is just for them to brag you know that a lot of people I'm definitely not saying everybody out there but a lot of people out there their goal isn't to genuinely help you and educate you of how they got there and what their mindset was like and everything.

12:58Andrew Sather:It's just to brag about what they did and where they are now and not really genuinely wanting to help people. And, and it also just leads you to pull straight goals from people for me to say, well, I need to have a 13 bedroom house, you know, in the middle of LA or something. And if I haven't done that, then I didn't achieve the same life that this person did. And that's just such a, it's a very narrow view of what their life actually is, of what their happiness level is actually like, what their finances actually look like on the back end. Just because somebody can afford a 13-bedroom or just because somebody bought a 13-bedroom house doesn't mean they can actually afford that 13-bedroom house.

13:34Andrew Sather:On the flip side of things, I think that goals are a great way as a waypoint just to track progress again. So instead of just looking at somebody and saying, that's what I need, and taking that as your goal instead of instead finding more flexible more scalable goals for yourself is a much better way to go so for example the kinds of goals that I would say to avoid are if you see somebody and you say I want to have a hundred thousand dollars saved or I want to earn eighty thousand a year or I want to have that 13 bedroom house because I saw somebody else have it pulling those concrete goals is not taking into account your own situation you know maybe you could do even better.

14:14Andrew Sather:Maybe you're not going to be able to reach that in the timeframe that they did something like that. Pulling those concrete goals is it's skipping so many other factors in your life that makes you, you and makes your situation, your situation. So instead we want to look for, you know, much more scalable, much more realistic and attainable goals for your own financial situation. Andrew, what is, what's a, what's a financial goal or expectation when you started? Cause we, we absolutely all have them. I mean, I just mentioned one of my own. What's an unrealistic goal or expectation you had when you started getting into finances?

14:46I'm not going to lie. Running a small business has been stressful lately, swamped in paperwork, different state agencies, and got all these expenses to track and everything. And it's hard to have visibility on these things. But I've stumbled on a better solution, kind of like a one-stop shop for my bookkeeping, my expenses, my P &L, my banking, my contractor payments, all of the messy pieces. It's called Found. It's for business owners like you and I. There's over 750 ,000 business owners who've chosen Found. I've chosen Found. It's cool because the interface is clean and all of my transactions are auto-categorized.

15:26I can pay all my contractors keeping all the 1099s organized on the app. So less headaches and more time to do the things I love. Take back, control your business today. Don't wait. Open a found account at found.com. That's F-O-U-N-D.com. Found is a financial technology company, not a bank. Banking services are provided by Lead Bank, member FDIC. Found does not provide tax, legal, or accounting advice. Optional subscriptions to Found Plus for$35 a month or$315 per year or found pro for$80 a month or$720 a year. There are no monthly account maintenance fees, but other fees such as transactional fees for wires, instant transfers, and ATM apply.

16:12Read found fee schedule.

16:14Andrew Sather:August is National Wellness Month, but most health trends equal things like buying random gadgets and guessing at what actually works based on whatever's trendy at the time. And I wanted to stop guessing at things like that and actually look at the data behind my body. I've mentioned it before, but lately I've been taking time in the gym much more seriously, not just to build a bunch of, you know, aesthetic muscles, but to build a good, sustainable, long-term health plan for my future. Your daily resilience leaves a clear data trail in your body and function tracks the exact markers behind your energy and immunity.

16:44Andrew Sather:Not a generic overview. They look at core biomarkers like white blood cell count, which maps your frontline defense against invaders, HSCRP, which catches hidden energy draining inflammation, vitamin D and zinc which are essential immune anchors and commonly low in a lot of people plus there are secondary metrics that they cross-reference things like ferritin which is iron levels behind your energy MMA which is your active b12 for energy and nerves and cortisol which is how stress is actually impacting your body I use function and you should too check your health the way I do function provides 160 plus lab tests for one dollar a day and member pricing on advanced imaging.

17:20Andrew Sather:Join at functionhealth.com slash beginners and use gift code beginners 25. What's the best way to get started in the market? Download my ebook for free at stockmarketpdf.com. The big one for me was as soon as I had my awakening, I knew I wanted to get a house. And I had, there are so many benchmarks, so many recommendations of people say, you need to have this much saved and you need to have this percent of your, oh, it drives you crazy. My income's changing every year. It's a moving target. So I thought I would be able to hit these arbitrary numbers a lot quicker than I ended up doing. And so I had to wait longer to get to that goal.

18:08But, I mean, the wait was worth it because getting a house, It is awesome, and it is probably one of the most impactful things you can do for your finances when you think about the equity you're building and all of those things. But as Evan's about to find out, it can also come with a lot of maintenance. You got pests. You got to worry about security. You got a lot of different things, landscaping if your HOA doesn't cover that. So it is not the end of the world. there are benefits to renting that a lot of people don't talk about also that you can still use your time to build your goal push your goals forward even if you're not at this arbitrary i have my house by 30 or something whatever the number is so for me i shouldn't have put so much pressure on myself to make it to that goal as if I didn't make it there.

19:05And I never set this tangible goal. It was just kind of always in the back of my head, giving me pressure. You got to get there. You got to get there. That was just unnecessary looking back. That was one for me. What about you? Do you have one?

19:18Andrew Sather:Yeah, frankly, you stole my first one, which was absolutely, you know, the home ownership is, you know, it's the quote unquote American dream and everything. You know, it's one of those big thing that's pushed as something that that you need to do it's always the right thing for everybody and i feel like that a lot of that is rooted in rooted in the past you know 50s 60s 70s when homes were more affordable much more affordable compared to income i mean the income to home ratio i think back then was something closer to like two and a half or three times the average income was the average home price and nowadays you know we're talking like seven, eight, nine times the average income.

19:56Andrew Sather:So we're in a drastically different financial landscape than when those sort of tropes and general goals were set that I don't think you can just take and blanket apply to nowadays instead. Another bonus one, so it's unrelated that came to mind was because I studied engineering, graduated as a mechanical engineer with my undergrad, in college, there's always that mindset of, okay, well, what's your next step in education? You're like, okay, cool. You've done your undergrad. Congrats. But like, what are you doing now? You're not just going to work and live a life, right? You're going to have some further education.

20:33Andrew Sather:So there's always that. I'd had those unrealistic goals of, oh, I'm going to go out and get the highest level of education or something. That died off pretty quickly in college, I'll say that. But early on, it was, you're constantly hearing other students you know, TAs, professors talking about, well, you know, then you get your master's and then you get your PhD and then you're getting your doctorate and then you're getting these additional certifications. And then once you decide, you know, once you're in a specific field and actually working out in the industry, then you're going to get these additional certifications because that'll help you.

21:05Andrew Sather:And it feels like it's very easy to set unattainable goals of, well, the next 15 years of my life are going to be nothing but education and certifications so that I can earn, you know, X amount of money. And those are the, I wouldn't say the expectations that are placed on you, but they're kind of placed in front of you. They're kind of dangled in front of you as more than likely the right way to go. And then you actually get into college and you get into the industry. And at least for me, I realized that's not what I want to do. I don't want to live my life in school in that way. And I had to shift my goals a lot more to realize, okay, you Why would I want to go to those further education?

21:44Andrew Sather:To earn more money. Okay. Well, why do I want more money? To live a better life. Okay. So how do I manage to live a better life, live a happier life without going through that entire debacle of education for 15 years or something? And we'll talk about this a little bit later. but one of the big shifts for me financially was realizing my whys, realizing why earning more money and why focusing on my finances is important to me at all. And building those whys allows you to shift your means of getting there without shifting the importance of getting there, without shifting where you're trying to get in the end.

22:23Andrew Sather:And so long story short, I realized that these sort of, again, concrete goals that were placed on me, getting these certifications, hitting this level of education, those concrete goals weren't for me. Instead, I wanted the end goals of a happy life, a vacation, time off to be able to spend with my wife and everything. Those are the things I actually want from the money, and therefore let me go out and find other ways to get there. And some of the goals that I built for myself that I still follow to this day and I think are a great starting point for beginners is to have six months worth of expenses saved up in an emergency fund, looking to earn enough money to vacation once or twice a year with a solid vacation and looking to save at least 20 % of your take-home income.

23:10Andrew Sather:Anything else that you look at that is percentage-based or based on your own expenses or income I think are great goals to have, but I think those are some solid baseline goals for a beginner to aim for. So say you're just diving into the financial space, then those are great things to aim for. And again, it's all scalable. So if you want to scale that down to maybe 10 % of your income for savings, then that's completely fine. If you need to scale it down to three months worth of expenses, that's totally fine. And then some kind of more intangible, but still realistic goals is to have automated investments.

23:47Andrew Sather:And if you want to dive into that, we have a whole episode on automation. You could just search AAR automation on whatever podcasting platform you use, setting up some kind of a basic budget. That's, I mean, we're going to talk about a million times. That is by far the best foundation you can build for yourself financially. And we actually have a great template for you to start out with and modify, you know, at your own leisure, whatever works best for your situation. You can see that at einvestingforbeginners.com slash budget. It's a free download. You can access that, copy it over and scale it to whatever your situation is, just like we're discussing now.