The Millionaire Money Rules (Get to $1M Faster!)

0:00On this episode of the Personal Finance Podcast, the millionaire money moves that you need to know.

0:14What's up, everybody, and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we're going to be diving into the millionaire money moves you need to know to get to$1 million faster. If you guys have any questions, make sure you join the Master Money newsletter by going to mastermoney.co slash newsletter. And don't forget to follow us on Apple Podcasts, Spotify, YouTube, or whatever podcast player you love listening to this podcast on. Now, my passion and my goal is to teach as many people as possible how to become millionaires.

0:54And we have said this a few different times that I want to create a million millionaires just from our financial education. And I think one of the most important things that you can do is understand some of the things that are truly going to move the needle for you. And that is the reason why we have this episode today is we want to teach you the millionaire money rules that can drastically change your finances. That's what each and every single one of us wants to do. And so I'm really excited to dive deep into this episode. I'm excited to go further with you guys on this one. So without further ado, let's get into it.

1:31Millionaire money rule number one is to spend only on your values and do not compromise. Now, the goal when it comes to learning how to spend money is not to spend as little as humanly possible. People who spend as little as humanly possible who don't decide what to do with those extra dollars typically are not that happy. But instead, we wanna make sure that we are spending aggressively on the things that we absolutely love to spend money on and cutting out everything else we don't like to spend money on. Now, you may be saying to yourself, well, I don't like paying my electric bill. Do you like having the lights on?

2:08Do you like having air conditioning? Do you like having warmth coming into your house during the winter? Sure you do. So you absolutely value something like that. Or you may be saying, well, I don't like paying my rent. Well, I think you really do value having a roof over your head. And so it really comes down to some of the things that you truly, truly value, but cutting out those things that you absolutely hate. So for example, a lot of people will go out and they will begin to buy the bigger house, but they don't really have a reason why they're buying the bigger house. They just feel as though, oh, I want some more space.

2:40Maybe you don't have more room for activities, more room to place your drum set. But in reality, what you do need to realize is you have to have reasoning behind that. Or some people go out and they spend more on the car they think they're supposed to have. Maybe you're driving a 10-year-old car and people have told you, oh, why don't you go and upgrade that car? It's looking a little old. And so you feel as though, well, maybe this is just what I'm supposed to do. And so you go and upgrade that vehicle. But instead, someone with a millionaire mentality, they're going to go out and they're going to decide, no, I want to spend more on the things that I value.

3:13So I personally don't care a ton about what car I drive. I drive a 2018 F-150 currently. And for me, I am completely happy with that vehicle. And I don't want a luxury vehicle. I don't want some fancy vehicle. I would rather spend those dollars on other things. I would rather spend those dollars on things like convenience. I would rather spend those dollars on things that I truly value. And so for me specifically, spending more on cars just does not make sense. For you, you may absolutely love spending money on cars, but you want to cut back and maybe you live in a smaller square footage house, or maybe you live in an apartment that isn't in the high rise, but it isn't just a normal standard apartment somewhere else, or maybe it's a duplex.

3:57And so you feel as though, you know, you're willing to make the trade-off because you love cars. Maybe you're a person who absolutely loves to travel and all you wanna do is travel and spend more money on travel and less on everything else. And you are willing to actually live in a sprinter van in order to be able to travel. That is another example of someone who is spending more on their values and less on the things that they don't really care about. I want you to lavishly spend on stuff you love. This is how you find fulfillment and this is how you find enjoyment with your money. Let me give you some other examples here.

4:32Another example of something that I truly value is reducing risk for my family. I like to make sure that my family doesn't have a ton of risk on hand when it comes to financial circumstances. And so that is why I like to build up cash in my emergency fund. That is why I like to have cash on hand and invest dollars into my taxable brokerage so that I have flexibility with some dollars when I need it. That's why I like to invest in the proper insurances to make sure those insurances are in place so that if anything were to ever happen, we are protected. And I think that is some of the things where people need to reframe the way that they think about what they are spending their money on based on their values.

5:14Now, for a lot of you, there are some value-based things that I think a lot of people overlap with. It's gonna be things like convenience, where if you feel as though, hey, I would rather, as my income increases, I'm making more money, I would rather somebody else do the lawn care, or I'd rather have somebody else clean my pool, or I'd rather have somebody else clean my home once a month. These are all wonderful things to consider, especially as you begin to get busier. Or maybe you really do value that travel. I think that's something most listeners that I have talked to really do value is travel, having that convenience in place, but you could care less about some other things.

5:50And so I think understanding what you value is super important. Here's what I would recommend for many people out there. If you've never done this exercise before, take a piece of paper out and draw a line down the middle and rank in order the things that you actually value versus the things that you spend money on currently that you don't value so what could be some of those things that you spend money on currently that you don't value maybe every single time you go to the store like target or marshall's or tj maxx and you know who you are you go into those stores and you walk out with 10 different things that you didn't plan on buying Well, that could add up to$100 every single time you do something like that.

6:29And when that happens, $100 could be going towards something you actually value. Maybe you are high on your list right now as you wanna get a brand new pair of sunglasses, or maybe high on your list right now as you wanna get a really nice winter coat. Well, if that's the case, then redirecting that$100 towards the thing that you actually want would be beneficial for you. Or maybe you are really stressed out because you're in debt and you wanna redirect those dollars towards your debt. that's another really beneficial thing that you could be looking at. I don't want you to feel deprived with your money.

6:57And a lot of people feel deprived with their money because they direct their dollars towards the wrong place. So learning the skill of spending means understanding everything in your values column and understanding that everything not in your values column needs to get cut out. Stop spending money on crap you don't care about. Stop spending money on crap you don't care about to impress people you don't even like. That is a big, big thing. I see time and time again. Just because your neighbor's got a new car or just because your neighbor got a new lawnmower or just because your neighbor got new landscape lighting in doesn't mean you need to get those things if you do not evaluate.

7:35If it's not something you truly want, then you need to understand that. And you need to understand how to get over the hurdle of thinking that you actually want it and not allowing yourself a cooling off period. And that's the big key. If you've never done a cooling off period before, it's typically, hey, 24 hours for anything. between$100 to$500. If it's above$500, wait at least a week. And if it's above$1 ,000, wait at least a month before you make that purchase to ensure that it is something that you actually want. So I think for many of you out there, making sure that you are spending on your values is gonna be number one.

8:10Number two is avoiding debt like the plague. Now there is good debt, sure, and there is bad debt. But for most people out there, debt has a very strong way of stealing away your financial future. And if you feel as though you are currently in credit card debt, or you are currently have a personal loan on hand, or you currently have a HELOC that you utilize for home repair or something like that, well, we need to make sure that we get a debt pay down plan going. We need to understand how to get rid of this debt because debt, especially high interest debt, any debt above a six to 7 % interest rate is a pants on fire emergency.

8:47This is going to eat into your ability to build wealth. This is going to steal and rob some of your income from you where you can't take those extra dollars and put them towards your financial freedom. Instead, you are having to pay the debt company in order to be able to make ends meet. You have to go to work every single day, be at a job you don't really enjoy, drive all the way back home, get everything ready for the next day at work, drive through traffic, do all these different things you don't wanna do just to be able to pay your debt. the borrower is a slave to the lender. And this is true because in many scenarios, you have to go to work so that you can make your debt payments.

9:25If that's you, I don't want you to have to do that anymore. And so making sure that you have a plan in place on first, how to manage your current debt and how to get that debt paid down. And secondarily, how to avoid debt in the future is gonna be really, really important. This is why students in Master Money Academy, one of the first things we tell you to do is if you are in high interest debt, send me your list of high interest debts and I literally give them a debt pay down plan inside Master Money Academy. And this is because I want you to have a foundation in place that allows you to be successful with your money and on track to becoming a millionaire.

10:01And if you will never be on track to becoming a millionaire if you're carrying credit card debt or personal loan debt and you are not having a plan in place to pay that off. And so debt can rob you of your wealth building ability and I do not want that to happen. I want to give you an example here, though, because I want you to understand how impactful this can be. When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier.

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13:49Join Wayfair Rewards today and get 5 % back on every single purchase. Head to Wayfair.com or shop the Wayfair app for all things home. That's W-A-Y-F-A-I-R.com. Wayfair, every style, every home. Wayfair, every style, every home. Let's say, for example, that you put$10 ,000 on a credit card and it has a 24 % interest rate. This is a really common interest rate right now. Now, again, I see tons of different debt pay down plans. Many people who have a credit card are right in the 24 % interest rate range. Some of them are even higher. Some are as high as 27%. I have seen some in the 30 % range. And so I see this every single day in Master Money Academy where people are paying this month.

14:36Well, at a 24 % interest rate, you are paying roughly 2 % per month in interest on these dollars, okay? So in the first month alone, if you have a$10 ,000 balance, you're going to have about$200 worth of interest that you are going to be paying on top of trying to pay back those dollars. So if you pay$250 per month, only about$50 worth of that is going to the actual debt. And I think most people don't realize that this is what is happening. The majority of the payment that you are paying towards credit card debt is not going towards that debt if you are only making minimum payments. So this means that you could be sitting the credit card company$250 and your credit card debt only goes down$9 ,950.

15:22Now let's say for example, you can't make the payment on your credit card debt and somehow you've just decided, well, I'm not going to pay this at a$10 ,000 balance with a 24 % interest rate. This would grow to roughly$20 ,400 in just three years. So if you bought$10 ,000 worth of just random stuff, all of a sudden that is going to be$20 ,400 that you are going to owe on your credit card. This is why credit card debt is so destructive to your finances because you are working and you are grinding and you are on this hamster wheel only to pay off a micro portion of what you are actually trying to pay off.

16:04And instead, you are spending all of your time working your butt off, giving the credit card company hundreds if not thousands of dollars and they are only putting a small portion of it towards your principal. My friends, do not do this. Do not allow credit card debt to make you build wealth in the wrong direction. Do not start going backwards. Instead, getting chunks of money and putting it towards your debt is really, really important. Now, one thing I would tell you to do is you can also make micropayments. This is one of my favorite strategies when it comes to debt is throwing small amounts of money at your credit card debt.

16:37So let's say, for example, you forego a$10 coffee. Well, instead, take the$10 that you would have spent on that coffee, send it towards your debt, make debt payments every single day in addition to your normal debt payments. And all of a sudden, you're going to be chipping away at the old block and slowly just hacking away. Let's say, for example, you see your debt as a giant log, for example, and you've got your axe in place, which is what you are throwing towards that debt. and every single time that you decide I'm gonna make a micropayment towards that debt, you're taking a swing of the ax into that branch of that tree and you're trying to knock this tree down so you don't have to worry about debt anymore and every single extra payment that you throw at that debt, boom, you're taking another swing of the ax towards that tree and you're chipping away and you're chipping away and you're chipping away and eventually that tree is gonna come tumbling down and it is gonna be completely gone and you will not have to worry about debt anymore and I promise you that, and that's why it is so incredibly important.

17:34Again, if you want a debt pay down plan in Master Money Academy, you can join Master Money Academy by checking the link down below in the show notes. Millionaire rule number three is to invest as much as you can every single month. So there's no magic millionaire investment, but we can use math to figure out how long it's gonna take you before you can become a millionaire. If one person invests$500 every single month and another person invests$3 ,000 every single month, the second person has an enormous advantage in comparison to the person who is only investing$500 every single month. Why? Because increasing the amount that you are contributing to your investment accounts is going to accelerate your path to growth, especially when you are in the early years.

18:19If you haven't gotten to your first 100K or your first 200K yet, this can be a dramatic impact on your wealth building ability if you are trying to build a million dollar portfolio. And so when I think about building out that million dollar portfolio, one of the first things I teach people to do is to tell them to put as much as you possibly can into the market as early as you possibly can. Because the more dollars you can get invested, the faster those dollars can begin to compound and the faster your dollars can work so much harder than you ever can. And so think of each and every single dollar as an employee.

18:56If you can get those employees to start to work for you, the more employees that are working for you, the more revenue they can generate, the more profit they can generate for your portfolio. And so I want you to think about, hey, how can I get more employees into my brokerage account or my portfolio so that I can start to really get more production going inside my portfolio? Recently, last night, in fact, I did a presentation for a friend of mine teaching them how to build out their portfolio with the portfolio pyramid. And this is something that is a reminder for a lot of you out there. When you are thinking through your foundation, just simplifying your foundation and focusing on your income so you can get as much money as possible into your first 100K and 200K is really, really important.

19:40And then every single time that you get a raise, take a portion of that raise and put it towards your investment. Every single time you get a bonus, take a portion of that bonus, a chunk of that bonus, and put it towards your investments. every single time that you pay off debt, take what you were putting towards that debt and put it towards your investments, at least a portion of it, so that you can start to grow the amount that you're investing. Every time you increase your income with a side hustle, take a portion of that side hustle and then throw it towards your investment. Or every time you eliminate an expense, instead of leaving it in your checking account and it disappears into the abyss, why don't we just put and redirect those dollars towards our investment accounts?

20:20Because you wanna ask yourself, how much can I redirect towards investing today? That's our ultimate goal is to get bigger chunks and redirect those chunks into investing. One of the things I do with a lot of coaching clients too is I will go with them, we'll sit down and we will do a spending audit. I have this beautifully built out spreadsheet that gives a spending audit. And basically what we do is we take everyone's transactions. We put it into this spreadsheet and we will literally do it for you. Our team does it for you. They take your transactions, they put it into this spreadsheet and then we go through there every single transaction and we say hey is this something that you want to hang on to or is this something that we can cut out and then all of a sudden you'll see the amount that they can invest start to and begin to grow because when we start to cut out expenses that are recurring or when we start to cut out expenses that they don't really value anymore you start to see that number balloon and if you can get the 10 to 15 percent in reduced expenses you can take that 15 percent of your income and put it towards investments that is a huge impact.

21:20For most people, it's a multi-million dollar impact just by doing something like that. And so that's why I think for many of you, it is really important that you understand how to direct your dollars towards the things, again, coming back to number one, that you actually value. That is why it is at number one, because when you redirect your dollars, you understand where your dollars are going. It'll tell you so much more. Now, you don't have to be someone who is thinking about, oh, how do I do this all the time? No, you can do this with constraints. My co-host on our other show called Your Next Dollar, Ryan Sterling, does this all the time.

21:53Setting up constraints or setting up parameters is something where you can easily be able to redirect your dollars without having to budget every single light at them if you don't want to. And I think that's super, super important for a lot of folks out there is having the ability to be able to have these constraints and these parameters in place so that you know how much you're investing every single month. And then automatically just automating those dollars. Every single time that you feel as though you've saved money somewhere, then increasing the amount that you're automating to your investments is all you have to do.

22:24Then you don't have to think about it anymore. You won't even notice the difference. And instead, those dollars are just going towards something else that's actually valuable to you. So really, really important stuff here as we keep going through this. All right. Number four is let's use broad-based index funds and ETFs. So when we're investing, using broad-based index funds and ETFs is a proven way to build generational wealth, especially if you wanna become a millionaire. You don't need to know which stock is gonna 10X. You don't need to predict the next recession. You don't need to even know what the Fed is gonna do every single month.

22:54But for most people, broad diversification into things like index funds and ETFs are the way to go. If you don't know what an index fund and an ETF is, I want you to think of it like a basket, okay? And in this basket, you're gonna put all the best companies, all the best stocks in the US stock market inside of this one specific basket. Or let's say, for example, you're investing into a dividend ETF. Well, imagine some of the top dividend companies all inside of this one basket, and then you can just buy the basket instead of having to buy these dividend companies individually. That's exactly how an index fund and ETF works.

23:28It's basically something that pulls all the best investments together based on what you are trying to accomplish and puts them into one fund. And inside that fund, then you can buy that fund and have a big diversified portfolio of a bunch of different companies, depending on what type of index fund and ETF you invest in. But the key here is not trying to find all those individual companies and individual winners. Instead, you could just buy the basket. Warren Buffett explains it like this. Instead of trying to find the needle in a haystack, why not just buy the entire haystack? That's what index funds do, which is why he invests his money, his family's money into the S &P 500 index fund.

24:04So then what happens is that your job becomes much simpler where you're not searching for the perfect stock. You're not searching for the perfect investment that's gonna go up 200%. Instead, you just buy consistently, you stay simplified with your index and ETF portfolio, then you stay diversified and you leave it alone. You just automatically continue to invest every single month. Your biggest advantage in reality is not the performance of the fund, it's your behavior. And so if you can automate this, you remove your wheel power from the equation, and if you can get those dollars into index funds and ETFs, you're proven long-term.

24:38Just go look and research research the historic returns of something like an S &P 500 index fund or something like VTI. Do your own research and you can see how those have performed over the course of the last 10, 15, 20, 30 years. I use a 10 % rate of return a lot of times when I use examples. And in fact, that has been low in comparison to what those have returned over the course of the last decade or so. Now, the past is not indicative of the future results that could be happening, but at the same time, it's all we have to go on. It's what we do our research on is past results. And so that's why I love broad-based index funds and ETFs.