Chapter 1: Why are your money goals too small?
Your money goals are too small, and I will prove it to you. So in this video, I'm gonna explain how you need to rethink your income, your investments, and savings goals and timelines. And so here's the problem.
A lot of financial gurus, even people on this platform, right, and I have no shade, right, will tell you to save $100 a month, and they'll tell you that if you do that from the time you're 18 until the time you retire at 67, you'll retire with a million bucks at a 9% compounding rate.
And that all sounds great until you realize that when you're 67, that $1 million is going to only be worth $170,000. So why is that? Just $1 in 1975, right, 50 years ago, has today's equivalent purchasing power of $6.02. That's a 6x difference in 50 years. The main reason? Inflation. The dollar. They don't make them like they used to, right? Or rather, they make too many of them.
And if you push back on that, then I'd like to ask you to think and study late-stage capitalism.
Chapter 2: How does inflation affect your retirement savings?
So, like, look if in late-stage capitalism and countries that are in it, which I would say America is in late-stage capitalism, look if inflation goes up or down. And I'll give you a hint. It goes up. So this measurement is conservative. This is based on the last 50 years, not necessarily the next 50. And so if that's the problem, how do we solve it?
So this is kind of the new way I think about your goal. Let's say that you had the goal to have a million dollars. Obviously, add or remove zeros as it suits you, right? Some of you might be 10 or 100 or a billion, whatever you want. Let your heart go wild.
But let's say that you wanted a million dollars when you retire so you could live passively on $50,000 a year from investing it in bonds or something that's relatively low risk. Well, you have to realize that in 50 years, that million dollars will only buy you $170,000 worth of stuff. And that $50,000 of passive income, oh yeah, that's only going to get you about $8,000 worth of stuff.
tough to live on that per year. So let's say that you were a little more ambitious and you said you wanted $4 million. Well, just to be clear, that was my lifetime goal when I was in high school, because I figured if I could do that, I could live passively on like 160 to 200,000 a year, which is four to 5% of that, which means that I could live indefinitely.
I could keep the principle and just kind of live on that four or 5% interest. And if that was your goal, like it was for me, you might want to adjust it and take into account the inflationary reality. So if you want that $4 million when you retire, you probably need $24 million.
If you wanted $200,000 in dividends that you could live passively on from interest, you probably need closer to like $1.2 million per year in distributions. I know, that's a big difference. Again, that's just because you're thinking in today's dollars, not future dollars.
Now, before you lose your mind and just throw in the towel and say that you'll never make it, I want to give you some good news. Compounding is still a thing and it still matters. You probably just need to do more of it and do four important things.
So think of this as your strategy to mitigate that so that you can actually get where you want in terms of your savings, your investment, and ultimately the freedom that you're looking for. So consider this the new strategy. So I'll give you the quick and obvious ones that you've probably heard, but in a new way, and then I'll wrap up with what I've actually done to achieve it, okay?
So number one is you have to increase your income. So a lot of people think about this in terms of savings. I think it's much more powerful to think about in terms of income, because if you're not making a lot right now, there's not a lot of room between zero and you. There's an infinite amount above that, right? And so you can only get your spending down to zero, right?
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Chapter 3: What is the new way to think about your financial goals?
and it makes it far more worth it for me or at least when i was thinking through my saving stuff when i was starting out that made saving 100 bucks 500 bucks a thousand bucks when it was 13 grand way more worth it so number one we got to increase income number two and it kind of naturally leads to is that you got to stop spending so much money now
On the other hand, right, if you think, you know, the $500 belt that you wanted to splurge on doesn't matter, just remember that it's 40 grand in 50 years, right? That $500 belt with compounding, reverse back to the present, is 6,500 bucks. That makes it hurt a lot more, right? And so here's something that's even worse. A $500 a month car payment, that's a lease.
That three-year lease is 18 grand. That 18 grand in today's dollars, when you retire, is $234,000, right? And if you want to say it in future dollars, it's $1.4 million in future dollars. Wild. 50 years, obviously. And that's just one lease. So even if you make less, it doesn't mean less when you're young.
And this is the point that I think really discourages a lot of younger people is they're like, I'm not making as much money as I want. You know, I wish I could make more. They want to flex the small amount of money that they've got because they're like... First off, never flex when you're young because everybody who's older has way more money.
It's just like, you just have more time to accumulate. You just do, number one. You have more time to accumulate. Number two, you earn more when you're older because you have more skills. So don't get weird about this. But the thing that really matters that people who are older don't have is you have time.
And so the value of the money that you make, even if it's half as much, the difference of that last 10 years of compounding when you start at 18 versus starting at 28 is the difference between a 30X, 33X, and an 80X. Think about that for a second. A 33X and an 80X in terms of that 10-year difference.
And so just because you make half as much or a third as much as you wanna make right now, it doesn't mean that those dollars aren't worth more to you. And so I say this to encourage you to make the extra few bucks here and there. Don't spend as much. You go out to the club, just pregame a little harder and get a soda with lime, all right? You don't have to go crazy with it.
And anyways, any girl that's gonna... just like you because of the money you're spending is not the girl you want to be with anyways. All right, so number one, increase income. Number two, stop spending as much. And then putting it in future dollars relative to today's dollars hopefully should soften that blow for you. The third is try and make it and save it faster, right?
Because the money you make now versus the money you make when you're 10 years older hits harder. So there's obviously a time value to money. So three quick strategies. One, set a watermark. Invest the rest. So it's like... I need to have $5,000 in my bank account. Everything above $5,000, I invest, period.
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Chapter 4: How can you increase your income effectively?
Because if you have something valuable to exchange, you will be able to exchange it at the present value in whatever denomination exists. And so that's why skills are always the ultimate hedge against inflation. Now, let's take the other example I had a little further. Let's say you invest that $2,000. in learning that skill.
And that $2,000 takes you from a $30,000 a year income to a $90,000 a year income, which is probably about what an average-ish salesperson makes. Not like a supreme one, just like an average-ish salesperson. And post-taxes, at least in the US, that's about $75,000 a year, assuming you live on, let's say, $2,500 a month because you're living lean.
That's $35,000 per year after taxes, after expenses. that you can invest on for the rest of your life. So that $2,000 one time gave you a permanent $35,000 per year increase in investable income. That is how you get the absurd returns that can get you out of the cycle.
And so put this in perspective, that alone would, like just that one change alone, if you did nothing else and you invested the $3,000 a month, roughly, that alone would get you to $31 million in 50 years. And that's with zero raises, zero new skills, and zero increase in opportunity. You literally just doing the exact same thing for 50 years.
So the idea here is like you want to use compounding to your advantage, but the biggest thing is how much you can invest over time. And the way to increase how much you can invest is to make more, spend less. And in the short term, where you will get the highest returns, actually over the long term, where you get the highest returns in the short term is in skills.
But people are so afraid of investing money in skills. And I really want to dive into this because I really, I truly want to help. So yes, you can absolutely achieve financial freedom if you live under your means, you invest the difference into increasing your income, and then once you have the amount that you need to compound to your number, you can just let the compounding work.
And if you're a maniac, my preference, my people, you'll realize quickly that you get higher return on learning skills than anything else. So then you put as much as you possibly can into it. And so for many of you who haven't had that reinforcing cycle, that one time where you spent money and you made more money back.
I was very fortunate that the first thing I ever spent money on, I made more back. And the next thing I spent money on, I made more back. And so I got very addicted to buying money, basically trading money for skills that I would immediately be able to make more money and increase my income.
And so as much as alternative education has its share of scummy people, because it does, don't get me wrong, I mean in a lot of places it's successful, it's still a cheaper alternative to learning realistic, real-world skills than higher education.
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Chapter 5: What strategies can help you save more money?
I don't want to say that's not true, for sure. But there are also people who do try, but just didn't have the missing links. And so part of the process of going through the alternative education world is... having the perspective of a collector of skills. And so, I don't know if I'm going to be able to use this today, but I know I will be able to use this eventually.
And as long as I see myself as the asset, I'm always going up. And once I have all the pieces together, guess what follows? The dollars start walking across the bridge and they keep going into your pocket. And so to me, this is what I mean when I say like invest your money into income earning skills. If you can trade the skill for money and you can learn it,
Can you imagine something that's more valuable? We just did the math on like getting $3,000 a month extra from one skill. Imagine adding 10 skills. Imagine that sales guy says, you know what, that $3,000 a month extra, instead of saying I'm gonna invest that three, I'm gonna spend six my next two months of it, and I'm gonna spend it on learning how to run ads. And you know what?
I learned how to run ads, but I don't know how to make offers or make landing pages and stuff. And so I'm going to spend another two months on learning how to do that. Like, I just always saw the money that was left over every month as like, what skills at the store do I need to go buy? And then I would just go buy them.
And so I think that in the early days, now I went through the brass tacks, the very simple version of this that you can use if you just have fixed income or you have a job and you choose not to make more than that. That's up to you. But one of the big unlocks that I had in my career was that I went to an event and there was a guy who was there.
The event was for everybody who was doing over eight figures is what it was for. So everybody's 10 million and up. And at the time, uh, Layla and I had just started making money. I'm talking like within the last 12 weeks and everything just started taking off. Right. I finally got the last piece of the connect. And so we were doing three or $400,000 a month.
I can't remember, but it was almost all take home because it was just me, Layla, and I had one assistant over kitchen table. Like that was the business. Um, so I was, and we had just gotten married. I was like living large. I, and when I say living large, like I spent no money, but I just felt not poor anymore, which was great.
Um, so as I go to this thing, I was like, I don't even know if I should be here. I'm definitely not making that. They're like, Oh no, you're going to, you're going to be way past that. And I was like, I'm glad one of us believes that. Um, I was just, you know, trying to ride this rocket with both hands.
And so anyways, um, everyone goes, you know, it goes through their presentation and the first guy who got up, um, cause I remember he was like busy. And so he like, I can't, he either want to go first or last doesn't matter. And he gets up there and he, and he starts by saying like, so we did $35 million in revenue last year. And I was like,
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