Why Earning More Doesn't Make You Richer: The Emotional Spending Trap (Part 2 of 6)

0:00Every action you're taking is leading you to where you want to be. There's no magic that's going to happen that's going to change it. You have to change it inside of yourself.
I wrote down that I wanted to make 500,000 bucks in a year, right? 500 grand. No clue how I'm going to do it. I just, you know, you got to start by writing it down. Then I wrote down all the ways I could do it.
When you're making decisions that you're saying, I deserve this or Lucy has it so I want it. Susie's doing this so I want to do this. and you're making those emotions and you're trying to fill those emotion gaps. Use that same logic. Is this just the pizza and the cake?
All right, we're live with the Be Wealthy Podcast. I am joined by my one and only co-host, co-pilot, business partner, advisor, friend, thought partner, Katelyn Mitchell. Katelyn, I don't need to tell you welcome, but I am so glad that you are here. I am glad to be here as well. I think co-pilot's a great term, but I'm a terrible driver, so not quite sure what

1:03me in a plane would be like. I think co-host are
you are an awful driver. I mean, I don't know other way to say it. You're honestly you're you're absolutely terrible at it. It's terrifying. Uh actually, you know, you've learned that even if you're driving your car, you're like, "Do you want to drive?" I'm like, "Yes, I would much prefer to drive your car." Uh I would do it. uh because I like to drive outcomes in life and I like to drive cars. But today, Katelyn, we are talking all about driving outcomes, but driving it with their spending. So, the last episode, if you haven't watched it, number one, stop everything you're doing. Stop, stop, stop. Follow our show. You don't want to miss an episode. We are going to show you the tactics and strategies to actually get what you want out of your life. And do us a favor. If you get value from this, please leave us a review. Your review is the fuel that keeps this fire going. But today, last episode, Katelyn was what does it take to actually be rich in as we're filming this right now in America. What does rich look like? And we focused on four main areas. We talked about what's the average what's the median net income?

2:06What does it take to be in the top 10%? What does it take to be the top 1%? And then what does it take to be in the top 01% which is 1 in 10,000 for our statisticians keeping you know all of our math and stat at home. So Katelyn we went through those four stats for net income, passive income, net worth, and home value. And we really broke it down and then we inserted some stories around business people and celebrities and what does it actually take to be rich? because if you don't have a target you're aiming at, Katelyn, I found it almost impossible to hit when I don't have a target. And I think that's true for most folks.
So Brett, that was the first episode in this six-part series that you put together that I'm super excited to be a part of. Um, tell us a little bit about what today's episode is now that we're pivoting out of that and into episode two. What do we have in store today?
Today we're really going to look at different different levels of spending. everything from a h 100,000 250 500,000

3:10a million dollars and what we want to see is how do the wealthy spend their money and allocate it because again if we want to be wealthy now we we've studied the categories and kind of our average income and net worth and where do we fall but really Katelyn when you dig into it spending is a huge part of that so let's figure out what the wealthy do with their money what can we learn from that and then how can we get better with our money and so Katelyn there's a lie we got to start with there's a lie about spending You know what that lie is? It's one of life's greatest lies and there's only a handful of them. Uh once I make more money, everything gets easier. Katelyn, have you ever told your yourself that? I I will tell you as a as a 19-year-old entrepreneur, uh I sat down and I don't know if I've ever told you the story. Uh I sat down and I had this huge goal. I was making about zero dollars, so it's easy to think growth when you're there. Um, and I wrote down that I wanted to make 500,000 bucks in a year, right? 500 grand. No clue how I'm going to do it. I just, you know, you got to start by writing it down. Then I wrote down all

4:11the ways I could do it. And I had this notebook and I filed it in a folder, you know, back when paper was a real thing. And I believed in my mind, Katelyn, when I hit $500,000, like I I want to set the scene. I thought fireworks shoot off, they release doves, you know, there's a band playing, we're all celebrating, and then somehow the skies part and everything in my life's easy, and now I'm just skiing downhill the rest of my life. Okay? And Katelyn, I'm going to tell you something interesting happened for me is I hit the number, not in the too distant future, from that moment. And you know what happened when I did it? Katelyn, do you know? I'm guessing
nothing,
absolutely nothing. It was exact same as the day before. And what I realized is that there wasn't earning a certain amount of money wasn't going to change anything for me, right? Your life was going to be largely the same as it was yesterday. Don't get me wrong, when you make $500,000 as opposed to $100,000, your the plates spin a little easier and there's a there's what

5:15there is is a massive opportunity to get ahead. But in that moment, what I realized it didn't change is like my happiness wasn't different, right, with the income, my life was easier, but what I started started looking at what was really going to determine where I landed at that moment for me was going to be because I was young was going to be how did I spend the money? How did I think about it? And it's really easy to go start as a 19-year-old who starts growing their income massively to do a lot of goofy stuff and start buying stuff and things and jet skis and and stuff you don't need. And so I want to focus on those areas today, but I I want to talk about some reading I think everyone should do. You know, reading is a lost art, Katelyn, we've covered that. It's a uh it is literally learning to read a book is one of the last arts that we're losing. Um but everyone should read. My favorite author right now is Morgan Housel. He wrote three really incredible books. Two are about money, one's kind of about money. He wrote the psychology of money, okay? Because we're emotional people. We make emotional decisions. We'll drop a link to the show notes on that. But everyone should be mandatory reading. I really believe that

6:16they should force high schools and colleges to have people read the psychology of money by Morgan Housel. His follow-up book is one of my favorite books of all time. It's called Same as Ever. And he just recently came out with a book called The Art of Spending Money. And in that book, Housel talks about money is a tool, not a scoreboard. And by the way, when I read these books, I don't know that I agree with everything single thing he says, but I really do believe that there is an art to spending money. And I think there's a way to do it that makes you feel wealthy. It may not make you look cool, but it'll radically improve your life. So, we're going to talk to today, Katelyn, about the four spending real dollars, four different income levels, 100,000, 250,000, 500,000, and a million dollar per year. And what I want people to think about is where does the money actually go? You can spend it many ways. You spend it many ways, right? But is it status driven? Is it habitual? Does it improve your life? There's so much to spending your money in a way that

7:18supports your happiness and actually actually allows you to feel better and creates more joy. And that's really what I want to talk about here today.
I think it's interesting. I we say this phrase a lot internally and in our team and and in our masterminds um and I think people miss the depth of it and it's that money just makes you more of who you are and we look at it and I think at first blush you think of it as like guys if you were a jerk and you have $10 million you're still a jerk you just have $10 million to be more of a jerk or the same amount of jerks you're just a jerk if you're an ultimately fantastic human whether you had10 $10 or $10 million, you're a fantastic human and you just have more of the capacity to be that fantastic human. But I think it's true beyond that. I think it's true in your habits. So whether you are worth $100 million today or you have a net worth of zero dollars today, the habits and relationship that you have with

8:20money and have with spending are just going to be more apparent with the more money you have. So think of it as a magnification. So if you're telling yourself the lie of if I just had more money, these problems wouldn't exist. We can use a quote from my dad. What's the constant? You will still be that same person with just more money to either do the right things with or the wrong things with. your choices of what you're spending it on or how you're allocating it towards your future wealth will just be on a larger scale. So, every single person who's listening to this, as Brett goes through these specific income levels, 100,000, 250,000, 500,000, and a million, know that these paradigms for you of how you spend your money will be the same unless you make a change. So, the ex problems you're experiencing today, if you're at

9:22100,000, are probably going to be similar problems for you later. So changing those things by doing the right reading, the right education, listening to this podcast, learning from Brett, that's going to help to make those changes to make sure every action you're taking is leading you to where you want to be. There's no magic that's going to happen that's going to change it. You have to change it inside of yourself. So I'm really excited to see all four of these income levels and what it looks like. You know, Katelyn, there's a really good song that's almost like a philosophy and it's uh more money, more problems. And um I think people a lot of people don't realize that money actually a lot of money or over income actually harms people more than they realize. In other words, Katelyn, if you went from making $100,000 and you made $500,000 a year and you weren't ready for it and didn't have a plan, you could actually really harm yourself. meaning just go buy a bunch of stuff on payments you can't afford and you could actually really damage yourself and put yourself in an impossible and people don't realize that money has got to be managed. It's a tool

10:26like anything and it could be harnessed for good and it could really harm you and how you spend is going to determine what that answer is. Right? You could spend it on productive things or non-productive things and we got to get really clear. So let's let's start at our first one. $100,000 per year, Katelyn. We're calling this the tightroppe. If you make a hundred grand a year, and that's kind of the, you know, if you take the app, the mindset for most folks, right, they think if I get to $100,000 a year, I'm going to be quote comfortable, right? I think that's what most people believe. And I think that was true, Katelyn, up until 2020 in my opinion. And then I think as costs have gone up so dramatically, I don't think 100 today is going to be very, very comfortable. I think it's going to be a rougher ride depending on where you live in the country. Right? That's a broad sweeping statement, but 100 today is not a h 100red six years ago. And it's sure not our parents 100. Okay? It's those are I know that it's funny. We think about dollars when people throw it out. They just don't adjust it for inflation, right? When they go back like you're like when you're you know your parents say, "Man, I made 100 grand in 1975."

11:28That's not 100 today, right? Yeah. That it's a radically different number. So here's where it goes. Okay. If you make $100,000 a year, $27,000 is housing on an annualized basis. 27% your house.
Your house.
Okay.
And this is taking renter ownership. We're averaging all of it. You're spending 11 grand on food, right? Little less than a,000 bucks a month. Cars, 14,000. A little more. Now, this is the average. I think that's I think that's too high. I mean,
if you only got 100 now, you know, you're going to drive a crappy car and pay it in cash and write it till the wheel swap. But 14,000 healthcare, seven grand. That seems about in line. Entertainment and vacations, $3,000. Entertainment and vacations throughout the year. I got to be honest, Katelyn, that's tight, right? Like, so that's we're probably camping or something, right? I mean, three grand entertainment and vacation, not entertainment on the vacation. That's this is a combined

12:30category. Um, kids education, kids or education, you know, partially we're lumping those together. 1,500 bucks and $7,000 for savings or retirement. But Katelyn, you add all that up, there's not a lot of luxuries and stuff in here, right? And this is this is what I would argue why people go into credit card debt because their things are tight. And what credit card debt or all debt is, Katelyn, all it is is taking your time and you're taking it in the future. You're spending it today and you're stealing from your future. That's what bad debt is. It's all it is.
Man, I'll tell you what makes me nervous about that is the savings and retirement number. That makes me nervous because if we go back to last week's episode, the last episode that we did based upon net worth and growth, if you're putting $7,000 away, fantastic. You're doing more than the median. However, that may point out like at age 60, we looked at that number and there was no passive income. Net worth was

13:32wildly low.
But I I also other than cars, Brett, I don't know how they really could do it for much less. Maybe we can scramble a little on food, but as far as housing's concerned, I mean, I don't know. Like rent, I know in our apartment complexes and what that looks like, like that's reason. Like I don't know how they do it for less. other than the the the the cars.
So, we're going to go to some things you could do. So, we're going to get there, but so the first, you know, and and I'm quoting Morgan Housel the first thing we got to do is write that you got to realize one thing. Spending reflects your priorities. Another way to say it, Katelyn, every purchase reflects your values. Two things in life you can go look at. If you if I could take any person, if you showed me one month of your bank statement and you showed me your calendar, I'd tell you what you care about. I could see everything you value, right? Is there is it thoughtful or is it just crap? I mean, you could see it almost instantly. And so, you know, they it's very tempting to think you're good or bad with money. Um, but your spending reflects what you think's important,

14:36Katelyn. Like, what do you when you look at someone's spending, it's what they think's important. Here's another one. It's what they feel they deserve, which is dangerous. I deserve this. I work so hard. I can't, you know, I coach people privately, some of the top real estate agents, investors, mortgage people, random business owners. I've been coaching for like 15 years one-on-one. It's my labor love. I love unlocking what people want in their lives. And I'll get this from my clients sometimes, Katelyn. They go, I You don't understand, Brad. I'm going to buy this bigger house right now because I deserve it. And I'm like, whoa, what do you mean you deserve it based on what?
Entitlement.
Based on your emotional feeling. And you said it on the phone. That's not reality. What does your balance sheet say? Can you afford it? Like, but be careful to saying I deserve this. What I mean that's and then the other thing is people buy to fill the emotional gap, right? We make what you do is we make an emotional decision. Took my car in for repair. Repair's $3,000. While they're I'm walking around thinking about it, walking around the car lot and I go, "Ah, I got to buy a new car." Obviously, put in three grand.

15:38This piece of crap is going to fall apart in five or six months. I'll put another three grand and then it'll be 10. And pretty quickly, you've wrapped yourself into buying a $70,000 car that you can't afford. And we've all done it. present company included. So knowing that we're going to make emotional decisions and justify with logic, we got to have rules around our money. So what you should do, Katelyn, how do we optimize optimize,00 I want to I wanted to point something out because Brett, you're just a data person. So for you, decisions when it comes to money and decisions when it comes to a lot of things in your life, you just build a model and then you think about it in a non-emotional way.
Let me pause you though. Hold on. I'm not I'm not a data person. I'm an emotional human and I know that. So, I had to create rules because otherwise I will make emotional decisions. I'm no different than than everyone else listening watch this. I've had the same thing at the car dealership. I've had all that and I realized like why am I this is emotional. So, Katelyn, I had to reduce things to math that automated my decisions. And so some of it's math,

16:42some of it's rules, but I created rules of how I approach things to eliminate the emotion. I'm sorry, I just had to
I just had to
I'm not a data personally personally.
I appreciate that. I I want to lean into for just a second and I'm I'm pretty sure it was Morgan's book. I've read all of his books and obviously, you know, I I'm a ferocious reader. I love to read. So I think it was one of his books where he does this comparison. Two things that people are most emotional about or or highly emotional about are money of how we make decisions and people get weird and funky around money and use a lot of emotion around it. You have a whole like mental paradigm of your childhood that's shackled your you know it's on your back that's you know how you're thinking about things and everyone money for some reason while it is wildly numerically driven is a hugely emotional component. The other thing that's super strange that people are super emotional around is food and health, right? So, when people think about, you know, what they're

17:46eating or you've heard the term like, "Oh my gosh, I had a bad day. I just want to have a piece of cake and eat my feelings." There's emotion that's driven with that as well. And this term that you brought up, what you feel you deserve. If I said to you, Brett, you had a hard day. You should eat that old pizza. You would say to me, Katelyn, the pizza's not going to fix my day. There's nothing to that, right? It's easy for us to look at that and say that's an unhealthy response to a pressure in your life. Right? You're applying that same emotion when it comes to spending. When you say something like, "I'm really getting my butt kicked at work. You know what I deserve? I deserve a new car so that when I drive to work, I feel better about myself and when I drive home, I feel better about myself and it'll be worth it. I want that little boot on my neck and that reward. Well, if I told you that in the pizza sense, you would tell me I was nuts, right, Katelyn? That's only going to cause me more problems later in life due to my health.

18:49So, rewarding myself by eating the pizza and the cake while I Netflix and chill or whatever it is, right? that's going to not solve my problem. In fact, it's going to give me greater problems in the future. Same thing on the the um in or excuse me, spending side. When you're making decisions that you're saying, I deserve this or Lucy has it so I want it. Susie's doing this so I want to do this. And you're making those emotions and you're trying to fill those emotion gaps. Use that same logic. Is this just the pizza and the cake? Am I just giving myself some semblance of emotional reprieve as a reward for something that's going to cost me greatly in the future? And when he drew that parallel, I'm pretty sure it was Morgan Housel. When he drew that parallel, I went, I would never sit and eat the cake, but I would buy the new shoes, right? So, what does that actually mean? Is that damaging me in the future, or is that purchase along the lines of making the right diet choice? Am I making the right

19:53money choice? So, that really that rang really really true to me.
I I um I I'm pretty sure that's psychology of money and and it's so hard because we live in a comparison society today, right? And people are so focused on an outer scorecard versus the inner scorecard, which we've talked about. You know, Warren Buffett said there's two ways to live your life. One, you could worry what every else thinks about you, or two, you could just worry what you think about yourself and what the people that are going to be with your entire life think about you. which is a very small group. And people are so worried about that external scorecard that they try to do things to impress people that they loosely know, kind of know, and and may not even hang out with in the future that don't know anything about them and really don't care. The reality is the average person does not care what car you drive. They don't they're so consumed in their own life, they don't care. Not killing that they're anti. They're not really thinking like, "WOW, Oh my gosh, i can't believe you got the new Audi. What I mean, no one's that impressed
themselves." In fact,

20:55
they're too worried thinking like, "I can't."
They're like, "I got the new Range Rover and I can't afford it either." We both are wrong. And so, at $100,000, we got to quit. The first rule, the income shouldn't be about impressing anyone. The first thing you got to do is you got to realize at that level, you don't have any margin, right? You have no margin. Margin being the gap between something bad happening in your life and you hitting, you know, really bad situations. So, we need to create margin. Margin allows you to have breathing room. You can think, you could plan, you can respond. If you have no margin, you're forced into tough situations. So, at 100,000 K, we need to optimize for four main things. Number one, housing that leaves room for savings. Maybe you got to get uh a fourbedroom house and have two people living, you know, like and you got a roommate, right? That helps take the edge off.
You've got to So, you've got to fix your housing, right? If you're in a one-bedroom at 2700 bucks a month or whatever, that's going to be tough, right? That's really tough at that

21:56income level. Your housing consumes such a large portion of your budget, it's going to be really hard for you to get ahead. Next, you've got to Katelyn, you got to build an emergency buffer. You got to find a way to save up enough money. I'm going to call it 10 grand. You got to get 10 grand in a checking account that you never touch unless, listen, you need it to eat, right? You got to get to there. You need reliable transportation. You know, it's funny. Um, you know, in my trust, right? When you have a trust that's irrevocable, you basically write a letter, Katelyn, to your trustees of how you thought about the money because you're not in control. I can't control it from the grave. you know, I pick really smart people and then I write a letter on my views of money. And so if my kids, you know, if I was abducted by aliens tomorrow and never get to come back, um, and that, you know, they say he's a goner, the trustees would kick in. And so one of the ways I wrote how I thought about cars, I said, if a 19-year-old came to the trustees and asked for a new car, they should get a car reflective of a 19-year-old, which would be like a late model Honda Accord,

23:01right? It's not a brand new Ferrari, right? It should be a It should be the lowest possible reliable vehicle. It should not be cool. It should not be a status symbol. It should be a functionable four wheels and a steering wheel and reasonably safe to get them to their destination. And so again, not a status car, reliable transportation. Okay. And next, any money you are spending is what genuinely matters to you. Right? I'm not anti-killing your Starbucks thing every day. Now, if you got to have three a day, I think that's stupid, but or if you're into whatever you're into, find a way to go after your thing in a way that isn't like destructive, right? One Starbucks a day is not your core problem. It's just not, right? You got other issues, but you don't have a lot of margin. So, if you're going to do that, it's a big decision at that income level. So, The worst decisions, Morgan Housel's book says, "The worst purchases you ever make, Katelyn, are those made to impress others because no one is as impressed as

24:04you imagine and you feel worse afterward."
It's true.
My comment on it, your money should buy agency, not applause. Right? We're not buying applause. You want agency over your life. Okay. At 100 grand, it's tight.
I think the biggest takeaway here is the buffer at this income level. A takeaway if you're making around a hundred,000 a year, Brett's takeaway here of having a buffer, a minimum of $10,000 in order to secure you from a future issue knocking you off the planet. In essence, a $10,000 buffer is the key takeaway here. Make changes in housing, in transportation, cars, knock off the three Starbucks a day, right? from a food perspective, get that 10,000 as quickly as possible because it provides you a safety net. And something else he said that we brushed over, it provides you the ability to respond, not react.

25:10When you don't have that buffer, you react and can make decisions that can compromise your future. I sound like a grandmother at this point, but it can compromise your future by taking from your future, meaning you had to put it on a crazy credit card or you had to make a a knee-jerk reaction to do something and you reacted instead of responding for a few choices every for the next several months. Making a few great choices, getting that $10,000 as your buffer can allow you to respond, not react. Now, that buffer does get larger as our income grows. But if you're at the 100,000 mark or your kids are at the 100,000 mark or you're listening to this and you're a business owner and your team members are at a $100,000 mark, the number one thing to do here is to make the changes to get the emergency buffer of $10,000.
100%. The word I use, Katelyn, is margin. Right? This level, you got to create some margin in your life. All right, let's move up a click. We're going to $250,000 a year. Katelyn, I'm

26:13calling this the illusion of abundance. Because you think 250 is like, it sounds massive. Like, oh yeah, $250,000. But here's the problem. The reason why it's the illusion. It's where your lifestyle creep sneaks in fast, right? At 100. And the reason is this, Katelyn. People were so tight at 100 and they've now got right. You got 150,000 almost 12 grand a month extra. We're just going to assume it's gross. You had 12 grand a month. You're like, they're all the things that I wanted to have when I was making a hundred. Katelyn, I want to have the three Starbucks a day. I want to drive the brand new BMW. I want to go to Hawaii four times. Like you're like, I'm going to do all that. Spoiler alert. No, you're not. Okay. Not if you want to be ridiculously wealthy. It does not work like that. So, let's look at it. Where does the money actually go, Katelyn? On average, $52,000 goes to food. So income went up 150%.
52,000 goes to housing.
I'm sorry, you're right. 50,000 goes to

27:17housing. So it was 27,000 before. So our income went from 100 to 250. We had 150% increase, right, in that. We went from I'm sorry.
I'm sorry. We went up. We went up one and a half times, but our housing or I'm sorry, two and a half times, but it and then our housing doubled. So, we we're going up. The housing isn't going up in proportion to our income, but it's real damn close is the point I'm trying to make, right? Our income went up dramatically. Our housing went up dramatically. Food doubled. Food went from 11,000 to 22,000.
Your transportation went from 14,000 to 30,000. Your healthcare went from$7,000 to 12,000. Your vacations went from 3,000 to 7500. Ironically, kids in education all little less than double. And your retirement or savings triple. So you your income went up 150,000 and you went from saving 7 grand to 21,000. Now, here's the joke I have, Katelyn. I always ask this. I love

28:20asking this in a crowd. So, if you're in a crowd of, you know, and I'm speaking to an audience, you know, is there a family of four in here that lives off $100,000? Right? Handle go up. Boom. Right here. Me. I love it. Is there a family in a four in here that makes $250,000? They go, "Yeah." And I'm like, "Well, where does the money go?" Right? You always want to know what's the where does it go? You have an extra 150. They both say, "We don't have any money." And it's crazy. And you're like, "So, not in the same city, right? similar economics. The person that's making 250 just got a little nicer car, a little nicer house, and a little nicer healthcare, eating a little nicer food. It's It's crazy. It feels like freedom until you realize your fixed expenses scaled exactly with your income. I'm going to say that again, Katelyn. You think you got freedom at 250 until you realize your fixed expenses scaled exactly with your income. It's almost it's a little better than that, but it it's so little it it doesn't really matter. And so here's the insight we get from Morgan Housel and I

29:22want to get your thoughts. The insight is now we got to go status versus utility. It was all status at 100, right? That we're worried about today, right? We need more utility spending. And I want to define those. Utility spending is what actually improves your life. It's the things you do, Katelyn, that make your life better. Status spending is to change how other people see you. So, I would have all of our listeners right now think about look at your last five major purchases over 500 bucks. Did they improve your life or was it to impress someone else? Another way to know, Katelyn, if you couldn't post about it on Facebook or Instagram or Tik Tok or wherever you're on, if you couldn't post about it and no one knew about it, would you still buy it?
What are some examples of that? So, can you tell me some utility spending at this level or an example of of one that you've heard of recently that is different than the status spending version?

30:23
At $250,000, right? I can give you 40, but I'll just you tell me when you want me to stop. The I mean, what I would think about, right, what I what I did at that level is I started investing in all the things that would get me more time. The greatest investments, by the way, you can't really post about that because like, oh, I have an extra hour. No one would care. I started investing in like I was doing my own landscaping, right? So, first thing I did, which was we're in Arizona, it's hot, it's annoying, it's hard. You know, if that takes me three hours on a Saturday and if I could go pay someone whatever uh $200 a month and they're going to come every week and do it and so I've bought back 12 hours for 200 bucks a month. That's an incredible utility spending. In the beginning, what was I doing? I was taking the 12 hours, Katelyn, to go read books, to gain skills, to grow my income or to spend the hours to generate more income. Right? That's an ex. So for me, I think the easiest way to think about utility, how can you invest small dollars to radically improve your life and save you time, a housekeeper could be one of

31:25them. Uh a pool person, right? I always think around I think those are really great utility items that pay you a dividend in the future, right? That would be how I would think about it. as opposed to the latest handbag, the latest, you know, stuff and things, right? So, at 250,000, people accidentally shift. They make the shift though into status. They buy homes because Katelyn, they're successful. Well, I'm making 250 now. I can't live in the same neighborhood as, you know, I was in before, right? They say things like that. Cars, right? I got to have the BMW because it's what, you know, my boss drives. I got to look cool. And then they go on vacation. And I think vacation would be the perfect one to set the scene and you see it all the time. You know, I spend a lot of time on vacation these days because I spent the first 15 years of my life hardly going on one and because I was getting my money right. But Katelyn, I'll be at the beach and this just happened. I was in Kawaii for Christmas and New Year's. Uh, and you're there at the beach and there's a group next to you who is spending what I'm going to call an hour

32:28and a half doing a photo shoot, right? different angles and the sun and the light and they're doing
and it's all to be posted. It's all to be posted online. And I'm like, God, I wonder if the people online know that they're not actually living at the beach right now. They're just trying to be online. Like they're actually stealing the moment to because they're so obsessed with that. And it it's just to brag. Like you'll see the people they they literally never hardly put and then they go on a vacation and it's 17 stories a day and 300 posts and you're like man what if you just experienced the moment like what would that look like? And so I think that's a good analogy to go back to all the other ways they do the spending
or like the concert that they paid a fortune for the tickets and then they watch the entire thing through the view for their phone because they're recording the whole thing to put online and you're like you paid a fortune but you're still watching it through your phone. You could have just stayed home and watched it through someone else's phone. Put it down and enjoy the moment. So I agree with you that that helped a

33:31ton. Um the lifestyle creep is the big one you said to me um a few years ago and it coincides with some of the things we've been talking about recently. If someone made an additional maybe they got a bonus this month, right? Maybe they're a W2 employee. They got a really cool bonus. They made an extra $5,000 in Q1 for hitting all their goals, right? Where does that show up on their balance sheet when I look at it in June? Is it still sitting there as additional income that's getting invested or did it torch?
And you often talk to us about guys go out and figure out how to increase your income so we can take some of that money and go and invested right those have to go together though. If we increase our income but then also allow the creep in right now all of the sudden we haven't achieved anything which is what he's saying here. You spend the money on status versus utility. We haven't achieved anything.
It Katelyn here Morgan Housel to anchor

34:35your point. It's so good. He literally says buying things for other people's admiration is like eating junk food. It tastes exciting but leaves you feeling emptier.
So good.
That's my pizza and cake.
That's your pizza and cake. It's from that. So, all right. What do we optimize at 250,000? Control your fixed cost before lifestyle creep wins. It's the reason we talk about and educate. I think budgeting sucks universally because people don't I mean cut everything out all the enjoyment out of your life. That's hard. What I believe is that you if you're at 100,000 lock in your long-term fixed expenses and let's call it 8 grand a month. Okay. So Katelyn, if you've got two checking accounts, all the money goes into one, no matter how you make your money, W2, business owner, whatever. And then every month you take your eight grand and you transfer it over to your operating checking account. And now you live your life. You pay your bills. You pay your rent. You pay your mortgage. You pay your car payment. Now, spoiler alert, Katelyn, we should have predetermined

35:36things. We should save some money there. But now what we do is we only have 8 grand. Now the key is you're never going to transfer more money over unless you needed to eat. Not because you went out and door dashed a bunch of stuff, but because or Uber eats it. But you literally have to live on that 8,000. And what it'll force you to do is anytime you go to make that transfer, you're going, "Ooh, I'm not living in line with it." And so I built that system. Then as my income skyrocketed, I kept still transferring over the 8,000. Now my income went from 100 to 250. I might have taken my monthly burn rate to 10,000 a month, right? My income more than doubled. My expenses went up 25% or whatever, right? I let it go up a little. So, I got a few more lifestyle things, but Katelyn, I've always lived by this. I transfer the money and when it's when it's gone, it's gone. Like, one of the early times we did it, my wife and I overspent that month and we got to like the 25th of the month and sadly, we had more month left than we had money. And she said, "Well, what are you going to do?" I go, "What are we going to do? We're nothing. We're just going to exist. Like, we have a pantry

36:40full of stuff
and a refrigerator." And
yeah, like good news, my my dad's a peno bean farmer, so I always got bags of I go, "Baby, we got pino beans here. You can live off this for 5 days." Now, we weren't starving. Don't feel terrible for us. But it's a great lesson. And by the way, did you think I wanted to go through that pain? Hell no. I had the money to transfer. But what I could tell you next month, we ran a little tighter. We're like, we're not doing that. Well, we'll splurge at the end of the month, not at the first of the month, right? But it's it's a really good lesson. So you've got to control the the fixed expenses before lifestyle creep wins. So you don't let your expense out.
We have a mastermind Oh, I was going to use the quick story for you on this. We actually have a mastermind member in um one of our groups that was struggling with lifestyle creep in their household and they were um utilizing just putting all their expenses on a credit card and then at the end of the month they paid it out, did the balance sheet, but they could never get ahead because

37:41the lifestyle creep kept going up. So, if they set their amount at 8,000, which honestly was their amount, their credit card bill would be 11 or 12,000 and it wasn't catastrophic. They could pay it
or 18.
Yeah.
Well, it for this example for her, it wasn't catastrophic. nothing was, you know, going to compromise the integrity of their existence, but that $2 or $3,000 difference was compounding over the entire year and it wouldn't allow them to buy the second rental on their wealth plan, right? It was that the $2,000, you know, 20% like it was going to compound such that it would compromise the integrity of their entire wealth plan. So what she decided to do based upon your mastermind, I think it was three sessions ago, you said it was when we read the slight edge and you said, "What is the one thing you can do every day to control what your goal is?" Right? What is the one micro thing that you can do? And so what she did was she said, "I'm going to log in to look at

38:44the credit card bill every single month and I'm going to or every single day, excuse me, and I'm going to text the number to my husband. We both know that by the end of the month it's got to be at the eight or lower. They've never missed a month since. And she just told that to me a couple of weeks ago. They've never missed it since. And now they're back on track with their wealth goal because she got a control of the creep. You don't realize it when it's $100 here, four Amazon things here, a little bit extra here, and you're just spinning. utilizing a simple habit like that to manage your creep or like what Brett said, it's the transfer of the money into the account. Put some kind of barrier around yourself. You don't have to live like poppers, right? Brett's saying you don't have to have like a super strict budget where it's like, oh my gosh, 14% is this and 12% is this and you know, I've got envelopes with cash in them and I'm going crazy. It doesn't have to be that. You can allow yourself to live a really beautiful life. Just don't let the creep of expenses steal from what your plan is for yourself in

39:46the future because you weren't paying attention.
Uh Katelyn, I I I love you brought that point up, but I would change one thing when you said, you know, it wasn't catastrophic. Um I would argue the difference when you're supposed to be spending eight and you spend 12. See, I would argue it is catastrophic. Like meaning like the problem, Katelyn, is that amount of money, that four grand of torch per month is the difference becoming hitting all of your goals or hitting none of them. It's that big of a deal. So, we've got to build that to get to that eight. The easiest way is sweep the money over, spend it on a debit card. It's linked to that account. And literally, again, if your income goes up from 100 to 250, got an extra 150 grand. Let your expenses go. You've, you know, you've got that amount of money. now have your expenses go up 20%. 30%, even though your income went up more than 100. All right. What do you optimize at $250,000? If you're listening this, watching this, and you're making 250, you got to make sure your expenses don't outpace. So, if your

40:50income's growing, if you're you got to make sure expenses are way, way slower growth. Housing and cars, two biggest expenses, make them manageable. Easiest way on on cars, I'll give you an answer. If you can't buy it twice in cash, you can't afford it. I heard that recently. That's Grant Cardone.
If you can't buy it twice in cash, you can't afford it. So, you want the brand new Range Rover, Katelyn, it's 150 grand. If you could, if you don't have just 300 grand rattling around in cash, you can't afford it. Uh, I buy all of my cars, as you know, this um via wire. And I cannot tell you because I always want to put, you know, the next hundred grand into an incomeroucing asset. So the the I literally the first time I ever bought a car for 100,000 bucks, Katelyn, you actually know when it was. It was like 3 years ago. That was the first one ever because I looked at that 100. I'm like, nah, nope. My old car is fine. It's just fine. Uh I wasn't driving a piece of garbage, but I was not driving, you know, my I mean I was not driving an incredible car. My favorite vehicle is a

41:51$3,000 99 Silverado. Different story for a different day. But my point is the cars and housing is where you get into trouble. You know, one question to always ask, I talked about a if would I buy this if no one would ever know. The best spending decisions at this level, the best ones reduce future regret, increase real satisfaction, and you buy something you'll feel glad about later, not just today. Let me tell you what doesn't cost a lot of money. The plane ticket home to see your parents. The flight to go stay with your best friend and spend a weekend with him doesn't cost that much money, right? And you will absolutely reduce future regret in that. Spending it on stuff and things and crap doesn't get there. All right, Katelyn, let's level up the game. We're going to go to 500 grand.
Wow.
500,000 a year. This is what we're we're calling the inflection point, right? We were in it was super tight. The tight rope is the 100,000. We go to the illusion of abundance. Now, we're at

42:54the inflection point at 500 grand, which in our last mastermind, I was like, "Look, most people in there are earning way over that, but if you're not making 500, you got to get there. If you're a business owner, you got to get there." Uh, here's where choice becomes strategic. So, Katelyn, your housing though, at 250, your housing was 52,000, and at 500,000 it only goes up to 70,000 a year. So, doubled the income. Housing only went up, what is that, a little over 30%. Food went from uh 22,000 to 30,000. Transportation went from 30,000 to 50,000. Healthc care went from 125 to 15,000. Pretty consistent. Vacations went from uh they basically vacations d uh almost doubled. So at 500,000 you're spending $12,500 in vacation. Kids in education's $5,000 per year. And the average person sadly is saving $45,000 about $45,000. So they're saving 10% of their income.

43:59That's tough, right? That's a that's not near enough. And so this is where mistakes don't destroy your budget, but it's where intentional spending really pays off, right? You got enough money at this level, Katelyn, you can make some really goofy decisions and stack up a bunch of things. problem is you build all these little payments that all added together or a lot. Um, it's a problem. I don't believe in payments. I I think you know this. I have never had a car payment in my entire life. It was the best advice I ever got my dad. Buy a car with cash. Never have a payment. He bought me a car when I graduated college. He said, you know, that's you're on your own. My advice to you, never have a car payment. I've never had a car payment in my entire life. Um, most people, you know, they stack up. I got a $400 and another, you know, today or seven. They had $1,000 a month in car payment over the course of their entire lives.
Crazy, right?
So, money should buy freedom, Katelyn. It shouldn't cause you anxiety. I see people out there that are so anxious about their money. It's because they're torching it. So, the highest return money ever pays is independence and control over your

45:02time. At 500,000, you should be outsourcing tasks you hate. You should be buying back your time, choosing the work that energizes you instead of just paying your bills. It's a magnified version of the same principle we talked about at 250,000. But now the art of spending becomes unmistakable. Katelyn, you got you got the income you need to be ridiculously wealthy and you're going to have at 500,000 you got to make a choice. Do I want to live a really incredible lifestyle right now and work forever with no plan or do I want to put away some money and I in 10 years I'm going to live a lifestyle that no one can possibly even understand? And that's the fundamental choice I think you're making at that level.
Yeah. So what do we do? So let's say we're making the 500,000. What action do we take? The the ideas make sense, right? Money should buy you freedom, not anxiety. you should buy things that are going to give you control of your time was a lot of what you talked about, but where do we really

46:04look at how we're spending our money and what to spend it on? What would you do at this level?
So, what I would first do, right? So, if I was spending in the example, we at 250, I'm spending 12 grand a month, right? So, I still got a 100 left over to do something. Now, I might adjust my spending to say 20 grand a month because I'm making So, going from 12 to 20 is going to feel like a lot if you do it right. So, I'm living I increased my lifestyle dramatically, but now, right, I still got $250,000 a year to aim at my future. So, I in terms of investing, I would do that. In terms of spending money, I would upgrade you'll ever make with your money once you've saved and got your money right is the great experiences with people you love. Right? I have yet to meet a person that will argue with that. A great experience is with people you love. And that could be your friends, your family, whoever. But that's important. I also think at 500,000 you should invest in your health. You know, one of my mentors said, "Brett, take 10% of your money and invest it in your education." And as my income grow has grown, that's been

47:08really hard to keep the education expense up. Uh, and expense isn't the right word. The education investment up at the level of my income. The other thing is take 10% of your income and invest in your health. And in the last two or three years, I've been doing that. And I will tell you it's dramatic. Uh I would also the other great spending Katelyn I would be investing in your personal growth, reading the books, joining the mastermind, getting a coach, getting around things that either grow your income or make you a better human. And then I would also just get more time freedom, right? That's the stuff that matters. So I would I actually think at 250 you should have solved all your status stuff that you needed. Hopefully that wasn't a ton. And now you're looking at just more utility, better experiences, better education. And really, you've got to make another decision too, Katelyn, is do I want to invest in me to take my income from 500,000 to a million? And I think people lose that part. Like my journey was overinvesting in this vehicle. Uh all of my original investments until I got to making about a million dollars a year, I was buying

48:11assets. But outside of buying an asset, it was all in me. I invested I've invested millions in education. Why? Because the gap between what I know today and what I need to know is the opportunity. Right? Everything I know, everything I believe, everything I've ever done, that collection of experience is leading me to get the exact results I'm getting right now. So, Katelyn, if I want something more in the future, if I want change, I've got to change. Well, what does that look like? Well, what's the gap? Am I How do I lead more effectively? How do I do I need to get a book on scaling or on marketing or on on empowering people or decision-making or whatever that is? I've got to start asking different questions. How do I grow my income from 500,000 to a million? Probably isn't going to be found sitting in your living room watching Netflix doing the same thing you did yesterday.
It's so funny. You know, we travel all over the country together and you teach at these wealth workshops where hundreds of people come into a room and for eight hours you're teaching all of the

49:13principles of how to go from where they are today to really creating an incredibly wealthy life. And universally, you take questions at the end. Universally, at every single event, someone raises their hand and says, "I'm not yet where I want to be, and I have $10,000. I don't have my net worth where I want it to be, Brett. I'm super behind and I have 10, call it$10,000, 20,000, $50,000." And they say in the first part's always, "I'm not where I want to be." And the second part is always what should I do with this bucket of money that I have first because we talked about a million things at the event, right? Like all these different avenues they can go from taxes and saving money and the right insurance and the right entity and trust structures and you could invest in hard money lending. You could do this. You know, you go over 42 different things. And that's always the question. I'm not where I'm at. I want to be and I have 20,000. insert the number. What should I

50:17go do? And you always give the same answer. Can you tell everybody what it is here?
I give the same answer. So, I mean, first of all, the background is everyone in life thinks they should be further ahead than they are. That's a human universal thing. There's not a single person on watching this, listening this doesn't go, I should be further ahead. I mean, I have that same thought. So, the first comment I make when I say I'm not where they go, you're right where you're supposed to be. You're in the perfect place. everything you know, believe your income, your experience, your life has led you to this exact moment, you're right where you're supposed to be. And the second thing I say is, if I had $10,000 and was looking for the greatest investment ever, I'm like, "Oh, someone's got good returns, you know, low risk. You want this finan." I go, "Perfect. You ready? You I would invest all $10,000 in your own education." Now, would I do it in one lump sum? No, I would not. I would go and I would determine what skill do I need to find that would take me from where I'm at right now making a 100 it would take me to 250 or what skills and then I would if like let's say you're

51:19running a roofing business and you're the you know you're an owner you got got an assistant and you're selling roofs all day I would invest in sales training I would read every book on sales then I would read the ones on roofs then I would join a sales training thing and I would buy some product around three or 400 bucks then I would if that person was awesome you know I would go jump into their there's so many good training you on YouTube. You can get endless. I would invest the time, effort, money, that 10,000 in myself. And and over time, I hopefully would see, well, my income went from 100 to 130 and I invested three grand because I learned this new script or sales process or methodology. And so, that's what people are missing, right? They want to they want to go find out what their neighbor did buying some crap coin in crypto. Um, which what a ride for the Bitcoin bulls, huh? You don't hear a lot from them these days. Um, but like they invest in stuff because their neighbor did it and they have no idea, right? Like, and I'm not anti-crypto. I just don't know anything about it. And, and look, they may be bajillionaires. I can tell you, I have a buddy whose entire net worth is tied up in crypto and he's

52:21had the worst month of his life, right? Like right now, he calls me goes, "What are you doing?" I go, "I don't own any of it." So, I don't really care if it goes to a billion or zero. Irrelevant. I own durable things that last, right? Like if Starbucks goes out of business, damn, that's a tough day for me cuz I own the building that Starbucks is within, right? If AT&T quits doing cell phone, that sucks if they go out of business. I just think cell phones are a real thing, Katelyn. That's the kind of, you know, investing wizardry I bring to the table. I think cell phones are going to make make a run at it.
Make a run at it.
Starbucks goes out of business and you you own that building. They lease it from you. The worst case scenario is we got to go get coffee, bean, and tea or whatever it's called. And we got to get again.
Exactly. We got to get It's not a disaster for me. I'm just saying it's an annoying Tuesday as opposed to, you know, you whipsaw your net worth down 60% uh or 40% in 60 days. You know, I don't know. I think that's tough. So, it's just about the in best investment

53:23you'll ever make in yourself. And you talk about compounding in the future. That one does compound massively in the future. All right, Katelyn, let's go to the big money. the mizzle as they're calling it 1 million a year. What we're going to call it, Katelyn, it's a completely different game.
It's literally it's where money shifts from a tool to where you can architect and design your whole life. Right at that level done right, done wrong, you're in the exact same spot as the guy at 100,000 bucks, guy or girl. Literally done wrong, you just got a nicer car and a nicer house, but actually the the number in your check account still zero at the end of the month. Zero is the same whether you you made a lot or a little. So, let's talk about where it goes. Katelyn, housing goes to about 100 to 120,000 a year. Food is 40 to 50,000. Uh transportation goes up to 80,000, which just blows my mind. Um blows my mind. Uh entertainment vacation goes to 20 or 30,000. Kids and education go to 50,000.

54:26Healthcare goes at 30,000. and investing in saving goes up to 200 grand plus. Okay. Um nothing when you look at that Katelyn is like tight. You're like ah how do they do it right? There's room there. Um again the further you go up this ladder Katelyn I think what people are going to realize is that happiness wasn't found in things. And I'll tell you a story in in my journey in that. So at about 20 years old uh I was dating someone who's my wife. 25 years later. Uh we married for 20 together 20 go now 27 years. Um 26 now. And so I did this vision board. I had her do it. We did we sat down. We did vision boards. We went away like went in different rooms. We got magazines. We cut it out and glued it. And I came out with mine. And she looked at hers and I mine was like this cabin in the mountains. And it was these other like they were largely material things, right? This is, you know, 1920-year-old Brett. Um, and I hung that vision board behind my across from my desk. So, I'm staring at it while I'm working all day

55:28long. And it was funny. I looked at it every day, but then you you're kind of just becomes like something that like you once you see something every day, you kind of don't really see it. Like you're looking at it, but it's your subconscious. You're just kind of not there. And then it was four or five years later, I had all those things, right? I had them all. Everything on that board was in reality from the watch I thought I wanted to whatever. But mine was all like largely material. And what I learned in that journey, Katelyn, the more money I made, the less I require. I less I I enjoyed material things. And then I did another well then my second vision board was like a little material, but largely like they were things that uh meant experiences, right? It was just a picture of the beach. And it wasn't about going to the beach. It was about being at peace and being with people I love looking at the ocean. The doesn't cost anything to go to the beach. Now, it might be expensive to get to the one you want to go to, but it doesn't have to cost that much money. And so, the journey, I think, is is time, if you really evaluate, um I my income has never been higher as we set to to film this right now. Uh you

56:32have a front row seat to that. And I would argue personally, uh I've never spent less money than I'm spending right now. And my wife's like, "Are you on this minimalist thing?" And I'm like, "Kind of. I actually my closet is largely empty. You know, there's about five of these black shirts. They're all the same. Um, I wear a uniform every day because I want to optimize for decisions. I don't really care. I'm not trying to impress anyone. I I wear black pants and a black shirt every single day. Uh, I have like three pair of shoes. No, I don't need more this year. And I mean, I'm I'm speaking because I think it's helpful for our audience. Katelyn, this year, you know, my my kids and wife gave me Christmas presents, and every year I say, "Please don't give me anything. Uh, I love you all. I want you to open stuff. I'm happy with what I have." and they give me stuff anyway. And then at the end of it, I literally handed it all back to my wife and said, "Do me a favor and please take all this stuff back. I don't want any of it. I love you. Grateful for the gifts. I'm not It's not that I'm ungrateful. Baby, it weighs me down." Like that stuff weighs me down. And I bring that point, Katelyn, up because I think

57:33people overinvest in the things that actually matter. And I think, you know, everyone's got to get there to experience that. If you can really anchor yourself into what do you really want to spend your money on and what will bring you joy, I'm just telling you it's not the flashy Gucci bag. It just it sadly it just isn't. Well, so what I want to say like that I think that the most shocking thing here, Katelyn, is that knowing when enough is enough is one of the greatest gift money can buy. And I think when you really figure out your life, people are chasing this perpetual wheel, right? I'm gonna get my skills. I'm gonna grow my income. And then I'm gonna be able to spend more stuff. And then I'm gonna grow my income again, you know, buy more stuff. And then I'm gonna grow my income and buy more stuff. But where does that end, Katelyn? And the analogy I use is most people like literally have you ever seen like the experiments when they do like the rats? They're running on that wheel, that treadmill. The rat I don't know that he knows that he's not going anywhere, right? He's just running. And I think the average person out there,

58:35Katelyn, they're I mean, I hate to use that, they're rats in a wheel and they're just running, but and if they just got off the wheel for a minute and said, "Wait a minute. I don't want to keep running the same wheel. There's a whole other world out there. I don't want to get in this wheel going nowhere. I want to go do some really cool things with the other rats. I want to go like do some epic things." And I just think it's a point that people got to realize that maybe real wealth is measured in other things. We're measuring it in dollars, but I'm going to tell you, you're measuring in experiences later.
You know, it's it ties back into how you started this series, right? We're on our second episode here, but you started our last episode with really talking about how people solve problems. Low-level problems are they're talking about stuff and things. Mid-level problems, they're talking about people. And highlevel problems, they're talking about how they can live bigger lives. So, when you look at our spending, it's the same model

59:38there. when whether you're a $100,000 earnner or income producer or you're a million dollars where you're spending and allocating your time, energy, and resources. Are you buying stuff and things? Are you spending it with people? Great. Are you solving bigger problems in order to create more long-term freedom and opportunity? So, we're going to actually put this in the show notes, but what I have is it's something that you shared a while back on at one of our masterminds, and I took a screenshot of it off of your slide deck, and I put it on my desktop on my computer. And everybody will be able to see this through the show notes, but it's a stick figure. And what he's doing at the beginning is he has two choices. One, he's climbing up a hill that says hard decisions. Right? Early in life, he is going through hard decisions. He's the $100,000 earnner and now he has to make the choice of how he's spending his money, how he's continuing to invest in his education or

1:00:40is he maybe just, you know, going to the bar and having a couple extra beers, right? Or did he go and buy the books that are going to help him to increase his income? He has to make those hard decisions. There's his alternative, which was easy decisions, and that guy's like sliding down the hill, and he's having a blast. The easy decision guy ends up needing to climb backwards up the hill in this diagram that you'll see to leading a really hard life. Because when he made the easy decisions early on and wasn't solving the highlevel problems at any income level, it leads to a harder life. But when you make those right decisions today, and guys, it can start today. start making those right decisions by just reallocating the way that you're thinking about how you're spending your money so that you're getting the right return on the on the investment. Meaning, if you're spending your money on investing in your education, awesome. It should give you the right rate of

1:01:44return long term. If you're spending your money going on a beautiful weekend with your wife and it's something you can afford and you're, you know, like Brett talks about with Taylor and they're having this incredible experience and investing in their time together on the beach, making it the most impactful, not taking a bunch of selfies to try to show everybody else how awesome they are, but really investing their time in each other. Well, that's an incredible return that's obviously worked for them. They've been, you know, together for 27 years. But if it's the Gucci bag at the expense of investing in yourself or spending time with the people you love or buying a cash flowing asset, is that going to give you the right rate of return? Was that the easy decision today that's going to lead to the hard life or was it the more impactful, maybe not as easy decision today that's going to lead to the better life as it compounds over time. So no matter of where your income level is, it it money is just going to make you more of who you are, whether you're making the decisions correctly at at

1:02:47your earlier stages or at your later stages.
So I love K. It's one of my favorite graphs and I know which one you're talking about. We'll drop in the show notes. Katelyn, I always think about it this way. There's like there's a this point right here is a decision, okay? And going up is a positive decision and going down I got my fingers for those listening. I got my fingers kind of the P symbol turned sideways. And so what you look at here, Katelyn, is let's just say my goal is up here and my opposite of my goal would be down here. Okay? So every decision you make in your life is going to move you closer to your goal or further away. But hold on, right here, there's going to be another decision-making point. And is that goal? You're not going to make them all perfect, but over time, we want to have the decisions keep going up and up and up as it relates to our financial world. Right? So, bad decision. I went and got at least a Range Rover for $2,000 a month. O tougher one. Further away from your goal, right? Now, I'm here. Then I went into credit. Boom. Well, really quickly, you made three bad ones. Man, that's tough. Now, we got to go make a

1:03:50we got to make like 50 good ones in a row. So always think about like where is this decision you know lead me? So at a million dollars what should you optimize for? Shape your life not your image. Spend on experiences, relationship and autonomy. Avoid inflation lifestyle inflation that buys applause but not peace. The other thing I would say is all personal personal finance is personal. So quit copying other people's decisions on what work for them and make sure you do it for yourself. And so I want people to leave here with a framework for the rich life. Katelyn, first only spend money that in ways that align with your values, right? Number one, what do you value? Do you value people? Do you value time? Do you value whatever? Spend I value time dramatically in a way that probably is uh very shocking to most. Katelyn, you know, I am a psycho for time. I will not waste 5 seconds of it. And so I spend my money to save time because I really value it. It's what I value. Why? because I want to go either give it to others or I want to go spend it with the people I love. Next, you

1:04:53want to spend it on things that buy freedom. Like our entire thing at Beealthy, our mission statement was the mission statement of my life is about getting free. Spend your money in a way that gets you free. Also, spend it in a way that minimizes regret. One book that everyone should go read is the five regrets of the dying. people that on their deathbed when they looked back, that book we'll drop in the show. It's had a huge impact on the way I live my life. And lastly, Katelyn, you've just got to watch you got to spend in a way that doesn't inflate your lifestyle without improving your life. And so the the framework, Katelyn, if you're if you're at 100,000, you want to optimize for margin, right? Put margin in life. If you're at 250, optimize for discipline. At 500,000, go for freedom. And in a million, make sure it's purposeful and it's intentional living. It should buy you control over time, not approval from others. So the question, Katelyn, as we wrap this episode up, isn't how much you can make, it's how can you wisely actually spend what you have. And so we're going to drop in here a

1:05:56worksheet, Katelyn. We've actually built out a worksheet based on this. We're going to drop that in there because everyone can put in their income. You could put in where you're spending your money and what percentage they are. We're going to give you a filter and some tools. go download this tool and absolutely utilize it and it will provide immense value for you in your life. So, we'll drop all that in there. Katelyn, what are your pine what are your parting thoughts as we wrap up what spending money where the money actually goes?
So, I think there's two things, right? It's the worksheet that we've created that you're really able to look at where am I spending my money so that you can sit down with your partner or your family and look at where are we spending our money, guys? is that getting us where we want to go. That worksheet without question is going to be really important, but it's going to be even more impactful when you pair it with Brett's balance sheet. So, we're going to give you that as a download as well. And that's your monthly balance sheet that you go in and you allocate here are my assets, here are my liabilities as far as bank accounts, credit cards, all

1:07:02those goodies. It might take you two or or three hours to set up on the front end, but then every month it should take you less than an hour to update. And that way you have a gauge. You've sat down. You've really looked at where am I spending my money? Where do I want to be spending my money? And then my balance sheet is measuring that every single month to make sure it's helping me to achieve my goal. I think when you marry those two together, you have an incredible uh road map to get where you're looking to go. And here's guys, here's the coolest thing I'll say, Brett. A lot of times we listen to podcasts, and I'm going to like categorize this for a second as a financial podcast. We're talking about money, guys. They're kind of a drag, right? People are saying, "Oh, don't spend as much and you need to live super tight and it needs to look a certain way." and you're just you listen to a podcast and it's people constantly or you read a book and there's a lot of negative around it because you're looking at someone telling you all the things you cannot do. I think the coolest thing I've experienced in

1:08:06learning from Brett over the past 11 plus years is he doesn't spend the time telling us what we can't do. Instead, what he does is he says by making certain decisions today, no one in the future can tell you what you can't do. you can do absolutely anything you want to because of the freedom. So think of him as a financial guidance voice or an advisor who's telling you the choices you make today can ensure you can do anything in the world in the future. It's all coming from opportunity. And look at your financials that same way as well. Making a choice to not spend your money on the Ferrari is not telling you you can't afford the Ferrari. Brett often tells us, "You can have everything you want. You just can't have it all today." So, all we're trying to do, all he's sharing with us in these worksheets and these spreadsheets and all these hours he's investing into spending time with us, it's so that we can make the right choices today to live the biggest

1:09:09life possible. It's not that he's telling us we can't buy something. In fact, he's saying you can buy all the things, all of them. you can have all of the freedom, but let's just make some really good decisions today that are going to ensure that we don't compromise the integrity of that freedom in the future. And I think that's the coolest.
Katelyn, that was in very incredible. And that's that's what we want for everyone, right? I I want everyone to figure out what they want and I want people to go get it. And for people, it's going to be radically different different numbers and different places. So, I want to wrap with this. There's a the three-part decision- making, Katelyn, on any expense. Okay, that I want our people to leave with when they make expenses in the next week. Number one, would you buy the thing you're going to buy if no one knew about it? First question, yes or no? Okay, would you buy it if no one knew? Second question, does it regret does it reduce future regret? Yes or no? And does this by time, peace, or control? If the answer to those three things are no, I would just encourage

1:10:12you to reconsider that purchase. Just reconsider it, right? Three things. If no one knew, does it reduce the regret? Does it buy time, peace, or control? If it doesn't hit those, don't do it. Guys, we gave you download the worksheet. Make sure you get it. Fill it out. It will add value to you. As always, that's Katelyn Mitchell. I'm Brett Tanner. This is the Be Wealthy Podcast. And we will see you here next week where we carry on this series about how to think about money. We'll see you all here next week. Bye guys.