Latest / Success Story with Scott Clary / Lessons - The Hidden Systems That Keep You Poor While Others Get Rich | Jaspreet Singh - Financial Educator

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Lessons - The Hidden Systems That Keep You Poor While Others Get Rich | Jaspreet Singh - Financial Educator · Success Story with Scott Clary

• 0:00
  In this lessons episode, discover the core principles of building lasting wealth rather than chasing quick riches.
• 0:05
  Learn why the TRD framework, time, return, dollars, dictates your financial success.
• 0:10
  Learn how automating a 75-15-10 split between spending, investing, and saving kick starts wealth growth.
• 0:16
  Learn why understanding inflation's hidden transfer of wealth from non-investors to investors is crucial for securing your financial future.
• 0:30
  Let's talk about wealth building versus just making money or just trying to get rich because what you're describing is wealth building 101.
• 0:44
  I think it's important to highlight the process that you went through and how you looked at assets and liabilities and investing.
• 0:52
  Learn how to describe what most people do versus what you were doing, but then also I think an interesting point is the way you did it is at the way people should do it if they want to build well.
• 1:04
  The way you should do it is what's right for you. Personal finance is called personal finance because it's personal.
• 1:10
  At the end of the day, building wealth comes down to three things, TRD, time return dollars.
• 1:18
  The one thing that we cannot control is time, but what we know is a longer your money has to grow the more wealth you can build.
• 1:27
  But let me back up just one minute. The way you build wealth is by investing your money.
• 1:31
  It's not by saving your money and it's not by spending your money.
• 1:34
  It's by earning money, not spending that money and then investing it.
• 1:39
  And the two or three asset classes that have built the most wealth in anything else in America over the last century are building a business, buying stocks, buying real estate.
• 1:48
  Now the majority people should not build a business, but everybody in America should be a business owner.
• 1:53
  How do you do that by investing in stocks or by investing in real estate?
• 1:59
  And so you have to be an investor if you want to build wealth.
• 2:04
  Now the question is how do you invest your money and how do you become wealthy that goes back to the TRD.
• 2:10
  So when you invest your money the more time your money has to grow the wealth you're going to become.
• 2:15
  But we can't go back a time and start investing five years ago.
• 2:18
  So that can't change the best thing to do is to start sooner rather than later.
• 2:22
  Then is our return.
• 2:25
  The better returns you can get on your money.
• 2:27
  The faster your money can grow the faster you're going to build wealth.
• 2:30
  I mean you can think of it in terms of how long is it going to take you to double your money.
• 2:34
  If it's going to take you 100 years to double your money you're never going to become wealthy.
• 2:38
  But if you could do it in five years well now you can really start to see the power of compounding because now you can invest for money, double it, grow it and just keep doubling it that way.
• 2:47
  And the final part is D dollars.
• 2:50
  The more dollars you invest the wealth you're going to become, which ultimately goes to how do you invest for dollars.
• 2:56
  Well you can either spend less money or you can earn more money.
• 2:59
  There's no other way around it.
• 3:02
  And in the beginning spending less is the simplest thing to do.
• 3:06
  That's how I started.
• 3:07
  I spent no money that way I had more money to invest.
• 3:10
  And so I spent as little money as possible.
• 3:13
  The problem with that is there's a limit to how much you can cut back on.
• 3:16
  There's a limit to how many pennies you can squeeze out of your budget.
• 3:19
  But there's no limit to how much you can earn.
• 3:22
  That does not mean you shouldn't try to cut back.
• 3:25
  You have to be able to spend less because if you don't know how to spend less than what you make you're never going to build wealth.
• 3:30
  But just don't get caught up into the game where all you do is spend less.
• 3:35
  That was what I originally focused on was just how to cut expenses, cut expenses, cut expenses and I cut back really hard, which was fine for me because my personality aligned with that.
• 3:44
  But I don't think the average person would want to do what I did.
• 3:49
  So if you can't spend less to, you know, whatever level.
• 3:55
  You spend less, but you can where you can as extreme as you can.
• 4:00
  Then you look for ways to earn money.
• 4:02
  And now you're going to say, well, how do you do that?
• 4:04
  And again, it's going to be dependent on you because personalized finance is personal.
• 4:08
  Maybe you work to ask a boss for a race, maybe you get a second job, maybe look for a new job, maybe look for a career change, get a certificate aligned.
• 4:17
  If you spent $500 online, you can get a certificate to get some sort of new job that might be able to pay you $70,000, $80,000, $110,000 a year, depending on what the job is.
• 4:27
  Maybe you go and start a side business or a side hustle or maybe you start a whole business.
• 4:32
  But that's going to depend on what's right for you.
• 4:34
  Do you have, I mean, personal finances personal.
• 4:38
  But when you look at a healthy, a healthy ratio, maybe for people to understand.
• 4:45
  Again, this, this, the audience for this is a wide range.
• 4:49
  Some of them have been investing for a long time and they get this game.
• 4:52
  Some of them are probably new to finance and they're trying to figure out they're in a nine to five W2 and they're a little bit entrepreneurial,
• 5:00
  but they're also focused on finance and they're not super financially literate.
• 5:04
  But they understand like they're, you know, some of their friends do real estate and stocks and they also want to start their own business.
• 5:10
  There's all these ideas that are sort of just like, you know, you know, ruminating in their head.
• 5:14
  And they're trying to figure out what to do and there's so many different options.
• 5:17
  So what would be like from an entrepreneurial perspective,
• 5:25
  I would say, don't leave your nine to five.
• 5:27
  And if you want to make a little bit more money, maybe start a side hustle or find a talent or a skill and you can go find ways to close clients.
• 5:34
  Like you said, you know, you work nine to five or nine to seven.
• 5:37
  Then you take your seven to nine or seven to ten or your weekend and you do some freelancing work and you can start to see what entrepreneurship is like.
• 5:44
  And that can make you a little bit more money.
• 5:45
  But say you have this bucket of money that's coming in from your work and your side hustle and your entrepreneurship or whatever.
• 5:52
  What are good ratios that people should think about so they can put X amount of money towards their rent or their market and X amount of money towards investing?
• 6:02
  Just some best practices based on an average risk tolerance of somebody from like 25 to 35.
• 6:10
  Yeah, a simple rule of thumb that I say is a 75 15 10 plan, which says for every dollar that you earn from here and out.
• 6:17
  75 cents is the maximum that you can spend 15 cents is the minimum that you invest 10 cents is the minimum that you save.
• 6:25
  Create three different bank accounts one for your spending money one for your investment money and one for your savings money and then automate this process automated.
• 6:33
  Most banks are going to do this for free.
• 6:35
  If your bank is trying to charge you find a new bank.
• 6:37
  And the reason why you want to automate it into different bank accounts is because you don't want to accidentally spend your investment money on a new TV.
• 6:43
  You don't want to actually spend your savings money on a car.
• 6:46
  Your savings money is there to protect you against an emergency.
• 6:48
  Your investment money is what's going to be used to invest in your real estate, your stocks, the books that you want to learn or to whatever your investments might be.
• 6:58
  And your spending money is what's used to pay your mortgage or your rent to pay for your car to pay for your groceries to pay for your vacations and everything in between.
• 7:06
  And the reason why I say it like this is because everybody is different.
• 7:09
  Some of you are going to say I want a nicer car.
• 7:13
  Others are going to say I rather live in a nicer place.
• 7:16
  Other people are going to say screw all that.
• 7:17
  I can live in a small box.
• 7:18
  I rather travel and that's fine.
• 7:21
  But as long as you're spending within your means and putting money aside to invest and save, then it's within your spending plan.
• 7:30
  And I would say this is a simple way to start.
• 7:33
  Do we have in the US in particular because I'm sure I know the answer to this but you live in this space so you must have some data or some insight.
• 7:42
  Do we have a massive wealth building problem like if we just look at because I mean I think I'm indefinitely I'm super biased because I speak to entrepreneurs all day and I speak to successful people who sold their businesses.
• 7:53
  So I have no I have no understanding of the average individual and what people are going through because I'm just it's I'm very fortunate my little circle of friends here is it's fabulous but it's not the reality.
• 8:06
  I don't think many people are financially literate.
• 8:09
  I don't think many people are investing if I even look at give you a personal example.
• 8:13
  I look at my parents like they don't invest in real estate and stocks the way they should they have a money manager and a financial manager and that's fine.
• 8:20
  But they're not the strategies that the most successful people in my circle of friends are using for example.
• 8:27
  So what's the state of wealth building in the US right now about 70 to 80% of Americans and the reason why I give a range is because it depends on the study.
• 8:38
  But some of which is 7 to 10 out of Americans are living paycheck to paycheck that means they have no extra money to save no extra money to invest.
• 8:49
  Half of Americans are not investing at all and have not invested at all.
• 8:55
  That means no savings no investments no stock market no goal no real estate no nothing no retirement no 401k.
• 9:03
  So if you walk down the street that means for 7 out of 10 people that you see actually closer to 8 out of 10 people that you see but will run it down.
• 9:13
  These are people that have less to nothing in their bank account more than half of Americans do not have a thousand dollars to their name.
• 9:23
  And that's the average state of America now there's two reasons for this there's the you problem and then there's the me problem.
• 9:31
  The me problem is I spend too much money.
• 9:34
  I don't know how to manage my money and I buy too many dumb things that applies to everybody.
• 9:40
  But there's also the you problem which is how the economic system is keeping a lot of people broke.
• 9:47
  And this is something that's out of control and what I mean by that is if we take a look at the last five years between 2019 and 2024.
• 9:56
  The average household income in America has grown by a little bit under 18% but I'm going to round it up to 18%.
• 10:04
  So the the median household income in America has grown by 18%.
• 10:08
  While the average inflation rate reported inflation was just over 23%.
• 10:14
  Over the same time period housing prices have grown by a little bit over 50% that's renting and buying.
• 10:23
  And at the same time the S&P 500 has grown by over 80%.
• 10:28
  So what does that mean? Over the last five years the average American who works to get a salary has become poorer because your salaries have not kept up with inflation.
• 10:40
  That means you have to spend more of your money to buy groceries.
• 10:43
  You have to spend more of your money to pay for your bedroom mortgage.
• 10:46
  You have to spend more of your money to just survive and you have less money to save and invest if any.
• 10:52
  At the same time the average investor has become disproportionately wealthier.
• 10:57
  The average rate of inflation over the last five years has been 23.1%.
• 11:01
  While at the same time housing prices have gone up by 50% which means if you invest in real estate chances are your rental income has grown.
• 11:08
  Chances are your rental properties have grown unless your own office buildings which have really been hurt.
• 11:14
  But the stock market has also grown. The S&P 500 has grown by around 80%, which means investors got a windfall.
• 11:21
  The average person became poorer. Why? Because of something called inflation.
• 11:26
  And inflation didn't start in 2019 or 2020. Inflation has been happening for decades.
• 11:32
  But it just became a hot topic after 2020 because of how extreme it got over the period of five years.
• 11:37
  But this same thing has been happening decade after decade after decade.
• 11:43
  If you look at what the Federal Reserve Bank says.
• 11:46
  The Federal Reserve Bank is our central bank in the United States.
• 11:50
  And what they say is that they want 2% inflation.
• 11:54
  And what I'd like everybody to think about when they say that is why 2% mean how do they come up with a number?
• 12:01
  Why is it not 3% or why is it not 1% actually? Why is it not 0% inflation?
• 12:07
  Because inflation means that you have to spend more money to buy groceries. You have to spend more money to buy things.
• 12:14
  And inflation is there to benefit the investor.
• 12:18
  Because when you see inflation that means more dollars go into the hands of businesses which means more dollars go into the hands of the investors who own those businesses.
• 12:26
  And inflation disproportionately benefits the investor while disproportionately hurting the average American who's not an investor.
• 12:32
  Because inflation means that consuming becomes more expensive at its core.
• 12:36
  I mean inflation is with the value of the dollar goes down causing the price of things to go up.
• 12:40
  So if you have to spend more money to buy things like you have to spend more money to buy groceries to buy a flight to buy a car.
• 12:46
  That means consumption gets more expensive which means more dollars are going into the hands of businesses which means again investors who own those businesses benefit.
• 12:55
  And this is where now you have to understand.
• 12:58
  That is happening. This economic shift is happening. It has happened in the past. It will continue to happen in the future.
• 13:05
  And it has happened since way before the pandemic.
• 13:08
  The reason why the Federal Reserve Bank wants 2% inflation is because 2% inflation is no one low enough that the average person doesn't notice a day to day.
• 13:17
  Now during the pandemic era we went way above that which is why it was so extreme and now people are starting to feel that paint job inflation.
• 13:25
  But 2% inflation is low enough that the average person doesn't notice a day to day.
• 13:29
  But it's still happening.
• 13:31
  Which means that if you just become a consumer and an employee and you are not an investor you are a victim to this economic system.
• 13:40
  You are never taught this and this is where a lot of people get upset.
• 13:44
  But in order for you to win now in order for you to beat this system you then have to look at the me problem which is stop spending so much money and dumb stuff that you can't afford.
• 13:53
  And that means you got to now cut back on your expenses that way you have money to invest.
• 13:57
  You don't have to be a millionaire to capitalize on this.
• 14:00
  But you have to understand how to control your money to do it.
• 14:03
  Thanks for tuning in. If you found this valuable don't forget to hit that subscribe button so you never miss an episode.
• 14:08
  And if you want to dive deeper into this conversation check out the links in the description to watch the full episode.
• 14:14
  See you in the next one.