- You won't become rich until you understand this.
These marbles represent all the millionaires in the world.
How many of these people do you think earned
an average of a hundred thousand dollars a year
during their careers?
Well, according to "The National Study of Millionaires"
by Ramsey Solutions, just 31%.
What's even more shocking is that in the same study,
it was revealed that 79% of millionaires
didn't receive any inheritance at all from their parents
or other family members.
So, what is it that our secret millionaires know
that most people don't?
And how can you become one of us?
Well, there are four important questions
you need to ask yourself.
Once you can answer yes to these questions,
you are on the right path to becoming a millionaire,
even on a low salary.
Let me explain.
(upbeat music)
(machine whirring)
So, when it comes to your finances,
there are only two levers that you have control over.
Your income and your expenses.
This looks pretty simple, right?
Well, the facts say the opposite,
as more than half of Americans earning
over a hundred thousand a year
are still living paycheck to paycheck
as their expenses are just too high.
It doesn't really matter if you're on a high or low salary.
You just need to be able to work these levers correctly
in order to create positive cash flow.
Let's play a little game.
Do you think an 18-year-old that has a positive cash flow
of $250 per month will retire a millionaire?
Yes, it'll actually be worth around $1.1 million.
How about a 25-year-old with a positive cash flow
of $500 a month?
Yep, they would be worth even more
at a whopping $1.3 million.
Okay, here's the last one.
A 50-year-old with a positive cash flow
of $3,000 per month.
Actually, no, it get very close,
but then only make it to about $950,000.
This shows why it's so important
to start thinking about this stuff while you are young.
These calculations were based on three different factors.
One, their positive cash flow is saved every month.
Two, they get an average yearly return
of 7% on their savings.
Now, you won't get this from a savings account,
but it is the average return of the S&P 500.
We'll get into that later.
And three, they retire at 65 years old.
So, what is the best lever
to focus on to create positive cash flow?
Well, let's first talk about your expenses.
I know it's not sexy,
but if you start using one of those money tracking apps,
you'll probably be shocked at how many tiny payments
are going out of your account each month.
Just think about all those subscriptions you don't even use.
Those alone may add up to over $30 a month.
I'm not saying to cancel the stuff you actually use,
just the things you don't really care about.
One of the biggest financial burdens
for most people is high interest debt,
particularly credit card debt.
It's crucial to eliminate this debt as soon as possible.
Imagine if I told you you could invest
and earn a return of 27% per year.
You'd probably laugh at me,
but credit card companies charge you
this crazy interest rate year after year,
so stop allowing them to drain your finances
and start using credit cards to your advantage.
Pay off your balance in full each and every month.
Improve your credit score and earn points
that can be redeemed for free flights.
Most online gurus would stop there
and not even talk about the other lever,
but this one, this is my favorite.
I've not always been the best at saving.
I didn't go silly when I was younger,
but I did have a pretty awesome life.
I traveled the world.
I learned to fly airplanes, raced cars,
and provided a great life for my family.
I can do this because I have a talent
for effectively leveraging the income lever.
I highly recommend that you also spend more time
using this lever.
Unlike counting the pennies, the potential to earn money,
it's unlimited.
Question two, do you split your income strategically?
Did you know that a surprise in 49% of people earning
more than a hundred thousand dollars a year
have no money left at the end of each month?
The truth is building wealth has a huge component
that most people are completely unaware of,
and that's the income split strategy.
This is how I suggest you split your main income source.
For most people, this will be the money
you earn from your job.
Now, ideally, you want to be spending 50%
on your basic needs.
These are the things that are essential for your survival,
and no, I don't mean your Netflix subscription.
These expenses include housing, utilities,
food, transportation, and healthcare.
Obviously, these do depend on your personal circumstances.
However, it's important to be very honest with this,
as the only person you'll be cheating is yourself.
Next, you want to be spending 30% on your wants.
This includes things like eating out,
getting the latest video games,
and going to events with your friends.
This is the category that most people don't limit,
and this is a huge mistake.
Even though I earn millions every single year,
I still limit the percentage I spend on the stuff I want.
I know that if I want more, then I need to make more,
and not use a higher percentage
of my income on these things.
That's because the most important part is the last 20%.
This should be invested.
I've heard others use the word save,
but I have a real problem with that.
Too many people save money to buy something,
like the latest iPhone,
or a vacation away with their friends.
This isn't what this 20% is for.
Investing is very different from saving
because the goal is to buy assets that go up in value,
or generate passive income, or ideally, both.
This can include investing in skill development,
stocks and shares, time pieces, and real estate.
Using this method, it's very possible
to turn a small salary into millions,
but it can be incredibly slow.
We're talking decades.
That's why I think you should take things one step further
and build an additional income stream
by starting a side hustle.
Starting a side hustle is powerful
because once you have the right income split,
you can invest all the excess money.
It's like pouring gasoline on a fire.
It speeds everything up.
If you invest this extra side hustle income
and get an average annual return of 10%,
then each dollar you earn now
will be worth $4.45 cents in 15 years.
It's truly the key to supercharging your earnings.
So, question three, do you have a side hustle?
But Mark, why should I have to start a side hustle
when I already work a full-time job?
My boss should just pay me more.
Well, if you are earning a low salary,
there are only a few reasons why this is the case.
The first could be your job isn't perceived as valuable.
And the second is you might be getting taken advantage of.
Most people think they're being taken advantage of
by the system.
You know the ones that moan about their bosses
and always seem to be the victims.
But in reality, this is only the case
for an extremely small amount of people.
If you are really being paid unfairly,
then, look for another job.
Now, for everyone else,
if you aren't generating enough value in your job,
then you need to do it through a side hustle,
if you're really serious about growing your wealth.
For most people with nine to five jobs,
I'd highly recommend working as a freelancer.
I mean, let's say you have an office job in marketing,
on the weekends you could share your knowledge
with small businesses looking to grow their customer base
in return for a fee.
Now, there are multiple waste charge.
The most common is for your time.
You could charge anywhere from $30 to $200 an hour.
Although, I personally don't like this idea
as you're already selling your time at your normal job.
Instead, it's a much better idea to sell results.
For example, I might approach a business
and offer to help them expand their reach on social media.
In return, I'd request a percentage of the sales
for every customer I bring in.
This way, both you and your client benefit
and your potential income is unlimited.
But what if I have no skills?
Oh, bloody go and learn one.
Any of these will do.
Just imagine if you could create
an additional $1,000 per month,
if you were to save that money and earn an average return
of 7% per year over a span of 28 years,
you would accumulate
an impressive $1,038,688.
This substantial amount is generated solely
from the extra money you've created in your life.
So, question four, is your money working for you?
Now, I can already see the comments.
This is crazy.
What savings account will give me 7% per year?
This old man, he's lost his marbles.
Look, I completely agree with you.
That's why this whole video comes down to this last point.
You need to start investing.
The average annual return of the S&P 500
over the last 10 years has been 13.6%.
Although this is slightly higher than the average over time,
no one has ever lost any money
if they've bought and held an S&P 500 index fund
for more than 20 years.
The key is to open the correct type of account.
You'll often hear people throwing around
the terms Roth IRA in the USA,
and Stocks and Shares ISA in the UK.
If you don't have one of these accounts,
then, you're really missing out,
as they allow you to avoid paying taxes on your investments,
but they do have limits because they're so powerful.
But where can I set up these accounts?
Well, there are multiple different investment apps.
A great thing about most of them
is they actually give you the ability
to buy fractional shares.
So, rather than having to pay $190 for a share of Apple,
you can invest as little as $1.
One of my favorite investing platforms is Trading 212.
Since I was planning to talk about their app anyway,
I reached out to see if they'd be interested
in sponsoring this portion of the video.
They agreed and are also offering a free stock
worth up to a hundred pound to anyone
that uses the code TILBURY when they create an account.
To buy the S&P 500 index fund that I just mentioned,
search for Vanguard S&P 500 ACC,
this stands for accumulation.
I'm not a financial advisor,
but it's pretty much that simple.
You can even set a monthly amount to invest automatically.
Of course, investments can go up as well as down,
but this strategy has made me millions over the years.
If you wanna have an even more diversified portfolio,
then you can also have a look at PIEs.
And I'm not talking mamas good old apple pie.
Mind you, that is a pretty good pie.
This lets you see how other investors
have allocated their money into different stocks.
You can track the performance of the PIE over time,
and you can even copy and paste someone else's PIE
and invest in the same split
with just one click of the button.
If you wanted to invest a hundred dollars into that PIE,
then it would be split amongst the various allocations
that the PIE creator has chosen.
Even after listening to this,
if you feel unsure about investing,
then you can always just keep your money in Trading 212
and earn interest.
They have some pretty good rates.
As of recording this video,
they're offering 5.1% on US dollars,
5% on the Great British pound,
and 4.2% on the Euro, along with other currencies.
So, if you live in the UK or Europe,
it's worth trying out Trading 212
because signing up is completely free
and there's no commissions.
Of course, don't forget to use the code TILBURY
and you'll receive a free share worth up to a hundred pound,
or alternatively, click the link in the description
to sign up and see exactly how to access the free share.
If you got to this point in the video,
let me know in the comments
how many questions you said yes to.
If you wanna know exactly how I pick my individual stocks,
then you can check out this video next,
but don't click on it just yet.
Make sure to subscribe
if you want to grow your wealth, okay?
I'll see you over there.