- So pretend you're this guy,
and you're in bed typing in random country names
on Google Flights, checking the prices
because, you know, after the pandemic is over
you're gonna travel the world
and see and taste things you've never seen or tasted before.
But then you remember...
(laughs) I'm broke.
If you've ever been in this situation,
then you're not alone.
Throughout most of my life,
I always found that no matter how much money I made per hour
in any of the weird jobs I worked,
by the end of the month I was always broke.
It's like somebody had a giant tube
connected to my bank account
and was just siphoning money away gradually
until by the week before payday,
I was living on ramen and eggs.
But I noticed something, the reason I was broke
wasn't because there was some third-party involved.
The problem was me.
And I was succumbing and falling prey
to the three most common money mistakes
that most people make.
And unless you correct these three things
you'll probably end up in that exact same situation.
But if you do correct the mistakes,
then you may find that at the end of the month,
you'll just be a little bit,
you know, your wallet will be a little bit fatter
and your tummy just a little bit more full.
I said, tummy again. I hate that word.
Okay, mistake number one,
you're succumbing to lifestyle inflation.
Lifestyle inflation is when you start making more money
and then as a result, you start spending more money.
You think to yourself, "Sick, I just got a raise.
"I'm making an extra $300 every month.
"Now I can probably afford a Disney+ subscription,
"I can buy those Nike Air Force 1s,
"and I can hit the pub tonight with Jim and Rand."
Lifestyle inflation, in essence,
comes from the weird fallacy that,
"Okay, rich people have nice things.
"And since I'm making a little bit more money
"and getting a little bit more rich myself,
"then I should start buying nice things
like the rich people."
But in reality, somewhere deep in your subconscious mind,
you know that the reason people are rich
is because they have money.
And when you spend money, you no longer have money.
But you probably already know this.
I'm not saying anything new.
So how do we solve this problem?
Well, first of all, it's an awareness thing.
We have to be aware of this thing
called the hedonic treadmill.
The hedonic treadmill is a metaphor
for the idea that an individual's level of happiness
tends to return to where it started, a set point,
regardless of good fortune
or negative life events the person experiences.
So in essence, you can go balls to the wall
and spend money on the most lavish
and ridiculous things in life.
You know, if you get millions and millions
and billions of dollars,
you will always be able to find things to spend the money on
and those things can be really shiny and really cool.
But the fact of the matter is, within a couple of days,
couple of weeks, you're just gonna return
to that baseline happiness.
So if you wanna fix your lifestyle inflation
and your incessant need to buy things all the time
to make you happy, first be aware of the hedonic treadmill.
And the next thing to do is to fix mistake number two,
which is you don't pay yourself first.
So, since you're super efficient at spending
every little nickel in your bank account with Jim and Rand,
you need to create a safeguard mechanism
that protects you from doing that.
Something that has your back
even in your weakest, most primal moments.
And that is to pay yourself first.
Every single month you pay the internet company,
the phone plan company.
You pay Disney. You pay Apple.
You're handing out your hard-earned cash likes it's...
Like it's a free money day. (laughs)
You're paying all these other people
but you can never get rich if you don't pay yourself.
Give yourself some of your own income.
Why does everyone else have to take it?
Pretty much everyone,
regardless of their financial situation.
can afford to live on 90% of their monthly income.
Like, if you learned next month,
that instead of making $3,000, for instance,
you'd be making only $2,700,
you'd find a way to make it work.
You'd stop buying lattes.
You would cut corners on certain things.
(camera scrapes)
No!
It happens to a lot of people all the time.
They find out they're not gonna be making as much next month
or they're not gonna be getting as many shifts.
They make it work. They survive.
But get in the habit of treating your income
like it's a 90% thing.
90% you can spend on whatever else you wanna spend it on,
but that 10% you give to yourself.
You put it away and you save it.
We can talk about investing in another video.
But if you're not already saving 10% of what you make,
as a minimum, your net worth isn't growing
and you're not improving your situation ever.
Just briefly though, if you have debt,
which is a lot of you watching probably.
I've been there. It's called college.
One of the best techniques that I've heard of
is the debt snowball tactic,
which was developed by Dave Ramsey.
And that's basically just the idea
of paying off your smaller chunks first.
So your smaller loans, maybe it's a small credit card.
Then you move up to your bigger credit card
and you move up to your car and then your student loans.
And this kind of goes against the notion
that you have to tackle the debts
with the highest interest rates first.
And while that's mathematically true,
a lot of people just don't do it.
They didn't get into debt because they were smart with math.
They got into debt because
they make weak financial decisions
based on impulse and emotion.
So you need to get impulse and emotion on your side.
It's really motivating to pay off your small debts first.
It gives you momentum and it gets you stoked
to pay off your bigger debts.
You can move on to your other debts
and then you can use the interest that you were spending
on the smaller debts to pay off your bigger debts.
And you create this debt snowball
where you're just used to paying off debts all the time.
And it's great.
But you can't do any of that
if you're just paying the minimum payments on everything
and then spending the rest of the money everywhere else.
Take that 10% and use it to improve your situation.
Okay, so mistake number three
is that you're falling for consumer traps.
Now, these can be extremely insidious.
So have you ever been going about your day,
you know, you went to work and then you went to the gym
like a good strong boy?
You know, and then you get home
and you start browsing the computer.
And you're on YouTube
and your favorite tech reviewer says,
"The all-new iPad. 10.-whatever-inch."
And at the end of the video, he says,
"Now is the time to buy an iPad."
"This is a great iPad.
"Lots of improvements over the last one.
"You should go ahead and buy it now."
So sure enough,
you go on to Google and you type in Apple iPad.
And you add it to your cart.
And you think to yourself,
"I actually have $300 more than I thought I would.
"And this iPad is only $300. Let's get it done."
So you add it your cart, you buy it,
and you pretend you just didn't even do anything.
You walked away from the computer.
Try to pretend that you didn't actually just buy an iPad.
You ignore the negative thoughts
and you just focus on the positive.
You're like, "Ah, that was a nice thing to do."
But here's the weird thing that not very many people notice
about that kind of situation.
You went your entire day
without even thinking about an iPad, you know?
You were just living your life,
unaffected by this iPad,
totally content without needing an iPad.
And had you not watched that YouTube video,
you'd have had a great night's sleep
and you would have been $300 richer.
But because of how marketing works,
all of a sudden when you come across the ad for the iPad
or something promoting the iPad,
it becomes the most important
and tempting thing in your entire world.
You have this deep sense of lack about not having this thing
and buying this thing would really just put that to rest.
That's marketing. That's a consumer trap.
It's like a bunch of little Fruit Loops
on a trail leading you to spending money.
In my own life, the biggest consumer trap
in my entire existence is camera equipment.
And my brain has this rationalization
that, "Oh, I'm a YouTuber and I'm really into video stuff.
"So I gotta stay on top of the latest tech."
But every time I stay in this consumerist mentality,
I produce way less.
And if I've learned anything about being a YouTuber,
is that in order to succeed
I need to produce a lot more than I consume.
That's kind of the way it goes in life.
If you're constantly on social media, on YouTube,
and you've subscribed to all these like equipment reviews
or yacht club catalog, whatever,
it's basically just a consumer trap.
It's a gateway into spending money.
It's a gateway to giving away your money
to everyone else other than yourself.
So the solution is to start deleting the traps.
You know, my favorite camera reviewers,
I had to click on YouTube and say,
"Don't recommend this kind of shit to me."
It's heartbreaking,
but you gotta eliminate these traps as you see them.
In "Atomic Habits" by James Clear,
he talks about how willpower
is kind of for losers, in a way.
Like most people have optimized their existence
and their homes and their online life
so that they don't have to use willpower all the time.
They don't have to sit there resisting urges.
They've just deleted it ahead of time.
They've gotten rid of the traps
so that they can just go about their business undisturbed
without all these companies just kind of like
tugging on you to go spend money on their stuff.
So don't succumb to lifestyle inflation,
pay yourself first, and then eliminate these consumer traps.
And you'll be so much better off.
You'll have so much more extra money lying around.
And if you wanna learn more about personal finance
without getting into like the crazy mind-numbing numbers,
talking about Roth IRAs and 401ks
and investments and all of that,
then I highly recommend checking out a book
called "The Richest Man in Babylon"
using today's video sponsor Audible.
And "The Richest Man in Babylon"
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Takes you on this journey.
It feels like you're not even really learning about finance.
It's just good storytelling.
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So this is my first personal finance video.
Let me know what you guys thought of it
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