5 Money Rules That Will Change Your Life & Create Financial Freedom

Seven out of 10 people are being left. behind because they're living paycheck. to paycheck. Wait, seven out of 10. people in the United States live. paycheck to paycheck? >> If you are living paycheck to paycheck, you are not alone. But what I know. because I've done this for 30 years is. that's a very hard way to live. I've. been teaching people how to be smarter. with money for 30 years. And my belief. is no one should be left behind. And what's happening in our country. right now is people are being left. behind.

Our guest today is David Bach. He's one. of the most respected voices in personal. finance for over 30 years. His books. have sold over 7 million copies. He's. taught millions of regular people just. like you how to build wealth starting. exactly where you are right now. Either. you have a plan for your money or. someone else has a plan for your money. I want you to reduce the amount of. credit cards you have as fast as you. can. Stop taking credit cards out, okay? They're traps. >> And this includes not just like. MasterCard and Visa and Amex. This is. like also store cards.

>> Oh god. Don't, please, please, please, please, please, please say no to these people. for those cards. Do not do those cards. There's two escalators [music] to wealth. in America cuz the system's rigged. You. need to hear this, especially young. people. Two things get people typically to make. a decision around money. What are they? One is. people don't know. It actually can make. me cry sometimes because people just. don't know. When you start the process. of digging out, you start to feel. better. It's so true. It actually.

doesn't take you being debt free to feel. better. It just takes you starting the. process and working on getting debt. free. It's It's never too late unless. you give up. Let me tell you what's. really going on in this economy cuz this. is probably the most important thing. you're going to hear in this podcast. David Bach, welcome to the Mel Robbins. podcast. >> Mel, thank you for being here. It's. fabulous to see you. It is fabulous to. see you, too. I love you as a friend. I. love your energy and I love your work. and I am very excited about the.

conversation today because so many of us. are concerned about money. We're. concerned about our future. We're. concerned about how to support the. people in our lives around their. financial future. And where I want to start is this. If I. take everything to heart that you're. about to teach us, how will my life be different if I apply. what I learn from you today? Well, first and foremost, I'm going to. give you hope. Oh. A lot of people right. now are missing hope when it comes to.

their money, which is impacting their. life. >> Mhm. So, I believe that nobody should be. left behind when it comes to money. That's why I've spent 30 years of my. life teaching people about money. And so. the challenge right now in this country, honestly, Mel, we're leaving people. behind. >> Mhm. In this country right now, seven out of. 10 people are being left behind because. they're living paycheck to paycheck. Wait, seven out of 10 people in the. United States live paycheck to paycheck? >> Stop for a moment and take that in.

because that means if you're driving. down a street and there's 10 houses, seven of those 10 are living paycheck to. paycheck. So, if you're living paycheck. to paycheck, if you've got credit card. debt, you maybe have student loans and. you don't have hope, I promise you at the end of these 90. minutes together or however long we are. together, you will see the light at the end of the. tunnel. So, that's number one, okay? Number two, not everybody's living. paycheck to paycheck, right? Cuz there's. three other people out there from the. 10. So, if you're starting on investing, maybe you've opened up your Roth IRA,

you heard about that somewhere, or. you're using your 401k plan at work, >> [snorts]. >> or you've even bought your first home. You you've You're doing a lot of things. right, but you're not sure. am I doing everything right? Like you. kind of have this doubt. Like I'm not. sure I don't know if I'm really on. track. I don't know if I really have the. right investments. So, maybe you think. you're doing things right, but you still. know you need help. I got you, too. Now, some people are starting over. Okay. Right? I mean, the reality of life is. between divorce, between widowhood, you know, average age.

of widowhood in this country is 59. When. you look at what happens to women as. result of widowhood financially, they're. often wiped out. And we're getting real, real serious. quickly here, but like so as a woman, you can't afford to not know what's. going on with your finances. There's so. much I want to just pull apart. because a lot of people ask me, "How did. you get 800,000 How did you get out of. debt, Mel?" My husband and I were. $800,000 in debt at the age of 41.

So, I like that you're starting with you. have to make a decision that you're. tired of living paycheck to paycheck. You're tired of being in the situation. that you're in and you're here to tell. us cuz you've you have helped millions. of people get out of debt. That it's not too late? It's never too late unless you give up. I always say you're one decision away. from a different life. And for me, I'm very negatively. motivated. Like things have to get. really bad. I'm kind of stubborn. Yeah. And I just got to a point.

where I was so tired. of the constant stress. and the constant [snorts] frustration. and the shame of not being able to pay. my bills and the crushing pressure of. being in debt. that I just made a decision. I'm done. doing this. I have to figure this out. because no one is going to No one's. coming. No one's coming to save you. >> No. No one's coming to pay these bills, but I'll be damned. There's so many.

people that are way less smart than I am. that have figured this out. If these. other people can do it, then I can. figure this out, too. Two things get. people typically to make a decision. around money. What are they? in general. It's pain. or. it's clarity around what's most. important to you. Mhm. Now, some people have to go through a. lot of pain to get clarity. That's the hard way. The hard way is someone smacks you over. the butt with a 2x4 and you're just.

like, I I can't do this anymore. That. was my grandmother even at 30. Maybe her. pain wasn't like yours with so much. debt, but her pain was clear She got. clarity around I'm 30. We have no money. We don't have a college degree. She sold. wigs at Gimbels department store. My My. grandfather worked in a a plant. They're. middle-class people living in Milwaukee, Wisconsin. And at 30, she got clarity. that she didn't want to retire. in Wisconsin. She decided at 30. She's like, "It's so. freaking cold here.".

Well, I grew up across the lake in. Muskegon. >> Okay. So, So, I know. >> grew up there and she's like, "I want to. retire one day to Florida or. California.". She decided that at 30. Then, like you, she worked on her plan for three. decades. And a company should say, "David, you. don't get rich in days. You get rich in. decades. You don't get out of debt in. days. If you The problem with debt is. you can get in debt in a day, but you can't get out of debt in a day.". I I think it's just this moment where. you get so sick of your own situation.

that you organize the resolve. to change and do better. I want to. broaden the tent a little bit because I. do think that statistic that. seven out of every 10 people in the. United States. and plenty of people around the world. right now are struggling. They're. paycheck to paycheck. They're feeling. the pressure and the stress of it all. And I want to talk a little bit about. some other people. Like people that. might be entering one of the worst job.

markets out there. You're in your 20s. and you're not quite sure what to do. because you're saying to yourself, I I. can barely even pay for my rent with. three roommates and I'm having trouble. finding a job right now and I have. crushing student loans. Who else is. going to get hope from this conversation. today? Let me tell you what's really. going on in this economy cuz this is. probably the most important thing you're. going to hear in this podcast. Okay. We're living in what I call now an. automatic economy. Automatic economy.

>> Okay. Okay? An automatic economy either. makes you rich. or it keeps you poor. And there are a lot of people, Mel, right now becoming rich. In fact, we're. going into a decade where I believe more. wealth will be created in the next. decade than in any time in our lifetime. Really? 100%. There There's two. escalators to wealth in America. Okay? Cuz the system's rigged. You need to. hear this, especially young people. Okay? There's two escalators to wealth.

They are real estate and stocks. You have to own real estate and you have. to own stocks. And this market's now. more rigged than it's ever been. And. when I say rigged, what I mean is. everything in our country is designed. for those two asset classes to go. higher. All the tax laws, all the. incentives, all the opportunities that exist. are for for investors. If you're not an investor, you are being. left behind faster than you ever been.

left behind. Anyone who's in their 20s. today can start investing their change. That's true. You can start investing. literally today. You can open an app. like Acorns and be investing your change. every time you spend money. You can be. investing a dollar at a time in. diversified portfolios. You can click a. button at almost no cost and that was. not true 20 years ago. 20 years ago it. was hard sometimes to become an investor. with a small amount of money. Today with. technology, the whole playing field's. been democratized. What are some of the biggest mistakes.

that people make when it comes to money. that keep them stuck? Okay. Number one, when it comes to money, you either have a plan for your money. or someone else has a plan for your. money. Ooh. What do you [laughter] mean? So, Oh, boy. Like let that sit for a second. Either you have a plan for your money or. someone else has a plan for your money. Lots of people have a plan for your. money. The automatic economy is driven. by your phone. Uh-huh. Okay, that phone.

that we hold all day long is a. money magnet. Think about that as a. money magnet. What do I mean by that? That means this tool is either helping. you build wealth or it's taking wealth. away from you. Oh, hold on. So, the. phone is either helping you build wealth. or it's taking money away from you. And. by the way, in both cases, it's. automatic. So, what's happening today? There's never been greater technology. ever in the history of our lifetime to. separate you from your wealth. But nobody wants to separate you from. your wealth once.

They want to separate you from your. wealth for your lifetime. They call it. the lifetime value of a customer. Okay. So, when I bring you into whatever I'm. selling you, I don't want you to buy. from me once. I want you to buy from me. on subscription level. I want you to be. paying me whether everybody, think about. it, Netflix, the gym, every single. service, your vitamins, your creams, your lotions and your potions. Everyone's got you signed up to pay them. automatically. If you go through open up your credit. cards or someone. people in your office, I already told me.

they did this. Use a system like. Monarch. Yep. Uh or YNAB, right? These. are different software systems where you. can track all of your expenses and you. can see who are you paying monthly. People have lost touch with how many. people are attached to their paychecks. But you got to have a you got to have a. plan for what am I putting away for the. future? What am I putting away for emergencies? And what am I putting away for my. dreams? That's called a plan. Okay. What.

most people have is what I call the no. plan plan. Okay, did you catch that? It's the no. plan plan. So, like if you're listening. and you're like, I don't really have a. plan for my money. >> I I'm sitting here right now like I. don't think I have a plan for my money. >> you have a no plan plan. Most people are. literally walking around with a no plan. plan. And so, what happens is the only. thing that's a part of their life. financially is their paycheck comes in. and then it goes right out the freaking. door. That's cuz you got a no plan plan. You need an automatic millionaire plan. Okay. >> You need an automatic millionaire plan.

where your money is automated to go into. everything that is important for you. financially. And And what needs to. happen is you you almost you take out a. yellow pad of paper and you go, these. are the things I have to have. Okay. I. have to have rent. Yep. >> I got to live somewhere. Yep. I have to. have a car payment. Now, a lot of car. payments are way higher than they need. to be, but there there are certain. things you have to have. You have to. have health care. Then you make another list. These are. nice to have. So, like when you go back to you having. $800,000 in debt, you had to cut things. out. >> god, we didn't go on a vacation for like.

a decade. See, people. >> go out to dinner. We did We We cut. subscriptions. Like we had to pull the. kids out of town soccer for a year. Like. they We just couldn't afford it. People. have to like really hear that because. they want it to be fixed often in 12. months. And you just said you spent a decade. But your whole life's different. The. other thing is when you start the. process of digging out, you start to. feel better. It's so true. >> doesn't take you debt free to feel. better. It just takes you starting the. process of working on getting debt free.

>> Okay, I want you to hear that. Whether. you're on a walk or you're in a car or. you're listening to us at work or you're. watching us on your big screen on. YouTube. I I mean it. Like you you literally will. feel better. when you start taking control. You don't. have to get out of debt. Why do you. start feeling better when you start. chipping away at your debt? >> better instantly because when you don't. deal with your finances, you know you're not dealing with it. It.

never goes away. It is in the back of. your mind, it is in the front of your. mind. And the problem with money is we. use it all the time, right? We We We. constantly have to spend money. So, when. you know you're not saving anything, you're not an idiot. You know what. you're not doing, right? So, I just. think it's all about priorities. And to. me, what the priority should be, ideally, I'm not trying to tell people. what they should do, but to me, I want you to use money as a tool to.

free yourself. From what? From everything. I want you to have. options. So, I think the more you. prioritize what matters in your life, like to get super clear on your values, like what's really important to me? What do I value most? When you deeply. look at whatever it could be, my family, my community, making a difference, my. spiritual growth, being with friends and family, being in. nature. Choose the things that matter. most to you. Cuz what I taught when I. wrote my first book, Smart Women Finish.

Rich, I taught people cuz this is what I. did with my clients, take your expenses, line them up, write out your values, and then go right. through your expenses and compare them. to your values. And ask yourself, do they match? Mhm. And most people spend money in a way. that is in conflict with their values. And when you are clear on your values, the decision-making process around your. money becomes easier. Okay, so we know.

we you got to have a plan or you have no. plan, but you got to have a plan and. you're going to give us the plan. And it. doesn't matter if I'm living paycheck to. paycheck, it doesn't matter if I've just. gone through divorce and I'm financially. ruined, it doesn't matter if you're 20. years old and you don't have a job yet. Like this is the plan we're going to. follow. But so, keep going. The biggest. myth we have about money is if I make. more money, I'll be rich. Mhm. You won't be rich if you make more money. if you don't keep some money.

You got to make money and then keep some. money. So, for 20 years I've been teaching. people to pay themselves first. automatically 1 hour a day of their. income. That means if you have a job. with a 401k plan, Yep. the first hour a. day of your income goes right into your. 401k. >> I don't even understand what that means. What's the first hour of the day of your. income? >> Okay, great question. So, most people. come to work at 9:00. I came here at. 9:00, Okay. >> right? >> Yep. And they work until 5:00. >> Okay. And they're getting a paycheck. from you. Okay.

>> Right? They're being paid from 9:00 to. 5:00. Yes. That first hour a day, whatever you. make, some people make $20 an hour, some. people make $30 an hour, some people. make $50 an hour, some people make $100. an hour. Whatever. >> Some people make minimum wage. Some. people make minimum wage. Whatever it. is, that first hour a day of your income. has to go into a pre-tax deductible. retirement account. >> Okay. So, that could be an IRA account.

or if the company has a 401k plan, that's where it goes. Now, 1 hour a day. of your income equals. 12 and 1/2% of your gross revenue. Okay, so 12 and 1/2% of your salary. >> Yep. is what you want to be. automatically putting into like out of. sight, out of mind and at work. So, now here's the thing. People are. going to like, did he just say I'm. supposed to save 12 and 1/2% of my gross. income? Are you freaking kidding me? >> Yes, that's what I'm thinking cuz I'm. like I'm I'm living paycheck to. paycheck. >> to paycheck.

>> feel trapped and I can't do the things I. want to do. So, why would I take 12%. that I don't have? >> Yeah. So, let's go through the math on this. >> Let's go through the math. The whole. reason you want to pay yourself first. >> Yes. is so you don't pay taxes. So, what. the government did decades ago, over 40. years ago, was create tax laws that made. these 401k plans deductible. Okay. So, that means and this is why it's called. pay yourself first. That means when you. put money in a retirement account, it.

avoids paying taxes. You You skip the IRS, okay, legally. Okay, so hold on a second. So, if I. Let's just say I make 100 bucks in a. day, I'm going to take 12 bucks and put. it in the 401k. 401k. What you're. basically saying is under the law, the. $12 comes out of the 100. Not taxed. >> Not taxed versus is what happens where. if you don't take it out, the whole 100. is taxed. So, the other thing is what.

happens is you put it in your retirement. account, now. it grows tax free. And it grows tax free until you take it. out at retirement. Now, you can always. access it beforehand. You shouldn't cuz. then there's taxes and penalties. So, it. is a vehicle to grow your future money. This is This is when you're putting. money aside for your future. Okay. >> This is not for your house, this is not. for emergencies, this is not for dreams. This is the future. If you're in your. 20s and you get your first job, like. we've got kids now getting their first.

job. My son Jack's 22, he's going to be. graduating from college, he's going to. have his first job. If my kids save an hour a day of their. income from the moment they get their. first job, they'll never have to worry about money. again. That's how simple it is. Because 1 hour. a day of your income buys your financial. freedom. Now, there's actually a lot of. research on this now, too, because we've. been doing this for so long. Mhm. So, Fidelity has one of the largest 401k. plans in the world. As of this month, 565,000.

people who are millionaires inside their. 401k plans. Those millionaires have on average $1.4. million in their retirement account. How. long did it take them and how much did. they save? They have all the data. I'm. going to give it to you right now. It took an average of 26 years. and the average person who has $1.4. million inside these Fidelity 401k plans. is age 59. And they saved 14% of their gross. income, a little over 1 hour. It's like.

1 hour and 10 minutes. So, if you put. 14% away. and then the employer, which most. employers match on top of that, yep, that's that's what these people did that. became 401k millionaires. They became. automatic millionaires in 26 years. These men are ordinary people. Okay, they're ordinary people who simply spent. less than they made. They spent 90 cents. out of every dollar. And they actually. they spent 86 cents out of every dollar. So they still they just saved 14 cents. out of every dollar. Got it. So one.

takeaway for sure, if you work for a. company where there's a 401k, pull it. out, make sure you're taking out at. least 12% and make sure you know what. it's actually invested in something. What should you invest it in? >> Okay, I'm going to tell you exactly what. you should invest in. >> Okay, I'm writing this down. I'm going. to make this super simple. I'm just I'm. just going to pretend like this is for. everybody that's in that behind this. wall for all your young people here. >> Yes. Okay, so I am willing to bet my. life on it that your Fidelity plan Yes. has what's called a target dated mutual.

fund in it. Target dated mutual fund, okay. So what cuz this is what's in the. bulk of all 401k plans now. So in the. bulk of 401k plans you have a target. dated mutual fund. What that does is. that is an. an asset allocation fund that is. professionally managed between stocks. and bonds. and it is created to be rebalanced. towards your age of retirement. >> So higher risk when you're younger and. more conservative when you're older. >> Exactly. That is the my recommendation. for 99% of people who have 401k plans.

because it is done for you. You don't. need to think. The returns have been. just fine. and then just leave it alone. And so we. know people who invest in their 401k. plans and just leave it alone. They're the ones who end up being. financially free. The other thing we see. give me like the full-blown retirement. plan lessons here. Not everybody stays in a job for 26. years. So some people are going to have a 401k. plan here and then they're going to. leave here and go somewhere else. Hate.

to say it just happens, right? >> Yeah. >> [snorts]. >> So what you shouldn't do, number one is. cash it out. Now young people cash out 401k plans all. the time. Why? Because they don't have a. lot in it yet. So they go well, it's. $10,000. It's not that much money. Right. >> And so I want to go on a trip. And they cash it out. They pay taxes and. they pay penalties. It's not just that. you took the $10,000 out and lost half. of it to taxes and penalties. You lost. all the compound interest. That $10,000. in 40 years.

could easily be just the $10,000 alone. could be worth 50 to 100 grand. It's. middle age. They go somewhere else. What they need to do is what's called a. rollover. Okay. So there's two ways to. roll money over. They can go back to. Fidelity cuz that's where you told me. your plan is. They can tell Fidelity I'm. leaving and I want to move it in an IRA. account. And Fidelity can do that on the. phone in 5 seconds. Basically, you know, I got to fill some paperwork. They'll. move it into an IRA account. You can. have the exact same investment. Now it's. in your name in an IRA account. They. didn't leave it here. Okay. That's. really important. You shouldn't leave.

money in old 401k plans. Or. they'll get a new job and they can roll. it into, depending on the plan the new. 401k plan. Okay. That can be a great way to go, depending. on the new plan. The mistake that people make, however, when they roll this money over. is that it rolls into a new plan and it. gets put in cash. And so that doesn't get put into a fund. So. >> Oh my gosh. >> So so that can cost people a fortune.

They I Did you Did you hear that? There. are so many I hear so many want to. share, share, share because this is like. one of those things where it's just like. people You think you're doing the right. thing. >> People don't know. It actually can make. me cry sometimes because people just. don't know. So I'll give you another. thing that happens. Someone's doing. everything right here at Mel Robbins. They listen to this podcast. >> Yes. They signed up for 14%. >> Yes. They heard me say don't leave it at. Mel Robbins and they go to their new. employer.

>> Yep. It gets rolled into their new plan. and the new plan opts you in. at 3%. Ah. So they were at 14% savings. They got opted in at 3% and they don't. get in there and change it. So Vanguard, one of the largest fund. companies in the world, just did a study. on this. Vanguard thinks that that. single mistake alone, that one simple. mistake, you switched from one plan to. another, you were saving at a certain. rate, you got opted in at a lower rate, you didn't bump it back up again. It's.

costing the average person $300,000 in. retirement. What? And it's just you I didn't know this. I. I'm I'm literally want to stop the. interview and go run and pull up like my. stuff and just make sure I'm doing this. right. >> at your 401k plan afterwards. But I I. that's incredible. I know. Now if you can't do the 12%. Mhm. You should still do whatever percentage. you can. Or should you just say do the. 12% and see if you can scale back? >> Okay, in an ideal world this is rip the.

band-aid off and go do the 12%. That's. That's the ideal. >> Why? Cuz what happened You've done this. with millions of people. >> Because when you rip the band-aid off. and you just go do it, you're going to. notice it honestly the first month. Second month a little bit less and third. month you won't notice it. So by the. third month you will have adjusted your. own spending. >> And here's And let me give you another I. cuz I used to speak all the time every. all over the place and I would say to an. audience, especially when you're head in. a in economy like this. Let me ask you. guys a question. Let's be honest for a. second. If I come into the office today and I.

say to you I'm really sorry. Things are tough. I I love you. You're amazing. You We. value you. We You're a part of our plan. long-term. And for right now we need to cut your. pay by 10% but we want you to stay. How many of you are staying? Most people are staying. So like when you're in a room and you. ask that question and people are honest. with themselves, most people will stay. They'll They'll take the 10% pay cut. And then I go. why would you take the 10% pay cut at.

work but you can't give yourself a 10%. pay cut? I'm not even asking you to take. the 10% pay cut. I'm just asking you to. put the 10% away for yourself. You know. what's interesting about that is you're. right. You would take the 10% because. you immediately perceive that it would. be harder to get a different job and. make the money and it'd be easier to. just take the cut or maybe you like the. job or whatever and you adjust. And. what's the second thing you would do? You Well, actually you just said it. You just adjust. >> You adjust. >> Yes. You adjust. >> you get used to the fact that you're. paying less. But we don't think about.

the fact that we could make a decision. to adjust to living on less in order to. take that money, that 12% you're talking. about, and invest it in our own freedom. We adjust reactively. We don't always want to adjust. proactively. Well, I'm thinking about uh. one of our kids, our daughter, who's a. singer-songwriter and she works a bunch. of other side jobs, you know, whether.

it's waitressing or picking up gigs or. babysitting or retail, anything she can. to make money. What does somebody in. that situation do if they don't work. somewhere with a 401k? What are you. making automatic? >> So So actually the single biggest. problem is we don't have automatic. retirement accounts for people who don't. have 401k plans. Oh. However, she can make it automatic. She just She just has to do the work, right? So what does she do? She can go. to, like in the book, Fidelity, Schwab,

Vanguard. I'm just listing firms here. Coinbase, Robinhood, Acorns. She needs. to pick a firm. Yep. In her case, I don't know how much money. she's making but she could start with an. IRA account. >> Okay. So she could do a Roth IRA. They. And so Roth IRAs are after-tax money. Okay. The advantage is the money grows. tax-free and it comes out tax-free. For. young people, if she's going to save it. this year it's going to be $7,500. Yep. If she I would tell her to do a Roth. IRA. Okay. Um if she needs a tax. deduction, she doesn't need a tax.

deduction. She's middle age. So So she. So So she should do a Roth IRA. Okay. So. I started. >> that's working a retail job, they're. paycheck to paycheck, they're like. minimum wage, you can still do a Roth. IRA. Everyone can do a Roth IRA. And all. you got to do is go online and click. some buttons and open it. Okay. >> And then you can have money taken out of. your paycheck. Well, not your paycheck. You can have money taken out of your. checking account. Okay. When you get. paid. So. going back to making automatic. When you make money at a job, that.

paycheck today, most cases, they. actually want to deposit it. automatically. They don't want to give. you a check. And the whole day of giving you checks. is going away. So when the money's. deposited on a retail job, see a lot of. retail jobs actually Mel have 401k. plans. People just don't use them cuz they like. they think to themselves I'm not staying. here. Mhm. That's a mistake, too, because people stay in retail jobs two, three, four, five years and they haven't. saved anything. But if she's not going to use a plan at. a retail job that she has and she opens.

up a Roth IRA. she sets up the account to debit her. checking account the day after her. account is deposited. >> Mhm. She knows when her check's being. deposited, right? So like for for checks. deposited on the 1st and the 15th. the Roth IRA, the account can pull the. money, whatever it is, 50 bucks, 100. bucks, 200 bucks. out of her checking account and move it. into the IRA account. And it can all be. done in the same place. Should be done. in the same place. It makes your life. easier. Got it. So that's the retirement.

account. >> Okay. Okay. Now. she will get to the security account cuz. there's a second thing she should do. >> Okay. And everyone should do this. This. is the automatic plan. Everyone should. do this. She needs to start building a. security account, an emergency account. An emergency account is how is setting. aside money for. an emergency. It's not for a trip. It's not for. Think of 10,000 other things that people. use emergency money for. Going to redo. my house. Going to redo the yard.

No, it's for an emergency. So the money. gets moved into a separate account. >> Okay. Okay. That account should be in a. money market. Okay. The reason is it. should be liquid. Okay. Okay, so a money. market account right now at this. moment's paying about 4%. It's not a big. return but it's safe, it's liquid. So, let's I'm going to I'm. giving Fidelity a bunch of free press. here, but let's just use it use a real. brokerage firm. Okay. She said she deposits her money at. Fidelity. Yeah.

And that money actually goes into a. Fidelity checking account. Okay. Now, in. that Fidelity account that she has, she. has a Roth IRA. Got it. >> money's moved to the Roth IRA. >> Yep. And she has a separate money market. account, separate money. >> account? >> Which is which is the emergency account. >> Okay. Okay. Now, if we're going to get. super sophisticated, then the third. thing is you have a dream account. And. the dream account is for all the things. that she's going to want to do between. now and retirement and emergencies. And so, maybe her dream's to go to. Mexico at the end of the year. Great. She puts money aside every.

paycheck in the dream account to pay for. that. Got it. So, if I'm doing 14% 12 to. 14% in the retirement, what am I doing. in the money market and what am I doing. in the dream account? So, it depends on. how serious you are. Yeah. But, I would tell people to be putting 3 to. 5% in the emergency account. >> Okay. And then I would choose how much. you want to put in the dream account. Okay. The fastest way to get the dreams. done is you fund for it. The way dreams. come true is you fund for them. So, I know people are like, "Oh my god,

this is so much money he's talking. about." So, for people who don't cuz I. skipped over this, for people who don't. believe they can go from 0 to 14%. >> Yep. And I said, you know, some people are. just like their heels are dug in. Or. they're scared, or their paycheck to. paycheck, or Put 1%. 1%. Just do some. Why do just 1%? Like, what benefit does. that have when you're already like. >> Because you're sign Because you're. signed up. And what you'll realize is if. you do 1%, you won't notice it. And then a couple months later you can. go to 2%.

And then a couple months later you can. go to 3%. If you just went from one Here's the. truth, you could do this in a year. You. go 1% January, 1%. February, you just do 1% a year, you'll. never notice your expenses changing by. 1%. And if you did it every month, you'd be. by 12% by. >> You won't notice your income changing by. 1%. There's just no way. First of all, it's not even 1%, it's more like 75. cents, right? For every dollar. It's. like it's not a whole full percent. because you're not paying taxes. So, that 1% if you just did 1% a year.

for a year, at the end of the year you'd. be at 12%. You'd be saving four [snorts]. times what the average American. who has a retirement account saves. That feels so doable. It's doable. Mel, here's the thing. How do we know. it's doable? There's 44 trillion dollars now. in retirement accounts. Let that settle for a second. There's. four This is just in the US. There's 44.

trillion dollars in retirement accounts. IRAs, 401k plans, all these different. retirement accounts. This has all happened in the last 30, 40. years, but the most of it's happened. last 20 years. What should you I forgot to ask you, what should you invest the dream account. in? Is that a money market account? Is. your dream a year? Is your dream in two years? Is your. dream in three years? Is your dream in. five years? Like, if your dream's to buy. a house, just like it took you 10 years to get. out of debt, most people can't just turn. around and buy a house. Mhm. So, if. you're like, "Look, I'm 22 years old,

I really someday do want to buy a. house." We'll talk about the difference. between renting and owning. It might take you five years. So, the. longer you have, the more aggressive you. can be. So, if you're telling me you. need the money in a year or two, I'm. going to have you put it in a money. market account. If you tell me you don't. you're not going to have this dream come. true for five years, I'm going to have. you put it in a balanced mutual fund. That's a That's a mutual fund that's 60%. stock and 40% bond. >> Okay. If And that I'm being conservative here, right? So, if you'd say to me it's seven.

years out, I'm going to have you invest. probably all stocks. Now, speaking of. stocks, should you try to pick. individual stocks? Absolutely freaking. not. Really? >> Absolutely. Even even though I started. by buying my first stock in McDonald's. at age seven and I bought my second. stock at nine in Disney. And Okay, so. I'm going to talk out of both sides of. my mouth. I learned how to invest cuz my. grandmother helped me buy my first stock. in McDonald's at age seven. Okay. At. McDonald's she said to me, you know, there's three types of people in the.

world. This is how the world works. There's. people like you who come to McDonald's. and you spend money, you're called a. consumer. She goes, "There's people who work here, they're employees, they make minimum. wage. That's a lot of people in America, it's a tough way to make a living. And then she said, "And then there's. owners, and the owners own this place. And I'm going to teach you today how to. buy stock in McDonald's so that when you. come here, you're an owner.". And she took me home. and she took out the Wall Street Journal.

and she circled MCD, which is the ticker. even back then for McDonald's. It's crazy, it's a long time ago. And. And she sat me in front of a TV screen. with the you know, the TV screen where. the tickers go across the bottom. You. know what's funny is most people don't. even know what those are. Those are. stock symbols. And she's like, "When you see MCD, I. want you to call out the price and write. it down. And then you're going to come back here. and we're going to look at what price. this is and we're going to look in the. newspaper and then tomorrow we're going. to go down to the the brokerage firm, we're going to buy you one share of.

McDonald's and you're going to own a. piece of this restaurant. And you'll now be in the American system. of investing." Mhm. I was seven years. old. At nine years old I'm with her at. Disneyland. I'm like, "Can you buy this. place?" She's like, "Yeah.". So, she So, she taught me at a young age. to think like an investor. Now, I have. done the same thing with my kids. My. kids don't own McDonald's, they own. things like Shake Shack. Right? It's been a great stock. Uh but. they own things that they're interested. in. They own Amazon.

They own Meta. Um. They got a handful of individual stocks. However, my kids also know I don't want them. owning individual stocks. I want them. owning index funds. So, they got a few individual stocks, but they have a portfolio I'm just. giving you like the behind the scenes of. my the Block family. >> this is exactly what every parent wants. to know. What are you doing with your. kids? >> have my kids in portfolios almost. identical to mine. So, I have them They're small portfolios,

but I have my financial advisor. build the same portfolio that I have, little bit more aggressive cuz they're. younger. And I have them in these portfolios of. ETFs, exchange-traded mutual funds, because that's the best way to invest. That's That's diversification, doesn't take time, low cost, tax. efficient, and you won't screw it up. >> Everyone wants to know what fund are you. in? Let me give you one fund. Okay. Because. I've got all I literally have all these. funds listed in here. >> All right, what page you on? What I'm on.

page 135. Um. So, there's a fund by Vanguard. Yep. Okay, this fund is called the Vanguard. >> I'm in that one. Total Stock Market. >> Yeah, I know I'm invested in that one. >> of you who aren't invested in this, the. symbol is VTI. If you buy the ETF, this. fund has 3,600. stocks in it. >> Meaning you're basically an owner in. 3,600 companies. >> an owner of America. Okay. >> Right? So, So, that's stock So, like if. a person's like, "I don't know what to. start with." Like you took your.

daughter, she'll stick the money in the. Roth IRA in the VTI fund. Okay. She's. got 3,500 stocks. So, I list all the. different index funds in here. Um. [snorts]. start with an index fund. It just makes. your life easy. And also, I want to say. something, this is really important for. young people. The greatest myth for young people is. that that's the time to be aggressive. with your money and take risk. Let me explain that. >> Wait, what? You're not supposed to take. risk in your What Okay. >> Let me Let me explain what I mean when I. say this. Okay? Because this is where I. think people get led astray.

Because people say all the time, "When you're young is when you should. take the risk." And what happens with. 20-year-olds, 20-somethings, and. 30-somethings because they see this on. social media and they hear this, they take the risk on crappy. investments. They're buying meme stocks. They're. buying meme coins. They're looking for. the NFT. They're look You know, they're. They're seeing all this garbage on. social media that they're hoping to get. this huge return on. And then they they lose everything. Mhm.

And what happens is you get people who. are gets to their you know, they save. money and then they make then they lose. all the money and then they save money. and then they lose all the money and. they get to their late 20s and their. early 30s and they're like, "This game's. rigged.". And then they stop investing. Whereas if they had just invested in an. index fund, they'd have something to show for it. All right, so let's talk about compound. interest. Mel, I'm so glad you asked cuz. compound interest is the eighth miracle. of the world. That's what Einstein said.

So, I actually brought a prop for us. Okay. Okay. Went to the bank yesterday, kind of. shocked them. What Wait, how much money is that? >> of you who are listening and you can't. see me, how much money would you guess that is, by the way? Uh. Are Are What are What are those Are they. >> This is real money. That's real money. I. have no idea how much money I mean, I. don't know. That's a couple thousand. dollars. >> so I'm holding $10,000. You're holding. $10,000? >> in real cash. This is a very important amount of money. I'm holding here.

for many reasons that people will. probably understand. When we've done surveys and we have. asked people, "How much money would. change your life?". the number one answer has been $10,000. Which is fascinating, right? It's not. 100,000, it's not a million, it's. 10,000. And usually the reason is it. would help them either pay off their. credit card debt or give them enough. financial freedom to leave their job or. the relationship they don't want to stay. in. Got it. So, $10,000 buys freedom.

from a job or a relationship. >> for many people buys freedom. Now, here's the really interesting question. Okay. How much money does it take to blow. $10,000. in a year a day? How much money you have to spend a day. to blow $10,000? So, I'm holding a brick. here of 10 grand. Okay. A lot of people. would like this brick. Yes. It's $27.40. a day. Wait a minute. $27.40. a day is 10 grand.

Okay. Now, what happens, Mel, if you. invest $27.40. a day? This explains compound interest. If you invest If you invest $27.40. a day and you're in your 20s, and you do this until for 40 years at a. 10% rate of return, which is what the. stock market has averaged for 100 years, you use that fund I told you about, the. VTI fund, you'd have $4,424,000.

Say that again. If you invested $27.40. a day, which comes out to $10,000 a. year, in 40 years, you'd have $4,424,000. That's a fortune. Now, the question is, are there people who are blowing $27.40. a day on stupid Yes. Yes. Every. one of us. Well, probably there are. people listening who are like, "I'm. not." But there are There are people. There are a lot of us doing it, right?

Because everything's so expensive now. It's takes nothing to blow $27.40 a day. Now, give me examples of how you can. find that money. Because Cuz I think. when you feel, having been somebody that. not only was in paycheck to paycheck for. decades, but then was in a situation where I. had no money, and was in massive amounts of debt. But when you're in paycheck to paycheck, where can you find the 20 Give me some. examples of where it's hidden. You. You've got to go through your lifestyle,

right? I mean, everything today is about. convenience, right? So, people are. getting food delivered to them every. single day. They're They're not really paying. attention to what that's costing. People. are taking Ubers every single day. I mean, there's just You've got to look. at your own lifestyle. Everybody's got. something that they're wasting small. amounts of money on. People don't think like if I spend $5 a. day on something, that's $150 a month. That's well over $1,000 a year. It's. five bucks. Right? But if you're.

spending again, $27.40, it's 10 grand. I've done podcasts in the past in the. past where I've talked about a 100-day. savings challenge. All right, let's do a. 100-day savings challenge. What is that? The 100-day financial challenge that I. have for people is this, especially people who do not have $1,000. in savings, cuz there's a lot of people who don't. have $1,000 in savings. So, for 100 days, save $10 a day. Where am I putting it? In a savings. account? >> Literally, you for you just start up by.

putting it in a jar in your house, but. you can put it in a savings account. Right? Save like my grandmother where. she put the money in a in a coffee can. Save it for 100 days. And what Pick. anything. It could be a dollar. Just to. prove to yourself. I actually like the idea of putting it. in a jar cuz you can see it. And then you're like, "Oh, I'm doing. it." Yeah. So, go and [snorts] think about your. life and see Am I Is it Am I wasting $27. a day? $27.40 a day on something? I. guarantee you I am because I guarantee.

you there are subscriptions I don't even. know about that are draining out of my. bank account every month that probably. add up to $27 a day. So, let's talk. about people though who are listening. and they're not in their 20s, they're in. their 50s. Yeah, okay. So, let's pretend. I'm in my 50s. I'm in a situation where. I've heard this podcast, and now I'm. like, "Oh god. Uh how do I get going? What do I do? I. didn't do it early enough. I've missed. the window on compounding interest. Where do I start, David?".

So, I'll tell you a classic story. This. is This is a really funny story, actually. One of my first book signings. that I did for The Automatic Millionaire. was in New York City at Barnes & Noble. So, I do the book So, I do the book. event, right? And then And then I take. questions from my audience. And this woman stands up and she's like, "David, I love you. I've read all your books. I've read Smart Women Finish Rich, Smart. Couples Finish Rich. I got the. Finisher's Workbook, and I'm going to. get The Automatic Millionaire.". And she says, "But you haven't written. the book that I need." And I go, "Oh, well, all my book titles, for the most.

part, have come from readers. What do. you need?" And she goes, "I need Start. Late, Finish Rich.". Ooh. And the room cracked up. And I'm like, "Okay. Hadn't thought. about that, but. how old are you?" And she says, "I'm I. think I think she was in her 50s." Okay. And I said, "Okay, well, let me ask you. a question." And go, "Are you married?". She said, "Yes, I am." I said, "So, my. question to you would be, could you save. $20 a day?". More than what you're saving. Could you. save $20 a day or more? She's like, "Yeah, I could.".

I said, "Could your husband save $20 a. day?" She goes, "I would make him.". >> [laughter]. >> Everyone laughed, right? I go, "All. right. So, that's a lot of money, actually. That's $40 a day between the two of you. If you just put that in a gave her an. example of a mutual fund, invested that. for the next 15 years, here's what it. could be worth.". And the answer is it would be worth. close to half a million dollars. Wow. And she's like, "Okay. So, I could So, you're telling me that. I could catch up a little like that I. could catch up a little bit, right?".

I go, "Let's just play this out. At 65, is it better to have a half a. million dollars or have nothing?". She's like, "It's much better to have. half a million dollars." Mhm. I said, "Great. So, start with the $20 a day.". She said, "Okay. I can do that." Right? Cuz that's the. whole thing. You got to figure out what. can you do. Some people who are. listening me right now can do more than. $20 a day. You got to come up with what can you do? But you But here's a big thing. Your 50s. are a beautiful time to save and invest. and catch up. And the reason is. your kids, hopefully, are finally gone.

Right? The kids are gone in many cases. by their late 50s. These kids are out of. college. So, the only thing you got to take care. of is you and maybe your your partner. So, you've got the time and money and. still the energy to catch up. Yeah. What. you don't want to necessarily be doing. is trying to catch up in your late 60s. Because the energy level's not the same. You might not even be still be working. So, you got to take advantage of your. job. You know, what I what I just got in. listening to you. is that there's an enormous.

mindset shift. around even the purpose of work. Because. you're right, I think a lot of us are. busy with our head down. making money to pay for our life, when. really what we want is freedom. And if. you don't have a plan, and you don't you're not clear about the. vision that you have for your life, you. are going to be on that treadmill. forever hoping it works out. 100.

[snorts]. %. >> I I believe everything you're saying, and it feels doable, and it feels very hopeful. You can kind. of see the light at the end of the. tunnel. And as somebody who has been in. situations in my life where I've been in. crushing [snorts] debt, like just running myself into financial. ruin, the shame that you feel Like it. can be so lonely, and really dark, and hopeless. Like.

that's how I felt. Like I felt hopeless. I felt like the only idiot in the world. who had screwed this up. And so, I'd. love to have you talk. to somebody who's listening right now. who's really in debt and just. overwhelmed. by the idea of digging yourself out. Because I remember, David, like there. It was like 6 months that I didn't open. up bills. Like I just could not even. open the bills. >> Total denial. Yes. I always say that.

this happens all the time. If you don't look at it, it's not real. Right? So, a lot of people don't. actually look at their bills because. they're like, "I can't I can't face to. look at them." Yes. By the way, I didn't. even talk about I got into credit card. debt in college. So, I've made multiple. mistakes. I remember having so much. credit card debt junior year that, like. you, I would open my bills, but I would. open my bills with some stupid mail. I. would open my bills and cover my eyes. Okay. >> [laughter]. >> So So, I'd be like I'd be like this. And. then I would And then And then. And then I would open the bill, and I. remember once sitting in my apartment,

>> [snorts]. >> I'm a junior. I've got like $12,000 in. credit card debt, which were was all on. stupid I didn't need to buy. And I. remember opening my bill and the room. spinning. >> [laughter]. >> Because I was so sick that I had done. this to myself. Yeah, and you don't even. remember what the hell you spent it on. >> I'm not even talking about like medical. debt, right? Like this Some people get. hit with things that they can't control. And I will tell you, it took me 3 years. to dig out of that credit card debt. after college, and I carried a charge card for 30 years.

and a debit card. I did not have a. credit card literally until maybe I. don't even know, 6, 7, 8 years ago. And I have never carried credit card. debt since I got out. But I got into. credit card debt twice. Because I got. into credit card debt sophomore year. with to $5,000. Cuz Cuz most people don't get into debt. once, by the way. If you've gotten into. debt and you've gotten out, then you got. back into debt, that's totally typical. Why is it typical? Cuz it's a habit. Mhm. So, the habit I had was spending money that.

I didn't have on things I didn't need to. impress people I didn't know. Right? You've heard that phrase before. Talk to me about how do you do it? You've maxed out your cards, you've. missed the payments, your credit score. is in the gutter. How do we turn this. around? Credit card. If you're in credit. card debt, how do you get out? I have a. system I call DOLP. DOLP? >> DOLP. It's It's in The Automatic That's. what I feel like when I have credit card. debt. DOLP. DOLP. It's in The Automatic. Millionaire book. DOLP stands for. done on last payment. Done on last.

payment. Okay. >> So, this is my system that I've taught. for decades on how to get out of credit. card that is very very simple. >> Okay. Just takes time. Okay, so first. thing you do is you literally take all. your credit cards out. And this day and age you got to go print. your statements. Okay. So take take the. credit cards out of your wallet. Go. print your statements cuz you're doing. everything online. Go back to my file folder. Go get the. file folders folder for every credit. card. Take one piece of paper. Put the.

credit cards down on the piece paper. Write down the debt that you have. >> Okay. Write down if you made minimum payments. How long would it take you to pay all. that off? So you can do a simple It's a super. simple calculation. Like if your minimum. payment is $100. >> Don't they print it on there? They print. it on there, don't they? Yeah, they do. Um. you know it's funny that I used to I. used to rail about that issue. You're. right, they do that. Um. I talked about that on a PBS show that. it wasn't be legal to not know this. So. you're right, you you can print your.

statement and you can look at that. >> It'll tell you it's like 20 years or. something. >> So take a look at the number though. I. want you to know how many months it is. Then look at the interest rate. Once you have that down, what I want you. to do is I want you to this is a. mathematical formula but I'll keep the. formula simple. I want you to pay the. smallest credit card off first. Regardless of the interest rate and I'm. going to explain why. By by smallest. what do you mean? The smallest balance? >> Smallest balance. Okay. Okay, so it. doesn't matter if it's the lowest.

interest rate. You take the credit card. with the smallest balance. >> Or the highest interest rate. Like let's. say that you have a credit card with 29%. and credit card with 0%. Logic would. tell you that you pay the one off that's. 29%. I want you to pay the smallest card. off first. Why? I don't know. I want you. to reduce the amount of credit cards you. have as fast as you can. So most people don't have one credit. card. Most people have three four or. five six credit cards. And they're traps. Because if you pay. your bills late.

you will get hit with a $30 late fee. and your rates go up. So the credit card companies and the. banks make billions of dollars a year. off late fees. So you need to reduce the amount of. credit cards you have as fast as. possible. >> Mhm. So you take the small card, you pay. it off first. And then checkmark. You see yourself. make progress. Now you go to the second. card that's small. In terms of the. balance. The next smallest balance. >> Next smallest and people. >> And this includes not just like. MasterCard and Visa and Amex. This is. like also store cards. Like all the.

stores that have cards, all that stuff. Don't please please please please please. say no to these people for those cards. Do not do those cards. Do not take the 10% discount because. that card then it's going to get jacked. up to 20% interest or 25% interest or. 30% interest. Stop taking credit cards. out, okay? So. then once you've got the order that. you're going to pay your cards off, now. we got to start tackling the interest. rate. Okay. Okay, so how do you get the. interest rate lower on your cards?

>> I don't know. There are multiple ways. You've even. talked about this. I've heard this. You. can play the game where you switch from. one card to another. Right? A lot of. times you can do the balance transfer. Okay. So if I've got a card that's 20%. maybe somebody will let me transfer to. them at 0%. However, you got to be very careful. because those cards are designed to also. have you have if you get caught with a. late. late bill Oh, they change the interest. the rate goes right up. It's all in the. paperwork. So nobody wants you to have a. credit card at 0%. So you that's also.

why you have to pay your credit cards. automatically. So every credit card you. can go in and you can click. pay minimum automatically and have it. debited from my account. So your credit card bill should actually. be automated on the minimum balance. Not the maximum balance because I want. you to look at your bills. But I want the minimum balance so that. you never have a late fee. Mhm. Now what. you can do to make this easier for. yourself is the credit card companies. will move the time that they bill you.

And they will. >> They will? Yeah, they'll coordinate to. the date that you ask them. So let's say. you're paid on the first. and you have a credit card coming due on. the 13th. Well, all of a sudden you can't pay the. bill cuz you're at the end of your two. week cycle. >> gosh, so you could call them and say can. you bill me on the second? Exactly. Oh, I didn't know you Could you do that with. other bills? Yeah, many case most people. do not care when they're billing you. You just tell them when you want to be. billed. And you know some people you you'll line. all the bills up same date.

Some people you'll spread it around. You'll have two bills in the first two. weeks, you'll have two bills in the. second two weeks. I feel like I need to. take a day off of work and spend an. entire No, I'm I'm dead serious. Like I. need to have a date with myself about my. financial life. And just give myself a Saturday or a day. probably during the week where I do a. little staycation. and I just do every single one of the. things that you're talking about. It is.

a great idea. I call it a money date. Are you you actually have a word for a. money date? >> date. So in Smart Couples Finish Rich I. teach couples to plan a money date. And they're like that doesn't sound. romantic. No, but you're going to sit. down together and plan a specific period. of time where you're both ready by the. way because most financial conversations. for couples take place when one person's. ready and one person's not. >> Mhm. And the and the person who was not ready. was like hanging out watching TV doing. whatever and then like we need to talk. about the bills. And it's like. >> [laughter].

>> So when you go look we I want to have a. money date. I listen to Mel Robbins'. podcast. How about we start with. listening to the podcast together. Let's. let's sit down together and listen to. this podcast. Let's make a list of what. we need to do. That'll be our second. money date. And you do money dates once a month. until you've got the stuff done. And. then once you've got the stuff done, what you do with your partner is you do. at least once a year. you know. I call it the money anniversary, you. know, where you sit down once a year or. twice a year and you actually check in. on everything. Um. if you have a financial advisor that's a.

great time to do it. So. people will say to me Mel all the time. around these ideas I don't have the. time. Yes. And you know what? That same. person's for sure binge watched. something on Netflix this year. You have. the time. You have the time. >> You have the time. I mean the amount of. people that talk about these television. shows. You we have the time. The amount. of time we spend on our phones, we have. the time. It's just prioritizing. What. do you want to say to somebody who's. watching us or who's here listening and. learning right now with us and they're.

convinced they're never going to be able. to afford to buy a house? Well, okay, so first thing I would say. is I would prefer that you don't believe. that. Yeah. [laughter]. Because what's happening is a lot of. people are believing they can't buy a. house cuz it's so cuz it's hard to sort. of say to buy a house. Yeah. So I I. would start with the basics. First. things you should know are the facts. It is an unfair truth that homeownership. is the single most important thing in. America. that creates generational wealth.

So when you look at who is. disproportionately. not as wealthy as others, it's families. that don't own homes. Wow. Because what. happens is families that own homes have. a net worth that gets inherited. Mhm. Families that rent they don't. So you got to figure out how to get into. your first home. And the key to buying your first home is. your first home is just never a dream. home. Everybody wants the dream first.

Your first home is not a dream home. Your first home is not in the. necessarily in the neighborhood you. want. Your first home is smaller than. anything you want to live in. Your first. home is almost always not as nice as. what you can rent. You know, I read that 40% of home buyers. today are getting assistance with their. down payment from family. Absolutely. positively believe that. How can people. whose family can't support them or won't. give them money ever buy anything? They. will have to buy in an area that's more. affordable. Or like I know a bunch of.

young couples who have been living with. their families. And saving money for a couple years. And. then they have a down payment. >> 100%. Now if you live in a major. metropolitan area because that's where. your job is, but you do want to own a. home. >> Yeah. what do you recommend? Buy the. smallest thing you can get into. Okay. Buy studio. Buy smallest thing you can get into. Maybe you got to go 10 minutes outside. Like what do you do if you really are. just in an area whether you're going. there for graduate school or you had to.

move there for a job and you've moved. from an area like Boston's crazy. expensive and so people will move here. to either work at this company or to go. to graduate school or move here for a. different opportunity and. it's like 5x the cost of where you've. come from. >> This happens all the time. You move to. cities that create job opportunity, it's. more expensive to rent. You're not going to be able to buy. something. Then you need to actually do. your best to save more money. I think you fund the dream account which. is for a house later and then maybe.

don't stay in Boston. I want to go back. to something that you said earlier. that really surprised me which is that. the average age of widowhood is 59. Yeah. So let's say you are in that. situation where it's later in life. You thought you were going to doing the. right things. And whether it's a divorce or widowhood. or cancer diagnosis or your adult kids. are struggling and now they're draining. you dry. and you feel like it's too late.

Is it too late and what's the first. thing to do if you feel like you're in. that moment where life has smacked you. across the face and you did not expect. to be in this position? >> Yeah. When you go on boats they do you know. they do those fire drills, right? Those. drills where they put you in the you. know here's where you go. >> Yes, yes. >> you put the life vest on. Here's where. the boats are. You're on a plane, here's. how the here's the air mask. The drill you should run, this This a.

horrible drill and I'm sorry to give it. this way, but it's the truth. You should run a drill if you're. married, which is if my husband or my. wife dies tomorrow, what would I need to know? And the answer is. everything. You would need to know. everything. You need to know where all. the accounts are. You would need to know. the passwords. You would need to know if. your spouse has left 401k plans behind. You would need to know if there's an. insurance policy. You would need to know where the will.

is. You would need to have a will. Right? Like six out of 10 people who are. listening don't have wills. A lot of people have wills, their wills. are woefully out of date. If you have a. will that's 10 years old, it's. completely out of date. If people get their wills done, they. also hide their wills. Then the person can't find the will. People put their wills in safe deposit. boxes. People still have safe deposit. boxes. Then they hide the key. Now the will's really missing because. it's very hard to get into a safe.

deposit box if you can't find your key. So, all of this stuff people sit in my. seminars and they're like, "Oh my god, he's. There's a big checklist here." You're. right. That's called real world. So, you want. to get this all done before that day. happen. By the way, you want to get this. done before you If you're thinking about. divorce, cuz gray divorce is a huge issue right. now. Lots of people getting divorced after. the age of 50 and 60. And most of those divorces are actually. from women. The women are choosing.

divorce. Really? >> Yeah. And I will tell you this, you do not. want to go out and suggest divorce until. you know where all the money is. If you don't know where all the money. Sorry, guys. Guys, this is true for you, too, by the way. Uh if you don't know. where all the money is when you go to. get divorced, you don't get half the. money. Wait, if you don't know where all the. money is before divorce comes up, you. will not get half the money. >> There's no way. Because people will hide it. Definitely. Wow. You look at me like, "Yes, this is. what goes on in the real world." So,

like don't just randomly pop off and say. you want a divorce. You need to know. where all the finances are. Wow. I'm sorry. I'm sitting here like, "I got a lot to do." Like I'm not. thinking about divorce, but I I I'm I'm. not sure I know where everything is. >> Okay, so now now we'll go to the part. that I didn't answer. Um That Now it's. hit. Mhm. You are now a widower. You are. financially in trouble. You are really. uh now you don't like you're paycheck to. paycheck or you're devastated in terms.

of your savings. By the way, this is. >> late? >> It's It's not too late, and let's just. be honest here. This is not always. because you're devastated. Like the This. is also just because you're left in a. mess. Uh You know, I've just lived. through this tragically. Um. My dad just died. My dad died in August. And my dad was in charge of all the. money. My dad managed money his entire. life. My mom was not involved looking at. the bills. She wasn't involved. You know, God bless. my mother, she's amazing. She's my.

biggest fan, my biggest supporter, but. my dad handled everything. And my dad. would be like, "Bobby, I've got this.". And And we would say to my dad in the. last couple years of his life, "Please, Dad, let's automate these credit card bills. Let's automate everything. So, if. something happens to you, Mom's okay. And we don't have to step in. here and start figuring all this stuff. out." And he'd say, "Oh, it's all fine. Don't worry about it." Now, my mom's. lucky. She's got two kids in the. business of managing money. What What.

did we have to go do for my mom? Cuz. this is what people have to go do. We. had to go into my dad's office and sit. down and figure everything out. So, what. would What do you have to do? You have. to figure everything out. You have to. figure out like, where all the bills? Where are all the credit card bills? How. many credit cards does Dad have that. they're using? Where was he paying them? Where were all. the bank accounts? You have to find everything. So, there's. just what you end up doing the moment. someone dies is after you deal with the. funeral,

the first thing you deal with is the. money. Right? Cuz you know, you're you're. grieving, but now you have the estate to. deal with. So, there's a lot of pieces to an estate. And we were able to help my mom do that. I don't know what my mom honestly would. have done without the two of us because. you're not in a good mental state, and you got to figure this stuff all. out. So, what I would tell you if you're going. through this, pull together everything. And And I'm a big believer in old school.

methods. So, I'm the guy that takes the goes and. buys a box of file folders. That's me, too. And I would literally go buy a box. of file folders and a bunch of my books. that I call it the Finish Rich File. Folder System. I had 13 file folders that people need. You buy a box of file folders and you. start putting everything in file. folders. So, you're like, "Credit. cards.". These are all the credit cards I got to. figure out. The will. Wait, there's nothing in that file. folder. I need to get the will done. Like you you go through the list of. things that you have to deal with.

And then you basically have a to-do. list. You're like, "What am I going to. tackle first?". >> Yep. And you typically tackle the things. that are the biggest emergency. We've. We've talked a lot today, David, about. how to prepare. for all of the curveballs and frankly. awful things that can happen in life. How has the experience of loss. changed you? I've lost three best friends in the last. 2 years. I'm 58 years old. By the way, they're. all guys. So, my best friend from high school and.

my best friend from Kitu My best friend. from high school, my best friend from. college had passed away. Wow. I know. And it's like We're too young. >> We're too young. But you got to I'll. tell you what, you got to live every. life to to fullest every single day. I. always say live rich now. Live your life. now. Because you know, all the things we. hear, be grateful for what you have, appreciate every single moment. I love. the fact that you tell everybody you. love them. By the way, you you started. by telling me I I love you back. You.

know, I My friends, I don't leave my. friends without telling them I love. them. Same. And people don't do that. And it's interesting when you actually. look someone in the eyes and you're. like, "I love you." Right? And And cuz. people aren't getting a lot of that. Yeah. >> The other thing is people aren't getting. a lot of good jobs. My father um when he was he was in. hospice for the month of August, I was there when he took his last. breath. And I knew that this was going. to be the end. I just had a sense. And I sat next to him and held put my.

hand on him, and I spent like 2 hours telling my dad. He wasn't talking then, but I felt like he could hear me. And I. spent the last 2 hours telling him. everything that he had done in life that. he'd done a good job on. And I I know he heard me, right? And I'm. like, "You did such a good job, Dad. And [snorts] And you can go now. It's okay. And I'll take care of everybody.". And I think I'm. think we have a whole lack of good job.

going around. I think we need to be. telling people good jobs, you know? We just need to be going around and uh. picking each other up more. I agree. You. know, you did a really good job here. today, David. If uh the person listening takes just. one action today. based off of absolutely everything. you've poured into us, what do you think the most important. thing to do first is? Leave this podcast with this. I want you to pay yourself first. 1 hour.

a day of your income automatically. for life. That's my goal for you. Pay yourself. first 1 hour a day automatically for. life. And if you can't start with that, start with something. Leave this. podcast, put down the phone, and go do something today where you are. saving money automatically. And it will. change your life. And if it only starts. with a little thing, $10, $5, anything, the moment you start to do that, you.

choose yourself. Mhm. You know, your. whole beautiful book, the world-changing. book, the Let Them Theory. This is let me. Right? All the problems in the economy, all the problems in the world, that's. all let them. >> [laughter]. >> It is. Ev- Everything that we've talked about. today that it involves you doing it is. let me. This is like let me financial. planning. >> [laughter]. >> And you know, with 7 million books out, I think a few people can relate to that, but like. that's it, man. People spend so much.

time in their story. of. money trauma and the psychology of this. And great. That's let them. Now today, decide. wh- This podcast is over. What's the. first thing you're going to do? That. What's your first let me financial. decision you're going to make? Cuz when. you make that decision, that's the. beginning of your life changing. And I also love that it can just be the. decision, "I'm done living paycheck to. paycheck. I'm done doing it this way, and I'm going to figure this out.". David Bach,

I love you. Thank you for being I love. you back. my friend. Thank you for the. work that you do. You're truly a gift to. all of us. Thank you. You're welcome. >> Very much. This [laughter] has. This has been amazing. It has been. And. it's also amazing that you're here. I. want to thank you for taking the time to. listen to something that will set you. free. And in case no one else tells you, I. wanted to be sure to tell you as your. friend that I love you. You're doing a. good job. We're going to take that one.

from David. You're doing a good job. And. there's no doubt that if you take what. you just learned today, you share it. with people that you care about. We all. need this wisdom and these [music] tools. and this truth in our life, that your life will get better. All righty. I'll see you in the very. next episode. I'll be waiting to welcome. you in the moment you hit play. And thank you for watching all the way. to the end here on YouTube. I love that. I love that. And thank [music] you by. the way for hitting subscribe. If it's.

lit up, it means you're not subscribed. Just take a second, hit that. It's free. It's a way that you can say, "Hey, thanks, Mel. Thanks for showing up here. and doing your best to [music] support. me in creating a better life." And that. way by the way, if you're a subscriber, you're not going to miss a thing. What. should I watch next? Oh, you're going to. love this one. And I'll welcome you in. the moment you hit play.