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- [00:00]
A
Hey, everyone, and welcome back to the Rich Habits podcast, a top 10 business podcast on Spotify brought to you by public.com by the end of this episode, you're going to completely rethink the way that you make your financial decisions. Because the single biggest predictor of whether someone builds wealth is not their income, is not their education, and is not luck. It's time horizon. How far into the future you're making decisions determines everything. My name is Austin Hankwitz and I'm joined by my co host, Robert Krok. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million, and I'm a multimillionaire in my early 30s with a background in finance and economics. As the show name might suggest, every single episode we talk about rich habits as they relate to business, finance and mindset. So, Robert, specifically what are we talking about in today's episode?
- [00:53]
B
In today's episode of the Rich Habits podcast, we're going to walk through three levels of time horizon thinking that you have to understand to predictably build and maintain wealth throughout your lifetime. Think in weekends, think in seasons, and think in decades. Each one represents a fundamentally different relationship with money. And as we go through them, you're going to recognize exactly where you're at right now and more importantly, what steps to move up and get through it.
- [01:20]
A
Robert, We've got a ton of studies. This is a well studied episode right here. So we're going to, we're going to hit y' all with some stats, starting with this one. According to a 2024 study from the National Bureau of Economic Research, individuals who scored highest on long term orientation assessments had a net worth of three and a half times higher than those who scored lowest, even after taking into account income and education. So same paychecks, same degrees, but completely different outcomes, with the only variable being how far ahead they were thinking when they made their financial decisions. So that's the theme of this episode. It's a mindset focused episode. And I'm so excited, excited to jump in.
- [02:06]
B
I am pumped as well. I know we've alluded to these topics over the years, but I love all the studies and facts so people don't think we're just making these things up. And that leads us into our first section, which is weekend thinking, the paycheck to pleasure cycle. You guys have heard this talked about forever and ever, and we're going to break it down for you. Weekend thinking means your financial planning window is five to seven days. Money comes in, money goes out, and every decision is filtered through one Question, can I afford this before my next paycheck? A 2023 Bank Rate survey found that 56% of Americans cannot even cover a $1,000 emergency expense with savings. And the median household income in the US is roughly $80,000 a year. So that's not a poverty problem, that's a time horizon problem. When your planning window is one weekend, there's no room for an emergency fund, no room for investing, and no room for anything beyond the immediate.
- [03:06]
A
And let's just like pull out for a second. Because if I'm listening to this episode, someone saying, okay, well, like, $80,000 a year is not that much money. No, let's, let's flip that on its head. 2024 survey from Lending Club says that 25% of households making over $150,000 a year are living paycheck to paycheck, where it says a quarter of the people making six figures have the same time horizon as someone making thousand dollars.
- [03:33]
B
Right?
- [03:34]
A
How do I go from this paycheck to the next paycheck, one weekend to the next? The income went up a lot, but the thinking, the actual deployment and thoughtfulness of how I should be treating this money stayed the same. They have the more expensive weekends, right? The nicer dinners, the bigger car payments, the better vacation. But the operating system remained identical, which was the problem. So every dollar is spoken for before the next check hits, keeping them in this paycheck to paycheck cycle.
- [04:00]
B
Yeah, Austin, we see it all the time. People level up, they get a bonus, they get a raise immediately level up their lifestyle rather than doing what we're talking about here. And behavioral economists call it present bias, the tendency to overvalue immediate rewards relative to future ones. A famous study from Princeton found that when people are offered $50 today versus $100 in a year, the vast majority of those people take the $50. Not because they can't do the math. They know that $100 is more than $50, but because the immediate reward activates the emotional brain, while the future reward only activates the logical brain. And in that fight, emotion wins every time.
- [04:42]
A
This is why thinking in weekends is just so hard to break. It feels irrational in the moment. You worked hard all week. You deserve to enjoy your money. And that's true. You do deserve those things. But thinking only in weekends creates a cycle where 100% of your income is allocated to the present, which means your future self gets nothing. No investments are compounding for you. No emergency fund is growing in a high yield cash account on public.com, you're essentially borrowing from a future version of yourself who has no say in that decision. So let's do a quick example here, Robert. If a 25 year old just took $100 a week, which at its core $100 a week is probably like one nice dinner out or a couple rounds of drinks with your friends or like a impulse buy of something on TikTok Shop or Amazon, right? Like 100 bucks a week and they put it in the s and P500 and had a historical 10% average return. That $100 a week turns into $1.1 million by the age of 60. Now you're, you're saying, okay, a million bucks, whatever I don't want. Like that's not that much anyway. Okay, but it's a million bucks you didn't have anyway. So it's like I always, I hate that argument. I get it all the time in the comments section in the DMs, like, what's 900 grand going to be for me in 40 years? That's $900,000 more than you had, right? So like, how about that? Better than a poke in the sharp stick. So you can argue inflation or whatever you want to do, but it's a million bucks. And it's a million dollars that you would not have because you're thinking in that weekend to weekend, week to week, paycheck to paycheck mentality. Now, that 1.1 million was not 1.1 million of contributions. It was 918,000 of growth and 182,000 of contributions. That 918,000 came from you doing absolutely nothing but being patient and forcing yourself to have a long term time horizon. But that type of compounding can only work for you if you give it time. And weekend thinking is the opposite of compound interest.
- [06:40]
B
Yeah, I love your example of people giving you pushback on this because I get hate all the time in videos when I say if you only put away $100 a month, this is what you'll have or $200 a month. And they always want to push back and say it just doesn't add up to much, which is just incorrect. But also they never think about it that you're not going to just put the $100 a month away forever. At some point you're going to make more money and go to 200 and then 500 and then $1,000 a month. And that's how you build this real wealth over time. But the first step to get out of this weekend thinking isn't a budget spreadsheet or a savings app. It's a mental shift. That's what this episode is all about. Getting you guys to realize the habits you need to change to get to that next level and build the financial freedom you desire. And it's recognizing that your future self is a real person. And right now, every weekend decision is a vote against that person's financial freedom. So, Austin, walk us through what happens when people start stretching that horizon out and what the next step is.
- [07:42]
A
Yeah, so now let's think like going from weekend to weekend, week to week. Right? Like that's that. Oh, just I'll live for the weekends. Right. But now let's think in seasons. Let's think of a 90 day, call it 3, 6, 9, 12 month at a time window. By thinking in seasons, the real transformation begins. Because it's the level where you go from surviving to actually building. This is the most important step. Right. We don't have to think all create. Like let's just go from surviving week to week to say, where do I want to be in three months from now? Right. So someone thinking in seasons operates in that 3, 6, 9, 12 month time horizon. Instead of what am I doing this weekend? It's where do I want to be in six months? This isn't some dramatic, glamorous thing. No one makes viral content talking about automatic transfers to an emergency fund or paying extra on your credit card debt. Like, that's not a sexy thing. But it's where the foundation of every wealthy person's financial life begins to get built. It's the boring decisions made over a longish period of time that start to give those decisions enough time to compound on themselves. So you begin to see the results.
- [08:52]
B
In another study we cited today from 2022 in the journal of Financial Planning found that people who set 90 day financial goals save 2.7 times more than people who set no goals or. Or only set annual goals. So there's something about that 90 day window that's uniquely powerful to people. It's close enough to feel real and urgent, but far enough away to actually accomplish something meaningful. A year feels abstract and a week feels too tight. Maybe this 90 day sweet spot is what really works for behavioral change. So what does thinking in seasons look like in practice? I think it's sitting down and mapping out the next 90 days. You know your income, you know your fixed costs, and you make a deliberate decision about the surplus before it hits your checking account. Maybe the goal is, I'm funding my emergency fund to $10,000 by October. Maybe it's opening a brokerage account and putting in 500amonth for the next three months. Or maybe it's paying off that pesky credit card by Christmas. Whatever it is, you're making a decision in the present that your future self in 90 days from now will benefit from.
- [10:02]
A
I love how you called out the difference between having a 90 day sweet spot goal versus that, like, annual goal, because, you know, everyone starts January 1st. Like, here's the difference for 20, 26, and here's what I'm going to do and achieve over the next 12 months, blah, blah, blah, blah, blah. But then like, you know, four months, five months go by and they kind of fall off the wagon because they're not like really close enough to that 12 month goal where they feel like it's attainable. But, you know, the progress they've made is not so much. And so like, I didn't really accomplish much. But 90 days, Robert, 90 days is what allows people to say, okay, you know, we're filming this episode right now in July, let's fast forward to October, right? Like, what can I accomplish over the next 90 days? What's that goal that's gonna really help me move my financial picture in the right direction? And that 90 day sweet spot, Robert, I love that you called that one out because I think that's just enough to get people to move in the right direction without feeling intimidated by what they're trying to accomplish. The financial behaviors that unlock at this level are the ones that actually begin to move the needle for people's well being. The emergency fund, the automated investing, the debt payoff strategies. None of these things are possible with that weekend thinking we're talking about because the time horizons aren't long enough. You need to have 90, 120, 180 days to actually begin to see the results. So thinking in seasons can also reshape how you think about your own income. Someone who thinks in weekends evaluates a job by a paycheck. I'm making 18 bucks an hour. I'll get this much at this paycheck on this Friday or every other Friday, whatever it might be, right? What am I getting paid? But as seasonal thinker, someone who thinks in, you know, 6, 12, 18 months sometimes evaluates a job by the trajectory of their income over time. Does this role have a raise cycle in a 6 month, 9 month, 12 month period of time? Does this bonus structure, can I achieve that in that, you know, 12 month period of time? Am I building skills over the next 3, 6, 9, 12 months that I can take back to the marketplace, go find a better paying job that's going to allow me to earn more money. How can I now begin to think in quarters versus weeks? And that 90, 120, 180 days, you know, 3, 6, 9, 12 months at a time there, I think is so important.
- [12:20]
B
I agree with you because I feel like having these bite sized chunks of that 90 to 120 days helps people have hope that they can make that improvement, maybe get that side hustle to get the extra money they need to get to that goal that they're trying to achieve in that 90 to 120 days. And that is why thinking in seasons is such a massive upgrade trade. It builds financial stability, it eliminates bad debt and gets money in the market. But it's still not how the wealthiest people operate. Thinking in seasons build a comfortable financial life. But the next level is what builds generational wealth. So Austin, take us away on this one.
- [12:58]
A
This is that level. Once you get to Robert's at that level, I'm at that level. But it's not some sort of like, you know, I'm in my 30s, Robert's obviously 30 years older than me, right? So it's like, you don't have to be on this planet for X amount of years to understand this, right? These are all mindset shifts. You can be 18 years old right now listening to this and put yourself in the mindset to understand what it can mean to think in these different time horizons. Or maybe you're in your 50s or 60s right now and you're finally now thinking through how to evaluate time horizon decisions. And so I just want to make sure before we get to this last one, this episode is for everybody. It's not just for people who are, you know, in their 40s, 50s, and 60s. And it's also not just for people who are in, you know, their early 20s because they've got the rest of their lives ahead of them. Anyone and everyone can apply these different types of time horizon mindset shifts to positively impact their financial futures. So the last way to think is by thinking in decades. By thinking in decades, everything begins to change. It's the level that separates the people who are financially comfortable from people who truly build generational wealth. What is generational wealth? Generational wealth is you have money that you are going to now pass on to your children. They will inherit something that's going to meaningfully jumpstart their lives. They have enough money now to take care of their children. To buy the house they want to go, you know, make the memories or have that business or whatever it might be like. That's the goal, Robert, is to have something at the end of our lives that we're able to then pass on to our children so they can jump start and achieve what they want to achieve. Something that I didn't have. Something that you didn't have. Right. But that generational wealth is what we want to help people build and pass on. But you don't get to build generational wealth. Thinking paycheck to paycheck, weekend to weekend, or even six month period to six month period. A decade thinker filters every major financial decision through one question. What does this look like in 10 years? Sounds simple, but it's not as simple as it sounds because decade thinking requires you to make decisions that feel wrong. In the short term, it means choosing the option that might be worse this year but better off in year seven. It means saying no to guaranteed money today for uncertain but asymmetric upside tomorrow. It means tolerating some discomfort and some volatility and even, and most importantly here, delayed gratification on a timeline that most people simply cannot stick to. Which is why you look around, right? The average person, I don't know the stat, but I think it is Robert, in their 60s or 65 or 70, according to Vanguard, you know, has a brokerage account of like $280,000. Like, don't get me wrong, it's a lot of money. But we just gave a clear example where 100 bucks a week, if they made that mindset shift in their 20s, would turn into at least a million dollars. Like, once you make this mindset shift and you're able to actually make it and stick to it, the world is your oyster.
- [16:06]
B
Well, you've definitely got me fully into my childhood now, which is just crazy. This episode is so powerful. I remember vividly my two friends that I work with when I was 18 years old. We made the same money, we worked at the same company, and yet every single week I was investing $25 in my paycheck like it didn't exist. $25 might not sound like a lot, but that was 40 years ago. And so think about that. I was doing this at 18 years old while they were blowing their money at the bars every weekend, going to the mall, buying clothes they didn't need. And I was setting aside that money so early on. And it just really illustrates what compounding does for people because I use and it compounded, I think, for seven or Eight years to buy my first four plex, which really started me on my journey of real estate investing many, many decades ago. So let's do some math, updated math right now with this investing, because this is the clearest illustration for everyone watching. If you were to invest $1,000 a month, starting at age 25, with an average 10% annual return, which is the historical average of the S&P 500, here's what the compounding curve looks like. And notice I said the compounding curve before I give you these illustrations. After one year, you'd have $12,600. Stick with me here. After five years, 77,000. After 10 years, 195,000. After 20 years, $687,000. After 30 years, 1.97 million. And after 40 years, when you're ready to retire, $5.5 million through compounding and reinvesting your dividends.
- [17:49]
A
And here's the critical insight. Listen, rewind the episode if you need to, and figure out, where does that acceleration truly happen? The first 10 years, you barely break $200,000. Right? 10 years of doing this. Every single month, I'm putting all this money in the markets. I've got 200 grand to show for it. Oh, my gosh. I just spent a decade of my life and I've got $200,000. Where's the millions of dollars that these guys talk about on the Rich Habits podcast? Stick with us. The next 10 years, you add half a million dollars to the equation. Ten years after that, you add another $1.3 million to the equation. And during the final 10 years, you add three and a half million dollars. The returns are violently backloaded. That last decade, that last 10 years, you added more wealth, wealth to your brokerage account than the first three decades combined. Right. So the last 10 years of compounding was more important than the first 30 years combined. That's why time horizons are everything when it comes to investing. If you bail out and you sell out of your investments in year eight because the market dips or because whatever's going on, you miss that entire compounding cycle. And, Robert, I want to just emphasize, you called out the curve. Right. I want everyone to kind of think in their minds how this would look, right? That's coming up, and then, boom, it just accelerates off the side with that Y axis going vertical. Because that's what compounding is. That is how people that think in decades are able to build generational wealth they can pass on, you know, generation after generation.
- [19:26]
B
Yeah, it's just so important for People to understand the power of compounding in that curve, but also consistency. We talk about it in the rich habits network all the time. The people that become truly financially free are the ones that stick to the plan and stay consistent. And history proves this over and over and over again. So if you bring up the 2008 financial crisis, the S&P 500 dropped 57% from peak to trough. Trillions of dollars in wealth evaporated. Weekend thinkers panic sold at the bottom and locked in permanent losses. Decade thinkers kept buying. And if you invested 10,000 at the bottom of the 2008 crash, that money alone is worth over $160,000 today, assuming you reinvested your dividends. So a 16x return, but only if your time horizon was long enough to ride through the worst financial crisis in the last 80 years. Now let's update to what happened recently. The COVID crash in 2020. Same pattern. The market dropped 34% in five weeks. The fastest bear market in history. Seasonal thinkers got nervous. This decade thinkers bought aggressively and The S&P 500 recovered in less than six months and went on to more than triple from these lows just in a couple years. Every single market crash in history has eventually covered and gone on to new highs. Every single one. But you only capture that recovery if your time horizon extends beyond the pain. We always talk about volatility and long term thinking. This illustration, please take notes. Rewind. This is so incredibly important for your future.
- [21:09]
A
Decade thinking doesn't just apply to investing either. It fundamentally changes how you think about your career and decisions you make as a business owner. A weekend thinker takes the job that pays the most. Right now, someone that thinks in seasons takes the job with the best 12 month trajectory. But someone who thinks in decades takes the opportunity or builds that business that offers the most optionality, ownership and asymmetric upside over the next 10 years, even if it pays less today. And here's what really separates decade thinkers from everyone else is they don't have to tolerate volatility. They expect the volatility. They know that there's going to be bad years, bad quarters, bad months. But they've pre decided that short term pain is the entry fee for long term wealth. Robert I literally made this decision myself when I started my own business back during the depths of the, you know, Covid 2020 BE market there that we had for a short period of time. When I went on and started my own business, I was like I'm going to go build something for the next 10 years. I'm 24 right now. I'll do this until I'm 34 and see what happens. And I'm six years into this right now. I'm, you know, past the halftime show and I'm rocking and rolling and having a blast. But by thinking in decades, right, by saying I need to go do this for a 10 year period of time, I've opened myself up to insane asymmetric upside as I've been able to build my business alongside Robert and Christian. And I think that's what's so important people understand is like, if I just thought about maybe I do this for six months and then if it doesn't work or I don't have the expectations, I just go back or I just, you know, find another job, whatever. But I said no, I'm going to push through that and I'm going to force myself to figure this out because I need to think in a 10 year period of time, not just a 10 month or a 10 day period of time.
- [22:58]
B
I hope people really take the time to focus on this episode. I think it's incredibly impactful and just so many things are going through my head. I feel like we could talk about it for hours, but let's stick to the plan. We've covered all three levels, weekend seasons and decades. And the obvious question everyone needs to ask themselves and understand is how do you actually make this shift? Because knowing about decade thinking and practicing it are two completely different things. So here are a couple practical moves you can start this week to get you on the right track to make these mindset shifts. First, the $200 rule. Before any purchase over $200, ask yourself, is this a weekend decision or a decade decision? You don't have to say no to everything. You're allowed to enjoy your money. But if 90% of your discretionary spending is weekend decisions, you'll never build wealth. So what we want you to do is flip the ratio, aim for 70% decade decisions and leave that 30% to weekend or seasonal decisions.
- [24:04]
A
And with that 70% decade decision, that brings us to the second way you can make the shift, which is automate the decade decisions, right? Set up automatic transfers so money moves into your investments, into your emergency fund, into your retirement accounts before you ever see it in your checking account. When you have these decade decisions happening on autopilot, you remove the willpower from the equation entirely, Entirely. So you make your weekend decisions with what's left over, right? The pay yourself first sort of strategy and mentality there because the important money is already working for you. Now, the last way people can make this mindset shift, Robert, is to run the 10 year test on your own career. If you're listening right now, I want you to look at where you're spending your professional time and ask, does this path give me more income, more ownership, or more optionality in 10 years? Again, more income, more ownership, or more optionality in 10 years? If the answer is no, might be time for a seasoned thinking career move, a strategic shift that could position you into a better position a decade from now, even if it costs you something in the short term. Taking a step back to take two steps forward. Not a bad idea.
- [25:19]
B
Austin, you always mention that wealthy people forecast and broke people react. And I think there's no truer statement. And all of this is so important for people to better plan to get themselves out of that weekend thinking. So here's the bottom line. Your time horizon is the single most important financial variable in your life. More important than income, more important than the stocks you pick, and more important than trying to time the market. A person earning $60,000 a year with a mindset thinking in decades will almost always end up wealthier than a person with $200,000 a year in income thinking in weekends. Because it's not about how much you make, it's about how far ahead you're willing to think and plan for.
- [26:03]
A
What a great episode, Robert. I freaking love this one. This is definitely a top 10 in my opinion. This is the mindset shift that people have to make. And I think that's what's so important too is like mindset shifts. I would argue that building wealth is 80% mindset, that 20%, you know, just like understanding what to do because like once you understand how to invest in the stock market, how to diversify, how to dollar cost average, like tactically how to understand and do things with your money. The other 80% of that is mindset shift of like I need to remember to do these things, feel confident about doing these things. It's the, it's the behavior. It's, it's doing the things. And that behavior comes from making a switch in your brain away from short term pleasure to pleasure, weekend to weekend, paycheck to paycheck, having fun. What to. How does this impact me 10 years from now? What can I do today that's going to positively impact me? Because that's what. And I think it's just like human psychology. Robert, you're 30 years older than me and I've already said that I'm not dunking on you for being older than me, of course. But what I am saying is that I'm 30. You're 60. When you were 30 years old, like, did you even think about what life would be 30 years from now? Like, it's so hard to conceptualize. Like, it's just. It's so weird. Like, I can't even imagine myself at your age right now, but I have to, like, continually remind myself that I will be that age and I have to have investments and I have to make the right decisions now so that that person can, you know, operate from a place of strength. But it's so hard as human beings to conceptualize that it feels like. So maybe just talk about that for a little bit.
- [27:34]
B
Yeah, I think you're spot on. I was different because at 30 years old, I already had real estate. I had my vending route, I had two restaurants and a bar. So I was doing really, really well. But all of my friends that were in their 25 to 30 year old range definitely didn't. And so I think you and I are built very different. And that is why we are here today. And we're good educators because we're always thinking ahead in trying to build not just structure and processes, but trying to build for the future rather than thinking for the weekend. Trust me, a day never in the last 30 years of my life has not gone by that I didn't want to go buy one more vintage Porsche or another cool watch or the lake house that I've been eyeing for the last year and a half. But I do it with process and intent to make sure that I never go below those thresholds of wealth that I've been working towards for decades. So I think it's important for everyone, no matter what age, to understand that if you can delay always improving your lifestyle and leveling up your lifestyle to be able to allow you to get that 10, 15, 20% of your money siphoned off for the future, you'll do just fine. Because I agree with you 100%. Austin. I think building wealth is 80% mindset. Because you can use AI right now and say, hey, I'm XYZ old. This is what I make, this is what I have. How should I invest? But AI is not going to teach you the mindset shifts that you need to have have at every stage of life to be able to get to that wealth building, generational wealth phase that we're trying to create here today and help people learn. So I think it's important and really impactful that you said the 80% because I agree with you totally.
- [29:20]
A
Well, before we jump to our Q and A section of this episode, which again, if you have a question for the podcast, email us at rich habits podcastmail.com DM us on Instagram at Rich Habits Podcast or join the Rich Habits Network. We're still running a seven day free trial completely for free. You can join and you can ask us a question live on Zoom. Every Tuesday night we host a two hour live stream on Zoom and people ask us questions live and we answer them. They turn their cameras on, they turn on their microphones. I know some really nice guy named Noah joined us recently and asked a question last night in our livestream like that's what it's all about. So like just jump in, ask questions, get them answered inside the Rich Habits Network link in the show notes below for that one. But before we jump to that Robert, we gotta give a shout out to NEOS investments. NEOs offers ETFs that seek high levels of monthly income with a keen focus on tax efficiency while providing core portfolio exposure across equities, fixed income, real estate, cryptocurrency and cash alternatives like t bills. Their ETFs may be especially interesting for investors looking to generate tax efficient monthly income inside their investment portfolios. Their funds may serve as a compelling income focused alternative or complement to many of the investments already in those investor portfolios.
- [30:36]
B
If you're looking to add passive income focused ETFs to your portfolio, consider learning more about NEOs ETFs@neosfunds.com and as with all investments, investors should carefully consider their investment objectives, risks, charges and expenses of NEOS Exchange traded funds before investing. To obtain a prospectus containing this and other important information, please visit neospons.com please read the prospectus carefully before you invest. An investment in NEOS funds involves risk risk including possible loss of principal. There are no guarantees that the ETFs will make monthly distributions and the amounts may fluctuate from month to month. Cryptocurrency is relatively new and the market has its own specific risks. And NEOs ETFs are distributed by 4 side Fund Services LLC.
- [31:24]
A
You all know I've got six figures invested in Spyi, QQQI and BTCI. So those are the NEOS funds. I love them, Robert loves them. They're in our portfolios and we're just grateful that they support show. So our first question comes from Joel on Instagram. Joel says hi, I need some advice. I am 18 years old with $9,000 in my checking account and it's just sitting there. Should I put it somewhere else? Robert?
- [31:51]
B
Yeah, I don't think you need $9,000 sitting in an emergency fund or in a regular checking account. So here's what I would do. I'd probably split it in half. I'd go open an account@public.com and I would get it half of it in a high yield savings account. So you've got it earning money while you slee. I would get your Roth IRA opened up and I would use the other half in the Roth IRA and invest it into a basket, a very simple basket of these ETFs and index funds we talk about like Voo, QQQ and AIQ. That's the move I would do because you don't need all that money sitting because we always say parked money is dead money. And good job getting $9,000 put away at 18 years old. But let's get that invested in making you money.
- [32:37]
A
I think that's a great call out. And yeah, you know, we always talk about like three months of expenses, but I feel like at that such young of an age, I don't know, you're probably still living at home, right? Like your parents probably still pay for your phone. Like you're still on your parents health care, right? Like, like you don't really have that many expenses. So to Robert's point, 2, 3, $4,000 sitting in emergency fund is great and I think it's probably plenty. And it's earning 3%, 4%, something like that inside of Publix High yield cash account. But the other call it four or five thousand dollars is in that Roth ira. It's invested. Don't worry about trying to time the market dollar cost averages. Go put all of that money in the Roth IRA at once and then invest it all at once into voo, qqq, dia, aiq, vxus, whatever basket you want to build here. But the point is it doesn't matter. You just need to get this money invested because invested at 18 years old and you forget about it 30, 40 years from now, when you're in your 50s and 60s, it's going to be where I mean we just gave that example Robert, about buying the bottom of the financial crisis with $10 that was, you know, 17, 18 years ago, it's already worth a hundred sixty thousand, right? So that's just in the last two decades. Imagine what four decades could be with this four or five thousand dollars we're talking about here for you, Joel. So get invested and I Love the idea of putting that in a Roth ira. Next question comes from Noah on Instagram. Noah says, hey Robert and Austin, huge fan of the podcast, but I need some advice on funding a side hustle. I'm 22 years old and I just graduated college and I and Now I'm making $80,000 a year. My foundation is solid I to six months sitting in a high yield savings account. I'm on track to max out my Roth IRA of $7500 this year and I'm contributing to my 401k and I listened to y' all and swapped out the target date funds for index funds. So thank you. Let's go. That's awesome. Noah says I want to scale the photography side business that I've been running in college on the weekends to diversify my income and speed up some early retirement goals. Not putting all my eggs in one basket, but I do want to upgrade to a A7s III and I need some gear which is going to cost me $2,000. So my question is, should I sell my old camera and use my upcoming corporate bonus to fund this upgrade in cash or should I go about this some other way? I love that strategy. Yes, sell the old camera, use your upcoming bonus to fund it with cash and rock and roll. Here's what we're not going to do. We're not going to sell our Roth IRA investments and take money out of there. We're not going to tap into that EM fund of four to six months. Although I will say four to six months with a salaried role like this, you might be a little on the hefty side when it comes to cash savings. When we say three to six months and I'll let you answer the rest of this, Robert. We always encourage people to think like if you have a salaried role and your income is very predictable on a monthly basis, like three months is plenty, right? Three months is plenty. Now on the flip side, let's say you are commission only and you do sales or you do real estate or, or you like, you know, your income's very lumpy and some months you make very little, but other months you make a ton, right? That's where the six month side of that high yield savings emergency fund comes in. So four to six months to me seems a little frothy considering you are making 80,000 a year and it's a consistent, you know, salaried income. So maybe there's a world where you could begin to drain that down a little bit and then put that and invest that into the markets as well. You've already maxed out your Roth ira, which is great. So maybe this is now going to start funding your brokerage bridge account. That could be pretty interesting. But Robert, what's your take on this?
- [36:22]
B
Yeah, I think you did a great breakdown. I agree. I wouldn't go into debt, I wouldn't run it on a credit card or do any of those things, because right now you have the ability to do this upgrade to make more income for yourself without going into more debt. So I love the strategy and it reminds me of something that I share a lot online and I probably should talk about more. For any of you out there that have an old camera sitting or you have an old set of golf clubs or any of these things, things look at that as an opportunity cost. That's what made me think about was this older camera gear not sitting on a shelf somewhere. If you have items you haven't used for a year, I don't care if it's clothes, camera, treadmill, whatever it is, sell it and get that money invested. Because that item sitting is generally just going to go down, down, down in value, but the money will go up, up, up in value if you seize that opportunity. So I really like this. Sell the old, old stuff, use the bonus, get the new stuff, make more money so you can give yourself more chances to invest a greater amount month after month.
- [37:22]
A
I will say, and maybe you can talk about this too, which is like, I really encourage people not to go into debt to start a business, because sometimes most of the time, right, businesses fail, especially if it's someone's first business. And if someone goes out and has a SBA loan loan of 40, 50, $60,000 because they want to go get a food truck and start their food truck, taco walking, taco business or whatever, you know, that's great. But now you've got $50,000 of debt hanging over your head. And it's not debt for the business because the SBA looks at you as a human. It's debt over your head now that you went into to start the business. And then the business. You know, again, businesses fail. They're not always perfect. And so if that business then fails, you still have this big debt hanging over your head. But what that's what I love about Noah's situation is Noah's not going into debt to fund Noah's saying, I've got that old camera, I've got this bonus coming up. I'm going to use that to go buy this camera. In cash, which means, yeah, he's in for $2,000 or so for this new camera in the gear. But I would argue that, you know, photography, you're doing some weddings, you're doing some graduation, you're doing some things here and there, you're going to make that $2,000 back in probably a couple months. Which means now all of the money you make on top of that is gravy. Maybe if we did go into debt for this, you might have had a slow season. Maybe that, that, that $2,000 used to credit card, that interest would have been accruing. Right. Like that would have eaten into, you know, obviously the, the prosperity of the business. So we just like to encourage people not to go into debt to go start a business because businesses are unpredictable.
- [38:56]
B
Yeah, I love that take because I could tell hundreds of stories of people where they raise capital for this new idea, this new app or this new business. They raise a couple hundred thousand dollars to get up and running and they immediately go buy new computers, new office furniture, new desks, or they're a restaurant owner and they go buy all new stuff. And I just think it's a big mistake. Just because you raise capital or you get that SBA loan doesn't mean you need to go blow it. Like I remember building one of my new restaurants. I went to an auction, we drove three hours with a truck because this auction had almost every piece of equipment I needed for the kitchen, the cooler, the, the pizza oven, all of these things. And they were all about 1 to 2 years old. And I think we got it all for like $75,000 less than the same thing new. And it just took a few hours to go to an auction, be patient, do some research and save all that money and it's going to work just fine. So I love that take, Austin, of not just going out and blowing all the money like so many people do when they first get started because they think it's just going to work and it's going to be all rainbows and unicorns. Small business is never easy. And I just love to for people to like be lean and mean, to get up and running and test things to make sure it's going to work. Then you can always add more equipment and better equipment later.
- [40:19]
A
Completely agree. Now, before we jump to our final question, got to give a shout out to public.com, the investing platform for those of you who take investing as seriously as we do here on the Rich Habits podcast podcast on public, you can build a multi asset portfolio of stocks, bonds, options, cryptocurrency, and now what they call generated assets which allow you to turn any idea into an investable index with AI.
- [40:42]
B
It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stuff stocks, builds a one of a kind index, and even lets you back test it against the S&P 500, all with just a few clicks.
- [41:03]
A
Generated assets are like ETFs but with infinite possibilities. They're completely customizable based on your thesis and not someone else's. So go to public.comrichhabits and transfer your portfolio today. That's public.com rich habits paid for by Public Investing.
- [41:18]
B
Full disclosure in the podcast Description so
- [41:21]
A
our final question coming from Amanda hey guys, guys. Still listening to the podcast after several years now and appreciate your continued insights. My husband and I are 43 and have a 15 year old and a 7 year old. I have 300,000 in my 401k. Roughly 65% of that is Roth with all future contributions to be in Roth, 80,000 in a taxable brokerage account, 43,000 in a high yield savings and 33,000 in 529 accounts. My husband is a school teacher with a pension worth around 85,000 right now and I'm also contributing a 11% to my 401k, $315 a month to the brokerage, 255 to the high yield savings. It goes into a sinking vacation fund for the next couple years and 150 bucks to the 529s. You guys always talk about the benefits of the Roth ira. Our income teeters on the limits, the income limits for that Roth ira. And I understand that one of the benefits is that you can withdraw the principal of your Roth IRA penalty free. Should I reduce my 401k contributions despite them being Roth and instead put that money into a Roth IRA so that in the future if I do want to tap into those contributions, I can do that without penalty of tapping into my 401k prematurely. What an interesting question. Like technically, yeah, I guess you can. Assuming you've got the same amount of money you're investing every month and like, you know, portion of it goes to the Roth 401K, another portion goes to the Roth IRA and the brokerage accounts. Like all that stuff. Like sure. But what I think is most interesting about this question is it it sort of assumes assumes that you're going to tap into this money. It assumes that you are going to sell your investments, look at what you contributed into your Roth IRA and you're going to take that money out prematurely. Now you had mentioned later in the question that you plan to retire at 60 years old. Good news for you is that's past the age of 59 and a half, which means at the age of 60 you don't have to prematurely take money out of the Roth ira. And like they like that's, that's, that's just normal withdrawals from your retirement account at that point. So do you move money out of the Roth 401k and instead of contributing so much there, start contributing more to the Roth ira? Have the flexibility to take money out in the future? Sure. But at the end of the day, the last thing we want is for people to borrow from their futures by selling their investments early and then tapping into it. Yes, without penalty. But like the real penalty is the fact that you're not compounding money anymore. And that sucks. You want to have your money invested for you and staying invested for as long as possible. Does that mean that you're able to do that most effectively with a 401k? Because there's some like parameters around that, like maybe. But in my opinion, forget taking money out of whatever account before you're 60 years old regardless, because that is the retirement age. You can do a penalty free. Just invest your money. You're already super smart, like 43,000. A high yield savings account saves saving for, you know, vacations for the next two years. Like the 529s. Like you guys are rocking and rolling here. At the age of only 43, you've got so much to be excited about. Just keep investing in the 401k, keep maxing out the Roth IRA and you're gonna be fine.
- [44:37]
B
I love that breakdown. And this whole episode is about mindset shifts. And I agree with what you alluded to that I feel that the mindset here is, hey, we've got all this money going here, but we're looking for an escape plan to be able to get some of it out later on before retirement and think that's the way to look at it. I think you should do exactly what Austin said, keep rocking and rolling. You guys have done a good job so far. Set yourself up. If you're worried about it, put some more money in the traditional brokerage account because then you can do whatever you want with it later on. But just keep maxing these things out, keep doing what you're doing and I think you guys will be just fine.
- [45:12]
A
If you learned something on this episode, do us a huge favor and consider joining us inside the Rich Habits Network. These are the types of conversations that are taking place in there every single day. Not just between us, but between the 940 plus other people inside of the network talking amongst themselves, networking, chatting, sharing their mistakes, their ups, their downs, all the stuff like that's what's part of the Rich Habits Network. That's so cool is it's a network, right? It's hundreds of people that that hang out inside of the network and give advice and talk about their own experiences and chime in and all the fun stuff like the Rich Habits Network is the place to be and you can join us for seven days completely for free. No money out of your your pocket, kick the tires, see if you like it. If you do, you stick around and we love it if you don't. That's okay. No hard feelings. Just thanks for tuning into the show.
- [45:59]
B
And don't forget, inside the Rich Habits Network if you do the seven day free trial to go to the investments tab, scroll around, dig around and see all the cool companies we're investing in with our members. These are investments that we bring to the table for everyone that belongs to the Rich Habits Network. And then I want to give a quick shout out because I'm very proud of it. Wall Street Favorites.com if you're out there buying stocks and you're not sure if you're buying the right ones, if your waiting is correct, or any of that, check out the Wall Street Favorites website. It's very cool to help you figure out where you stand and what Wall street thinks of the stocks you own. So make sure you check it out.
- [46:38]
A
Thanks everyone and we'll see you on Thursday. Sam.