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- [00:00]
A
So what if the reason smart entrepreneurs still feel anxious about money has less to do with math and more to do with the habits quietly running their lives? Hello, and welcome to another episode of the ducktape Marketing Podcast. This is Jon Jantz. My guest today is Mike Michalowicz. He's a bestselling author, entrepreneur, and longtime champion for helping business owners take back control of their time, money, and energy. He's the author of many books, Profit First, Clockwork, Fix this Next All In. But today we're going to talk about his latest, the Money Habit, the Worry Free Way to Financial Independence. So, Mike, welcome back to the show.
- [00:50]
B
John is amazing. You know, we've known each other, I think, 17 years. We're almost approaching 20 years of knowing each other. That means wow.
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A
Wow. Dang. I, I got sneakers older than that, though.
- [01:02]
B
That's not those Chuck E. T's that you wear.
- [01:05]
A
I love this thing. So, all right, you're back with another book about money, the Profit. Profit first book is pretty much legendary. I mean, you sold six gazillion and have lots of people practicing that and you brought that to a lot of entrepreneurs. But why are you going back to the well on a more personal book now? To help individuals. And I'm assuming there's a lot of crossover.
- [01:32]
B
There's a lot crossover and it originally started off with helping the entrepreneur, but there's another larger community that it's now serving and I'm focusing on or paying more attention to, but the entrepreneur. What I found, John, is some folks deploy profit first or in some other ways move their business forward so that the business was highly profitable, but their lifestyle started gobbling away at the business and they weren't managing the numbers at home, and therefore the home leeched off the business. And I also saw the reverse. I've seen some people prepare for retirement, their future, and then they start an entrepreneurial endeavor and it doesn't do well. It struggles and it leeches off the home and both collapse. So I had the awareness like, oh, if you're not the only numbers at both sides, the business and the home front, you're screwed. And then I realized this was the biggest. Aha. I got a call from a business owner that was doing profit first, and he said his employees are coming to him asking for raises, seeing if they can get an advance. And he goes, I want to accommodate that. By a certain point, the business will no longer be sustainable. They need help managing their money because most people believe that the solution to financial struggle is more money. And the Reality is the solution to financial struggle is authority and control over money. And then more money helps, but you need to assert that control first. And that's why I wrote the book.
- [02:53]
A
Yeah, it's interesting. But I mean, you, even in the subtitle you have worry free. I mean, so there's stress and behavior issues and people grow up with real. You know, I grew up not wealthy at all, a lower middle class. I have nine siblings. And so money was always an issue. And so I kept, you know, my parents really struggled to spend any money because it was like, we gotta buy milk or we're gonna do this. And. Yeah, and so I think a lot of people like that kind grow up almost with a unhealthy relationship with money. I mean, I mean, it's like the last thing they want to even talk about.
- [03:28]
B
There's no question there's generational financial trauma and we are programmed. There was an article that broke from USA Today, I think it was August of 2025, that really shocked me awake. And it said financial worry has become a part time job. And it went on to explain that for the typical American that we are worrying about some kind of financial consequence, four hours a day on average. And that's devastating because that eats away at us not just emotionally, but physically.
- [04:02]
A
Yeah, you don't sleep. I mean, yeah, no sleep.
- [04:05]
B
Yeah, you can, you're distracted at work, so your productivity declines. It becomes to some degree a vicious cycle. Yeah. So what we have to do is we have to learn to make, not make do with what we got. We have to assert control over what we've currently got first. And then we start building from there.
- [04:21]
A
Would it be safe to just call the money habit basically profit first for personal finances or am I missing something?
- [04:28]
B
I was missing something actually, because originally that's what I wanted to call it was profit first personal. And then I realized this is a radically different book. So when I started interviewing people, the biggest difference is that the majority of income earners or not entrepreneurs, have a predictable income or no income. So you're humming along and maybe get a little raises over time, incrementally, and then someone else can turn off the switch and all of a sudden it stops and you start up again. An entrepreneur's trajectory is much more volatile, up and down. You have a banner year and you're walking on water and then you have a devastating period after that. Prop first was designed to work for volatility. The money habit is designed to work with potential, predict more predictability, but also understanding that the climb won't be as fast and hopefully the decline won't be as fast either as entrepreneurs expect. So I had to integrate that and how to work with different income levels. I don't know if you noticed the average American earns $50,000 a year. So this book is designed to work on the average or serve the average income earner. And people can earn more and people can earn less. And what I designed is as your income changes, we need to change ratios for what we're addressing. If you own less than the average earner in the US you're going to have to focus more on the essentials of living, food, shelter. If you are earning more than the average, you may be able to orient more toward future dreams. Some aspirational things you have. But the other thing is a lot of people come in with different mindsets. Some people are recovering from debt, other people are preparing for future events. Classically it was retirement, but now it could be just activating funds, like taking the family on a two year sabbatical. That, that is like a mini retirement before you officially retire. And there's other goals. So I call these seasons. And so the book speaks to tiered income levels, more predictable income levels, but what to do when you lose your income. And it speaks to the season that you are in currently and that's not in profit first.
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A
So there are other mentors, books out there. Dave Ramsey comes to mind and it's like, pay off your debt, don't get a latte, just have discipline. I mean, are you essentially saying that, but just in a nicer way?
- [06:44]
B
First, let me start by saying Dave Ramsey's work has been personally transformative for me. I love it. Yet this is not a translation of that or an expansion of it. It's a different perspective for most people. Discipline becomes a form of. Well, one of two things will trigger retaliation. So deprivation. Discipline becomes deprivation, deprivation becomes retaliation. It's classic in diets like don't eat anything with sugar and we don't.
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A
That's all you can think about.
- [07:13]
B
All you think about, right? And you retaliate. The other scenario, which is far less frequent, is the Scrooge mentality. When you go into deprivation, there's a certain point that your identity shifts enough. You say, I will never spend money. Then why are you earning money? And so there's people who have accumulated a lot of money and it's all about the fear of losing that money. So they live like paupers. So I found deprivation works for very few. So this system is nothing like in this Case Dave Ramsey system. What it does is it's based upon what I call behavioral intercepts. Commitment devices is the technical term in behavioral psychology. Understand your current natural path of behavior. Instead of trying to change how you behave, deprivation, these external spreadsheets or apps or whatever, instead look at what you're naturally doing and put commitment devices in that pathway that assure that you will get what you want. And the beautiful part is you don't need to change yourself. Just keep doing what you're doing with a system that directs the outcome that you desire.
- [08:10]
A
So in profit first, I mean, one of the things that you introduced that, you know, I hate to like, go, well, duh. But for a lot of people, you know, everybody goes like, pay yourself first to have, you know, money to put away for taxes. I mean, everybody gets that. But you created the bucket or envelope system for that, which was basically just what they should be doing, but kind of enabled it, put it in front of them, and all of a sudden it was like, no, it became a habit. Is that the same thing that you're talking about In a lot of ways, that it's habits. It's not like I'm never going to spend. It's. I'm going to have a set of habits that are going to serve my objectives.
- [08:46]
B
Yeah, yeah. So I've deployed established systems. In fact, the envelope system goes back to biblical times. It's in actually all the religious, significant religious books and manuals. Tithing is a concept or prepaying and allocating for an intention before you quote, benefit from it. And other systems like pay yourself first, that's the same idea, is reserving money for an intention first. The envelope system is carving money up. What I did was I modernized it by realizing the path that most people follow. So it's funny, I just did a presentation to a large group and I surveyed the audience. I said, what's the most common money app today? And I heard, rocket money, because it's advertised so aggressively.
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A
Yeah.
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B
I heard, oh, it's a spreadsheet. I heard, ynab, you need a budget, which is a great system. It's different things. I said, okay. I said, what do you log into most to manage your money? And the response was, my bank. I said, well, your bank then is your app. The most used app in the world is our bank account. And for many people in that room, they were logging in daily or multiple times a day to see how much money you have. So what I did was I said, okay, there's established systems out there that work, but why aren't we all using them? Because we know they work, because they don't. We don't stumble over them. They're not forced down our gullet. So that's when I realized this needs to be done at the bank level, and that's why it's there.
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A
So. So you mentioned the word budget in talking about one of the apps, but you kind of take it to task a little bit. Right? I mean, it is as far as why budgeting failed for the traditional person,
- [10:18]
B
this is the money habit, is a real time budget. So when you spend a dollar from an account. So let me just kind of set the stage. So we understand we have multiple accounts at our bank, and ultimately you can get very specific, but you could have more generic ones like my essentials, needs, my. My lattes out, or whatever people like to talk about. And that's the wants, these are the meaning luxuries and so forth. But you can be very specific. My wife and I have a mortgage account, for example, and we allocate money to that account every day. Well, what happens is it's a real time budget. So when I log into my bank account, if the money's there, I know exactly how much is there. Once the money gets transferred over to pay my mortgage or I go out and have that latte or whatever it is, I only use debit cards. I will see that money instantly withdrawn. And I can, next time I log in, I know what's truly available. So it's living with you at a real time. I do want to add one little asterisk when I say I only use debit cards. I only use debit cards linked to those accounts. I do still use credit cards. I think credit cards can be a valuable tool when managed.
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A
Right.
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B
So I'm not rejecting credit cards.
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A
Yeah, those airline points, I mean, I love them.
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B
Yeah.
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A
All right, so talk a little bit about that idea. You hinted at it. But for people that don't know the idea of separating money by purpose, you know, instead of. So you are literally talking about instead of like, here's my checking account. It's. Here's my eight accounts that are separated by purpose. And I'm making allocations, which probably freaks some banks out. I mean, it's hard to open an account in some banks. So I know you've also developed some banking relationships too, right?
- [11:52]
B
I do. And we. I set up a website called moneyhabit bank.com so you can find banks that support this. There's one bank in particular that's really aggressive. It's called dream first. And when I say aggressive, they're actively supporting this and love it. And they focus on personal finances. But if you go to moneyhabitbank.com that's the site. Yeah, some banks will resist it. Here's the irony is when people use profit first, and this is a derivative of profit first, it's not totally new profit first. We have over 1.1 million deployments of it. So we have a lot of case studies under our belt. Money habit is now starting to get some serious momentum. We have, we think, about 10,000 books in circulation. It's kind of hard to measure, but so the deployments are coming in. Actually the emails are coming in actively. Of what we ask people, when did you set it up? Tell us, tell me. And what we're finding is some banks say, why are you sample these accounts when you do in person, but when you're online, that friction's gone away. You just click and you click and you click. And it's surprising how many banks, particularly regional small banks, will do no fee, no balance necessary accounts. So do it online. You won't experience that. But I also suggest you start off slow. I think setting up eight accounts or five or 10 or whatever you want is a little bit overwhelming. You can actually start the money habit with just one account, and I call it the warrior wonder account. And it's real simple. Whatever is the most frequent financial concern that you have. For some people it's like, can I cover the rent or the mortgage? For other people it's like, hey, can I pay groceries today? Can I afford that? And for some people, and it seems pretty common is retirement. Like, do I have enough money to retire? Whatever is the thing that comes to you most frequently or the first thing that pops your mind? Set that account. And let's just for easy sake, say it's mortgage. And let's just say is $4,000 a month, which ironically is pretty close to my darn mortgage, but it's 4,000 bucks. And say I get paid once a week, every week, I'm going to allocate $1,000 to the mortgage account to assure I cover the nut. Now what's interesting is that starts alleviating some of the worry because I'm always, I'm worried if I can pay the mortgage now, I know with confidence, but the magic isn't there. The magic's in the remainder. Because what you start seeing is, oh, I only have X, Y, Z available for the rest of my lifestyle. It starts bringing subconscious kind of reaction to conscious Consideration. And that's the goal of the money habit. And that's where financial independence happens, when you assert authority and control over money as opposed to it having control over you.
- [14:19]
A
So we've kind of touched on this. But how do you begin repairing people's, you know, that have kind of this guilt and this fear and avoidance over money is, do you feel like just equipping them with this tools enough or is that going to take some deeper work?
- [14:35]
B
Yeah, for me, my wife and I, it took some deeper work. We came from very different perspectives. She grew up in absolute abject poverty. I grew up in middle class, middle class to upper middle class. So the whole perception was radically different and it would cause frustration and arguments between us. What happened was I asserted the control over money and my wife would then ask me, hey Mike, can I go out with my friends or do I have this available? And I either say yes or no. Almost like a parent child relationship. The beauty of the system is it's just numbers, man. They're in front of you, you face it and you say, consider it. So when you do this by yourself or you do it with a partner, which many people do, it gives you absolute clarity and you start teaming against it or with it. The other thing is to start slow because if you come from a money trauma situation, it's quite appropriate to be very skeptical if this is going to work. So just start with that one account, see how it serves you, see the emotions it brings about with the awareness it brings about. Then try another account and then another account. But it's so interesting with this absolute clarity. I often find out that people are very capable because of the system. The last thing I want to share on the subject is I was at this event and someone's like, yeah, it was like 700 people in the room. This one guy grabs microphone, goes, yeah. He goes, really interesting system. He goes like, right, you're already good with money. He goes, I suck with money, I'm not good with money. This isn't going to work for me. I said, hold on in that question, you said something that's not true. I'm not good with money. I've never been good with money. I have a, I found systems that are really good with money and so I'm perceived to be good with money, but it's because of the system. So it's very capable of working with people that aren't good with money. That's not the goal.
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A
I'm gonna allow you to be very self serving with this question. If somebody can you borrow a few bucks?
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B
You want to borrow a thousand dollars?
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A
No, no, no. If somebody's got profit first, heck, maybe they're even a, you know, quasi practitioner.
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B
Yeah.
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A
Do they need this book, too, to apply to their personal situation?
- [16:35]
B
The big. The question's a maybe or the answer is a maybe. I should say I'm surprised how many people struggle to translate profit first to another application, because a lot of us just want to follow the script. And if you're the type of person, and most of us are, I'm that type of person. I want to follow the prescription. Then the money habit will help you because it addresses the nuances of lifestyle and income in a home, which is different than a business, and at the same time is. Some people have translated this on their own. That's actually how this kind of came about. I got a call from an entrepreneur who said, hey, I'm doing this in my house, and it's working for me, but my employees are struggling to help my employees. And that's when I realized I needed to adjust the book a little bit. But for. In John, in your case, to support me get the book, that's really all
- [17:23]
A
I wanted you to say, Mike. So, all right. For the business owner, listening right now feels very profitable on paper, but maybe anxious in real life, because that's a little bit of what you're describing. And maybe that's just the common state for entrepreneurs. Right. You're always like, when's the shoe gonna drop?
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B
Yeah.
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A
You know, no matter how good it's going. Right. Or how well it's going. So where should they start? Because. Because probably the first step is like, how do we relieve some of that anxiety? You know, so where should they start?
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B
With their business.
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A
Yeah. Or really with this concept. And this week, like, you know, I'm. I've got this, like, anxiety in my business, or I mean, I feel pretty good about my business. It's going pretty well, but I've got this anxiety on the other side of my life. Where should I start?
- [18:11]
B
One of my colleagues, her name's Aaron Moger, said something great. We had an event. We're on stage, and someone asked a similar question. And she said, she looked around, she goes, if in doubt, add an account. And that's become like, a mantra. And when there's concern about something, create an account that addresses that concern. For many business owners that don't have profit first using, you know, in their business, or they're not using the money habit at their home, it's Runway is the biggest Concern like I don't know if the other shoes can drop and what to do. So in that case, we often set up a profit account to ensure they're profitable. We also have an account we call the vault. And the vault is a reserve to cover expenses for your business should the other shoe drop for an extended period of time, months. So in our case it's a year. That's how vaulty I am. We've ensured that our salary for every employee is covered for one year in a specific account and the other shoe has dropped. So it was so interesting is when the shoe drops for us. There was a lawsuit that was ridiculous and caused off guard. There was a slowdown in business. You know, there's always things that happen. When those things happen without having some kind of cushion or Runway, we become highly reactive. Desperate people do desperate things. But since we had that, we were able to move through those steps very methodically and recover to an amplitude.
- [19:30]
A
In fact, I'm curious, in your. In some of your other work, you have created a licensing or, you know, a network of folks that are practitioners of what the book preaches are. Is. Is that in the works for this?
- [19:43]
B
It is. It is Money Habit Mentors. And we have 40 certified mentors already. And so moneyhabitmentors.com is a website. It's actually part of our Profit First Professionals because these programs, the Money Habit and Profit first run so in parallel. That's the umbrella organization managing it.
- [20:00]
A
Nice. Awesome. Well, Mike, I appreciate you taking a moment to stop by. Is there any place in particular you invite people to learn more about the Money Habit and connect with you?
- [20:08]
B
Yeah. If you want to learn about the book and learn about me, it's mikemotorbike.com no one can spell McAllowitz. And I just got to be clear. Motorbike, like the motorcycle. Some people confuse that with some other stuff. But mikemotorbike.com all the resources, the books, even pictures of me and you together at events are on that site.
- [20:24]
A
No way. Awesome. Mike, again, it was always great to catch up with you and hopefully we'll run into you one of these days soon out there on the road.
- [20:31]
B
That would be good. Thanks, John.