My Worst Financial Mistake (The #1 Wealth Killer)

Hey guys! So about a month ago, I took a break from the normal content to post a more personal video that wasn't scripted, and I just spoke from the heart for over 30 minutes. To my surprise, it seems like a lot of you preferred that style of video, so I'm bringing it back to talk about another topic that I feel very strongly about, and that would be money.

I've recently started to see all these articles breaking down why Gen Z is splurging on luxury goods to show their economic despair. Affluent Millennials are now exaggerating their wealth to appear richer than they are on social media, and there's this new phrase of "doom spending" to represent the belief that people are so financially screwed that it's pointless to even try. Honestly, it just seems like these types of situations are only getting worse, and there are too many mistakes being made for me just to sit back and not at least acknowledge what's going on, along with some potential solutions so you don't fall into the same traps.

I've literally read through every single article that I could find on these topics, and I've broken them down into six categories that'll absolutely destroy your money if you aren't careful. So here's exactly what to avoid, and we'll start here. Oh, and by the way, if you prefer this style of video that tends to be a lot more laidback, it's less scripted, it's more off the cuff, just let me know in the comments section. I'll do my best to read and reply to as many of you as I can. And also, a big thank you to Cook Unity for sponsoring this video, but more on that later.

Anyway, I read through a lot of these doom spending articles, and I hate to say it, but the situation is a lot worse and a lot more common than expected. Like, this article found that 43% of Millennials and 35% of Gen Z has basically given up on the idea of saving any money because the concept of buying a house or a car or paying off any debts seems completely pointless. But I'll tell you, if you want to make a substantial change to your finances, you're absolutely going to regret not focusing on the first $10,000. Here's what I mean.

When you're just starting out, let's say you got your first job, you're starting to figure things out, and you're realizing how expensive it is just to be alive. Saving money is really, really difficult. In fact, it's now reported that 73% of Millennials are the most likely generation to live paycheck to paycheck. So it's no wonder why there's this mentality of, "Well, I'm already financially screwed to begin with, so I may as well spend whatever money I have left over now." So I could at least enjoy myself, because otherwise, I'm not enjoying myself and then making no progress towards anything I'd want to buy anyway. So, uh, may as well just spend it.

But you know what? I'll tell you firsthand, if you have what it takes to make the first $10,000, then you also have what it takes to make your first million dollars. And if that sounds stupid, it sounds crazy, I'll break it down for you. It goes something like this: excuse my language here, it's not me saying this; it's Charlie Munger, but he once said that the first $100,000 is a b***h. You gotta do it, I don't care what you have to do; if it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to get your hands on $100,000.

After that, you can ease off the gas a little bit. I know, easier said than done. But how do you make it to $100,000 when that's more than what most people will ever save? Well, like I mentioned earlier, it starts with $10,000, and just like with any goal, here's how you could achieve it. First, you gotta break down the time frame. The thing is, when you set a goal and you don't have a specific time frame to get it done by, you're never going to get it done. It's like Parkinson's law that suggests that your work expands to fill the time available for its completion. So when it comes to saving something like $10,000, give yourself a year to do it.

Second, you just gotta start right now. I've just noticed that you have the most momentum when you're initially excited about the idea of starting something new, and then after about a day or so, that excitement wears off, and you're left with the reality that your entire life has been one giant procrastination. So don't do that. Just start immediately.

Three, you gotta also create a budget. All you need to do to make this happen is sign up for any one of those money tracking websites that aggregates all of your information together, links your bank accounts and credit cards, and then it shows you in real time how much money is going into and out of your bank account. Once you do this, I guarantee you're going to see all these random little things that just pop up that you didn't ever actually need, and those are the ones that you could cut back on.

Four, you then got to pay yourself first. I know this is the most cliché money planning advice that everyone always says, but it's true. By paying yourself first, or basically just taking money off the top and transferring it into an account that you do not touch under any circumstances, it forces you to live off whatever's left over, and by doing so, you're going to rack up a lot of savings.

And then finally, five, you gotta get a side hustle. Like, the fact is, it is possible to get to the point where saving more money becomes completely counterproductive. Like we all know not to spend too much money on a brand new car, to rent a luxury apartment on an entry-level salary, or not to eat out at restaurants too much. But when you're already spending as little money as you could possibly get away with, then making more money becomes the next logical step. And with a side hustle or second part-time job, that's the easiest way to go about doing this.

This all means that if you're able to save an extra $10,000 a year and you invest that into the markets, which historically has generated a 7% return, in 7.84 years, you'll have your $100,000. From there, if you just keep doing the exact same thing and you keep saving just $10,000 a year, you'll be able to reach that next $100,000 in just 5.1 years. Then again, if you just stay the course, you'll make another $100,000 in only 3.78 years and another $100,000 in 3 years after that, and another $100,000 in 2.2 years after that.

This means that theoretically, you could go from $600,000 to a million in less time than it took you to go from that zero to the first $100,000. That's why, even though it might seem pointless to save some extra money now because it doesn't add up to much, if you could just save an extra $28 a day and do that on a regular basis, you'll have your first $100,000. And then after that point, if you stay consistent, that does all the heavy lifting for you.

Second, another aspect that does not get enough attention is the fact that most people are living in extremely unhealthy lifestyles. Like, did you know that 56% of Americans between the ages of 18 and 25 are either overweight or obese? The average American drinks more than nine alcoholic drinks a week, and only 28% get enough exercise. You know, all of this reminds me of a Facebook post the other day by Alex Becker, and he summarized it perfectly. He said, "At 30, I always assumed that I would just have to accept aging. At 36, I realize this is simply because most people just have terrible lifestyles and habits that build in their 20s and catch them post-30 as the negative effects start to pile up. Declining at 3 to 5% a year due to your habits leads to a massive decline over time."

You see this at 30 plus, as people put on an extra 3 to 5 pounds a year. By 35, they're obese, inflamed, complaining about getting old and assume this just happens. It does not age as well as you like. Anecdotally, I found all of that to be completely true. Like, I just turned 34 years old, and believe it or not, I'm in better shape today than I was back at 25. Albeit, I have to work a lot harder to get there, but the habit stuck with me. Like, I remember getting my first gym membership at 24-Hour Fitness when I was 19 years old, and I would go after work. I'd listen to a self-help audiobook, and I remember thinking to myself that no matter what happened earlier in the day, even if I had a really unproductive day, I got nothing done but I went to the gym.

I remember thinking to myself, "At least I went to the gym. I got something nice done for myself today, and that's a win to me." I guess I just saw fitness as something that I had direct control over, and I felt really safe knowing that it was 100% on me to make a difference. Like, it was my choice to go to the gym, it was my choice to eat healthier, it was my choice to lift heavier, it was my choice to stay longer, and I think all of that built and compounded to build a lot of mental fortitude.

This was also one of the reasons why I started eating cleaner. I stopped eating fast food, I stopped drinking alcohol, because why would I want to destroy all the progress I just made at the gym by doing these things that I don't really want to do anymore? And no, this journey has not always been a straight line for me. There have been times when I've not been as good as I should have, but it is possible at any age to correct course and get in the best shape you've ever been in in your entire life.

Now, separate from that, from a financial standpoint, there's a direct correlation that employees who exercise regularly earn approximately 9% more than those who do not. Of course, it could be that the personality type to exercise on a regular basis is also the same type to want to advance more within their career. But the point still remains: regular exercise was found to improve energy, focus, mood, and motivation. So if you want a life advantage to getting ahead, this is it.

Plus, like I mentioned earlier, the older I've gotten, the more I've begun to realize how important it is to take your diet and the foods you put in your body extremely seriously. Like, when it comes to myself, I've just found that when I eat random snacks throughout the day or have a cheat meal because I'm really busy and I just want to save some time, it ends up with me feeling tired, lethargic, and just really demotivated throughout the entire day.

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All right, so if you'd like another super simple practical step that you could start immediately for free that'll put you leagues ahead in terms of building your wealth, it's this: build your credit score. Unfortunately, this, for me, was just one of those lessons that I learned the hard way because growing up, I was taught that debt was bad. I distinctly remember my parents paying for everything with a debit card, them telling me that credit card companies were always out to get you, and if you couldn't afford to buy something outright in cash, you shouldn't be able to buy it.

For whatever reason, from all the things I saw growing up, that just stuck with me. And as I started making my own money, I started to really like and embrace the idea of only buying things that I could afford outright in cash, that I had sitting in my account. Even as I got older, I made my first adult purchase, which was a 2005 Toyota Prius, and I purposely waited until I had all the money available in cash before I went to buy the car. And it was really nice. There was something really calming about not having all these random monthly payments, and for me, I just started to believe truly deep down that this is the best way to manage your money.

Of course, I did have a few friends who were telling me to go and open up a credit card at the time just to be able to build credit, but I was really stubborn and I thought I was so cool. I thought I was so much smarter than them because I never needed a credit card, I never needed a loan. I thought it was so cool to be able to brag that I could just save up and buy whatever I want in cash. And that was until I wanted to buy a house.

At the time, it was 2011; the real estate market was in the gutter, and I had $100,000 saved up after four years of working as a real estate agent. So I went to all these lenders and I told them I wanted to use this as a down payment to go and buy a property, but they all said the same thing. They ran my credit report and nothing came up because there was no history. There was just nothing there. And as a result of that, they denied me despite me having tax returns, despite me having the down payment. It was a no. That experience really just taught me that if you want to win the game of money, you gotta play the game of money.

This means building your credit score as soon as possible and then using it to your advantage, because the fact is, the people with good credit scores get the lowest interest rates when they want to apply for a mortgage, or get a car, or even get accepted on a rental, because the person with a good score is more likely to get it than the person with a bad score. It might even help them save money putting down on deposits with utility companies. Like, there's so many ancillary things having a good credit score is going to help you with.

In terms of how to do this, all you got to do is open up a no annual fee credit card, like the Discover It secured. Put a few minor expenses on the card every single month that you'd be spending anyway, and then pay off the card in full. Once you do that for 6 months, repeat the process with another no annual fee credit card. Within about 2 years of doing that and paying it off on time in full, always, no matter what, you'll have a whole bunch of positive trade lines on your report, and by doing so, you'll probably have a pretty decent credit score.

And no, don't get this confused; it's not about borrowing money to buy stupid stuff you don't need and wasting it. It's simply about taking advantage of the credit system to be able to get the lowest rates possible, to get accepted to the things that you would be buying anyway, and saving money by doing so. Without exaggeration, had I not been stubborn and actually done this when I was 18 years old, I could have easily made another million dollars because I would have leveraged my money during a time where real estate was trading at 1/10 the value it is today.

So just let my misfortune be your blessing: build your credit, stick with it long term, get a good credit score, and hopefully, that’ll help make you more money. Now, fourth, when it comes to stuff like this, don’t wait for things to happen because it won’t. I remember the first time this clicked for me. I had just got my real estate license, and I began working underneath another agent. He would allow me to shadow him throughout the day; he'd give me tasks to work on, and I would stay as late as needed to get whatever he wanted done.

But one morning I showed up, and he was out of the office, so I spent my time viewing homes on the MLS, probably checked my emails every 5 to 10 minutes. I spent the entire day in front of a computer doing absolutely nothing. Then I left and showed back up the next day; he was also out of the office, so I wasted that entire day too. I did absolutely nothing. The next day, the same thing—I did absolutely nothing. And it took me about a week to realize, like, wait a second, I don't know how to manage my own time without someone else telling me what to do.

Like, let that sink in. Growing up, you're told exactly what to do and when to do it by your parents. When you go to school, you're told to complete very specific assignments with very specific instructions. You get there at 8:00 AM, lunch is at 12:30, school ends at 3:30, Friday gets out an hour earlier, breaks at 10:15. There is just so much structure that it becomes impossible for you to be able to figure out how to manage your own time, on your own schedule, doing what you want.

And most people never have that opportunity. Instead, they go to college, which is a similar structure to high school, then they get a job, which is a similar structure to college. And that's great if you like instruction and just want to be told what to do, but it's horrible if you want complete autonomy over your life. For me, it was really just those days in front of a computer waiting for someone to tell me what to do while I made absolutely no money that made me realize that if there's something I want to go after, it's up to me to be able to make that happen. It's on me to make those decisions for myself.

In life, there's really no one out there who's going to push you to take risks, to get yourself out of your comfort zone, to go to the gym, to eat healthy, and to pursue your dreams and really make that a reality. I mean, sure, plenty of parents out there want the best for their kids, but I would venture to argue that most of them would rather than be safe than take a risky path that has a high likelihood of failing. And you bet they're not pushing you to try to keep the gym streak going.

That's why you really gotta take matters into your own hands, because as an adult, no one is going to save you. No one cares if you don't achieve your full potential. And hey, I'm sure your friends are great, but I'm sure even in those circumstances, they don't want you to progress too far ahead of them because they might be afraid that you would leave them behind.

Although, if you really want to make the most out of life, I recommend doing this: first, think about what you really want out of life. Think very clearly about what you want to set out to achieve. Do you want your own business? Do you want a great 9 to 5 where you could go home and mentally check out and be done with work? Do you want to go and travel? Do you want more money? If so, what do you need the money for specifically?

I would take a few days to be as clear as possible about every single part of your life that you would like to change. And then you need to consider how much you would pay for this. And by paying, I don't mean money, but achieving anything beyond the bare minimum is going to come with some level of sacrifice. That could be giving up all your waking free time, it could be cutting out all short-term fun, it could be the financial risk of losing absolutely everything.

But here's what I found: once the pain of changing becomes less unbearable than the pain of ever achieving what you actually want out of life, the price you pay seems cheap compared to a lifestyle that stays exactly the same. This entire mindset shift really set me in a different trajectory because I thought to myself, if there's something I want, I now have the power to be able to work towards it.

In my case, the sacrifice was simply living like a broke college kid throughout my entire 20s. It meant constantly delaying gratification, no matter how badly I wanted something. It meant having absolutely no free time beyond anything just work-related. But the payoff was that that allowed me to pursue what I really wanted to do, not to mention, you know, making YouTube videos was another example of doing just that.

Like, I had always wanted to make YouTube videos talking about my experiences saving money, working as a real estate agent, and building credit and optimizing credit card rewards points, but I always thought to myself, I could always do it in the future; no one would listen to me anyway until I get more experience, so it's probably better I just wait and I don’t do it. But years passed by until it got to the point where I realized that no one's going to push me to do this, and if I don't take the initiative right now to do it myself, I'm never going to do it. And so I did, and here we are, 7 years later.

Moral of the story: whatever you want out of life, be very clear about it and then work towards making that a reality. Sure, you might fail. Yeah, it'll take some getting used to. But recognizing that you have complete autonomy over your time is a very powerful force to be reckoned with.

Now, next, speaking of pursuing what you want, I know I just alluded to it, but you're going to have to embrace the risk of failing or at least losing a lot of time and money. Look, when it comes to anything money-related, I definitely operated with a scarcity mentality. For whatever reason, ever since I was a kid, I've had this belief that everything could disappear in a moment's notice, and because of that, I don’t like taking a lot of risks. Like, I would rather keep what I have than risk it to potentially make even more.

And even though this is great for things like saving money and being super consistent, it's also held me back from pursuing things because I wasn't sure if they'd pan out. This apparently is called money dysmorphia, where you feel insecure about your finances even though, objectively, you have nothing to worry about. And apparently, it's also really common, like about 50% of Millennials and Gen Z feel this way. Some say it's because they became an adult during the Great Financial Crisis; others say it was seeing how quickly things changed during COVID.

Personally, I just like to plan for the worst-case scenario because you never know what might happen, and that's how I justify it to myself. But even when acknowledging that, you also have to realize that no matter what you do, there is the risk that it's not going to work out.

In my case, at 18 years old, I bet everything I had on becoming a real estate agent, but I wasn't worried about failing because if I failed, I had nowhere to fall because I was already starting out at the bottom, and the worst-case scenario was that I was wasting my time of which was worth nothing to begin with. From there, I invested all of my savings into the real estate market, and I thought to myself, the risk is these homes decline in value, but they're never going to be worth nothing. I could always rent them out for something, and even if things go absolutely wrong, I will just end up making less money than expected, so I'll accept the risk.

Even with creating this YouTube channel, the risk was that I'd spend my evenings working on a channel that went nowhere and I'd embarrass myself. So that was a risk I thought was worth accepting. I hate to say it, but I've done the similar risk versus reward behavior throughout my entire life, and anytime I'm thinking about a new venture, I think to myself, what's the worst-case scenario? How likely is that to happen? And probably it's never going to happen anyway, so it doesn't matter.

Like, let's give an example of this. Let's say you want to try a new job. The worst-case scenario is that you hate the job and you have to stay there until you try to find something better. But the best-case scenario is that you love it and wind up making more money. So that seems like a great risk to take on. On the other hand, betting your entire life savings on an untested business venture that has a high risk of failing is a really bad risk profile. I don't think that is worth pursuing to that degree.

So instead, you could keep your job, test it out, do it at a small scale, grow it over time, and then you're still able to pursue it, but without the risk of downside. I think you get where I'm going with this: the way I see it is that there are ways for you to pursue what you want and try different things while limiting the downside, and if you could become clear about what that is, you could still go and do it. The downside is really not that bad, and they are worth pursuing.

And finally, please say yes to new opportunities. Looking back, there were so many random events and gatherings that I could have gone to, but I said no because I was tired, I didn't want to leave the house, and I felt awkward going alone. I know it sounds silly, but in hindsight, I should have gone. Every single time you push yourself to do something you didn’t want to do, you look back at it, and you're always glad you did.

I guess it's kind of like the same feeling as going to the gym when you really don't feel like going, and it seems like the last thing on your mind you want to do, but then you go, and then afterwards, you're really happy you did it. Apply that towards just about any invite or opportunity to push yourself and meet somebody new, and good things usually happen.

The way I see it is that, especially when you're starting out in a career, you never know where the next big opportunities will come up, who you'll be able to meet, or what you'll get offered. The more you put yourself out there, the higher the chances are that you'll be exposed to new ideas, jobs, and people that could change your outlook.

I know it's easy to get complacent and sometimes you don't have the energy, but if you have nothing else better going on, get out of the house, meet new people, and I promise it's not going to be something you'll regret.

And that is my very long-winded advice for anyone who finds it helpful or is willing to listen to it. I really appreciate that. Let me know what you guys think about these types of videos down below in the comments section. Hit the like button and subscribe if you made it all the way through. That's all I ask for; it would mean the world to me. Thank you so much, and until next time!