068: When It Comes to Money, We Are Hard-Wired to Screw It Up
Hello and welcome back to the Cashflow Multipliers- 👋 the podcast dedicated to high-level entrepreneurs who are on a mission to become financially free. You know Nan, we have some pretty incredible and smart people who listen to this podcast.
Oh yeah, no doubt! Which is why they’ll have no trouble figuring out this riddle I had to share for the top of today’s episode. What five-letter word only has one left when two letters are removed?
Actually, that one’ss got me stumped too!
Money! Get it? Once the M and Y are removed you’re left with–
One. Yeah. I got you! 💪💪
All of this to say, when it comes to money we’re hard-wired to screw it up. Almost like a bad date, sometimes it feels like money enters your life only to leave almost immediately.
I think millennials are calling it ghosting 👻 these days. I can get over a bad date not calling me back, but when it comes to my hard-earned cash slipping through my hands…not so much. I mean, think back to when we were growing up– right?!
Totally. When we were younger we saw how hard our parents worked, and they still lived paycheck to paycheck. Even as business owners themselves, it seemed like no matter how large the check from customers were, usually five-six figures, it disappeared almost as fast as it hit their bank account.
It was heartbreaking to say the least. We’re talking within 1 to 2 days of depositing the check, 90-95% vanished to cover payroll, fixed expenses, taxes, etc. We used to joke they were getting poorer while making other people richer.
This brings us back to our main point of today’s episode, as human beings, we are hired-wired to screw up money matters. Why is this? We have to think we’re not wired to consider saving money for the future. Our ancestors weren’t thinking of the future when they were moving from land to land in order to live. They were thinking to survive with whatever they had on their back and were able to carry.
This really isn’t our fault. We can definitely blame our ancestors for this one. According to one financial psychologist, Dr. Brad Klontz, he wrote “our brains have evolved over thousands of years to focus on short-term survival in a dangerous world with limited resources. They were not designed for today’s optimal financial.”
I mean, this makes sense right? Why is there such a gap between what we know we should be doing– saving for the future, taxes, building credit safely, etc., and what we actually do. We literally have to override our instincts to do the quote/unquote “right” practices when it comes to our finances.
While our ancestors were crossing deserts, and mountains, and cooking their own meals over open flame every night– saving for the future was not really top of mind. After all, they were either in feast or famine mode. It all depended on what they brought back after a good hunt. Safe to say, they would not understand the concept of a Costco.
Seriously! The giant freezers alone would freak them out! But all jokes aside, living this life is dangerous and exhausting. Simultaneously, it explains why our ancestor’s instinct to consume as much as possible is a direct parallel to our modern-day struggle with overconsumption.
The Consumer/Producer Spectrum. Where Do You Fall?
Fast forward to today, money is expressed in the consumer/producer spectrum. You’re familiar with this way of living already. On the consumer side, money enters your life through some form of labor– (aka trading your time for dollars) – whether it’s a job or business. Money leaves when you consume things. Such as your car payment, utility bill, or expensive boba 🧋 habits perhaps?
Ugh, that last one hit a little too close to home! Here’s an interesting statistic- show that 60% of millennials who make over $100,000 a year claim to live paycheck to paycheck because they have not yet figured out how to solve their consumption instincts.
However, on the other side of the spectrum, the producer side, you are generating money. Instead of money flowing out and disappearing into the ether, you are producing lasting wealth through building your income-producing assets. Of course, we do this through multifamily apartment syndication.
So, let’s pause for a sec and consider which side of the consumer/producer spectrum you fall into. This could be a gut punch for some folks– but that’s okay! This is a safe place, and don’t worry, we’ll get into some tips on how to maneuver your way out.
After all, it wasn’t that long ago that Nan and I sat a little too comfortably in the consumer camp. When we discovered real estate investing, educated ourselves, and became passionate about financial security, we found ourselves leaning way more towards the producer side.
When you lean a little too heavily on the consumer side, you’re living on a sword’s edge. What do we mean by this? Anything can throw you off. An unexpected job loss, health care, or sudden move can throw your entire financial positioning into turmoil. Sadly, you work not because it’s fulfilling, but because you have no other option than to continue, even if showing up to work every day erodes your mental and emotional health.
This situation is a little too real for people who are close to Nan and me. Recently a nursing friend of ours described her sense of despair. She told us that every day when she drives to the hospital where she works, she literally sits in her car bawling her eyes out because she can’t stand working there anymore but has no choice but to continue because it pays the bills. In her mind, she has no way out.
We hear these types of stories all the time and it breaks our hearts 💔. Because this doesn’t have to be her reality, and it doesn’t have to be yours either. So what does it take? A paradigm shift, where you start planning the steps and taking action to make the conscious move into being a producer rather than a consumer.
So here’s the good news if you’re ready to make this change– you’re listening to the right podcast. Nan and I have dedicated so much of our lives to helping people break out of what they think is their only option. You are more than a person who pays bills, or a person who has to make ends meet, you’re a person first. So let’s make your ancestors proud by laying out some simple steps to move you from consumer to producer.
From the Seats to the Field
Number one thing, know your place. As in, your place in the economy. You can’t go anywhere without some sort of advertisement encouraging you to spend spend spend. Even Netflix, notorious for not having commercials, is experimenting with ads now. We are bombarded with products and services to spend our money on. 🙌🙌
So we understand how tough this mental shift can be. We’re not saying you should stop buying things, and then live below your means on top of it, that would be a terrible way to live!
And totally unrealistic. Our mission is simple– we want to empower 🤩 you to become producers in the economy. Because guess what? You don’t have to stay where you were born into. Just because your grandparents were consumers, and your parents, and then you for a large portion of your life doesn’t mean you’re stuck there. You have the power to switch lanes to being a producer.
So, what are some roles that producers play in the economy? Creating energy, clean affordable housing, and anything that produces jobs for other people. The great thing about being a producer is that it doesn’t require you to do all the work.
Have you ever seen the end credits to a Hollywood blockbuster? There are hundreds of names listed after the executive producers because they are the team that supports the efforts of the producer– all of those people are working hard on their behalf.
For multifamily apartment investors, the executive producer is parallel to passive investors who only have one role– to invest their money. Then, they get to sit back and have their squad work to build up their income-producing assets. To be a producer, in an economic sense, you contribute minimal input to receive a maximum return.
Secondly, you’re going to need a good squad to back you up that supports and uplifts your lifestyle vision. You need a strong team that only has the will and desire to see yourself where you see yourself, but also have the expertise and experiences to help you maximize that return.
We can’t say this any more clearly: you need a good team to make your financial freedom dreams come true. It’s a beautiful thing to see people chase after their wants and desires with the same passion and vigor.
Lastly, to round out today’s episode in how you can take a comfortable seat in that producer role is to maximize your tax efficiency. As we all know, Uncle Sam loves to reward the producers in the economy because they provide passive tax benefits for those who follow the rules.
And currently, there is no better asset class that is rewarded for this role than multifamily apartment investments. In fact, a lot of 6 and 7-figure earners we know pay virtually zero dollar in taxes because they invest in apartment syndication.
Did you hear that? Zero! In! Taxes!
So, what’s the catch? Well, none really. Remember, even as producers, growing your wealth will be choppy when your gains are taxed but there are ways to mitigate this. Your wealth will grow exponentially faster if you pay little to no taxes on your gains. If this sounds a little over your head, learn more about paying less in taxes on episode 11 which we’ll link in the show notes.
Okay, so moving from consumers to producers, how do we feel Cashflow Multipliers? Look, we get it, this is a lot to digest and change about ourselves in the short amount of time we spent together. We’re talking about literally re-wiring our brains and re-writing the systems we were born into– for generations!
So we understand if it takes you some time to process, but, we wouldn’t dedicate this time to preach about it if we didn’t see the massive, life-changing rewards that can come from taking this seriously. You deserve the best this life has to offer– and we want to help you get there.
Until next time, Cashflow Multipliers! 😘😘
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