“What’s the one thing about money that you wished someone had told you when you were younger?”
~ Sunday, February 5, 2023 Blog Post ~
I really enjoyed listening to this podcast episode of the All About Your Benjamins podcast by financial adviser Justin Castelli back in June 2018. I even downloaded it on my phone.
This podcast episode — “All About Your Benjamins™: Project One Question-EBI West (018) on Apple Podcasts” — made me gather some wise words from some of the best and brightest in finance. It featured a simple question yet a very important one:
“What’s the one thing about money that you wished someone had told you when you were younger?”
Mr. Castelli asked this query to some of the brightest minds in finance at the Evidence-Based Investing (EBI) West Conference in Dana Point, California in 2018.
Here are the participants:
Read by Justin: Kyle Moore and Jon Boorman
Recorded Live: Joey Fishman, Morgan Housel, Ryan Kirlin, Jack Vogel, Kris Venne, Dina Isola, Blake Street, Jonathan Novey, Howard Lindzon, Perth Tolle, Peter Lazaroff, Phil Huber, Ian Rosen, Blair duQuesnay, Taylor Schulte, Tony Isola, Nick Maggiulli, Christie Hamilton, Bill Sweet, Tadas Viskanta, Carolyn Gowen, Michael Batnick, Barry Ritholtz, and Josh Brown
I believe the golden nuggets that Mr. Castelli accumulated and shared on “All About Your Benjamins™: Project One Question-EBI West (018) on Apple Podcasts” can help improve my financial situation further, aid the listeners in getting back on track, or just keep us audience stay reminded on the importance of the basics of finance.
Here are the salient insights from the All About Your Benjamins podcast:
1. Do not be afraid to spend money on investing in yourself, whether it’s a book, training, certification, conference, or new software. Not all have the same impact, but each personal investment has the potential to give you a thousand extra return on your investment.
2. I wouldn’t change anything because I believe no matter what you tell someone, they still need to make their own mistakes to truly learn from them. But if I could, I would make my mistakes smaller. Do not over-extend yourself. Do not buy that house you cannot afford, or in investing or trading, do not use marginal leverage.
3. Time is on your side. Be patient. Adopt the mindset of “Bet small to win big.”
4. Have a very high savings rate. The many benefits are optionality and tons of flexibility. It also produces hunger and over time, if you can stick to it, only good things can happen.
5. Money is not just for buying material things. It is useful for gaining control over your time and that is what savings and wealth does. Money makes control of your time so you can live the way you want to. Do what you want to do with who and when you want. Money adds freedom. Every dollar of savings means more freedom.
6. Do the hardest thing to make money and make money as much as you can. Don’t worry about following your passion.
7. Invest earlier. Invested money will be worth double or triple what it was worth.
8. Start saving in a simple Roth IRA. It’s the first example of something children can’t immediately take the money from without it being a hassle.
9. Money is very emotional and not about dollars and cents. When you feel emotional, you might do things that you shouldn’t with your money.
10. Money is your most malleable employee. It does whatever you tell it to do and when you tell it to do it. If you neglect money, it will neglect you.
11. The only benchmark that really matters to someone is what they’re trying to do for themselves — what they want their money to do. It’s all about planning and goals.
12. Money is a language. Saving begets investing. If your parents aren’t saving for you, that’s a shame. The number one lesson is compounding. Having cash is important, even if you’re not investing it. Having that access to some savings is important.
Of the top of your paycheck, always start saving money for yourself first, be it 20 bucks or 50 bucks. Be selfish with your money. Take some off the top to pay yourself in the form of savings. If you have a wealthy family, be really nice to them. It really does matter.
13. Money is a tool. It is not the end goal. Money is a tool you can use for other purposes and as a form of expression.
14. Let time and compound interest work for you.
15. Money is a means as opposed to an end.
16. You can learn about money from so many different sources. Especially in today’s world, it’s much easier to learn about how to be smart from more distributed range of places than what the formal structure will tell you is true.
17. Your earning potential is not necessarily correlated with your intelligence. There’s a lot more to earning money than having straight As. You’re going to need to make a lot of streetsmarts in there in order to earn money.
18. Making money and saving money is more important than investing money. Talking about and finding the best investment strategy does not really mean a whole lot if you are not making and saving money.
It’s challenging to make real money. It’s fairly straightforward to go and get a job and put food on the table. But to really make money — a healthy 6 to 7-figure income — is really challenging.
19. Money is not as important as you think it is.
20. Start saving and investing sooner.
21. Women tend to be nurturing or providing. They should not liquidate their savings or 401Ks to pay for some short-term excitement to make someone happy. In reality, anybody who loved you would never ask you to cripple your long-term financial security for their short-term happiness. Be careful. Don’t use your long-term money for your short-term fun.
22. Start saving. That is the answer because of the time-value of money. Dollars compound over time. The earlier you get started, the better. Roth IRAs, Roth 401Ks, or Roth accounts are so powerful because that’s compound interest doubling hopefully every ten years or so.
3 Sources of Tax-free Income in the Tax Code:
1. Municipal bond interest — You really need to be super-wealthy on that to really move the needle;
2. Life insurance proceeds;
3. Sale of one’s primary residence; and
4. Roth IRAs.
23. Having money is not going to make you happy. There are plenty of miserable, rich people out there in the world. However, that being said, a lack of money can make you unhappy. It can make life’s ups and downs all the more stressful.
From a perspective of an investor and advisor, trying to smooth out those bumps and trying to essentially smooth out that ride is important.That should be a goal for everyone when they’re looking at their money lives.
24. Pay your future self first. It’s hard to first start out to work and not earn a great deal. But no matter how small an amount is, put aside a little amount for your future self. Every time you get a pay rise, give your future self a pay rise as well. Before you even get your first improved paycheck at the end of the month, you don’t miss it. Get that money going out straight away.
25. Losing money and making money are things that can’t be taught. You have to experience them on your own. That’s how you learn about money.
26. Money is just a tool. We put a lot of emotional baggage and there’s a lot of issues that come with money — chasing it, having enough of it, and not having too much. Money is simply a tool that allows you to purchase things and a certain degree of security for yourself and your family — health, financial, and retirement security.
Once I kind of figured out money is a tool that could be used, it really changed my relationship with how I thought about it. Money isn’t an object to pursue for its own sake. And at a certain point, you come to realize “Hey, I’ve checked out all these boxes. I could throttle back a little bit. I don’t have to be in a mad dash anymore or at least not the same way I once was.” Find a way to use money as a tool that best helps you reach your goals.
27. Start investing early. Even if you think you cannot afford to, you still have to find a way to. Get serious about your money. The magic of compounding will help you have so much more put away by now. You will also not be up against the clock saving your own money. Your life will be easier by investing. Invest even if it is a small amount and keep going.
Sources:
https://www.justincastelli.io/
https://podcasts.apple.com/ph/podcast/all-about-your-benjamins/id1331238711
https://podcasts.apple.com/ph/podcast/project-one-question-ebi-west-018/id1331238711?i=1000417859594
