It's Boring, But It Will Make You Richer Than Anyone You Know

[00:01] zero dollars and really explode it, it's not about finding that perfect investment or following some sort of get rich quick course. It's about following a very simple, boring stack of behaviors consistently over time. In this video,

[00:14] five layers that I call the boring stack. Now, if you follow all five layers, I can almost guarantee that you will hit your net worth goals, including your first 100K. So, let's start with layer number one today, knowing your

[00:27] goal is $100,000 and you want to push your limits and try to attain it in exactly 1 year. In order to do that, you would have to know exactly what your time needs to be valued at in order to hit your goal. Studies show that if

[00:40] you're able to write down goals that are very specific and measurable, you are 42% more likely to hit them. Now, on the flip side, vague goals are going to produce vague results. So, the first thing that we need to do is actually

[00:52] actual number that we are targeting. $100,000 in a single year is $273 a day, but if you're only counting the 260 working days that we have in a year, that will jump up to around $384 per day. Or roughly speaking, you would have

[01:07] to make around $48 an hour in a standard work week. Now, of course, even if you were making $48 an hour and making $100,000 a year, you're not exactly taking home $100,000 a year. There are going to be bills, taxes, expenses, etc.

[01:21] So, maybe a better stretch goal here is to actually hit it in 3 to 5 years. At 3 years, we would need to net save, so that means after all expenses, $91 per day. And if we wanted to hit it in 5 years, we would need to save around $55

[01:34] per day. So, perhaps you even make a table for yourself, which is what I did originally. I mapped out how much I needed to save based on a 3-year, 4-year, 5-year, 6-year, and 7-year time horizon. The timeline that's going to be

[01:46] much you make, how much you can save, and also perhaps some of your investing returns. But, investing returns aren't everything because Morgan Housel, the Money, says that, quote, "Building wealth has little to do with your income

[02:00] or investment returns and lots to do with your savings rate." Now, that's not what Wall Street or crypto day traders want you to hear, but the math is actually shockingly simple. If you save and invest $15,000 a year and earn a

[02:12] 4.5% return, after 6 years, you would have around $105,000, but 85% of that actually came from your savings and only 15% came from your investment returns. Okay, but let's pretend you are a great investor and you

[02:26] average 10% per year. You'll actually hit it in 5 years, but savings will still make up 77% of your first 100K. Lastly, let me give you an extreme example. Let's pretend you invest $10,000 per year, and this time, you're

[02:38] averaging 20% returns every single year, which is nuts, by the way. That's maybe close to what Warren Buffett was able to accomplish over periods of his career. It would take you still about 5 years to hit $100,000, and even then, 60% of it,

[02:51] or the majority, is still comprised of savings, and 40% is investment returns. first 100K is actually a savings game and not an investing game. You saw that we just got 20% returns, but the majority still came from savings. So,

[03:05] figure out your number, reverse engineer the timeline, and then write down that and you want to put it somewhere where you will actually see it. Let's move on favorites. It's to become hard to

[03:18] will make more money. That's just a simple fact of it. So, if you wanted to make $273 a day, you need a skill or a certain set of skills in order to command that type of pay. In this world of AI that we live in, it's increasingly

[03:32] becoming really hard to stand out because AI can do a lot of what humans better. But, let me give you a practical example that can show you the difference Let's pretend for a moment that you are

[03:45] the country's top brain surgeon in America. So, you have a specialized tons of general practitioners. Those people make great money. There are lots of doctors and physicians and nurses, but the one person making way more than

[03:58] all of those other medical professionals is the top brain surgeon in the country. for another physician and get pretty comparable results, but if you're trying maybe a handful of them out there, then

[04:11] premium on that market. Now, you don't have to be a brain surgeon. I'm not get that $100,000 in net worth and beyond, but you definitely want to have a skill that isn't easily replaceable by AI or another person because, therefore,

[04:25] you will make more money. Trade skills, for example, can't be replaced by AI that easily. So, if you're an electrician, an HVAC guy, or a plumber, you cannot outsource this to a robot just yet, and these skills are highly

[04:37] defensible against AI. Another skill I believe is defensible against AI is writing. In our current world, where everyone is using ChatGPT to write their internal or external communications, I believe that all the communications are

[04:50] starting to sound kind of the same. First off, you're not crazy. You're human. So, because ChatGPT often uses repetitive phrasing and it sounds a stand out is a real human connection or

[05:03] believe that individuality will become very scarce and therefore valuable because it will stand out in a sea where everything sounds the same. So, try to interested in and ask yourself, can that skill be replaced by a robot? If the

[05:17] answer is no, then also ask yourself, can it be replaced by a human? You want it just comes down to supply and demand. If there's less supply of a valuable skill that you have, you will be more in demand and therefore you will be able to

[05:30] move on to layer number three today. We talked about how to earn income as well as how to figure out what your number is in order to hit $100,000 as quickly as about the other side of the equation, which is spending. Every dollar you

[05:45] don't spend gets you closer to that $100,000 number. That's because if you aren't spending it, you have an opportunity to save it and invest it practical. I have three easy tips for you. The first is what I like to call

[05:58] the 24-hour rule. This is probably the single most effective thing that I use in my personal life in order to cut back on spending. Before any non-essential purchase that's over $100, you want to wait 24 hours before you actually buy

[06:10] the thing. Now, $100 is just a number that I chose in my head, but for you, it could be $25, it could be 50, or it could be 75, etc. You just want to make number that's a little bit of a stretch as to what you don't spend on a regular

[06:23] times I might go out to eat with a friend, and that might be 50 bucks for about those purchases. However, if I'm about to buy something that's $120, like thinking about that purchase a little bit harder. Most spending decisions

[06:39] emotional, actually. So, by giving yourself 24 hours between when you see the item and when you actually purchase that item that's over, let's say, $100, really question if you really need this item or not. What you'll actually find

[06:53] in most cases is that after 24 hours, you might not even want that item save a little bit of extra cash. The second practical tip that I have for you is to do easy alternate swaps. So, whenever you're about to spend money,

[07:05] think about if there's a less costly alternative to doing so. If you go to making coffee at home? If you like eating out every meal, perhaps you see how much money you could save. And my favorite, when you do go out for

[07:19] lunch, maybe you keep it simple. Maybe you get the sandwich, but you skip the chips and you skip the drink, and this small decision will save you money over that I have for you guys to cut costs is to look at the biggest three categories

[07:32] where most people spend money in. That's going to be housing, cars, or food. So, if you are really serious about hitting $100,000 as quickly as possible, you have to think about where your money is going in relation to these three big

[07:44] you currently live by yourself and you pay $1,500 a month in rent, but your lease is coming due. The question then worth asking is, could I get a roommate minutes further than where I live right

[07:58] month? Because if some of the answers to these questions are yes, then you should absolutely do so. The power of saving that extra 300 to $500 a month is going especially if you do it early on. Now, after you do that exercise with housing,

[08:13] with your car, as well as the food that you are eating. With your car, are there ways to lower your car costs? Perhaps you look into comparing auto insurance offers across different providers, and you might be able to save 100 or 150

[08:26] bucks a month doing that. I'll link a car insurance comparison tool down below check to see if you're already getting the best offer on insurance, so you you might even sell your current car, which has a really high monthly payment.

[08:39] You would get a reliable used car instead, and then you would save the understand this is not about being too cheap or too frugal. You are simply just There's a big difference between being cheap and being deliberate, and I think

[08:52] with your money, you will be in the right frame of mind to change overall all your financial habits. All right, so now we know our number. You're going to become harder to replace as well, and you're cutting unnecessary costs. So,

[09:05] what is layer number four? And that is going to be automating these behaviors. James Clear says it best in Atomic Habits. He said that in order to form a good habit, we shouldn't aim to rely on motivation. We want to design our

[09:17] environment so that the right behavior just happens automatically and happens that those who pay themselves first, also known as automatic savers, they will usually hit or exceed their savings target more often than manual savers, so

[09:30] those that don't automate their savings. And from a psychological standpoint, you get paid, you have a small percentage of that paycheck going automatically towards your savings goals, you're not going to be tempted to

[09:42] environment to encourage the right behavior. As humans, we face so many financial decisions every single day, and if you have to make every single one that you could possibly get wrong, and in fact, we often get them wrong when

[09:56] left to our own devices. So, I would say take the time to set up some sort of work for somebody else, you can either do it on the payroll side with your employer, or you can simply set up an automatic transfer in your own online

[10:09] banking. Say you make $2,000 every 2 weeks, try setting it up so you save $400 automatically every pay period that gets split between a savings account and least every month you'll have at least $800 you have to work with when it comes

[10:23] to saving or investing. All right, this brings me to my fifth layer of our stack them all because it doesn't require any skill, it just requires something that people severely underestimate and that is time. Everything that we've talked

[10:36] about in this video, it doesn't work if you quit after 3 months. I said this in a previous video, but building wealth does not give you instant feedback. It's course, you know you're about to hit this ball and then you hit the ball and

[10:48] maybe it goes nowhere. When it goes nowhere, you know that you just hit a instant feedback on how well you just struck that ball. Your direct input in this case had a direct result, which was

[11:00] if you wanted to iterate on that feedback, at that point you could, but it's going to be vastly different. There's a huge delay in what you were doing now versus what your expected result is going to be. Because of this

[11:13] there will be some people that watch this video, they will do everything that I say in this video to a T. They will not see the results in the next 3 months and guess what? They will abandon their entire plan. You can do everything right

[11:26] in the next 3 months, 6 months, even a year and you will assume it's not moving or you're not seeing those results. If you are starting from zero, that you're going to hit $100,000 in roughly 4 to 7 years. Am I saying that

[11:41] it's impossible to hit it within 1 year? No. I know some people that have done increase their income at an incredible pace because of some business or side took off. But here's what I want you to think about, 4 to 7 years is going to

[11:55] happen no matter what you do, that time is going to pass. The only question is whether you're going to be at $100,000 in net worth or more when it does, or wondering what happened. So, I didn't say it was exciting, I said it was

[12:09] boring. The boring path does work, it just requires a lot of time and it requires discipline. Do it for longer than it feels reasonable and I promise you that if you trust the process, the results will come. If you enjoyed this,

[12:21] which is talking about every financial trap you're going to face as your net those in mind as you grow yours. I'll see you guys in that video or a future one on the channel. All right, thanks for being here. Peace.