Transcript of The Hidden Beliefs Keeping You BROKE: How to Shift Your Money Mindset ft. Ramit Sethi | Mel Robbins

I would love for you to talk to the person listening and guide them through the process of locating this core memory so that they have that with them as we move forward. And you help us define this philosophy that you've created called a rich life.

I love it. Let's do it. Okay, so let's start. We're gonna start in your early twenties.

Okay?

And we're gonna zigzag throughout our conversation today. We're gonna go back to childhood and we're gonna go to the future. We'll do it all. Cause that's what money is about. It's about understanding the seasons of life and how money interacts.

Oh, I fucking love this.

Okay, so in my twenties, again, that irrational joy came from being able to buy appetizers. And for everybody here, I want you to think about, you may have been in college, you may have been working at your first job. What was the thing where you said to yourself, I wish I could do that, or am I ever going to be able to do that? And remember, it's not usually a big thing. It's not. I want to take a round the world trip and stay in all these fancy places. It's often an appetizer. It's being able to pay for your own vacation. It might be, you know, a lot of people joke about it's getting the guac at Chipotle. It might actually be that there's nothing shameful about a small, vivid aspiration that you had. How do you think everyone listening is, is going along with this journey so far? Mel?

I think good. Amy?

Okay.

You think we're good? Okay, good. Yeah, my producers, like, mm hmm. This is.

Okay, good.

We got, like, I think we're all right there. I have a question to ask you to go a little deeper in this, because I was, I noticed that, you know, you've spent a lot of time studying psychology, and you, of course, help people change the way they think about money. And I would love to ask you about the way in which your formative years as a child and what you experienced as your parents emotion or conversation around money, how that impacts your mindset around it. And, you know, I'm asking that because I feel like it must be somehow related to this core memory of, I just wish I could go and take myself vacation. I wish I could buy the guacamole. I wish I didn't have to worry about the needle on the tank of gas getting to empty and not being able to fill it up. And so for me personally, you know, it's interesting. My parents. My father was the first person in his family to go to college, and he had to pay for it. And my mother also went to college and had to pay for it, and she ended up dropping out to have me.

And then my dad got into medical school, and my mom worked nights for the IR's while she and my dad took care of me at night, and then she took care of me during the day. And we lived in public housing while he was a medical student and when he was a resident in Dayton, Ohio. And then my. I was in fourth grade when my parents were able to purchase their first home. And my dad did not pay off his medical school loans until late into his thirties. But here's the interesting thing about it. Even though we struggled, and I can relate to the. You know, we never went out to eat when I was a kid, not until middle school, anyway. And I never remember my parents being stressed out about money.

What do you remember them saying about money?

Nothing. I don't remember them talking about it. And I just had this sense because there was this, like, ease about it, that if you need something, you figure out how to get it. That there wasn't a lot of griping or complaint. And I know they were trying to make the ends meet, and they come from very blue collar, modest families, hard working. They were very hard working. And so I just kind of got this thing, like, money's there when you work for it, and you don't need to worry about it. And. You know what I mean? Like, I not. Like I was spoiled or anything. That was not it at all.

Yeah.

But they didn't pass on the stress to me. Now, Chris's family had plenty of money, but there was this huge dialog, you don't deserve that. We don't have it. You're not going to be spoiled. And so his butt is so clenched when it comes to money. Like, the guy's like, how much does the guacamole cost? I'm like, dude, have you seen our checking account? You can afford it. Like, he literally adopted this. This kind of gripping mentality. How does your. What would. Like, how does that impact the mindset that you have your early childhood years?

So you just gave us a fantastic journey into your childhood. And if you don't mind, please, I'm going to dive a little bit deep and kind of shine a light on what you just told me.

Okay?

Okay. So, a lot of this comes from my work on my podcast, and, of course, on the Netflix show with individuals and couples. And many people believe that money is simply about numbers. And, of course, the numbers are a very small part of how we experience money. So when you say your family never really talked about money, but there was a sort of ease about it. I'm listening. I'm going, okay. And then it clicks when you tell me they were blue collar, and they taught us that if you work hard, money will come. Okay. That's a cohesive belief. I totally agree. Sometimes I speak to couples where one person in the couple grew up, let's say, white collar, maybe upper middle class, and the other grew up working class, blue collar. Their beliefs conflict, and they can't figure out why. Right? They think it's about, oh, she spends too much at target or his truck is too expensive. But really, there's this belief, particularly with different class structures, which we never really talk about in America, which is, if something's hard, let's just grind harder. And you can grind harder. There's no doubt about that.

Law school, etcetera, medical school. But there's a certain point where grinding a little harder just doesn't work. You have to change the way you think about money. For example, did your parents talk about investing? Iras compound interest when you were growing up?

Oh, my God. No.

Exactly. And so some of the folks who I speak to, they said, we were talking about investing at age five around the dinner table. Here's what happens if you put a quarter in the bank. Now, imagine if a couple is meeting and one of them has been talking about investing since age five, and the other has never talked about investment. That's what we discover when we peel back the curtain and we see how beliefs affect us. So if you're listening, the question I would ask you is, what conversations do you remember your family having when you were young about money? What phrases? Here's some examples that might sound familiar. We can't afford it. We don't talk about money in this family. We're not like those people. We don't need a fancy car, vacation, eating out. Any of these sound. You heard these or your friends heard these?

No, but I have heard these. I'm nodding because I'm like, this is exactly what people hear.

Exactly. And so here's the consequence of that. Okay, so you hear the most common one is, we can't afford it.

Yes.

Parents just say this like it just comes out of their mouth. Parents, you got to stop, because let me tell you what happens. They end up 40 years later talking to me, and they heard, we can't afford it 10,000 times. Growing up, just reflexively, oh, I want shoes we can't afford. I want a trapper keeper we can't afford it. And then this person, hopefully they end up in a pretty nice job. You know, maybe they read my book, they set up some investments, maybe they've done well, they have some decent amount of money. They come to me, they go, why do I still feel guilty ordering a salad when I eat out? And my partner is saying, we have the money. Look at our checking account. Why? Well, trace it all the way back to conversations you had starting at age six. We can't afford it. And it really shows this key principle of money, which is the way you feel about money, is highly uncorrelated to how much you've got in the bank.

Okay, say that again?

Yeah. The way you feel about money is highly uncorrelated to how much you've got in the bank. Most of us believe if I have $5,000 more or $50,000 more, $500,000, finally I'll feel safe. And I'm here to deliver some unfortunate news, which is that's never going to happen. Now, you can change the way you feel about money. You can. But a number in the bank is never going to change your feelings about it because it's uncorrelated. You've got to work. If you want to live a rich life, you got to do two things at the same time. One, you got to understand the numbers, the basic numbers of finance. You've got to know your savings rate, you've got to understand the rule of 72. This stuff is actually not complicated. It's really fun. We could talk about them. I'll give you a couple of ratios. It's easy stuff. It's like a 6th grade.

I'm already zoning out on that. We'll get to that in a minute. But first, I want to hear the second part of this.

The second one is you've got to simultaneously work on improving your money psychology. You've got to put a practice into place to start feeling good about money because so much of society tries to get us to feel bad. I love this you're going to be doing.

I love this because whether you're listening right now and you've got millions of dollars in the bank and you're set for life, or you are nearly a million dollars in debt like my husband and I used to be over a decade ago. Starting with changing your psychology around money changes absolutely everything. And that's what we're going to focus on today, because that is something that we all need to do. Even if you've made a ton of money, grinding it out, putting your head down, you probably haven't enjoyed it. And there is a way for you to change the way that you think and relate to and the psychology of money so that you have greater freedom, so that you have possibility, so that you're more present, so that you can be more confident and effective in your decision making. And that's exactly what Ramit is teaching millions of people to do. And it's available to all of us, regardless of where we've come from, what class we're in right now, what we've experienced in our lives. We can all just have a zero on the balance sheet, and we're going to go up from here because Ramit's going to teach us how to change our psychology.

So where exactly do we start knowing that, that, you know, everybody comes to this conversation, dragging historical baggage that they might not even be aware of about their relationship to just money and what it means?

Yeah. Let's imagine that it's the first day and you've decided to join the soccer team.

Okay?

People come with. Some people have fancy shoes. Some people have no shoes. Some people are really physically fit. Others haven't run at all in years. And for this metaphor, I'll be the coach.

Okay.

And what I'm gonna say is, we're all in this together and we're all going to start on the same page.

Okay?

Okay. So I like to start from a place of, we're going to have fun with this. I'll tell you what we're not going to do. I'm not going to say, pull out this 46 part spreadsheet and let's go through all your spending. Nah, everyone's going to leave, and I don't even want to. No one. It's irrelevant. Instead, I want to do something, an exercise together with you, me, and everybody listening.

Okay.

About what I call your money dials. So I'm going to ask you, let's do this together. And everybody listening, I want you to follow along. So, Mel, if I asked you, what is something you love to spend money on, not like, but truly love? Look at that smile. What would it be?

Oh, I love buying dessert. I like, now that I've started, I've gotten out of debt, I make a lot of money, my favorite thing. And I always joke that this is my version of a Lamborghini.

Uh huh.

When I go out with a group of people, I order every dessert on the menu.

Okay. What does that get you? Tell me about that. Why?

It feels really decadent and fun, and it allows me to sample things without committing. And it's a way to take care of everybody at the table because everybody kind of secretly wished that, you know, somebody would order one of the desserts.

Yes.

And it's a way to relax kind of that grip, like, oh, I'm only allowed one dessert, so I gotta pick the one. It's just like, a playful way that's kind of ridiculous. But every time I do it, everyone's like, oh, my God, that's so fun. And so I just love doing that. And I'm also a massive gift giver, so I love spending my money on other people and orchestrating gifts and creating experiences for people. Those are my two big things.

I love it. I hear. I hear so many things that I'm so thankful I get to highlight some of the things I just heard. So it sounds like you're what I would call a money dial. The thing you love either gifting or eating out. Desserts.

Yes.

Would that be fair?

Yeah.

Okay, pick one. Which. Which is the one that gets you really excited?

Um. Gosh, I don't know.

Um, it's. I kind of think it's desserts, because.

You deserve minutes talking. Desserts. Desserts.

It's. It's usually very obvious. Like, it. People light up when they talk.

Well, because I also feel like it is a gift. Cause nobody does it for themselves, and it's ridiculous. Like, why would you order all the desserts knowing everyone's gonna take one bite? Because we can. And because it's fun and very abundant. Yeah. And it's very. It's about abundance and play and, like, that kind of. It makes me feel like a kid almost.

Okay. I love it. So here we have Mel in, like, a Willy Wonka chocolate factory. Just like, we get to get it all. And it's very abundant. So for everybody listening, the most common money dial, or thing you love to spend money on, is eating out. Number two, most common is travel. Number three is health and wellness. Number four is convenience, which happens to be my money dial. And there's a variety of others you can search online. Okay, so that's great for everybody listening. You should identify the thing you love and go into that detail if you're doing it with a partner. Notice how I asked why. Tell me what. What does it mean to you? Get curious. And then the second question I have for you, Mel, is, if you were able to quadruple your spend on your money dial, what would that look like and feel like for you, I'd send.

Those desserts to everybody in the restaurant.

Whoa, tell me more.

Just kind of spreading that exuberance and joy and this kind of. Psychologically, it's not financially extravagant if you can afford to do it. It's not like you went out and spent $200,000 on a car. But there's this level of surprise and exuberance and extravagance that there's delight, there's surprise, there's the fact that it tastes good. That if I spread that through a whole restaurant, I think the positive vibes that would go out and the positive energy that would swell in that space would be freaking unbelievable.

Amazing. Okay, I'm going to ask you to take that and extend it even more.

Oh, okay.

Because I know you're very successful. So, you know, let's say you eat out once a month. You could do that, no problem. It wouldn't even affect your bottom line. Let's turn it up even more. Not quadruple. Let's ten exit. Think expansively. Think beyond the confines of a restaurant.

Well, the first thing that came to mind was the Ben and Jerry's free cone day.

Okay.

That they celebrate the. It was this year, their 40th anniversary, by having a day where they give everybody a free ice cream cone if they show up. And they typically support a charity, right? Yeah, I think that's pretty cool.

So you would do that like, a day of, let's say, outside of school or something or some charity. You're just gonna get an ice cream truck and rent it and do that?

Well, when you said school, I was like, how cool would it be if, like, everybody got dessert at school for free?

Okay, you know, I love your answers. There is a cohesive thread that goes through them. It's generosity, it's surprise delight, and it just happens to be around food. But I'm willing to bet in your life there's a bunch of other things like that.

Yeah.

Okay. So for everybody listening, take this example we just heard and apply it to yourself. Let me. Let me give you some examples that will help, please. So for most people, like I said, eating out is their number one money dial. And when I ask them to quadruple it, they almost always say the same, like, pg rated joke. They go, well, I'd probably have to watch what I eat because I'd be eating out four times a week.

Ha, ha, ha.

I go, ha, ha, ha. And then I go, all right, listen, that's very linear thinking. The fact that you eat out once. So you're going to quadruple. You're just going to eat out four times. That's linear. Like, okay, you could eat out four times a week, but are you going to eat at the same place? And people pause, they start thinking, oh, wait a minute. Okay, so if it's like Chipotle or whatever it is that you eat at, wow, okay. And I remember this young man in DC. I was speaking there and he said the same joke, and I had the same unamused response. And I go, where would you eat? And he thought for a second and he goes, you know what? I have a list of every Michelin starred restaurant in DC, young guy. I go, wow, okay, cool. You like food? He goes, yeah, I love it. I go, who would you take with you? And he got really quiet. The entire audience pin drop silence. And he goes, I would take my family. Why? Because they could never afford to eat at places like that. Now, that is a money dial.

That is a vision of what you love today. And it could be modest, right? Buying dessert for your friends. That's very generous. Also pretty modest. But when you understand, hey, where could I go with this? Could I turn my dial up? Two x four x ten x? What would it look like? It wouldn't just be more of the same. I might change the quality. I might change the frequency. If I love clothes as a young woman in Pasadena did, I asked her, you're going to still shop at the same place H and M? She goes, no. And when we really explored and played, we came up with this idea that one day she could fly to Italy with her mom and they could get something custom made together in Italy. Now, she can't do that today, she can't do it tomorrow. But now she has a vision of what excites her with money. That's how we get started.

Why is it important to start with a vision that's exciting?

Because money is such a drag for most of us. When you think of money, what are the first words that come to mind?

Debt.

Yep. Yep. Restriction. Overwhelming mistakes. Am I too late? Mistake. It sucks. So are we surprised that Americans have terrible financial behavior? Well, I'm not really surprised when everything around us basically tells us, don't pay attention to this until it's too late. I mean, it's more exciting to talk about flossing than it is to talk about money. It sucks. But if we start talking about, oh, my God, I love to eat, I'm unapologetic about spending extravagantly on the things I love. As long as I cut costs mercilessly on the things I don't, well, suddenly it's a lot more fun to talk about.

It really is. Because I think there's so much shame that we carry about money, because there's all these expectations that you have about how much you should have, how much you should have by now, what you should have done with it. If only had I invested back in the day in Apple. Like, I missed these opportunities. I should have done this, I should have done that. And that sort of negative story that you keep reinforcing to yourself that then has you go, oh, I can't buy the guacamole. I better not get a latte. Fuck, fuck, fuck. It keeps you stuck in that story. But when you allow somebody to play and dream again, because money, it's not only psychology, it's sort of a vehicle to do those things.

Exactly. Yeah. And I love what you said about the guacamole example. Is that because we feel shame because we feel like it's too late, our field of vision narrows, almost like if you've ever felt like you're about to faint, everything shrinks, and we shrink our own desires. So I'll often ask people, what is your rich life? And you know what they always say to me? They always go, I want to do what I want when I want. I go, oh, there we go. And then I go, wow, that's so interesting. I never heard that one, except for the 8 million times I heard it. I go, so what do you want? They are stumped because we never actually thought about what our rich life is. And so then I, you know, I'm gentle. I want them to come to it, but I also want to have a little fun with them.

Yep.

And so they'll say something like, well, I guess, like, you know, it would be cool if I had a beach house one day, but doesn't have to be a big beach house. It could be small. It could be a shack. It could be dilapidated. I don't even need anything. I go, what the hell? We're talking about your rich life, and you already shrunk your desires in 5 seconds. Uh uh. I don't allow that. I go, dream bigger. And then let's figure out if your finances support it, what investments you need to make. And, hey, maybe you're not going to get a nine bedroom place in the Hamptons, but maybe you could get a beautiful place, rent it for a week, or buy it in ten years, et cetera, et cetera, et cetera. So we minimize ourselves unnecessarily.

And then that cuts off our access to authentic inspiration.

Yeah. Nobody's inspired by a tiny vision. Nobody's inspired by the idea. Like, ooh, I could save 5% on coffee. Who cares? That's not exciting.

It's so true. I want to ask you a question on behalf of anyone that's listening that is up to their eyeballs in debt and is having trouble dreaming and is trying to make ends meet. Or maybe they're not even. It's not even the debt. It's that with two kids in college and bills to pay and a mortgage, they're just in those crunch years of just grinding it out. What is the concept of a rich life? And can you walk us through, regardless of where we are financially, how we start to define it for ourselves? Because we've covered the money dials. But I want to just get a flat definition from you of what a rich life is and what are the steps you walk somebody through, regardless of where they are, to creating one?

A rich life is when you look at your life and you go, wow, this feels amazing. Now, you can have a rich life and still be in debt. That's okay. You can have a rich life and not be exactly where you want to be, ultimately. But a rich life can be traveling two months a year. It can be buying a beautiful cashmere coat. A rich life can be picking up your kids from school every afternoon. The key is that your rich life is yours. It's not mine. It's not your friends, not your parents. It's yours. And in fact, the more you carefully define your rich life and really turn those dials up and down, the more bewildering your rich life will be to other people. I'll give you an example from my own life. My rich life is really weird to other people. And that's exactly what it should be. I love spending extravagantly on travel. I'm a hotel guy. I love. I have a list of hotels in all parts of the world. I know the exact room I want to stay in. Like, I love it. I'm obsessed. That's my thing. I also love clothes.

I love them. I spend a lot on it. And so those things are things I spend extravagantly on. On the other hand, my car is not that important to me. And to give you a point of comparison, I've spent more in one year on travel than I spent in 20 years on the all of my car expenses added together.

Wow.

So that's crazy. That's bewildered. It makes no sense to somebody listening. And that's exactly how it should be. If you love camping, maybe you turn that dial up, you find a way to have a smaller cost for your rent or mortgage, and instead you're going camping. I don't know, x weeks per year. You've got some behind, you've got some place you go that nobody else knows about, some equipment. That's amazing. You take friends with you. Amazing. Not my thing. I've got a reader of mine who told me he retired in his thirties with his wife. They travel around the world, the country, in an rv. I go, that sounds like hell.

Yeah, to me. No way.

But I love that. It's their rich life.

Yes. So are there particular questions other than the money dial that you would want us to ask ourselves or answer in order to start to really define it? Because I agree with you, most people, when you ask them for real, what do you want? It's like, uh.

It's hard. It's a really big question.

Yes.

So we. What we can do is we can zoom in and out.

Okay.

To help people create some context around it.

Okay?

So, you know, I have this journal which you can do solo or with your partner, and I'm going to give you a few exercises that are really helpful. Let's start big picture, and then we'll zoom really tight down to day to day.

Okay.

So this is a fun exercise. I did this one with my wife. We sat down and we said, let's create a ten year bucket list. So in our. In the next ten years, what do we want to do that would make this an amazing and rich ten years?

Okay.

So we took two separate pieces of paper, we spent a few minutes, we wrote it down, and then we came back and compared it. And this is a really cool opportunity to recalibrate the way you talk about money because it's dreamy, it's fun. You don't have to commit to anything. So you want to get curious. You know, one of us is like, oh, I want to learn Spanish. And the other one goes, oh, cool. You want to do that online? Or, like, would you want to go to Mexico City and do an immersion? The other one, you know, for one of my things was, I want to write a book at a hotel. Makes perfect sense. Well, I don't necessarily love writing, but if I'm going to write a book, I'm going to write it in an amazing luxury hotel that I love.

Which one?

Okay, cool. Oh, so there was one in Kyoto that I love, and, in fact, recently went there on a writing project. I achieved one of my takeaways. Yeah. And you know the funniest part? My wife was going to Japan anyway, with some friends. She goes, hey, why don't you go and work on your writing project? You know, I know you love that hotel, and you've got the time. Why don't you? And I was like, oh, yeah. It didn't even occur to me. So sometimes you need somebody to remind you about your.

Now, if you're single or you're newly divorced or you've just graduated from college, do you recommend that you grab a friend or a sibling or somebody, or is this something better?

You can do it solo.

You can do it solo. Okay.

Yeah, you could totally do it solo. So you come up with a list of things, and it's. It's things that are exciting that you would look back on and be like, wow, that was a really cool ten years. I remember. That's memorable. Okay, then, so the two of you have, if you're in a partnership, you've asked each other if you're solo, you're looking at them, and you're picking one that really jumps out at you. Don't overthink it. It's the one that you go, I want to do that above all others.

In the next ten years.

Yep.

I gotta go to Australia for a month in the next ten years. I'm not saying that's mine, but I'm just saying, like, what are some of the things you've seen from the millions of people that you've helped?

We want to take a family trip to Italy. Super common. Everybody wants to go to Italy. Like, it's like. And I just. I love hearing it because I then get to help them dimensionalize it. Like, Italy alone is just a word. I want to know, what seat on the airplane are you flying? What season are you going? What are you wearing? Where are you eating? I want to know every detail to the point where we can almost smell it, because then it becomes vivid and aspirational.

Okay.

Okay. So that's what we're doing in this first process. It's actually really fun. Oh, my God. We get to go on a pizza tour, whatever. Then you pick that one, and solo or together, you go, all right, let's actually make it happen. When do I want to do this? In our case, we decided we want to have an amazing ten year wedding anniversary. We were inspired by some friends of ours who did it, and we were like, what people actually do that? And then we're like, well, who cares if people do it. We want to do it. And so we said, that's it. We happen to know the exact date we want to do it and the location. If you want to go to Italy or wherever, you got to pick a specific month and year. It's got to now start getting specific, and then you got two more steps, and then you're good to go.

Hold on. Let me just clarify something.

Yeah.

What Ramit is teaching you to do is to dream again and to attach very positive and aligned emotion with what a rich life would feel like. And I think so many of you are going to have trouble even getting past this part and giving yourself permission to do it because of the amount of mistakes that you made. And, you know, I'll just say, Ramit, when Chris's restaurant business was really struggling and we had liens on the house, couldn't pay for groceries at times, and I had lost my job, dreaming seemed impossible, but it was actually a lifeline because it made me feel like this was gonna be temporary, that we would figure out a way through this. And so I just wanna underscore that if you're a, like, got crushing student debt right now, if you've gone through a divorce and you're in financial ruin, this is actually exactly what you need to do. Because if you continue to stare at the debt, you're going to feel disempowered, which means your actions will be disempowered. If we can give you a beacon out on the distance to raise your gaze and get you feeling inspired again, something to work toward that we know based on the research, that's your biggest why when it comes to a goal.

And so I love what you're doing here, because it's the exact opposite of what a financial advisor would tell you, which is you'd sit down, you'd go through the numbers, you'd feel like an imbecile. You'd basically get somebody politely telling you you're fucked, and you shouldn't buy coffee out, and you shouldn't enjoy yourself until you get your debt under control and you pay this off. And that can come. But let's first get the conversation fun and exciting again, because when you're in that kind of mood, you're going to be more motivated to do the tedious bullshit that any financial advisor can tell you. Correct?

Correct. 100%. And thank you for slowing us down and really providing the context behind why we are doing it this way. I don't want us to shrink our world to a spreadsheet that's not going to help you. That's not going to help anybody. Instead, what I want to do is expand our vision, even if it feels impossible to dream and to say, look, just in this moment on this piece of paper, let's dream for a second. And it's having a conversation with yourself or your partner and saying, we may not be able to even see how we can get there today, but we've got time. And if we put the intention behind it and we marshal our resources, I think we can do this.

Yeah, that's beautiful. Absolutely beautiful.

So you've got one powerful vision of what you want to accomplish in the next ten years. I say powerful because it's not like eating at a restaurant. That's not powerful enough. I had a guy once tell me his rich life is coffee. And I just sat there, and then I said, that's boring. I just told him point blank, and he was shocked. Oh, somebody's telling me my rich life is. I was like, yeah, that's boring. You can't just say coffee. Like, this guy had a lot of money. I go, okay, if you love coffee, then tell me you want to go to Guatemala and take a behind the scenes tour of a farm. Tell me you want to go to the national barista competition and bring somebody. Tell me something beyond I want to order an extra Dunkin donuts coffee shipped to my house. No, that's not acceptable. So sometimes I have to challenge people to think bigger. You got something big? It could be skydiving. It could be a trip, whatever. All right, you know the date, okay. Specifically the month.

In the next ten years, you got to pick a date. The month and the year.

Yep. You got to be specific then. This is the hardest part. But it should take no more than five minutes.

Okay?

Approximate the cost. So if you're going to Italy, people, they start to freak out because they. I just freaked out. Yeah, it's. It's like we revert back to 7th grade math, and we're like, oh, got to do the quadratic equation and get it perfect. I go, listen, you don't need any decimal points, okay? In fact, you could approximate on the back of a napkin, how much is a flight gonna cost, approximately? You know, add 15% because you forgot about tax and all that stuff. What's a hotel going to cost? I don't know. Google Hotel Italy, Rome, whatever. Okay? Let's double the price because maybe want to stay at a nice hotel. All right, fine. That's the level that we're talking about here, okay? And if you have two different. Like, my wife and I had two completely different numbers. Mine was way bigger. And my rule is, if you got two numbers, go with the bigger one.

Got it.

Okay.

Okay.

Go with the bigger one. And so now you've got a beautiful vision. You've got a month and year. You've got the approximate amount it's gonna cost. The last step is to make it a reality. How do you do that? Let's say that it's ten years away. It's going to cost $10,000. I'm just making it up. That means you need to be saving $1,000 a year or roughly $100 a month. Roughly. Okay, we could do that. Suddenly, you start to understand a little concept of, like, time and money, and you set up an automatic savings from your checking account to your savings account for $100 a month. And you call it dream trip 2030. Boom. Every month that you are talking about money in what I call a rich life review. It's like a video game. You see, we're getting 3% closer, and that is a joy.

I love this. And I know that you. Is that what you call a conscious spending plan?

That spending plans a little different, but it would incorporate that? Yes.

Okay, we're gonna start with one of these topics that I hate. When it comes to money, this is number one of the five things you're gonna help us master, Tiffany. And it is budget.

Yes.

It's in your name. Budget. Nista. I hate that word, budget. I hate that word, budget. I feel like budget is a punishment. It's a diet. I don't want to be on a budget, Tiffany, what do I need to do? Why do we need a budget? And let's talk budget.

I want you to think about a budget the way what I say is, like, how you think about, like, your mom, right? So you've got three kids, right?

Yeah.

And so if, like, say, your son's like, oh, when he's little, you know, mom, can I have dessert? You'd say yes, after you have dinner. Or if your daughter says, mom, can I go outside to play? Yes, when you do your homework, you know, or, you know, mom, can we go on vacation? Yes, if we lower the light bill. So your budget is like, your mom. She's there to say yes when, if, after. So it's really a say yes plan, but one that's safely implemented so you can maintain the thing that you want. Right. So you could call a money list. That's what I usually start with, because people hate that name.

I like the name. Money list.

Yes.

What does a money list mean?

A budget.

Okay. I love this reframe. Because I hear the word budget and I hear no. And restriction. And you're saying no. That the budget is how you say yes to what's important to you.

Yes. It's not there actually to tell me no. It's there to find the yes in the safest way possible.

So, for somebody hearing you say that, and they're like, but I've never made a budget, or I've never stuck to one, I don't know what my budget should be like. Where do you begin?

Step one is to write everything down. Just the words of, what do I spend money on? Don't think about the month. Just in general. So it's like, oh, the kids. Oh, credit card. Oh, grooming, going out. Like, just. I want you to just write the words. Don't think about the money. Just words. Okay, so that's first part.

Step one.

Yes. Then step two is. Now you say these words on my money list. How much am I spending approximately monthly? Some stuff you'll know, like your mortgage or your rent. Some stuff you might not be sure. Go pull out your bank statement and see, on average, the last few months, how much you're spending on groceries or.

Eating out or grooming electricity or water.

Yes.

Or any of those things you don't even really think, oh, my God, I got that bill.

Exactly. So then that's within a month frame, on average. Right. So that's step two.

Okay.

Then step three is to write down how much you make, on average, every month from all of your area. So maybe you get alimony. Maybe you get child support. Maybe you have a job, whatever that is. How much are you making monthly? Then you add up step four. You add up how much you're spending monthly and subtract it from how much you're making monthly. I call that the tears and tissue step. Cause usually people get there and they're like, can I have a tease?

And should you do this with a friend?

Yes.

Should we call Linda?

Yes. Get yourself a Linda. So, so, literally, so I. When I used to do one on ones, we would do all that. People would be like, okay. And then I would literally just grab a box of tissues and just put it here. Because I'm like, it's about the water coming up. They added up. I remember it was a nurse. I'll never forget. I'll call her Bee and I came to her house, and it was beautiful condo. And so we did that step, and she started crying. And then I started crying, cuz, baby, I'm a baby. And she was just like, I. I didn't realize how much over I was spending. And she said, as a matter of fact, I can't even afford the air conditioning that's on. Can I turn it off? And I was like, yeah. Yes. So we sat with the fan on because she just turned on the air conditioner because I was coming over. So I was like, turn off the AC. A fan is fine. That tears and tissue step allows you to see what do you need to do now?

And so let's say you've done that, right? And you've made the money list and you see what's coming in and what's coming out. You're like, faced with the reality.

Yeah.

Tears and tissues.

Yes.

And you see that you are outspending every month what's actually coming in. What is the next step?

The next step is I want you to categorize your expenses before you get to slashing and dashing, you know, because that's what people want to do. I won't eat out. I won't.

Yeah, I'm never gonna eat again. Never to turn the lights on in this house. Get the cat candles.

So I'm like, categorize your expenses into three categories. One, I want you to write a b next to all the bills on your list. So, bills are, if you don't pay it, someone's gonna come knocking on your door and say, where's my money? Right?

Yeah.

So put a b next to all.

Those things and give me an example. I know that sounds like a basic question, but is your mortgage a bill?

Yes. Mortgage is a bill. Rent, car. Note your student loans. So if you don't pay, you're likely to be sued. Think about that.

Gotcha. Like when you were, like, standing at Walmart or Sephora, and you're like, yeah, I'd like 10% off this. And then you're like, oh, wait, that's a credit card. Yes, that's a bill. Got it.

So a b next to all your bills.

Okay.

And then. And those are really, like, fixed expenses. So that way you understand. Right. And then I want you to put a u in front of any b that fluctuates based upon your usage.

Oh, I love that.

So I call these, like the u stands for usage or utility.

So your student loan does not have a, uh uh. Your mortgage or rent does not have you. No, but the water. Water.

Electricity. So your usage.

Yes. The data on your phone.

Yes. And so it's important to separate those two, because I want you to. You'll see that. I want you to understand the level of control you have on these expenses and whatever is not a B or U B. Everything else is a c. C stands for cash or choice, meaning that you have full choice of how you spend here. So grooming might be left over, groceries might be left over.

How much? Eating out with friends.

Yes. And so entertainment. And so now, before you get to slashing, I want you to ask yourself, where is most of your money going? For many people, most of their money might be going to the B's and ubs. Uh huh. But for some people, it's actually all the c's.

Yes.

So then I, then we have to identify you have a don't make enough issue or spend too much issue. And so if most of your money is going to the B's and you bees, you might not make enough. So it's not about slashing, because these are your bills, you know? But if most of your money's going to your c's, your choices and your cash expenses, then you probably have a spend too much issue. So now we need to slash.

Yes.

You know, because it's entertainment and grocery and all those things where your money is going. Because what I find is that frugal people want to get more frugal when things are tight. I'm like, that's not the answer.

Right.

You know that. Instead, I want you to put your energy toward learning how to earn more. If all of your money's going to your bills because we're cutting the mortgage, what are we cutting? That's true.

You know, one of the things that I worry about, and I'd be curious to hear your perspective, is that you and I both had the experience of being in college, and it's that opening week, and literally at the opening registration fair, there were banks with credit card tables. You get your snickers bar when you sign up for one, and then it's free money. But I worry a lot about the fact that in today's world, particularly for people who are in their twenties and thirties, that social media has become like shopping with a click, and you and I had to leave our house to go spend money back in the day. And when I think about TikTok or Instagram, every other freaking suggested thing has a shop now button and stuff gets sent to your house. And have you seen a big increase because you've been doing this for a while in people in the spending category, that spending has gotten so easy because of social media, it's always in your face. You always see what you're missing out on. There's an influencer that has the product for free who's like, this changed my life. And, oh, click, click, click.

It's 1130 at night. So do you see a spike in this, or is it absolutely.

Overconsumption is the new way. We all have so much that we don't need. I mean, even I sometimes I'm like, Stephanie, you do not need, like, another. Like, you don't even vacuum. I'm like, but that one is so cool, you know? And I'm like, this is influencer who I follow, who I love her because. So esthetically pleasing.

Yes.

But you know, the ones that we're like, everything in the kitchen is esthetically.

Yes, this is these Amazon shops.

Like, yes, click through to my Amazon. So it's all for free.

I'm gonna make money on you buying it.

A container for the container?

Yes.

Like, well, who wants to eat cereal out of a cereal box? We want to eat it out of an esthetically pleasing glass container.

Yes.

You don't.

Yes.

You know, so it is really hard. So that's why I don't believe in leaning so heavily on discipline when it comes to financial, like, stick to it ness, you know?

What do you believe in that?

I believe automation. Automation. Automation. That's the new discipline that if we can put systems and automations in place, it will help to safeguard you because you're human.

Yeah.

So we're not here to fight against your humanness.

Right.

You know, I'm like, for budgeting, for example, I do this thing where I call it budget without a budget. You go to HR, you say, hey, HR or payroll. I want to split my money before I get my money. And so what that looks like is that. And most places can do this. I'm not a huge company, and we're capable of doing this. There are four accounts, two checking, two savings.

Wait, so everybody needs four accounts, ideally, give or take.

I mean, it depends on where you are. But this is, this is the ideal two checking, two savings. So checking one is kind of like your spending account. This is attached to your debit card. Right? So most people have this account, but everything just gets dumped there.

Yes.

You know, so that's the account. You keep it. The second account is a checking account, which is your bills account. And so I want you to separate your bill money from your spending money.

And does it cost money to have two different checking accounts with your bank?

Well, the good thing is, if you have direct deposit into those. Most banks will waive that fee. So that's why you're gonna do it from like, I have payroll direct deposit into those accounts.

Oh, so you at your company level.

Yes.

You basically say x percent.

Yeah.

My paycheck is gonna go into checking account number one.

Yes.

For my bills are.

Yeah.

And, or spending.

Yeah.

And then the other percentage. And do you have a particular percentage in mind?

Well, the good thing is people ask me that all the time. I'm like, well, we don't have to guess. Money list is right there saying, hello, we know how much you need to put in here.

Be kind of embarrassing to walk into HR and be like, could you put $1,500 in checking account one and $10.

Usually it's a form so you don't have to tell all your businesses.

You know, but still, you can see how that then creates an automation that helps you stay in the lane.

Yes. So the key is with that checking account. The second one, you are going to call the bank and say, I do not want a debit card. I did not know that you could just opt out of a debit card.

You can, but what do I do if I need cash?

Because you have your spending account. Because why are you swiping with your bill money?

Because I don't need a debit card.

For the bills account.

The bills account?

Yes.

I've never had two checking accounts.

Yeah. Okay.

My freaking money goes right into that thing.

Yes. So if you. That way it keeps your bills account. This is why I say you don't need as much discipline.

I am actually going to do this.

Yeah.

I think this is so empowering because I have had such the philosophy of, just put your head down, work, work, work, work. And as long as there's a balance in there, we're okay.

Yeah. So I like to separate it because I'm like, I know that when I'm at target. Cause it's my favorite. I'm swiping that. I know one thing, I'm not swiping my bill money because this debit card is not attached to my bills account. I put the money into the bills account. And if you have enough, you can automate your bills. And if not, you can certainly manually pay them. You could just say, every two weeks, I'll sit down and manually pay my bills.

I love this advice. You are so good at what you do. No wonder you've helped millions and millions and millions of people.

And remember the other two savings? I want you to put those savings accounts, not at your regular brick and mortar bank, because they're gonna pay you 0.00.

Okay, so where do we put our savings, and why do we need two savings accounts?

Well, I, like, again, because I want you to separate so you can see.

Okay.

You know, and so this is like, that kind of, like what I said. Automate, automate, automate. You don't have to be as disciplined.

Right.

So savings won at a high yield savings account. Typically, these are online only banks. You know, they pay right now, currently make 4%. A little bit more. And so you're gonna have to.

Now, when you said online only bank.

Mm hmm.

I had a visceral reaction because I immediately thought about the dude that scammed you out of money for some reason. How do you know that an online bank is a reputable bank to put your money in? Because that.

FDIC insured.

FDIC insured. So how would you know that? Because everybody can copy that little icon.

So. No, because that would be against. I mean. I mean, if they want to go to, like, under the jail by federal government.

Okay.

So you could honestly Google search.

There are, like, we're also going to link everybody. You know, our resources are robust, and today there will be a lot of information.

Yes.

From the Budgenista.

Yes.

And Tiffany will have stuff so that you can go to her resources and understand what's reputable, what's not. And so.

So I list a bunch. So with. With both of my books, get go of money and made whole, I list some of the banks that I like.

You know what else I love about this approach? Because you mentioned target, and, you know, we have a huge global audience. So just think about your favorite even place where you go to pick up your prescriptions or your local kind of pharmacy type store. When I walk in there, it's as if I have walked onto a game show. This was even when I had no fricking money. And it's like you walk through the doors, and I'm like, oh, I feel like I need some hair rubber band things. And, yeah, I need those little cotton things.

Yes.

I have that shit in my drawers.

Yes.

Like, I don't know why I. There's something about the psychology of that. So in your model, when you do your money list and the B's and the U's, and I walk in there and I don't have a debit card. I've only got the debit card for what I can spend.

Yes, because all your money is literally squirreled away someplace else. You have a savings account for emergencies. You have a savings account for goals. I want to buy a house. I want to buy a car. I want to invest in the market. We're going to separate them because you don't want to spend your emergencies on goals. That's your emergency account is like your seat belt, you know, like your safety belt. And so that's why you have the two savings and you let it earn interest. So if you have those four accounts, you use your money list to figure out how much money you want to place to into those four accounts. Then all you have to worry about is, especially if everything's automated, the money lands, it splits before you get it. Bills pay themselves savings and save. And when I go swiping, it's not my savings, it's not my emergency savings, it's not my bill money. So I can rest assure without having to be so disciplined because I just set it up one time. And so it's just one of my favorite ways to budget. Without budgeting, like the hardcore, you know, my.

My journal and a diary, and I'm not doing all that. Yes.

Yes. You do it once, set it, and forget it, and now it's aligned with what you want. Do you have a guideline in terms of when somebody's making their money list? We got the B's, we got the U's, we got the C's. We've now got our four different bank accounts, the two checking, the two savings. So if you followed all this advice and you kind of look at what it costs for you to pay for your life, you know, all of the stuff that's going out in all of these categories you've just taught us about, what do you think the percentage should be? If you look at the income coming in, like, what percentage is your day to day expenses?

I would say ideally. Ideally? Ideally, if you can live off of 70% of your income, that's ideal. Like, you might be at 99, that's okay. But this is what you're working toward. No more than 70%.

Okay.

Obviously you make more, it might be even lower. Like, I think at this point, I might live off of 20 or 30%. At one point, I was living off of 200%, you know, but 70%, meaning.

You were in debt, meaning you were spending more.

Way more.

Yes.

So this is not shame. This is just like, I'm working toward this. This is what your ideal is. So 70%. So that would be what's in your spending account and what's in your bills account. That would equate for 70% because that's living off of money.

You know, I love that you just offered up, though, this hope, because what you just said to somebody who is in the place that you and I have both been in, which is your life costs way more than you make, and you are also dealing with a mountain of debt that there is hope for you. So if you make this money list, which is step one, your b's, your u's, your c's, and you then look at it and you're like, oh, I'm screwed. What Tiffany is saying to you is that the goal is to move from a negative position to a position where 70% of what's coming in covers your life.

Yes. And the other 30% goes to savings and investing and. Mm hmm.

Awesome.

Yeah.

And I cannot wait to go home and make a money list. Now, there are four other topics, tiffany, that you're going to help us master. And so I don't want you listening to us to go anywhere. You're about to learn her amazing tips to increase your credit score. You'll learn about something that Tiffany calls dreamscaping, which is a critical part of you creating a plan and finding hope and enthusiasm to take all this advice and apply it. And what I love about Tiffany's approach, and I'm sure you're loving it, too, is you're going to hear her say, you don't need discipline. You just need to understand these tricks. Stay with us. Welcome back. It's your friend Melanin. We are so glad that you're here. And by we, I mean me and Tiffany. Alicia, she's also known as the budget Nista. You're falling in love with her as you listen to her. She's been featured on Netflix. She's a New York Times bestseller, and more importantly, her genius. And you're experiencing it right now. She's helped 2 million people save, manage, and pay off hundreds of millions of dollars in debt. And here she is showing up here for you, giving you relatable, world class strategies in the five key areas that you need to understand when it comes to taking control of money.

So you and I have covered budget with Tiffany. There are four more to go. And up next, debt. What do you do when you go through the money list and what you see is a lot of debt. What are the steps?

Well, for debt, you have to. That's another kind of, like, list. So I just call it just honestly, like the debt list. We have to just get a picture, like, what's happening here.

Yes.

Who do you owe? This is what's going to go on your debt list. Who do you owe? How much do you owe? When is it due? What's the interest rate? What's the status? I know this is why you want to have your bestie and best.

I'm thinking about my friend Jody. Jody, pull up a chair. Let's go. Right, exactly.

So, yeah, so you. Because you have to get a paid. This is actually. Sometimes it could be a little harder than the money list.

Oh, I would think so, because I was. I. As I'm listening to you, I'm thinking to myself, I haven't even done this for myself. Yeah.

To see, like, who do I. Yeah.

Like, what is my mortgage at right now? And how many more years is it going to be? And what are. Like, I. What is the car loan that I have? And how many more years is it? And what is the interest rate?

Yeah. So just knowing, like, what those things are, and like I said, don't do it alone. You can literally have a part. It could be like, you know, but.

We'Re not spending money. There's no ice cream, there's no nothing.

It's a potluck. You know, it's like, you could just be, like, where you and a group of friends to sit down and say, we're gonna do our debt list, you know?

Yes.

And so just knowing where you are. So now you can start to prioritize who's getting paid and when. So I have a few methods that I really like.

Let's talk about one.

There's a snowball method.

Okay.

And so this is when you pay the lowest balance first. So you're gonna look at all of your debt and line it up from lowest balance that you owe.

Okay.

Right. Like. And then to the highest, like, debt that you owe.

Okay.

And if you're someone who is, like, emotionally charged by your debt and need you to have early success, yes. You're gonna pay the minimum to everybody else, but that lowest bill is going to get the bulk of the money that you have available, and you're gonna know what that is. This is why that money list is so important.

Right.

Cause it's like, where am I gonna get the money? Let's look at the money list.

Right?

How are you making a little more right now? Are you able to spend a little less? That money that you're able to squeeze from your budget is gonna go to that lowest debt. So let's just say you owe $200 to granny.

Yeah.

You know, and you're giving her $100 a month.

Right.

So now it's like, okay, that $100 a month now rolls over like a snowball.

Yes. Because now that debts paid to granny.

Yes.

And now we go to the next.

Yes. The next debt gets its minimum, which was already getting. But it gets that lowest. That's minimum. That the first one. And that extra money from your. From your. Your money list. So now all of a sudden, it's getting like three payments in one. So you're cooking with grease now, you know, and when that's paid off, you roll over that full amount to the third. And what's so great is as the snowball rose down the hill, it collects snow minimums along the way. So by the time you get to the biggest debt, you have the most amount of money. But it didn't actually take any additional money out of your budget because you've collected minimums that you were already paying.

Oh. So I'm gonna try to translate that. So if your credit card bill has a minimum of $50.

Yes.

And you've just been paying the 50 and paying the 50, that means you're not really chipping away at the. At the balance. So as you use this method and you get the lowest paid off, you don't have to pay that $50 anymore.

No.

And then you go to the next one.

Well, you take that 50, but then.

It goes to the next one. Got you. And so you've accumulated all these fifties, and by the time you get to the big one, you might have 200 extra dollars in the top of the minute.

Yes. Yes. So it doesn't actually hurt your. You're not coming out of pocket anymore. Cause you've been paying all these minimums.

Yes.

You know, and so it's a great way for people who need that early success and don't want to tackle the big bill right away.

Amazing.

So that's the snowball method. The avalanche method is when you're like, forget all that. I'm logical. I want to attack the debt with the highest interest rate, the most expensive debt first, because interest rate is the fee you pay for what you own.

Okay.

So the more you owe, the more the interest rate is going to affect what you have to pay. So you're going to line your debt up from the highest interest rate to the lowest interest rate first, and you're going to attack highest interest rate debt first.

Okay.

So there's snowball, avalanche, and I call this the tsunami method is this is for people who really get emotionally overwhelmed, and you line up your debt by how it affects you emotionally.

Oh.

You know, because let's honor the fact that some of us really need to navigate from that place, like, which debt is causing you the most stress. It's like the tsunami is coming over you, and it's like I have to pay my grandmother back because I feel so bad. And then next it's really my mortgage, and then next it's this bike that I bought, and then. You see what I mean? So with that method, you're lining up the debt from most stressful to least stressful and paying it off in that order. But either way, you're collecting the minimums amount along the way. You pay off the debt, you roll over their full payment to the next one, pay off that debt, roll over all those payments to the next one. So that still stays the same. It's just the order that it depends on, like, what you need in order to be successful.

We must have similar grandmas because I wouldn't want to have to face my grandmother either. They're knocking on the door, complaining again at the dinner table. So you have this concept that I absolutely love. That was budget that we've talked about. We've now covered debt. The third concept that you talk about is saving.

Yes.

How do you save? Especially if you don't feel like you have money to save, because you are just making the ends meet or not even.

And sometimes you can't. I know people don't want to say that, but I'm like, I remember when it was like I had a savings account because it was free, but that account was like, hello, is it me? It didn't have anything in it. I mean, because that's life sometimes.

Yeah.

And I just remember, but I opened it because sometimes you do a thing not for where you are currently before.

You want to go.

There you go. And so I opened up the savings account because they're typically free, and I said, one day I'll be able to put something into you. And so for the first year or so, when I was paying down all that credit card debt and, like, making little money here and there, the budgetista was starting to do a little better. And I was like, I remember I was able to save $5 a month, and I put it in there not for the five, but five was proof. If I could do five one day, I'll do ten. If I could do ten one day, I'll do 100. If I could do 101 day, I'll do 1000. And so it was a placeholder for that one day. In the beginning, it's okay to acknowledge that you might have these four accounts, and those two stay empty for a while. Yeah, because there's not enough money.

I love that you said that, because I can absolutely remember years of my life where there was a savings account attached to my checking account. I could not afford to put anything in there. Literally be like $0.27 like that. And I made friends with the tellers. And so when you kind of get that, they penalize you for having, and, oh, I'll just waive that for you. No problem. But just seeing that still, someday, someday, someday, someday I will get it in there someday.

Dreamscaping.

Okay, let's talk about dreamscape.

Yes.

What is dreamscaping?

So this is where I totally made up, as preschool teachers are apt to do. And I just thought, like, you know, landscaping, this is when you design the outside of your home to be beautiful and esthetically pleasing. And so I'm like, well, why can't we do that with our dreams? Why can't I? Dreamscaping means that, like, I think of the most beautiful, esthetically pleasing, big, expansive life that I want to live. And I was a big daydreamer when I was a kid, so I got, like, I was a kid in class, talks too much and daydreams. And so I. But I love daydreaming because it allows me to, like, really, like, go into the future and say, this is what life is going to look like for me. Live there for a little bit of, and then bring back that feeling here, and it says, okay, this is what you need to do for that to be life.

Okay.

And so with dreamscaping, I identify a time in the future that what I want to see. So maybe it's the December 31 version of yourself this year. Yes, maybe it's you five years from now, ten years from now, whatever that is. And then I ask myself holistically, how do I want life to go? Not financially, holistically. Like, how long do I want my hair to be? Like, where do I want to live? What do I want to draw? You know, what kind of foods am I into? Like, I just imagining my full, complete life. Where have I traveled to? That kind of thing. And so that's the second part of drescaping is, like, really dreaming, like, your full life. Then the third part is to find a guide asking for help. So if there's someone who there's part of your dream that they're living it, you know, maybe they're on social media, and you follow their social media. You know, do they do podcast interviews? Do they have a book that's come out. Do you know them personally? Like, don't go all this alone. Why? You know, the fastest way from where you are to where you want to be usually is through someone else, right?

So I'm literally studying, like, oh, I love the way Mel does that. Okay, so I'm just. I'm gonna read all the things you've written and watch all your shows and. And listen to all your podcasts so I can get a guide from you about what does that look like? And then fourth, I create a plan based upon what I've learned about. This is where I want to be. This is what I'm learned from Mel of how she got there. Let me create a plan that's focused but flexible, because I'm not you. So it's like, you know, there's, like, this framework there. Yeah, but a lot of flexibility in there. Like, oh, well, Mel did this, but I'm gonna do it like this. Right. You know, and so I create this plan. But as I work the plan, the last. And to me, one of the most important things is then find community that, like, it had so big for me. I started the budget, Nista, because if not for Linda, where would I be? You know, that, like, I don't care if community is one person or a thousand people or 2 million people. Find community and work the plan within that community so you can have accountability, you can have people to cheer you on and a place to vent and say you're scared, you know, and to see yourself in other people.

So if you do those five things, that's the five steps to dreamscaping.

Well, the other piece that's powerful about that is, when I look at all of your advice, it is empowering you to take your emotions out of it and to align the actions that you're taking with the kind of person that you want to become.

I love that you ever think to yourself, so, this is something I remember I learned in therapy. When I was talking to my therapist, she said, like, I've never smoked. I have asthma. So I'm like, I do not want to take myself out of here. And so. And so she said, tiffany, do you consider yourself, like, a non smoker? And I was like, no, because it doesn't even resonate, because I just don't smoke. I'm not. That's just not part of, like, who I am. So I don't even associate smoker, non smoker. I'm just never anybody who smoked, because I align with I am who I say I am, and so, like, that should be the aim for all that we do. So it's not like, oh, am I an overspender or underspender? It's like, well, no, you're just, you aligned with this is I show up, I am who I say I am, that my goal is to be the person who I'm not worried about over underspending. I spend in a way that's aligned with the way, the life that I want to live. Do you see what I mean? Not attached to that label?

I do. I feel very empowered as I'm listening to you about going and creating a money list and going and doing the debt list and just really getting a very clear picture for myself. For myself, so that I can decide in the dreamscape model. Well, what is the story I tell about myself to myself in this category? Because clearly, if I wanted to get good with money, then I've got the expert right here and I follow your steps and I can easily learn it, and so can you. As you're listening to this, you have this concept that I freaking love about paying yourself first. What does that mean?

So that means I want you to ask yourself four questions before you spend any money. And those questions are, do I need it?

No.

Do I love it?

Yes.

Do I like it? Do I want it? So need it. Love it like it wanted. And so they show you that, like, needs are most important. Then your loves, then your likes, then your wants. And so when I'm spending money, those are the quadrants. I try to stay on the half of needs and loves. So a need is something you must have in order to be. Okay, so bills.

Yep.

Those u, b's and b's, those are your needs.

Yes.

You know, right now, loves are different. I loves are something that is going to bring you joy over a year from now. You know, and so that's different for everyone. For some people, it is that haircut. For some people, it is. You know that amazing dinner.

Yeah.

For some people, it's travel. For some people, it is that dress. So there's no judgment there. Just a year from now, will this thing still generate joy for me? So deep. Joy are the things that. Are the things that we love.

Yes.

And then likes, which is next arm, temporary joy. So that's something about six months from now, you're like, oh, it's still cute. I remember.

Yeah.

You know, but a year later, you might be like, wait, where's that shirt that I had? You know?

Yeah.

And then wants are literally the opposite. Just instant gratification.

Yes. It's like a shop now on Instagram.

Yes. So when you are spending money, I'm not here to tell myself no. So I, for example, this is a lot. I always travel, but this year in particular, I really want to go. I've never been to Johannesburg, and I want to go. Oh, yeah.

Oh, yeah.

And there's this, like, really cute travel group. There's like, 15 women, and it's like, johannesburg, Namibia, Botswana.

Sounds incredible.

Right? And so it's not a little bit of money, obviously, as you can imagine. And so when I was deciding whether or not to do it, I said, tiffany, is this a need? No, it's not. Food, shelter, clothing, water. Is this a love? Will you remember this trip a year from now? I said, abso freaking lutely. And then, of course, you look at your budget. Can it allow it? You know? So what that means is that if I don't have enough of that, like or want, so what?

Right?

Because if I get another stinking t shirt from target, like, what are we talking about? Yeah, yeah, exactly.

You know, I think everybody. Even when you're struggling.

Yes.

Even when you're struggling, I think most of us can look around, whatever room we're sitting in, in our apartment and be like, I have too much stuff.

Yes.

Why am I. And I. I do think that there is this rise in shopping and consumerism. Because you don't have to leave your house.

Yes.

You do not need to leave your house. They pull up and drop it on your doorstep.

Yes.

And you just constantly. It's like pulling. If you're watching this on YouTube, you see me doing it, but it's like you're at a slot machine.

Yes.

Pull the lever.

Pull, pull.

But if you really want to pay yourself first, then you try as much as possible to stay in the need. And the love category, I love that because that means your money is meaningfully spent. You know what I mean?

Yes.

Like, meaningfully. So I'm not here to tell myself, no, I'm here to say as. Yes, as much as possible to my needs and my love.

Yes, yes, yes, yes, yes. What is your biggest hot take on saving money?

My biggest hot take on saving money is there is a cap for how much you should save. Like, you can actually over save what? Yes. I've been an over savere where I had so much money saved because there is a point where it's like, no more than a year's worth of emergency savings is necessary for savings. I mean, at one point, you're not.

Talking about investing you're just talking about savings.

Yes, saving.

Okay, great.

So, like, you know, like, depending. So my mom was a nurse before she retired.

Yep.

Right. So three months was enough for her. You know, my sister is an engineer. Six months is fine. Me, as an entrepreneur, I feel more comfortable with a year. But anything above that, you're actually losing money because savings is not really growing. You know, it should be put to work. The purpose of. I want people, because people get mad about savings. They're like, I want all my money to be put to work. But every belt is not meant to be a fashion Gucci belt. Some belts are safety belts. It's not for fashion.

That's right. Your car has a buckle belt in it. Yes.

I'm sorry, it's not monogrammed.

Yes.

Right. The intention is for safety and that money, although it'd be nice if savings grew astronomically, that money is just for safety.

I love that.

And then the excess that no more than a year should be put to work. Absolutely. For some people, the excess is anything above three months. Some people, anything above six months, I say no more than a year. So too much savings is actually detrimental. There's like the law of diminishing returns. One glass of water, so good for you. Four glasses, so great. 40. You're going to drown.

Yes, I. That, that is, that's the first time I've ever heard that. And I think for those of us that has lost your money or nearly lost your house or, like, you don't ever want to be in that. And so I probably have too much in terms of savings, but it's just sitting somewhere where the market can't affect it, the housing recession can't affect it, you know, but it's not doing anything.

And money that's not being put to work is losing.

Okay, so you're calling me a loser.

No.

So we've covered budget, debt, savings, and now let's talk about number four, which is credit.

Okay.

And this is a hugely popular topic with your audience, with everybody. How can you improve your credit score?

So credit, if your issue is credit, congratulations. It's the easiest thing to fix. So I want you to just ruside. Because credit is the thing that people worry about the most.

Yes.

Quite honestly, it's the easiest to fix. Credit is tips and tricks.

Oh, my God.

That's it.

Tips and tricks. Here we go.

Right. So first thing to understand that there are, there are multiple categories that affect your credit. It's 35% of your score is. Is what your payment history is.

Okay.

Right. And so, like, do pay the people on time. Do you play at least the minimum? Well, then 35% of your score, you're good handle. 30% of your score is going to be amounts owed. So get your payments down, everybody.

That would be the debt list and the money list. Okay.

So if those two things alone is 65% of your score. So if you just, like, concentrate on getting your debt down, and if you automate that bills account, do you see how it all comes together?

Yes, I do.

Yeah. So automate that bills account, 65% of your score is being positively affected. There's other things to consider with your score, is they look at length of credit history. Okay, right. So length of credit history is just. How long have you had access to credit and have you been using it? Now, this is important because think about, like, um, so you said your. Your, um. Your son is 17. Is he driving?

He's eight. Yeah. Yes. Yes, he's driving.

Right. So if your son said, oh, mom, can I borrow your car? I've never been in the accident. Interesting, because you just started. Right? And then let's just say, like, you have any siblings?

Do I?

Yeah.

Yeah, I have a brother.

So your brother says, sis, can I borrow your car?

Yeah.

I've never been an accident. So you've got two drivers. Never been in an accident. One just got their license, one that's had it for years. It's not the same. It's the same for credit. Length of credit history says, like, yeah. So you might not have any bad marks on your credit, but you're so inexperienced, you are a bad driver because you have not driven much.

Got it.

Yeah. So there's. They call it a thin file when you have hardly any credit. So no credit is bad credit.

Gotcha.

Just like, no driving experience is a bad driver.

Gotcha. So you have three ways that you can boost your credit score pretty quickly. Like, even up to 100 points. What are.

Yeah, so my favorite way is I learned this from, like, a debt lawyer.

Okay.

He was like. Cause after I lost everything in my credit score, I learned the embarrassing way, like, I was teaching, like, classes. Cause I told you, I was like, as I dig my way in, I'm gonna teach.

Yes.

My credit score at one point was 802. So in class, I was showing people how to look up your credit score. So I look up mine, thinking clearly. It's still in the 800. It was a 530. A room full of people. I'm looking at the. And I was like, luckily, it said, like, t alete and I have a sister named tracy. I was like, I logged into Tracy's account. Let me just. Can you imagine? I was like, wait, is that a five? And they were like. I was like, anyway, let's talk about how to raise your credit. I had no idea. Cause I'd not checked. So I was like, how do I raise this 530? Because I had an active foreclosure. Because I lost my house.

Yes.

I had that credit card debt that was just mounting.

Yes. From the scam.

Oh, my gosh. So one of the best things to do is, he said, pay off a credit card in full every month. But, like. So then I realized, like, so he said, there's something about paying off a debt in full that makes the credit bureau say, yay. So think about your credit score as your GPA, your grade point average. It's an average of your choices and financial choices. Think about the credit bureaus as your teachers. They give you your grade.

Yeah.

And think about the credit report as your transcript. It has your grade. But, like, all the other, like, classes and things, like, the real in depth of what you've done with your life, your financial life. Right? And so if you want the credit bureaus, the teachers, to give you, like, really great grades, they love to see an a every month. An a plus in credit is when you pay off a debt in full.

And so you're talking, like, if we were to go the method and look at you line up all your debt, and you look at the one with the lowest balance, paying off that lowest balance is like, boop.

Yep. Just. But it'll be. It'll give you a but just that a. That one month. But we want to get an a every month.

Okay.

And so I like to get a credit card with zero balance or pay one off to zero balance. And then I look at my money list and say, what is my least expensive reoccurring payment? Is it Spotify? Is it Apple? Is it Netflix? No more than $25 a month. And I say, hey, Apple or Spotify or whatever, actually don't go to the bills account like you used to. I'm gonna put a credit card in the middle of that equation, and you're.

Gonna pay that every month?

Yes.

So they're seeing you pay it off to zero?

Yes. Every month. Like, the credit bureaus are like, hey, hey, hey. And I'm like, so at the end.

Of, it's like, hey, hey, hey. Now it's your song because it's Spotify, too. Oh, my God, I love that.

So what I did, because I was like, at the time I had these two cards, I did it with two cards. And so I went from a 530 to a 750 in one year, which doesn't sound like a lot. Cause you can raise your credit score.

Sounds like a lot.

Especially with an active foreclosure.

Yes.

And especially if you're in that zone where you're like, I'm trying to put groceries on the table. How the hell am I gonna raise my credit score? I gotta get to the store and buy some chicken. I'm not worried about all this other stuff, but you're basically saying any of those odd. You can automate the payment this way.

Yes.

And have it serve like, this double duty for.

There you go. If you do that, that was tremendous.

Wow. Any other tips in terms of boosting credit score?

So another tip is just to, like, it's. Remember I said not 30 for 35% of your score is payment history.

Yes.

And so one of the best ways to do it is to just automate your bills from your bills account, because you don't. That's the payment history. And so if this is only though, because not everyone makes enough to cover their bills, this is for those people who make enough to cover your monthly bills. But it seems like so little. But not being late and just having them automatically paid 35% of your score, which is huge. So if you do those things, like I said, credit is tips and tricks. It's actually not discipline.

Oh, I love that. All right, let's talk about the fifth thing we need to master, which is, how do you increase your money?

So best way to start to increase your money is where you currently work. You know?

Okay.

I would be looking like, am I paid? Like, let's look at, like, what glass door is talking about.

Yeah.

You know, but you have to keep in mind not just your role, but the size of company. I promise you, the janitor at Facebook is making more than the janitor at your local high school.

Yes.

You know, so. So one, understanding the size of your company, but also, you know, many women, especially, are underpaid paid. And so before you ask for money, create something that my sister calls the go me file. That's your brag book. And so whenever she does something at the company, she writes it down. She says, go me. And so, ideally, the go me things on your list are ways that you made the company money.

Yes.

You can quantify or save the company money.

Yes.

She's like, if you can't quantify it, figure out how to quantify it.

Yes.

You know, and then that way, when you go and you sit with your manager or boss or whatever, and you're having your review, you're not actually asking for a raise. You're asking for a correction to salary because I made the company $100,000 last year, or I saved the company $30,000. So me asking for this 2% raise, I mean, you know, I'm undervaluing myself. Look at the value that I bring. And so starting there is a great.

Place, and this is really backed up by research. So especially for women and any person of color, that the number one thing that will determine your ability to make more money or your ability to get a promotion is whether or not you make your contributions known.

Yes.

And so that go me list is a critical habit because you're gonna forget.

Yes.

And without that, you don't have the ability to really explain why. Because I agree with you. Like, there is a lot of advice out there, like ask your valet, look at Glassdoor. But if you can't make the case.

Yes.

You're just making a threat.

Yes.

That's it.

I call it. This is what I tell my mentees. I call it illustrating your Oprah. And so I like Oprah. Right? Is a type of, like, if right now in this room, we said, hey, if we could gather $300,000, Oprah is going to showcase all of us on her social media, open up her Rolodex, and help negotiate our deals. Like, we would gather that 300,000 so quickly because we know that it's worth hundreds of millions of dollars. Right. Because we know the value of Oprah is so obvious that it's just illustrated in the way she navigates. And so whenever I'm not getting paid as much as I want as a speaker or someone trying to undervalue me, I ask myself, have you illustrated your Oprah? Have you illustrated your value in such an obvious, overwhelming way that they're like, of course we will find the money.

Yes. And I think this is so important that we just take a minute and highlight this, because the tendency is to be angry at the employer or the client that you're offering a service for that they didn't see my value. No, no, no. You didn't see your value. You didn't actually make the case, and you did not present yourself or the value you provide. If you are somebody that offers a service, you are a coach, you're a real estate agent. You cut hair. You walk dogs. That is a business. Do not give that shit to your friends for free, because you will start to resent them for them taking you for granted? No, you're taking yourself for granted. So people are gonna ask. People are gonna assume you cannot do that with yourself, but this is about you understanding your value. So in terms of somebody who's listening, and they're like, okay, I can't quit my job. I advocated, and they gave me a small amount, but it's not enough. You also talk a lot about, well, what else can you do? Is there side hustles? You mentioned it as part of your story. This has always been part of my story.

On the side, as I was climbing out of debt, I will do anything well within limit. You know, I mean, limit. So what are some of your favorite side hustles that you recommend for folks that are like, okay, I don't need to go out on the weekend, and if I'm working my side hustle, I'm both making money and I'm not consuming and spending more money. So what are some side hustles that you like?

Well, one, I say before, like, they're not a specific one, but I, before looking, like, externally, ask yourself one, do I have a degree of certification in something? Because, one, it means that you'll get to get paid more for that thing. You know, it's like, oh, I'm a teacher. Like, who doesn't want a preschool teacher babysitting? I don't have to get regular pay. You know, I can increase my pay. And then two, what do you do at your current job? So there's not this additional learning curve? Oh, that's huge, because now, unless you're starting a business, that's different. But a side hustle, if I'm just here for the money, then I'm not trying to learn anything new. Like, I just want to be able to just do it. And so for me, tutoring and babysitting was so perfect because autopilot, I can tutor. I teach all day. You know, when I was teaching preschool babysitting, the kids love me. I'm such a, you know, this is what I can do. And so that was a perfect side hustle for me, you know? And so say, if you were like, I don't know, like a. Maybe you work as a.

A home health aide or something like that. Or, you know, maybe organization is something you're like, you know, I'm already helping people in their home get their things together, and I love organism or organizing. I can do that. You know, it's important to do the math before you jump into it, because some side hustles require a little bit of investment, you know, so it's like, well, does this make sense? You know, like, you know, let's just say you decide, oh, I'm gonna drive Uber. Okay. So is your car insurance gonna go up? Oh, you know, like, yes. Gas. And so is the math gonna math? You want to make sure whatever side hustle you choose that you do the math ahead of time. You know that if you are gonna invest, let's just say you're a really great baker. You know, if you are gonna invest, like, and maybe you're gonna invest time and energy and money into learning how to decorate cakes, because you bake cakes. Well, but so you're like, oh, I'll take the $200 decorating class because it means I can charge another 30% on the cake that I bake.

Oh, I love that.

So there has to be what I call direct return on investment. You know, so. Meaning that in the beginning, when you are investing in a company or whatever you're doing, it's okay to. It's indirect return. Doesn't make sense. Meaning, like, I'm not going to get, you know, a Mel Robbins pen in the beginning or, like, business cards, necessarily, because can I sell this pen? Unless I'm going to pen selling business to make money. So, in the beginning, it's like, okay, I'm gonna invest in maybe, like, a cute alpha for marshalls because I'm a speaker, and because when I show up, this will allow me then to get paid more because I look really professional. So there's a direct return.

Got it.

If I bake cakes, I'm gonna buy egg, flour, sugar, the things I make, put it together, bake the cake. So many people invest in the indirect thing, you know, like, the accoutrement, like the website that this, that. And it's like, you haven't made any money, and now you're broker.

Yeah.

Before you know. So just be mindful. Like, make sure that the math makes sense. Get things that are aligned with, like, what you're already doing and what maybe you have a certificate or a degree in so you could get paid more.

Well, I love that. Any final parting wisdom, I'll say this.

That, like, we are here. Well, I don't know if you know this, Mel, but two and a half years ago, my husband passed away suddenly. I did not know that for my aneurysm.

So that sucks.

And so one thing I learned from that, aside from the financial component, which is that we did, I want to say, 85% to 90% of the things right so I get to just miss him. There's not the financial ruin that so many women lose their partner and their home. That has not been the case for me. But what I did, what my therapist calls the gift of grief, is that it gave me perspective of what's really important. You know, like, that all of this that you're learning today is not for money's sake. It's for meaning's sake, you know? Like, I hope you remember to put that first and center that. Like, what is the real thing that you're wanting? To what? End time with family, time with friends, you know, like, purpose, whatever that is, to center that and to use the money to match to it, because you might already have enough, you know? I didn't know I had enough. I was like, the driver, like, oh, babe, we could do this. And he'd be like, well, I like our house. You know, we could get this car if I work even harder. And he's like, well, the car's paid off.

I like our car. His thing was always. Because I have a stepdaughter, Alyssa. He would always be like, well, if liss is good and you're good, I'm good. You know? And it took for him passing away to make me realize that it's enough. Like, I have enough. I spend way more time with family and friends now, you know? Like, so all that I work toward is to just bring back to center, to enough. I don't need to collect any more. Like, you know, I'm so happy my book made the New York Times bestsellers list. But honestly, like, what does that even mean? You know, we're here for a flash in the pan. And how will you spend that time? And I hope you spend it, like, on the things that mean the most. Connectedness, love, purpose. And they use your money as one of the tools to help you achieve that life.

You are a gift to all of us.

Thank you.

Thank you for absolutely everything that you poured into us today. Hey, it's Mel. Thank you so much for being here. If you enjoyed that video, by God, please subscribe. Cause I don't want you to miss a thing. Thank you so much for being here. We've got so much amazing stuff coming. Thank you so much for sending this stuff to your friends and your family. I love you. We create these videos for you, so make sure you subscribe.

Bye.