As much as we try to do right, we all fall into some common money mistakes. Ash Exantus joins us with 3 to avoid, and a special challenge for ambitious grownups.
3 money mistakes to avoid
Mistake 1: working hard for money- instead of letting money work for you
Mistake 2: having the wrong number of bank accounts
Mistake 3: saving money - you should actually invest first
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Website - www.iamashcash.com
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Full Transcript:
Bobbi Rebell:
Hey, grown-up friends, a big thank you to so many of you that have already bought my new book, Launching Financial Grownups: Live Your Richest Life by Helping Your (Almost) Adult Kids Become Everyday Money Smart. This book was not easy to write because I had to get honest with myself about what was working with my teen and young adult kids and what was not working. I also had to be prepared to share it with all of you.
Bobbi Rebell:
So, first of all, thank you for your support and your wonderful responses to it. There's definitely some things in there that you may not have been expecting to hear. By the way, I got a lot of help from my money expert friends and also financial therapists and parenting experts. I am really happy with how Launching Financial Grownups came out, even though it really was hard to be, like I said, that honest, and it was a lot of work. But I really loved doing it, and I'm really happy with how it came out.
Bobbi Rebell:
On that note, if you have not already, please pick up a copy of Launching Financial Grownups today. After you do, please share it on social media. Please leave a review on Amazon. Those reviews are super important because the algorithm picks up on them and that can make the book a lot more visible to more people. So I truly appreciate it, and I really also appreciate all of your support.
Ash Cash:
Instead of focusing on active income, meaning, working for money, we have to focus on passive income, which means that once we make the money, we use that money to buy income-producing assets and let those assets buy the things.
Ash Cash:
Then if we decide to continue to work for money, we just keep that cycle going. So that way, we're growing wealth, instead of relying on our physical labor in order to manage our money.
Bobbi Rebell:
You're listening to Money Tips for Financial Grownups with me, certified financial planner Bobbi Rebell, author of Launching Financial Grownups because you know what? Grown-up life is really hard. But together, we got this.
Bobbi Rebell:
Grown-up friends, get ready to smile and be really excited about your money and the potential to have more of it. No get-rich-quick ideas here. You know I would not take you guys there. But today's guest Ash Cash Exantus is going to help us all see the money mistakes that we make and also provide some easy solutions that can work for all of us.
Bobbi Rebell:
Ash Exantus, AKA Ash Cash, is often called the Hiphop Financial Motivator because he uses a culturally-responsive approach to teach financial literacy. He's also a speaker and a bestselling author of many, many books. We're going to talk about that. Lots of books, lots of money coming from books for him. He is also very much a financial grownup you will learn a lot from. Here is Ash Cash Exantus.
Bobbi Rebell:
Ash Cash Exantus, you're a financial grownup. I'm so happy I finally got you on the program. Welcome.
Ash Cash:
Thank you so much for having me, Bobbi. I appreciate you.
Bobbi Rebell:
We were joking before I started recording. I have been trying to get you on, literally, for years since we met at Shannon McLay's Financial Gym, which is now virtual, so hey, Shannon. So glad you're here. What have you been up to the last few years? You have, oh, I don't know, 11 books going on?
Ash Cash:
Yes. Yes. Yes. Yeah, just writing books and making sure people get their minds and their money right so they could live in abundance.
Bobbi Rebell:
Which is apropos. Your company is called Mind Right Money Management. Tell us quickly about that.
Ash Cash:
Yeah. I think a lot of times people always think about the practical things as it relates to managing money, but they have to focus on a mindset first.
Ash Cash:
So when I started doing this work, I said, no, I can't. Everybody wants to lead with practicality, but the practicality is really the mindset. So mindset or Mind Right Money Management is really a company that teaches how to change your mind in order to manage your money the right way.
Bobbi Rebell:
Which is so important, and one of the important mindsets, it's also to understand that as grown-ups, we make mistakes. It happens all the time, and it's part of the learning process, and that it's a really important thing.
Bobbi Rebell:
You brought with you three mistakes that we grown-ups need to be aware of so that we don't make them. We probably are making a lot of them already. I mean, I know mistake number two is something I may be doing. I'm excited to hear what you have to say about it so let's dive right in.
Bobbi Rebell:
Mistake number one is working hard for money, instead of letting money work for you. Tell us more about that and what we need to be aware of.
Ash Cash:
Yeah. Number one, society, school, everything teaches us that we have to go to work, work hard. Then once we make some money, we buy things with the money, and then we continue that cycle of working hard, working hard, we put a little bit away.
Ash Cash:
But the truth of the matter is that if we want to create financial freedom, we want to build wealth, we have to change that relationship with money. Instead of focusing on active income, meaning working for money, we have to focus on passive income, which means that once we make the money, we use that money to buy income-producing assets and let those assets buy the things. Then if we decide to continue to work for money, we just keep that cycle going. So that way, we're growing wealth, instead of relying on our physical labor in order to manage our money.
Bobbi Rebell:
So give me a practical, real-world example of that.
Ash Cash:
Yeah. Young people are taught to buy a home first to live in, but you can house hack. So imagine a young 20-something-year-old or any age, to be a hundred percent honest, if they're saving to buy to become a homeowner, instead of buying a home to actually live in, you buy a home, a multi-family home and you rent it out. So now, immediately, you have achieved mortgage freedom because you live in one apartment, you rent out the other apartment, and then what you're renting that other apartment for pays for your mortgage and so now that rent is covered.
Ash Cash:
I wrote 11 books. Books are a great example. You write it one time, and so it took me active work for me to physically write these books. But after the books are done, you sell them over and over and over again. My first book, I wrote that in 2009, I still get checks to this day from something I did over 12 years ago.
Ash Cash:
So those are two high level and low level, if you will, examples of how I took active work to make money, but then now that asset is paying me over and over and over again.
Bobbi Rebell:
Right. Mistake number two, this is the one that has me sort of second-guessing myself. Mistake number two is having the wrong number of bank accounts. I've never given it that much thought. Tell us more about how many bank accounts should we have.
Ash Cash:
Yeah. Everyone should have four bank accounts. Most people have the two. Mainly, people have one, they have the checking account. Some people have a checking and a savings account, but the savings account never accumulates anything because once they start to save, they get the buy one, get one from Macy's and then they charge so much through the checking account.
Ash Cash:
Everyone should have four accounts. You should have a spending account, and so that's the money that you allocate to spend money, and so whatever your bills, once you start allocating things, you want to have a bill account.
Ash Cash:
Let me back up a little bit. You should have a bill account first, and your bill account is where the money is going to go to pay your bill. So you should have a debit card attached to that bill account, everything should be automated, paid online.
Ash Cash:
You should have a spending account. You should have money put aside whatever the percentage is to spend, and that's in a checking account.
Ash Cash:
You should have a savings account, and that savings account is going to be for when you separate your budget from short-term spending, long-term, midterm goals. You should have a savings account and that money goes there.
Ash Cash:
Your fourth account should be a financial freedom fund. People call it an emergency fund. Words have power so we're not calling any emergencies into our lives so we call it a financial freedom fund. Every time you get paid, you should have a percentage of money that goes into your financial freedom fund.
Ash Cash:
But here's the kicker, Bobbi. Your financial freedom fund should not be in the same bank that you have your checking account. It could be a online bank. It could be a regional bank. I do not want you to have a debit card attached to it. I actually want you to make it so inconvenient that you don't even remember that you have this account. In fact, when you get paid, I want you to automate it somehow where the money goes automatically to that account and allow that money to grow. As that money grows, you use that to increase your wealth.
Bobbi Rebell:
I'm processing all this, but, okay, I feel like I just got a homework assignment from you because I don't have my funds set up that way, and I bet a lot of our grown-up audience does not. So this is a lot to really think about and really incorporate into our lives.
Bobbi Rebell:
The third one is you lose money saving money. Invest first, save last.
Ash Cash:
Yes, yes, yes, and this is old advice. So I was a banker for 15 years, and I remember when I first started my career as a banker in 1999, that was the last time rates were probably like 4, 5% in the CD. Since then, you are, literally, losing money if you keep it in a bank. Especially now with the economy being what it is, I think inflation is over 7%, which means that if you're not at least making 7% in your checking account or your savings account, you're losing money.
Ash Cash:
When you think about investing, whatever investing means for you, whether it's index funds, whether direct stocks, mutual funds, whatever it is, if you look from a long-term investing perspective, the average is going to always beat inflation. So if we are looking to truly manage our money the right way by looking at or activating old advice, we're literally losing money.
Ash Cash:
So we have to invest first. Invest your money first. When I say savings, yes, you'll have that financial freedom fund because you want to have some liquidity. Things happen and so you want to have some liquidity, you want to have some cash available if things happen. But minus the financial freedom fund, let's start getting into investing as soon as possible. Because once you start investing, you take advantage of compound interests. You think about dollar-cost averaging.
Ash Cash:
You think about this year, stocks have been a rollercoaster. Some people get afraid at this time. But companies are, literally, on sale right now. So if you do what's called dollar-cost averaging and you're like, "You know what, let me start investing now," the companies that you would've gotten at $100 or maybe at $20 right now, you better buy them up. Then by the time the economy rebounds, your account's going to start looking nice, really, really nice.
Bobbi Rebell:
And it is important to dollar-cost average and to buy when you do see value, of course. I know you would also counsel people if you're buying individual stocks, make sure that they're down because of things like the overall market tone, not because of a company-specific reason so I just want to add that caveat in for people.
Bobbi Rebell:
What's the biggest mistake you think people made in the pandemic in terms of financially? Because it really threw so many people for a loop and a lot of us really, you talk about the stock market, we thought the market would crater during the pandemic, and it did for like a hot second and then it came right back. So I'm just curious to know your observations, what you're seeing among your clients and everybody that you work with.
Ash Cash:
Yeah. I think the number one money mistake that was made during the pandemic, we didn't pivot fast enough.
Ash Cash:
There's four types of people in the world. You have consumers, producers, investors and philanthropists. Most of us are just consumers, and I think that the pandemic gave us a great opportunity to become producers and investors, and we didn't pivot fast enough. We knew the world how normal it was, and we thought normal was going to come back where normal was never coming back.
Ash Cash:
So people got so used to meetings on Zoom and digital that if whatever our expertise was, if we jumped on it and said, "You know what, we're going to start providing that from a digital standpoint," there were so many digital millionaires made during the pandemic and I think that was the biggest mistake was that we were trying to hold on when it was time to kind of double down on our expertise and reach more of the world because everybody was home. Everybody didn't know what was next, and we could have reached our consumers faster had we pivoted.
Bobbi Rebell:
Well, we all need you on our side. Before I let you go, you have a challenge for our listeners.
Ash Cash:
Yes. So I have the Max Out Your Income Challenge, and it's, literally, helping people do exactly that pivot. Wherever you are in the income spectrum there is always that next level. So I've been able to max out my income through books, creating 15 streams of income from books. So if you go to maxoutyourincome.com, you could join the five-day challenge and take your income to the next level.
Bobbi Rebell:
Well, congratulations on all, and thank you so much for joining us. Where can people reach you besides, obviously, we know where to get to that challenge, where can people reach Ash Cash?
Ash Cash:
Yeah. You could follow me or go to my website, iamashcash.com or follow me on all social media platforms at iamashcash.
Bobbi Rebell:
Love it. Thank you so much.
Ash Cash:
Thank you so much, Bobbi.
Bobbi Rebell:
Okay, grown-ups, I think we can all agree Ash Cash has a way of getting us newly re-motivated to take action on our finances. I think my favorite takeaway was when Ash reframed the idea of an emergency fund as a financial freedom fund. It just seems more optimistic.
Bobbi Rebell:
What was your favorite takeaway? DM me on Instagram at bobbirebell1 and on Twitter at bobbirebell and let me know.
Bobbi Rebell:
Thanks to all of you who have bought my new book, Launching Financial Grownups. I have another ask, but it's a really easy one and it doesn't cost a thing. Please leave a five-star review on Amazon. You can keep it short and sweet, but having more reviews makes a big difference in getting the book discovered so we can help more people learn about money and generational wealth.
Bobbi Rebell:
Speaking of generational wealth, I would love to come speak to your company or organization and book clubs. I have some great virtual and in-person programs that you can learn more about by going to the Work with Bobbi tab on the top right of my website, bobbirebell.com. That's B-O-B-B-I R-E-B-E-L-L.com. You can also get show notes and transcripts of every podcast right on my website and check out my adulting merch store, GrownupGear for fun gifts. If you're going to graduations, bachelor and bachelorette parties, housewarming parties, birthday parties, whatever you're celebrating, we've got good stuff to give your friends and relatives. Super cute fun stuff to make everyone smile.
Bobbi Rebell:
With that, I wish all of you well, and especially a big thanks to our guest Ash Cash Exantus for helping us all be financial grownups.
Bobbi Rebell:
Money Tips for Financial Grownups is a production of BRK Media, LLC, editing and production by Steve Stewart, guest coordination, content creation, social media support and show notes by Ashley Wall. You can find the podcast show notes, which include links to resources mentioned in the show, as well as show transcripts, by going to my website bobbirebell.com. You can also find an incredible library of hundreds of previous episodes to help you on your journey as a financial grownup. The podcast and tons of complimentary resources associated with the podcast is brought to you for free, but I need to have your support in return. Here's how you can do that.
Bobbi Rebell:
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Bobbi Rebell:
Thank you for your time and for the kind words so many of you send my way. See you next time, and thank you for supporting Money Tips for Financial Grownups.