Money Expert: “This Keeps You Broke! Do This to Build Wealth & Financial Freedom” | Jaspreet Singh
Added: Jul 23, 2024
Jaspreet Singh, the chief executive "money nerd" at Minority Mindset, emphasizes the critical importance of developing the right mindset and beliefs around money as the first step to building wealth. He argues that our economic system is designed to keep people poor by teaching them to go to school, get a job, and spend their money, without educating them on how to convert that money into wealth. Singh states that the beliefs we have around money, often passed down generationally, can significantly impact our financial success.
Key Beliefs For Building Wealth
Singh outlines four key beliefs necessary for building wealth: 1) It is my duty to become wealthy, 2) Money is abundant, 3) Money is a tool, and 4) I will become wealthy. He stresses the importance of aligning one's subconscious beliefs with these principles, as simply thinking positive thoughts about money is not enough if deep down one believes wealth is unattainable or undeserved.
The podcast host, Lewis Howes, and Singh discuss how generational poverty is often perpetuated not just by external circumstances, but by the limiting beliefs and attitudes towards money passed down within families. They emphasize the need to break this cycle by consciously changing one's relationship with money and understanding its role as a tool for freedom and options in life.
Building Wealth: Key Principles and Strategies
Singh outlines five fundamental steps to becoming wealthy: 1) Earn money, 2) Don't spend all your money, 3) Buy investments with the money you don't spend, 4) Reinvest the returns from your investments, and 5) Work to earn more money to invest. He emphasizes that the path to wealth is not complicated, but it requires discipline and a shift in priorities.
The conversation touches on the importance of living below one's means and prioritizing investments over conspicuous consumption. Singh introduces his 75-15-10 plan, where for every dollar earned, 75 cents is the maximum that can be spent, 15 cents is the minimum to invest, and 10 cents is the minimum to save. He acknowledges that this can be challenging for many people but stresses that it's a necessary step for building long-term wealth.
Singh and Howes discuss the three assets that have built more wealth than anything else over the last century: building a business, stocks, and real estate. They note that while these assets have the potential for significant returns, they also carry risks and require education and preparation to navigate successfully.
Economic System and Government Spending
The conversation delves into how the current economic system and government policies impact individual wealth-building efforts. Singh explains that the government's increasing debt and spending habits lead to inflation, which he describes as a hidden tax that disproportionately affects the financially uneducated and poor. He points out that while inflation hurts many, it can benefit investors as asset prices tend to rise with inflation.
Singh discusses the United States' national debt, which is approaching $35 trillion, and how interest payments on this debt have become the third-largest expense for the government. He explains that this situation leads to either higher taxes or more inflation, both of which can negatively impact individuals' wealth-building efforts.
The conversation also touches on how government policies and banking practices encourage spending and debt, which keeps many people in a cycle of financial struggle. Singh argues that understanding these systemic issues is crucial for individuals to make informed financial decisions and protect their wealth.
Investing and Financial Preparedness
Singh emphasizes the importance of being financially prepared for economic downturns and market volatility. He advises against trying to time the market or predict specific economic events, instead focusing on consistent investing and building a diversified portfolio.
The discussion covers various investment options, including index funds, real estate, and speculative assets like cryptocurrencies. Singh shares his personal experience with Bitcoin, explaining his decision to sell a portion of his holdings to reinvest in cash-flowing assets like rental properties. He stresses the importance of understanding one's own risk tolerance and investment goals when making such decisions.
Singh and Howes discuss the psychological challenges of investing, particularly during market downturns. They emphasize the importance of maintaining a long-term perspective and not letting emotions drive investment decisions. Singh advises separating news from trends and being prepared for both positive and negative market movements.
Social Media and Consumer Behavior
The conversation touches on the impact of social media on consumer behavior and financial decisions. Singh points out how platforms like Instagram have amplified the "keeping up with the Joneses" mentality, leading many people to overspend in an attempt to match the lifestyles they see online. He advises distancing oneself from social media or at least being mindful of its influence on spending habits.
Howes shares his experience of taking a week-long break from his phone and social media, highlighting the benefits of disconnecting and gaining perspective. They discuss the importance of following accounts that provide knowledge and inspiration rather than those that create fear, anxiety, or envy.
Personal Experiences and Lessons
Both Singh and Howes share personal experiences that have shaped their financial journeys. Singh discusses his background as the child of Indian immigrants and how cultural expectations influenced his early career choices. He talks about the challenges he faced in real estate investing and how he learned from his mistakes.
Howes shares his experience of living on his sister's couch with significant student loan debt, feeling hopeless about his financial future. He describes how he began educating himself about personal finance through books and blogs, which eventually led him to pay off his debt and build wealth. Both emphasize that financial success often comes through a series of mistakes and learning experiences.
Cultural and Religious Perspectives on Wealth
Singh discusses how his Sikh background influences his approach to wealth and business. He explains three core tenets of Sikhism: remembering God, serving others before oneself, and earning an honest living. Singh emphasizes that building wealth should not be about greed, but about taking care of oneself and others.
The conversation touches on how different cultural perspectives can impact one's relationship with money. They discuss the immigrant mindset and how the experience of leaving everything behind for new opportunities can foster resilience and a strong work ethic.
Advice for Building Wealth
Singh offers three key pieces of advice for those looking to improve their financial situation:
1. Take a deep breath and relax, understanding that there is a way out of financial struggles and a path to wealth.
2. Take action, which might involve educating oneself through books, classes, or starting to invest small amounts of money.
3. Be prepared for mistakes and keep going when things go wrong, understanding that losses are part of the learning process.
Singh and Howes emphasize the importance of consistency and patience in building wealth. They encourage listeners to think about their future selves and make decisions that will benefit them in the long term, even if it means sacrificing some immediate pleasures.
Current Economic Outlook
When asked about his predictions for the next 6-24 months, Singh is cautious about making specific forecasts. He anticipates increased government spending due to economic uncertainty, which could lead to higher taxes and inflation. Singh notes that Americans are starting to cut back on spending for the first time in recent years, which could impact economic growth.
Singh discusses the rise of "buy now, pay later" services and increasing credit card debt as signs of financial stress among consumers. He advises being prepared for various economic scenarios rather than trying to predict specific outcomes.
Conclusion
The conversation concludes with Singh reiterating the importance of financial education, consistent action, and resilience in the face of setbacks. He encourages listeners to invest in themselves, change their beliefs about money, and take daily actions towards building wealth, even if these actions are initially uncomfortable.
His final message emphasizes the importance of continuous improvement and the understanding that building wealth is a process that requires sacrifice but ultimately leads to greater freedom and options in life. The conversation ends with a call to action for listeners to invest in themselves and take steps towards financial freedom, regardless of their current circumstances.
Related episodes
