We're going to start with one of these topics that I hate when it comes to money. This is number one of the five things you're going to help us master, Tiffany, and it is budget. It's in your name, budgetista. 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 how you think about your mom, right? So you've got three kids, right? Yeah. And so if, say, your son's like, Oh, when he's little, 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. Or 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 It's not really a say yes plan, but one that's safely implemented so you can maintain the thing that you want, right? So you can call it a money list. That's what I usually start with because people hate that name.

I like the name money list. What does a money list mean?A budget.Okay. I 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.

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. 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. 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.

Or electricity or water or any of those things that 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. Then And step three is to write down how much you make on average every month from all of your areas. 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, because usually people get there and they're like, Can I have a tissue?

And should you do this with a friend? Yes. Should we call Linda? Yes.

Get yourself a Linda So 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 waterworks. It's common. Because 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 a beautiful condo. And so we did that step, and she started crying. And then I started crying because I'm a baby. And she was just like, 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, yes. So we sat with the fan on because she just turned on the air conditioning 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 faced with the reality. 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 slash and dash it. Because that's what people want to do. I won't eat out.

I'm never going to eat again. Never going to turn the lights on in this house. Get the 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 is going to come knocking on your door and say, Where's my money? 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 credit card, student loans. So if you don't pay, you're likely to be sued.

Think about that. Got you. When you were 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. That's a bill.

So a B next to all your bills. And then, and Those are really fixed expenses. So that way you understand, right? And then I want you to put a U in front of any beam that fluctuates based upon your usage. Oh, I love that. So I call these the U stands for usage or utility.

So your student So your rent loan does not have a U. Your mortgage or rent does not have a U. 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 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 UB, 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 leftover, 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's most of your money going? For many people, most of their money might be going to the Bs and Ubs. But for some people, it's actually all the Cs. So then we have to identify, do you have a don't make enough issue or spend too much issue? And so if most of your money is going to the Bs and Ubs, you might not make enough. So it's not about slashing because these are your bills. But if most of your money is going to your Cs, your choices and your cash expenses, then you probably have a spend too much issue. So now we need to slash. Because it's entertainment and grocery and all those things where your money is going. Because what I find Instead of frugal, people want to get more frugal when things are tight. I'm like, That's not the answer. Right. That instead, I want you to put your energy towards learning how to earn more if all of your money is going to your bills. Because we're cutting the mortgage. What are we cutting? That's true.

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 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 20s and 30s, that social media has become shopping with a click. And you and I had to leave our house to You 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 11:30 at night. So do you see a spike in this?

Absolutely. Overconsumption is the new way. We all have so much that we don't need. I mean, even I, sometimes I'm like, Tiffany, you do not need another... You don't even vacuum. I'm like, But that one is so cool. And I'm like, This is influential who I follow, who I love her because it's so esthetically pleasing. Yes. But the ones that were everything in the kitchen is esthetically pleasing.

Yes, this is these Amazon shops.

I can click through to my Amazon thing.

I got this all for free, but I'm going to make money on you buying it.

A container for the container. It's like, Well, who wants to eat cereal out of a cereal box? We want to eat it out of an esthetically pleasing glass container. Do I need an esthetically pleasing? You don't. Yes. It is really hard. That's why I don't believe in leaning so heavily on discipline when it comes to financial stick-to-it-ness. What do you believe in? That I believe automation, automation, automation. That's the new discipline. That if If you can put systems and automations in place, it will help to safeguard you because you're human. So we're not here to fight against your humanness. 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 the ideal. Two checking, two savings. So checking one is like your spending account. This is attached to your debit card. So most people have this account, but everything just gets dumped there. So that's the account you keep it. The second account is a checking account, which is your bill's 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 going to do it from... I have payroll direct deposit into those accounts.Oh.

So you at yourCompany, yes.company level, you basically say X % of my Paycheck is going to go into checking account number one, which is where my bills are, or spending. And then the other percentage, and do you have a particular percentage in mind?

Well, the good thing is people ask me 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.

It'd be 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 business.

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

Yeah. 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 away your bill money?

Because I don't need a debit card.Not for the bills account.For.

The bills account. Yes.

I've never had two checking accounts.

Yeah, okay. I'm sitting And you're thinking, my freaking money goes right into that thing. Yes. So if you... That way, it keeps your bills account. This is why I said you don't need as much discipline. It keeps them money.

I am actually going to do this. Yeah. I think this is so empowering because I have had such the philosophy philosophy of just put your head down. 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, because that's my favorite, I'm swiping, that I know one thing, I'm not swapping 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. Thank you. 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 account not at your regular brick and mortar bank because they're going to pay you 0.000..

Okay, so we're Where 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. And so this is like that, like what I said, automate, automate, automate. You don't have to be as disciplined. So savings one at a high yield savings account. Typically, these are Online-only banks. They pay, right now, currently, 4%, a little bit more. And so you're going to have one-Now, when you said online-only bank, I had a visceral reaction because I immediately thought about the dude that scammed you out of money for some reason.

You know what I'm like? How do you know that an online bank is a reputable bank to put your money in?

Because that, to me-FDIC insured.

Fdic insured. But how would you know that? Because everybody Can you copy that little icon.

So no, because that would be against... I mean, if they want to go to under the jail by the federal government. So you could, honestly, a Google search.

We're also going to link everybody. You know our resources are robust, and today, there will be a lot of information from the Budgeonista. And Tiffany will have stuff so that you can go to her resources and understand what's reputable, what's not.

So I list a bunch. So with both of my 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 we have a huge global audience. So just think about your favorite, even place where you're going to pick up your prescriptions or your local 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 freaking money. And it's like you walk through the doors, I'm like, Oh, I feel like I need I need some hair rubber band things. I need those little cotton things. I have that shit in my drawers. I don't know why there's something about the psychology of that. So in your model, when you do your money list and the Bs 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 squirled 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. Your emergency account is like your seat belt, 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 So if you have those four accounts, you use your money list to figure out how much money you want to place 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 is saved, 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 assured 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, my journal and a diary, and I'm not doing all that.

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 Bs, we got the Us, we got the Cs. We've now got our four different bank accounts, the two checking, the two savings. So if you followed all this advice and you look at what it costs for you to pay for your life, 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, what percentage is your day-to-day expenses?

I would say, ideally, if you can live off of 70% of your income, that's ideal. You It might be at 99. That's okay. But this is what you're working towards, no more than 70%. Obviously, you make more, it might be even lower. I think at this point, I might live off of 20 or 30%. At one point, I was living off of 200%, but 70%, So 70 percent- Meaning you were in debt.

Yes, exactly. Meaning you were spending more.

Yes, way more. Yes, yes. So this is not shame. This is just like, I'm working towards 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 I'd like to quit for 70 % because that's living off of money.

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 Bs, your Us, your Cs, 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. Awesome. 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 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're learning about something that Tiffany calls dreamcaping, which is a critical part of you creating a plan and finding hope and enthusiasm to take all this advice and apply it.

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 Mel. We are so glad that you're here. By I mean me and Tiffany Aliche. She's also known as the Budgetnista. You're falling in love with her as you listen to her. She's been featured on Netflix. She's a New York Times best seller. 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. 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. Tiffany. 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 list. I just call it just honestly the debt list. We have to just get a picture of 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 what you want to have your bestie of besties.

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

Exactly. So yeah, because you have to get a pay. This is actually, sometimes it can be a little harder than the money list.

Oh, I would think so. Because as I'm listening to you, I'm thinking to myself, I haven't even done this for myself.

To see who do I owe?

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

So just knowing what those things are. And like I said, don't do it alone. You can literally have a party.

It could be like-We're not spending money. There's no ice cream. There's no nothing.

It's a potluck. It's like you could just be like, Where are you and a group of friends just sit down and say, We're going to do our debt list. 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. And so this is when you pay the lowest balance debt first. So you're going to look at all of your debt and line it up from lowest balance that you owe, and then to the highest debt that you owe. And if you're someone who is emotionally charged by your debt and needs you to have early success, you're going to 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 going to know what that is. This is why that money list is so important. Because it's like, Where am I going to get the money? Let's look at the money list. Right. 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 going to go to that lowest debt. So let's just say you owe $200 to granny, 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 debt's paid to granny. And now we go to the next one. Yes.

The next debt gets its minimum, which it was already getting, but it gets that lowest debt's minimum, the first one, and that extra money from your money list. So now all of a sudden, it's getting three payments in one. So you're cooking with grease now. 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 snowminimums 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 collected minimums that you were already paying.

I'm going to try to translate that. So if your credit card bill has a minimum of $50, and you've just been paying the 50 and paying the 50, that means you're not really chipping away 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. Yes. Got you. And so you've accumulated all these 50s. And by the time you get to the big one, you might have 200 extra dollars in the cash flow.

On top of the minute, yes. So it doesn't actually hurt your... You're not coming out of pocket anymore because you've been paying all these minimums. Yes. 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 owe. 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. 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. 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.

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

And sometimes you can't. I know people don't want to say that, but 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. And I just remember, but I opened it because sometimes you do a thing, not for where you are currently, but for where 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 in you. And so for the first year or so, when I was paying down all that credit card debt and making little money here and there, the budget needs to be 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 10. If I could do 10, one day I'll do 100. If I could do 100, one day I'll do a thousand. 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 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. It would literally be like 27 cents. I like that. And I made friends with the tellers. And so when you get that, they penalize you for having... And I'll just wave that for you. No problem. But just seeing that, still, someday, someday, someday I will get it in there someday.

Dreamcaping.

Okay, let's talk about dreamcaping. What is dreamcaping?

So this is where I totally made up as preschool teachers are apt to do. And I just thought, 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? Dreamcaping means that 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... I was a kid in class, talks too much, and daydreams. But I love daydreaming because it allows me to really go into the future and say, This is what life is going to look like for me? Live there for a little bit 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 Dreamcaping, I identify a time in the future that what I want to see. So maybe it's the December 31st version of yourself this year. Yes. Maybe it's you five years from now, 10 years from now, whatever that is. And then I ask myself, holistically, how do I want life to go?

Not financially, holistically. How long do I want my hair to be? Where do I want to live? Where do I want to drive? What foods am I into? Just imagining my full, complete life. Where have I traveled to? That thing. And so that's the second part of dreamcaping is really dreaming 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, maybe they're on social media and you follow their social media. Do they do podcast interviews? Do they have a book that's come out? Do you know them personally? Don't go all this alone. Why? The fastest way from where you are to where you want to be, usually is through someone else. So I'm literally studying like, Oh, I love the way Mel does that. Okay, so I'm going to read all the things you've written and watch all your shows, 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 there's this framework there. Yeah, of course. But a lot of flexibility in there. Like, oh, well, Mel did this, but I'm going to do it like this. 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's so big for me. I started the Budgetnista because if not for Linda, where would I be? I don't care if community is one person or a thousand people or two million people. Find community and work the plan within that community. So you can have accountability. You can have people to cheer you on in a place to vent and say you're scared, and to see yourself in other people. So if you do those five things, that's the five steps to dreamcaping.

Well, the other 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 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, 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 a nonsmoker? And I was like, no, because it doesn't even resonate because I just don't smoke. That's just not part of who I am. So I don't even associate smoker/nonsmoker. I've just never anybody who smoked because I align with I am who I say I am. And so that should be the aim for all that we do. So it's not like, oh, am I an overspender or an underspender? It's like, well, no, you align with this 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 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, so that I can I need to decide in the dream scape 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're going 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, want it. And so they show you that 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, those Because you bees and bees, those are your needs. You know, right? Now, loves are different. Loves are something that is going to bring you joy over a year from now. And so that's different for everyone. For some people, it is that haircut. For some people, it is that amazing dinner. 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 we love. And then likes, which is next, It's on temporary joy.

So that's something about six months from now. You're like, Oh, it's still cute. I remember. But a year later, you might be like, Wait, where's that shirt that I had? And then wants are literally the opposite. Just Insta gratification.

Yes, that's the shop now on Insta. Yes.

So when you are spending money, I'm not here to tell myself no. So for example, this is... Well, I always travel, but this year in particular, I really wanted to go. I've never been to Johannesburg, and I want to go. Oh, yeah. And there's this really cute travel group. There's 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, absolutely. And then, of course, you look at your budget. Can it allow it? So what that means is that if I don't have enough of that like or want, so what? Because if I get another stinking T-shirt from Target, what are we talking about here? Yeah, exactly.

I think everybody, even when you're struggling, 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. Why am I? And I do think that there is this rise in shopping and consumerism because you don't have to leave your house. You do not need to leave your house. They pull up and drop it on your doorstep. And you just It's just constantly... It's like pulling the... If you're watching this on YouTube, you see me doing it, but it's like you're at a slot machine. Pull. Pull the lever.

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. So I'm not here to tell myself no. I'm here to say yes as much as possible to my needs and my loves. 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. You can actually oversave. What? Yes. I've been an I'm in the saver, 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.

You're not talking about investing.

You're just talking about savings. Yeah, saving. Okay, great. So my mom I was a nurse before she retired. So three months was enough for her. 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. It should be put to work. The purpose of... 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.

I'm sorry, it's not monogrammed. The intention is for safety. And that money, although it would 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 the law of diminishing returns. One glass of water, so good for you. Four glasses, so great. 40, you're going to drown. Yes.

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, 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, 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 if your issue is credit, congratulations. It's the easiest thing to fix. So I want you to just rouse that, because credit is the thing that people worry about the most. Yes. But quite honestly, it's the This is the easiest to fix. Credit is tips and tricks.Oh.

My God.That's it.Tips and tricks. Just tips and tricks. Give me some tips and tricks.

So first thing to understand that there are multiple categories that affect your credit. It's 35% of your score is what your payment The industry is. Okay. Right? And so do pay the people on time. Do you pay at least a minimum? Well, then 35% of your score, you're good.

Handled.

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 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, 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, so You said your son is 17. Is he driving?

He's 18. Yes, he's driving.

Right? So if your son said, Oh, Mom, can I borrow your car? I've never been in an accident. You're like, Hmm, interesting, because you just started. Right? And then let's just say, do you have any siblings?

Do I? Yeah. Yeah, I have a brother.

So your brother says, Since can I borrow your car? I've never been in 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, Yes, 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. So they call it a thin file when you have hardly any credit. So no credit is bad credit. Got you. Just like no driving experience is a bad driver.

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

What are they? Yeah. So my favorite way is, I learned this from a debt lawyer. Okay. He was like, because after I lost everything in my credit score, I learned the embarrassing way. I was teaching classes because I told you, I was like, as I dig my way in, I'm going to teach. 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 800s. It was a 530. A room full of people. I'm looking at the. And I was like, luckily, it said Tia Lita, 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 then I was like, Anyway, let's talk about how to raise your credit. I had no idea because I had not checked. So I was like, How do I raise this 530? Because I had an active foreclosure because I had lost my house. 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. So then I realized, he said, There's something about paying off a debt in full that makes the credit bureaus say, Yay. So think about your credit score as your GPA, your grade point average. It's an average of your choices, your financial choices. Think about the credit bureaus as your teachers. They give you your grade. And think about the credit report as your transcript. It has your grade, but all the other classes and things like It's a real in-depth of what you've done with your life, your financial life. And so if you want the credit bureaus, the teachers, to give you 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.

So you're talking like, if we were to go the math 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.

It'll give you A, but just that A that one month. But we want to get an A every month. 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 bucks a month. And I say, hey, Apple or Spotify, whatever. Actually, don't go to the bills account like you used to. I'm going to put a credit card in the middle of that equation.

And you're going to pay that every month. So they're seeing it off to zero every month.

Every month, 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 a 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 5:30 to a 7:50 in one year, which doesn't sound like a lot because you can raise your credit for a family. 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 going to raise my credit score? I got to 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, you can automate the payment this way and have it serve this double duty for you.

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

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

So another tip is just to... Remember I said 35 % of your score is payment history. Yes. One of the best ways to do it is to just automate your bills from your bills account because that's the payment history. And so 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. Okay. I would be looking like, Am I paid? Let's look at what Glassdoor is talking about. 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. So So one, understanding the size of your company, but also many women, especially, are underpaid. And so before you ask for money, create something that my sister calls the go me file. That's your Bragg 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 so you can quantify or save the company money. She's like, if you can't quantify it, figure out how to quantify it. 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'm undervaluing myself. Look at the value that I bring. Yes. 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 going to forget. Yes. And without that, you don't have the ability to really explain why, because I agree with you. There is a lot of advice out there. Like, ask I'm not going to ask you, Valley, look at Glassdoor. But if you can't make the case, 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... 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. 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 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, 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 your sofa granted. So people are going to ask, people We're going to 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 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. 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 Well, one, I say before...

They're not a specific one, but before looking externally, ask yourself, one, do I have a degree of certification in something? Because one, it means that you're going to get paid more for that thing. It's like, oh, I'm a teacher. Who doesn't want a preschool teacher babysitting? I don't have to get regular pay. 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. 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. When I was teaching preschool, babysitting, the kids love me. This is what I can do. And so that was a perfect side hustle for me. And so say if you were, I don't know, maybe you work as a home health aide or something like that, or maybe organization is something you're like, I'm already helping people in their home get their things together, and I love organizing.

I can do that. It's important to do the math before you jump into it, because some side hustles require a little bit of investment. So it's like, well, does this make sense? Let's just say you decide, oh, I'm going to drive Uber. Okay, so is your car insurance going to go up? Oh. Gas. Gas. And so is the math going You're not going to make a math. You want to make sure whatever side hustle you choose, that you do the math ahead of time. That if you are going to invest, let's just say you're a really great baker. If you are going to invest, and maybe you're going to invest time and energy and money into learning how to decorate cakes because You bake cakes well. So you're like, Oh, I'll take the $200 decorate in 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. So meaning that in the beginning, when you are investing in a company or whatever you're doing, it's okay. Indirect return doesn't make sense, meaning I'm not going to get a Mel Robbins pen in the beginning or business cards necessarily, because can I sell this pen unless I'm in a pen selling business to make money.

So in the beginning, it's like, okay, I'm going to invest in maybe a cute album 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 going to buy egg, flour, sugar, the things I make, put it together, bake the cake. So many people invest in the indirect thing, like the accoutrement, like the website, the this, the that. And it's like, you haven't made any money yet. Now you're a broker than before. So just be mindful. Make sure that the math makes sense. Get things that are aligned with what you're already doing and what maybe you have a certificate or a degree in so you could get paid more.

I love that. Any final Parting wisdom.

I'll say this, that 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. That sucks. 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 somebody is... So many women lose their partner and their home. So that has not That's been the case for me. But what I did, what my therapist calls the gift of grief, is that it gave me a perspective of what's really important. That all of this that you're learning today is not for money's sake, it's for meaning's sake. I hope you remember to put that first and center that. What is the real thing that you're wanting? To what end? Time with family, time with friends, purpose, whatever that is, to center that and to use the money to match to it because you might already have enough. 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. We could get this car if I work even harder. And he's like, well, the car is paid off.

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

You are a gift to all of us. Thank you. Thank you for absolutely everything that you poured into us today. 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. Life.

I love it. Let's do it. Okay. So let's start. We're going to start in your early 20s, and we're going to zigzag throughout our conversation today. We're going to go back to childhood, and we're going to go to the future. We'll do it all because that's what money is about. It's about understanding the seasons of life and how money interacts.

I fucking love this. Okay.

So in my 20s, again, that irrational joy came from being able to buy appetizers. And for every 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? Remember, it's not usually a big thing. It's not, I want to take around 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. 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 going along with this journey so far, Mel?

I think good. Amy? Okay. You think we're good? Okay, good. Yeah. My producer is like, This is fantastic. Okay, good. I think we're all right there. I have a question to ask you to go a little deeper in this, because I noticed It's that you spent a lot of time studying psychology, and you, of course, help people change the way they think about money. 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. 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 on 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. For me personally, it's interesting. My father was the first person in his family to go to college, and he had to pay for it. My mother also went to college and had to pay for it, and she ended up dropping out to have me.

Then my dad got into medical school, and my mom worked nights for the IRS, and my dad took care of me at night, and then she took care of me during the day. We lived in public housing while he was a medical student and when he was a resident in Dayton, Ohio. Then 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 30s. But here's the interesting thing about it. Even though we struggled, and I can relate to the... We never went out to eat when I was a kid, not until middle school, anyway. I never remember my parents being stressed out about money.

What do you remember them saying about money?

Nothing. Can you talk about it? I don't remember them talking about it. I just had this sense because there was this 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. I know they were trying to make the ends meet, and they come from very blue collar, modest family families hard working. They were very hard working. I just got this thing like money's there when you work for it, and you don't need to worry about it. You know what I mean? Not like I was spoiled or anything. That was not it at all. 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. The guy's like, How much does the guacamole cost? I'm like, Dude, have you seen our checking account? You can afford it. He literally adopted this gripping mentality. How does that impact the mindset that you have, your early childhood years?

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 shine a light on what you just told me. 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 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. Some 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. 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 at SET, 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 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. 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 It's not going to 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. So you hear the most common one is we can't afford it. Parents just say this It's 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 it. I want a trapper keeper. We can't afford it. And then this person, hopefully, they end up in a pretty nice job. 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 to go, Why do I still feel guilty ordering a salad when I eat out? And 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.

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. 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 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 sixth-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 do those two things, 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, changing 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 Rameet 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 is going to teach us how to change our psychology.

So where exactly do we start? Knowing that 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. For this metaphor, I'll be the coach. What I'm going to say is we're all in this together, and we're all going to start on the same page. 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, He'll pull out this 46-part spreadsheet and let's go through all your spending. No, everyone's going to leave. I don't even want to... It's irrelevant. Instead, I want to do something, an exercise together with you, me, and everybody listening, about what I call your money dials. So I'm going to ask you, let's do this together. 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. Now that 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. 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. It's a way to take care of everybody at the table because everybody secretly wished that somebody would order one of the desserts. And it's a way to relax that grip like, Oh, I'm only allowed one dessert, so I got to pick the one. It's just like a playful way that's 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 so many things that I'm so thankful I get to highlight some of the things I just heard. So it sounds like what I would call a money dial, the thing you love is either gifting or eating out desserts. Yes. Would that be fair? Yeah. Okay, pick one. Which is the one that gets you really excited?

Gosh, I don't know.

I think it's desserts because you spend 10 minutes talking about desserts. It's usually very obvious. People light up when they talk about their number one.

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

Okay, I love it. So here we have Mel in a Willy Wanca 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 spreading that exuberance and joy and this 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 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 Come up even more. Not quadruple. Let's 10X it. 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, 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 going to 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 everybody got dessert at school for free? Okay.

I love your answers. There is a cohesive thread that goes through them. It's generosity, it's surprise, it's delight. And it just happens to around food. But I'm willing to bet in your life there's a bunch of other things like that. Okay, so for everybody listening, take this example we just heard and apply it to yourself. Let me give you some examples that will help. Please. For most people Like I said, eating out is their number one money dial. When I ask them to quadruple it, they almost always say the same 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, ha, ha. I go, Ha, ha, ha, ha. 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. Okay, you could eat out four times a week, but are you going to eat at the same place? 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. I remember this young man in DC, I was speaking there, and he said the same joke, and I had the same unamused response. I go, Where would you eat? He thought for a second and he goes, You know what? I have a list of every Michelin-star 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? 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, 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 2X, 4X, 10X? 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&M?

She goes, No. 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. 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, I missed these opportunities, I should have done this, I should have done that. And that negative story that you keep reinforcing to yourself that then has you go, 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 a vehicle to do those things.

Exactly. Yeah. I love what you said about the guacamole example is that because we feel ashamed, 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, okay.

There we go.

And then I go, Wow, that's so interesting. I never heard that one, except for the eight million times I heard it. I go, So what do you want? And they are stumped because Because we never actually thought about what our rich life is. And so then I'm gentle. I want them to come to it, but I also want to have a little fun with them. And so they'll say something like, Well, I guess it would be cool if I had a beach house one day. But it 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 five seconds? I don't allow that. I go, Dream bigger, and then let 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 10 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, oh, I could save 5% on coffee. Who cares? That's not exciting.

It's so true. I guess I spent so much of my life causing myself a lot of unnecessary heartache, and it's because I didn't know any better.

And you're not alone. I mean, so many of us, myself included, caused so much heartache just by what we imagined was true that wasn't really true about life.

True. And also chasing the wrong things. And I just know that this really matters. And so let's talk about first this study so that the person listening has context for why this study is so important, how it is different, and the impact that it can make on their life. So can you just tell us about the study?

Sure. First of all, nobody would ever have dreamed when the study began that we would still be going to It started in 1938, and it started with two groups of young men first, Harvard College undergraduates, so a very privileged group, and boys from Austin's poorest and most disadvantaged families, a very underprivileged group. Then eventually, we expanded to spouses, we expanded to children. But initially, it was a study of thriving arriving. The question was, what helps people make that transition from adolescence into young adulthood on good developmental paths? And of course, with Harvard undergraduates, we think, well, they've got their lives all set up. They're privileged. But with the inner-city boys, and they were on average about 12 when they entered the study, the question was, how do some children from really disadvantaged homes manage to stay on good developmental paths and grow up into healthy, happy adults. So both groups were studied with the question of what helps us thrive.

And how did the study work? So you started in 1938. You've got a group of two very different people, right? Or that's the assumption because they come from very different backgrounds. And how did the actually work?

Well, the Harvard group consisted of 268 young men and the Inner City Group, 456. We started with medical exams, psychological interviews. We went to their homes and talked to their parents and sometimes their grandparents. The workers made notes about disciplinary style in the home and even what was being served for dinner in 1938. Then they were followed all the way through adolescence into adulthood. Some famous people, John F. Kennedy was part of the Harvard Group, Ben Bradley, who was the longtime editor of the Washington Post, the Boston Strangler was part of the Inner City Group. But most people were not famous. They weren't infamous. They were just living their lives.

And then how did you follow them? Because it didn't end with just this one series of interviews.

No. And most studies do end that way. Or most studies that try to follow people over time stop before 10 years are up because too many people drop out. So this study followed people year after year with questionnaires, How's your life going? Interviews every 10 years where we went to their homes and sat down with them and talked about their lives, medical exams, getting their medical records from their doctors. And this is the thing. Eventually, we brought in new techniques. We studied the same big things like physical health, mental health, work-life, relationships. But we started bringing in new techniques as science developed them. Now, We draw blood for DNA and messenger RNA. Those things weren't even imagined in 1938. We put people into the MRI scanner and look at their brains and how they light up when we show them different images. Again, people would have thought this was like something from outer space. If we had told you in 1938, we could put you in a scanner and look inside at your brain. It's a really exciting way to see how we can bring in the new tools of science to look at the same questions about well-being.

What is the biggest takeaway from this 86-year-long study?

The biggest takeaway is that the people who live the longest, stay the healthiest, and are the happiest are the people who have more relationships with other people and warmer relationships with other people. That the people who literally saw more people In a given week, the people who felt happier with their relationships actually lived years longer and they stayed healthier. They didn't develop the diseases of aging as soon. If They developed them at all, compared to people who were more isolated, who didn't care about relationships.

What was the most surprising?

The surprise was not that relationships keep us happier, because sure, if we have warmer relationships, we're going to be happier. The surprise was that they keep us physically healthier. How could relationships get into the body and shape our physiology so that good Some relationships make it less likely that we'll get coronary artery disease. They make it less likely that we'll get type 2 diabetes. How is that even possible? In the last 10 years, that's what we've been studying in our laboratory.

How is it It's possible.

Well, it turns out. So the best hypothesis we have with good data is that it has to do with stress, that relationships are stress regulators. So if you think about it, We're stressed at different times all day long. I might leave here, and an hour from now, something really stressful might happen, and I can literally feel my body rev up, my heart rate revs up, my breathing gets faster, all that, right? A fight or flight response. What we know is that if I can go home and talk to somebody, if I can call somebody on the phone or talk to someone at home, I can literally feel my body calm down. And that's what the body is meant to do. So it's good that the body gets all revved up in response to stressors, to meet a stressor. But then it's meant to calm down. And what we think happens when we don't have good relationships is that we stay in a low level fight or flight mode, where we have higher levels of circulating stress hormones, higher levels of white blood cells ready to fight off danger, and that those things gradually break down multiple systems in the body over time.

Hey, it's Mel. Thank you so much for being here. If you enjoyed that video, by God, please subscribe because 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.