Nischa Shah: They’re Lying To You About Buying a House! My 652510 Rule Built $200K Passive Income!

Category: Personal Finance

Tags: FinanceInvestingMindsetSavingWealth

Entities: FidelityISANisha ShawRoth IRAS&P 500

Transcript

00:00

We put a lot of pressure on people today that as soon as they start working, they need to get onto that property ladder. But there's ways to build wealth that don't require you to be in the real estate game, including three numbers that everyone should know when it comes to their personal finance 65 20.

Just knowing that creates a better life for

00:16

yourself. Nisha Shaw is the former high-profile investment banker turned financial mentor whose content has helped millions rethink their relationship with money, break free from crippling debt, and take the first steps toward building lasting wealth.

Everything is trying to pull you away from your money. Cost of

00:31

living going up, prices going up, fighting against marketing to keep your money in your pocket. You earned this.

So, it's becoming harder and harder. And I've gone through this.

I followed society's version of money until I realized that if I continue living this way, the freedom, the choice, the options that I want aren't going to

00:47

exist. Um, hold on, give me a second.

And I felt really trapped at times, but I don't know how to escape. And I know a lot of people are probably hearing this and thinking I'm also in that place.

And so I really feel like my purpose is to

01:04

help as many people to go from feeling trapped to freeing themselves and using money to do that. Wasn't expecting that.

Okay. So people are hungry for easy money tips and these stay the same regardless of how much you earn.

So we

01:20

could talk about the peace of mind fund and doing that puts you ahead of 59% of Americans. Then there's building your emergency buffer and this does more for your emotional well-being than earning over 200k.

But with the way cost of living is going, you cannot save your way to retirement. So this is when you

01:35

want to move on to investing. That is the easiest way to make money.

And my principle with investing is very very simple and it's just listen to my regular listeners, I know you don't like it when I ask you to subscribe at the start of these conversations. I don't like saying I don't like it being in there.

None of us

01:51

like it. It's frustrating.

Do you know what's also frustrating? It's also frustrating when I go into the back end of a YouTube channel and I see that 56% of you that listen frequently to this podcast haven't yet subscribed.

And so many of you don't even know that you haven't subscribed because I see in the comment section you say to me, you go, "I didn't even realize I didn't

02:07

subscribe." And that actually fuels the show. It's basically like you're making a donation to the show.

So that's why I ask all the time because it enables us to build and build and build and build and we're going for the long term here. So all I'd ask you is if you've seen the show before and you like it, help me help my team here.

Hit the subscribe

02:22

button and we'll continue to build this show for you. That's my promise.

Thank you to all of you guys that do subscribe. Means the world to me.

Let's get on with the show. Misha Sha with your YouTube channel which has accumulated almost 2 million

02:39

subscribers in a incredibly short period of time. What is the goal?

What is the mission that you're on? What is it you're trying to do?

Money touches almost every part of our life and impacts so many choices from where we choose to live, uh what we

02:55

choose to do for a living, what our weekends even look like. So my mission is really simple.

It's take the complicated financial jargon and turn it into easy, practical, actionable money tips that anyone can implement and

03:10

understand. And what kinds of people and what kinds of financial situations?

Because obviously we've got millionaires on one end and then we've got people like me at 18 years old that are struggling to even get a couple of quid together to feed myself. The principles of money stay the same regardless of how much you earn.

And

03:27

although my mission is to help make money more accessible, the principles, the underlying thinking, the mindset can be applied whether you're making 50,000, 500,000 or more. And we don't really learn about money.

We don't. We don't.

Nobody in school was teaching

03:43

me about money. My parents didn't teach me about money growing up either.

So someone like you who can simplify some of these big complicated words or terms or strategies I think is um is of the moment but also more needed now than ever because people are complaining

03:59

about cost of living crises and prices going up and inflation and all these kinds of things. Is that is that what you're seeing?

Absolutely. And at the same time, it's becoming harder and harder to save our hard-earned money because everything,

04:15

whether it's marketing, whether it's needs going up, everything is trying to pull you away from your money. And who are you?

I'm a qualified accountant. So I I studied finance at university initially, then I qualified as a chartered

04:30

accountant, and then I spent nine years in banking. And do you do you think your sort of psychological or emotional or I don't know trauma response to money plays a role in our relationship with money?

Absolutely. We definitely all have our unique relationship with money.

And a

04:47

lot of it comes from our upbringing. It's like an invisible backpack that we carry that we don't even realize that we're carrying it.

And it could be fed through us through what we've experienced firsthand or whether we've just been on a a fly on a wall. Hearing a conversation between our parents

05:03

and what might feel invisible at the time has such a big impact on the way you see money, how you use it, how you earn it, grow it, spend it, save it, everything. But that said, you can understand what to do to start making it and turning it

05:19

into your favor. What was your relationship like with money when you went to university?

I didn't understand what money meant to me. So I followed society's version of money.

So I bought all the things to make me look better. All the things to

05:34

make my lifestyle look better. And I did that after graduating for years and years and years.

That was the path that I followed for a very long time until I realized that if I continue living this way and spending my money this way, the

05:50

freedom, the choice, the options I'm have or that I want aren't going to exist. Was there like a catalyst moment where you realized that or was it just an accumulated feeling?

So for a long time I believed in this blueprint. Go to school, get a job, climb the ladder and security will

06:06

follow. And I did that to the tea for almost a decade, nine years in banking.

And I'll say I was about halfway into my career where I was we me I met this amazing woman. She was basically my mentor.

And we were working

06:23

on multi-billion dollar transactions late into the nights for weeks in a row at times. And we were in the middle of one of the largest deals that we've done.

And overnight she lost her job. Overnight she was made redundant and the

06:39

very next day I was asked to replace her. And I remember thinking at the time that this person believed in financial security.

This person believed in the blueprint and it was taken from her. And now I'm in her shoes.

What's to say that

06:54

the same won't happen to me? And that was the first time I saw a crack in the system and I realized if you give someone else the power to feed you, you're also giving them the power to starve you.

And that's when I really understood, okay, I need to learn

07:10

about money. I need to stop spending it in the way that I'm spending it.

I need to stop having this mindset around money because what it's done right now is it's kind of trapped me. So what I did is took it took the power back in my own hands.

did everything I needed to learn how to save, spend, invest, budget. And

07:25

it came very easily to me because I was in banking. That was it was financial lingo and I could simplify it very very easily for me.

And that's really where my mindset or my change in thinking around money changed. And that's the same moment where I started my YouTube

07:41

channel. Oh, okay.

That was it. Cuz a lot of people bury their heads in the sand.

I was looking at some stats earlier on that said the vast majority of people just have this sort of avoidant relationship with their financial situation, with financial literacy, with their bills, with their bank statements. I mean, there's like

07:57

long-standing jokes from the internet that people just don't open their banking apps. They just don't look at it.

Yeah. Yeah.

There's there's even a terminology for this and it's called the uh ostrich effect and it's a cognitive bias that explains people will avoid looking at negative financial

08:12

information because of the fear of how it makes them feel. It's the same reason why we don't check our bank account after a night out or we don't open there's a a pile of bills on our table and we don't check them.

But it's that thing avoiding it thinking

08:28

that oh it's just going to disappear if I don't look at it. It's that thing that keeps you stuck.

It's that thing that makes you realize I don't even know which direction I'm going. It's a disorganized finances.

Yeah. So someone's listening to this right now and they resonate with this idea of they're slightly avoidant.

They don't

08:44

really have a plan. and they're kind of just they get paid, they they they answer their bills, and then they wait till the next payday.

They're not being intentional with their money. Is there a step one in taking back control?

The very first thing number one that I would say to do is build a peace of mind

09:00

fund. A peace of mind fund.

This is not about maths. It's not the mathematically optimal thing to do, but it is the psychological because as we've discussed, money is as much about emotions as is it as as it is about numbers.

09:17

So, what I'll say is go through the last 30 days of your bank statements and calculate exactly how much it costs for one month of your living. So, mortgage, rent, utilities, bills, minimum debt

09:33

payments, car payments, whatever that total is, that's the amount that you want to saved up for your peace of mind fund. Okay.

So, I go through my last uh 30 days of my bills. I find out that it's cost me, let's say, $1,000.

Okay. That's one month of your core

09:49

living expenses. Yeah.

So, I need to save $1,000. You don't need to invest it.

You don't need to save it. You don't need to It's not for a holiday.

The reason why you want to save this is because when life does what it does best, which is throw curve balls, you want to make sure that

10:05

you have it handled. If a boiler broke, breaks, your car dies on a Monday morning, the last thing you want on top of the stress of dealing with that thing is the financial stress of how you're going to pay for it.

That's what this thing covers. It tells you, I've got peace of mind.

Whatever life throws at me, I can handle it. And

10:22

saving that one month of living costs puts you ahead of 59% of Americans and 30% of people living in the UK. 59% of Americans unfortunately can't pay for a $1,000 expense.

10:38

And 30% of people in the UK can't cover one month of their living expenses if something happened. What is what is step two in that regard?

Step two, this is where we do move into the mathematical optimal thing. This is you cut the financial bleeding.

Okay. And what I mean by that is I get so so

10:54

many times people ask me, Nisha, I have 4,000 5,000 sitting in my bank account. What should I do with it?

And my first question back to them is, do you have any high interest rate debt? Because if you have savings of $2,000 earning 4%,

11:10

but you also have credit card debt at 20%. You're leaking money more than you're making it.

It's like pouring water into a bucket with holes in it and wondering why it's not going to fill up. So, what you want to do is you want to take all of your debt that you have, rank it from highest to lowest in terms of interest,

11:26

in terms of interest rate, and then everything above 8%. You you want to make minimum payments across everything first.

And then everything above 8%, you want to throw your extra savings into the highest interest rate first, the debt with the highest interest rate, and then move down in that order. And interest rate, is that paid monthly

11:42

or yearly? It's paid monthly.

It's paid monthly. So, if I have a £1,000 loan on a credit card and the interest rate is 10%.

I'm paying £100 paid monthly over the year they're going to pay 100. Okay.

But that's split out into monthly payments assuming that they're not

11:58

drawing down more on that credit card. And are you against credit cards?

Credit cards are good if you're using them the right way. Really good if you're using them in the right way.

And that means the points that you're using, the rewards that you get for it, the bonuses that you get from it, all really helpful. only if you're paying them off

12:15

in full every single month. If you're not using that or if you're not doing it in that way, which is kind of what they want you to do because they want you to miss these payments because that's how credit card companies make money by your missed payments.

If you're not doing that, then the benefits just don't weigh up. Okay?

12:30

It doesn't make sense. Use credit cards, but use it in a way that stacks up in your favor, not in the credit card company's favor.

It's almost paradoxical that you'd use a credit card, but only if you can afford to use a credit card. Yeah, that's exact.

Yeah, you got to you got to think about it. Can I can I pay for this thing outright in cash?

12:46

If I can, then I can ship put it on my credit card. And that's the the anomaly is property.

If you're using it to make money, healthare, education, but for anything else, unless it's making you money, yeah, you that's the way you want to think about it because it does encourage extra spending otherwise.

13:01

Okay. So, I'm going to pay off my high interest debts first with any spare cash that I have.

Yeah. What's number three?

Number three is build your emergency buffer. Okay, so this this is your core living expenses that we've already calculated

13:17

in step one. And you want to times that by three if you are single, you have um predictable income.

Mhm. Or you want to times it by six if you are head of household, you have a mortgage, you have unpredictable income.

That's your emergency cushion and it

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protects you from the bigger life things. It's a very It's the third thing you want to do.

It's protects you if you lose your job, if you have a health scare, if there are dependents that you need to care for. This kind of buys you that time.

But there's really interesting research from Vanguard that

13:50

actually showed saving 3 to six months of your living expenses does more for your emotional well-being than earning over 200k. So, just the peace of mind again, it's that breathing room.

Yeah. 3 to 6 months of breathing room in your bank

14:05

account. It just moves the needle.

It's the peace of mind. It's the security.

It's the stability. One of the core human needs.

And it's interesting because we we're kind of looking at making more money and earning more. And we're chasing the next number.

And actually, the thing that's going to have the biggest impact or move the

14:22

needle on our financial well-being is at this stage having that 3 to six months of living expenses saved up. It's all relative, right, at the end of the day.

So if and it's it's incredibly stressful and I've been there when you don't know if you can pay this month's rent if you don't know if you can feed

14:37

yourself. Um but also the sort of un back of the mind knowledge that if something were to happen you'd be screwed.

It's incredibly stressful way to live and you might not even realize the stress consciously but you might just feel it. It might just be an angst in your life.

Yeah. And I I this applies at any income

14:54

level. Even people earning six figures who are living paycheck to paycheck who don't have that emergency buffer in place.

They have that anxiety. And also that same report showed that having that 3 to six months with the the people that they surveyed their productivity at work was better just from knowing that they

15:10

didn't have that financial stress. I know millionaires, people that have a lot of money that are in a similar position in the sense of they are stressed and anxious because their overheads are also in the millions every month and there's a lot of money coming in but there's a lot of money going out.

15:25

So they're still sometimes just one or two months away from being at zero. Yeah.

Um it's a different type of stress because their sort of subjective experience and lifestyle is better on a dayto-day. But it's interesting that it's it's really relative to your your outgoings.

Exactly. What's the what's the fourth point then?

15:41

So, I've got so far I've got have a peace of mind fund um which is one month's expenses. Number two is pay off high interest rate debt.

Number three is build an emergency fund which is three times your monthly expenses if you're single and six times if you're in a relationship and and there's people

15:57

depending on you. Yeah, most people actually stay here.

Okay. A lot of people just save save.

And I just want to before we move on to step four, I want to say that if you're saving, you only want to save for one of two things. the emergency fund and the piece of fund mage fund that we spoke about.

And the second thing is for any

16:13

goals that you have in the next five years, whether that's a house deposit, car pay, car deposit. Other than that, you don't want to be saving that money.

It's going to be the value is going to be eaten away quicker with inflation if you're just keeping it saved in a bank account. So

16:30

that's when you want to move on to step four and that is investing. Okay?

So you don't want to save, you don't want to oversave. You don't want to oversave.

know when to stop saving and start investing. And when does one start investing and stop saving?

After they've saved the three to six months of the living expenses. Okay,

16:46

that's the third step. At that point, once they've done step one to three, this is the point.

And the reason why I say this, Stephen, is because if you start investing before you've got from steps one to three and you don't have your savings set aside and the market goes down and you have an emergency, you're going to have to pull that money

17:01

out at a loss. Yeah.

or you're going to have to go into debt, which is why that was step two, cut the financial bleeding. So, it's really important to have steps one to three done before you even think about investing.

Okay? Those 3 to six months, it's your core living expenses.

So, it's forget all

17:20

your spending on the things that you love or the things that make make life good. It's just the things that you need to absolutely survive because if you do job lose your job, you're not going to be out partying and spending loads of money.

You're going to think, okay, how do I pay my bills for the next 3 months?

17:35

How do I survive for the next month? That's the thing that's going to cover that off.

Okay. Right.

Yeah. So, it's not like the season ticket at Manchester United or the Louis Vuitton jackets.

It's No. No.

It's just your your your heating, your bills, your food, survival. Yeah.

So, number four is investing.

17:51

Number four is investing. For a while, we've heard of the phrase save for retirement.

Yeah. Saving for retirement.

You cannot save your way to retirement with the way cost of living is going, with the way inflation is going, with the price retirement is going to cost by the time

18:07

you get there. Saving is just not enough.

You have to be investing your money. And there are two main ways that you can invest.

But before I even say that, most people know that they should be investing, but they don't do it. They say, "I'll do it tomorrow or next week

18:23

or next year or when I'm rich or when I'm rich." And then by the time they do start, they've missed out on the most powerful lever that they had going for them, which is time. That is one of the most important things when it comes to investing because of the way when you start

18:40

investing with small recurring amounts, it just compounds over time. So early often when it comes to investing, there's two avenues to invest through.

The first is through your employer sponsored retirement account and the second is through your own individual

18:55

uh tax advantaged account. What are those two things?

The first is done through your employer. So what they do is they invest on behalf of you.

In the UK, you're automatically enrolled into it. In the US, you'll have to check check with your HR and get yourself enrolled into it.

And what this

19:11

does is your company before you it pays you or puts money into your bank account. It takes a small percentage you could decide how much and it puts it towards investments for you on behalf of you pre-tax.

So you're not paying tax on that amount. You're putting into an investment account and then that money is

19:27

compounding for you pre-tax. Do all employees do this?

Most employers do it. Not all employers do it.

And some employers have a match which means if you put some money in, they will also match that amount that you're putting in. So, how do I know if my employee does this?

Check with your HR.

19:42

And is there a cap? There is a cap to how much they will match.

Yeah. Um, so say if they match up to 3%, then you want to put in the 3%.

But then you could keep going, but at this stage, you don't even need to go over the match at this point of the the steps. You just want to put in enough to meet that match

19:58

because you're getting the tax benefit and then you're also getting free money from your sponsored plan on top of that. You don't want to leave that on the table.

And when can I pull that money out? when you retire at retirement.

So, this is for your retirement. You're looking after your future self.

It's today's you

20:14

planting seeds for future you. That's what this is about.

What about people that say, "Listen, retirement's a long way away." Yeah. You know, I'm going to be what, 65, 75.

It's just a long way away. I want to live a good I want to live it up now, I don't want to be putting money in a

20:30

box that I can't open for 50 years. And you want to spend the money now to live the good life.

I the most important thing when it comes to money is understanding what you want and then making sure your money backs those decisions. And I say this because when I was in the graduate scheme, there

20:47

were two very different people who worked in my team. And the first person who sat opposite me on the bank of seats in front of me, he used to come in in his Ferrari and he on Monday morning when we were talking about what we did over our weekend, what we did on the weekend, he would talk about the Michelin star restaurants he tried, the

21:04

last minute trip to Italy and his computer screen was the next car that he wanted. And on my left was Phil, who later become my mentor.

And he came in with his pack lunch. He wore the same shirt tie combo that I could probably remember it and sketch it from memory.

21:20

And he had his holidays, he had his vacations, but he was a lot more selective about them. And I didn't see it at the time, but now it's so clear to me that they were chasing very different things.

The person opposite of me, he was chasing

21:36

this good life, the stories, the status, the memories, and that was important to him, and he went for it. But Phil, and I visited him just before I came to LA, him, his wife, um, his two kids, dogs in their countryside home, and he was enjoying the retired life.

He was

21:55

loving life. He bought what he wanted, which was early retirement, freedom, time, choice.

Neither path is wrong, but both paths, both people required taking a series of trade-offs.

22:10

Both had to make some sacrifices. And I think that's the thing that people miss.

Sometimes it's so easy to say yes to the thing right in front of you because the benefit is there. The benefit is immediate.

You don't realize what you're going to miss out on later on in life. So the guy that was sat opposite you with the Ferrari, what was the trade-offs he was making?

22:26

He was probably going to be end up working for the until he had retirement money to spend. He was going to spend his life at banking, but he was going to live it big, but he wouldn't have the freedom, the choice, the time because his spending and his income matched each other.

22:42

And so what I want to just say is for anyone saying, "Oh, I just want to live it big. I want to enjoy the money." Find out what is the thing that's most important to you.

And make sure your your money choices stack that decision because the wrong choice isn't choosing

22:57

the wrong path. It's just not knowing that you even had a choice in this whole thing.

Do you think the guy that's sat opposite you with the Ferrari was in any way insecure? Was there an element of seeking validation?

There might have been. Yeah, there might have been.

That's that that might been

23:13

what made him happy. But I think it's also not having the self-awareness to if that made him happy, then by all means.

But if it didn't make him happy, and a lot of people do that do this, me included. I've I've gone through this.

I've done it. When you don't know what makes you happy, you end up just doing

23:28

things that gets you that external validation. And for some people, it might mean, okay, you know what?

I actually do enjoy this new car. It does bring me happiness.

But for others, it might just be a facade. And later on, they later on in life, they just realized that actually no one really cared.

The only person who cared was me.

23:44

And although I did it for other people, it's uh now I realize that all the trade-offs I had to make as a result of it. Because happiness and external validation, they're like cousins.

Yeah. But they're not the same guy.

Do you know what I mean? They're like they look

24:00

they're kind of like of the same family, but one of them's they're like dysfunctional sibling, but they kind of look the same. You know, you look at that guy in his in his Ferrari, you go, "Oh, must be happy." And he comes in and he's probably got a smile on his face because he's talking about his Ferrari.

Yeah. Yeah.

Yeah. That's what he's built

24:16

himself on, I guess. But I don't know if that's happiness.

You know, the guy without the Ferrari might be. I think universally most people what they want is the freedom and the choice and the time.

I think more people are after that and that can make more people happier than

24:34

any status symbol because when you do end up going down the route of buying something to make your make you happy, you're on a hedonic treadmill. you're then buying the next thing and the next thing and the next thing and you get those spikes of happiness.

There never is really long lasting fulfilling happiness.

24:51

So investing strategy number one is asking your employer about their investment scheme. Finding out if your employer has yeah an retirement plan and making sure that you're invested into it enough to cover the match that they offer.

What's strategy number two? The strategy number two is your own

25:07

individual tax advantaged investment account. This is ISA in the UK and this is where you put your own money after tax into an investment account and then the money grows over time taxfree.

So when you pull it out at the end you

25:24

could with um the UK you could pull it out in 5 years and 10 years or in retirement then you could withdraw that money taxree. So both of them have taxable advantages.

One is when you put the money in, you're getting the tax advantages. The other one's when you draw the money out, but they both have tax advantages.

And so you're putting

25:40

the money in and it's growing taxfree. That's really a big deal.

That's huge. That's that's money that's compounding for you and you're not paying tax on that.

But there's a limit. There's a limit uh annually it's 20,000.

But in the UK and the US, it changes um year. at the moment I

25:56

believe at $7,000 but with a quick Google search you could stay on top of whatever the current limit is for the account or the taxable advantage account that you're investing in. So I get paid I put it into my in the UK it's called an ISA.

Yeah. And the the limit is 20k.

So if I put

26:11

20k in let's say Yeah. If it goes to a 100k because the investments go really well is the whole 100k taxree.

Yeah. You're not paying capital gains tax.

You're not paying interest. I mean sorry dividends tax.

So pretty much that's the first place everyone should

26:26

really be investing if they want an alternative to investing in their pension. Yeah, that's the first thing you want to cap out because of the taxable benefits that come with it.

Is it called a Roth IRA in the US? That's right.

So it's max contribution is $7,000 to $8,000 a year if you're 50 or older.

26:46

Yeah. The specific amounts depending on who you are.

Standard employee contribution limit of $23,000. Interesting.

Whereas in UK it's just a flat 20,000 is the current. And with my ISA, this taxfree ISA that everyone is eligible to invest in, do I

27:02

then have to pick the things it invests in? Yes.

Okay. This is the next Oh, we could talk about this now actually.

Yeah. So, when you are deciding what to invest in, this is with the employer sponsored account, the employee sponsored retirement account, you actually just choose what risk

27:18

profile you have and it will do that investing for you. So you'll say I'm I feel really risky or I'm not very risky at all.

Yeah. And it does it for you and it does it will invest on behalf of you.

Yeah. And so most people don't even realize that they're investing but they are investing through their company if they have that employer sponsor plan.

27:34

Then the individual account is you doing the investing yourself. You're picking what to invest in.

Yeah. And what shall I invest in?

My principle with investing is very very simple and it's just keep it keep it simple and do it for the long term. So I

27:49

say index funds and target date retirement funds is what you want to invest in. What's that?

An index fund. Let's put it out.

An index, think of it as a list of companies. So the S&P 500 is a list of the largest the top 500 companies to

28:05

keep this really simple. Footsie 100 is the top 100 companies in the on the London Stock Exchange.

The fund is a pot of money that invests in the companies on that list. So by investing in an S&P 500, you've

28:22

invested in a small piece of the top 500 companies in the US. That's what an index fund is.

And so even if one company goes down, you're diversified. And so there'll be another company that will and the other companies will bring it back up again.

28:38

And what kind of performance can I expect from investing in the S&P 500? Historically speaking, um the long-term average has been 8 to 10% per year depending on the years and the time frame that you're looking at.

That is

28:53

different to a one-year holding period. It could go up, it could go down, you just don't know.

So, the longer you invest for, the chances of you getting that 8 to 10% on average increase. Is 8 to 10% going to make me rich though, Nisha?

How long are you doing it for?

29:09

You tell me. If you have a lumpsum amount that you're like, "Okay, you know what?

I have 2,000 that I want to invest. What should I do with it and it's taking me five years to invest this?" I would say 1,900 of that.

Don't invest it. 100 of it.

Invest. And I'll I'll say

29:28

why I'm saying this. 100.

I want you to invest it for anyone listening. I want you to listen.

I want you to invest that because I want you to see and feel the emotions when you see your money go up over time. Sure, it's going to be small.

It's not going to make you rich investing that, but you're going to

29:45

instill that good habit early on. And you're going to remember that because the remaining amount, you're going to put that towards increasing your income.

That's the first thing you're going to do. Think of your income as a river and your specific milestones, life

30:01

milestones, as buckets across the river. So, you have retirement, you have your house deposit, you have your car payment that you're all saving up for.

Those buckets will fill up faster the quicker and wider that river is. That is your income that's coming through.

If you

30:18

don't have much of an income coming through, those buckets are going to take ages to fill up. That's why I say if it's taken you a long time to save that amount, I actually would recommend you putting that money towards increasing your income first before investing it.

If however you have disposable income,

30:34

you have an reoccurring amount that you can invest monthly, use that to your advantage. Harness the power of long-term compounding growth because that is the thing that is going to make you rich.

Sure, it will take 25, 30 years, but that is leverage that you

30:50

don't get through your day job. It's your money working for you without you having to be there.

So you would suggest if you're really at that early level to focus on increasing your income, investing in increasing your income. Yeah, that's the first thing.

If you're figuring out, okay, I need to increase my income. It's taking me a while to

31:06

earn this amount and I only have a lump sum of 2,000 5,000. Focus on increasing your income.

Yeah, that's what I would say. And how does one focus on increasing their income?

There are a couple of ways to do this. So the easiest way to increase your

31:22

income is asking for a pay rise, increasing your responsibility, the work that you do, your contributions, and saying to your boss or your manager, this is the value that I've bought. This is the responsibility that I've taken on.

This is what the market is paying

31:38

for a similar role, and this is why a pay rise is fair. The other option, did you ever ask for a pay rise?

Multiple times. multiple multiple times when you're in investment banking.

Yeah. It's one of those things where

31:54

if you don't ask, you don't get. Of course, you'll get, but you sitting there and thinking the hard work is going to show without you asking for it.

It's unlikely. You're going to have to build a case and say, "Okay, these are the things I've done.

These are the

32:10

things that we said we were going to do or I wanted to work on in my performance review," which is what I had. get to the end of the performance review and these are the things that I actually did and this is where I went above and beyond.

So if I'm your boss Nisha. Yeah.

If we just replay one of those conversations you had. Yeah.

You were sat in a performance review and

32:27

what did you say to me? I would say hey Stephen.

Hey, 3 months ago or 6 months ago, we spoke about um the things that I needed to do to get promoted or to get a pay rise. And we mentioned XY Z and I've done all

32:45

of those things here and here is the feedback that I've got. Here is where I've gone above and beyond.

And this is some extra things that other people or the 360 feedback that I've done. And that this is what it says.

Yeah. And that's when I was like, do you

33:02

think that this is the bracket that we discussed? Do you think that's fair?

Research shows that women are much less likely to ask for a pay rise and when they do, they are less likely to get one compared to men. Is that kind of what you found?

33:17

Yeah, I've seen those facts and I think it's really such a shame that when a woman asks for a pay rise, it may not be seen in the same way as when a male counterpart asks for the payriseise. And the factors that we can control are the

33:34

being prepared, having the book of all the things that you've done. But I recommend and this is things that I done when I was in an organization or when I felt like even I was being paid less than my male counterpart is speaking firstly if there's a HR team in your department

33:51

speaking to them and asking am I online or am I aligned to the average for my department and for what my role is. they can give you a really good guideline as to whether you are underpaid or whether you deserve a bump to be more aligned to

34:06

the general pay in in that role. And the second thing is have an ally or have someone in your workplace that you'd always speak to, whether it's a mentor, whether it's a colleague.

And it's worth always speaking to other people about money. It's such a taboo topic.

34:22

Yeah, we hate it. We hate talking to someone else about their salary, what they're making, but the more financial transparency that we encourage, the more we can learn from each other.

Yeah. Openly ask the person next to you, hey, this is what do you get paid?

As much as

34:38

hard as that is, open up that conversation. But the other way to increase your income is actually through switching jobs, switching companies.

Because there's so much research that's been done, and the most popular one is actually one

34:54

cited by Forbes that says people who stay at the same company for two years or more on average earn 50% less over their lifetime. And I've made a video on my salary year

35:10

by year over the last over the nine years I spent in banking. And the biggest pay jumps that I saw were from switching companies.

So those are the the two ways that I would actually say yeah increase your

35:25

income by asking for more by switching. I do think one of the most effective ways that I've seen as well is just looking at the industry as well and presenting a case from the industry and people have done that to me several times.

They've over the last 10 years they've come to me and said the industry pay for my role and my seniority level

35:42

in this part of the world in this city is this I'm currently on this um is can we have a conversation about about this to rectify it and I can't think of an instance where I haven't been receptive to that especially if it's justified you know

35:57

because actually sometimes the employee doesn't know the employee doesn't know that they might be underpaying you um that's a a genuine possibility I know that sounds like crazy talk But sometimes employees don't know because a lot of roles that we're hiring for these days are new roles. They're not roles that existed 10 years ago.

Even in

36:13

podcasting, like there's it's hard to find benchmarks for what people were paid in podcasting 10 years ago for different roles that now exist in our industry. So it's worth having a convers an honest conversation.

And I do think I do think from the employer standpoint it's worth leading with the value that

36:31

you've brought like you've said versus blunt demands because humans are human beings and you can turn someone's nose up or their backup by the way in which you deliver your message but delivering it from an evidence-based perspective and saying this these are kind of the

36:47

accomplishments that I've made and these are the responsibilities I've taken on and this is like the industry um average and I love being here and I want to stay here. Um so I was wondering if it'd be possible to have a conversation about my salary.

I'd receive that very very well.

37:03

And even aligning it to your company's objectives. This is what I was doing.

Yeah. Exactly.

Here is what I've done aligned to your objectives that you're looking for. Exactly.

And you talked about um saving for a house as well. Is do you see buying a

37:18

house as a good investment? Because it is it is the first thing most people do, right?

It's like the first thing we're told as part of the like script of life. When you get some money, save it up, get a mortgage.

A lot of our view about buying or renting or buying a house is actually

37:34

formed from what we saw our parents do and what we saw the generation before us do. And so even looking at my life formed from the way my parents thought they came to the UK as immigrants and when they bought their first house it

37:50

was like the epitome of success. They had this thing that they can that represented wealth for them that they could touch, they could see, they could feel.

It represented stability, security. And then when we moved out of

38:07

that terrace home into another home, it was between two stations in a catchment area. So me and my sisters got access to better schools.

That was then their happiness. That was then their goal and the milestone achieved.

And for the previous generation

38:25

and still the way people see it today when people say, "Oh, we need to build buy a house for wealth building." It's because a big factor of it is that it was a forced mechanism of saving. So when you're buying a house or paying

38:40

for a mortgage, that's not optional. You have to pay it.

You then can't then spend that money on anything else. And so as a result, those monthly payments are going towards building your equity and building this house's value.

And as a byproduct, it's building wealth for

38:57

you. So for someone listening to this, if they're hearing this conversation, they say, "Okay, you know what?

I have I have a goal to buy and they run the numbers, it makes sense for them, they're doing it for the long term." Then I would say that's a really good goal to have. Go for it.

But I think we

39:15

put a lot of pressure on people today that they need to buy a house and as soon as they start working that they need to get onto that property ladder. So, if you're listening to this and thinking that I don't have a goal to buy a house, then there are also ways to build wealth that don't require you to

39:32

be in the real estate game. I think there's something psychological about paying rent that you never see again.

That makes you think that it's a terrible idea. Yeah.

And sometimes when you look at the mortgage payment versus the rental payment, you go, "Well, they're the same and I'll end up owning this chunk of concrete, so I might as well go for the chunk of

39:48

concrete." Yeah. But if you are choosing to rent and actually there's been studies that's done on this almost nine out of 12 regions in the UK and the same applies for other areas in the world as well.

It's renting is or can be cheaper than buying in that equivalent neighborhood.

40:04

And so if you are renting and you're saving money on that difference then you've got to be disciplined and sensible enough to know that you need to invest the difference. What you mean?

So, if your rent is 1,500

40:20

and to get that mortgage and you've checked the mortgage payments and you've realized that with the interest that you're going to be paying on the mortgage, all the other things that come into buying a house, so the stamp duty that you're paying, the property tax, the repairs, the maintenance, the insurance, if you factor in the cost of both, and you do run the numbers and you

40:37

say, "Okay, renting is cheaper than buying than getting a home." That difference is what you want to be able to invest. It's kind of a way for you to say, "I'm creating my own forced mechanism of saving.

This is my own version of a mortgage. I'm the man I'm

40:53

saving. I'm going to set up an investment account and I'm going to automate it and I'm going to put money into it every single month." Mhm.

And that's the way you're going to build wealth. That's just as legitimate.

And actually, I've I've went onto the property ladder and the money that I put in towards that flat

41:10

hasn't grown as near as much as the money that I made through the stock market by investing in the S&P 500. So, tell me about that.

So, you you bought a property in London or somewhere in the world in North London. Okay.

Um to live in.

41:25

Okay. And I bought it in 2017.

Okay. Yeah.

and it's gone up in value I'd say about 10%. Okay, I've had about eight years.

Then you compare that to the stock market. So

41:41

sure, there's a numbers side of it where people think, okay, I need to buy a house to build wealth, but that's what I'm trying to explain that actually if you save that money and you invested it, you might be better off financially. But coming back to your point, yes, there's that psychological thing of okay, do I want to pay that money on rent or do I

41:57

want to buy? The other psychological part of it is also the comfort of knowing that you have somewhere.

And this is a big reason as to why I bought. The comfort of knowing that no matter what happens, you have this place.

It's yours. The landlord

42:13

can't serve you notice. You can do whatever you want to the flat within certain restrictions and rules.

And you have this piece of the earth that belongs to you. And so that's the psychological comfort that came from it.

Sure, we could talk about the numbers and what investing will do and how much you can make on that, but the

42:29

bit that often gets forgotten about is the invisible side, which is the peace of mind, the psychological comfort of just owning a home. So, can I ask how much did your apartment cost in London?

42:44

530. So, you spent 530k on it?

Yeah. Um, presumably on like a mortgage or something at the time.

Yeah, it was on a mortgage. Yeah.

So, 530K. It's gone up 10%.

Yeah, it's gone up about 50k. About 50k.

So, it's now worth 580.

43:02

But if you'd put that amount of money into the S&P 500. Well, the thing with the house in a flat is you could use the mortgage, you wouldn't put that full amount in it because you had the mortgage.

But if you put that deposit amount into it. Yeah.

The deposit amount. Yeah.

Yeah. The the amount that you would have put on just a down payment.

Um the stamp

43:19

duty that I would have also paid. If I saved that amount and then put it put that amount whatever it was and invested that that's the comparison that I would have made.

So how much was that in total that you paid into the um property? I put about

43:35

50 I think K. 50k and probably the net return on that if it's gone up 10%.

Yeah. So tank 55k.

Yeah. And the S&P 500 in the same time

43:51

has delivered roughly 10 to 12% per year on average. It has more than doubled in value since 2017.

So you would have probably got there you go. Pretty incredible return on the S&P 500.

Even in the last 5 years, the S&P 500

44:08

has grown 90%. Yeah, makes sense.

So it's almost doubled in the last 5 years alone, which which means you would have basically doubled your money just investing it in an index fund. Are you looking at that from the lows of the co?

Yeah, it says even with the co lows, it says so um it has more than doubled in value since 2017 driven by

44:23

strong growth in technology despite the co crash and 2022 pullback last years. Case in point that we we're we're looking at building wealth just through one mechanism that feels like it's urgent and needs to

44:40

be done by everyone. But actually, if you're looking at it purely from a numbers and building wealth perspective, there are other ways to do that.

My brother is was an investment banker. He now works full-time um helping with my money and helping in my my companies.

44:56

He went to LSC. He's a very smart guy.

He's always been like the buffin in the family. He always talked to me about this ter opportunity cost.

So, when I told him I said, I want to buy this house in Cape Town. He was like, you know, this is going to cost you X millions.

Um, think about the

45:11

opportunity cost. Yeah.

And he always every time I say I want to do this, he's like, think about the opportunity cost. And he he basically stands in the way of it.

What is opportunity cost? And why should why should people be thinking about this when they're spending their money?

So every pound or dollar that we spend

45:26

is one less that we could use on something else. And that is the opportunity cost in essence.

And we often don't think about life in terms of opportunity costs because we only look at the thing that is in front of us. So your brother was telling you about how

45:42

you can make more money investing somewhere else. But what you saw is this one thing in front of you and you thought no, I don't even know if I'm going to make this money elsewhere.

I don't know if that's going to happen. This thing is right in front of me.

And that's the thing with the with opportunity cost is always a a trade-off of what you can see and what you can't

45:58

see. But with every decision you make, there's something else that you're saying no to.

is coming at the cost of something else. I was thinking about that as you you were talking and just to give a bit of color to this for people at home and a good example of opportunity cost.

So like yesterday I bought lunch for the team, right? And the lunch cost $100.

It

46:14

was like the salad bar in in Los Angeles cost me $100. Fine.

$100, who cares? But then when I think about the numbers you shared earlier on, if I'd taken that $100 and put it into the S&P 500 in 40 years, assuming I got 10% return a year, which is like the average of the S&P,

46:30

that is almost $5,000. So in terms of opportunity cost, buying the team lunch for $100 has effectively cost me in opportunity $5,000 that I would have had um presuming that return in 40 years from now.

So that lunch

46:45

yesterday actually cost me potentially roughly $5,000. Yeah.

And I guess for you it's that's the last time the team get lunch. But on the other side, you might have missed out on how the team felt going to that lunch and the invisible benefits that you might have got from

47:02

that. Whether it was just the memories at that moment in time, whether it's the motivation, whether it's the culture that you're bringing in, that's the thing that you might miss out on if you choose that $5,000 in X years of time.

And I guess it's a balancing act as well. Like you know, I was thinking about the guy you

47:17

mentioned with a Ferrari and if he were to die today, one could argue that in fact he played life correctly. Absolutely.

Because he lived it. He saw it.

He did it. And this is I think the difference you see in people.

Some people have that

47:32

long-term view where they think, "No, I want my money when I'm 65 or 70 in my pension fund." And other people play a bit more short term in their life and go, I just want to have good experiences now. And so it's hard to understand who's right because we don't know how this story ends, I guess.

Yeah. And I think there's a fine line, but there's also a way to balance living

47:49

in the present with planning with for the future by understanding that you are going to allocate a specific amount of the money that comes in towards the here and now. And then the rest you are going to look use towards the future you because there's something very rewarding about spending now.

When you know the

48:07

future you has already been looked after, it makes you want to spend it without thinking, oh, what is this coming at the opportunity cost of? Do you think people should buy a house if their objective is to make money or do you think there are other

48:23

opportunities like the S&P 500, like using your tax-free ISA? A lot of people listening probably don't have or on their way to building a deposit or working their way to have the money for a deposit.

If they're putting themselves under pressure and they think that they're just buying a house to build

48:38

wealth, I would say actually look into investing through that stocks and shares ISA as a start that is taxfree. If you haven't even started investing through that stocks and shares is which by the way 75% roughly of people in the UK aren't investing.

48:55

So yeah, I would definitely say open that up first. And do you think one should split a proportion of their investments into different categories of risk because you got like crypto on the one side of it which sometimes feel like being at roulette table and then you've

49:11

got things that are typically safe like the S&P 500. Yeah, I'm going to say with the stocks and shares actually when you invest in and a lot of people also want to invest in crypto but they also want to invest in individual stocks as well.

Should I go after the next big winning company stock? Should I invest in this stock?

49:26

Um, what I want to say is that there's two parts to think about the returns but also the behavioral concepts. How you feel when it comes to investing because your one of the biggest impacts on

49:42

market performance is your contributions but also your behavior. So, Fidelity did a re found that

49:59

people who invested in funds underperformed the fund that they were in. It sounds impossible.

How can you be underperforming a fund that you're in? But then when they looked into it, they found that when

50:17

fear and anxiety took over, when the market dropped, these people bought sold bought sold. They essentially danced in and out of the fund as a result underperforming the fund that they were already holding.

Okay. So it went when it went down, they sold.

Yeah. When it went down, they sold.

When they went up, they bought. And so what

50:34

you want to do is you want to invest in something that makes you buy and hold. Fidelity looked into the groups of people that had invested in their funds to see which group performed the best.

And when they looked into it, they found one group significantly outperformed all

50:50

other groups when it came to investment returns. And that was dead people.

Dead people outperformed the living when it came to investment returns because they didn't touch their investment account. They just said it, forget it.

They didn't chase the next

51:07

company stock. They don't go after the thing that's going to go up really quickly and down really quickly.

And that all ties into the behavior. You're not letting your emotions drive the investments.

And by the way, this they found the second best performing group were the people who forgot that they had a fund in the first place. So

51:23

when it comes to deciding what allocation you want your portfolio to be, it's understanding, okay, what is going to give you the returns, but also what is the thing that's going to help you stay the course even when the market goes and drops? What will make you feel like, okay, I

51:39

could still stay and hold my position? That's how to decide what kind of percentage portfolio you want for yourself.

And I've done that with my portfolio. There's with crypto, it's less than 2% of my overall portfolio.

I've invested the amount that I feel like it won't make a difference if I

51:56

lose it. And if it goes to the moon, great.

And that's how when I say somewhere here, the last thing I want to do is encourage people before they've even set up the financial foundations to invest in something that can go up and come go down when 75% of the population

52:11

isn't investing. Mhm.

And the reason why they're not investing is because, and I keep hearing this from time and time again from the people I speak to, is either they're really scared they're going to lose money or they don't know where to start. And so when it comes to losing money, I always

52:27

say do the foundations first, set up your portfolio there, and then move on to speculative assets should you want to go down that path. I remember the first time I invested and I I downloaded this app and I put some money in there and then I watched it and I was watching it so much and it was going up and down and

52:43

up and down and like three four months later I sold it and I didn't really make a I think I lost a couple of a couple hundred quid or whatever and then I watched that same investment over the next five, six, seven years just go to the moon. Yeah, it went up and I remember thinking,

52:58

I should have just kept it in there. And then the best investment I ever made correlates to what you were saying because I lost my password.

I like lost the password to log in. Yeah.

Yeah. Yeah.

Yeah. And so I couldn't do anything about it anyway.

And I watched it and it went down and up and down and up and down and up. But over 5 years it went really

53:14

really high. And so when I first started investing in crypto and I invested in Ethereum and now Bitcoin, my strategy was the same.

My strategy was get the the private keys and give half of them to one person that I trust and half of them to the other person that I trust. And even if I want to, I can't do

53:30

anything about it. And that's proven to be one of my greatest returns in investing because I just I don't even know what's going on with it.

I'm not paying attention. Yeah.

And that's the thing, you've just taken the motions out of the equation. Yeah.

There's no fear, greed. There's nothing else that controls your financial decisions other than logic.

53:46

I think actually on that first investment I made when I was like must have been in my early 20ies, I needed the money. Like I didn't have the emergency fund or a peace of mind fund.

So when it started to go down a little bit naturally you kind of panic. So I think in that the second season of life where I started

54:02

investing in Ethereum and Bitcoin it didn't really matter if I lost the money. So it made it easier to hold my nerves.

And I think nerves are such a huge part of investing. Um, it goes to what you said earlier, like it's worth taking $100 or £100 or whatever you can, which is a really inconsequential number of money, and putting it into some kind

54:18

of S&P 500 or even a stock just to feel that almost to like train your psychology and emotions of like what the ups feel like and what the down feel like. Yeah, exactly.

So, your investment strategy, your portfolio, you mentioned it there. Yeah.

What does it look like?

54:33

It's 40% funds. Okay.

What kind of funds? index funds, S&P 500, uh I also do international markets, so UK um so emerging developed uh across all sectors I also do and I

54:48

keep it very very diversified S&P 500 target date retirement funds that automatically rebalance. So target date retirement fund for anyone who's listening and wondering what it is, it's essentially a fund that has different

55:03

types of investments within it. So you could go on to a platform of your choice that you use to invest and you could type in target date retirement fund and at the end of every fund will have a year and so you want to pick the year that is the closest to the year that you plan to retire.

So if you plan to retire

55:20

in 2050, that's the year that you will pick. And what that fund does is it rebalances and the the percentage of different investments changes to become more conservative as

55:36

you approach retirement. So it starts to protect you a little bit more.

Exactly. So it goes risk off.

it kind of goes less risky or it becomes less risky because you don't want to be investing the same when you don't have that much time as you if you're investing in your 20s 30s you have enough time to ride out the stock

55:52

market waves so that's 40% of your portfolio that's 40% 30% is real estate okay in all parts of the world no just in the UK just in the UK yeah then I'll say about 25% I'm putting back into my business at the moment

56:08

okay and then the remaining is between crypto to and cash cash and cash reserves. Okay.

What about investing in yourself? Because because you know we think about education and skills and stuff like that.

Should we be investing a small

56:23

amount of money into our selves in some capacity? 100%.

I think you just don't stop investing in yourself at any point in time. It goes down to increasing your income, increasing your skills, increasing your value, which then has a

56:39

knock on effect on everything else that you're investing into. It's a really interesting time to be leading a business.

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And for 10% off your first order, use code diary. You actually you made a video um about 40 books that you've read that improve your own financial

57:42

literacy. If there was one book that you recommend people to read that you think is most accessible and will advance their financial literacy in the most profound way that did that for you, what book would you recommend?

Think and Grow Rich by Napoleon Hill. It's not actually about financial

57:59

literacy, but it's around money mindset. And the other book to start with when it comes to financial literacy is also The Richest Man in Babylon.

when people don't learn about money is because they find it quite boring and not very interesting. So, Richest

58:16

Man in Babylon does a good job in intertwining a novel into financial literacy concepts. I've not read that book.

I've heard a lot about it though. It's the underlying principles when it comes to money don't really change much and it's really starts at the basics

58:32

when it comes to saving and spending. So, it's it's a good starting point.

Are there any other principles of of building wealth that we haven't talked about? I mean, we we haven't talked about payday routines.

Um, but I've heard you talk at length about what we should do when we get paid every single

58:48

month. Some of the things we've talked about already, like uh knowing your reference point, which is was point one, right?

That was your piece of mind fund. I guess knowing your reference point is essentially just understanding where your finances break

59:04

down and what buckets they fall into. So I would actually say this is really important for anyone to know and it's the three numbers.

It's called the 65205 and it's three numbers that anyone should know when it comes to money and

59:22

their own personal finance. Okay.

65205. Okay.

And the way it works is you want to the idea of it is to take your net income. This is your take-home pay after you pay taxes, not the number on your job description,

59:38

the number after you paid state contribution, all other taxes. And you want to split that into three buckets.

The fundamental, which is your core living expenses, everything that is essential to your living costs. mortgage or rent, utilities, groceries, minimum

59:56

debt payments, car payments, all of that should make up approximately 65% of your net income. Okay?

The 20% that's for your fund spending. These are for the pottery painting that

00:15

you booked last minute, the Glastonbury tickets, the Pilates class. That should make up about 20% of your take-home pay.

And the remaining 15% that's for your future you. That's today's you planting seeds for tomorrow's you.

And that

00:30

should go to savings, investments, and extra debt payments. And those are three good numbers that I think everyone should know and understand as a good starting point to try and benchmark your numbers or your income against those spending categories.

I would say however

00:47

if you are someone who's living closer to paycheck to paycheck those numbers might look slightly different and it might be that you're you want to dial down that fund percentage to have enough saved over for the future you so you can continue contributing to your savings investments

01:04

or if you're finding that your housing and mortgaging is higher than 80 90% start with when it comes to future you start with what you can whether it's saving 2% 3% % start somewhere. You just want to build that habit.

01:20

And in terms of spending, should I, you mentioned cars earlier and we talked about houses briefly. Should I be buying a car?

Should I be leasing a car? A car is, let me just say, it's one of the two areas that most people overspend.

And it's because we don't just buy the

01:37

numbers. We buy the emotions of the car.

How the car might make us feel, how we'll look like in the car, the family memories we'll create in the car. And I know cuz I did this when I um got my first job.

The very first thing I

01:53

did was upgrade my car. I went into a car showroom, found a car that I thought I'd look cool in, walked out with the car an hour later, drove out with the car, and didn't run my numbers, didn't check if I could afford the monthly payments, and for the next couple of months was figuring out how I was going

02:08

to make the rest of my finances meet. And car dealerships know this.

So they will manipulate the monthly payments in a way that makes you buy more car than you can afford. And if you don't understand how the numbers work, this is probably one of the

02:24

quickest ways to destroy your chance of building real wealth. The way I recommend buying a car is to buy something that's 3 to 5 years old straight.

And I say 3 to 5 years old because at that point it's enough it's depreciated

02:40

enough as someone else's expense and won't depreciate as much during the time that you have it. But if you are someone who is wealthy and you don't mind taking that hit on the depreciation or you want a nice car every couple of years and you want to trade it in and you don't mind

02:56

that fact that it's not the best financial choice then lease. That's how I think of the buy the lease situation.

Then you also want to think about how much can you reasonably afford as a monthly payment when it comes to um the proportion of your income that you're spending towards it. So what do you do you buy new cars or do

03:12

you No, I actually at the moment it was more economical for me to get a taxi everywhere. So I don't have a car.

So you've run the numbers and thought the amount I'm traveling away from home makes more sense just to get a taxi an Uber every time. Yeah.

I'm saving on the for me and

03:29

it makes sense for this point in my life. It might be in 5 years, 10 years time that I want a nicer car and I don't want to restrain myself from having it.

But for now with the numbers, I can use that num that amount somewhere else. What about other things we spend money on?

Where are the big sort of traps in

03:44

spending that that we haven't mentioned? So we talked about cars, talked about houses.

What about uh iPhones and iPads and technology? I think there's traps in spending in almost everything that we do that we don't even see.

going to a grocery shop, which is a fundamental living cost for

04:02

everyone. You're fighting against marketing to keep your money in your pocket.

You walk to a shop, a grocery store, they have the eggs, the milk, the bread right at the back, which makes you walk through the the shop to get there. They have the premium products eye

04:18

level, the sweets for the kids at the kids eye level. So these are also areas where you don't even realize that you're overspending because there's these subliminal marketing messages around you.

Mh. So that's one area where people spend where it's just like spending on the

04:33

necessities but not even realizing that there's a way to um save there. So what you suggest going in going into those supermarkets with a shopping list?

Yeah, I mean that's one way shop going into going into the going into the supermarkets with shopping list. Also

04:48

checking if you're shopping at the cheapest supermarket near you. I mean, shopping at M&S and Waitro is different to shopping at Audi if that's where you want to save your money and you're more paycheck to paycheck and you're thinking about where where to save your money.

Other areas where people overspend is

05:04

everything now can be bought as an impulse buy. You could buy now pay later.

There's Apple Pay on your phone. There's so many debt financing methods that make you pay more.

And so just understanding

05:19

running this budget, running these numbers, understanding what you actually have available to spend towards these things is a really good way of fighting against everything else that is trying to take your money away from you. What about like iPhones and iPads and stuff like that?

Do you think people should be getting new ones or

05:35

The way I think about this is the law of diminishing returns. When you first get something, there's a really big impact on your happiness.

When you first get like an iPhone and you don't have an iPhone, that's good. That's big.

You're like walking around your iPhone, this is pretty cool. Then with every upgrade,

05:53

that diminishing return starts to plateau. It's not as exciting.

So actually thinking about, do I need the next upgrade or is that something I could pass up on? But always remembering that the first time you buy something is worth it.

The upgrades after that, the

06:08

happiness doesn't increase as much. And what about hair, nails, dying your hair, and all those kinds of things?

Do you think people should be trying to sacrifice those kinds of things as well? Or I'm not in this camp of trying to save money on everything.

I really do believe

06:24

that you should have a percentage that you allocate towards the fun things in your life and not being restrictive about what it is that you love. If it is getting your nails done, getting your hair done, getting a new bag, go for it.

Enjoy it. as long as on the other side

06:41

that's not at the opportunity cost of you in five years or you in 10 years because you talk about this term lifestyle inflation. Yeah.

Which I've never heard before. What is lifestyle inflation?

Lifestyle inflation is when as your income increases, your spending also

06:58

increases in a way that you think might be necessary, but actually they are all necessities being hidden away as just upgrades and luxuries. It's essentially

07:14

your spending rising at the same place that your income is increasing. And what you want to do to counteract lifestyle inflation is you want to make sure that your spending increases.

Sure, you want to treat yourself. You want to reward yourself, but not at the same pace that your income increases.

You want to make sure that the gap between your income

07:30

and your spending is getting wider as you earn more money, not narrower. What's the best way for someone to track their money?

Because there's lots of figures here. Some people aren't mathematically literate.

Yeah. Um, many people don't want to be in Excel documents.

Are there simple tools or an app that I could use to track my

07:48

spending and saving and income? So many bank accounts nowadays have categorized spending within them and it will tell you what you're spending and what you're spending on.

So if you are someone that even me, I don't sit every single month and track every single transaction, but I do

08:05

have a ballpark figure in my mind based on my banking apps about what I'm spending and where. And the key isn't, oh, should I be allocating this much here?

I've over spent here. Oh, I spent a little bit more on my trip than I needed to.

The key is, are you saving

08:20

10% minimum of your salary? Whatever you decide to do with everything else, that's up to you.

And when you think about it that way, you think of this whole budgeting, managing finances is a lot more freeing than something that's restricting you.

08:36

If you're someone who doesn't want to sit in the spreadsheets, spit in the numbers, just think, what am I saving and what am I spending? Am I sp saving the right percentage?

Cool. Doesn't matter how I'm allocating the rest.

That's what I recommend for those people. Oh, they're like budget trackers that are already built that I can use because, you know, my bank might tell me

08:51

how much I'm spending, but it doesn't necessarily doesn't necessarily inform me in real time of how much money I have left. Yeah.

I mean, I have a budget tracker which actually tells you in real time. It's not connected to your bank accounts, but when you put your numbers into it, it will tell you what you have left to spend for the remaining of the

09:08

month. And what is that?

Is that an Excel document? It is an Excel document.

Yeah. Can I have your Excel document?

Yeah, sure. I I'll link it below so people can use it if they want to use it.

What about um money and love and how these two worlds collide? Because I I was speaking to Kevin Olri recently on

09:24

the show and he was telling me that one of the reasons people end up in divorce is because of financial insecurities and pain and friction and arguments. Do you get a lot of messages from people about money, love, joint bank accounts and all these kinds of things?

I have a lot of questions about from people asking

09:41

firstly how to bring up the conversation of money and secondly how to manage their finances with a partner in a way that keeps the autonomy but still makes it feel like you have a shared life.

09:57

What are those big questions when it comes to how to bring up a conversation? Yeah, I guess with your partner.

This is really important because the top two reasons why people argue or why couples argue is money and sex. And when it comes to money, it's lack of transparency, lack of openness,

10:16

and lack of shared goals together. And that's not to say, yeah, you should go on a first date and ask someone what their credit score or debt utilization is.

But it is to say having those conversations, asking the right

10:32

questions in a way that can help you understand someone else's money beliefs in a way that can help you create a financial life together. So, what should I be asking my partner?

I'm your partner. Okay.

10:48

What do you what do you say to me and when do you say it? I think there's levels of the questions that you could ask someone.

Mhm. And if you're just getting to know someone, you can ask them something along the lines of if you found or if you won 10,000 tomorrow, how would you

11:05

spend it? Lamborghini.

That will tell you a lot about what they value. So then that that automatically tells you that they probably value status.

If you say, "Oh, I'll probably save it." If I said Lamborghini, I'm going to rent a Lamborghini for for two months. Yeah.

11:21

What should you then do about that? You take that information and you understand this is what the person values.

Yeah. Because money is just a symbol for what the person values and if they if they want to spend it on a Lamborghini that's not to say you should then judge the way they're spending but you take that

11:36

information you understand what do you want to do with it. Is this way of thinking something that you want to have a life with?

Okay. Is there is there a good answer to that question?

M I think it comes down to understanding because even if someone says I just want to save

11:52

you might think okay this is great it's stability security but you might be someone who wants experiences you want to spend on flights to take your friends and family away around the world so it's just about understanding how your money values fit in with their money values and are they completely in

12:07

conflict with each other or are they actually do they marry up and can you see yourselves creating a financial life together because if someone's like oh I'll spend all my money on like status symbols and not save anything and you're a saver, that is

12:23

going to be a cause for arguments. Yeah.

Especially if uh you get bad news and things get tight. You know, someone loses their job and then when things get tight, you're really going to be focused on the money or you have kids and you know any sort of pressure on the budget.

12:38

Exactly. and like other questions and that those kind of questions come down further further down the line actually I guess as well when it comes to financial goal setting but I guess another question you could ask someone is and it comes back to what we spoke about at the start of the podcast is where did your beliefs about money come from

12:55

because so much of the way we think about money is inherited through what we saw our parents do what we saw during our upbringings and it has an impact on the way we are with money it might be that we're an impulse spender as a result of it might be that we see debt in a certain way. It might be that we're

13:10

really frugal. But what that does is it opens up a conversation of empathy and compassion rather than judgment.

And that automatically can lead to more conversations about okay, how do you view debt? How can we manage our finances

13:26

based on your views and my views and how can we work together as a whole to make this sustainable? And then the the next question is when it comes to family and kids and how you're going to manage your finances there.

That's when it comes to like the third layer of questions where you ask asking someone what does our

13:43

2year, 5year, 10 year goal look like? And if we were to merge our finances together, what would that look like?

Should we merge our finances together? Nisha, my straight answer to this is no.

We have very unique individual money

13:59

personalities and habits and we are getting married later in life where these personalities are really set in stone. And you know how they say opposites attract in a relationship.

The same goes with money. Savers typically attract spenders and spenders typically attract

14:15

savers. So if you have a saver saving and then a spender who's spending the savings, that's going to be a cause for arguments regardless of if there's financial shortcomings.

Mhm. So, what I recommend is having a team fund and then a Mi fund.

14:32

Team fund is for the grown-up adult stuff, the joint expenses, mortgage, rent, bills, council tax. And this isn't 50/50.

You both pay into that proportionate of your income. 90% of

14:49

your household income that you're making. You pay 90% of the expenses.

You're bringing in 30% of the household income. You're paying for 30% of the expenses.

That's a team fund. And then you have the MI fund.

And this is for your own individual personality to stay alive.

15:04

Your own money habits. No one else can see the way you're spending here.

If you have a match addiction, go for it. If you want to buy that nice watch, go for it.

You can do whatever you want. Spend this money however you want.

If you want to save it, save it. But that way,

15:20

you're creating that unity, but also having that autonomy. And I think this is really, really important for both parties, women and men, but specifically for women.

They want to, you want them to have their independent access to their finances. And I've seen situations, I've spoken to

15:36

people who have merged their finances, and it's when the relationship has turned sour unsafe. They haven't been able to know what to do because they haven't had the independent access to their money.

15:52

Do you think people should be getting prenups? Did you get You're married, aren't you?

I am. I think everyone has a prenup whether you know it or not.

Prenups, you could either have your

16:10

own customized prenup. Mhm.

Or you could have what the state is telling you as what's going to happen if you decide to go your separate ways. Depending on where you are, the prenup

16:27

holds different values. So some areas might not look beyond what the couple agree and they just say, "Okay, this is what the couple's agreed.

this is how the finances are going to be split or the assets are going to be split in the

16:42

UK and I'm not a divorce lawyer or anything. I don't believe that the prenup is fully legally binding.

Mhm. So, it's useful to have in some circumstances, but it's the courts will still look past it and see what is fair

16:58

as a couple. This term passive income is quite a popular term.

What is passive income? The way I see passive income, it's money that you do not have to work or to invest time in to make.

And in all

17:16

honesty, I think the word passive income gets thrown around a lot and people forget that the things that you do see that might be passive income streams required a lot of work upfront to start with. What are

17:32

some passive income ideas that you think some people could pursue? Like the the average person could potentially pursue on top of their their 9 toive job?

I would go back to the easiest way for someone to pursue passive income is through investing from like the S&P 500 and stuff like

17:47

that. That is the easiest way if you want to.

Everything else and this is how I see it. Everything else requires some level of time or energy because you could increase your income through a couple of avenues if that's what you're looking to do.

You can, like we spoke about, ask for a pay rise at work. You can, if

18:04

that's not available to you, set up side businesses to increase your income. And there's two ways to do that.

There's the tapand go that I like to call it, and it's ways to increase your income that you can do immediately. This isn't passive.

This is

18:20

things like putting a spare room on Airbnb or um an dog walking or Ubering. They require your time.

M for money, but they are immediate. The downside is there is a cap to how much you could earn because it's not leaning

18:36

into your unique advantages, your market advantage, your unique selling points. The other side is value and skill-based income.

And this is where you lean into your individuality, your unique selling point. You tap into your skills and you

18:54

create businesses around that that can scale. The downside with that, even if it is passive, say if you want to create um content and then through that sell products which you could then earn passively with that kind of income stream, there's always it always takes

19:11

longer to make that money. And there's a time period where you are putting in more time or even more money before you start earning that.

So when I talk about passive income, that's when I say sure, there are avenues for passive income, but the easiest one that's accessible to everyone is investing. Everything else

19:26

does require some upfront time or energy. Yeah.

I was we obviously we were talking before we started recording about Standtore, which is a company I've become a co-owner in, and that business allows you to sell digital products online. And we did this 30-day challenge and I was looking through the results of how much money people had made and also

19:42

how much how much of a following they had because I think digital products are really like interesting entrepreneurial opportunity. And there was this one, I was going through all of them yesterday over in the studio and there was like so many people, but there's this one that stood in mind because she had a thousand followers and she's helping women to get

19:58

control of binge eating and other sort of eating disorders by selling like digital products and information and really like a community. She had like a thousand followers or something.

And in the last 30 days, she's made4 or 5,000 doing that. She sold like 40 like

20:14

digital products and like basically PDFs and stuff like that. I just thought this is a massive untapped opportunity for the vast majority of people who have spent 10 years, 20 years in a career and know something, have some kind of expertise.

Yeah. Using what you've learning through your day job and turning it into a

20:30

business on the side that can be scalable. Mhm.

Not necessarily through creating content, which is what I think a lot of people think that they need to do. Mhm.

Yeah. I imagine like everybody knows something and there's a demand now for people to buy that expertise that you know if especially if you've been in the working

20:45

world for like a couple of years. Yeah.

I'd say if you want to figure out what it is that that expertise is for you cuz sometimes we're sitting on a mountain of knowledge but we don't even know it until we kind of take a step back and then look to see what that thing is. Ask your friends what is it

21:00

that you'd come to me for advice on? Because I know I have people in my life who I go to for advice on specific areas or if I want planning for an event, hey, what should I do?

How should I do this? If I need help with Excel, hey, can you help me with this formula?

If I've got

21:16

back pain, just a quick message or WhatsApp to someone saying, hey, what can I do in this situation? Find out what are people coming to you for advice on.

Mhm. That kind of will give you a signal as to what people want to know about you, what people want to learn from you, and see if there's a way to turn that into

21:32

an income stream. I mean, it's very much what you did.

Yeah, it is exactly what I did. It's turning the finance knowledge, which at the time my tagline was sharing everything I know and I'm learning along the way to create a life that I love.

And it was me kind of doing it as an

21:48

online diary, sharing this is what I'm learning, this is what I'm doing. And then it ultimately ended up into something that I do full-time.

And that's changed your life in a pretty profound way. I wouldn't be here if I if I didn't take the bet.

22:03

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Talk to me about that journey. Was it um was it faster than you expected?

And was it are you in a place that is higher than you expected when you started? You've done 151 videos on YouTube.

Yeah. And is it safe to say it's made you millions?

24:09

Yeah. I would never have thought I was in the place that I am now through sitting in my spare bedroom and creating videos.

Monday to Friday I'll be going to work glitz and glamour

24:27

meeting clients. There was a kind of allure to it.

And then the weekends I'll be spend spending in my spare bedroom googling what's a-roll, what's B-roll, how do I do color grading, which are all terms in terms of editing videos.

24:42

It's all terms of editing videos cuz that's what I was doing on my weekends and evenings while you were still at work. Yeah, I quit my day job just over two years ago.

And so for a very long time, this was just a creative outlet for me and I loved it. I found so much

24:59

interest in it, but my purpose for it really grew as the channel grew. It grew very quickly from 1,000 to 50,000 within a few days and then 100,000 within a few weeks of that.

And as the channel grew,

25:18

I saw the comments that were coming in. Hey, I've just invested in this for the first time because of what you've said here or I've just asked for a pay rise at work because of this conversation.

And when you see something like that come

25:33

through, there is no amount of money that can be made through a day job that beats that. There is nothing.

What was previously external fulfillment for me turned into internal fulfillment. So, it has been the best thing I've done, hands

25:49

down, and it is the thing that I would continue to do, even if I wasn't making money from it. You made one video seven months ago about things you stop doing to waste your evenings after work.

The video is titled, "Five things I did to stop wasting my evenings after work."

26:05

Yeah. Because I had to be really disciplined with my time when I uh was working in banking.

So, what is it what is the essence of that video? Is it telling people to use their their time as an asset more effectively?

And so often we just are living in autopilot

26:22

mode. We don't even think about the time that we're using and how we're using it.

We are just coming home after work and turning on the TV and watching Netflix and sinking into the couch because we've done that the day before and the day before and it's comfortable. And the essence of that video is to say

26:40

there there's probably more out there. If you're sitting there and you're in a place where you're thinking, I don't really like my job.

I don't really like what I'm doing. I'm not really happy.

I want to meet new people, but I'm not doing that. Then this video is about

26:56

saying, "Hey, come out that autopilot mode that you might be in and you have hours maybe on the weekend, maybe in the evening that you can use to create a better life for yourself." It's almost like budgeting your time.

27:12

It is budgeting your time. Exactly.

That thinking about how you can spend each hour in a way that brings you closer to the version of the life that you want. I think about that a lot because ultimately our time is the center point

27:28

of our influence. Like it's the thing that's going to determine our long-term outcomes pretty much more than anything else.

Whether we spend it reading a book that's going to educate us or learn how to color grade for YouTube videos like you did or whether we spend it, you know, watching Love Island. Yeah.

On the TV or something like in the same

27:45

way that that $100 is going to compound at 10% a year in the S&P 500, that choice is going to compound. Like so let's play that out.

So instead of watching Love Island, I decide to read that book you recommended about money. And then that means that I make a series of different decisions which

28:01

change the trajectory of several areas of my life. I maybe stop spending as much.

I start budgeting a little bit. I go and educate myself in a new skill.

And if you zoom out on that as a graph over like 10, 20, 30 years, you're in an entirely different position because you used one hour differently 30 years ago,

28:17

but you'll like never see the return because it's so compounding is so hard to see. It's invisible in the moment.

But yeah, I really think about this a lot. I I try and remind myself on a frequent basis that like the actual currency I'm spending is these these hours that I have and how intentional and wellplaced and

28:33

aligned they are to my long-term goals is maybe maybe the most important thing. And it's the most powerful thing that you have.

Mhm. Exactly.

What about your happiness? What is um what makes you happy, Nisha?

The way I'm living right now, which is doing what I'm doing for a living is

28:50

making me extremely happy. And it's the happiest I've been since starting a career in banking.

It comes back to finding a meaning in a purpose in what you're doing. And to say that I make money from

29:07

helping people get better with their finances. I don't think there there's stuff and you can't get much better than that.

I don't think there's many jobs in life that are more rewarding than giving back in some way.

29:23

However that looks like for you through your own skills, your own expertise, your own unique selling points. I can't imagine a like a better place for me myself to be in.

And it's taken a

29:40

long time to get to that. But it's been good.

It's been a it's been a journey, but it's it's been a good one. AI is this, you know, the the topic of the moment because it's just impacting everything.

It's impacting people's ability to get jobs. It's impacting how I'm hiring as a employer.

It's impacting

29:57

how I do my creative work and even me as a podcaster as well. I was wondering if you what you're doing, how you're thinking about AI.

I'm seeing more and more people leaning into AI to get money tips and money advice. Mhm.

And I think that's great because it's everything's at the expertise. If you're

30:13

looking at what was available 20 years ago versus what was available 5 years ago versus what was available a year ago to what is available now, there's so much more information that is vastly available at your fingertips for you to learn financial literacy and be prepared for it. The thing that I'd always ask people to

30:28

remember is don't forget the emotional side of money because greed, fear, that all comes into how you're managing your finances as well. Yeah.

So, use AI, use it to your advantage. I think it's brilliant and I think you always need to lean into it.

30:44

Um, but there's a there's the human component that can never be taken out of the equation, especially when it comes to money and finance. Could I not just go on like chat GPT and ask it to be my personal accountant every month and tell it my situation, tell it my goals, and then tell it to

30:59

give me advice every every day, week, month on what I should be doing. I think that would be a great starting point to understand what do I need to do if I'm absolutely clueless.

That's not to say cha cha GPT is always correct. Um, as you probably know, there's some errors in it.

So, take it

31:16

with a pinch of salt. But if you're starting from scratch, even saying, "Hey, this is my income.

This is my spending. How do you recommend I budget?

Give me three or four ways to consider it." Yeah, that would be a a way for you to take if that's a way for you to take

31:32

that next step, then I definitely think that's a avenue to be explored. Jack, you were telling me um the other day that you're now using AI a lot for financial support and advice.

Mhm. What are you What are you doing?

Um, so I got like this prompt on on chat GPT

31:48

where I've I've asked it to be the world's best financial adviser for me and uh I screenshotted all my bank statements and I every time I tell people this they kind of went because it's like a lot a window into your life and I don't kind of know the GDPR or whatever around it but it's been so

32:04

useful. So, I've screenshotted everything on my bank statement, and then it tells me how much I spend a month, how much I can put into investments and stuff.

And I also screenshotted this investment account I had, and it told me that I was overpaying on my investment account, and that I should switch to another one

32:20

because the fees were better. And then it was like, you don't have enough in savings, so you should stop investing and put your money into savings.

gave me a advice on a savings account to put it into with a high interest like 4% interest and it's actually been

32:37

gamechanging because it's kind of a base knowledge that I wouldn't have had an understanding towards and I get very excited when I listen to these podcasts cuz I sit here and they tell you like ones to invest in and I think it was a particular guest we had on and she said you should invest in this kind of stock

32:53

and I said like oh what do you think about this stock and it was just like don't be silly you're not this person and it's just been really helpful for me to kind of understand it's it's um advice changes and adjusts. Oh, was that Kathy Wood?

Yeah. It was it was it Tesla?

Yeah. Well, it told you to behave.

It was like

33:09

behave yourself. Cuz I asked it to be brutally honest about all the advice it gave me.

And I was like, Kathy Wood had this advice. Tell me tell me should I put in should I put all my money into Tesla?

And it was like, look, you're not Kathy Wood. Like, you don't have enough.

It's kind of what you said about um having emergency

33:25

funds. Yeah.

It's like you don't have enough in your emergency funds. Top that up first.

And that's like if you want to invest in Tesla, we'll have another pot. So the new one I've done trading 212.

Yeah. And you can do pies.

So I've got a safe one and a not so safe one and then a high interest account.

33:40

That's really interesting, Jack, that that that you've done that. And I think that's that just shows the power of AI now.

And there's two really interesting things that I picked up on then. first is that it's very tailored based on you which with AI it's probably understood

33:58

who you are as a person from the information that you fed to it your risk profile your amounts the bank statement had your savings and from that it derived a profile and gave you the correct information based on your current situation

34:15

and the second thing that probably doesn't get mentioned in maybe podcasts that you've done so far, Stephen, is the the savings, the putting it into a high interest savings account. It's a very easy basic personal finance tips that

34:31

actually do make a difference when it comes to habits, but also it's easy. That's passive income for you, but it would get missed out on a lot of the advice if you're watching a specific investing focused YouTube video or podcast.

So, it just harnesses the

34:47

power of chat GPT. I don't know yet if or I don't know if we have any information about how much information we can actually feed into chat GPT and where that goes but it sounds like it's just you've given it the underlying framework or this is my current situation and it's given you the correct um initial guidance at least and then

35:04

you've been able to say okay that makes sense for me or no I'm not going to listen to this. Yeah I think the the I keep asking it like am I on track and it changes its advice.

So although it's been really good initially, I think I'm now with

35:19

that base knowledge just going to go and sort of and everything I've learned on these podcasts as well, just kind of go and run with it. Yeah.

Yeah. And that's really important thing because you know there's there's so much information online when it comes to money that you don't actually know who to listen to and who to get advice from

35:35

and who to trust because you could be scrolling through Tik Tok and the first video you see is put all your money into Tesla or crypto or one asset or you could see another one that says, "Oh, stop buying lattes so otherwise you'll die broke." And then the next video

35:50

might be mine and you might think, "Oh, the last two people just told me BS. Why should I listen to this person?

And so finding a person who whose principles and philosophy align with your way of thinking is a way that will keep you motivated and inspired to

36:07

want to keep getting better with finances. And so you've probably got that information from chat GPT and it said to you, hey, based on your profile, this is what's important.

And you've kind of leaned into the leaned into that and thought, this is right for me.

36:23

Actually, this makes sense. and you've probably actioned it.

And so it's it's a um fine line between finding someone who you resonate with and also understanding that their principles align with yours, I would say to that. And how much do you think about credit scores?

Because I absolutely butchered my credit score before I even realized it existed and my credit score was in

36:39

the bin. I I got uh two CCJs, which are county court judgments, which is where you really up because I didn't know a thing about money when I was 18, 19 years old, and they gave me these credit cards and I had overdraft and defaulted and didn't pay them back and went to an ATM, put it in, it didn't come back out.

Yeah.

36:55

Um and then I found out that I had destroyed my credit rating before I knew what it was. And I hear this quite a lot from people.

They don't understand the importance of it or, you know, you don't realize the importance of it until you're looking to buy something big. Yeah.

because that's what it impacts the credit score. It two people can go into

37:12

a car showroom and choose the same car and the amount they pay for it will be completely different based on the history. Yeah.

The credit background and so there are it is something that you need to think about. It is something that you need to make sure you're paying off in time in full your credit card for instance.

And

37:28

it is definitely one of the main things or one of one of the things people should always look at and consider. And you can check your credit rating online for free.

There are websites that do that and you can check it just make sure all of your details are correct. If there's any

37:44

anomalies, correct that. But most importantly, just make sure and it really comes down to are you paying the things that are outstanding on time.

I think most people, especially younger people, don't actually realize that they have a credit score and that they can check it right now for free. And they also probably don't realize that things

38:00

like being registered to vote has an impact on their credit rating. Cuz I remember the first time I logged in to check my credit score and I was like 45 and it said the reason why one of the reasons why it's low is because you haven't registered to vote.

I was like what the hell? Yeah.

You register to vote that that's

38:16

one of the things even something like you could call up your credit card company or your uh the company that you have a debt at and say hey can you increase the amount that I have available. What that does is it reduces your utilization when you're using debt.

And by just saying, okay, you have

38:31

instead of utilizing 50% of your credit available, you're now using 20%. What companies now see is, oh, okay, then they're being sensible, they're not really relying on this debt on their day-to-day living.

So, there's a couple of things that you can take into account, but even if you do, and again,

38:48

people don't realize this, even if you do have interest rates because you're not paying your debt off in time, you can negotiate that. You can call up the company and say, "Okay, this is the interest rate I'm paying, but this is what I have planned.

This is how I plan to pay off my debt, and I want to do it

39:04

over the next 12, 18 months. Can you reduce or can you look at reducing my interest rate?" I have these personas here.

There's three of them. And I was wondering, there are three different people at three different stages of life.

When you think about the advice you'd give these people, does it come back to this

39:20

framework, this 65, 20, 15 framework really regardless of what stage they're at? You know what?

Most things in finance do come back to that framework, the 65, 2015 or even a variation for it. With Andy, he's just started his job.

He's early on in his career. He's making less

39:38

now than he will in 10 years, 20 years time. So it may not be that his paycheck allows for 65% to go towards his rent and his car, which is what he wants something new of.

It might be that it might be 70 or 75%. But the key is, especially at this stage, the most important thing that he has going for

39:54

him is time. So save, invest early, do it recurringly, which is often, and harness the power of long-term growth is what I'll say to Andy.

When it comes to the new phone, remember that there is a trade-off for every decision you're making. If it's not an absolute necessity or an urgency, that can be

40:11

spent and the value of that maybe thousands today can be worth significantly more in 10 years or 20 years time. Mhm.

So balance that together. Again, if there's budget with his after he's put down the money for his savings

40:27

investing, if he wants to spend that on the fund, then go ahead. With him though, do you think his risk appetite should be a little bit higher?

Cuz I when I look at uh Andy here, he looks like he's early 20s, maybe late teens or something. Yeah.

With him, I think you need to take risk.

40:42

You need to go work at an AI startup because he wants to fill that bucket of knowledge with like really high yielding, relevant skill. Yeah.

So, I don't know. I think of him.

I go, "Bro, roll the dice. You got nothing to lose.

You ain't got a mortgage yet. You ain't got kids."

40:58

In your 20s, you can play the long-term game. Absolutely.

Everything feels like it's urgent in your 20s. You feel like you need the promotion.

You feel like you need to invest straight away. You feel like you need the pay rise immediately.

But decades over dopamine and he's got a long time and the the

41:13

things that he learns now, the things that he invests in, the skills and the risks that he take, he can bounce back from that. And even when it comes to investing, actually, when you're in your 20s, you can be more risk averse because you have the upward trend of the market that will see you through.

41:30

Mhm. So 20s is the time to take the risk, take all the tiny experiments, and just be a sponge where you absorb everything.

Yeah, that's what I'll take. What about Lisa in the middle, though?

Lisa is she's got a mortgage, she's got

41:46

an income, and she's got a good amount of savings, and she is keen to start investing, but she doesn't know where to start. And this is where a lot of people fall into.

They have their savings setting aside. Um, and this is she's doing really well, someone like in

42:02

Lisa's position. But if anyone listening to this is similar to Lisa's position, it chances are they're not investing because they are scared and fearful of what to do and they don't know where to start.

So Lisa, I would say have your

42:20

emergency fund in place. Pay off any debt.

It doesn't look like you have any debt. If your mortgage isn't over 8%, you can make more from instead of paying down your debt, you can make more investing.

So, you're great to start wanting to invest. And I would say keep it simple.

Do it for the long term. Keep

42:38

it simple. You want to if especially if you're just starting out, your emotions and the behavior is going to play a key part in your investing.

So, 100% of your portfolio, stick to index funds and target date to retirement funds at the moment. And then if you are ready as you

42:55

get more senior, you haven't increased your income, then you can dip into other assets should you want to. And we've got Matt over there who's a single parent earning about So Lisa was earning roughly 140,000 a year.

Yeah. Matt's earning60,000 a year.

Over over 50% of his income is going

43:11

towards his rent. He has credit card debt of 1,500.

The first thing I would say looking at someone in Matt's position is if you've already saved for your peace of mind fund, you the first thing you want to do is pay off that high interest rate debt. It is like running with weights on your ankles.

You

43:27

want to take them off so you can start moving on to the next path of your financial journey. So focus on paying off that credit card debt.

He wants to increase income income sources but has little time outside of work and being a dad. So that says to me that he probably

43:43

doesn't have time or energy to spend on trying to see if something's going to work and see what comes out of it. He wants to um make an immediate source of income.

So the easiest way to increase your income is getting an increase in

43:59

your current job, getting a pay rise, and if not switching companies to see if you get a pay rise that way. When I'm looking at my own career, when I stayed at the same organization, it was the increase was between 3% 5% sometimes a bit higher if I got promoted to 10%.

And then when I

44:16

switched companies, it was always between 20 and 30% when I moved. And I know that is I I was in a lucky place where I had the movement to get those pay jumps and to get that salary increase.

And not everyone's in that position. Um but if you have or if you're in an industry which there is a

44:33

there is more path to earn more then I would definitely say first and foremost increase your income. You don't have to put in any more time towards it given you also have uh children to look after as well.

If you've stopped, if you've already exhausted those two avenues, then the next thing

44:50

I'll say if you want an immediate income is picking up income streams that unfortunately might be tied to your time, but they will have an immediate impact on your income because that's probably what you might be looking to do because your rent and I'm guessing your other living expenses are taking up a

45:05

lot of your take-home pay. So, you want to find out that extra buffer to start paying towards the debt that you have.

things like so this could be things like uh selling secondhand stuff online um selling products online renting out a spare room if you have that on Airbnb um things

45:21

that you don't actually need to put capital in to make money straight away from are there things you never spend money on at this point in my life me specifically I don't think I bought a designer item in two years which is a lot for me because I was dripped out in the

45:37

designer wear beforehand I've found that my validation in life has come through by work and through internally and it took me on a journey to do that and I just don't believe in the premium prices that you pay for

45:55

promoting another product or a brand if it's for utility. If you're buying a branded item or a designer for utility, i.e.

this design or this brand works better, then go for it. But if you're doing it purely to show, then for

46:13

me at this point in my life, it's just a no-go. I could spend that money in other ways that brings me a lot more um fulfillment in different ways.

Do you spend on fast fashion instead of the luxury high-end stuff? Oh, that's a good question.

No, I don't spend on fast fashion unless it's a

46:29

really urgent last minute buy and I haven't found anything else. But I tend to have a capsule wardrobe which means I could play around.

I spend a good amount on quality pieces and that's important to me. Quality pieces I could use time and time again and can switch in and out of.

And I I

46:45

think for me when it comes to clothing, it's more just okay with work. It's what can remove the decision- making for me.

What about books? I think that is one area that I love spending money on.

There's an infinite return. There really is.

And actually some of the breakthroughs I've had have

47:03

come from the books I've read. Even the first book I read which was Rich Dad Poor Dad that just that concept of understanding assets versus liabilities.

Just knowing that from an early age can start changing your thinking in a way

47:18

that you wouldn't be able to having a normal conversation because the people you hang around with, the people who you spend time with, they have a massive impact on where you end up. And I think it's easy to say just hang out with

47:34

another crew or just hang out with a new crowd that pushes you. But actually for a lot of people, they don't have access to that.

And that's where books, podcasts, YouTube videos, it almost has

47:50

that averaging effect of the five people around you. It mirrors that effect.

So even if you don't have access to the people who you want to learn from by reading their book, watching the videos, listening to the podcasts, you can still gain that

48:06

knowledge and it's almost equivalent to you sitting with them for an hour. So you're saying people should definitely subscribe?

Always subliminal messaging. You wear black a lot like me.

Is that an intentional choice? It started off

48:22

because when I was doing my YouTube channel alongside working in banking, I had to find every way possible to eliminate any sort of decision- making that will stop me from doing the thing. Yeah.

And so it was a way for me to create a

48:37

system, not rely on motivation. So there was about four outfits of black that I'd always change from and it made my life a lot easier.

Now this has carried through. It's been a lot of just it just makes me think about things less.

But no, I do also wear other colors just as

48:53

much. It just happens to be that black is 60% of my wardrobe.

Nisha, we have a closing tradition on this podcast where the last guest leaves a question for the next not knowing who they're leaving it for. And the question that's been left for you is who is the one person that was slash is responsible

49:10

for the person that you are today and the reason why you are sitting here? It goes back to the person who when I started my YouTube videos and I got a lot of noise and a lot of people saying, "Oh, like what is she

49:27

doing? Does this make sense?" The person who really kept me going was my dad.

Yeah. He saw my videos and he said to me, "What you're doing is so good for the world.

Your education is going to help so many people. don't stop.

49:46

And I didn't. So, thanks, Dad, for believing me when there was like nine or 10 views on my videos.

50:03

Wasn't expecting that. It's crazy how someone just saying a few words at the right moment can be so sort of pivotal to your like trajectory.

50:21

Does he know how much he inspired all of this? I don't think he knows the extent to it.

I sent him like a message maybe a few months ago um telling him like, "Hey, remember that

50:36

day when I showed you my YouTube video and it was just me in my dining room and I couldn't even speak properly and it was set up in a weird lighting and it was getting nine or 10 views and you said, "Don't stop. Keep passing this education down." And I said to him, I

50:52

did send that message to him and said, "I'm so glad you did that because I've continued because of that." And we're not really wordy with each other, but I think he heard it. I don't know if he knows the extent, but I think he'll be happy to know the extent of it now.

51:09

You got the tissues, Jack. Thank you.

Thanks. Yeah, I think we're good.

Who is the one person that was is responsible for the person that you are today and the reason why you're sitting here now? And that is dad.

51:27

That is dad. He must be pretty shocked to some degree.

Like no one could have imagined and your channel would be this big and you'd be reaching this many people. He didn't expect it.

I didn't expect it. I think he

51:44

believed that for him he believed that a job was security for us. I'm one of three girls.

I'm the middle sister. And all he wanted was for us to get a good job and be secure.

And so whilst this is beyond I could ever expect, when

52:00

I quit and I quit taking a big pay cut, that was hard for him. How big was the pay cut?

84%. So you were on 220.

Yeah. Which is about $300,000.

Yeah. And I was just about to get a a

52:17

six figure bon. So I left before a six figure bonus.

Just before the biggest bonus of my career. I negotiated it.

I spent months negotiating it. And two months before that six figure bonus landed, I resigned.

Why didn't you just wait?

52:35

There's always going to be a carrot waved in front of your face. And that carrot's going to come in different shapes, sizes, forms, and it's going to be a distraction to keep you on the default path.

52:51

The carrot for me was that bonus telling me, "Hey, just wait. Just wait another two months and then wait another year and another year and 5 years and 10 years and just wait till you're 60." And I had this once in a-lifetime

53:08

opportunity that was just exploding on the side. And with it came all these people saying, "Hey, I'm so thankful for all of this." And I was getting DMs from people just pouring their life story to me.

53:25

And there is no monetary value that beats that. There really isn't.

And so I like took a step back. I ran my numbers.

It was 84% pay cut. I thought it still covers my mortgage.

It covers my like basic living expenses.

53:41

The biggest risk isn't quitting my job. The biggest risk is letting this once in a lifetime opportunity pass me by and never knowing where that path could have taken me.

That was the biggest risk. And the hardest part was actually just letting go of the identity that I

53:58

wrapped myself in. Yeah.

What was identity? I my title was my identity.

I'd worked in

54:13

banking for nine years and I could sit at a dinner table, cling on to my title, say I worked in finance and feel externally validated. And so that move to quit at the time that I did from a career, a corporate

54:29

career which I've worked so hard for, it's like it's what I wanted for so long. and then just let go of that and say I'm letting go of that identity.

It took

54:45

so much reframing in my mind and so much mind work and so many things I had to do to make myself feel comfortable to say okay I'm not letting anything else dictate the way my life goes from here. It was a lot of work.

And I would say if anyone else is listening to this

55:02

thinking, I'm in a place where I'm unhappy. I really want to do something new, but I'm scared and I don't know what other people are going to say and what's society going to say if I quit or take this other path.

55:18

I could say the things that I did that really helped me. And the first is spend more time on the path that you want to go down than

55:33

around the people that are telling you otherwise. Because so often we're half in half out.

We're interested in something but we're not obsessed with it. And when you're interested, you just kind of just do whatever needs to be done.

But when

55:49

you're obsessed, you're going to do whatever it takes. And this applies to anything to changing your career to being a parent to being an entrepreneur.

Become obsessed with that thing that you want to do cuz that will give you the

56:04

courage to make the hard decisions when they come. The second thing, and I think I made a video on this too, I I wrote down on my phone on on an Apple notes, and I wrote down all the things people

56:19

were saying to me, the external noise. And underneath it, I had what my inner voice was saying.

And it's really easy when your inner voice isn't loud for it to be diluted by what everyone else around you is saying.

56:36

that at that point if anyone said anything or if anyone is saying anything to plant seeds of doubt in your head look at what your inner voice is saying read it repeat it let that be louder than anything else that is happening around you and what was the external voices saying

56:53

well when my channel started picking up it was being shared into um WhatsApp groups of people I know and friends of friends and friends and friends and it was just, you know, when you're just starting

57:08

something new and someone is breaking barriers, it's just trying to pull them back. Pull them back a little bit.

This isn't you. Mocking them subtly.

Yeah. Why are you saying your numbers online?

What are you doing? Lol.

And you've just got to remember the reason

57:23

why I'm saying my numbers online. That is hard to do.

It's hard to sit there and say this is my salary over 9 years. It's hard to do that.

But I I remind myself it's to be transparent. It's to help people make the decisions that help

57:40

them with money. It's the same reason why I came back and said, "I want to say this because it's the transparency." And I think the third thing I think everyone should like kind of

57:56

take into account when they're making um Hold on, give me a second. Where's where's this emotion coming from?

It's very deep inside you.

58:11

There was a lot of pain during my career and I felt really trapped at times but I don't know how to escape but also cuz I know a lot of people are probably hearing this and thinking I'm also in that place

58:29

and so I really feel like my purpose is to help as many people to go from feeling trapped to freeing themselves and using money to do that. And so I guess that's why I'm feeling like it's bringing it all out because this is

58:45

just alignment for me. And it's just like bringing back the memories of what where I was at that time and what I had to do to like just take that cup because at the

59:01

end of the day, no one else has to deal with your with the decisions you make in life more than you. They have to deal with maybe the consequence of a moment.

But only you have to deal with the consequences of all the decisions that you make in life. Only you have to go to a job and

59:18

whe a company that you don't want to work in. Only you have to live that day.

Only you have to be with a partner if that's the reason you chose. If if you chose because everyone else is saying it, only you have to do that.

Only you have to grow

59:36

old with the memories of what could have, should have, would have been and live with the what if. And that's why I I guess there's so many people that I know and that probably listening to this that know deep down there's something more out there.

And I just

59:54

want to if anything give them the courage to say take that risk. It's usually a calculated risk.

And if it's to do with your money and finances, spend some time, make sure you have your emergency

00:09

fund or whatever it is that's needed, but align your money to match your life decisions cuz it can really be freeing. Have you spoken much about the pain?

Why?

00:26

It's my content is personal finance. It's not really about me.

It's about personal finance. I'm just trying to educate people.

Um, yeah, I didn't I probably wouldn't have spoken about it here if you didn't ask me the question

00:42

about where it's come from. It's taking me back to the start.

And sometimes you go into a journey and you get tunnel vision and you forget why you did it and you forget why you started. And

00:58

you forget all the people that helped you on that journey. And there was a lot of people that helped me and at different points.

My partner, my mom, my dad, my sisters, like they've all helped me at different points. And the people I learned from, my mentors, like it's just all

01:17

a reminder as to how it started and how different things have lined up. What was the hardest day when you look back through that transition that you've been on?

What was was there a hardest day, a hardest moment?

01:32

The hardest day was that morning when I emailed my manager to get on a Zoom call and I said, "I'm turning down that bonus. I'm leaving banking." That was the hardest.

01:48

If I was a fly on the wall, yeah. What would I have seen that day?

You'd see a girl in her late 20s taking or saying no to a path that could

02:03

make money and that was very certain and that followed the default path to go to a path where she wasn't sure if she was going to make money. She didn't know how it would turn out, but she did it because it meant so much to her and she did it because she saw the impact

02:19

she was having. And in her 10 years or nine years in banking, she's never felt like she's had that impact on individuals.

It's been on for corporates or for sovereigns. It's never been for specific people or day-to-day people who

02:34

need it. And she did it and she didn't know where it was going to lead her.

Is there an element of being a first or second generation immigrant that ties into this? Because I hear so often when people come up to me

02:51

in the in the gym and you know their their mother's African like my mother's African and and I was born in Africa and so my mother's Nigerian and put tremendous weight on you know going to university and becoming a success in the eyes of the public and then I hear a lot from sort of more Asian

03:07

first generation immigrants or second generation immigrants that they feel you know the doctor lawyer can't remember what the third one was doctor lawyer something accountant I don't know maybe finance do you think that plays a role into why you go down a certain path. Yeah.

In in terms of like if you're at

03:22

home and you're you have first generation immigrant parents and they see success as like one of three jobs, it becomes harder to break out. Like breaking out is basically makes you a failure at home.

I think there's two things. I think it's definitely that's a big part of it.

but

03:39

also seeing what your parents did and how hard they worked to get you onto a path of security, which is a job, and then saying, "Yeah, you worked really hard and I'm throwing that away." There's a lot of guilt that comes with that. Mhm.

So, I think it's I think it's both. I

03:56

think it's Did you feel that guilt? I did at the time.

Massive guilt. Massive guilt.

I couldn't tell anyone that I was quitting until after I quit. The only person who knew was my then boyfriend, now husband.

Your parents didn't know. They didn't know till after I quit.

I

04:12

couldn't tell them. Why?

Cuz I knew that if they said something, I might have just changed my decision. And you think they would have said something?

I don't know. But when I told them, they

04:27

supported it because they knew it was also too late. I think they might have just said, "Hey, this is secure." Well, maybe there's something in that.

Maybe in those big decisions where, as you say, you're going to deal with the consequences yourself, both the upside and the regret. Maybe consensus and

04:44

focus groups aren't needed in such a moment when we should be tuning into the voice inside. Because yeah, external voices will just complicate those things.

But I also think, you know, I say this to people a lot when they come up to me and they say, "I'm in this situation. I'm in finance.

I'm working

04:59

in the city. I've got this dream of being a violin player in Peru." The first question I often ask them is like, could you go back if you're wrong?

Because if you could go back if you're wrong, then that's what we call a I think it's a type one decision in business, which is a door that is reversible. And so many people spend one

05:17

year, 3 years, 5 years, 10 years, 20 years of their life stood in front of a type one decision, a door that they could walk back through if they're wrong. And actually, it's just like such a crazy shame not to make those type one decisions at speed if if it's reversible.

And it's so crazy

05:32

because like 95% of the time when I ask someone that question, they respond. They said, "Yeah, I could go back to investment banking if I was wrong." Yeah.

I'm like, "Go do the violin thing then. Go up, fail.

It might work out, whatever, but come back here if you're if you can." So yeah, you won't have that pain of what if anymore.

05:48

The what if. Yeah.

And I I remember reading that study from Bon Bronny Bronnyware. Yeah.

Palative nurse who interviewed people on their deathbeds. And it was um I think the number one regret is not living the life that I think I could have lived.

And I've always remembered that. I thought, okay, so if it's reversible,

06:04

then maybe go through that door as fast as you can. Nisha, thank you so much for doing what you do.

It's really um it's really incredibly important. And I think the very fact that your channel has been so resonant and so far reaching speaks to an unmet demand in people's understanding of finance, but also having a voice that they can very much

06:20

relate to that um simplifies, makes things complicated things accessible, but also just a human being that is um relatable in many forms. your intentions of why you're doing what you're doing are so abundantly clear and I could see that in the emotion.

I could see that

06:36

you really really do care about other people and actually your decision to take a leap from the world of investment banking which was much more secure and high status in many people's eyes at that moment in time was one also inspired by the fact that you want to do good for the world and that is exactly what you're doing. So I highly recommend

06:52

everybody goes and checks out your channel. and I'm going to link it below um if they want to continue this conversation because you make very actionable, concise, clear videos on all the subjects we've talked about, but many more.

Um and also to go follow you on social media, which I'll also link everywhere else. Um but I just want to thank you for your time and hope

07:08

hopefully we can talk again soon when you've uh written a book and the the book comes out. Thank you so much, Stephen.

It's been a pleasure. This has always blown my mind a little bit.

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07:24

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07:40

to speak to and we'll continue to do what we do. Thank you so much.

We launched these conversation cards and they sold out. And we launched them again and they sold out again.

We launched them again and they sold out again because people love playing these with colleagues at work, with friends at home, and also with family. And we've also got a big audience that use them as

07:55

journal prompts. Every single time a guest comes on the diary of a CEO, they leave a question for the next guest in the diary.

And I've sat here with some of the most incredible people in the world. And they've left all of these questions in the diary.

And I've ranked them from one to three in terms of the

08:11

depth. One being a starter question.

And level three, if you look on the back here, this is a level three, becomes a much deeper question that builds even more connection. If you turn the cards over and you scan that QR code, you can see who answered the card and watch the

08:28

video of them answering it in real time. So, if you would like to get your hands on some of these conversation cards, go to the diary.com or look at the link in the description below.

Heat. Heat.

N. [Music]

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[Music]