5 Money Rules Nobody Taught You in School | Money & Business Expert Codie Sanchez

Key Takeaway

Today, automate a 10% transfer of your after-tax income into a diversified, low-cost investment account—and treat it like a bill, not a leftover. If you have little cash, direct part of that amount toward skills and financial education first; your earning power is your highest-upside asset. The key is consistency: remove the monthly decision, avoid trying to look wealthy, and let small contributions compound while you build knowledge and income.

Episode Overview

Codie Sanchez and Jay Shetty discuss how to build wealth in a difficult market without relying on outdated assumptions about homeownership, debt, or entrepreneurship. They cover financial literacy, using credit responsibly, starting a business alongside a job, negotiating pay through measurable value, disciplined investing, and choosing problem-solving over passive consumption.

Full Transcript

Transcript of 5 Money Rules Nobody Taught You in School | Money & Business Expert Codie Sanchez from On Purpose. Auto-generated from episode audio; may contain minor errors.

We read articles, we watch the news, we see the headlines, and we assume that this is not a good time to make money . Yes. And we keep saying things like when the market improves, when the market changes. It's a terrible time to buy property. It's a terrible time. And the curious thing is that this rhetoric simply continues. Mjm. So, what should people think about money right now? Yes. Well, first, I think we have to be honest about the fact that the situation is difficult. And it's real.

Like, all the things you're feeling about money and finances right now are real. Wages have been the same, really, since you and I were born. No, they haven't really increased. Oh really? Yes, I mean, if you go back and go, say, to the days of Dave Ramsey, who is a friend I respect very much. But if you go back to Dave Ramsey, when Dave was working, he would tell you today that you should buy a house. That's the number one thing you should do. You should have a house, you should own your property.

Well, the problem with that today is that our salaries have increased twice in your lifetime, but housing prices have increased nine times in your lifetime. And so, we can't really afford the same things that the previous generation considered totally normal. Therefore, its structure might not work for our generation. So, one, I think it's important to realize that the situation is difficult. Second, however, I think we should return to what Warren Buffett says, which is to be fearful when others are greedy and greedy when others are fearful.

And it 's really difficult to do. It hurts in our stomachs. But today, all around us, things are starting to be on sale. And what we need to try to do is figure out during this period, how can I start to get a little piece of this? Housing prices in Austin have fallen by 30%. This is really since I bought a house a year ago . And so, there are actually sales happening all around us, and I think we need to be prepared for that. But before we can buy things , we need to have enough money to do so, and we need to know a little about money so we can earn more.

So, I think we should also talk about how, yes, everything is difficult right now. Yes, things are on sale. You're not crazy, but you can make money in any market. And one of my favorite quotes from Baron Rothschild, one of the richest men in the world, you know, the creator of industry in the US, is: "Buy when there is blood in the streets, even and especially when the blood is your own." And so, that's a hard visual way of realizing that real money is made when the market feels tough.

Yes, so actually right now, even though the market is difficult, we shouldn't get discouraged and should wait for the market to improve. This should be the moment when we really double down and listen to your advice. Yes, I mean, think about it, yesterday I was looking at an NFT that sold for $60 million at the height of the NFT world. Today it is worth $19,000. From 60 million to 19,000. It felt good during that time, didn't it? Everyone was saying, "We're making money. We have all these extra things." But what really happened is that we bought things like overvalued assets, and now we're left with assets that are undervalued.

The opposite happens in this market. And so, I think now is the time to activate your spider-sense and start saying, "Okay, everyone else is panicking, where can I start making smart moves?" Because there's always money and opportunities, but you definitely want to buy when things are on sale. Should people even dream or think about wanting to own a home now? I believe that owning a house as an investment today is not mathematically a smart decision. For the first time in my life, the numbers say that today, with interest rates of 5 to 8%, a 3 million home shortage in the U.S., stagnant wages, and this increase in house prices, the housing market is booming.

The math just does n't add up. So today I don't think you should feel like you're not an adult, that you're not living the American dream, or that you're a failure if you don't buy a house. You could be being really smart financially. Rent and go negotiate your rental prices right now , by the way, because there's a lot of oversupply on the market and they want to hold you back. And you could be making an incredibly smart financial decision . So don't let people make you feel bad if you're not doing what used to be the American dream of an adult.

The market has changed. Yes, you have already shared some very powerful advice for the current moment. What should people be thinking about how to make money now that they couldn't do a year ago and that is very different today? Yes, that's an excellent question. Well, first, what I would think today is that you need to understand a basic of financial education. And you and I were talking about this. You know, they say the average American reads at a sixth-grade level. They say the average American only really understands finance at a high school level.

So, I think the first thing I want people to do is realize that if you don't understand money, you'll never earn more, because understanding money is like speaking a language. How are you going to talk to someone in Spanish, communicate, and have a successful relationship if you don't speak the same language? It's very difficult , isn't it? That's why I want people to speak the language of money. So I think about this in small ways. Let me tell you one way to find out if you have financial education today.

One way could be if you really understand the difference between debit and credit cards and why you should never use debit cards. Everyone's talking about how bad credit cards are these days , right? Well, credit cards are bad if you don't pay your balance every month, if you let large amounts of interest accumulate, and if you use them for what you want instead of what you need. Credit cards are bad. But debit cards are actually worse. They don't allow you to build a credit history, and credit—good credit in this country—is the foundation of wealth.

Debit cards don't allow that . You also don't get points, benefits or cash back, and you're less protected with a debit card. So, if someone steals your debit card and makes charges, the bank says, "I don't know. That's your money. We don't really care." If you make several charges on your credit card and there is fraud, what do you do? Two clicks, they delete it, right? They send you a new card. And that's why I think this generation was so tormented with the idea that credit is bad , debt is bad, don't have it.

Well , the richest people in the world all have some debt. Except it's good debt instead of bad debt. So, where I want you to start, before you even think about making more money, is by understanding the language of money, right? I'm very glad we're starting there. That's brilliant. And I had a personal experience with this. I grew up in London, where the situation is not the same. It's similar, but not exactly the same. The entire structure is not so heavily based on credit. And I was taught to believe that you should only use debit cards.

And that's what I did throughout my life. When I came to the US and moved here, for the first year I lived without much money, so I only used my debit card. And when I finally wanted to buy a car or think about getting an apartment, whatever , I couldn't get anything because I had no credit history. My credit score was virtually nonexistent. And it hit me like a ton of bricks, because I couldn't believe that things were finally going well for me in life, but I couldn't take advantage of any of it.

So, explain to me the myths about credit and debit cards that people can clear up right now. Here, I believe, are the first steps towards financial freedom. You know, if you want to set your child up for success, you really want them to get a credit card from a young age . It doesn't matter so much what kind of credit card it is. I'm not like the points expert who likes to operate and optimize every aspect of a credit card. I think that's almost more work than trying to earn more money.

But I think if you go to any of the major banks, there are a lot of rules about credit cards, so they can't really affect you that much with interest rates. There are many protections for consumers. So don't stress too much about which one to choose. The one that seems to have some nice benefits for you and with which you can get the most money you need. Brilliant. That's the first step. And if you can do that for your children when they're in high school, they'll have more access to the first pillar, I think, of wealth, which is resources.

We all know the saying. You need money to make money, right? And if you come from nowhere, well, you can start building your resource base simply with your credit, which you can begin at a young age. You don't need to be rich to do that. And after resources, you accumulate knowledge, right? The wealthy teach how to invest. We need to start doing that with our next generation. Then you pass on the accumulation of wealth. That's where you start to accumulate your own money. And finally, you convey , you know, the ability to invest in order to keep your money moving cyclically and making it work for you.

But that's where I would start. It's like starting with a credit card. You only really have a debit card because you want to withdraw cash sometimes if you go to the club and buy drinks or whatever it is that people do these days that's cooler than me. And that's where I would start. And then I would move to this next level of, okay, if I have some credit, now we need to focus on winning. So, how do I earn more money? And I think most people skip that first step because credit is scary.

And look, listen, Charlie Munger, Warren Buffett's partner , obviously a very famous guy, but he has a phrase that I love: men only go bankrupt for three things. And they are whiskey, women, and leverage. And leverage means debt, right? Warren Buffett added a small comment at the end and said: I think what my friend really meant was that it's just the last one. It's really just leverage. And Warren Buffett, one of the richest men in the world, said he doesn't like debt. But here's the problem, Jay.

He is highly leveraged. It has a huge amount of debt. Because? Because it has debt on other people's assets and things instead of personal guarantees on its own. You are not mortgaging your house to buy these companies. He is creating debt for a company so that it can earn more money. So if you do n't understand all of that right now, that's where I want you to delve a little deeper. Perhaps you could start with a debit card and a credit card. But . I think it's very important to understand debt, and you see it when you see a celebrity buy a new house and you realize they borrowed money to buy it.

They didn't buy it with cash even though they have the money and it's available to them, and I think that idea is so foreign. If someone is thinking about starting a business right now or wants to grow it, and the first thing you hear is: " Well, I don't have any money. I don't know how to finance it." How much do you really need to start a business? I think you never suffer from a lack of money. You suffer from a lack of knowledge about how to earn money .

The richest people in the world never use only their own money to buy things. And if you can reflect on that for a second and let it sink in, I think you can really open your eyes to the fact that there are opportunities all around you right now, and there's money waiting for the most unusual thing: a person who wants to work really hard and has a good idea of ​​where to invest it. So, in reality, you don't need money to start a business. I don't think you need it at all .

What you need is access to it. But I think the most important part isn't just tactical; it's more like saying: can I change my belief to think that money is all around me and that I don't need to have only my own money to become rich? And I want more people to think that way. It 's difficult. I understand. Do you think everyone needs an extra job right now? I have two thoughts about it. One , I don't think you have to bet everything on what you want to do in life.

I think that's what people with a survivorship bias tell you . Like: "It worked for me, so it will work for you ." And what do we know to be true? 90% of startups fail within any 5-year period. That's why I truly believe that the way to avoid risk when building a business, if you want to create a risk-free startup, is to keep your job. You do a great job in that job while you're there. You use your salary to finance your extra work or your next project.

You keep progressing until your extra work equals your cost of living, your cash flow, and then you leave your job to start your business once you have enough income from it. And I think we've told too many people and idealized this idea of ​​entrepreneurship . When, in fact, I had three or four businesses that failed. If I had quit my well-paying job , I would have ended up sleeping on someone's couch. So yes, you can have a side job, but please keep it secondary for a while until you're sure it's not just a passion project, but a profitable one.

Yes. Yes, and I think that's Desmond's wisest advice. I'm in the same situation. Yes. When I started doing what I do today, I had a full-time job. It didn't pay very well, but it was enough to get by. I paid my bills . It means that I wasn't creating from a place of stress. And when you create something new solely from stress, it can be quite paralyzing. However, sometimes stress can be the greatest motivator. It can give you a boost. It can be your launching pad.

But you have to find the right balance. Too much stress and you fall apart. Very little stress and you keep the golden handcuffs. That's how it is. And I think that's where I see a lot of people stuck today; I know many people who I feel have put on golden handcuffs, but they don't use them as an investment. So, it's like I want to have a certain lifestyle with the money I earn. I don't want to use it to build a new life. Yes, that makes sense.

Yes. Well, I mean, and you know, there's a lot of data to back that up. A study was done on whether you should quit your job to start a business or whether you should stay in your job and do your business on the side. And what the data from hundreds of people who went through this tells us is that you have a 33% greater chance of your startup succeeding if you have a source of income while you're doing it, because we make better decisions when we're not in fight-or-flight mode, when we can regulate ourselves.

You know all about this. Fortunately, there are many tools like yours that teach people how to regulate themselves, and sometimes you can't control it, but if you can control your decision-making by maintaining a source of income, well, why wouldn't you ? Because being a CEO is, in my opinion, three things. If you want to be a great CEO, the number one thing is that you must be able to sell a dream so big that other talented people want to join you. They think their vision is bigger under yours.

Then, number two, you have to make great diagnoses. What is happening in the world around us, just as a doctor would, to understand what is good or bad, and then you must make big decisions based on those diagnoses. So , if you can hire great talent and diagnose well, but make bad decisions out of fear, that won't lead to a successful startup, in my experience. I, I, I love those three main qualities of a CEO. I wanted to ask you the opposite. What allows an employee to be great and earn more money as an employee?

If you want to earn more money as an employee, number one, you have to understand how much money you make the company today. If you don't understand your dollar value to the business, you should probably talk to your boss and say, "Hey, I'd like to understand how I can make you money." " If you had to quantify how I make you money, could you help me understand it?" First, your boss will think: " This is incredible." "I don't know if anyone has asked me this before." And then, two, once you understand that, you need to figure out how you could make more money for the company.

Once you understand how you can generate more money, you can say, "Okay, what do you think the profits are from this business?" "If we make a sale of $100, do we keep $20 of it?" And if I find that out, then I can say, "Okay, I made you $100, we keep $20." "If I do that, can I keep five of those 20 I brought you?" And then you really know how to negotiate your salary. And often this isn't always possible if you're in a big corporate job, but most of the time there's money available for those who know how to ask for it because they've earned it.

But think about it from your boss's perspective. In other words, they hired you for a reason, because they thought you would make their lives easier and improve the business. And I think that many times you leave your job before you get all the money you could have earned. And I did this very often at the beginning. I think you'd make a lot more money if you thought you could have a conversation with your boss and say, " Man, this isn't working out exactly as I thought it would." "I think it could be useful here too." "I'd love to have more responsibilities here, maybe fewer here." "You know, could I make you more money here?" "If I prove my worth here, could we do less here?" You often leave the devil you know for the devil you don't, and when that happens, I think you actually lose more money than you expect.

In the past, you used to earn between 20 and 25% more money each time you jumped from one job to another. Today, I truly believe that increasing your total salary or pay by 25 to 50% is very valuable if you stay and analyze, rather than jumping in and guessing . Yes. That's why I strongly recommend not doing what I did at the beginning of my career, which was to jump, jump, jump and never give them the opportunity to pay me more. Yes. Because maybe they want to.

Absolutely. And what you lose by jumping is, in reality, the ability to negotiate, manage upwards, and learn new skills in that same place. You're absolutely right. It's very brave of you to admit it, because, you know, you've done phenomenally well. But it's a very important lesson, because for the incentive of a little more money, you switch, but you're really losing those skills. I believe there is a culture, a culture of effort, that says hard work equals wealth. And that, in reality, is not true at all.

We have seen over time that, if hard work equaled wealth, the owner of my laundromat would earn as much as Jeff Bezos. And we know, there's an amazing video out there that I can't remember who made, but it basically shows for 60 seconds, while Jeff Bezos walks through the factory, how much money he makes per second. And it shows that it earns, let's say, I do n't know, X million dollars per second. So, by the time the owner of my laundromat takes his coffee and puts it in his mouth, Jeff Bezos has already surpassed him several times in the year.

Now, why? Jeff doesn't work as hard as the guy who's laying bricks or cleaning the roof. Therefore , I think we need to ask ourselves if that idea of ​​"just work harder" or " what is your work ethic" is no longer true, especially in the age of AI. You know, the more I think about AI as an ordinary person—I'm not a tech expert, I'm almost like a boomer, incapable in many ways with technology—but the more I think about it, the more I believe it will allow us all to have massive knowledge.

And because we will all have a massive amount of knowledge, we will actually have to perform better because everyone will be able to perform at an average level. Very few people will be able to stand out amidst the noise. And we are already seeing this. A 47% increase in online creators this year alone. So why? Because now it's much easier to click, click, done, put it on the internet. So, that will be everywhere, which means that from now on, simply doing much more, working much harder, won't be what makes the difference.

What will do it ? Take a moment to analyze: What do I know that makes me different from others? How do I increase my knowledge base? And how do I become truly creative in a world of mass production but a lack of creativity ? And that's why I loved Naval Ravikant's quote, which said that in today's world, you don't want to work like a cow. You don't want to work continuously like you're constantly grazing like this . You want to be the lion. You want to have periods of sprinting and rest.

Sprint and rest. And that's what the best performers will do. Yes, absolutely. Well said. Is passive income a myth? Well, passive income is a tax return. In other words, the words passive income versus active income are real for the government. But is passive income simply the fact that I will earn money if I do nothing and assume X amount of risk and X amount of my money to do something? No, that's a complete lie. And I think anyone who tells you that this will be a completely passive income is a red flag.

An immediate warning sign. I mean, I own a lot of vending machines. Vending machines are often what people call passive income. Let me tell you what is not passive: a vending machine. They break all the time, people force them, they don't make that much money per machine, although they make a ton of money together. And they're great for many things once you have hundreds or thousands of them. But there is no such thing as passive income. And once you know that , I think you can also recognize, do you want passive income?

Is that what you really want? Or do you simply want a job you love, that pays well, and that ignites that spark within you? I think we want passive income because we hate what we do. Because 87% of Americans do not enjoy their work or like their coworkers. So why would they want to dedicate more time to that? Please give me passive income. But I don't think that's really what we want. We just want something that truly excites us. Is that a genuine search? For example, do you think people can do what they love and earn a lot of money?

Or are they disconnected ideas? I think anyone who tells you that you should follow your passion to make money is probably already rich. And it sounds really good, actually. That's why they say, "Of course, follow your passion." Well , even someone like...we both know some of the founders of Airbnb. You are closer to them than I am. But, you know, Joe and Austin, he would say he was incredibly passionate when he started Airbnb. But was he passionate about, I don't know, the design of his home with, you know, a mattress on the floor?

Well no. Why was he so passionate? He found a game he loved to play within the business world. It could probably have been a lighting company, a paint company, or Airbnb. He simply learned to love the game. So, where I think people go wrong is in not learning to love the game. Don't try to become obsessed with your passions. We try to turn painting, underwater basket weaving, or any other strange hobby into our source of income, and that's where you're really wrong. In fact, there is a lot of data to support this.

I mean, we have something called the boring-sexy matrix, which basically looks like, you know, two lines and a graph that shows that the more boring the industry, the higher the revenue. And so, especially in Hollywood, there's an incredible study that shows that in SAG-AFTRA, the Hollywood union, there are 187, I think 187,000 members in this union. And of those, more than 80% do not qualify for health insurance, which means they do not earn enough to even afford it. The average income is about $23,000. Oh. for an actor in Los Angeles.

So , what does that tell you? When you want to try to be a Clooney, or you want to try to be, you know, a famous Brad Pitt, most people don't make money from it. You'd be much better off going into finance, where 99% of people earn 100% of their income from their work, than acting, where it seems less than 20% of people earn their entire income from this job. Mhm. And I'm not trying to discourage anyone from doing the things they love. Perhaps I 'm just prompting them to say, "How could I be more creative with this?" Yes.

If I love acting, where in the acting world can I make money and combine both, but it has to be this predestined and appealing role? And I think the answer is no. You are a perfect example of that. This is how podcasts were born. You know, these were people who maybe wanted to have talk shows , who wanted to interview people, and we said we could do it here instead of in a studio, and you change a whole industry. I love the distinction you made, because I think there's a difference between a hobby and a skill.

So, you just said it. You literally just said it. So, I love football. Football is my first love. It's one of my favorite pastimes. I love talking about him. I like playing it. I like FIFA, on PlayStation, Xbox, whatever. I'm in. If I had tried to become a footballer, it would never have happened. In other words, I'm not good enough, not even close. And sure, I could have found a way to maybe dedicate myself to coaching, or maybe whatever . But to be honest, it's a hobby.

It's something I love to talk about with my friends. It doesn't have to be what I monetize or what I turn into my offering to the world. And I love the difference because I think that when we hear the word passion, we confuse hobbies with skills. Yes. And then you say, "Wait a minute." "No, my hobby is painting." "I'm not the best painter, let me be honest." "And I don't think I've ever heard anyone say that before." I had never heard such a clear explanation. So, thank you for making that perfectly clear.

Yes, it really is...You know, I heard Michael Dell, the...I think it was in Michael Dell's book. He said someone was asking him why he wanted to get his company back after it had practically been taken from him . He and another major investor had a falling out, and someone asked him, " Why do you still care about Dell? You're a multi-billionaire many times over. You're incredibly successful. Why don't you just let it go?" And he replies, "I will care about this company even after I am dead." He loves the game.

He was so obsessed with Dell that you couldn't pry it out of his cold, lifeless hands. And I think about that often . I think, you know, you couldn't make me retire, no matter how much money you gave me. Why? Are there many days when the game of entrepreneurship is so brutal that I think, what am I doing? I don't have to keep doing this. Why do I do it? But I love the game. Yes. And I think if we can instill a love of gaming in more young people, they'll realize it's the most fun thing you can do when you have the chance.

The best performers are simply people who are obsessed with the game. It's not that you have to have an incredible IQ. It's not that you need to have an incredible skill set. It is very difficult to overcome the cumulative effect of obsession. And I think that should open some people up to the realization that they can win. You could beat a Jay and a Cody if you're more obsessed with something than we are. Oh, definitely. And what I've learned is that to love the game, you have to respect the rules.

Oh. And what I discovered is like playing Monopoly. Everyone knows Monopoly, so I'll use it as an example. It's like playing Monopoly. You know you need a set of three to be able to build houses. Once you build four houses on a street, you can upgrade it to a hotel. That's the rule of how Monopoly works. Now, you play with some people and they'll say, " Well, I don't like that. I just want to be able to build even if I only have one of the properties in the set.

Or why do I have to build four houses to build a hotel? I should be able to build a hotel directly." And I see this in real life too, where we start saying things like, "Well, I don't like the social media algorithm because it's not fair." And it's like , "it's not fair, but it's the rule." And so, if we hate the rules, we cannot love the game. And I see that over and over again , where they say, "Well, Jay, but this isn't fair, this isn't right or it shouldn't be this way." "Or anything new, and I say, 'I understand.'" In fact, I empathize with that.

And I agree . I feel the same way. But to love the game, you have to respect the rules. So, figure out the rules like you figured out the rules of vending machines. Yes. You discovered the rules of the different businesses you've built. And once you know the rules, you can play the game, just like in Monopoly. And I think that's what's needed. So, what would you say are the rules of some interesting businesses, or even business in general, or money in general, that you think people should learn to respect?

I think the number one rule, if you want to be successful today, is that there really are two types of people. One type of person will be very successful, and another type of person will never succeed until they change their mindset. And we call them problem solvers versus opportunists. A problem solver is someone who, if you imagine a sinking ship, right? And it has all these holes. The problem solver will be the one who actively starts thinking: "Okay, we have some putty here." Let's put it here.

We're really going to start pumping the water out over there. "They realize there's a problem. The problem is annoying. They probably didn't create the problem. The problem could be entirely someone else's fault. And yet, what do they do? They immediately go into solution mode. And then there's the freeloader. And we can all have a little of this, but the freeloader is very common these days. The freeloader is the one standing on the boat and might be saying, 'Well, you know, the holes don't bother me.' Or, 'That was someone else's problem.' Or, 'I don't have time to fix that.' Or, 'I really don't know what to do about it.'" And if you go through life with this freeloader mentality that someone else will fix it all the time, well, then someone else will benefit all the time.

That's okay, right? I've had this revelation lately: every time I find a problem in my business, that's where the profit is. Every time I have a problem in my life, that's where the money is. Oh, that's so good. And if I can stop feeling that pit in my stomach when I find a big problem and instead say, "Whoa, that means there's money there." That means there's an opportunity there. That means there's growth there. Then my worldview changes. And you know, when we came in here, we were talking, and I was like, "Oh, God, what a week I'm having." Because, you know, I have this business, and we're growing really fast, which sounds great, except when you grow that fast, all these problems come up.

There are staffing problems and operational problems, so I'm in the thick of it right now . And yet, I always try to force myself to go back and say, "It's my fault we're here." "And that's actually very liberating. Because if it's my fault, it means I might be able to fix it, too. If it's someone else's fault, then what am I going to do about it? So, as often as possible, be a solver, not a freeloader. That's where the money is. I really like that. And that's true whether you're a team player, an employee, or the owner.

Yes. Whether you're looking for a new opportunity, it's true for everyone. That's why I like it so much. Because you can be on a team and think, ' What's my CEO's biggest pain point ? What's my manager's biggest pain point ?'" And if I can work it out and we're clear about it, that could be the best opportunity to grow my career." There's something very contagious about someone who 's hyper-passionate about the things they do for a living. I mean, there are so many studies that show humans are contagious.

I was reading something the other day that said, "If you want to make more money, the fastest way to do it is simply by who you surround yourself with." And there's a real correlation: if you have more friends who make over $100,000, you're 10% more likely to make more money and between 2.9%, I think, and 5% more likely to invest more. It's the same as if Jay stays the same and Cody stays the same, but I spend time with people who have more money, I start making more and investing more.

It's crazy. But if you think about it, it makes perfect sense. Imagine you want to lose weight. So what do you do? You hang out with a group of people who party all the time, eat late, drink constantly, who gets up late and is therefore more apathetic. Or you hang out with CrossFit people who don't drink, who train every day, and who already have six-pack abs. Jay is the same person, Cody is the same person. I choose the party group, you choose the CrossFit group .

Who do you think wins? It's the people you surround yourself with. And, man, people are contagious in every sense of the word. If you hang out with passionate, obsessed, and striving people, it'll be so much easier for you to do the same. Oh, it's so good. It's so true. And I know how easy it is when you first start doing it , but I feel like we're all afraid of letting our friends down. We think, you know, sometimes we get criticized. Like, our friends might say, "Oh yeah, now you only want to be with that person." Now you just want to succeed.

" We're not good enough for you anymore ." And I think all those things are what's going through people's minds; we don't want to be bad people, but this does n't mean being mean, even though we carry that feeling. It's very true. I mean, there's a little lesson in this. Let's say you 're trying to save more money right now. A lot of the ways you spend when you're young and don't have a lot of money is on entertainment, right? It's going out with your friends.

And a lot of times when you go out with friends, what do you do? You eat, you drink, who splits the bill, and what's going on here? I think it's a very awkward thing for young people to do. I don't know how to have a conversation with someone saying, "I'm really limiting my spending." So, I know there are six of us, and it would be very awkward, but I'm not going to drink tonight, and I'm just going to order a small thing. Would you mind if I only paid my share?

Why are we worried about doing something like that? Because people will think we're cheap, they'll judge us, they'll think we 're not united in this. And yet, how are you going to How can you achieve your goals if you're not willing to make even that small gesture? I remember a while back when I had no money and couldn't afford anything, I felt so ashamed. And yet, those micro-decisions will help you on a macro level if you follow through with them. And it all comes down to setting expectations.

I think a lot of times, if you want people to agree to something, just say, "Hey, I'm really embarrassed to mention this. I feel a little awkward about it, but I'm really trying to save up to invest and do other things. And I want to go out with you guys tonight. Would you be too uncomfortable if I asked you to pay just my share? Because I can't keep going out if I have to spend all of it. You know what you're going to accomplish? You're going to free someone else who's afraid to say it and never will, even though they feel the exact same way.

They'll think, "Thank goodness, I'm going through the same thing, because happy hour is blowing my entire investment budget." Cody, there are two important areas I want to ask you about now. Oh, I like that. There will be a lot of interesting things. I'll let you choose. Which one should we start with? One is money and dating. Hmm. And relationships, and the other is investing fundamentals when someone is starting small. Where do you want to begin? I want to start with something very random: I saw an interesting study the other day that shows how to predict a recession based on how women buy beauty products.

It's called the lipstick theory, and I was looking into it today because I think we're all wondering where the economy is headed. Basically, it happened around the time the Twin Towers fell . Estée Lauder, the founder of the company, noticed that even though the market had a lot of fluctuations, it had dropped dramatically after the Twin Towers collapsed. Lipstick sales went up 11%, and in fact, many of these non-essential cosmetics increased a lot. So we started investigating why. And what they discovered is that when the market really crashes, you would think people would cut back on things they don't need.

But what they actually do is cut back on big luxuries and spend more on small ones. Maybe They might not go on vacation that year, but maybe they'll look a little better in the mirror every day. I found that interesting because, when you think about the recession, what are those indicators that no one is looking at today that could tell us what 's going on? One of them is observing a spike in beauty product sales. You can also see it by an increase in the number of people launching them .

A lot of people are still buying, which I found quite curious. It's happening right now. Yes. Yes. And well, I think this takes us a little more to the dating side, and here's a somewhat difficult truth. It turns out that if you want to make more money, one of the best things you can do is find a partner, which is crazy. Married couples earn, on average, more than 30% more than unmarried couples. Their net worth is almost three times that of a single person over their entire career.

And I bring this up not to shame anyone who hasn't found their partner yet. I know how it feels when You think there are no options and you want to find love, but it's not around. But I bring it up because I think it's something we should really prioritize. We should prioritize it if we care about making money, and we should certainly prioritize it if we care about love. And I think it has a bad reputation. Marriage has a bad reputation. You do an amazing job of showing the beauty behind it, while also saying, "Sometimes I hate it." Like me with my husband, sometimes I say, "Oh, you today?" Oh really?

"." "They have to love you, because I want to kill you." It's a real boon to your financial health. And everyone around you saying, "I don't need any man." I'd be better off without him. You know, they're all toxic." "Everyone else I've dated is a narcissist." I want to challenge your perspective a little bit and say: first, do you think you attract the things you criticize? Probably not. Second, there are many reasons why demonstrating stability in a relationship will lead to a more stable life overall.

And that's why I found it fascinating. The way I've always heard it is, in fact, from men. So, when I see successful men— going back to your earlier point about mentors—every successful man who has mentored me has told me how having a one- woman life changed his career trajectory. Because they discovered that the less time they wasted chasing, courting, and conquering women, the more time they had to focus on their careers. So, even from the other side, men who choose to commit to one woman have more energy, more focus, more drive, and more power to direct toward making money and building a business than when they're trying to impress or cater to many women.

Now, of course, there are exceptions. There are people who are very successful without a partner and all that. They may even have left Their love lives take a backseat. Sure. But men who are married simply had that commitment in their lives. Which is crazy. They say you're happier, too, and that you live longer. I speak more from a woman's perspective simply because I'm a woman. And I try to talk about all the things I know. But , you know, from a female perspective, there are a lot of things I think are wrong with the way we date money.

Yes, that's what I want to delve into. Yes, for example, it's increasingly said that 64% of women won't date a man if he doesn't have the same or higher income than they do. For men, that doesn't really seem to be the case, at least in the studies. They don't really care about income level. Well, the problem there is that more women are increasing their incomes and education levels these days than men are. I think there's something even darker than the 6'5" guy with a trust fund and blue eyes, which is that we're prioritizing what doesn't seem to lead to no increase in happiness.

Couples aren't happier if they have the same income level or more, or not. They aren't richer if they focus on that more than anything else. So, from my perspective, I think, "Wow, if you're a woman these days, I'll give you some dating advice, but money seems to prove that it doesn't matter in a relationship." "You know, my husband is amazing, and I already had a business when I met him. He was a Navy SEAL . The government doesn't pay much for that role. So he was just playing a completely different game.

He did n't really care about money at all. He cared about service, and he cared about respect. That's what he wanted. He wanted to do something that served, and he wanted to do something that inspired respect. I, in finance, wasn't as much of a service person, you know, but I made a lot of money. And so, when the two of us came together, it was really, really powerful . So, for women today, a lot of times when they ask me, ' How do you know, how do you find a partner?

What do you do if you make a lot of money and he doesn't?'" "I tell them: find someone who plays a different game. I never had financial goals. I never knew anyone who was that financially successful. I just wanted to find a way to help people, and then I realized that you can't help others full-time if you can't do it full-time. So, you can have all the noblest reasons for doing what you do, but if you can't pay yourself and pay those who help you, you won't be able to do it for very long.

So , I had to change my relationship with money because I used to believe that if you were going to do good in the world, you had to be poor. Wow. And I had to completely change my relationship because I had to understand that, actually, if I wanted to do more good in the world, I needed money because I needed bigger teams, better opportunities, and better relationships. And the rules of the game are that money gives you access to that. Money is an accelerator of whatever you have inside.

Yes. So, if you're not a great person and you want to do bad things in the world, it's very bad to have money in your hands." If you're a good person and want to do good in the world, it's very good to have money in your hands. And as long as you can stay true to what's inside you, money is really just a capacity to build the world you want, instead of living in someone else's. I want to come back to this, and I know I'm not asking you for dating advice.

I'm asking you for money advice. Okay. Which I think are very much intertwined now. And I love how we started, but there are a lot of things to discuss about this . Who should pay on a first date? Men or women? In my opinion, I think the person who asks out pays. I agree. Yes. Men versus women. Women, if they're going to ask someone out on a date, I think the expectation is to at least offer to pay. Men, if they're going to ask someone out on a date, I think the expectation is that they will.

I tend to be traditional in some ways. I think a high- value man wants to provide for and protect his woman. It doesn't always have to be financially, but in some way, shape, or style. And a woman of A high- value woman wants to do the same for her man, but she probably can't protect him as much. I mean, that's just our physiology, right? And that would be my instinctive reaction. Now, if it were up to me, I remember being asked out on a date once, they didn't pay, and it really bummed me out.

We're still friends, but I thought, "Cancelled immediately." We'll never go out. So it's tough being a man in that situation these days, but if you're going out with someone like me, I would expect you to at least offer to pay if you're paying. What do you think? I think I agree with you. The person who invites the other on a date should pay. I think a lot of men feel like, yeah, I'll do it once we have a commitment. Yeah. Like, once we're going somewhere. Yeah.

These days, men are like, " Well, why would I do that if we're both just seeing where things go?" "I would kind of do it once we both say, 'Hey, we're exclusive, we're dating, we're in a serious relationship, this is going well.' But if it's our first or second date, or third, and we don't even really know each other, then I want you to reciprocate, because that's what we're trying to build. I mean, I can't imagine ever having a date where I didn't ask to split the bill, at least.

I think I would feel weird if you asked me, you know , 'Yeah, you pick it all up.' I would be like, ' Oh yeah, that would be a sign. Yeah, that's definitely a sign. That's laughable.' But you know, men, it's a byproduct of the fact that, for the first time in, let's say, the last 200 years, probably, of human existence, men and women are competing for the same thing. This never really existed before. I mean, my parents were the first generation where this started. For my grandparents, that wasn't an option.

So we have to be honest." Regarding the fact that today, men and women are competing for jobs, competing for places in education. They're competing for relevance. They're competing to be heard in places. I mean, hell, in a way they're even competing for the need to procreate with everything that's going on in modern medicine. And then, there are going to be chain reactions to this that I can't even imagine. And one of them is that when we say we want to be equal as women, well, then we need to think about what that means.

And so, I think young men today are quite right to say, "Hey, you know, we're equal in every way." It's a partnership between the two of us. So, I don't think we're partners yet, so ipso facto, let's split the bill. Yes. And I think in life Chris and I always have a saying: "Do you want to be right or do you want to win?" " Hmm. So, my thinking is, if you're a young man and you're courting a woman you really like or think you might like, do you want to be right or do you want to win?

Do you want to be right in the eyes of society that, yes, she should have paid half, but now you have to convince her for a second date? Okay, fine. Then go that route. If you're a young woman and you really like the guy and he's more comfortable with this, do you want to be right or do you want to win ? Split the bill and then say to him at some point, 'Hey, you know, if we're committed to each other, this is important to me.' Can we negotiate this between the two of us?" "We are so busy these days pointing out what is right instead of saying, 'What is it that I want?'" " So what steps am I going to take to get there?

Yes. In a world where many men split the bill, if you're having trouble getting invited out, it would be a huge advantage if you could pay the bill, wouldn't it? And if you're a woman who can't find a man, maybe you'll show him that you're a true partner. And even if he offers, you say, 'I'd really like us to split it.'" Would that make you feel comfortable? I want you to know that in a relationship, I believe in supporting my man. Neither of those options is wrong.

They might just help you win. Definitely. I love that. Yes. And I think this is going to get difficult when we talk about money, because money creates power dynamics; it creates power dynamics, especially in couples and in families. I mean, the number of friends I've had recently, both men and women, who have had to ask their partner to sign a prenuptial agreement before getting married, and it's been very awkward because you hope that we love each other and that we'll never have to do that. And my friends have talked to me about this; it's really difficult.

What are your thoughts on people having to sign a prenuptial agreement before getting married? I think you should always sign a prenuptial agreement before you get married. Wow. I think you should have all the difficult conversations you need to have from the beginning, and that's just another difficult conversation. You also need someone they call the visionary, right? The person who has all the ideas, the crazy ones. And then you have your executor, often called the implementer. So, if you only have vision, but no execution, you'll fail and you won't make any money.

If you only have execution, but no vision, you'll play small games your whole life. And well, there's an excellent book called, have you read How to Make a Few Billions of Dollars? No? It's a good book. It's by this guy, Brad Jacobs. He always talks about what constitutes a great business. If you want to make a lot of money, you have to choose the right business. And there are like four types of businesses. You can think of it as a quadrant. You could have a low-risk, low- reward business.

That's, in fact, most businesses in life, right? It's like staying in the same job, not taking risks, etc. The problem is, you're not going to make a lot of money. Then you have a high- risk, high-reward deal. Well, that might be like investing in a power plant in El Salvador. Okay, it's so likely to fail that even though it's hugely profitable, we'd probably want to stay away from it. And then, you have the " golden child," Which is how we can have high reward and low risk.

Well, there aren't many of those, are there ? That would be a unicorn. So , what we're really looking for is where there's a complex, difficult problem that has the right level of risk, and if we can find it, then we have profits. And now they call a deal a "hair"—it's investment terminology. You want to look for those complex deals where you think, " Oh, that level of risk is manageable." And in our culture, for some reason , I think we've become risk-averse. Yeah. God, we don't even want to take the risk of asking somebody a question at a bar, you know, let alone starting a business.

Hmm. And that's a problem. I mean, the SBA has fascinating data. You know, more small businesses close every year than open in the U.S. ? That ca n't be right. They close more than they open. And so, we have people taking way less risk than we think. And that means you'll never make that much money. Hmm. Is n't that crazy? Yeah. Okay, let's talk about that in investment terms. If someone is thinking exactly what you're talking about now, this risk-reward profile , if someone has never invested in anything ...

Hmm. They're working their job. They have a little money. Maybe they have a thousand dollars to start thinking about investing. Maybe they have a little more. Maybe they've been saving and think the house they want to buy is very, very, very, very, very far away, but they have something. What should they invest in? If you only have a little cash, the best-performing asset class of all time will be you. Invest the money in your education first before you go investing. Many days... many people today will say, "Hey, it's Airbnb." "Hey, it's about buying small businesses." "Hey, it's real estate." The highest-yielding asset class you could have is you, because you have unlimited potential and it capitalizes over time .

So, if you don't have a lot of cash right now , bet on yourself first before you bet on someone in the S&P. Now, after that next amount, I think—because I'm old school, I started at Vanguard— I think if you're reasonable, you 'll probably agree with me. I mean, do we think we're going to outperform the best stock analysts in the world who obsess over this every day? Are we going to outperform the titans of the industry with their technology? No. That's why I always choose low-cost, slow-moving index funds so they don't trade much.

I worked at Vanguard; they have the best cost structure. So I put things in the S&P 500 within a diversified portfolio in one company. Do that? Someone who's totally new to this. Go to vanguard.com. You don't have commissions on their trading platform. In my opinion, avoid Robinhood, avoid anywhere. where you buy individual stocks without knowing anything, unless you're doing it purely to learn and don't mind losing everything. And you go to vanguard.com and select a diversified portfolio. It's great, too, because they actually help you do it based on your age and how much risk you want to take.

So, they'll have a 60/40 portfolio, which is like 60% stocks and 40% bonds, if you're our age, for example. If someone is a little younger, they'll go for an 80/20 because you should take more risk with stocks when you're young. So you can, literally with one click, get a diversified portfolio, and then you can keep adding to it. You could also use something like Wealthfront for that. What is a diversified portfolio for someone who doesn't know? It means you would never want to put all your eggs in one basket in anything in life, but certainly not in investing.

And that means they'll give you stocks and bonds. It means they'll give you emerging markets versus the US. Let's say India, China, Russia , Brazil, and the US stock market. And it means that, typically over time, you know, there are these charts you see in finance where it looks like a grid. And all these different colors. So, what you want to have is a portfolio that, over time, averages out around 10 %. That's the average cost of inflation. How your money really, if you don't invest it, every year you don't invest, you lose money.

Let's say you took a $100 bill right here, and I had it right in front of me. And I analyzed that bill from the beginning of the Federal Reserve, which is the government institution that orders or manages all of our currency in the U.S. So, if I go back to the 1970s and look at it today, what do I see? I see that $100 bill, if I had kept it from then until now, is worth about $25. It's not worth $100 anymore. Why? Because of inflation.

And so, if we don't invest our money and keep it under the mattress, sadly, the government eats it up every year. Both sides. Politically agnostic. Therefore , we have to make sure we put our money somewhere. That's why the stock market is what most people eventually do. Okay, that makes a lot of sense. And what's the difference between a stock and a bond? Okay, basic stocks and bonds . I think of stocks as the ability to receive future profits from a company. So, in a way, you're betting on a company.

You say, "Today, Amazon's stock price is $10." I believe that in the future, the price on Amazon will be $15. "I want to participate in that growth." It's called positive return. With a bond, what do you do instead? You say, "Actually, I want income." It's like a certificate. If I give you $100, I promise that in the next five years, I'll give you back $ 120. You won't make more if the bond you're investing in goes up or down in price. You're just going to collect coupons—that's what they're called.

It used to be that way. So, you're collecting the coupon. And the reason we want both is because, again, when the stock market is falling , you want your bond to keep paying those coupons, baby. They keep coming. When the stock market is booming, you want to capture some of that growth. And that's how we play right in the middle of investing. Is there a third stage? So, we did stage one, which is you, stage two is the S&P. What's stage three? Stage three is private.

So, if you're a real pro and you want to go for the third stage of investing, that's where We started doing private equity. That's just investing in those same companies, but instead of them being publicly traded, those companies are now owned by private investors. They'll never be listed on a stock exchange. That also includes things like having alternative investments. That could be investing directly in real estate, or investing in commodities, like lumber, right? You could bet on lumber prices. That could be like stocks and options.

I think this generation went a little crazy because they were the first to turn stock investing into a game and make it seem fun instead of something serious. And they were the first generation that had easy access to things like options and warrants. And that's really just for professionals. So I think anyone who tries to tell you how to day trade, anyone who tries to tell you how to use options, that strategy, think of it as someone trying to tell you, "Let me teach you in a couple of hours of talking how to crack someone's brain." Hmm.

We just wouldn't do that. This is for professionals. And if you really want to make real money, you don't do it by wasting time. In the margins of financial investing, in my opinion, you do it by becoming the company they're investing in, which is stage four . So that's when you say, "I'm buying the business outright. I'm raising money for my own business," and that's the next level of the game. That's great. I love that step-by- step approach because I feel like for a lot of people it seems disorganized, confusing, and like the Wild West.

And now it's like, wait a minute, stage one, stage two, stage three, stage four. I love that. Going back to stage two of the S&P, yes. What percentage of someone's income should go toward the S&P? There are a lot of rules about that, but I believe in paying yourself first. And by paying yourself first, I mean thinking of your investments as a necessity, not a want. That's why , every month, I believe in automatic investing. I've done it my entire career. Vanguard taught me that. You're very lucky in finance.

They teach you to invest so that it becomes a habit, not a It's a possibility. You don't wake up, unless you're sloppy, and skip brushing your teeth, right? You just brush your teeth because you 're not sloppy. And then, with investing, I think the same way. It's like setting up automatic payments so that a little bit of money is always allocated. I think you should allocate at least 10% of what you earn to investing. There are many different rules. People can do it any way they want, but I think you should pay yourself first because otherwise, you'll never do it.

And allocate at least 10% to yourself because we want to beat inflation every year. If you do those two things, you're better off than 90% of the people who don't . 10% after taxes. It's a great goal for people. And you start thinking about it and you say, "What am I spending money on foolishly? You know, what do you see people wasting money on?" " You know what the main thing is? People are wasting money trying to look rich instead of being rich. And that's a cultural phenomenon that I think is eroding our wealth as a society.

I mean, a perfect example here: Coachella. We know, because we're on the inside, that the dirty secret of Coachella and everyone you see there is that most of the influencers: one, get paid to go; two , get free tickets; three, have their flights paid for; four, have warehouses where you can pick out clothes, because that part is expensive, and you get the clothes for free. Or, if you're a real pro, you get paid to wear the clothes and they also give them to you for free.

So, this whole experience for the few who become...because we all want what others have, that's just how humans are—they don't pay anything for something that costs thousands and thousands and thousands of dollars. Well, the problem is that the average Coachella ticket holder , about 64%, couldn't afford it. So they had to resort to buy-now-pay-later options. Really? This. They offered buy now and pay later." Afterward. And that's just for the entrance fee. That doesn't include clothes, food, or drinks. So, basically, we're racking up credit card debt that lasts forever in exchange for one-minute Instagram posts.

That's why the number one thing you can do to change your financial future is not to fall into what you see everyone else doing online, which is why I have so much respect for what you do. And I try to do the same online. Sure, we have nice things now. Sometimes you notice it out there because I do n't really talk about it, but you don't see me showing off expensive watches. You don't see me owning luxury cars. You don't see me posting pictures of private jets.

Why? That's really not necessary. And all you point out is that that's success. That's not success. Those are just accessories that can be fun if you like them once you 're rich. Yeah. But I promise you, I've met a lot of unhappy people who have private jets. Yeah. No, and I really appreciate you saying that because I think it was the same for me . No I wanted... I mean, when I started, I didn't have anything to show for it, but I didn't want anyone to follow me because of what I had.

I wanted them to follow me because of what I said, what I did, and what I lived, and for me, that always meant anyone could do it. And as soon as it became... And also, it was never about getting the thing, not even for me. So, if you make it about getting the thing, then the thing you do to get it, you don't love it. Whereas for me, I love the game. I love what I'm doing, and just like you, it goes back to where we started, where it's like, if you love the game, if you respect the rules, if you love what you do, then all these things are a byproduct.

They're wonderful, but they're never the goal, they 're never the destination, they're never the thing you wanted. That's not what got you there. The habits of millionaires are that , actually, to a large extent, they don't care about money. Mhm. They care about winning, and they care about learning, and true players find that Things and money stop being interesting at some point. Cody Sanchez, you're amazing. This was great. Hanging out with you is simply refreshing. We talked about everything from dating to investing, making money, and being a good employee, and I love that you're so flexible to go anywhere and everywhere because I feel like people will get so much out of this episode, and I'm so grateful that you show up as you always are.

Despite all the other crazy life you have, you 're able to come here and drop gems of wisdom with ease. Thank you for the invaluable advice. It was so much fun. Incredible value. If this clip provided you with value and you'd like to see more, this next video has been specially chosen for you based on your viewing behavior. I hope you enjoy it, and if you do, please subscribe to the channel so we can continue bringing you fantastic conversations.

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