Podcasts > Growth Stacking Show with Dan Martell > 9 Money Habits That Keep You Broke

9 Money Habits That Keep You Broke

By Dan Martell

In this episode of the Growth Stacking Show, Dan Martell shares key insights about building and maintaining wealth. He discusses the importance of cultivating the right mindset and seeking guidance from three types of advisors: successful mentors, expert coaches, and peers who are slightly ahead on similar paths. Martell explains how daily financial monitoring, automated tracking systems, and delayed gratification contribute to effective wealth management.

The episode goes beyond basic money management, exploring how to develop valuable market skills and transition from trading time for money to creating passive income streams. Martell draws from his experience after selling his company to emphasize that accumulating wealth alone doesn't guarantee fulfillment, and discusses how financial resources can be channeled toward meaningful initiatives that serve others and align with personal values.

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9 Money Habits That Keep You Broke

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9 Money Habits That Keep You Broke

1-Page Summary

Building Wealth: Cultivating the Right Mindset and Seeking the Right Advice

Dan Martell emphasizes that building wealth requires both the right mindset and guidance from successful individuals. He identifies three essential advisor types: mentors who've achieved success in your desired area, coaches who provide expertise and blueprints, and advanced peers who are slightly ahead on a similar journey. Martell advocates for an abundance mindset, encouraging individuals to leverage their unique advantages rather than focus on limitations. He points to MrBeast as an example of someone who consistently reinvests earnings back into ventures for continued growth.

Managing Finances With Tracking, Automation, and Delayed Gratification

According to Martell and other financial experts, successful wealth management requires daily financial monitoring and automated tracking systems. They recommend using personal finance apps and setting up alerts for account changes. Martell emphasizes the importance of delayed gratification, sharing how he tied major purchases to specific achievements, such as buying a McLaren only after completing the 75 Hard challenge. He strongly advises against impulse purchases, viewing them as obstacles to achieving longer-term dreams.

Sustainable Wealth: Invest In Yourself, Time, and Business

Martell stresses the importance of developing valuable market skills like sales, marketing, or AI automation over focusing solely on cost-cutting. He advocates transitioning from trading time for money to creating passive income streams, introducing the concept of a "buyback rate" to determine the value of freeing up time. As an "empire builder," Martell emphasizes reinvesting profits for business expansion and making strategic investments that don't require active involvement.

Finding Purpose and Meaning Beyond Just Accumulating Money

Drawing from personal experience after selling his company, Martell reveals that money alone doesn't guarantee fulfillment. He encourages using financial resources to serve others and make positive impacts, suggesting that true purpose often connects to the challenges one has overcome. Rather than pursuing wealth solely for status, Martell advocates channeling financial success toward meaningful initiatives that resonate with personal journeys.

1-Page Summary

Additional Materials

Counterarguments

  • While mentors, coaches, and advanced peers can be invaluable, not everyone has access to such resources, and some may find success through self-education and independent learning.
  • An abundance mindset is beneficial, but it must be balanced with realistic expectations and risk management to avoid overconfidence and potential financial loss.
  • Daily financial monitoring might be overwhelming for some individuals, leading to anxiety; a less frequent, yet regular, check-in could be more sustainable for long-term financial health.
  • Personal finance apps and alerts can be helpful, but they also risk oversimplification of complex financial situations and may not be suitable for everyone's needs.
  • Delayed gratification is a valuable principle, but it's important to balance future goals with present well-being, as excessive delay can lead to missed life experiences and decreased quality of life.
  • While developing marketable skills is crucial, not all skills have the same return on investment, and some individuals may find success in niches that are not traditionally seen as valuable.
  • The concept of passive income is often idealized, and while it can be part of a financial strategy, creating truly passive income streams is difficult and may not be achievable for everyone.
  • Reinvesting profits is a common strategy for growth, but it also carries the risk of overextension and potential financial instability if not done cautiously.
  • The idea that money doesn't guarantee fulfillment is widely accepted, but financial security can significantly contribute to personal well-being and should not be undervalued.
  • Serving others and making positive impacts is noble, but individuals must also ensure their own financial stability and well-being to sustainably contribute to society.
  • Linking purpose to past challenges is one approach, but purpose can also emerge from a variety of sources, including future aspirations, personal values, or community connections.
  • Channeling financial success toward meaningful initiatives is commendable, but what is meaningful can vary greatly between individuals, and some may find fulfillment in pursuits that are not directly connected to their financial success.

Actionables

  • You can create a "wealth-building support group" with friends or community members who share similar financial goals to fill the roles of mentors, coaches, and advanced peers. Meet monthly to discuss progress, challenges, and strategies for wealth building, ensuring that each member takes on a role that aligns with their strengths and experiences, such as one being a motivator (mentor), another an accountability partner (coach), and someone who is at a similar stage but slightly ahead (advanced peer).
  • Develop a "skill investment plan" by identifying marketable skills relevant to your interests and committing to a structured learning schedule. For example, if you're interested in digital marketing, dedicate two hours every week to online courses or workshops, and apply these skills in a freelance capacity or on personal projects to build a portfolio that can eventually lead to passive income streams.
  • Establish a "time value fund" where you set aside a small percentage of your income into a separate savings account each time you choose not to spend on an impulse purchase. This fund then becomes available for you to use on outsourcing tasks that are not a good use of your time, effectively buying back your time. For instance, if you resist the urge to buy a new gadget, transfer the equivalent amount into this fund, which can later be used to hire a virtual assistant for mundane tasks, freeing up your time for more valuable activities.

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9 Money Habits That Keep You Broke

Building Wealth: Cultivating the Right Mindset and Seeking the Right Advice

In the conversation about building wealth, Dan Martell emphasizes the importance of both cultivating the right mindset and seeking advice from those who have accomplished what one aspires to achieve.

Choose Advisors Successful In Your Desired Areas

Martell is adamant that in order to cultivate wealth, one should seek guidance only from those who have achieved the success they desire.

Seek Guidance From Those With the Outcomes You Desire, Not The Financially Struggling

Martell points out that it is crucial to get advice from people who are where you want to be. He insists that seeking advice from someone who has not achieved the success you aim for is counterproductive.

Three Valuable Advisor Types: Mentors, Coaches, Advanced Peers

Martell identifies three types of advisors that are essential in guiding you toward wealth: mentors, coaches, and advanced peers. Mentors are individuals who have succeeded in the area you are pursuing and can offer substantial guidance through significant decisions. Coaches, with their deep expertise, provide a blueprint for success, helping you build wealth. Advanced peers are those on a similar journey, slightly ahead, who can provide assurance that your decisions align with what is currently working effectively in the market.

Focus On Abundance, Not Scarcity

Martell advocates for an abundance mindset, rather than a scarcity mindset, when it comes to finances.

Leverage Your Advantages, Don't Compare or Focus On Lacks

Rather than focusing on what y ...

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Building Wealth: Cultivating the Right Mindset and Seeking the Right Advice

Additional Materials

Counterarguments

  • Seeking advice only from successful individuals may lead to a narrow perspective; sometimes valuable insights can come from those who have failed and learned from their mistakes.
  • Success in one area does not always translate to expertise in another; it's important to evaluate the relevance of an advisor's experience to your specific goals.
  • Mentors, coaches, and advanced peers can be helpful, but self-education and critical thinking are also crucial in making informed decisions.
  • An abundance mindset is beneficial, but it's also important to be realistic and prepare for potential setbacks or market changes.
  • While leveraging advantages is key, it's also important to acknowledge and work on weaknesses to ensure a well-rounded approach to wealth building.
  • An offensive, grow ...

Actionables

  • Create a personal advisory board by inviting a small group of individuals who embody the success you're aiming for to provide periodic feedback on your goals and strategies. This could be as simple as setting up a quarterly coffee meeting or a group chat where you share updates and seek their insights, ensuring you're getting diverse, experienced perspectives on your journey.
  • Develop a "strengths inventory" by listing your unique skills and advantages, then brainstorm ways to apply them in new, income-generating contexts. For example, if you're good at graphic design, consider offering your services to local businesses that lack an online presence, thereby using your strengths to create value and build wealth.
  • Automate your inv ...

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9 Money Habits That Keep You Broke

Managing Finances With Tracking, Automation, and Delayed Gratification

Martell and other financial advisors provide insights into managing finances through daily tracking, automation, and the practice of delayed gratification.

Monitor Your Financial Accounts and Key Numbers

Daily Financial Awareness: Check Balances and Review Finances

Financial experts like Martell suggest reviewing your bank accounts daily, looking at cash holdings, and adhering to a "24-hour rule." Neglecting to check your finances within this time frame is considered a "big no-no."

Automate Financial Tracking and Budgeting to Avoid Overspending

It is highly recommended to use free personal finance apps that can automate the tracking and budgeting of your finances to prevent overspending.

Monitor Account Changes With Alerts and Sensors

Creating sensors and alerts to monitor transactions can be extremely helpful. For instance, you can receive email alerts when the cash in your savings account drops below a certain threshold or get notified for every credit card transaction. These sensors ensure that nothing unusual happens without your awareness.

Practice Delayed Gratification to Build Sustainable Wealth

Real wealth builds over time and requires resisting the urge to get rich quick. Martell advocates for resisting impulse buys and suggests that big purchases should be tied to specific goals. He shares personal examples, such as rewarding himself with an orange McLaren only after completing the 75 Hard challenge, and taking his family on a trip to Cabo as a reward for accomplishing a project with Visible Labs.

Cul ...

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Managing Finances With Tracking, Automation, and Delayed Gratification

Additional Materials

Counterarguments

  • Daily monitoring of accounts may not be necessary for everyone and could lead to unnecessary stress or anxiety over normal fluctuations in account balances.
  • Automation can lead to disengagement from one's finances, potentially causing a lack of understanding of one's financial habits and reduced accountability.
  • Over-reliance on alerts and sensors might result in a false sense of security, as technology is not infallible and may miss certain types of fraudulent activity or errors.
  • Tying big purchases to specific goals can be motivating, but it may also delay necessary or beneficial expenditures, potentially leading to higher costs or missed opportunities in the long run.
  • While saving and investing are important, there is also value in enjoying the fruits of one's labor in the present, and a balance must be struck between current enjoyment and future security.
  • The concept of delayed gratification is important, but it should not lead to extreme frugality that diminishes quality of life or neglects the importan ...

Actionables

  • Turn your financial goals into a visual roadmap by creating a personalized vision board. Place images and symbols that represent your savings and investment targets in a space you see daily, like on your fridge or as your phone wallpaper. This constant visual reminder can reinforce your commitment to delaying gratification and tying big purchases to goals.
  • Start a 'Finance Book Club' with friends or family where you read and discuss one personal finance book each month. This shared learning experience can deepen your understanding of wealth-building principles and provide a support system to help resist the urge to make unnecessary purchases or fall for get-rich-quick schemes.
  • Implement a 'One Month Rule' for all non-essential purchases. Wr ...

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9 Money Habits That Keep You Broke

Sustainable Wealth: Invest In Yourself, Time, and Business

Building sustainable wealth requires investing in oneself, leveraging time wisely, and adopting a business-focused mindset. Martell lays out strategies for prioritizing skill development, managing time to enable growth, and adopting an empire-builder approach to financial success.

Prioritize Investing In Developing Valuable, In-demand Skills

Prioritize Improving Capabilities Over Cost-Cutting

Martell emphasizes that attaining a skill valuable in the market, such as sales, marketing, or AI automation, is essential. He encourages starting the wealth-building process by developing real skills that are in demand rather than focusing solely on cost-cutting measures.

Pursue Education, Training, and Coaching to Increase Market Value

To build a business, it's crucial to learn how to sell to strangers, as taking money for a skill or a solution to a problem is at the heart of entrepreneurship. Thus, Martell suggests pursuing education, training, and coaching to increase one's market value and business competency.

Leverage Time and Money Strategically for Scalable Growth

From Time-For-Money to Passive Income Business

Martell discusses the importance of transitioning from trading time for money to passive income business models to build wealth without being tied to hourly work. This allows for scalable growth and greater financial freedom.

Identify Opportunities to Outsource or Automate Routine Tasks

Wealthy people, according to Martell, prioritize spending money to save time, since time is a limited and equal resource for everyone. He introduces the buyback rate formula, which determines how much to spend to free up an hour of time and suggests seeking ways to gain leverage, potentially through building passive income businesses.

Martell shares how his father missed the opportunity to outsource the mowing of lawns on his rental properties, exhibiting a common practice where people do not utili ...

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Sustainable Wealth: Invest In Yourself, Time, and Business

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Counterarguments

  • Skill development in areas like sales, marketing, or AI automation may not be suitable for everyone, and the value of skills can fluctuate with market demand.
  • Education, training, and coaching can be expensive and may not always provide a return on investment, especially if not carefully chosen or if the individual does not have the capacity to apply what is learned effectively.
  • Passive income models often require significant upfront investment or effort and are not guaranteed to be successful or sustainable.
  • Outsourcing and automation can lead to a disconnection from the core operations of one's business and may result in quality control issues or a lack of personal touch in customer service.
  • The "Empire Builder" mindset may not align with everyone's values or life goals, and some individuals may find more fulfillment in hands-on work or a work-life balance that does not focus on aggressive wealth a ...

Actionables

  • You can leverage online marketplaces to sell digital products related to your skills or hobbies, creating a passive income stream. Start by identifying what you're good at or passionate about, such as graphic design, writing, or creating educational courses. Use platforms like Etsy for crafts, Amazon Kindle Direct Publishing for ebooks, or Udemy for courses. This approach allows you to put in the work upfront and potentially earn money while you sleep.
  • Create a personal "automation fund" by setting aside a small percentage of your income to invest in tools that save time. For example, if you spend hours every week on social media management, consider subscribing to a social media scheduling tool. Or, if budgeting takes up too much of your time, look into personal finance software. This fund is dedicated to purchasing tools or services that free up your time, so you can focus on more strategic tasks or learning new skills.
  • Partner with ...

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9 Money Habits That Keep You Broke

Finding Purpose and Meaning Beyond Just Accumulating Money

Dan Martell delves into the epiphany he experienced post-exit from his company, which pivoted his view on wealth and happiness, emphasizing on the fulfillment derived from purpose rather than just financial success.

Money Is a Tool, Not an End Goal

Avoid the Trap Of Making Money Your Sole Objective

Martell explains how the pursuit of money as the sole objective can lead to emptiness. He shares his personal story: after selling his company, despite achieving monetary success, he felt lost and without purpose. This experience taught him that money in itself doesn't confer happiness or fulfillment—it's what you do with it that counts. Martell urges others not to chase wealth simply to impress or maintain a certain image, but rather to invest in what truly brings them joy and satisfaction.

Use Your Resources to Serve Others

He also touches upon the significance of using money as a means to serve and contribute positively to others' lives. After selling his company, Martell realized nobody cared whether he got out of bed in the morning—a clear indication that purpose surpasses financial success. He suggests that the absence of an overarching purpose can leave one directionless, even in the presence of abundant resources.

Discover Purpose: Align Finances With Positive Impact

Martell believes that one's true purpose is often connected to the most challenging experiences they've faced and overcome. He encourages individual ...

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Finding Purpose and Meaning Beyond Just Accumulating Money

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Counterarguments

  • Money as a measure of success: While the text argues against money being the sole objective, some might counter that accumulating wealth can be a legitimate measure of success and a reward for hard work, innovation, and risk-taking.
  • Financial security and happiness: It could be argued that financial security itself can contribute significantly to happiness and well-being by reducing stress and anxiety related to financial instability.
  • Personal fulfillment through wealth creation: Some individuals may find the process of wealth creation itself fulfilling, not just the use of wealth for other purposes.
  • Diverse motivations: People are motivated by different things, and for some, the pursuit of wealth might genuinely be their passion or a game they enjoy, rather than a means to an end.
  • Economic growth: Accumulation of wealth by individuals can lead to investments that drive economic growth, job creation, and societal benefits, which could be seen as a purpose in itself.
  • Autonomy and freedom: Wealth can provide the autonomy to make choices that align with one's values and desires, which can be a source of happiness and fulfillment.
  • Charitable giving effectiveness: While using wealth for communal good is encouraged, there is a counterargument that not all charitable efforts are effective, and without proper due diligence, the impact may be minimal or even negative.
  • Persona ...

Actionables

  • Create a "Purpose-Driven Budget" by allocating a portion of your monthly income to support a cause that aligns with your personal values. For example, if you've overcome a health challenge, consider donating to a related research foundation or if education has transformed your life, fund a scholarship for students in need.
  • Start a "Happiness Account" where you set aside a small amount of money each week, specifically to be used for acts of kindness or support for others. This could be as simple as buying a meal for someone experiencing homelessness or contributing to a friend's crowdfunding campaign for a community project.
  • Develop ...

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