3 steps to money mastery: Would you rather have freedom or stuff? | Vicki Robin

So let’s take a look at financial independence
and what that really means. It means, you know, if you haven’t thought
about it at all you just think “Oh, that’s for rich people” or “I could never do
that.” And so first of all I’d like to distinguish
between independence and freedom. So financial freedom is like freeing your
mind. Financial freedom is understanding that I’m
me and there’s an economy out there, and I have a relationship with it but it doesn’t
run my life. It’s freeing my mind from the messages of
the consumer culture, the messages of the economy. The message is that, you know, a house is
a “starter house.” No, that’s MY HOUSE! I could die in my house, you know. It’s like there’s so many presumptions
that drive us into wage slavery, debt, and it doesn’t matter whether you are at the
low end or at the high end. If you are engaged in that sort of ancient
process of “more, more, more” you are not free. So the first layer of financial independence
I talk about is this freedom of the mind, this freeing your mind, of saying like “I’m
sovereign, the economy is secondary. I will move my sovereign self into the economy
for my own purposes.” Rather than “I’m a schlump and the economy
is my mega boss and, I don’t know – my boss seems to be as big as the sky and so
I will just let my life be run by my boss and the tax system. I’m just going to let myself be run by this
thing.” No, so you’re a sovereign being! So that’s your first layer of financial
independence is your own sovereignty. And then the second layer is to get out of
debt. And for some people debt feels endless. And the first step to getting out of debt
is stop going into debt. Really. It’s like – and so there are many organizations. There’s Debtors Anonymous. There’s many ways that people can help them
with this addiction to constantly spending and spending beyond their means. However you do that you just stop increasing
your debt and start whittling your way through it. And with the approach in Your Money or Your
Life I mean there’s many people who have written to us who flatten their debt in a
couple of years—impossible debt, debt that was going to be endless. They would die with this debt. And once they see what the debt is doing to
them in terms of the actual opportunities, the future opportunities of their lives, once
they see that, once they have a taste for, a yen for the kind of sovereignty, authenticity,
autonomy, freedom, whatever you want to call it, you know, mastery over your own time,
ability to write your novel or take your sailing cruise or play with your grandkids—Whatever
it is that you want more than you want stuff that’s what we’re trying – that’s
the sort of link that we try to get people to make, so that something in the future is
more important than the immediate pleasure of buying one more tchotchke that you’re
never going to use. We call them “gazingus pins”, the things
you buy repeatedly and you never use, and they go into the gazingus-pin-drawer and yet
when you’re in the store you buy another one. And just look in your drawers, look in your
closets, you’ll find it. So getting, flattening your debt is the second
level of financial independence, and the third level really is to get those six months of
savings in liquid assets, whether it’s bank accounts—Someplace where you can actually
within 24 to 48 hours you could realize that money. So that you have an emergency fund so that
you are not tumbled back into debt as soon as something happens; You lose a job which
many people now feel that even their very, very important and significant jobs are precarious. So you want to get out of the zone of precariousness. And part of how you get out of that precariousness
is savings. And then over time the next layer of financial
independence is you start to see that surplus savings can be invested in such a way that
it throws off an income. And over time if you become a systematic and
sometimes obsessive saver, you know, there are people who save up to 80 or 90 percent
of their income whether it’s in their 401K or in a Roth IRA. There’s all these instruments for saving
money. You become a super saver and you can see,
you could chart it. You can watch your passive income grow, and
you can start to see because you track your daily expenses based on the mechanics of this
whole thing, of knowing money is your life energy. You track everything you buy. And an easy way to do it—if you don’t
like, you know, like writing in a little notebook every time you do a transaction—is just
use your debit card. I said debit, not credit. You use your debit card and your bank has
a complete record of all your purchases. And then every month you take a look at your
purchases, you sort out in categories the plight of your lifestyle. And then let’s say, you know, you have a
category called shoes and you spend like $150 or let’s say $162 on shoes. And we have a calculation that says “my
real hourly wage,” all things considered is not $36 an hour, it’s $9 an hour. So I’ve just spent X number of hours, ten
hours of my life or whatever on shoes and then you ask – is this worth it to me? Did it make me happy? Am I glad about this purchase? Would I spend more on it? Would I spend less on it? No shame, no blame, no like admonition. No going and confessing to your financial
planner. Just between you and your Mint.com or whatever
it is. You just look at that and you kind of tell
yourself the truth about whether spending your life energy in that way makes a difference. That process gives you a sense. You develop a month in, month out, year in,
year out sense of precisely how much money it costs you to have a happy life. You have your happy life number. It’s not, you know, some columnist in the
Washington Post, blah, blah. It’s your happy life number. It is, “I spend $3,776 month in, month out,
month in, month out, month in, month out, month in, month out more or less plus or minus
ten percent.” And then you start to see your income from
your investments, from your savings line—when that crosses and you have $3,7776 (or whatever
I said) dollars passive income you realize you could let go of the active income and
live on that amount of money. So it’s reality-based, it’s unique to
you. The only person who knows what your number
is is you. Some people become FI on $700,000. Some people a million. Some people ten million. Some people less. Some people basically they get out of debt
and they have their six months of savings and they have some basic income that the bottom
will never fall out. And then they travel around the world for
three years on bicycles. It’s freedom. It’s like you’re buying yourself degrees
of freedom through this developing a habit of precise attention to the flow of money
and stuff in your life.

89 thoughts on “3 steps to money mastery: Would you rather have freedom or stuff? | Vicki Robin

  • Both yeah? I am going to be the first zillionaire! Mansa Musa was my great great great etc whatever! I come from his bloodline! Y'all took everything from us!

  • "Pecunia Nervus Belli" ~Money is the soul of War. Vicki makes a great point distinguish between Financial Independence and Freedom. Freedom starts within our minds, telling ourselves that we don't NEED to work, but choose to work because we choose to spend. There is always the option of sleeping under a bridge, but we choose to sleep in beds which comes with rent. So finding that Happy Number is so critical to ensuring that everyday of work isn't arbitrary. People aim for these high salaries not realizing that they may only need half that in order to be satisfied. These topics are very interesting to me, the economic, psychological, and philosophical implications of our decisions have vast impacts not only on our lives but on our world.

  • I used to hate the thought of working all day using my precious hours in this life only getting so much money. Maybe it was my hippie phase if you wanna call it. Whether it was 9 bucks an hour on my first ever job. Or getting 13.50 dollars like I am now. I felt i wasnt getting what I deserved out of my time. But after years of getting older and wiser. Watching all these new TV shows of people living off the grid, seeing how hard they work and that lterally most parts of the world have it way harder then us, I felt blessed…… And thinking what were to happen if civil chaos erupted or a major war started, maybe ww3. And we were pushed back to the dark ages. I thought to myself if shit were to hit the fan, say a major blackout, food shortage, etc for months or maybe years….How fast all of us working our day jobs would want that back. Wishing we could go back to normal life working 9-5. Anyone ever think about that? We have it good. We don't have to hunt, we have electricity, internet, everything. I think until something catostropic were to happen we will realize life isnt so bad after all.

  • I think the target audience of this video is baby boomers. The majority of millennials hardly make enough money to survive… let alone spend money on stuff.

  • This is all solid advice. Perhaps better for avoiding debt. In the past, this would have been good. The problem is the system, if you will, is designed to keep as many people as possible in permanent debt. Keep people working hard for the basics with lower wages.

  • I think the best thing millennials can do is to stop listening to Marxists, boomers and liberals, and instead start listening to people who are not afraid of money, rich people, "stuff" or wealth. Guys like Grant Cardone, Dan Lok, Patrick Bet David and other entrepreneurs who actually have money in the bank. Those are the people you should be listening too. It's not that any of these guys will give you The Answer to becoming wealthy, but they will offer some perspective and tips that can help you. Most of these tips are things you will understand intuitively but there are some gems in their videos. Another person you should be listening to is Jordan Peterson. And the final test: if you hate Donald Trump's success, if you hate Wall Street, if you hate the stock market, big corporations like Apple and the 1% — you will probably stay poor/average for the rest of your life. I think the two most important traits for becoming wealthy are a flawless work ethic and actually WANTING that lifestyle.

  • Ignorant of the chains of poverty. Too many people can never escape a paycheck-to-paycheck existence. If you can follow her advice then you are very privileged and you should be aware of all the low-wage workers who make your opportunities possible.

  • I was already doing the time equivalent of costs thing although i kind of forgot about it after the first couple months of work.

  • One word – TINY HOUSE. It limits your overhead expenses and how much stuff you can fill it with. Your time on this earth is finite. Don't waste it in dept chasing material things.

  • Seems like you are focused on yourself so much that you may overlook the 'value add' from climbing ladders and other necessary growth in being a productive employee. You are 'extracting' value for your own benefit. This is not a long term nor advisable strategy to promote in my opinion. Be careful with this woman's ethos. It breaks down at a community/societal level.

  • Personal Sovereignty is a fine ideal and people should strive for it, but the trouble is, it will only get you so far. If some Rich assholes decide to gamble with the entire economy ala 2008, they could wipe out your savings regardless of what you do. You can be the most responsible person ever and you'll still be fucked if the Rich decide that the billions they have simply aren't enough. Personal Sovereignty is a good thing, but it won't solve the fact that we are currently in a deeply effed-up system where the gap between rich and poor is growing everyday, with the Rich living in ridiculous levels of opulence while the poor struggle to get the most basic of needs–food, shelter, medicine–met. This is not sustainable and it is going to end badly.

  • It is perhaps impossible to be free and independent if you are caught up in the consumer mind set, as it will be a giant factor in all of your decisions, for your entire life.

    I do not have much stuff'. But I have lived an unusually independent life in which I have been able to educate myself and explore ideas, beliefs, and ways of living that I could never have explored so deeply, had I had big interest in material things. I am not completely immune to the consumer urges but they have never controlled my life. I am not a spiritualist of any variety, just a man obsessed with personal freedom.

    Money is very useful but getting money for all that stuff, traps you in a very small space. We are so bought into the consumer life style that if you do start breaking out of it, many will think you've gone crazy and that you are throwing your life away, rather than gaining control of your life.

    At 70, I am very glad I lived the odd life I chose to live. But I cheated, in a way. I never fathered any children and did not get married until my late thirties. Not having children and not getting married too young, make it much easier to have that kind of independence. It is easier to make interesting life choices when no one else depends upon you.

  • Beautiful stone age advice sounds like my grandmother. you can tell this woman has been frugal and financially discipline for most if not all of her life, at least way before FICO and credit cards were introduced lol.credit over debit anyday ( cash back, price protection, insurence, perks like free travel etc..) need I say more we have Facebook, microwaves color tvs now food takes 5min tops harmful nevertheless true attention spans are shorter then you can imagine by design it's all business trust me the monster is too big to escape especially living in it's core(United States my opinion) my advice find your passion,work your ass off, join the system rather then avoid it and create passive income with your passion and oh invest a little in stocks like she said not too much though as it is proven to sink like the titanic (the unsinkable ship) every now and then. good luck people

  • This is all solid hypothetical advice predicated on you being able to make that "happy life number" which would require a job good enough to do so but most can't so what then ? lol dream?

  • There is bad debt and good debt. Bad debt is a car loan, and good debt is an income property you rent out. If you really want to be financially independent, avoid bad debt and load up on good debt. Imagine you rent out an apartment for $1000 a month, but you have a loan to repay on the apartment. If you owe $120,000 on an apartment (worth $130,000) at 5% interest, you must pay $500 a month to the bank. After you pay the bank, you are left with an additional $500. If your downpayment was just $10,000, you are essentially making $6,000 a year on a downpayment of just $10,000. That is 60%! If you learn that not all debt is bad, you will have learned one of the most valuable lessons in personal finance.

  • What does this say about an economy where a huge number of people aren't in debt, don't buy unnecessary stuff, hold a good job with an above everage income, put money in their investment savings or similar every month and will never_ever be able to save up enough for them to live on their passive income? The ideas and techniques in this talk are valid and good but near the end it completely looses grip on current reality…

  • I used to be in debt since I got my CC when I was 19. I owed nearly 20K in CC and 55K in student loan by the time I turned 30. I was barley making payment on interests only. Then I got lucky with a decent job in hospitality, and it wasn't even related to my education. However, I stuck with the job, because I finally had the opportunity to make a difference in my financial mess. It took me 8 yrs to pay everything off, and it wasn't easy at all. I now actually feel like a person, not a prisoner.

  • Income and Debt all relates back to PRIDE. Everyone will readily admit that we are judged upon by our possessions. With that sort of mindset it easy to see how the vast majority of americans turn into Pure and simple Consumers. Consumers who are more focused upon their Group dynamic standing; than their own standard of living. Our American Way of Life is extremely unhealthy in so so many ways. From Nationalism; to he insanity of how we are supremely Wasteful ; to the simple fact that we Consume more than we contribute back to mother earth and society in general. Me Me Me; its is all we think about. However if we were truly that concerned about Me Me ME; we would wake up to the fact that we are Sick both Physically and Mentally. And then we would bring about the necessary changes that would guide us onto the path of Healthiness and Peace. Guilt is what drives this country, none of truly believe we are deserving of Peace nor Love. Our actions prove it each day. We all must strive to change this; our very own nature.

  • "Buying yourself degrees of freedom" and being "sovereign" is useless if you die tomorrow and have spent your life trying to make things comfortable/free for yourself. This is not a new concept at all, and is dangerously self obsessed.

    Luk 12:16– 21… 16 And he told them this parable: “The ground of a certain rich man yielded an abundant harvest. 17 He thought to himself, ‘What shall I do? I have no place to store my crops.’

    18 “Then he said, ‘This is what I’ll do. I will tear down my barns and build bigger ones, and there I will store my surplus grain. 19 And I’ll say to myself, “You have plenty of grain laid up for many years. Take life easy; eat, drink and be merry.”’

    20 “But God said to him, ‘You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?’

    21 “This is how it will be with whoever stores up things for themselves but is not rich toward God.”

  • THE PROBLEM is that the Federal Reserve/US Gov't continues to INFLATE THE $&%^ out of Fed Notes. Most Americans have realized that working for FED NOTES is a losing battle. On a daily basis, Fed Notes are WORTH LESS than the day before. American workers are getting SCREWED getting paid in WORTHLESS Fed Notes.. the CFR has accounts worth 2.588 septendecillion Federal Reserve Notes. That makes everyones' savings and checking accounts literally WORTHLESS. https://govbanknotes.wordpress.com/2016/05/12/every-loan-by-every-fractional-reserve-bank-is-fraudulent/

  • America has laws that allow ANYONE to LOAN ANY amount of debt-money into existence FROM NOTHING!!!! Donald Trump loaned himself nearly 50 million to buy the presidency. He then cancelled the loan TO HIMSELF! creating DEBT-MONEY is literally protected FIRST AMENDMENT SPEECH!!!!! EVERYONE IS A BILLIONAIRE. https://www.youtube.com/watch?v=DjV3LKvWuVE

  • Not every person is taught to be smart with money. That’s so many are not self aware of the environment that influence them. Fact that some can’t see they are be sold product they don’t need. Should give person a clue why they are in debt.

  • Buying freedom buy understand the basic of your happy number. Good plan for people that understand how money affects there life. Bad for people that continue to not be self aware of there income and spending habits. Now if financially smart about spending habits. Now that backup plans and are best plans to think ahead. Then financially free living your life as your please.

  • People don't realize that the act of paying money that you don't have to buy things you don't need causes more harm to our society than racism, sexism, gun crimes and illegal immigration combined.

  • Idiocy. Would you rather feed your kid and keep ons cheap car and a pet or Not more like it.

    I make $75,000 after taxes and other than a single local beach holiday for four days in summer, everything gets used by the basics.
    Now, debt? That’s a different story.

  • I've noticed that we have so much stuff than we can spend time on it. It could be shoes, clothing, gadgets, car, or a house.
    I'd rather be free and use the few stuff I have as much as I can.

  • 'First step of getting out of debt is stopping going into debt'? Stop talking through your hoop, you've never lived pay check to pay check if you're saying that bollox.. good luck to you in the real world

  • I'm pretty good with money, and I definitely understand that I waste some money on stuff I don't need…but I just don't see how I could ever generate enough savings to live on "passive income". : Most of my money goes to my mortgage and bills, not frivolities.

  • More education at an earlier age is needed about finance. Imagine your kid learning about saving, mortgages and investing at a young age, leaving school knowing how to be financially sound and avoid debt

  • Not worrying about money is solid, but everything else this woman said is truly only attainable if you make more than 60k per year and that's only true if you live somewhere inexpensive. Even at 60k you'll have to save money for years probably a lifetime to achieve passive income freedom. You'd have to live like a miser forever to cut years off of that timeline

  • Worst advice ever! News flash lady, it’s not 1960! The economy and the way money works is drastically different in 2018! I’ve seen other economists videos that put this one to shame. Saving money in a bank and doing nothing with it, is useless. Fun fact: if the average person wanted to double what they save every year in the bank, it would take 840+ years in average! 🤬 Big Think seems to be running out of viable guests lol.

  • That's great if you are able to earn more then your daily costs. Unfortunately as the real wage declines many people do not. I know people that have to decide between food and electricity. They are working in some cases 2 jobs. How do they follow this advice????

  • Save 80% – 90% of your income? Yeah, right.
    Maybe if I made myself homeless and lived in a shoe.

    I mean it's all common sense, but most people of the world have no extra money to save after the necessities of life are paid for. E.g. home, food etc.
    I guess this video is pitched at the middle-classes.

  • I am a carpenter and I like to work, I don't sleep very well if I have not made some kind of positive difference in the world that day! There is so much that needs to be done! Oh I wish more people would work with their hands, for money or not!

    Big money really shapes the world though so yes saving is a good plan! I typically save my income in the form of tools, shelter and the ability to produce food. Since I am 33 I get the feeling that savings will evaporate here once baby boomers retire so I invest in tools and skills and experience. None of the older carpenters want to get up on the roof anymore so I end up doing a lot of roofing.

    It is good to have skills and develop a trade because that will still have value when money doesn't any more.

  • I still don't understand why people get loans instead of just using cash. If you read the Bible, do people use cash? Not at all. Jesus says that you should just pay up front.

  • Instead of all that just spend as little as possible on everything that doesn't directly bring you greater health and don't sweat the rest.

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