5 Ways to Go BROKE (By AGE!)

Every decade has its own way of quietly breaking your finances, and most people never see theirs coming until it already happened. 👉 Want personalized help from Andrew? Join Master Money Academy at https://www.skool.com/mastermoneyacademy/about 👉 Join Andrew’s FREE Investing for Beginners Masterclass: https://event.webinarjam.com/q05p7/register/0o8z9io?webinar_id=21 👉 Live Call Registration Form: https://docs.google.com/forms/d/e/1FAIpQLSeqIw5xncfn5tZbGG_U22iZ3BUmyHe9fPvBQaC1vW_x1D7bJA/viewform 👉 One-on-One Coaching Application Form: https://docs.google.com/forms/d/12UHo5Zmu1AyY_G4Gmbrcx9vThIZhxqFnaJ5dIihZL24/edit What You'll Learn in This Episode Five ways to go broke in your teens, 20s, 30s, 40s, 50s, and 60s What waiting ten years to start investing actually costs you The 20/4/12/10 rule for buying a car without going backwards Why a house is a lifestyle decision more than a financial one, and the total cost nobody runs The business risk in your 40s that can force you to start over Catch-up contribution amounts available at 50 and again at 60 Why paying for your kids’ college before your own retirement works against both of you The one thing to protect in each decade, from your time to your freedom Start Here Join the community built to help you master your money, stay accountable, and reach financial freedom. 👉 Try Master Money Academy FREE for 7 days today! https://mastermoney.co/join/ 👉 Join Andrew’s FREE Investing for Beginners Masterclass https://event.webinarjam.com/q05p7/register/0o8z9io?webinar_id=21 👉 Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! https://expert-hustler-605.ck.page/6aa7bb9a79 Partner Deals Hostinger → Build your website step by step at https://www.hostinger.com/ and use code PFP for 10% off Indeed → Get a $75 sponsored job credit at https://www.indeed.com/podcast Wayfair → Shop thousands of products for every style and budget at https://www.wayfair.com/ Leesa → Get up to 30% off mattresses plus an extra $50 off with promo code PFP at https://www.leesa.com/ Policygenius → Compare life insurance quotes for free at https://www.policygenius.com/ DeleteMe → 20% off with code PFP https://joindeleteme.com/PFP20/ Resource/s Car Insurance https://secure.money.com/pr/gc43ce394da5 Best HYSA https://secure.money.com/pr/r453ecf4d190 Stock Brokerage Accounts https://secure.money.com/pr/v8d06f8de92c Best IRAs https://secure.money.com/pr/oe09b73d1952 Favorite Travel Credit Cards https://milevalue.com/best-credit-cards/?aff=mastermoney Episode/s Mentioned The 1-3-6 Method For Building & Managing Your Emergency Fund https://youtu.be/rGdII_Z0hnw The System to Pay Cash For Cars (and NEVER Have a Payment Again!) https://youtu.be/kgmjjQEN3Xs Tool/s Mentioned Total Cost of Ownership Calculator https://mastermoney.co/total-cost-of-ownership-calculator/ The Wealth Builders Matrix https://mastermoney.co/wealth-builders-matrix/ The Portfolio Pyramid https://event.webinarjam.com/q05p7/register/8mz7rho?webinar_id=23 The 1-3-6 Method https://mastermoney.co/the-ultimate-guide-to-managing-your-emergency-fund/ Watch Next How to Evaluate a Stock Like Warren Buffett with Brian Feroldi https://youtu.be/posnNC99UFQ 12 Reasons You Need to Stop PLAYING SMALL with Money https://youtu.be/qFz3_-pLapg 19 Strategies to Pay Off Debt (FASTER!) https://youtu.be/WAnf4Z7PHjs How to Build a Portfolio If You Are Worried About An AI Bubble https://youtu.be/NhfJVhSTedA The Millionaire Money Rules (Get to $1M Faster!) https://youtu.be/CNeIBcfXtUA Connect with Andrew Instagram → https://bit.ly/Skool-Instagram TikTok → https://bit.ly/Skool-TikTok Facebook → https://bit.ly/Skool-Facebook Podcast → https://bit.ly/Skool-Podcast Youtube → bit.ly/Skool-Youtube Newsletter → https://bit.ly/Skool-Newsletter Website →⁠ https://mastermoney.co ⁠ X → ⁠https://x.com/mastermoneyco LinkedIn →⁠ ⁠⁠https://www.linkedin.com/in/andrew-giancola-45027b340 ⁠ Question for you: Which decade are you in, and which of those five are you guilty of right now? Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Andrew Giancola?

  On this episode of the Personal Finance Podcast, five ways to go broke by age.

• 0:13Andrew Giancola?

  What's up everybody and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of mastermoney.co. And today on the Personal Finance Podcast, we are diving into five ways to go broke by age. If you guys have any questions, make sure you join the Master Money Newsletter by going to mastermoney.co/newsletter. And don't forget to follow us on Apple Podcasts, Spotify, YouTube, or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five star rating and review on Apple Podcasts, Spotify, or your favorite podcast player.

• 0:54Andrew Giancola?

  Now, today in this episode, we're going to be diving into five ways to go broke by age. Before we dive in, a quick announcement. If anybody wants to work with me one-on-one, we are taking a small group of people to work with me one-on-one. If you are interested in that, feel free to shoot me an email, [email protected]. The only qualification that we have currently is that you have to make over $100,000 per year in household income or have $100,000 to invest. All right, let's dive into the episode. So today, we're talking about five different ways to go broke by age. And in this episode, I really, really want you to understand that there are mistakes that are going to happen by decade. Life happens in seasons. And in fact, some of these seasons are going to shift some of the things that you need to be looking out for.

• 1:39Andrew Giancola?

  And so in this episode, my goal is to help you as much as possible when it comes to figuring out what some of these things are. We're actually going to be going through the teens. Teens, I'm going to show you some love. Every single time we do these by age episodes, a bunch of people say, what about the teens? Well, we're going to show you some loves today on teens. We're going to go through the twenties, we're going to go through the thirties, the forties, the fifties, and even the sixties. And we're going to go through some of the mistakes that I see that are pretty common within each of these decades. Now, I think it is super important for many folks out there to understand that when you are thinking through some of these different areas, you want to ensure, hey, I'm looking at the twenties and thirties, and maybe you're in your forties right now and you're saying to yourself, well, I got to make sure I avoid some of those mistakes as well.

• 2:24Andrew Giancola?

  And I got to make sure that going forward, I know what to do and how to solve these problems. So I'm going to give you the mistakes. I'm going to tell you how to solve those problems. And so we are going to get right into it. I'm excited for this episode. So without further ado, let's get into it.

• 2:39Andrew Giancola?

  All right, first, let's talk through the teens. This is my honorable mention group. We haven't done the teens before on a by age episode. And I think this is really important. Now teens, this is a timeframe where you are going to be shaping your money belief. I got really into personal finance as a teenager, and it was something that was transformative for me. And it was something that was super interesting to me. I used to spend time in computer class when I was younger, reading personal finance blogs. In fact, one of the blogs that I used to read was called youngmoney.com, which is now got bought out by Lil Wayne and Birdman and all those different guys out there. But they used to have this blog on there for young people to learn more about personal finance, investing, and those types of things. And so I loved, loved, loved, loved reading that blog.

• 3:21Andrew Giancola?

  So if you can get into personal finance, investing, and building wealth as a teenager, you're going to be so much further ahead from everybody else that is out there. So let's talk through some of the things that you should watch out for. First, if you get a job, start right away, understanding how to manage that paycheck. That should be the number one thing that you do as a teenager is understanding how to manage your money. If you begin the habit of overspending, that will carry into adulthood and could cause problems for you moving forward. Two is avoid buying things just to fit in with your peers. Look for things that you actually want to spend money on and things that you actually value, and try to start to develop some values even as a teenager so that you could understand, hey, these are some of the things that I like to spend money on.

• 4:05Andrew Giancola?

  These are some of the things that I don't like to spend money on. The perfect time to do this is when you don't have pressure of having a bunch of bills or a bunch of things that you are dealing with. Now, if you're 18 or 19 and you're already on your own, then obviously that's a little bit different. But you want to make sure that you understand not to just buy things to fit in. Three is opening a credit card without understanding how it works. I would not open a credit card as a teenager. This is not something I'd be super interested in unless you are 18 or 19 and on your own. Instead, just paying for things in cash, I think, is more important. Four is using something like buy now, pay later, or getting into the habit of using buy now, pay later. That is something everyone should be avoiding. And avoiding debt as early as you possibly can and just telling yourself, actually, you know what? I'm not going to go into debt.

• 4:51Andrew Giancola?

  I'm going to avoid debt as much as I possibly can. I'm going to try to save up my cash for the things that I want. And then I am going to buy those things when I have enough cash on hand. Starting the right habits early is so important. And then lastly, is borrowing for college without a plan. I think this mistake can be something that can catch a lot of people off guard and can be something that if you don't have a plan in place on how you're going to pay that back, it is super important. I see way too many people taking out student loans. And when they take out those student loans, the degrees that they are getting are going to make it very difficult for them to be able to pay those loans back. Listen, if you are starting your life off or you are going to college and you are taking out massive amounts of student loans,

• 5:32Andrew Giancola?

  just know, the more loans you take, the harder it is going to be to pay those back. A lot of people regret the amount of loans that they take out. And so finding ways to have a plan in place on how you're going to pay those back, or finding ways to get scholarships, or finding ways to fund some of it with cash can be super helpful. Listen, student loan debt is on the rise in this country. It gets higher every single year. And so you got to protect yourself when it comes to taking out those loans. So a couple of things that I want you to do is first, I would love for you to get started investing. I would love for you, even if it's small amounts of money, I don't care if it's 10 bucks a month, 20 bucks a month, 50 bucks a month, $100 per month, whatever you can figure out that you earn. If you could take a good portion of that money that you earn,

• 6:16Andrew Giancola?

  and if you live under your parents' roof still, take half of that money and put it towards wealth building activities. It's going to be things like investing. It's going to be things like saving. Because if you can do this early and often and learn how investing works, you have the most valuable asset of all, which is time. And so I really want you to get the ball rolling there as you start to think about this. Two is if you have too much free time, if you're not playing sports or extracurricular activities, I would recommend starting to earn money now and taking those dollars and putting them towards future you. Because if you can learn how to earn money, how to invest money, and really, that could really transform your life early. And also, if you don't know how a lot of these financial instruments work, if you don't know how credit cards work, if you don't know how mortgages work,

• 6:58Andrew Giancola?

  if you don't know how brokerage accounts works, or Roth IRAs, or 401Ks, get educated now in understanding how this stuff works because it will take you so much further long-term. So I recommend for all teens, if you're living under your parents' roof, save 50% of your income, just save half of it. The other half, go spend on whatever else you want. And that, my friends, can be really, really valuable. Also, you are in the golden age of being able to start a business, starting a low-cost online business, something like an AI business, starting a pressure washing or a service-based business. You know, you could go out and pressure wash driveways. You could pressure wash trash cans. I just hired a neighborhood kid this week who pressure washed my sidewalk, paid him 70 bucks. It took him less than an hour. And there are things like that that you can do and make some pretty good money.

• 7:42Andrew Giancola?

  And so I want you to figure out what are some of the businesses I can start. If I am doing sports or extracurricular activities where I don't really have the time to go get a job, well, then you can go get, start a business and have flexibility in between to earn some more money. I also want you to look at what we have, which is called the Wealth Builders Matrix. The Wealth Builders Matrix shows how valuable every single dollar you invest is. And I just want you to understand, if you invested $100 per month from the age of 16 to the age of 65 at a hypothetical 8% rate of return, that turns into about $731,000. And you would have only contributed about $59,000. So this is why I say that you have by far

• 8:24Andrew Giancola?

  the most valuable asset of all of any of these other decades, which is time. Let's jump into the twenties.

• 8:32Andrew Giancola?

  All right, let's jump into the twenties. Now, the twenties is the decade that I usually start with, with these episodes. This is the point in time where you're graduating from college, you're starting your first job, you've entered into true adulthood where you're out on your own, hopefully, or you are starting to really see how the real world works. And so many times when you're in your twenties, there was a lot of really cool things that you could be doing with your money. And I'm going to talk about some of the biggest mistakes first, so that you can avoid some of those mistakes. Because many times, people who make these mistakes in their twenties, they get themselves into hot water and then they have to spend a ton of time trying to recover instead of just starting off on the right foot. So first one is financing a new car that you can't afford.

• 9:16Andrew Giancola?

  I cannot tell you how many times I talked to people in their twenties and they have financed the BMW, or they have financed the Tesla, or they have financed the brand new car, or the big fancy truck, because they had a little bit of extra cash on hand and they felt as though they could afford the monthly payments, only to realize that they really can't live the rest of their life because they financed too much car. I don't want that for anybody out there who is in their twenties. Instead, what I want you to do is focus on buying vehicles that you can afford. One of my favorite rules that we talk about is the 24 12 10 rule. The way that this rule works for buying a car is you put 20% down, then you only finance that car for four years or less. If you have to extend out those payments for longer, then you can't afford the car.

• 10:01Andrew Giancola?

  Then 12 stands for 7% of your income goes towards monthly payments, 5% of your income goes towards maintenance costs. This is to help you avoid those really high and expensive luxury brands that are going to have this massive monthly maintenance costs. And the last number is 10. And 10 is one of the most important numbers in this equation. It means drive the car for 10 years or longer. If you finance a brand new car and you're spending $700 to $1,000 per month on that vehicle, you are building wealth in reverse. You are going backwards when it comes to wealth building, because a car is a depreciating asset, meaning it goes down in value the moment you drive it off the lot. And so be very selective about the depreciating assets that you add into your life.

• 10:45Andrew Giancola?

  Number two is carrying credit card debt. Credit card debt is the crippling devil when it comes to building wealth. It is the opposite of what you want to be taking on, and it is not something you should ever be interested in. Why? Because credit card debt has extremely high interest rates. Right now, most people that I'm seeing, that we coach through, are having 24, 25, 26% interest rates on their credit cards. I have seen credit card interest rates as high as 35%. And so I want you to understand this right now. Avoid credit card debt at all costs. If you have credit card debt right now, we need to pay it off as fast as we possibly can. Because if you don't understand how credit card debt works, it is literally compound interest working in reverse.

• 11:30Andrew Giancola?

  It is working against you. And I have seen people who have been trying to pay off their credit cards over and over and over again, only to find out that the balance keeps growing because they're not paying it off fast enough. And so you want to make sure that if you have credit card debt, you have a plan in place to pay it off. One of the best ways to pay off credit card debt, I believe, is the snowball method, meaning taking the smallest balance first, attacking that one, then going to the next smallest balance, attacking that one, and making minimum payments on everything else. This is something I think is a super important for anybody in their twenties. Just avoid credit card debt at all costs. You can use credit cards, and I love using credit cards. And number two is you never pay a cent in credit card interest.

• 12:13Andrew Giancola?

  When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI website builder. I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer, or developer needed. And Hostinger doesn't stop at launch.

• 12:57Andrew Giancola?

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• 13:42Andrew Giancola?

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• 14:27Andrew Giancola?

  Just go to indeed.com/podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com/podcast. Terms and conditions apply. Need to hire? This is a job for Indeed Sponsored Jobs. Now, if you watch this podcast on Spotify, Apple Podcasts, or YouTube, you've probably noticed the wood slat walls behind us. We wanted this podcast set to look professional, but also not be a project that was overly complicated. And I found these slat walls on Wayfair, and it completely changed this space. And it's now basically the background that you see in every single podcast or piece of content that we record. And that's one of the things that I love about Wayfair. You can shop thousands of products across different styles and budgets,

• 15:09Andrew Giancola?

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• 15:54Andrew Giancola?

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• 15:56Speaker 01

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• 16:01Andrew Giancola?

  All right, number three, and this is a common one for folks in their twenties, is you may have friends, you may have family members, you may see people even, you know, in their 30s who have been in the career world for a little bit longer than you, starting to upgrade their lifestyle. Maybe they're buying the nicer house. Maybe they're buying the fancy car. Maybe they're getting the nice apartment. Maybe they're going on the nice vacations. And you feel as though, well, I am missing out. Why can't I do some of those things? So you decide, I'm going to upgrade my lifestyle every single time I get a raise. So you start off making $50,000 per year. You get a raise, and all of a sudden, you know, at the age of 27, you're making $65,000 per year. Then at 28, you're making $90,000 per year. And by the time you get to 29, you're all the way up to close to 100 grand per year.

• 16:45Andrew Giancola?

  But the problem is, every single time you got that raise or you increased your income, your lifestyle also increased with that income level. So you got the nicer apartment, you went on more vacations, you spent money on the nice car, because hey, appearances matter, right? And so because of all of these different things, you ended up causing a problem. And so because of all these things, you increased your lifestyle at the same level as your income increases. And my friends, this is called lifestyle inflation. Some lifestyle inflation is good. It is okay. It is healthy to have some lifestyle inflation every time you get a raise. But also, a portion of that needs to go towards wealth building activities. And so what I would say is if you feel as though you've been increasing your lifestyle every single time you get a raise,

• 17:28Andrew Giancola?

  let's focus on a system that helps you combat against this. One of the best ways to do this is take 50% of your raise and put it towards your investing, and other 50%, put that towards whatever you want to spend it on. If you want to improve your housing situation, if you want to improve your car, you can spend it on those different things, okay? Number four is don't ignore your 401K. One of the most important things that you could do in your twenties is making sure that you start contributing to retirement accounts, things like your 401K, and also getting that 401K match. Folks who forego their 401K match or just don't even know it exists have a real problem on hand, meaning that you are missing out on hundreds of thousands of dollars that you could be compounding on throughout your entire lifetime.

• 18:12Andrew Giancola?

  Depending on what your match is, this could be a massive opportunity for you. Let's say your employer matches at 5% if you put in 5%. Well, if that's the case, that means you're already, just by saving 5% of your income, actually saving 10% of your income. And people ask me all the time, hey, does my employer match actually count towards my savings rate? Absolutely. If you have an employer match, that can count towards your savings rate long term. Now, it is one of those things that I think is one of the most powerful boosts to your wealth building activity, because we have looked at this time and time again. And studies have shown that a lot of folks get a really good match now. It is a perk that a lot of companies are putting into play. And if you run the numbers on those matches, most of the time, if I'm looking at a 4, 5, 6, 7, 8, 9% match,

• 18:58Andrew Giancola?

  all of a sudden, you're seeing anywhere from six to seven figures if you compound that money over the course of 30 years. So it is really important to make sure that you are taking advantage of that match. Now, the fifth one is not building an emergency fund, not building that moat, not building that protection around your finances that is going to allow you to build wealth. Now, in your twenties, I want you to really start on the 136 method, meaning one month of expenses saved up. Pay off high interest debt, then get to three months of expenses saved up. Then you could start investing and then ultimately getting towards that six month emergency fund. If you build up a six month emergency fund in your twenties, you are setting up the rest of your life to be able to protect your finances long term.

• 19:41Andrew Giancola?

  Now, one thing people need to note is in your twenties, if you build an emergency fund, but then your lifestyle begins to change, you get married, maybe you have kids later on down the line in some of these other decades that we're going to talk about. Well, your emergency fund also needs to increase with those lifestyle changes. And so we want to make sure that we are on top of it. If you haven't heard our episode called the 136 method on emergency funds, I definitely recommend that you check that one out. It is one of our most popular episodes on YouTube and it is one that I think can really help you understand how to build a fortress of an emergency fund that is going to protect your finances long term. Cause that's all it's there to do is an emergency fund is just cash that is going to protect you against life. We want you to protect against life so that you can really do the best thing for your finances long term.

• 20:25Andrew Giancola?

  So your twenties aren't about getting rich. They're about building the habits that are going to eventually allow you to become wealthy, because we're playing the long game here and you have the ability, the most valuable asset of all, which is time. Now, let me tell you about the real cost of waiting in your twenties, because I want people to understand this. Let's say, for example, that you start investing $500 per month and you start investing that over the course at the age of 25. Well, if you started age 25, all the way up until age 65, you'd have about $1.75 million invested. This is with a hypothetical 8% rate of return. Okay? If you start at age 35, meaning if you just waited one decade later, you're only going to have $745,000 for saving that same $500 per month.

• 21:09Andrew Giancola?

  That 10 year delay costs you $1 million just by waiting for 10 years. And so folks in your twenties, get started investing now. The time to get started is right now. I don't care if it's a hundred bucks a month that you will have. I don't care if it's 200 bucks a month, but get started investing now. Compound interest is your most valuable asset and time is your most valuable asset. And you have both of those at your disposal right now. And so taking advantage of those and really reaping the benefits of those two is going to change your life forever. You will set yourself up forever if you get started investing right now. Now let's jump into the thirties.

• 21:50Andrew Giancola?

  All right, you're thirties, we are here. This is the timeframe where a lot of things for folks are beginning to change. And in your thirties, this is the decade where you're going to see a lot of vulnerability towards things like lifestyle creep. Why? Because your income usually begins to start rising during this decade and so does everything else. It feels like everything becomes more expensive throughout my thirties. I look back at my twenties and I look at my expenses and I've even gone back and look at some of my budgets from my twenties and then come back to my thirties and it is drastically different how much I was spending in my twenties and how much I am spending in my thirties. Well, what is the reason for that? Well, first, a lot of folks get married or they start to have some serious relationships in their thirties.

• 22:34Andrew Giancola?

  And so if that is you and you are getting married in your thirties, that is one of the areas that you could be looking at. But also because your income is rising, you want to spend a little bit more on some other things. And also many people in their thirties start to have kids and they start their families. And so there's just a lot more expenses that begin to rise during this timeframe. This is also the timeframe where your income is rising the fastest and then it will start to peak within your forties. And so these are some of the ways that I see a lot of folks in their thirties go broke. And I want you to avoid these at all costs. Number one is buying too much house. This is something that has become more and more prevalent in this country because of the rising cost of housing and the rising interest rates that we have been seeing over the course of the last couple of months.

• 23:18Andrew Giancola?

  If you are someone out there who is interested in buying a house and you have been told that buying a house is a great financial investment. I'm sorry to tell you this and this upsets a lot of people when I talk about this, but a house is not a great investment. You can go look at the numbers and run the numbers. What do I mean by this? Why am I saying that what a lot of people have been saying for decades, that a house is a great investment? It is not. Why? Because of something called total cost of ownership. When you buy a home, there are a ton of different costs associated with buying that home. These are going to be things like the closing costs for when you buy a home. These are things like maintenance, insurance, HOA fees, taxes.

• 24:02Andrew Giancola?

  All of these add up to the total cost of owning a home. And many people miss out on how expensive this can actually be. One of the things that you will notice pretty quickly is if you have never been a homeowner before, the maintenance costs just eat into your budget every single month. Something like the water heater will break and then you'll have some sprinkler issues and then you'll have an issue with a sink or a faucet. And then you'll have to go to Home Depot 12 different times to try to figure out how to fix it. Or you're going to have to call somebody up to come in to try to fix it. And all of a sudden you realize that over and over and over again, the cost with owning a home add up. That's before you even decide to upgrade different things within your home. Maybe you want to put in a nicer kitchen or a nicer bathroom or you want to paint the walls.

• 24:46Andrew Giancola?

  All of this stuff is extremely expensive. And if you look at the average and you go and look at the Schiller index or you look at anything else that is out there, the range that you were going to see is the return is like three to 4% on your own personal residence. So there are a lot of reasons to buy a bigger house, but the reasons are not financial. They are lifestyle. So if you want to be in a better school district, great reason to buy a house. If you love remodeling homes and that's something you value and you love your space and you want to be able to make it your own, a great reason to buy a house. If you want to make sure your kids have roots planted and you feel as though that is the best way to do it. You want a place that you own and it just brings you a ton of joy and a ton of value to own that home. More power to you. That's a great reason to buy a house.

• 25:30Andrew Giancola?

  But we need to make sure that we're buying that house within the certain parameters of the amount of income that we make. Because if you buy too much house, that is the first sign that someone is going to be stressed about money because you have become house poor. So we want to make sure we keep our housing costs 30% or less of our income. That's going to be the most important step when you are thinking about buying too much house. Now we have something called the total cost of ownership calculator. If you go to mastermoney.co/resources, you'll find it there. And that'll tell you it's a spreadsheet that helps you run the numbers on a house to see if you should actually buy a house or even consider renting a home. It's really, really important to do that. The second one is financing cars. Well, the stats have been coming out lately of how high the car financing numbers have been and it is astronomical.

• 26:14Andrew Giancola?

  A lot of couples right now are spending over a thousand dollars per month on car payments. And if you have a two income household, that is something that can sink you pretty quickly with the rising cost of living. We talked about this in our twenties already, but this is just something you really want to make sure that you are avoiding. Number three, and this is one that I have seen more and more as time has gone on. Letting things like restaurants, vacations and subscriptions begin to creep up. Your thirties, because you are so busy and because it's so messy and there's so much going on, a lot of times you can let those small expenses all begin to creep up. And all of a sudden you're paying for all these different things that add up to hundreds, if not thousands of dollars every single month.

• 26:57Andrew Giancola?

  And many times, some of these things like going out to eat or DoorDash all the time, or the convenience of being able to get things delivered to your home, or the convenience of subscriptions, all are going to start to creep up and it can be death by a thousand cuts for a lot of people in their thirties. In fact, what I would do is many times when I see a lot of the costs and the subscriptions for folks in their thirties is I would do a subscription audit, at least on a quarterly basis, to understand where we are spending some of our money and some of the things that we do not value. You in your thirties need to understand what your current values are. If you value convenience, great, spend more on DoorDash if you want to, if you can afford it. But if you don't value convenience and you're just calling DoorDash every single day to the office

• 27:38Andrew Giancola?

  or you're calling DoorDash to your house four times a week, well, all of a sudden you are way overspending in some of those categories. Let me give you an example of this because I am someone who almost never orders DoorDash. I can see the value behind it, but I can't stomach the costs. And I can't stomach the cost of Uber Eats either and all the additional components that come into play with it. And so for me, I know I just don't value it. I don't value it enough. I'd rather just go get in the car, go down there, grab it really quick and then come back home with it. And so for many folks out there, when you're in your thirties, I see this time and time again where people are spending more on some of these different areas. And so you just want to be careful about that. Fourth, this is one of the biggest costs for people in their thirties. And this is like having another mortgage, which is not planning for childcare upfront.

• 28:22Andrew Giancola?

  Daycare costs are on the rise and daycare costs, if you have one child in daycare, you could be paying over a thousand dollars per month. If you have two children in daycare, you could be paying $2,000 to $3,000 per month. And some families have three children in daycare and this can be an astronomical cost to your budget. You must, and I repeat, you must make sure that you are planning these expenses out because this is an area that you really don't want to skimp out on. You want to be cautious with who is watching your children every single day. And so making sure that you plan this out and understanding this is a season of life. This is a short-term season of life that if you feel as though, you know, you are so financially stressed because of daycare costs, then evaluating and understanding some of the moves you can make is really, really important. We actually did an entire episode on daycare costs.

• 29:06Andrew Giancola?

  If you haven't checked that out, we will link that up down below in the show notes so that you can check that out as well. The fifth mistake is not investing. I have seen people in their twenties who have foregone investing, but then they get started in their thirties. But when you get into your thirties and you're still not investing, that's when it becomes a real problem. And in fact, that's when I start to get concerned for you if you don't get the ball rolling in your thirties. Now, if you're in your forties right now and you're listening and you're like, hey, was it too late for me? No, it's not too late for you and it's not too late for anybody in their thirties either. But you gotta get started today because it becomes increasingly difficult to build wealth if you get started in your forties. And so you gotta start today. I don't care if it's small amounts of money, but getting started and understanding where to go is really important. And in fact, you're like, well, how much do I invest?

• 29:49Andrew Giancola?

  Figure out what your retirement number is and work backwards from there. That's going to be the big number that you need to understand. And then you can work backwards from exactly where you are. Now let's get into the forties.

• 30:03Andrew Giancola?

  Now, your 40s is a decade that I think is really important. In fact, I have seen more people go broke in their 40s by making stupid mistakes that they could have just avoided if they understood the actual risk implications of making those mistakes. And so, let's talk about some of these different ways that you can go broke. Because in your 40s, this is a decade where your income is most likely starting to peak. It is starting to really, really rise. And you can start to see peaking levels of income where you are really making more than you ever have before. Studies have shown that folks in their 40s make the most they ever make during that decade. And then in your 50s, if you are a really high performer, you can really carry that over and start to make even more. But your 40s is when you're going to see the biggest acceleration and the biggest growth of your income.

• 30:47Andrew Giancola?

  Because you've been in your career for a while, maybe you're hitting management positions. Maybe you're hitting vice president levels. You know, there's some executive stuff that could be happening right now. Or maybe you have just been in your industry for a very long period of time and your income just continues to rise more and more and more. But there are ways to go broke in your 40s. And there are things that I need you to avoid at all costs. And make sure that you understand that this is not something that you want to be doing. Okay? Number one is taking enormous business risks with personal money. More and more, the American dream has been to own a business. But if you take an enormous risk with your money and you take an enormous risk with the amount of money that you have on hand and you say to yourself, you know what?

• 31:29Andrew Giancola?

  I think I'm going to start a business in my 40s and I'm going to take half my net worth or three quarters of my net worth or all of my net worth and I'm going to take a big swing on this business. When it has not been proven and it has not been something that you have been doing in the past, I would say that's a huge mistake. Instead, if you want to start a low-cost business or if you want to start a business with, you know, funding or things like that, that's a different story. But if you're starting a business and taking an enormous business risk, it can sink your entire ship and you have to start over. And if you have to start over, trying to claw your way back is going to be 10 times harder. Why? You have less energy when you were in your 20s and 30s. But also, you have less time before you get to a retirement age if you want to retire. Now, if you never want to retire, fine.

• 32:14Andrew Giancola?

  But if you get to that retirement age and you're like, actually, I wish I could retire right now, but I got to keep working because I took a huge business swing that really was not necessary. I was already making progress with my finances and I just took a swing because I wasn't happy with where I was. I would be very cautious about the business risks that you take in your 40s. Because if you take too big of a swing, it can really sink the entire ship. I have seen this happen. Folks who open restaurants or folks who go out and do some sort of industry that they've never been involved in before, all of the sudden can get themselves into hot water. I don't want that for any of you out there. So, I'm saying this as a word of caution. Do not take enormous business risks in your 40s. Number two is panic selling investments. You have to understand how the market works in your 40s.

• 32:59Andrew Giancola?

  And the last thing I want you to do is start to panic sell when the market takes a dip or there's a shift in the market. And if you are someone who is kind of pocket watching when you're looking at the market or you're looking at your portfolio all the time and you're stressing out about the direction the market is moving, we need to settle down and we need to work on our money psychology. Because our money psychology is the most important thing that is going to allow us to build wealth long-term. In fact, building wealth is 90% psychology and it's about 10% know-how. And so, when you are investing, making sure that you don't just panic sell investments because the market is down and understanding that, hey, the market goes up and the market goes down. It is a very normal cycle. In fact, guess what? There's going to be a recession coming. I don't know when the recession is going to be coming, but recessions are very normal. And so, we have to make sure that we understand these things

• 33:43Andrew Giancola?

  before we get stressed out about the market and how it is moving. Okay? So, don't worry about the market. Be a long-term investor and continue to invest in that one direction. Number three is to gamble on concentrated investments. I specifically build my portfolios in a very specific way. It's called the portfolio pyramid, meaning I have my foundation, which is usually 80% index funds and ETFs. Then, I have my individual stocks or individual investments that I think can be higher growth, which is usually 15 to 20%. And then I have my speculative investments, which is 5 to 10%. And that foundation never changes, that 80% never changes because that is what I'm focused on, that's what I care most about.

• 34:26Andrew Giancola?

  The other 20% can shift into more concentrated investments if you want to, but you got to know what you're doing. Let me give you an example of this, okay? I have a friend who has been talking about the crypto XRP for a very long time. And they keep telling me, oh, XRP, it's going to go and take off. It's going to go to the moon and XRP this and XRP that. It's all they've been talking about. And they've been buying it consistently for a very long period of time. Well, now they hold so much XRP and it's a huge portion of their portfolio. And they really don't really know what they're buying. They really don't understand what they're buying. And it's one of those areas where they are so overly concentrated in a really high-risk investment that it could cause them a huge amount of trouble if they continue on this path.

• 35:12Andrew Giancola?

  And we've had conversations about this. We've talked about it a number of different times, but they are so bought in on XRP that they can't get it out of their head. And I think for many folks out there, sure, could it do well at some point in time? Maybe, I don't know. It's not a risk that you want to take because the percentile that it's going to do well or outperform the S and P 500 is so low that you really just don't want to be taking that risk, especially in your 40s. This is the time where you're building up the foundation for your retirement. You're building out and really making sure that you're solidifying the foundation for that retirement so that when you get to your 50s and when you get to your 60s or if you want to retire early in your 50s, you have the ability to do so. Four is ignoring insurance. Insurance has become increasingly important, especially as your wealth continues to build.

• 35:57Andrew Giancola?

  You need to make sure you have insurance on play. So, the basics, obviously, homeowners insurance, auto insurance are important. But there are other things that are important as well. Disability insurance is a big one. Umbrella insurance, if you are someone who makes good money, umbrella insurance is important. If someone falls on your property or something happens to you and you don't have umbrella insurance, they could sink your entire financial ship just because you didn't have the right insurances in place. So, that's an important one. Three is life insurance. So, looking at things like term life insurance is really important if people depend on your income. Now, you don't need life insurance if people don't depend on your income. But if they do depend on your income, term life insurance is very cheap. And if you didn't have it in your 30s, looking at getting it in your 40s

• 36:40Andrew Giancola?

  for a short period of time for that term can be very helpful and help protect your family. So, what I want you to do is really think about those insurances and kind of check off the boxes based on your income and where you currently stand. If you have questions on that, feel free to shoot me a message or DM and we can help you through that as well. Number five, and this is the big mistake I see for people in their 40s, is raiding retirement accounts. This is not the time to start pulling money from retirement accounts or borrowing against your 401K to remodel your house or to do all these different things that I see people do. No, this is the time that you want to make sure that you are working towards building wealth and investing. So, don't be borrowing against your retirement accounts. Those are there to help you gain financial freedom. Retirement accounts are there for your freedom. You want to make sure that you are avoiding that.

• 37:26Andrew Giancola?

  So, making sure you protect your base, making sure you're diversifying your money, you're maintaining proper insurance, you keep on investing and you are keeping your emergency fund are all going to help you in your 40s to make sure that you are running smoothly when you get into the next decade, which is your 50s.

• 37:46Andrew Giancola?

  If you've heard any recent episode of Health Corner, you know that I have spent the last few years trying to optimize my sleep. I've tried sleep trackers, cooling my room, changing my nighttime routine, all the different things. But nothing really matters as much as having the right mattress. And that's one of the reasons I love Leesa. A great mattress is one of those things that you use every single night and you spend a third of your life sleeping. And it can make a huge difference on how you feel the next day. Leesa has mattresses designed for different sleep positions and comfort preferences. And their sleep quiz can help you get matched in less than two minutes. Plus, they're designed and they're assembled in the USA and they come with free shipping,

• 38:29Andrew Giancola?

  easy returns and a 120-night free sleep trial. So, go to leesa.com for up to 30% off mattress plus and get an extra $50 off with promo code PFP. Exclusive for my listeners. That's L-E-E-S-A.com promo code PFP for 30% off mattresses plus an extra $50 off. Let them know we sent you in the survey after checkout. Leesa.com promo code PFP. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent and life looks a little different than it did the year before.

• 39:10Andrew Giancola?

  And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some of America's top insurers side by side for free. And their licensed team helps you compare coverage, prices and terms, answers your questions and even handles the paperwork so you can get the right policy without the hassle. For me, having life insurance isn't about expecting something to happen. It's about knowing my family is protected so I can actually enjoy these moments together instead of worrying about what comes next. And with PolicyGenius, you can find 20-year life insurance policies

• 39:53Andrew Giancola?

  starting at just $276 a year for $1 million of coverage. Head to policygenius.com to compare life insurance quotes from top companies and see how much you can save. That's policygenius.com.

• 40:08Andrew Giancola?

  All right. So when you enter your 50s, a lot of things change. One, retirement is not 30 or 40 years away. It is anywhere from being 10 to 15 years away. It could be five years away for you if you have been diligent, saving and investing. And so there are some things that I really want you to make sure that you do in order to take advantage of this decade because you've got a lot of things that you can take advantage of. But there are a lot of things that I want you to avoid and ways to go broke in your 50s. You need to avoid these at all costs. Number one is counting on working longer as your only plan. I see many people in their 50s who kind of throw up their hands. They give up and they say, I'm just going to keep on working for the rest of my life. That's not a plan. In fact, if something were to happen to you or you were unable to work at a certain point in time, you need to have a plan in place.

• 40:53Andrew Giancola?

  And so if you're just getting started in your 50s or you have been investing for a while and you just feel as though you're not making enough progress, work on a plan that is going to help you gain financial freedom at a certain point in time. If you're 52 and you want to retire at the age of 67, for example, you've still got a lot of time, a lot of things you can do in order to be able to do that. If you're 52 and you want to retire at 60, you still have eight years to be able to really make some progress here. So I want you to know that it is not too late. You gotta work on a couple of different things and you gotta get a little bit aggressive here, but you can really make some progress in your 50s. Two, don't upgrade your lifestyle at peak income. If you want to retire soon, prioritize that retirement.

• 41:35Andrew Giancola?

  Don't just upgrade and buy the brand new bigger house or buy the fancy car in your 50s just because your income rose and you feel as though you could swing it and get by while your retirement is still struggling. No, instead, let's make sure that we are thinking through where our dollars are going and putting them towards the best activities for financial freedom. Three is skipping catch-up contributions. So in your 50s, you have this beautiful thing available to you called catch-up contributions. And catch-up contributions are by far one of the most valuable assets you have. Meaning you could contribute more money to your 401k and your Roth IRA. So don't miss out on those because they are great benefits to you where you can get extra dollars in those accounts.

• 42:16Andrew Giancola?

  So at the time of recording this, the catch-up contribution for something like your 401k is $8,000. And in your 60s, the super catch-up contribution is going to be $11,250. So you can get an extra $8,000 per year into your 401k. In your IRA or Roth IRA, you can get $1,100 into that account. And so these are just additional contributions that you can make in those retirement accounts that help you catch up. The IRS gave these to you so that you can actually work on catching up. Number four is putting your kids' college ahead of your retirement. If you're paying for your kids' college, but you are not on track for retirement, you are building wealth in reverse. You need to take care of your own retirement first, then you can help your kids out with their college costs.

• 43:00Andrew Giancola?

  But do not start paying for college before your retirement is taken care of. That is doing this in reverse. I know you want to help your kids. I get it. But if you get to retirement and you don't have your retirement taken care of, then your kids are going to have to help you out, which is not the order that you want this to happen in. Instead, you want to be able to take care of yourself in retirement. I think that's super important. And then number five is never running your retirement numbers. If you don't know in your 50s how much you need to be able to retire, now is the time to figure that out because waiting too long is going to cause you stress, anxiety, and you could be planning and trying to hit the wrong target when in reality, either you could retire now or you are way behind. And so you want to make sure that you understand what that retirement number is and how to run that number.

• 43:45Andrew Giancola?

  And this decade has a lot of potential. Why? Because your income could be at its peak and some expenses may begin to decline. Maybe the kids are out of the house now or just some of the other expenses are declining, like you paid off your mortgage or whatever else. Well, if those are declining, you have some huge potential here. Plus you have those catch-up contributions and you can invest more dollars during the 50s. So I want you to really understand. I think it's so important in your 50s to understand what your retirement number is. I think it's imperative to note what that is. And so for many of you out there, I think that is a great place to get the ball rolling. Now let me give you an example of closing the gap. Let's say, for example, that you enter your 50s with $180,000 invested, okay?

• 44:26Andrew Giancola?

  Well, $180,000, if you left it alone for 15 years at an 8% rate of return, it'll grow to about $595,000. But let's say you started to invest an additional $2,000 per month. Well, if you did that over the course of the next 15 years, you'd have about $1.29 million invested. That's a big difference just by investing an additional $24,000 per year. Imagine if it was 4,000 or 8,000. You could really reap the benefits of compound interest even in your 50s. So I want people to understand it is not too late to get started investing. Don't make the mistake of not investing. Instead, get those dollars working. You still have time. Let's get into the 60s.

• 45:08Andrew Giancola?

  All right, your 60s is the last decade we're talking through today. And there are five ways to go broke in your 60s. Number one is retiring without knowing your annual spending. If you don't know how much you spend every single year and you retire, well, you are taking a massive risk, my friend. We need to make sure that we understand how much we spend every single year in retirement. And we are pretty calculated on this. We need to kind of have a real calculation here. If you try to retire willy-nilly based on social security and a little bit of money that you have, that is not a wise plan. Please, please, please understand how much you spend in retirement. Two is if you have no withdrawal strategy whatsoever when you get to retirement, meaning you don't know how much to withdraw, you don't know how much you're going to be pulling from those retirement accounts, that is a mistake. You need to make sure you have that. Three is claiming social security without a plan.

• 45:52Andrew Giancola?

  There are optimal times to claim social security. And in your 60s, figuring that out is very, very important because now you can begin to claim social security. Should you take it early? Should you take it late? There are a lot of pros and cons to both sides and it very much depends on your personal situation. So make sure you get some analysis on that so you understand what to do. Four is understand your healthcare costs. In your 60s, understanding healthcare costs is by far one of the things that I think you need to note because if you don't understand them, that can sink your ship as well. And then number five is if you're still investing like you're 30, you need to understand that there are two phases to the investing cycle. It's the accumulation phase and the preservation phase.

• 46:35Andrew Giancola?

  And if you're in preservation mode, meaning you're living off your portfolio, but you're still investing like you're 30 years old, you gotta make sure that you are adjusting your asset allocation slightly based on that risk tolerance and based on what you were trying to do with your portfolio. So in your 60s, make sure you avoid those five mistakes because I think it's really, really important to keep you on target. Now, as you see throughout this episode, there have been some patterns for every single decade. In your teens, it's all about building habits, making sure that you have the right habits in place and you don't just start to spend money willy-nilly. In your twenties, it is all about time. The amount of time that you have is by far the most valuable asset that you have in play and you can get started investing. Don't waste your greatest advantage in your twenties. That is the thing I want you to avoid.

• 47:20Andrew Giancola?

  In your thirties, it is lifestyle. Your lifestyle creep can sink the entire ship if you start to spend too much money on extracurricular activities because you have so much going on. A lot of times, you can start to spend more and not realize that you're doing it and it is so much harder to go backwards than it is to just avoid it all together. In your 40s, it's all about the risk. Making sure that you mitigate risk so that you can build that foundation for one of the most important layers when it comes to your retirement plan. In your 50s, it's about urgency. If you're behind, it's getting ahead. And if you are ahead, then it's about making sure that you have the right plan in place for retirement. And then in your 60s, this is all about sustainability. Making sure that you can sustain and live off the amount of money that you have on hand

• 48:05Andrew Giancola?

  and you have planned this out appropriately. Now, you can recover at any specific decade, no matter what you, where you're starting. Let's say you're starting at the age of 18. You could start saving and you can learn how credit works. If you're starting at age 28, get started investing today. It's the most important thing that you can get going is getting started investing today. If you're at the age of 38, is getting that lifestyle inflation under control. If you are struggling with your money, get lifestyle inflation under control first and that'll be the most important thing. If you're age 48, protecting your wealth, making sure you have a wealth protection plan for this next coming decade is really important. If you're 58, making sure you're running your retirement numbers because you're getting really close to the number. And if you're 68, optimizing your spending, your taxes, your social security,

• 48:49Andrew Giancola?

  all those different things is going to be very, very important. So to summarize everything we've been talking about, in your twenties, protect your time. In your thirties, protect your savings rate. In your forties, protect what you've built. In your 50s, protect your retirement timeline. And in your 60s, protect your freedom. That's what I want you to take away from this episode in understanding that decades have different seasons. They have different seasons of life that you're going to have to deal with various things. And the ways to go broke are going to change throughout your life based on what's happening in your life, who's under your roof, what's happening within your career, what's happening within your family.

• 49:30Andrew Giancola?

  And so you want to make sure that you are avoiding some of these ways that you can go broke by age. And I want you to make sure that you are thinking through some of the things that you feel as though you are struggling with right now. But also, if you want to dive deeper and you want to learn directly from me with group coaching calls, I encourage you to join Master Money Academy. Master Money Academy, you literally get group coaching calls with me every single week. But in addition, you also have the ability to be able to take all of our courses. You get a community of people who are all working towards that same common goal. And then again, if you want to work one-on-one with me in private coaching, feel free to shoot me an email. We'd be happy to help you out there. But Master Money Academy is linked up down below.

• 50:13Andrew Giancola?

  Again, this is our group coaching setting that's going to help you invest. It's going to help you build wealth and learn exactly how to get yourself on the right track. Awesome. Well, thank you guys so much for being here for this episode. I truly appreciate each and every single one of you and we will see you on the next episode.