Our biggest lessons from the #1 personal finance book

Maddy: [00:00:19] Hello and welcome to You're In Good Company. A podcast makes investing accessible for everyone. I'm Maddy and as always, I'm in some very good company with my co-host, Sophie.

Sophie: [00:00:28] Hi, Mads. How are you this afternoon? 

Maddy: [00:00:30] We are good. How are you? 

Sophie: [00:00:32] We've got Sascha here as well. 

Sascha: [00:00:34] Hey, I've got a mic now.Quietly skulking in the corner. 

Sophie: [00:00:47] You're not echoing this time. 

Sascha: [00:00:48] I know you might be regretting this momentarily. Like reaching a dead horse, turning me down. 

Sophie: [00:00:56] I have a bit of a story to start us off tonight because it's the best thing that's happened to me this week, and I need to tell you both about it. So one of the staples in my household when I was growing up I'd like to stifle was one of them was like a packet of chips, usually like Red Rock deli chips and then flavour. Well, this is what the story is going to be. 

Speaker 2: [00:01:13] Okay, so, Smitty, you picked it already.

Sophie: [00:01:17] And then the sacrum is like a block of Cadbury dairy milk. 

Maddy: [00:01:21] Delicious.

Sophie: [00:01:21] What's the one with the wide on the top. 

Maddy: [00:01:23] Top, top. 

Sophie: [00:01:24] Deck. That was like mom's favourite. Have it off to dinner like creature of habit she she is anyway. So when I was growing up, maybe like high school years, there was a flavour of chip that I was obsessed with the honey Dijon mustard. 

Speaker 2: [00:01:37] Did you have you guys? I remember you introduced me to my sophomore year in year eight. 

Sophie: [00:01:42] Oh, my God. I'm so happy that you remember. So sleepovers. I'd come to your house. Yeah. Get that favour, go to the movies, get a snack. I'd get that. Fine. My mom would buy that flavour every single night at 5:30 p.m.. You have a little trip before you do. 

Maddy: [00:01:56] This is so nostalgic.

Sophie: [00:01:57] Nostalgic, right. One day this trip gets taken off the face of the earth. Anyway, yesterday or the day before stopped. I walked down to the IGA in the city for my 3 p.m. snacky snack and a colleague of mine said, Can I please get a savoury snacky snack? Can you buy me one? I said, Yeah, of course. Someone asked me to buy them a snacky snack. I'm going to go rogue. So I go to the snack. 

Maddy: [00:02:19] Snack one more time. 

Sophie: [00:02:21] I got him ham, packaged ham. [00:02:22][1.4]

Speaker 2: [00:02:23] Oh, he loved. [00:02:25][2.4]

Sophie: [00:02:25] It, the whole. [00:02:26][0.4]

Speaker 2: [00:02:26] Package. [00:02:26][0.0]

Sophie: [00:02:28] But whilst I was in the IJA, honey, Dijon mustard, Red Rock deli chips. [00:02:33][5.0]

Speaker 2: [00:02:33] Were there, they have their. [00:02:35][1.5]

Sophie: [00:02:35] Back. So my market research was going to be, is there someone else out there that just remembers this chip as the best chip in their whole life that they've ever tasted? [00:02:42][7.1]

Sascha: [00:02:43] Do you know I have a theory. [00:02:43][0.7]

Sophie: [00:02:44] Okay. [00:02:44][0.0]

Sascha: [00:02:44] That's just occurred to me completely unscientific. Maybe there was another Grade eight person out there who was also obsessed with this chip. And now they're old enough to work at Red Rock Deli and they've got a job there and they've spent the whole time campaigning to bring it back to it. Played the long game. [00:03:02][17.7]

Speaker 2: [00:03:03] Yeah, I actually. [00:03:03][0.8]

Sophie: [00:03:04] Feel like I should have been doing that and campaigning earlier. You're in the wrong job. I literally sent a photo of this chip to my family WhatsApp group. My mom replied in like, Yum, mom, you're not getting it right now. Dad being like, Cool. I'm like, Dad, you're not getting it. And then Charlotte, my sister, older sister was. [00:03:18][14.3]

Speaker 2: [00:03:18] Like, Yes, I've already bought three packets. Yeah, someone else got excited as I am. [00:03:25][6.5]

Maddy: [00:03:25] I'm so happy for you. So if you tuned into last week's episode, you know that I have recently had a Corvette and I how do it is there time on my hands whilst I was in lockdown so I decided what better to do than to raid and invest in book. [00:03:41][15.7]

Speaker 2: [00:03:41] Oh, that's what we tell people to do all the time. Yeah, exactly. [00:03:44][2.8]

Maddy: [00:03:45] I'm finally putting my words into action. What I thought we could do today is to, I guess, save you guys from having to read the book too. Although I will say it was fantastic. I highly recommend you radiant, but I'm going to give you guys the short summary so that you can take away all of the key lessons that I took from this book without having to do the hard work yourself. [00:04:04][19.5]

Sophie: [00:04:05] Okay, so you've sent me a little bit of a summary. [00:04:06][1.5]

Sascha: [00:04:07] Hang on, Maddie. What's the title of the book? [00:04:10][3.0]

Speaker 2: [00:04:10] Oh, yeah, thank God. Yes. [00:04:12][2.0]

Maddy: [00:04:14] The book is it's the number one personal finance book in the world. Apparently it is by Robert Kiyosaki. And it is called Poor Dad, Rich Dad. [00:04:22][7.9]

Sascha: [00:04:23] Rich Dad, Poor Dad. [00:04:24][0.8]

Speaker 2: [00:04:24] It is. I mean. [00:04:26][2.5]

Sascha: [00:04:27] It doesn't matter. That verse is different in my dad. [00:04:29][2.1]

Speaker 2: [00:04:29] It didn't feel quite right when it came out. But I have to say. [00:04:32][2.7]

Sascha: [00:04:33] Maddie's had a really long day at work, so we're just lucky to have her at this moment. [00:04:36][3.1]

Speaker 2: [00:04:38] Yeah. [00:04:38][0.0]

Sophie: [00:04:39] Okay. So can you give the listener, like I, who have no idea what this book is about? A guy like I? What's the rundown? Quick rundown. [00:04:47][8.9]

Maddy: [00:04:48] It's all set the same. The author, Robert, grows up and goes to school and it's quite a well-off school, but he sort of is from a slightly different neighbourhood. He's just on the edge of the sort of entry to the school. So he. It would consider himself, I guess, poor or a lot less well-off than a lot of the other kids that he's going to school with. So from a really early age, he is quite aware of like money and wealth and what that means. Now he is the son of his dad. [00:05:14][25.4]

Sophie: [00:05:15] Yes. Makes sense. [00:05:16][0.9]

Maddy: [00:05:16] His dad works for the government, has a pretty well-paying job. So one day he comes home from school and he's like, Dad, how do I make money? How do I become rich? And his dad says, Go and speak to your friend's dad. My financial advisor is always telling me how good your friend's daddy's with money. So he goes over to his friend's house off school. He gets his friend on board, and they go to his friend's dad, who is rich dad. Now, I think what's really important to know right off the bat is that Rich Dad did not finish, didn't go to uni and started his own business very young. That grew very rapidly and he sort of built his own empire. [00:05:49][32.7]

Sophie: [00:05:50] It's like that typical, like Silicon Valley tech story as in I don't know what this guy was doing, but those people I just. [00:05:55][5.9]

Maddy: [00:05:56] Didn't. [00:05:56][0.0]

Sophie: [00:05:57] Know. But, you know, they didn't believe me and they're smart and they have heaps of money. [00:06:00][3.1]

Maddy: [00:06:00] And so, you know, I guess the point is conventionally shouldn't be rich, so to speak, but makes a really good living for himself. Yeah, this is what he refers to as his own dad. As poor dad who works for the government despite having a pretty well-off wage is sort of in this what he refers to as rat race of black money comes in, money goes out, has to work to keep living. [00:06:20][19.8]

Sophie: [00:06:20] Well, it's like, I guess what we talk about a lot, it's how you define money and your values around. Money is how you spend it, how you make it, what it means to you kind of thing. So it doesn't mean that an education means that you're good with money necessarily. [00:06:32][11.2]

Maddy: [00:06:33] Exactly. And that is what we're going to get into. [00:06:34][1.8]

Sophie: [00:06:35] So you're going to give me the four key lessons from this book that I think. [00:06:39][4.0]

Maddy: [00:06:40] Lessons that I took away personally. [00:06:41][1.2]

Sophie: [00:06:42] So as you sent me a WhatsApp and you jotted down some of the key lessons to tell me to think about and reflect on. I did that in my spare time. Shower thoughts. The first key lesson was. [00:06:53][11.2]

Speaker 2: [00:06:53] Live to work or work to live. [00:06:56][2.6]

Sophie: [00:06:57] What does that mean? [00:06:58][0.7]

Maddy: [00:06:58] Yes. So I think this sort of comes down to the idea that for most people, when you earn more money, it sort of translates into higher expenses. So if you think about you get the promotion at work and then you think, oh, finally, I'm going to buy that expensive back that I've always wanted. Yeah. Or if you get the promotion or the pay rise you've been looking for, for ages, you might go and get a larger mortgage than you were previously able to do. So your higher income is just translating into more debt. [00:07:23][25.3]

Sophie: [00:07:24] I think they call that the lifestyle creep. I think yeah, to that. Now where is where you when you make more money, you feel like you can spend more money and you're a little bit more flexible with your finances rather than being on such a strict budget. [00:07:35][11.2]

Maddy: [00:07:36] Yeah, I think probably the key thing that I took away from this book or the thing that sort of stuck in my mind most is the idea of when you work for a company, you know, you working hard is not actually leading to you being the beneficiary of your hard work. I didn't say that very well. So let me explain it. The way the book sets it up is if you work for a company, if you work harder, that translates into the company's owners and the company's shareholders earning more money and doing benefits for themselves. So you're basically paying for their retirement. Which leads me nicely to the next point, which is as you earn more money, the more money you pay in tax. So if you are working harder and get a pay increase, that's more money going directly to the government in the form of tax. Then there is a final point, which is the bank. So as you earn more, like I mentioned before, you might have a higher mortgage. You start paying more off to the bank. So I guess the point that the author is really trying to raise here is how do you think about how you are earning money? And I guess reframing it to make sure that your harder work or your increased effort is actually translating into increased results for you. [00:08:43][67.8]

Sophie: [00:08:44] Yeah. And so that saying work to live or live to work, is it that living to work is that you're potentially doing something that you're super passionate about and something that you love doing? And then because of that, you're actually investing in yourself and that money is going directly to you rather than you're just being a workhorse for a big company that maybe thinks that you're just a little fish in the ocean. [00:09:03][19.1]

Maddy: [00:09:03] I think that's exactly right. He talks a lot about how people work in order to get money to feel secure. He talks a lot about the notion of fear and greed. So, you know, a lot of people work in order to avoid fear and feel secure. So by sort of not finding a job or not working in something that you're passionate about, then the only other option really is sort of you're working for fear of not being, you. [00:09:30][26.6]

Sophie: [00:09:31] Know, but that really makes sense. And I think that's something that did resonate me that I did reflect on because if I think about, you know, say this podcast and like what we're doing on the side and people, you know, might say, well, would you take it full time? It's always in the back of your head. It's like, you know what I do on my day job? I love it, but it's always like, Well, that's such a secure thing. Like, I have a secure, stable income to like step away from that is really scary to think about. [00:09:53][22.5]

Maddy: [00:09:54] Yeah, the author talks a lot about that. It's not so much the lack of technical information that holds. A spark, but more the lack of self-confidence. Yeah. And so I was wondering, do you have any examples of where sort of self-doubt got in the way of, like, opportunity? [00:10:08][13.9]

Sophie: [00:10:10] To be honest, I have always like had a little entrepreneurial like streak in me and I've always wanted to start something little businesses. And I've had so many ideas and like done like massive research for them because I get quite addicted to doing it and I've never started any of them just because it's like the. [00:10:26][16.8]

Maddy: [00:10:27] Podcast. [00:10:27][0.0]

Sophie: [00:10:27] You know, obviously the podcast, I mean, that's just it's different, but I've always just been like, well, it's going to be too hard and if I fail, it's so embarrassing. But then every time that you listen to people that have started businesses like they've failed 100 times before they've ever found something that sticks. So true. But as you said, it's that fear thing. It's like if you don't have a stable income, like how are you meant to get by day to day? So that's kind of what stopped me bringing. [00:10:49][21.6]

Maddy: [00:10:49] It back, I guess, to like money and investing as you have developed your sort of financial knowledge or investing knowledge, how do you think it's helped you to like find better investing opportunities or be better with your. [00:11:02][12.8]

Sophie: [00:11:02] Money? I think what investing has brought to my life is so much more knowledge about anything and everything because I speaking about it so frequently. And I think the thing that it gives me is opportunity to speak to people that I would never speak to, not only in the podcast sense, but like when you're out in a bar or you're speaking to someone at work, you all of a sudden have this array of knowledge which opens you up to new opportunity. So I think investing in terms of that money sense, it kind of, you know, money comes through through networking, I find. And so I think that's what investing has done for me. If you just get rid of the traditional sense of like making money through the stock market. [00:11:35][33.3]

Maddy: [00:11:36] It honestly makes my heart look happy. [00:11:38][2.0]

Speaker 2: [00:11:39] You look happy right now. [00:11:39][0.7]

Maddy: [00:11:40] I think it's just such a cool way to engage with the world around you. Yeah. [00:11:44][4.1]

Sophie: [00:11:45] So you said live to work or work to live k learning. How do you make your money work for you? [00:11:51][6.6]

Maddy: [00:11:51] So I think this brings us nicely to lesson number two, which is one dad had a habit of saying I can't afford it. The other four begged those words to be issued. He insisted, I ask, How can I afford it? [00:12:02][11.0]

Sophie: [00:12:03] So what was the lesson that you learnt? [00:12:06][2.8]

Maddy: [00:12:07] I think it's really reflecting on your own mindset towards money. You really need to start with yourself and really reflect on how you think about money and how your attitude sort of influences the way that you do manage or don't manage your own finances. One is a statement which is I can't afford it and the other one is a question. And it really starts it gets that mine working, it really makes you think. And I think that change in mind frame is so powerful. They talk in the book about how he draws a parallel between a person who goes to the gym to exercise on a regular basis versus someone who sits on the couch watching TV. Right. Proper physical exercise increases your chances of good health in the same way that proper mental exercise increases your chances of wealth. [00:12:47][40.6]

Sascha: [00:12:49] Can I say this really does remind me of that because it's like that negative mindset of when you say I can't afford it, or you go like I look fat or I can't believe I ate all that. You have a chance of bingeing. [00:12:59][10.4]

Maddy: [00:12:59] Or I'm so poor, therefore buy the dress because you're already poor. You aren't well. Staple. Yeah. [00:13:04][4.6]

Sascha: [00:13:05] As opposed to being like, how can I afford it? Well, if I put $50 aside for the next four weeks, then I then I'll be able to afford it. So it's like just reframing your mindset, listening. [00:13:14][9.5]

Maddy: [00:13:15] Afterpay is super interesting in this space because it's like the psychology of paying less. Yeah, but in reality you are paying more and it's like, well, if you can't afford it right now, should you really be buying it? [00:13:26][11.2]

Sophie: [00:13:26] Yeah, it's almost like you're not planning for the things that you want to be able to afford, but you need to be forward thinking and going, okay, I want that. So what's my strategy to get there? Because at the end of the day, you can afford stuff if you, you know, to certain limits. If you do really plan around it. I think it's up bank. It's coming out with a book, one where it's like, you know, you want to buy. Yeah, you want a new couch and it's like, okay, well that's going to cost me. I don't know how much. And so you have to put your money away to get there. And I think that's the whole question of thinking, how can I afford this? What's my plan going to be? [00:13:53][27.5]

Sascha: [00:13:54] Can I ask you about the question? Are you like this with shares? Because I always put mine in my share account and then I'm like, Don't buy anything. You've got to wait for the dip. You got to wait for the dip and then buy two days in. I'm like, Now just buy an ETF and then I just buy it. So I'm like terrible waiting. [00:14:12][17.7]

Maddy: [00:14:12] So one of the things that they talked about in the book and it really resonated with me, was paying yourself first. Now, obviously, I mean, there's a level of probably privilege that comes with this, right? Because at the end of the day, you have to pay your bills and things like that. But what it it's the shift in psychology about my income comes in and I've started doing this straight away. I transferred to my share account and invest in shares. And then what I have left over is what I have to live with. And it's a really different shift in psychology as opposed to if I it to the end of the month to invest. [00:14:43][31.1]

Sophie: [00:14:44] Yeah. [00:14:44][0.0]

Maddy: [00:14:45] I would probably have spent most of that money and I would definitely be investing less. Kind of like my own savings strategy is I make my money illiquid and then I can't use it. [00:14:52][7.7]

Sophie: [00:14:53] Well, I've also seen people who do that right for other things, like their health or something that they really enjoy doing. It's like they can thing. 200 bucks away for pottery class or something because it's like, that's what I want to do. It's like making sure that you do have that money available. So what is your take away from this lesson? [00:15:08][14.7]

Maddy: [00:15:08] So Roberts reached out and said that true learning takes energy, passion and burning desire. So I am wondering, can you think of any examples where that has proven true in your life and something that you really care about has led you to learn something that has really, I guess, shifted your perspective or really changed your life? That's very deep. [00:15:30][21.4]

Sophie: [00:15:32] One that I can kind of pinpoint was when I was in my teenage years. I was very fortunate to live in another country. I lived in Italy for a year and it was kind of the back of a burning desire to learn the language and learning that language, even though it's one of the hardest things you can do. And it's very isolating. But learning that language completely opened my mindset to how other people think, how the people see the world. And I think it kind of has helped me define what success is a. [00:16:00][28.0]

Speaker 2: [00:16:00] Little bit differently. [00:16:01][0.5]

Sophie: [00:16:02] Just because, you know, you incorporate how other people define success in different cultures. It's not just, you know what I say. [00:16:07][4.9]

Sascha: [00:16:08] Did it give you a new understanding of how hard it must be for people who moved to Australia to learn English? [00:16:13][5.0]

Maddy: [00:16:13] So it is. [00:16:14][0.4]

Sophie: [00:16:14] And I also even like when people have moved from another country, I'm just so much more like empathetic and want to give my time because you know, Australians can actually be quite closed off. People say that we're like an open bunch. We're not that. Yeah. And so it has completely changed my perspective. And you know what? It comes back down to the most amazing and most interesting people you meet because you've just got that slightly open, more open mindset. What about yourself? [00:16:39][24.9]

Maddy: [00:16:40] When I reflect on, I guess, learnings, some of the biggest things I've had, it's probably from a very close family friend of ours, someone called Matt, shout out if you're listening. I don't know if he does, but we've just had so many conversations over the years and I really take so much of what he says on board, and I think it's changed my perspective on so many things. And one thing that I think he really taught me was that is always an opportunity in as in every situation, no matter how shit it is or no matter how boring you think what you're doing is or how unfortunate things have worked out, there is always something really great to come of that. Yeah. And I think that has just totally changed my perspective, like both at work in particular, I would say, but in life and really just trying to I guess find the opportunity out of every situation. I mean, that's how the podcast started. [00:17:32][52.7]

Sophie: [00:17:33] Yeah, it's like glass half full. Finding a positive in every situation leads you to success, apparently. We are going to take a quick ad break for our sponsors, but we'll be right back to find out what the second two lessons are that Maddie took away from this book. [00:17:46][13.1]

Speaker 2: [00:17:50] What? What's that? [00:17:52][1.5]

Sophie: [00:17:52] The third lesson, which was my favourite lesson that you nurtured in the WhatsApp, was financial education is your greatest asset. So what did you get from that book? [00:18:02][10.4]

Maddy: [00:18:03] So the phrase it really stuck with me, which allowed to thrive. Instead of working to end, work, to learn. [00:18:09][5.9]

Speaker 2: [00:18:11] I feel like we're in a like a prep classroom now. I think this is good. Clap your hands. Sorry. [00:18:16][5.0]

Maddy: [00:18:17] So, according to this book, money isn't your greatest asset. And if people are prepared to be flexible and have an open mind and learn, then they'll actually tend to get richer. [00:18:26][8.3]

Sophie: [00:18:26] Mm hmm. I think this is the number one piece of advice that my dad has instilled in me is take every single opportunity to learn. Like, your learning is a total privilege, and you have no idea where it's going to take you. But it's like it's honestly the key to success. [00:18:41][14.7]

Maddy: [00:18:42] We are and investing on Finance podcast. So I mean long term listening to the podcast will know how you got into investing, but where would you say your sort of money education began? [00:18:52][10.0]

Sophie: [00:18:53] Definitely like selling my mum fake for like setting up. [00:18:56][3.5]

Speaker 2: [00:18:56] Shops. [00:18:56][0.0]

Sophie: [00:18:57] You know, you'd have a little cashier selling lemonade, but no, I walked myself down to Brumby's at 14 and nine months, which is the age that you can get into in Australia. And I got myself a little loan, a badge and a little brumbies t shirt and I was so excited to cut the bread and I. [00:19:13][16.0]

Speaker 2: [00:19:13] Right. Yeah. [00:19:14][0.5]

Sophie: [00:19:14] Except for when that workplace ad came out and someone gets like the hands on it for. Yeah. That was the time spent working at Brumby's. Not good. Not good for. [00:19:22][7.9]

Maddy: [00:19:22] Morale. You know I have such a vivid memory of us circa year eight or you know, it must have been in nine because we were very young for a year, so we were waiting for ten and nine months. And I remember we were talking about three more months until we can finally get a job. I was so excited. [00:19:38][16.0]

Sophie: [00:19:39] It's so bizarre, isn't it? I was so excited to work. But coming back to a question, where am I? Where my money story came from, I think it was just again, instilled by my parents. My dad has always been like, you work. If you work hard, you'll find success. And so, like, that was just the story I'd create in my head. If I get a job, I'll be successful. [00:19:57][17.7]

Sascha: [00:19:58] Yeah, I was a bakers delight girl. [00:19:59][1.3]

Speaker 2: [00:20:00] Oh, yeah. [00:20:01][0.6]

Sascha: [00:20:01] So the other side of the coin, the other side of the bread, I. [00:20:04][3.0]

Maddy: [00:20:04] Feel like people definitely go out one or the other. I was a brumbies. [00:20:07][2.3]

Sophie: [00:20:07] Brumbies. I had better brownies circling back to my mum who loves to actually love the brownie. [00:20:11][3.7]

Sascha: [00:20:12] I remember once they introduced this new line of croissants and I you one of those came who says Colossal Cross. Yeah. And then I moved in and they were stuffed with, like, feta cheese and some sun dried tomato. And I hope no one's listening for my boss job, but, you know, we used to be able to take home what was leftover at the end of the day or if it fell on the floor in airports. Sorry. [00:20:36][23.9]

Speaker 2: [00:20:37] I know. [00:20:37][0.1]

Maddy: [00:20:37] I hope no one's listening because you're still his point. [00:20:39][2.0]

Speaker 2: [00:20:41] No, I am. [00:20:41][0.5]

Sascha: [00:20:41] He is my former boss. Bakers delight. And they were like, Oh, we're just trialling them. So they're going to like sell six a day. And then the girl I call and I ate all of. [00:20:54][12.5]

Speaker 2: [00:20:54] Them. [00:20:54][0.0]

Sascha: [00:20:55] And said that they'd all fallen on the floor and then they went, well, no one likes them. Oh. So they didn't sell them anymore. But it, it turned out that we just eaten them out because of you. [00:21:05][9.9]

Maddy: [00:21:05] We never got to experience quizzes with feta cheese and sun dried tomatoes in them. [00:21:10][4.6]

Sascha: [00:21:10] Yeah, pretty much. And then, you know, it was one of those first lessons where I went, Oh, that backfired because they were so good. Then we just kept eating them also. [00:21:18][8.0]

Sophie: [00:21:18] Why wasn't your manager like, these are two hopeless workers that they've dropped 6% on. [00:21:22][4.1]

Speaker 2: [00:21:22] The floor. [00:21:23][0.1]

Sophie: [00:21:23] Rather than, oh, no one likes them. [00:21:25][1.7]

Sascha: [00:21:25] I think we checked, we kept changing the excuse between like, oh, they fell on the floor, oh they burnt too much. Oh no. And likes them. So we took them home that day. Yeah, it was not good. [00:21:35][10.3]

Sophie: [00:21:36] Nanny, where was your first job or better question? Where did your money story come from? [00:21:39][3.4]

Maddy: [00:21:40] I think it was always sort of instilled by my parents to be engaged in the topic, but not necessarily investing more. Just kind of like the how money works and I guess kind of like you working hard and sort of what you get in return for that. But I think for me it's been much more about like I'm fascinated by businesses and how businesses work and what cool things businesses are able to do. And in my mind, everything really comes back to money and finances because, you know, someone a business can have the greatest ideas or the Start-Up can be the next biggest thing or the coolest thing. However, if they don't have the funds or if they aren't able to manage their money enough in order to achieve what they want to do, then they're not going to be able to do that. So I think I've always just been really fascinated by sort of how businesses work, and then the flow on of that is like how money makes the world go round. [00:22:33][52.9]

Sophie: [00:22:34] So I think we're all in agreement that you've got to continue learning till the day you die. What is the final learning that you took from this book? [00:22:40][6.4]

Maddy: [00:22:41] This one is huge. I'm pretty excited to share with you guys. Wow, this one is know the difference between assets and liabilities. [00:22:48][6.8]

Sophie: [00:22:49] Which sounds like really boring. [00:22:51][1.6]

Maddy: [00:22:52] Well, it's a counting rat, like in its core. However, the author has quite a different perspective on it, so the way he defines it is really simple. And asset is something that puts money in your pocket and a liability is something that takes money out of your pocket. [00:23:06][13.8]

Sascha: [00:23:06] So my ability to walk microphones is an asset, but my terrible timekeeping of turning up late every day is a liability. [00:23:14][7.4]

Maddy: [00:23:14] Yes. Because you currently are podcast producer, so your ability to. Yeah. That puts money in your pocket. And also when you run late, instead of taking the time, you have to jump in and everybody takes money out of your pocket. [00:23:25][10.3]

Sascha: [00:23:25] Honestly, the number of times that happens to me so well, you just have to look at my uber account. [00:23:30][4.6]

Sophie: [00:23:31] So why did you find these are really important lesson? Because it seems like pretty obvious money coming in, money coming out. [00:23:36][5.1]

Maddy: [00:23:37] So he has a pretty controversial opinion. And I'll say it's controversial and I don't fully know whether I agree or I think it's probably just more complex than what he sort of presents. But his opinion is that a house is not an asset. [00:23:50][13.4]

Sophie: [00:23:51] Yes. So you told me this the other night over a drink. So you had to sit for a while and talk about it. [00:23:57][6.3]

Maddy: [00:23:57] Explain it. Let me rehash it. The idea is bad is when you buy a house, if you have a mortgage, you go to the bank. It's an asset. Right. But the reality is, is when you have your mortgage that has all that, it's leading to his money coming out of your pocket because you are paying off that house and you are paying interest on your repayments. [00:24:13][16.0]

Sophie: [00:24:14] But we see it as an asset because it's like once it's paid off, this is something that I can sell off and make more money on, etc. etc.. Right. [00:24:20][6.6]

Maddy: [00:24:21] So the author makes the point that rich people acquire assets, so securities, so for example, stocks and investment, so, you know, potentially an investment property. Whereas he says poor people add liabilities, commitments and obligations. So think your mortgage for your home. And it really got me thinking that because there is sort of this way up in terms of if I want to rent for the rest of my life, you know, that comes with a bit of risk, right? Like I am forever at the whim of my landlord turning around and saying, time to move out. I want to sell the house or time to move out. I want new tenants or I'm upping the rent. [00:24:52][31.5]

Sophie: [00:24:53] And Australia is really bad with that. Like overseas they have really long term lease commitments and people have more rights or is in Australia it's seems kind of everyone is worried about buying a house because you can get kicked out of rental apartments, rental properties really easily. [00:25:06][12.8]

Maddy: [00:25:06] I think just what it really made me think about was, you know, we have grown up so strongly with this idea of the great Australian dream and that the ultimate goal is to buy a home. And that is what I guess is financial success in a way, in my mind. And it's just kind of makes me really reconsider, right? Because like if my goal is to grow my wealth and he talks about wealth being how long can you survive if you stopped working tomorrow. Yeah. [00:25:33][26.7]

Sascha: [00:25:33] Oh, that's interesting. How long can you survive if you stop working tomorrow? [00:25:36][3.1]

Maddy: [00:25:37] And he contrasts it from this idea of net worth, which is the difference between your assets and liabilities. And he says is often is filled with pebbles, expensive junk and opinions, which I thought was so interesting. Right. Because it talks about if you think calculating your net worth. You know, you might put your car on there and you say how much it's worth and you put your home and you say how much it's worth. You might also put your expensive jacket or your shoes, and that is apparently a net worth, whereas in reality. [00:26:01][23.9]

Sophie: [00:26:02] Your car is costing you a lot of money, your house is costing you a lot of money. [00:26:04][2.3]

Maddy: [00:26:04] And it kind of makes more sense that your wealth would actually just pay well if I stopped working tomorrow. How long am I going to be cool for? Because that's kind of the goal, right? Is like that freedom to not have to work and to be financially secure. [00:26:16][11.6]

Sophie: [00:26:16] Yeah, you're making me think about it. I'm trying to calculate a timeline. I don't think it's too long. You know what you're saying is so right? Because I'm thinking about it now. I'm like, oh, my God. It's it really doesn't necessarily mean your assets, because your assets could be costing you a bunch of money. So you can't be looking at it in that hot and fast sense. So I like that. It's like questioning your perspective and my perspective on when you first told me this, I'm like, Oh my God, a house is not an asset. Which I'm not saying that that's what it is. I'm just saying that it's an interesting way to think about it. [00:26:44][27.5]

Maddy: [00:26:44] You can also still want one, but I think it's shifting the idea from you buying it because it's an asset and because it's a really good thing to you buy it because you want the security or you want to build a home or you want somewhere for your family to live versus if you want a medium to generate wealth and to build your wealth. Maybe that's not on his sort of definition, the best way to do it. [00:27:05][21.0]

Sophie: [00:27:05] So the four lessons that you've taken us through. Live to work or work to live to find your success. Baby one dad has a habit of saying I can't afford it, whilst the other says, How can I afford it? Switching out perspective financial education is your greatest asset and nor the difference between your assets and liabilities. What was your favourite lesson, do you think? [00:27:26][20.5]

Maddy: [00:27:26] I think my favourite lesson was the first one. Live to work and work to live. I mean, I think the rest of them sort of flow from that and are a part of that. But I think, you know, I always want to be doing things that I love and I want money to be a side beneficiary of that. But I don't want to have to ever be doing something for money. I mean, obviously that's like quite a privilege thing to say and that sort of. Very high level. I'm obviously need to work in order to make a living and survive. But I think continuing to have that mindset sort of drive the way that I live is a really positive way because you don't want to be part of the rat race, you don't want to have to go to work and you're unhappy just to pay the rent or pay the mortgage or survive. [00:28:09][43.2]

Sascha: [00:28:10] And if you are now like that might be why you're investing. Because in ten years and 20 years, you want to be able to change that for yourself. Like it's okay to be doing that now. [00:28:18][8.0]

Sophie: [00:28:18] So yeah, I mean, we're in the rat. [00:28:19][1.2]

Speaker 2: [00:28:20] Race right now. Absolutely. [00:28:21][1.5]

Sascha: [00:28:22] So what was your favourite? [00:28:23][0.8]

Sophie: [00:28:24] Mine is definitely financial. Education is your greatest asset. I just think learning is such a privilege and it opens so many doors. Learn one thing could start a conversation with you with a random person, change your life. So I think it a great lesson that I resonated with. [00:28:39][14.7]

Maddy: [00:28:39] And learnt, not learnt and or the other way around. [00:28:42][2.6]

Sophie: [00:28:42] To learn, to earn. [00:28:43][0.7]

Speaker 2: [00:28:43] To learn and to learn and to learn. [00:28:44][1.4]

Sophie: [00:28:46] Well, thank you so much for taking the time to read a whole book to yourself. [00:28:49][2.7]

Maddy: [00:28:50] My pleasure. [00:28:50][0.2]

Sophie: [00:28:50] Giving us all the lessons so I don't have to write it, but I probably will. It sounds like a good deal. [00:28:54][3.6]

Maddy: [00:28:54] I honestly highly recommend. I mean, we have really only scratched the surface with our chat today. But as always, if you have any questions or you want to continue the chat, please jump into my damns on Instagram @yigcpodcast or post in our Facebook group at YIGC Investing Podcast Discussion Group.

Sophie: [00:29:10] And we'll put in a thread in if any of you have read the book, I would love to hear what your favourite lessons have been. Otherwise you will hear from us next week.

Maddy: [00:29:20] Catchya