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Does Your Behavior Affect Your Finances?
Sean: From Erika. Once I make my first million, what should I do with it?
Toni: That’s a very broad question because you don’t know what your goals are.
Toni: Right? You don’t know what you want. It’s like asking us the best vehicle to take if we don’t know what your destination is.
Sean: Right, right. How about you, Toni? What did you do with it?
Toni: Actually before I hit my first million, people thought that I invested my way there, but it’s actually more of I earned my way to my first million. So what I did was whatever income that I earned on a monthly basis, I saved like more than 50% of it or maybe like 60 to 70% of it. And then once I’m able to have my first million, that’s when I started aggressively investing and building my investment portfolio.
Because not a lot of people understand that a 10% gain on 10,000 is just a 1,000 pesos, but a 10% gain on a million is 100K pesos. So if you look at the difference in volume, you’ll realize that you’ll actually yield better returns when you have a bigger starting capital to begin with. So that’s what I did. So I invested in myself, I just took on a lot of side hustles to develop my skills that people are willing to pay me for. And then once I hit my first million, that’s when I started investing into our new startup. And then also other investment vehicles that I’ve mentioned earlier. But how about you?
Sean: I think I rolled it in the business. That’s what I did. Not a lot of people see as far as five years into the business or even three, four years into the business. If your business is growing, that doesn’t mean that you’re going to make a lot more money and that’s it. It actually means that you have to reinvest a lot more money.
Toni: Correct. Correct.
Sean: Yeah. Kind of like losing it from your bank and investing it in your business. So with SEO Hacker, we had a very small office. I actually started out in the attic of my parents’ house, I was still a freelancer at that time. And then I got kicked out of the house, so I stayed at a friend’s place for a while and I was building SEO Hacker there. And then we finally rented our first office. It wasn’t big, it’s like 30 sq. That’s it. That’s our first office. And I paid like 10K a month for it, which is fine during that time. That’s 10K a month, that’s okay.
When we started growing, I had to rent a bigger place and it cost more money and I had to renovate it. That cost more money. So it’s not like you could just keep the money and invest it right away like in a paper asset or in land. You can’t. You have to invest in your business first because you can look at it this way. If you invest it in a paper asset, and it makes you like even 50% for the year, but your business would make 500% for the year, of course, you’re going to invest it in the business. It just makes sense.
And if you don’t grow your business, there’s a huge chance that your competition will eat you up because that’s what competition does. They’re always going to want your piece of the pie. If you’re not growing, they’re probably eating your piece of the pie already bit by bit. So you have to be on the edge. You have to be competitive. Even today, I’m investing money I saved up in the company for the business. What you said is right, Toni. It depends on what your goal is when you make your first million. But it’s not big.
I just want you guys listening here to know, with a million, you can buy a car and it’s gone. A million flies by fast. It shouldn’t be that if you have one million, it’s already okay, you’re going to chill. It shouldn’t be like that. One million just flies by so fast. And the property today, if you want to buy a house and lot, it’s a lot more than one million. So it may sound big, that one million pesos, but if you’re going to buy assets like a house and a car, it’s not big. So, yeah, I hope that helps.
Where can I spend my money if I’m 13 years old? Oh, we have a watcher from Twitch. Welcome to the show.
And if you’re 13 years old, save it up, dude. I mean, if you have money as young as now that you’ve saved up. When you’re as young as 13, the behavior is more important. The behavior, the mindset is more important because you’re not yet worried about a lot of responsibilities if you’re living with your parents. So just save as much as you can so that when the time comes when you have to support yourself, you have to support a family, you know how to save. You have that discipline, that behavior and that mindset already with you.
Money is all about behavior. Just as business is all about behavior. Most businesses close down 9 out of 10. It’s not because of the economy. It’s not because of the pandemic. It’s because of behavior. A lot of business owners, the behavior is let’s wait it out. March 2020, it’s ECQ, let’s wait it out. Let’s just wait and see. Government says, oh, by May or by June, we’re already okay, we’re going back to normal. What happened? In May and June, nothing was normal. And those business owners are still in a wait and see mode and they’ve been bleeding out. It’s a behavior problem. And finally they closed business because they couldn’t bleed out further.
But those businesses that have the behavior of, we can’t wait this out, we have to do something right now and pivot, they’re the ones actually thriving right now. So business is all about behavior, just as money is about behavior. And when you’re young and you’re still in your formative years, I’d say 13 to 20 years old, it’s still quite formative, although independently formative, rather than parental formative. So your parents aren’t influencing you as much now when you’re a teenager, all the way to when you’re 20.
You’re being influenced and you’re solidifying yourself, your identity, and your behaviors during these years. And so I’d say save up. Make sure to solidify that discipline that you can save money and you can say no and deny yourself some things that you want to buy. How about you, Toni? What’s your take on this?
Toni: You’ve said it all. When I was still, I wasn’t even thinking about where to save yet and all. Actually, no. I posted a video back then of me making a video about how I budget my 20 peso allowance. So if you guys haven’t watched it, go ahead on my TikTok, you’ll be able to see it. I was 10 years old and I was showing my 20 peso bill. And yeah, during that time I was already learning how to budget.
Wow, at 13 years old. Okay. So if you’re thinking about it now, then definitely in the years ahead, you’d be able to establish yourself. You’d be able to learn how to manage your money better, because you’re already thinking about that as early as now. It makes me proud.
Sean: Would you recommend getting a credit card at a young age?
Toni: Yeah. We’re both young so I think you can also answer.
Sean: Thank you.
Toni: But okay, I’ll start. So yes, for as long as you know how to use it, obviously. I mean, you’re ready, if let’s say you spend less than you earn, you have savings every month and you can easily say no to impulse purchase or shopping, meaning you can walk by a sale and not spend or blow all your money. And I would say you’re not ready to get a credit card if you view credit cards as free money. Because when you look at it as money that you think you have, then you’ll just end up racking interest charges.
But overall people would recommend you to get the credit card as young as you can, if you can, because it will be reflected in your CNC report. At least lenders would be able to see history. Because from what I understand, they’re more skeptical of account holders that have no credit history. So they’re almost always going to assume the worst about you and that you’re a bad spender and all. So if you have that credit history, then it helps them decide if they can take on your loan application or not. So, yes. My answer is yes. Maybe you could add into that.
Sean: I agree with everything that you said, Toni. So heed that advice. That’s very good advice right there. My answer would also be yes. Why not if you have the discipline. Again, we’re talking about personal finance management. It’s not complicated, but it’s tough because you have to have discipline. And the discipline is to deny yourself. Deny yourself.
When you want to swipe that credit card for something that you don’t really need, take a pause, and let a day or two pass by. If you still feel that way, take a pause again, and let a day or two pass by again before you swipe.I mean that. Because people usually think that a credit card is a means to be able to buy things they can’t afford. That is the worst way to use a credit card. If that’s how you’re going to be thinking, if you’re going to be tempted to think like that, don’t get the credit card or cut your credit card.
But why I would recommend it is because of the points. So all of my bills, I use credit card, like the ads I run for all my clients, and Meralco bills, all the bills, everything, I pay them via credit card. So there was a time my miles, like it reached half a million. Well I couldn’t use them because it’s a pandemic. Right? So it’s very huge.
Toni: Yeah. Free travels for you.
Sean: Free travels or, well, I spent it on Amazon. So Amazon accepts the miles for some strange reason. And I was able to buy a lot of stuff for free. For me, a credit card makes sense like that because if you can pay it and I always pay my bill, my credit card bill on time, full amount. So make sure you always pay on time, full amount. If not, the interest is crazy, it’s just crazy. So do not make that interest catch up with you, but yeah, that’s probably the reason why I’d recommend it.
Toni: Well said, okay.