Chelsea sits down with Hank Green to ask him about money, success, and his top secret “5% rule”.
Hi i’m chelsea from the financial diet i’m hank from the financial diet not really a little bit i helped produce the show and today we’re going to be talking about money success working on creative projects all of which hank knows a little something about i know everything about money and success so tell me a little bit about how you were with money growing up were
You always the kind of kid who like saved and planned and invested for the future i loved to have money i didn’t really care about it spending it was never a thing especially as like a kid kid like all the money that came to me like grandma checks like anything i found the couch cushions i would keep and like hide it was like a collection but did you have plans for
It no in fact in fact the two things that happened to that money where my brother would steal it from me or i when i got into like high school age i spent it all on magic the gathering cards i was like i needed a new collection so when you graduated high school you really didn’t have anything by the time i graduated high school all of my like childhood savings had
Definitely been burned away but i do remember what as it as a kid and i still like it is difficult to get out of this mindset now for me that just having money is the point not having money to spend on stuff i disagree with that sort of philosophically but there’s still a thing in me that’s just like oh money it’s for for having yeah not for eating around not for
Actually the value it can provide your life but just because it’s like keep the points you have in life which is a bad way of looking at it i think dollars are not life points experiences are life points as a look at that you can put that on a coffee mug so you have something called the 5% rule i do i have never told anybody about the 5% rule except chelsea fagan
Did that start when you were hoarding money as a child it didn’t know the 5% rule started when i was in college and i had this idea if i took all the money that i spent on soda on coca-cola and mountain dew and instead of spending it on like literal poison that i was putting in my body delicious poison and i took that in instead i spent it on just whatever that
Was like something that could maybe like even if it was a tiny percentage maybe but maybe pay back that amount of money then like what a remarkable thing that would be and then i had this idea in my head but then i could take whatever money i made from the enterprising i funded with my soda money and then i could put that in a new enterprise and then when i was
You know 50 years old and like ted turner the i could be like i started this all with the money i would have spent on cokes uh whippersnappers to to problems with this idea one it isn’t very much money it turns out that you spend on coke too i couldn’t stop drinking mountain dew when i finally did have something that i i wanted to like this is an idea that i want
To spend money on if i could take five percent of the money that i haven’t put that in this like that’s not that’s like not that disastrous of a risk and even if it doesn’t work out i’m investing in myself and like and figuring out how to do this thing like even if it goes terribly wrong at least i learned why it went wrong and so since then i’ve always had like
I’ve had that i’d like looked at my and said like it is always okay to spend five percent of my money on an idea if i think that the idea has a chance of like of paying that money back is that what kind of because i feel like a lot of people somewhat myself included look at investing as something that like old rich people do exclusively and that like young people
Who have like bills and students are just like not entitled to is that like what got you over the hump of like okay i can invest honestly there is no one who should be investing more than young people the investment horizon i think is a term of a young person is much broader like that so like compounding interest works best if you have a very long period of time
In which to have it compound so if you start investing when you’re 20 or 25 like it is so much more valuable than if you start investing when you’re 35 or 45 you know every dollar you put in is going to be worth five or ten dollars by the time you retire which is ridiculous it’s so weird how this is weird to say but now that i have money i understand how easy it
Is for rich people to make more money oh yeah it’s just such a racket it really is i make so much money from just google’s price going up in the stock market and i know that that’s a that’s a risk and it’s an investment and maybe that will go down but it is remarkable to have seen i bought google in 2008 and that money is worth 300% more money now it is tripled i
Sort of like resent you know i know everybody’s gonna hate me it’s just a lot it’s just so weird and it’s the other thing is that those same rich people who are investing and making money off their money they never talk about it they’re never like you’re right to wear it well you don’t want them to resent you exactly and then the other thing is when i take that
Money out i pay 17% taxes on it instead of the 35% taxes i pay on the actual money that i actually work for wow all right but uh that those systems are open to everyone it’s just whether or not you have the money to invest and fit and i like figuring out how to have the money to invest is the hard part and why people watch this show so invest kids do you consider
Yourself successful today and how do you define success oh my god i consider myself successful in that i see that people say that about me and so i not gonna toss it back in their face and be like i am but the thing yeah is success doesn’t ever seem to be the kind of thing that you get and you like like keep you have successes you have like times when things go
Well you feel really good but like the human existence is always about like baseline like where you at and that tends to be fairly similar for a person throughout their lives like i have always been a fairly happy person i remain a fairly happy person i don’t feel like i’m happier because i have success what up like this this kind of success i feel like i’m happy
Because i don’t have to worry about money very much like like i’m secure like that’s what i feel like it is there’s a lot of ways to get to security and one way is just to have like stupid amounts of money that you could never spend that the amount of money and get yourself out of security that’s not where i am by the way but that’s one way and another way is to
Like have the amount of money that like an amount of money in like not be stupid with it oh well and also said like remain somewhat conservative in your tastes because i know that you don’t you’re not like someone who’s out there like buying ferraris no yeah i do not have extravagant i live in montana like and i’m happy to i when i come when i come to fancy places
I’m like a little fancy i don’t feel compelled to participate in that but do you think that keeping that gap between like your taste level and what you could have is like a huge part of it yeah well i think what it is is finding value in life that isn’t the value of the goods you have like that’s what i really think it is and and society like you know i’m deal
Advertising you know the the industries that sell things they want your self-worth to be tied up with your the worth of the of the things you can afford the worth of the things that you have separating those two things is difficult especially and if you live in a place where like obviously there are lots of people walking around very very nice things fancy things
Like you see that as this this gap between their level of like value and your level of value and that’s really kind of what we mean when we say success it’s like like it’s a little bit like do you see yourself as you know in a top tier of usefulness to society which is kind of the screwed up thing mike and that’s not really how like i want to imagine myself and
It’s certainly not how i feel like people should imagine themselves you have any money rules or lessons that you use now because you’ve achieved a modicum of success that you wish you’d started implementing before you had i think the number one thing was realizing that investing in myself was more valuable than investing in anything else i wish more people who have
Had lots of money would see it this way you know like if i have an extra ten thousand dollars it makes a lot more sense to put that ten thousand dollars into a project that i believe in and i think is interesting and that might might pay off than it is would be to put that $10,000 into ge in the stock market because of course ge is a giant company they’re probably
Going to do just fine but i did this once angie totally tanked but like even if my idea tanks i’ve got this thing that i can put on my linkedin page also knowledge that i didn’t have before and in like that’s what school is about that’s why it’s okay to take out a low-interest loan to go to school because you are investing in yourself what is something that you
Would tell someone who wanted to start out in a creative career but was worried about it not making enough money there aren’t that like there aren’t a lot of careers that are actually safe right now and creative careers are much more likely to be safe because in creative careers you make things for people and computers are bad at that now what i would say is that
There’s nothing quite as powerful as having a combination of a creative degree and an expertise in some other thing whether that’s like history or law or business like that is very powerful we business may be the most useful right yeah yes if you’re a freelancer you are a small business owner and it’s hard like there’s a lot of parts of that job that are well like
They’re just doing the books paying taxes begging to be paid yes no absolutely i mean when i worked as a freelancer i got i you know i i had done a huge project for this nonprofit and they and at the end of the project they were like we are gonna have to put this off a couple of months to pay you and i was like no you’re not and then ii was like well here’s where we
Are with our books and i was like that is not my responsibility right and they paid me but i think that creative professions are extremely valuable i know a lot of people who make good money in them i know people who a lot of people who have been hired right out of school in them at the same time like obviously i majored in sciences and i worked in the sciences for
A while and now i don’t mostly what i do was write and edit video and manage people what is the big thing today in terms of finance or career or whatever that you could still do a lot better mmm being a good boss is really hard and i think that’s why so many people are bad at it it is a really complex creative tasks that can be wonderful and can be awful really
The big step is understanding that people aren’t like you like all people are different they’re motivated by different things and when i like when i get frustrated with somebody because they’re not doing something the way that i would do it or they’re not feeling the way that i feel about it it’s because they’re not me there’s this very weird thing where if if
It’s the bosses problem it’s the employees bonce ability to work around it really it should be both of those people trying to come to the place where they’re making it work but i feel oftentimes that bosses feel they have much more responsibility to their company than their to than to their employees and i think that that is not the way to approach that equation
Because the people are your company yes correct um well thank you yeah to us thank you so much smarter and more money savvy now boom boom there was some financial advice all right and as always click the subscribe button and go to the financial diet comm for more woo
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An Interview With Hank Green | The Financial Diet By The Financial Diet
