We used to think that living a good life was all about taking care of our bodies.
Now that mentality has changed towards the mind. However, every part of our well-being influences our relationship with money – how we make it, how we spend it, and how we use it. Money is an integral part of every form of energy in this world.
Jay Shetty sat down with Jaspreet Singh, licensed attorney and “serial entrepreneur,” to discuss people's complicated relationship with money. Singh is the CEO of Minority Mindset and has a YouTube channel where he teaches and empowers his audience to create healthy habits around handling their wealth and finances.
Singh shared his philosophy with Jay Shetty: “Every day that you save up money in the bank, you are slowly becoming poorer each and every day, and most of us never see it happen.”
Early Money Lessons
Coming from the Punjab state in India, Jaspreet Singh never received formal financial education but his parents' advice. He was taught to work hard to get a good job. His parents wanted him to become a successful doctor. However, he realized early on that this might not be the only way.
There is a misconception that money can buy happiness, but Singh disagrees. However, the lack thereof can harm your mental health, making you depressed, stressed, or anxious. Therefore, it is essential to get educated about money to have a healthy relationship with it. Money is, at its core, a mere tool; it amplifies who you are.
With a similar background, Jay Shetty recalls his parents' discussions about money and successful people. There was a lot of distrust towards the wealthy because people believed they were doing something illegal or immoral. This way, a harmful or toxic view toward money arises and is passed on to the next generation.
Singh explains to Jay Shetty: “Money talks. And if you don't understand money, then you're going to be at the mercy of people who have money.”
The Quadrant Theory
Singh shares with Jay Shetty the four areas of your life that you need to nurture to achieve a healthy relationship with your finances.
- Be physically fit – it doesn't matter how much money you have if you are on your deathbed.
- Be mentally fit – having money can make you even more miserable if you suffer from any form of mental unbalance. There is a misconception that money can buy happiness and that it would solve mental aspects of your life, but, in reality, this is not the case.
- Be spiritually fit – you can have all the money in the world, but if you don't have a purpose, a reason to get out of bed in the morning, your financial situation won't matter.
- Be financially fit – once you balance the other three areas of your lives, money only comes as the icing on the cake, allowing us to have a happy, healthy life.
When you have the resources to do whatever you love, to give back to your community, start a business, etc., you can do more of whatever makes you happy. To achieve this level, you must educate yourself about finances and be willing to talk and learn about money.
The Effects of Money Illiteracy
The cause for the money talk (or lack thereof) is insecurity around people's financial situations. Because we think that if we do the “right things,” we should be wealthy, and when this is not the case, we start to speculate as to why others have more success. We create excuses without understanding that the foundation of success is financial education. It is “the thing that can make or break your finances,” according to Singh.
He shared with Jay Shetty that recent studies have shown that 7 out of 10 Americans live paycheck to paycheck, even 50% of those earning six figures. So the central aspect of financial education is what you do with the money, regardless of your income.
We are generally not taught to think about money, which is the base of our poor financial decisions. Jay Shetty was curious about the three bad habits concerning money, which Singh explained in more detail.
Bad Habit 1: The 2 S: Saving and Spending
The average Indian person spends 20 cents for every dollar earned, while Americans spend 2 dollars for each dollar made.
Buying things on credit has become very normalized. Singh told Jay Shetty that people buy expensive designer clothing, trying to look rich, although they can't afford it. The only true beneficiary of this exchange is the designer, who becomes more prosperous, while the consumers slip deeper into debt.
Generally, we think about our money as equal to our buying power, but that is not how we get more financially stable. So we need to create a buffer between earnings and spending.
They teach us to save money, and usually, people pile up their savings in a bank account that can only grow by a minimal percentage, usually 1%. In the event of inflation, the savings will likely become worthless.
For your savings to be worthy, they need to fall into one of the following three categories:
- Money for an emergency
- Money for an investment
- Money for a big purchase
Jaspreet Singh stressed to Jay Shetty: “f it doesn't fall into one of those three things, you don't want to save money because now you're saving money, your savings are just making you poor each and every day.”
Bad Habit 2: Blindly Following the System
They tell us that we need to get good grades and a good job to become successful or climb the corporate ladder. Hence, in the beginning, Jaspreet Singh thought everything was a linear path toward wealth.
He shared with Jay Shetty how his entrepreneurial journey began. While still in high school, Singh used to play the drum at Indian weddings, and, eventually, he associated with some of the DJs he met there to host teen parties in a club. While he had to keep it a secret from his strict parents, he enjoyed this newfound hobby of his. When he got into college, he resumed organizing parties in various clubs. By the time he started Medical School, he had already saved up a good amount.
It was about when the real estate market hit rock bottom, and through his research, he found that wealthy people invested in real estate. He had the buying power and decided to invest in real estate. He bought a condo for a meager price and rented it out for 600 dollars. Only at this point did he understand that he could get paid monthly without having to work for it, unlike what he learned growing up.
“There's a different system here that none of us are ever taught, where the goal isn't to just get a job and climb the corporate ladder. What wealthy people are doing is they're working to own the corporate ladder.” Singh told Jay Shetty.
Wealthy people work towards owning assets that bring them passive income, and very few people have this mindset. Luckily, YouTube has made this information more accessible and easily digestible to the public.
Bad Habit 3: Not Understanding How Money Works
In the light of the 2020 pandemic and the inflation in the coming years, people started to realize that their earnings could get less than in the previous years, meaning that the dollars are losing their value.
He stressed to Jay Shetty the importance of understanding the two aspects of money: the currency aspect and the store of value. Money by itself is going to lose worth, so it needs to get converted into something that holds value or will produce income. So you need to put your cash to work.
You need to understand the wealth formula: income-expenses=investments+savings.
Singh's advice is to build equity. You can buy shares, invest in real estate, startups, cryptocurrency, create your own business, or own gold.
Jay Shetty urges the listeners to take some time and ponder which of these three habits they struggle most with and start with a change there.
Changing The Mindset
Jay Shetty is curious about how to handle the mindset that we don't have enough to invest. According to Singh, we live in a day and age where we can invest as little as 2 dollars into equity, which is still more than most people invest.
If you are not in the habit of doing thorough research by yourself, you can look at exchange-traded funds (EFTs). Some, such as the S&P 500, give you exposure to the top 500 biggest companies on the stock market in which you can invest.
However, the key to success is consistency – he strongly recommends automatically investing in something with every paycheck. Then, re-invest the profits these investments produce. “Make it automatic, make it passive,” he explained to Jay Shetty.
Investments take time, and many want to become rich overnight. One of the most significant investments that you can make is in yourself. You need to be willing to put time and effort into it and maybe get a shortcut if you have a mentor to guide you through it. Jay Shetty knows from his experience that “one of the biggest trainings is in the discipline of being able to postpone pleasure.”
To save, you need to want to scale, not just squeeze more money out of your income. You want to grow the revenue so that you can afford to invest even more.
As you start growing your mindset, you will also see growth in your income, and once you increase your revenue, you need to think about investing that money into something that can bring you even more money in return.
Financial education is crucial in building wealth because making money alone is insufficient. You must know how to save and invest money to create real wealth. So Singh is on a mission, trying to make financial news more accessible to spread financial literacy. He built a company called Market Briefs, which he is currently working on growing.
Singh's objective is to educate people enough to make informed decisions regarding their finances rather than telling them what to do. Everybody has a different background and goals, and there is no one-size-fits-all recipe for success.
Preparing For a Recession
Jay Shetty addressed one burning question: how to deal with being scared in the face of an imminent market crash? According to Jaspreet Singh, “more millionaires are made during recessions and crashes than any other time” because crises create low-price opportunities for investments.
When the pandemic hit in 2020, the state started to print money to keep the economy running. Money was printed, but the wealth did not increase, and supply chain issues arose – this is how inflation happened.
Currently, the issue is deflation, meaning the devaluation of the dollar. The more money is printed, the more the currency's value drops. It leads to an economic slowdown, which means that people's buying power drops, leading to companies losing revenue and being unable to hire more workers.
But the outlook of a potential recession should not be a grim thought. On the contrary, it holds a lot of prospects for investments. There is no better time than the present to set aside some cash to be able to invest once you identify an excellent opportunity. Then, make a clear list of things you want to buy with that money and buy in phases, not everything at once. Singh shares with Jay Shetty that “the smartest investors are not the ones that invest on emotion; it's the ones they invest on finances.”
More From Jay Shetty
Listen to the entire On Purpose with Jay Shetty podcast episode on “3 Money Myths That Are Making You Poorer Every Day & How to Survive and Thrive in a Recession” now in the iTunes store or on Spotify. For more inspirational stories and messages like this, check out Jay’s website at jayshetty.me.