Doug: "Welcome back to The Fuel for Financial Freedom Podcast! I’m your host, Doug Shepherd, and today we’re diving into a topic that has the power to completely transform your financial life. Imagine this: you’re stuck in a cycle of spending more than you earn. Your net worth is plummeting, your stress levels are through the roof, and you feel like you’re drowning in debt. Sound familiar?
Now, fast forward just six months. You’ve not only stopped the bleeding, you’ve doubled your income, created multiple sources of income, and your net worth is climbing faster than you ever thought possible. How? By mastering “The 7 Rules of Money.”
Today I’m joined by my good friend, cohost, financial coach and bestselling author, Dave Smith. Dave, thanks for being here and sharing your story with us!
Today’s episode is going to be a little different because we’re diving into a personal story that perfectly illustrates the power of “The 7 Rules of Money”. Dave, you’ve got quite the journey to share, so let’s hear it!"
Dave: "Absolutely, Doug. This is my story, and it’s one I’m really excited to share because it’s proof that no matter where you are financially, you can turn things around. Let’s set the stage: several years ago, I was earning $5,000 a month but spending about $6,000. My debt was increasing, my net worth was going down, and I was constantly stressed about making ends meet. I was working as much as I could, but it felt like I was stuck on a treadmill, running hard but going nowhere."
Doug: "That’s such a relatable situation for so many people. What was the turning point for you?"
Dave: "The turning point came when I reached out to someone I really admired. This guy wasn’t flashy; I didn’t even know he was wealthy until I got involved in a project with him through one of his companies. I found out he had plenty of money to bankroll the project, and I was blown away.
So, I went to him and said, ‘I really admire you, and I’m struggling. Can you give me any advice on how to do better?’ I didn’t ask for money; I knew that wasn’t the solution. I just wanted to know what he knew that I didn’t. And that’s when he introduced me to ‘The 7 Rules of Money’."
Doug: "That’s such a powerful moment. It’s not every day that you get to learn from someone who’s truly walked the walk. What happened next?"
Dave: "He taught me the seven rules, and I’ll share them in detail in a minute. But first, he had me rate myself on each rule, from 1 to 10. A score of 1 meant I wasn’t living that way at all, and a 10 meant I was consistently following that rule. The possible total score was 7 to 70.
When I first rated myself, my total score was 9. I was basically failing at every rule. But within two months of applying these principles, my score jumped to 70. I was living all seven rules consistently. And the results? My income doubled within six months, and my net worth started skyrocketing. My net worth went from, get this $-70,000 to over a million in a relatively short amount of time."
Doug: "That’s incredible, Dave. It’s amazing how quickly things can change when you commit to a new way of thinking and acting. Let’s break down these rules so our listeners can start applying them too."
Dave: "Absolutely Doug! I’m excited to dive into today’s topic; it’s one of my favorites. As you stated I am going to share what my mentor shared with me. How I used it to go from financial chaos to doubling my income in less than six months by creating multiple sources of income, then watched my net worth climb faster than I ever thought. Trust me, if I can turn my finances around, so can you. Let’s get started!"
Doug: "OK! Today, we’re breaking down “The 7 Rules of Money”. These are principles that can help anyone, no matter where they are in their financial journey, build a healthier relationship with money and create lasting wealth. Dave, let’s jump right in. I have heard you tell many of the people you have worked with, Rule 1 is Pay Yourself First. What does that mean to you?"
Dave: "Great question, Doug. Pay yourself first is all about prioritizing your own financial well-being. It’s like the oxygen mask analogy; you have to take care of yourself before you can help others. In practical terms, this means paying yourself first by saving or investing a portion of your income before you spend on anything else."
Doug: "Exactly. And I think a lot of people struggle with this because they feel guilty about putting themselves first. But the truth is, when you’re financially secure, you’re in a much better position to help others, whether it’s family, friends, or even charitable causes."
Dave: "Absolutely. It’s not selfish, it’s strategic. And it’s the foundation of everything else we’re going to talk about today."
Doug: "Right. So, how do you actually do this? Let’s get practical. The first step is to decide how much you’re going to pay yourself. A common recommendation is 10% of your income, but it can be more depending on your situation. The important thing is to start somewhere."
Dave: "Totally. And the best way to make this happen is to automate it. Set up an automatic transfer from your checking account to your savings or investment account as soon as you get paid. That way, you’re not tempted to skip it or spend the money on something else."
Doug: "Exactly. Automation is your best friend when it comes to paying yourself first. It takes the decision-making out of the equation and ensures consistency. And over time, those small contributions add up in a big way."
Dave: "Doug, let’s talk about the impact of this rule. When I started paying myself first, it completely changed my relationship with money. I went from feeling like I was always behind to feeling like I was finally in control. It’s amazing how empowering it is to know that you’re building a financial cushion for your future."
Doug: "That’s so true, Dave. Paying yourself first isn’t just about the money, it’s about the mindset shift. It’s a way of saying, ‘My future is important, and I’m worth investing in.’ And when you start prioritizing your financial well-being, it creates a ripple effect in every area of your life."
Dave: "Absolutely. And here’s the thing, it doesn’t have to be a huge amount to start. Even if it’s just $100 a month, the act of paying yourself first sets the foundation for bigger financial wins down the road."
Doug: "Now, I know some people might be thinking, ‘But I can barely make ends meet as it is. How can I afford to pay myself first?’ Dave, what would you say to someone in that situation?"
Dave: "It’s a valid concern, Doug. The truth is, paying yourself first might require some tough choices at first. It might mean cutting back on discretionary spending, finding ways to increase your income, or even reevaluating your budget. But the key is to start. The act of prioritizing yourself is what matters most."
Doug: "Exactly. And once you start, you’ll be amazed at how creative you can get with your finances. Maybe you cancel a subscription you don’t use, cook at home more often, or find a side hustle to bring in extra cash. The important thing is to take that first step."
Dave: "Doug, I think Rule 1: Pay Yourself First is such a game-changer because it’s not just about money; it’s about self-worth. When you pay yourself first, you’re sending a powerful message to yourself that your future matters."
Doug: "Couldn’t agree more, Dave. It’s the foundation of financial freedom, and it’s something everyone can start doing today. No matter where you are in your financial journey, paying yourself first is a step in the right direction."
"Alright, Rule 2: Always Spend Less Than You Earn. This one seems straightforward, but it’s where a lot of people trip up. Dave, why do you think that is?"
Dave: "I think it’s because we live in a culture of instant gratification. It’s so easy to spend money, credit cards, buy-now-pay-later schemes, and social media constantly showing us things we ‘need.’ But the key is to create a gap between what you earn and what you spend. That gap is where financial freedom comes from."
Doug: "Totally. And it’s not about depriving yourself; it’s about being intentional. Track your spending, set a budget, and make sure you’re living within your means. That gap you mentioned is what allows you to save, invest, and build wealth over time."
Dave: "Doug, tackling Rule 2: Always Spend Less Than You Earn sounds simple, but it’s where a lot of people struggle. Let’s break it down and talk about why it’s so important and how to actually do it."
Doug: "Absolutely, Dave. At its core, this rule is about living within your means. It’s the foundation of financial stability. If you’re spending more than you earn, you’re either going into debt or depleting your savings; neither of which is sustainable in the long run."
Dave: "Exactly. It’s like trying to fill a bucket with a hole in the bottom. No matter how much water you pour in, it’s never going to stay full. Spending less than you earn is how you plug that hole and start building wealth."
Doug: "Dave, I think this rule is crucial because it creates what I call the wealth gap. That’s the difference between what you earn and what you spend. The bigger the gap, the more money you have to save, invest, and grow your net worth."
Dave: "Totally. And here’s the thing, it’s not about how much you make. It’s about how much you keep. I’ve seen people with high incomes who are broke because they spend everything they earn, and I’ve seen people with modest incomes who are financially secure because they live below their means."
Doug: "That’s such a good point. It’s all about intentionality. When you spend less than you earn, you’re making a conscious choice to prioritize your financial future over short-term gratification.
Alright, let’s get practical. How do you actually make this happen? Dave, what are some steps people can take to start spending less than they earn?"
Dave: "First, you need to know your numbers. Track your income and expenses for a month or two to see where your money is going. There are plenty of apps and tools that can help with this, or you can go old-school with a spreadsheet."
Doug: "Tracking is so important. It’s like turning on the lights in a dark room—you can’t fix what you can’t see. Once you know where your money is going, you can start making changes."
Dave: "Exactly. The next step is to create a budget. And I don’t mean a restrictive, I can’t spend on anything fun budget. I mean a plan that aligns your spending with your priorities. Start with the essentials, housing, utilities, groceries, and then allocate money for savings, debt repayment, and discretionary spending."
Doug: "Love that. A budget is just a spending plan, and it gives you permission to spend on the things that matter most to you. And here’s a pro tip: pay yourself first, like we talked about in Rule 1. Set aside your savings and investments before you spend on anything else.
Now, I know this isn’t always easy. Dave, what would you say to someone who’s struggling to spend less than they earn?"
Dave: "Great question. The first thing I’d say is, start small. If you’re spending more than you earn, look for one or two areas where you can cut back. Maybe it’s eating out less, canceling unused subscriptions, or finding a cheaper phone plan. Every little bit helps."
Doug: "Absolutely. And don’t be afraid to get creative. Can you negotiate your bills? Can you find free or low-cost alternatives for entertainment? Can you increase your income with a side hustle? Sometimes, it’s not just about cutting expenses; it’s about finding ways to make your money go further."
Dave: "Totally. And remember, it’s not about perfection. If you overspend one month, don’t beat yourself up. Just refocus and get back on track. The goal is progress, not perfection. There is an saying I really like ‘Don’t let perfection stop progress.’"
Doug: "Dave, let’s talk about the impact of this rule. When you spend less than you earn, it’s like flipping a switch. Suddenly, you’re not just surviving, you’re thriving. You have money to save, invest, and build the life you want."
Dave: "Exactly. It’s empowering. When I started spending less than I earned, it completely changed my financial trajectory. I went from feeling like I was always behind to feeling like I was in control. That was the first time I ever felt in control, and that sense of control is priceless."
Doug: "Couldn’t agree more. It’s the foundation of financial freedom. And the best part is, it’s something anyone can do, no matter where they are on their financial journey."
Dave: "Doug, I think Rule 2: Always Spend Less Than You Earn is so powerful because it’s not just about money, it’s about mindset. It’s about making intentional choices that align with your goals and values."
Doug: "Absolutely, Dave. And the sooner you start, the sooner you’ll see the benefits. So, track your spending, create a budget, and start living below your means. Your future self will thank you."
Dave: "Now, Rule 3 is a mindset shift: Believe Money Is Neither Good Nor Bad. Doug, I know you’ve talked about this before; how people often attach emotions or morality to money."
Doug: "Yes, and it’s so important to break free from that. Money is just a tool. It’s neutral. It’s what you do with it that matters. If you believe money is evil, you’ll subconsciously push it away. If you think it’s the key to happiness, you might chase it at the expense of everything else. The goal is to see money for what it is; a resource that can help you create the life you want."
Dave: "Couldn’t agree more. Money amplifies who you already are. If you’re generous, it gives you the means to be more generous. If you’re driven, it helps you achieve bigger goals. It’s all about perspective."
Doug: "Rule 4 is Understand the Importance of Money. Dave, why do you think this is such a critical rule?"
Dave: "Because money is more than just paper or numbers in a bank account, it’s freedom. It’s security. It’s the ability to make choices that align with your values and goals. When you understand that, you start to see money as a tool to create the life you want, not just something to spend."
Doug: "Exactly. Money gives you options. It allows you to take care of your loved ones, pursue your passions, and handle life’s curveballs. But it’s also important not to overvalue it. Money is a means to an end, not the end itself."
Dave: "Alright, Rule 5: Make Sure Your Emotions Are in Check When Spending. This one hits home for a lot of people. Doug, how do you manage emotional spending?"
Doug: "It’s tough, especially when emotions like stress, boredom, or even excitement come into play. For me, it’s about pausing before I buy and being aware of my emotional state. I ask myself, ‘Do I really need this? Will it add value to my life?’ It’s amazing how often the answer is no."
Dave: "Same here. I’ve also found that having clear financial goals helps. When you’re focused on what really matters, like saving for a house or investing for retirement, it’s easier to resist impulse buys."
Doug: "Rule 6 is all about your environment: Hang Around Financially Successful People. Dave, why is this so important?"
Dave: "Because success is contagious. When you surround yourself with people who have a healthy relationship with money, you start to adopt their habits and mindset. You learn from their experiences, and they can inspire you to aim higher."
Doug: "Totally. And it’s not just about copying what they do, it’s about seeing what’s possible. When you’re around people who’ve achieved financial success, it becomes easier to believe that you can do it too."
Dave: "Finally, Rule 7: Always Have More Than One Source of Income. Doug, this is one of my favorites. Why do you think diversifying your income is so crucial?"
Doug: "Because relying on a single income stream is risky. Whether it’s a side hustle, investments, or a small business, having multiple sources of income gives you stability and growth potential. It’s like having a safety net, if one stream dries up, you’ve got others to fall back on."
Dave: "Exactly. And in today’s world, there are so many opportunities to create additional income streams. It doesn’t have to be complicated, start small and build from there."
Doug: “Alright, Dave, let’s recap these 7 rules real quick:
1. Yourself First
2. Always Spend Less Than You Earn
3. Believe Money Is Neither Good Nor Bad
4. Understand the Importance of Money
5. Make Sure Your Emotions Are in Check When Spending
6. Hang Around Financially Successful People
7. Always Have More Than One Source of Income
These rules are like a blueprint for financial success. Dave, let’s talk about the results. You went from a total score of 9 to 70 in just two months, doubled your income in six months, and saw your net worth take off. What advice would you give to someone who’s just starting this journey?"
Dave: "Start small. Pick one rule to focus on, maybe it’s paying yourself first or tracking your spending. Once you’ve mastered that, move on to the next one. And don’t be afraid to ask for help or learn from people who’ve been where you want to go. And for those of you listening who are ready to take the first step, we’ve got something special for you. Head over to daveanddoug.com where you can rate yourself on the 7 Rules of Money, just like I did. You’ll get a personalized printout that will help you identify where you’re starting and what areas to focus on first. It’s a fantastic tool to kickstart your journey."
Doug: "That’s such a great resource. And if you have questions or need guidance along the way, we’ve got you covered.”
Dave: “Join us for our live weekly Q&A call, where we answer your questions about the 7 Rules of Money. It’s a chance to get real-time advice and connect with others who are on the same journey. Details are on the website as well."
Doug: "Exactly. We’re here to support you every step of the way. Whether you’re just starting out or you’re already on your path to financial freedom, these tools and resources are designed to help you succeed."
Dave: "Thanks, Doug. And thanks to all of you for tuning in. If you’re ready to take control of your finances, start with “The 7 Rules of Money”. Rate yourself at daveanddoug.com, make a plan, and take that first step. Remember, it’s not about where you are today, it’s about where you’re headed.”
Doug: “And remember, if Dave can do it, so can you. Thanks for sharing your story, Dave. It’s truly inspiring.
And to our listeners, don’t forget to share this episode with someone who needs to hear it. Until next time, stay intentional and keep building your wealth!"
