Ep. 125/ Strategies for Achieving Financial Independence: Money With Katie host Katie Gatti
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"Understanding financial independence was a game changer for me.” Financial expert Katie Gatti from "Money with Katie” joins me as we discuss personal finance and the concept of financial independence. She makes a compelling argument against hoarding large sums in savings accounts without a clear purpose, something that too many of us are guilty of. Instead, she advocates for making your money work for you through investments. Now, I know the idea of investing can be daunting, especially with all the conflicting advice out there. But Katie breaks it down in a way that is both practical and relatable, emphasizing the power of automation to take the guesswork out of investing.
What really struck me was her journey from corporate America to full-time entrepreneurship. Katie didn’t just dabble in personal finance—she immersed herself, turning what began as a side project into a thriving business acquired by Morning Brew. We also explored her profound thoughts on societal expectations, particularly around traditional domestic roles versus modern career-driven lifestyles. Tune in if you want to learn how to become financially independent in today’s market.
In this episode you will learn:
How to monetize and structure a new business - 15:08
How to challenge norms of empowerment and take self-control over your finances - 26:13
How to invest for your future - 30:20
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In this episode you will learn:
How to monetize and structure a new business - 15:08
How to challenge norms of empowerment and take self-control over your finances - 26:13
How to invest for your future - 30:20
Quotes from our guest:
“Understanding financial independence was a game-changer for me. It’s the idea that your investments can eventually support your lifestyle indefinitely, which is incredibly freeing.” - 13:14
"The first is a shift in the way that we culturally think about women and women's rights. So one of my major, major focuses in my work is how women's financial journeys are different than men's, that they face obstacles, they face pressures, they face expectations, barriers that men just do not experience." - 20:30
"I regret to inform you that there is literally not a single topic on earth that is more political than money." - 26:38
Katie’s Bio:
Katie Gatti Tassin founded Money with Katie in 2020 as a space to document everything she was learning about personal finance on her journey to financial independence.
As a former public relations major in corporate America with a penchant for swiping her Discover card, her obsession about personal finance came out of left field — and as she watched her net worth grow in tandem with her financial literacy, she realized just how valuable the information was.
She left her full-time job at the end of 2021 to devote all of her energy to building her business, and Money with Katie was acquired by Morning Brew in 2022. Today, she runs Money with Katie as part of a team of two.
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KATIE’S LINKS:
Kim (00:01):
Joining us today is Katie Gatte of Money with Katie. She tells us the biggest financial mistakes people make, and she talks a lot about trad wives and girl boss and what that means for culture and our money, plus the biggest financial learning she's had that has changed her life. Welcome to the Exit interview with Kim Rittberg. Do you work for yourself and want to supercharge your business while still having fun? Well, this is your go-to podcast part MBA Part Cheer Squad. Every week I'll be joined by top business owners who share the secrets to their success. After I found myself working during childbirth true story, I quit my executive media job to bet on myself fighting the fear and imposter syndrome to eventually earn six awards, an in-demand speaking career and features in Fast Company and Business Insider. Now, I'm here to celebrate all you rock stars betting on yourself, and I want to help you win Tune in every Wednesday to hear from remarkable founders and don't miss our Solo Friday episodes, a treasure trove of video and podcasting mini masterclasses with me. Exit the Grind, enter success on your own terms. Don't forget to subscribe today and grab my free video tips at my website, kimrittberg.com.
(01:21):
This is going to be really fun everybody. We have Katie Gatti Tossin, better known as the host of Money with Katie. She founded that in 2020 as a space to document everything she was learning about personal finance on her journey to financial independence as a former public relations major in corporate America with a penchant for swiping her Discover card, who isn't her obsession about personal finance came out of left field and as she watched her net worth grow in tandem with her financial literacy, she realized just how valuable the information was. She left her full-time job at the end of 2021 to devote all of her energy to building her business and money with Katie was acquired by Morning Brew in 2022. Today she runs money with Katie as a part of Team of Two. Amazing. What a story. Thank you. I'm like, I was a communication major, but I didn't swipe my credit card at all. I had no money, so I was like, I had no knowledge and no money, so I probably could have used you back then.
Katie (02:11):
Well, that's the gag, right? Is that I didn't really have the money to be spending either. I was just all over town gallivanting and ignoring that reality for probably about a year.
Kim (02:23):
Yeah, my saving grace was that I had a debit card only basically.
Katie (02:26):
Oh yes, that will definitely, that will cap your downside. Cap your losses.
Kim (02:30):
Yeah. I love hearing about's pivots. I dunno why I'm having such a hard time saying that. I love hearing about people's pivots. Talk to me about that moment that you were like, I'm done with corporate. I'm going to do this on my own. Tell me about that moment.
Katie (02:44):
It was a pretty challenging transition because I had for so long, particularly going to college and being really involved in the pre-professional organizations in college for my field of public relations, and then eventually I was working in marketing and user experience, but I basically had this vision going into my career that it was going to follow this very institutionally prestigious path that I would work for big companies or I would work for agencies that were well-known. Typically, this means you are not making very good money. Well, not necessarily
Kim (03:20):
Making very money, very good money. No, it's usually no, it's true. I feel like it's, if the industry considered glamorous or prestigious and the company is prestigious, the pay there's salary is down.
Katie (03:30):
So I wouldn't say that my pay was bad necessarily, but it definitely, I didn't go into my career thinking, okay, I'm going to make a ton of money. It's going to be easy breezy. It was like, Nope, I'm going to follow this path. I'm going to do everything right. I'm going to check the boxes. And then something that I had always kind of buried deep was in college as I'm envisioning this life for myself, I was kind of obsessed with startup culture. This was like the mid 2010s. So the texting startups were very sexy. There was a lot of media about startups, and so I found this podcast literally called Startup that I just totally ingested with a converts zeal. I was just so enamored with this concept of entrepreneurship and starting something yourself, but I didn't actually really consider it as that is something that I could do.
(04:22):
It was like, well, no, I'm going to go work for a Fortune 100 company and ascend the corporate ladder. I think that for the first several years, three to four years in, I was happy ish. I liked where I worked, I liked my team, but I wouldn't say that I was all that engaged or that I really deeply cared about the work that I was doing, that I was excited about my career. It was kind of like, alright, I'm on the first rung of the ladder. Okay, now I'm on the second rung. Okay, now I got to get to the third. It was just a little bit of a endless expanse in front of me, so I always kind of had that feeling in the back of my mind, okay, yes, if the opportunity presents itself or if I have a really good idea, I would ideally like to do something that is mine.
(05:05):
I would like to start something myself. And it wasn't until I started digging into the personal finance world for my own edification of I need to know how to manage my money, that I realized, oh, I'm actually extremely interested in this. It does come strangely, naturally to me. I feel like I kind of get it and I'm really enjoying connecting all these dots and going deeper. And so that's why I started Money with Katie in 2020. But I continued to work full-time for my full-time employer and did money with Katie on the side for almost a full two years. And it actually wasn't until the morning brew acquisition happened that I left my other job, my full-time job and started doing money with Katie. So it was really a handheld transition from, it was meta platforms at the time that I worked for, from a massive tech company with great benefits and whatever. Now granted, I probably would've gotten laid off in 2022 had I stayed, but that transition to a small, scrappy ish, 200 person media organization. So I've never really been full on self-employed.
Kim (06:21):
Right. I love that though, because I do think it's, even though you had, it was going like that, you still maintained it on the side for a long time. It was your side hustle, and then the point at which though you only went fully on your own when Morning Brew acquired it. So then you had that stability there. At that point, was the acquisition money basically equal to what you were earning before or not really, and you knew that the next few years you'd have to make it equal up?
Katie (06:47):
The way that the acquisition worked, it was an acqui hire. So instead of getting a big upfront some, it was a contract that was over the course of three years where there was a minimum every year and then upside. So it became very lucrative kind of from the jump. But at the time, the way that the financials broke down between my full-time job and money with Katie, money with Katie was revenue wise, three or more times higher than my full-time employment was producing for me. So at that point, I already knew, okay, I'm making more money doing this other thing that I'm doing nights and weekends than I am on the thing that I'm spending 40 hours a week on.
(07:37):
But stability is something that I really valued, and I was really afraid. I've only been doing this for a year, so that's fantastic that it's already making so much money, but I don't really have that long of a track record to point to know that this is going to stay this way. What if this is just a flash in the pan and the revenue starts trending back down again? That is a hundred percent a possibility. So I think for a long time I really struggled with that decision of like, okay, well, there's the optimist's perspective, which is, well, when I start devoting all my time to it, it's going to grow so much bigger. Or there's the pessimist perspective, which is like, yeah, you have a year's worth of data that says that this is going really well. That's hardly enough to be worth throwing a nascent career away over.
(08:28):
And that's a really dramatic phrasing of the dilemma. But at the time, that's how it felt. It felt like if I quit this job at this tech company, who knows if I'm ever going to be able to break back into ux? That just feels like such a huge cliff to jump off of with 12 months worth of proof that it works. It didn't really matter to me at the time that I loved money with Katie. I was obsessed with it. It was all I thought about that was great, but I don't know. It didn't feel like enough. And now in retrospect, it's really interesting to look back at that decision and kind of sit with that of why was I so afraid? What ended up happening was you spent all your time on it and it blew up. So why was that so, why did that seem so unlikely to you back then? Why did you feel like that was such a big risk?
Kim (09:19):
I do think there's the element of some stat 4 million podcasts are out there and how many are big in revenue positive. So I do think there's always that people are afraid. We're all afraid of change. I think we're all afraid of change
Katie (09:32):
Plus healthcare.
Kim (09:34):
Healthcare, exactly. The benefits, right? I am always real about the fact that I'm like, I am married to a man with a stable job and benefits.
Katie (09:40):
Yeah. It's like, well, I would love to not be bankrupted by a major illness, so going to keep the full-time job and figure it out on the side.
Kim (09:49):
Exactly. Exactly. And then talk to me about how long do you feel it took to get your footing? You're like, this feels right. You're finding your brand, you're finding your voice. How long do you think it took?
Katie (10:01):
Probably about a year, because I think in the beginning when I first bought the domain, I didn't have any grand plan for monetization. I think that's really important to always state in conversations like these because I think it can be easy to assume if I were to lay out this timeline and be like, ah, bought a bing a boom three times, full-time salary, what? It's hard. No, this was not some grand strategy that I had in April, 2020. This was like, I'm going to have a blog and write about money. And I remember actually trying to get a Chase Inc business credit card because it had a really high signup bonus, and this was at the height of my travel hacking obsession. So I remember being on the phone with the rejection line for this business card, and I'm trying to basically shoehorn this new nascent LLC into this application to be like, no, see, I have a business.
(10:56):
This is real. It's like a website with three blog posts on it. I'm like, that's a business. And the guy on the phone is, so what's your estimated revenue per month? We're not going to just give you a credit card. And I remember being a thousand dollars and feeling like I was just lying through my teeth. I'm like, how the frick am I ever going to make a thousand dollars a month with a blog? It was so out of the realm of possibility. But that's the thing is it was just a hobby. It was just a project. It was just something that I was excited about. And it wasn't until later that year, probably in the late fall, early winter, that the Instagram profile kind of started to, it suddenly had more followers than my personal page did. And I felt like I was getting a really interesting response from people, and people were reading the blogs and I was always getting dms and people were asking me to make a product. And that was, I think the first time eight-ish months in where I was like, oh, so there is a path to making money with this. So I made the first product, I think in the first month it sold four or $5,000 worth, and this is a $20 product. So I'm like, oh, there is something here. This is a path I can actually turn this into a business. And I think that flip switched, that switch flipped, I don't know, from whatever, take your pick
Kim (12:15):
Switch flipped.
Katie (12:18):
The switch flipped. And I was like, oh, it's a business. It's not a hobby. It's a business. And I think that switch allowed me to start thinking about it a little bit more strategically. And that's when I started pursuing sponsors again, knew nothing about media, knew nothing about how media was monetized. I was completely naive, but I literally would just DM financial services companies that I liked and used myself and would be like, Hey, you want to sponsor a blog post? And it worked and they did, and then we were just kind of off to the races.
Kim (12:48):
But at that point, how many followers did you have that this company would be like, yeah, I'll respond to this person.
Katie (12:53):
Oh, 5,000. I think that's the thing about a niche, a personal finance for women niche is not the same thing as a beauty and lifestyle influencer with 5,000 followers
Kim (13:04):
Where you need a million or 500,000 or 200,000,
Katie (13:07):
Especially in 2020, there were a couple. It wasn't a space that was just teaming with people. So these brands didn't have thousands of options for who they were going to partner with. There weren't that many, and so it was actually not super hard to break into. Now that's a huge niche. I feel like there's still, I mean, it's not as big as beauty and wellness, but there are a lot of women that are talking about this, which is amazing. But at the time, it wasn't like I had to break through that much noise, I don't think. And that really worked for me. And I think the fact that it was a blog too, and not just an Instagram profile. I wasn't really selling social media posts. It was like, I want to do a product review of this thing that you offer that I really like, and I think that my take is going to make my readers want to use it too.
(13:58):
Between you and me. At the time I was like, I'm going to write this anyway, but I want to promote this product no matter what, but I'm not going to tell them that. I'm going to see if they'll pay me for it. And they did. To this day, that advertiser is still my biggest advertiser. They have been with me for four years, and at one point in 2022, I can't remember exactly when, but they were like, yeah, you're our biggest referrer of anyone we've ever worked with. You ever referred the most people to us. So I think that when those fits are really organic, it just kind of makes sense for everybody involved. And it's really easy to promote products that you really like that are going to make somebody's life better and are going to make them wealthier.
Kim (14:38):
I think it's interesting though. It sounds like you got really knowledgeable about the space really quickly because for me, this is my second time in entrepreneurship. I actually had a side hustle when I was working in TV as a producer. I had a side hustle making and selling jewelry that I would do trunk shows at Bloomingdale's and Henry Bendle. And to your point, when people were like, oh, that's nice, you make jewelry, so does my grandma. I'm like, does your grandma sell in Bloomingdale's? But I was like, it's not a hobby having people pay you
Katie (15:07):
For this. This is a business. Yeah,
Kim (15:08):
This is a business. I'm not great at this, but I have a spreadsheet where I understand the profit on how much materials and how much time and blah, blah, blah, blah. So anyway, about growing a side hustle, it sounds like you got smart about how to monetize early. Because I think for me, one of the hardest things about shifting into this new sphere where I've always been a video expert, a video producer, an executive producer, a video, I don't want to run a production company. So then it's like, well, what does that look like? And then I had to basically figure out what is the structure of what I'm selling to people? How do I charge for it? What does it look like? How is it structured? Is it one-on-one, is it a group? Is it a passive product? Is a PDF is a video series?
(15:47):
Is it coaching? And I think that that was something that I really had to take a huge new educational experience and lesson. So I love that you already were like, yeah, I started selling this $20 product and I sold $5,000. And then you're like, well, obviously something's working when you're selling that much product, even on a low ticket item, yes, you have an audience. If they'll buy $20, maybe they'll buy 50, maybe they'll buy a hundred, maybe whatever. But I think that that's interesting and really smart. It sounds like you did it early. I think for me, I'm always like, I got so much going on. I'll do that when I do that. And then I feel like it takes a while to realize the things you're supposed to do to grow your business and to test things out and to start moving forward.
Katie (16:27):
Especially because even to this day, I have tried other things, like other digital products or other, I dabbled in courses lightly for a hot minute and to varying degrees of success. But this original product that I started with less than a year in is still my flagship product that I revamp entirely every year. And so the stakes have now risen tremendously. This year, the one that we're building, we spent like $30,000 on the development of it.
Kim (16:58):
What is it?
Katie (16:59):
It's called a wealth planner. So started as, Hey, this is the spreadsheet that I use to manage my money. And it was very bare bones. It didn't have much functionality, but it was like, if you want to use the same system that I use and I'll bake a little bit of my recommendations into it, here you go. And that was kind of, I think it was kind the perfect move because it so seamlessly coalesced with the material and the information that I was sharing, and it basically just allowed people to implement the things that I was talking about and made that easier. And so now we're building out the fifth one or the sixth, I don't even know. I've lost count at this point. I think we're building out the fifth version of it. And every year we up the ante, we add more features throughout the year. We have tens of thousands of users now. So throughout the year, we have a pretty sophisticated at this point, filing system of customer service questions and support questions that we'll figure out, okay, what are people struggling with? How can we improve the feature to make it better? And so in some ways, it's a little bit like my old job working in user experience design for a tech company. It's not an app, it's a spreadsheet, but we use a lot of the same principles of
(18:15):
User testing and wanting people to understand how to use it really easily and to not have to think that hard, it should just work the way that you expect it to. And the growth in that segment of our business has just come from us making the product better and then increasing the price every year because we're adding more features. And it's becoming far more robust now. I feel like it's a little underpriced for what we've put into it, but we'll cross that bridge when we get to it. We do a big launch at the end of every year, and because the audience gets bigger every year, most people who buy it once end up buying the upgrade. And then we've got a slew of new people that come in that buy it for the first time. So our growth with that product in the business hasn't really been expanding into a huge product suite or building out really expensive offers to tack on. It's kind of just been incremental improvements to that one thing, which I think is a little bit rare. And I think in the beginning kind of freaked out. My boss at Morning Brew, he was like, we need more stuff to sell. And I'm like, we can try that. But I actually think that we kind of got it right the first time and we should just focus on making this as good as possible.
Kim (19:31):
Right. That's interesting. That's cool. Okay, so I know that your mission, I like this, is to be the intersection where the economic, cultural and political meets the tactical, practical, personal finance education everyone needs. I love that because it's very specific. And I guess I'd like to ask you a couple of your recent headlines Caught my eye.
Katie (19:49):
Yeah, hit me.
Kim (19:50):
What do you see as being the big cultural changes that are impacting people in their personal finance? A couple of things I was following, and you I'm like, oh, that is interesting. Money dysmorphia, how we see money. I know just from being a human and being a general news journalist, money's the top thing. Couples fight about money is the top thing people don't understand, even though it touches every single person. So what are the sort of cultural changes that are happening now that you think are important for us to be aware of, whether it's generational or just cultural?
Katie (20:21):
Oh man, such a good question. There are a few things that immediately come to mind. I think we're in the midst of a couple big shifts. The first is a shift in the way that we culturally think about women and women's rights. So one of my major, major focuses in my work is how women's financial journeys are different than men's. That they face obstacles, they face pressures, they face expectations, barriers that men just do not experience. One of these very kind of common examples that I'll point to is the beauty industry and how much money women spend conforming to traditional beauty standards. That entire deep dive is we could spend the next three hours just talking about that and this idea of like, well, I'm doing it for myself and what doing it for yourself really means in benevolent patriarchy. But the point is it's an economic issue.
(21:24):
And so I think that that coupled with the rates of women bearing disproportionate burdens of their domestic labor in their homes, even the primary breadwinning women still do more housework and caregiving than their spouses and mixed sex relationships. So the pressures of that unpaid second job at home, I think that those things have always been there, but there's a really interesting tension right now playing out in politics and culture that I kind of describe at the most gender essentialist level as saying it's the trad wives versus the girl bosses. And so I think that even that framing does it a disservice, but both sides are kind of digging their heels in. And I think that there's a really interesting conversation to be had in the intersection about what underlying assumptions are we making about women, about the way society has to be structured? Because there are so many downstream personal financial consequences of that.
(22:24):
If you as a society assume that if there is an underlying belief that women's job, their obligation is to take care of a family and that is their number one priority, or it should be, well then policy wise, you are not going to see any support for families because the person who's supposed to be taking care of that family is the mother. And then the downstream impact of that is that the United States and parents in the US are the most cost burdened in the world. They spend more money than parents in any other country taking care of their children. So that's one example that I think is really fascinating, but it's the reason why anytime I talk about policy or economics or culture, we wade into these issues because there are such clear connections to money and people are like, keep politics out of it.
(23:16):
I'm like, I regret to inform you that there is literally not a single topic on earth that is more political than money, and pretty much every major financial decision you make in your life is impacted by the decision of a policymaker sitting in Washington DC or sitting at your state capital. So to ignore it is just kind of like to willfully put up the blinders, and it's one of my biggest pieces of my mission is to get people to start understanding that the choices that they're faced with their money and the individual decisions that feel so personal to them almost always are the result of systems. And it is far more interesting to look at the systems level when you are assessing your individual choices because so much more comes into focus and you can honestly make more informed and empowered decisions when you're not operating from this place that everything is happening to me in a vacuum and therefore everything is my fault. So that I think that shift from an individual mentality and personal finance to systems level thinking and allowing that wider aperture to inform the types of political and personal decisions you are making just gets us to a more interesting and honest place.
Kim (24:34):
I feel like there's all these hypocritical and ironic things happening in the world and in the country, and you look at the percent of women participating in the workforce, so you're like, wait, I think it's like 50. It's basically 50 50. So you're like, but women are still treated as a special interest group and parents are also still treated as a special interest group. I'm like, well, women are half of the country and half of the world, so I don't know why we're treated like a niche. We're literally half. But anyway, and I think some of the other things I'm always like, people can believe whatever they want to believe, but if you're going to force people to do X, then you need to support them financially. So if you're going to say, you have to live in this type of world, in this type of traditional culture, wonderful, then give support to this thing. Or I just think, obviously we all have our own politics. It's just more like they're not the financial, the systems, the rules, the laws do not support even the goals of politicians, specifically one side, but in general, that's going to be your goal. Then put your money where your mouth is and then do these things to support that, which I don't agree with anyway. But still talk to me about what does it mean to be a rich girl and arrows talking about rich girls, what does it mean?
Katie (25:36):
The origin of that phrase was when hot girl Summer got really popular a couple years ago, and it was also just so happened to coincide with my realization that I was spending like $300 a month on hair, nails and makeup, and I was like, ah, screw. Can't do that anymore. Okay, change the plans. You guys, we're not doing a hot girl summer. We're doing a rich girl summer and we're going to save and invest that money instead and we're going to build up our capital reserves instead of just paying to conform. And so that kind of stuck. I think it was a fun twist on, it's like how do you make something that is actually kind of in some ways a little bit subversive and in some ways a little bit uncomfortable because obviously pretty privilege is real, so you are kind of taking a risk by not adhering, but how are we going to frame that as a fun and empowering choice?
(26:33):
And so that's where Rich Girl came from. People liked it. And so it has just kind of stuck around, I think about it really as just a mentality of being in control of your own life, being self-possessed, making decisions that further your own freedom and autonomy and recognizing that you bear a collective responsibility to help further the liberation of others. And so it's not that acquiring wealth is a progressive act. Obviously that's not true. And that in some ways, depending on how deep you want to go in the theory wealth acquisition is inherently anti progressive. But in the context that we exist within in our current paradigm, women getting more money usually means women becoming freer and having more autonomy. And that is a really important place for us to get to.
Kim (27:24):
Well, I mean in a capitalist society, I think money is power. And so whether it progressive or not progressive, it's like if money gives you power and choice and freedom, then it helps whoever has not more of it, but more of the absolute zero number of more. So I like that. One thing I meant to, now I was thinking about that, I forgot my question. What are the biggest mistakes people are making with regards to their personal finance?
Katie (27:48):
I think the biggest mistake is probably willful ignorance. And so I mean that very literally, I am choosing to ignore it because there are, as I've kind of already referenced, there is so much about your economic situation that you have exceedingly little control over. So the cost of housing in your town, unless you are marching your ass down to city hall to vote for the development of more affordable housing, you really can't control what the median rent or median mortgage is in your town. You can control where you choose to live, but that is a choice within a constrained set of choices that is provided to you. Same with the cost of groceries, the cost of gas, the cost of an education, the cost of going to the doctor. So many of these things are not in your realm of controller scope of influence, but the one thing that is in your control is taking inventory every month at what is coming in and where is it going.
(28:52):
And I think that if more people just had an honest accounting of how they were allocating their resources, the next best step would become fairly obvious. So usually people fall into one of a few buckets. The first is they are resource scarce, so they're not earning enough money. This is probably going to be the case for about half the population. They just are not making enough. So whether that means they need to negotiate for a race or it means they need to get further job training that they can command a higher wage, or it means they need to join a union or switch industries to one that does unionize. There are multiple paths, but you might realize, I just need to make more money. There's just not enough coming in. The other thing that you might realize is that you make decent money, you've got plenty of money.
(29:44):
You could theoretically do something positive with it, but you are spending in a way that is not conducive to building wealth. So you're kind of like a leaky bucket. There's a lot coming in, but you're finding a way to get rid of all of it by the end of the month. That is going to be a really helpful indicator that, alright, I need to figure out and build a spending plan that is going to allow me to save and invest. Then the third bucket is people who are making enough money and are spending in a way that generally works within their means and they've got leftover savings every month, but they are not investing it. So it's just sitting in a savings account. I see this all the time. They've got savings accounts that are 50, 60, $70,000 and they're like childless renters that have no ostensible need for $70,000 in cash.
(30:33):
They're not waiting on a roof paying for a new roof. I mean those people, the next best step is I need to start investing and I need to systematize and automate that investing so that every month those savings immediately just go into the market and I don't even have to worry about it. But I think people get confused or people get overwhelmed, understandably so, because there is so much out there and depending on which bucket you fall in, the advice that you're reading might not actually make any sense for you. And so that's kind of the way that I think about it in that order, is my income at a place where I can even afford to live? Is my spending reasonable for that income and then of the money that I'm saving, am I putting it to productive use so that the money that I am saving is going out and making more money for me?
Kim (31:22):
And now that you've been doing this for so many years, has there been one or two things you've learned that you're like, that is massively going to change my life or other people's lives?
Katie (31:33):
Yes. I think the understanding of financial independence is the thing that made everything else click for me. So to summarize it quickly or briefly, it's basically the math that allows you to determine at which point your investments will be enough for you to live on in perpetuity. So it's basically the critical mass threshold or crossover point where your investments are going to pay you enough such that you can spend and support your lifestyle without having to do paid work that is known as financial independence or the financial independence number is the amount that supports that spending. And it's really easy to calculate. You just multiply your annual spending, what you spend in a year by 25, once you have that number in investments, you could live on those investments for 30 to 40 years just withdrawing your spending, which works out to about 4% is the math, and you are now work optional.
(32:33):
So that to me is true freedom. You are completely self-possessed. You do not have to report to anybody. No one else controls your time or your schedule. You can choose to work or not work however you want. But that realization was what made it all click for me and what made it me realize, oh, that's why you save and invest. It's like, because trying to get to that point, that's really just like retirement in a nutshell, but it's not an age. It's a number. So if you reach that at 40, that's obviously better than reaching it at 65 or 70 if you can,
Kim (33:08):
As long as there's no insane stock market crash. No, even
Katie (33:11):
With crashes.
Kim (33:12):
So you're talking about investments like hard investments. You're not talking about stock market investments,
Katie (33:15):
No stock market investments, investing in the stock market in total stock market index funds and some US treasury bonds. I mean, I could send you the paper that goes into all the details of the asset allocation, but yeah, it's investments in the stock market that yes, historically speaking, even with major crashes, even with extreme inflation, even in those worst periods in the last a hundred years, you still could have gotten 4% per year out of the investments and then that amount would've been recovered by the gains in subsequent years such that you never really, you're not depleting the principal balance. It's like
Kim (33:54):
Magic. There you go. I just outed myself as not a financial expert. The takeaway is that I am learning along with the audience,
Katie (34:04):
And this is your next level stuff. This is what I wish they would just teach you in school. Have one day where they bring someone in and they go, all right, explain compounding returns. Explain the 4% rule. You're good.
Kim (34:18):
I am like, why did I learn about trigonometry and chemistry and I didn't learn about financial literacy in high school? For real. I feel very strongly about this, and especially for women, I feel like it's way worse for us. Nobody is like, this is important. And so now I have a daughter, so I say to my husband, let's get her a bank. We're getting her a bank account, and we do a bake sale or we do flower shop also. And we say, okay, well how much did the mason jars cost? And what do we want to charge for? Small, medium, large? Same with cookies. They're like, oh, we made $45. I go, well,
(34:55):
What's on that document? Write down what else you put in it. But even those small things, I do think about that a lot. And I remember I paid off my college debt when I was 30. Not that I'm not 30 now, but I remember paying off my college debt when I was 30, and I was so excited. I mean, basically I was working in media, getting paid nothing, having a side hustle of jewelry, and it took years, but it felt really good because even though those are low interests, it's still just something, you know, owe someone. And I just hate the idea of owing anyone anything. But I wasn't investing in my 401k when I first started because I was earning so little money. It felt like, can I really put in my 401k? And then I got smarter. I didn't do it for that many years, but I didn't commit, I didn't contribute to my 401k for a little while, and then I did, and I still have a good amount in that.
(35:42):
But it has been the sort of thing that as I learn things kind of always later than I wished I had known them, it does feel good to be like, okay, this is right. This is good. And I do think, to your point earlier about people not investing and sitting on money, I think that we have that mentality of scarcity where we have money and we are worried to put the money somewhere because when we don't have the money, and of course you do have the money, but it is scary that when you have a checking account and you have a savings account, I can see my money. I see where it is. It's not going anywhere. It just takes a while to break through that. Anyway, I loved all the things you shared. Thank you so much for having me. Thank you so much.
(36:21):
Thank you for joining us. Don't forget to exit the grind and enter success on your own terms. This is the exit interview with Kim Rittberg. Don't forget to grab my free download, how to Grow Your Business with Amazing video at kimrittberg.com and linked out in the show notes. I love to hear your feedback. Make sure to submit to me what you learned from the show and how you are crushing it on your own terms. Connect with me on Instagram or LinkedIn at Kim Rittberg, R-I-T-T-B-E-R-G. And this show is edited by Jillian Grover and produced by Henry Street Media. I'm your host and executive producer, Kim Rittberg.