Ep. 41 The $500 Mindset Gap: What Wealthy People Do That You Were Never Taught

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If somebody handed you $500 right now, what would you do with it?

Most people think pay a bill, cover a need, maybe save it. All reasonable. But not what wealth builders do.

In this episode, Jim breaks down the 5 moves that people actively building real wealth make with $500. These are habits and strategies that were never taught in most schools and that the average person never considers.

What's covered:
- Why an emergency fund is armor, not savings - and why wealthy people fund it first.
- How automating even a small monthly investment can compound into $400K+ over 20 years.
- The tax-advantaged accounts (401k, Roth IRA, HSA) most people leave completely untapped.
- How wealthy people spend money to buy back their time... and then use that time to build more wealth.
- Why financial education + accountability is the one investment that unlocks everything else.

Jim also shares a personal story about coaching, accountability, and what happens when you think you've "figured it out" and go it alone.

The game of money is learnable. It just was never taught to most of us.

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Net Wealth Nest LLC is an educational platform. Content is not financial, tax, or investment advice. Consult a qualified professional before making major financial decisions.

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Transcript

Jim 0:00

So if somebody handed you $500 right now, what would you do with it? It. Let that sit for a second. Most people think pay a bill, buy something they need, maybe save it. And all of those are reasonable answers, but they're not the only thing wealthy people do. Today I wanna show you five things that people who are building real wealth do with 500 bucks, And I guarantee at least two of them were never taught to you in school. This is not about having more money, it's about thinking differently with the money you already have. Welcome to the Netwealth Nest podcast. I'm your host, Jim Lobe. Thanks for joining us again. Today we're gonna talk a little bit about the $500 mindset gap and what separates wealth builders from everybody else. Most people see $500 as maybe not even enough to matter. That thinking is exactly what keeps people stuck Wealthy people understand one thing, most don't. It's not the amount, it's the habit and the direction. An easy example. $500 invested consistently every month for 30 years At average, market returns turns into over a million dollars with compound interest. Again, the amount is not the point. The decision and the direction is the point. Every wealthy person you've ever heard of, they started somewhere. Some started with nothing. Some were handed some assets to get them going. The difference, though, is what they did with whatever they had started with. So let's talk about the first one they fund or top up their emergency foundation First. Wealthy people, they work to never leave themselves exposed to a financial emergency ever. If the emergency fund is not at three months of expenses yet, that $500 goes there first. There's no debate for them in this situation. This is not boring. This is one of the moves that keeps everything else from falling apart. An emergency fund is not savings. It is armor. It is there to protect you when something you don't expect happens so that you don't have to go into debt to figure that problem out. Every dollar in it protects every other financial move that you make if the fund is already solid. That $500 does not send in a checking account. It moves immediately into one of the next four things. Number two, they automate a reoccurring investment, even if it's a small one. Wealthy people don't wait to have enough to invest. They start with what they have and then they automate it. $500 used to set up or increase an automatic monthly contribution into an index fund is not a one-time move. It's built as a system. The s and p 500 has averaged roughly eight to 10% annual return over the long term, so that a $500, a month investment over 20 years, it's not $120,000 that you would accumulate there. It's actually about $400,000. It's significantly more because of the compound growth and the time that it was given. The key is they don't watch it. They don't trade it, they automate it, and then they leave it alone. That's the wealthy behavior. An easy first step for you here is open up a Vanguard, a Fidelity, a Schwab count, E-Trade, whatever. These are free accounts and all of them offer low fee index funds, many of which you can start with just a few dollars to get going. And this leads us to the third thing. They capture every available tax advantage that they can. So if they haven't maxed out their 401k employer match as an example, that $500 is going towards getting there. An employer match that is, 50 or a hundred percent. Match is an instant return and nothing else can compete against that. If that's covered, maybe they look at either maxing out their 401k or money going into a Roth IRA as an example where it could have tax free growth and potentially tax free withdrawals in retirement. There's also categories like an HSA, which is triple tax advantage, meaning the contributions going pre-tax. The growth is tax free and withdrawals as long as they're used for. accepted medical purchases are also tax free. Wealthy people treat tax advantage accounts like a cheat code because legally they are a cheat code. Most people leave thousands of dollars of tax advantage on the table every year simply because nobody taught them that these accounts actually exist. That leads us to the fourth thing. They buy back their time strategically. So wealthy people will use money to buy back their time, and this is the one that surprises people, those wealthy people are spending money to free up time, and then they use that time, and this is key to earn or build more money. So, for example, hiring somebody to handle a task that frees up five hours a week. If those five hours go towards a skill, a side income. Or building something, the return on the money they're spending to free up that five hours could be massive. It also does not have to be hiring someone. It could be a tool, a software, a system that removes friction from their life or their work. The question wealthy people ask is this money going to give me back more than what I'm spending in time, income, or growth? If yes, it's an investment, not a cost. most people never think about money this way. They only think about what they can buy, not what they can build. And then last, but certainly not least, and certainly while it is the fifth one that we are covering, could be something that would move up anywhere in that order. Wealthy people invest in their own financial education and accountability. This is the one nobody talks about, and it's the one that kind of unlocks everything else. Wealthy people spend money learning on how to manage, grow, and protect their wealth. Consistently. They buy books. They buy courses. They hire consultants and professionals. They hire coaches. They're involved in communities and masterminds. They invest in their IQ the same way they would invest in the market. Because knowledge without accountability. For most people, it just doesn't drive action. Most people know they should budget, they should invest, they should plan. But people. Frequently do not do this. this was a great learning moment for me and one of the things I still work on is eating well and taking care of my health. And while I know what I should be doing, I should be eating mainly Whole Foods. I should stay away from processed foods. I shouldn't, Over index and things like sugar and salts and all the things that could, you know, maybe, make me unhealthy. I should eat the appropriate amount of food for the body weight. I want to be, I need to work out consistently, frequently high intensity and low intensity. Like the list I just did all the things. If I just did all those things, I would consistently be healthy, probably feel better, probably sleep better, probably just be better at almost anything I did. I know all the things to do. It's the execution and the part of the execution is. I can't always be motivated to do those things. So what do I do? I have a coach that I report to daily that helps me through these things. It's an individual that calls me out when I'm not doing what I said I would do, which happens more often than not to most of us. It's somebody who gives me advice or says, I had this problem. Let me show you what I did. May or may not work for you, but let's have some ideas and talk about it. That accountability and That person that has experienced that and gone through that and has come out on the other side is almost invaluable. And I did coaching for a while. I got really. Attuned to where I wanted to be, and then I thought I could just stop doing the coaching and kind of break off. And I did that for a while. And guess what? I started to backslide some. And so what I really did is I got back to the coach, I said, Hey, I was doing good. I did great while I was doing coaching. I did great at first, but then, you know, things in my life changed, uh, maybe more stress, more, responsibilities. And now I'm starting to backslide. I need help. I need to get outta this funk. And so understanding that. Investing in the knowledge, investing in the accountability and the coaches and the communities. Wealthy people understand that this is part of the price of admission to move to where they want to be, and so they will work to put money in those categories to get the results that they want.

9:13

Before we wrap, here's what I want you to do. Everything I share on this podcast is meant to help you understand the game of money, but knowing where you stand in that game is actually what changes the next 30 days. That's why I built the financial pulse check at netwealthness.com/pulse. It's two minutes, a handful of questions. It'll show you whether the biggest leak in your financial life right now is your spending, your income, or your follow-through. Because the fix is different for each one, and most people are working on the wrong one. I've been on the other side of this. I know what it feels like to be doing all the right things and still feel stuck. The pulse check is the same diagnostic I start every coaching conversation with. Take it. It's free. Netwealthness.com/pulse. All right, let's wrap it up

Jim 9:59

Okay, so fast recap of the Five Things. Emergency Fund Your Emergency Armor, automate investing. Make sure you are taking, advantage of those tax breaks that the government allows buying back your time. And finally, education and accountability. Here's my challenge. You pick one of those five things this week and do it not next month, this week, even if it's $10. The amount is not the point. It's about the decision and starting to build those habits. The game of money, it's learnable. It was just never taught to most of us, And that's what we're here to do and help change. Do you want help figuring out which of these five moves makes the most sense? Where you're at right now? This is exactly why you should head to our website and look into a coach or look into our upcoming community. as always, if this video is helpful, please like, subscribe, share it with your friends and family. Give us reviews. If you're listening to us on Apple Podcasts or Spotify. The more people we get in front of, the more people we can help. Thanks for joining the Netwealth Nest podcast today. My name's Jim. Bye everybody. Net Wealth Nest LLC and Podcast is an educational platform committed to providing resources and information to empower individuals on their financial journey. Please note, we do not provide financial, tax, or investment advice. All financial decisions should be made in consultation with a qualified professional who understands your unique circumstances. Seeking personalized advice is a smart and necessary step before making any major financial commitments. Thanks so much for joining us today. If you found value in this episode, please like and subscribe to our YouTube channel, Net Wealth Nest, and leave us a review on your favorite podcast platform. We read every comment, and they help us improve and guide what topics we dive into next. And hey, if you-- something you heard today resonated with you, don't keep it to yourself. Share it with a friend, a family member, a coworker, your barber, your barista, even a stranger in line. You never know who might need this message. Remember, building net wealth is a journey, but you don't have to do it alone. Stick with us, and together, let's grow your net wealth nest