The Get Ready Money Podcast with Prudence Zhu: Living A Life You Love

On the latest episode of The Get Ready Money Podcast, I spoke with Prudence Zhu, the founder and CEO of Baoba USA about changing the way we think about money and living your best life. 

In this episode we discussed:

• The importance of being confident in your habits.
• How money is intertwined with life.
• Have clarity that it’s your money and then make it matter. 
• Why compound interest is the eighth wonder of the world. 

Prudence Zhu, CPA/PFS is the founder and CEO of Baoba USA. Hailing from rural China and settling in the US, Prudence's story is a tale of dreams, challenges, and tenacity. Landing in 2012 with the basics, she carved out her path to financial freedom by 2021, mastering the art of saving and investing. Now a proud mom in Phoenix, AZ, and the voice behind the YouTube channel Invest with Prudence  (www.youtube.com/@investwithprudence), Prudence extends her wisdom through Baoba USA (www.baoba.us), offering tax advice and financial coaching. To her, financial freedom is not just a bank statement; it's about living with purpose, making informed decisions, and inspiring others to do the same.

Connect with Prudence Zhu:

Website: http://www.baoba.us/

LinkedIn: https://linkedin.com/in/prudencezhu

You Tube: https://www.youtube.com/@InvestWithPrudence

Transcript

Speaker 1: 0:04

Are you looking to get ready, be prepared and transform your financial future? Then you've come to the right place. This is the Get Ready Money Podcast with Tony Stewart, where Tony has insightful conversations with financial experts who are changing the way we think about money. Watch up on the latest financial trends and hear practical advice from Tony and his expert guests so you can build healthy habits that work. Be empowered with tips for implementing small changes that can have a big impact on your financial future. So sit back and get ready to hear from today's guest.

Speaker 2: 0:48

Welcome to the Get Ready Money Podcast changing the way we think about money. Please be joined today by Prudence you. Prudence is the founder and CEO of Baobai USA. In this episode, we'll be discussing Prudence's thoughts on how we change the way we think about money and living a life that we love. Prudence, welcome to the Get Ready Money show.

Speaker 3: 1:11

Thank you, tony, happy to be here.

Speaker 2: 1:14

Yeah, excited to have you on today. So this is a question I ask everybody to get started, tell us a little bit about yourself. What is your origin story?

Speaker 3: 1:22

Oh, happy to do so. So I grew up in China, born in the 80s mid-80s. I came to the US in 2022 for my MBA program and I graduated in 2014. And since then, I was building my financial independence, or financial freedom. Back then, I still didn't know financial planning. I didn't know it was a thing, so I just calculated 4%. Well, so basically, I calculated my annual expenses and multiplied by 25, and set that, which is 2 million at the time, as my financial goal, and I achieved that in 2021. Since then, I was okay, what's the next phase in my life? Now I can do whatever I want with my life, and I settled on financial coaching and financial planning. That's why I founded Baobai USA, and here I am.

Speaker 2: 2:19

That's awesome and that's exciting that you were able to achieve your goal at such an early age. I mean just to go a little bit deeper on that for a minute. Is there like one or two things that really you think made the difference for you as opposed to other people?

Speaker 3: 2:35

Yeah, I would say just to two. One is that both me and my husband were very diligent workers. We had our salary increase year over year and we also save around 40% year after year. And the second thing is that we really got lucky In 2020, we moved to Phoenix and we purchased a second house, and that house basically increased in value like 50% in the first couple of years and stayed there, even though there has been like fluctuations, so that was a big boost to our net worth. And if you remember in 2021, that that was also the year where the market was crazy, and because in 2020, there were a lot of people panicking and taking their money out of the stock market, it was as low as I remember 33,000 something for SP500. But then it was like increased to the height of 4,800, right, and so that's why we got lucky, both with the stock market and the house, and we both me and my husband are long-term investors, so we basically have a strategy and then keep investing.

Speaker 2: 3:55

Yeah, I love that. Long-term investors staying steady. I think that's something that people sometimes overlook. Well, and of course, saving a large percentage of your income is so important. People oftentimes just don't make that very simple correlation that the more you save, the more you're going to have.

Speaker 3: 4:14

Exactly, exactly, because a lot of times people think that, oh, I make good money and my salary is going to increase, but then you get into the trap of making more, spending more, and now you cannot get out of it. And then if something got forbidden, like if something happens with your job security, then everything crumbles, or?

Speaker 2: 4:36

the economy is unstable. Definitely what I think you bring up. Something important there, too, is about lifestyle creep. Is that piling on more expenses when your income goes up, instead of maybe putting aside a larger percentage of your bonus or something like that, and I think people oftentimes overlook these very simple rules. So Prudence. Obviously you were inspired to do something new. What particularly inspired you? To empower people to get control of their money, to make that mission.

Speaker 3: 5:12

Yeah, that's a very good question. So, as a first-generation immigrant, I've seen so many sad stories, not only for the first generation but the second generation, where their parents came to the US, sacrificed everything and worked so hard to put them through medical school or law school and now they're obligated to follow this path that's prescribed by the parents and, as a result, even if they are really successful, they might be really sad in terms of happiness and, in my opinion, that's two or three generations of kind of people not living to their fullest potential and may have regrets towards the end of their life. And I personally saw the potential of not living that life, but through planning and investing, and I just want to spread that around for more people.

Speaker 2: 6:10

Well and I think that's an important message is because I think, especially with first generation people, is that there's a very strong desire well almost, to survive and that they don't take anything for granted. Like people who are multi-generational, they take a lot of things for granted, and the first generation, second generation people appreciate all the opportunities that they're given and as well as maximize the opportunity, but at the same time, as you point out is, they're not as happy because of that sex, especially if it's not something they wanna do.

Speaker 2: 6:51

Exactly exactly. I know what you're talking about. So one of the things you talked about your own personal financial freedom is could you define for the audience what is financial freedom and why is it important? How does it help people?

Speaker 3: 7:09

That's a very philosophical question, I think. For everybody the answer might be different, but for me, financial freedom is free of the consideration for money when you are making decisions, meaning you don't have to sacrifice your other values when you're making a decision or having the resource to give back to the society.

Speaker 2: 7:36

I love that definition to not sacrifice their values, because I think people sometimes, quite often, don't include their values when they're thinking about their money, and that I think your definition is easy. It's free of consideration for money, because I think that's the root of it financial freedom, and I talked about this in my new book. As opposed to retirement planning, it's really financial freedom because you didn't retire when you reached your financial freedom number. You just changed what you were doing and are living in a different way, and I think that's what people need to realize is that it is your own definition, and that's why I love that you've defined it for yourself and are helping other people meet their dreams and goals.

Speaker 3: 8:24

Yeah, but I do have to point out that it's not free from money or financial considerations, because that's always in the consideration, but that shouldn't be your predominant consideration.

Speaker 2: 8:38

Excellent clarification on that. Yeah, you still need to think about money, but your decisions shouldn't be driven by money. Right, exactly At that point. Or money yeah, so let's get into the Get Ready questions. The first one is what basic money concept do you wish people knew?

Speaker 3: 9:02

I think was it Einstein who said the compounded interest is the eighth wonder of the world. And I just want to add a little bit to that, because it goes both ways. It can be a return or it can be an interest cost, right? If you think of in terms of credit card debt. In that case you're owning debt and it's compounding at 20% rate. So basically your debt would double in less than four years and most people don't realize that. And now you're comparing a person who's consistently investing in index fund, for example, with very low cost, they're gaining 10% year over year, and the people in debt they're losing 20% year over year. Then you'll see, like the difference right there. So compounding interest not only will increase your wealth if you invest correctly, it might also damage your financial situation if you are in high interest debt. Is that understandable?

Speaker 2: 10:09

That is totally understandable and I love it is because I've had a lot of guests. A very common answer is compound interest, but I haven't I don't recall anybody talking about the compound effect on debt.

Speaker 2: 10:23

And I think that's a missing part of the conversation, so I love that you brought it up and if I have any basketball fans out there, they might relate to this. And someone else playing basketball is if you had an offensive play and you lost the basket ball and the other team scored a point is the coach said you gave up four points, the two points you should have had if you didn't make your mistake, plus the two points the other team scored.

Speaker 3: 10:47

Yep.

Speaker 2: 10:48

And I think that's a way to look at this. I love that you brought that up. That's an excellent point, and it's a positive and negative reaction, so that's fantastic. So what is one simple thing people can do each year to set themselves up for financial success?

Speaker 3: 11:14

So I have a CPA background and I do handle a lot of people's taxes, and what I realized over the years is that a lot of people think that, oh, if I get a refund, I don't have a tax problem, but the reality is that they are not using what's available to them to build their financial wealth or financial wellness.

Speaker 3: 11:37

So, for example, there are so many pre-tax accounts out there that people are not using and things like HSA, 401k. Or, if you are in a low tax bracket, you can use Roth IRA to stash away some money for retirement and that money would grow tax-free. So basically, this serves two folks right, because we're trying to promote people to think ahead of time about their finances. So it not only would help people to get into the habit of setting up for a successful future, but also benefit from the tax savings either current tax savings or, down the road, from the growth. So I would say, yeah, tax planning for anybody. Basically, if you are in a low tax bracket, there are so many things you can use. If you are a high tax bracket, there are so many things you can use, but different things.

Speaker 2: 12:35

Yeah, and I think that's an excellent point, because I think a lot of people are into the conception that you have to be wealthy to do tax planning, and your message with 100% is tax planning is for everyone. It just may not be the same thing. That's great advice. So what is one habit that people can change when it comes to their money?

Speaker 3: 13:01

That's a good question. So I think, okay, I'm going to offend a lot of people. So one habit right now, right now, is to stop buying from Amazon. Okay, so that is just crazy, because a lot of times when I see my clients' transactions, they don't realize how much small transactions they are putting on Amazon without thinking. They're probably thinking, oh, we need this, we better get that. And one button it's like taking money from your credit card and showing up the product is showing up on your door and then the end of the year, if you add all those transactions together, it's easily thousands of dollars for things that you don't really realize you're spending money on.

Speaker 3: 13:54

And it's getting worse and worse as the time goes by. Because now, like the other day, I was doing a comparison like Amazon versus kid to kid, which is a second hand kid store, that's like in our neighborhood. They also have new products, because my daughter was going to a dance lesson so she needed a bunch of tip-tap shoe and ballet shoe and outfit and all that. So when I add the car, in Amazon it was $80. And I went to kid to kid it was $35. So at the beginning you'll think Amazon is saving me money and it's convenient and it's like you know, you don't have to think about it. But now Amazon is actually more expensive than the retail stores, not to mention it's squeezing all the profit margin from all the manufacturers and pushing all the real stores that's the supporting factor of the greater economy out of business. So for your own wallet and for the macro economy, like, please stop buying on Amazon, or at least like think about it.

Speaker 2: 15:14

I think that you know that's a lot to think about, but I think your points are really compelling and I think you know. One thing to even add on to that is what is the prime? $180 a year that everybody pays without even thinking about it, and that's gone up quite a bit from I think it started $100 a year.

Speaker 3: 15:37

Seriously like. If you compare that with a Costco card. Costco is 50. And you save like probably 50 cents on every gallon you get from Costco gas station and Costco is committed to 15% of margin on all their products. And if you compare Amazon, it's easily like 50% and that's like right there, Like what's the value the prime is providing, saving you some trips to the retail store, but it's actually costing you a lot of money.

Speaker 2: 16:08

I love that. I have not seen a study on that, but that would make an interesting study. I am making a note.

Speaker 3: 16:18

So when I was in corporate world. We are a big candy manufacturer, so that's why I know all the retail margins. So Audi and Costco are by far the best, but dollar stores and Amazon are by far the worst.

Speaker 2: 16:35

Yeah, dollar stores I've heard interesting things about. I haven't read any real analysis on that, but I'm with you on. Amazon is the other thing too. I think people don't realize is that Amazon uses dynamic pricing and so if you're shopping on Amazon, it get tip is to always go to an anonymous browser and see if the item is the same price.

Speaker 3: 16:56

If you encountered that dynamic pricing, yeah, so one easy one is that if you select a product and it has different patterns or colors, I always go for the cheapest because I don't care. Sometimes I would even see if there's a used in terms of books. That way it's like easy money saved.

Speaker 2: 17:19

Yeah, now that you mention it, when I think about it I can remember what we were looking at it at a shirt that my son wanted and we were flipping through the different colors. The surprise changed yeah, and I was like that's so weird. But yeah, it's buyer beware. But I think he gets to mindful spending and cracking.

Speaker 3: 17:41

Yeah, I think that's, at the end of the day, what I was trying to get at. But the thing is that if you just tell people to think more about spending, they're not going to listen. That's why I'm saying stop buying on Amazon, make it a target, and then you'll realize, like many other situations, like you would see the difference 100%, 100%.

Speaker 2: 18:04

That's great advice. So, britance, what money myth are you trying to break?

Speaker 3: 18:12

Well, so here now we're back to the conscious spending, right? So a lot of times people say, okay, when I have more money, I'd love to spend money without thinking about it. And that's a very dangerous thought to have, because most people with that thought would not deal very well with that money. What I'm saying is that for the first generation millionaires, they get there not because they're spending money without thinking, but they got there because they're making good money, saving and investing diligently year after year.

Speaker 2: 18:55

So I think yeah Well, I think one thing I'm getting from that is that you know, don't forget what I've got you there don't change your habits when you have success and going back to your story is that was something it sounded like for you and your husband is that you didn't change your habits as you started achieving financial independence.

Speaker 3: 19:20

I think we did change a little bit, because we valued a lot more comfort and convenience. As before, we would save a penny for the sake of saving, whereas now we are more objective in terms of thinking what's the cost of getting the convenience and what's the value we're getting out of it.

Speaker 2: 19:42

I think that's great advice become objective about the cost and the value that it provides, because I think that's really and it gets back to the habit that you were talking about is becoming objective about the cost is talking about Amazon, is people, don't you know? Everybody is conditioned, as you point out, to think well, amazon's the lowest price and they're not, not anymore. For certain things they may be, but yeah, they're definitely not.

Speaker 3: 20:14

Not when you're thinking the habit of just clicking the button and get whatever. You have the split second of thinking that you need. So basically that's what they want from the get-go. Basically, they created the prime, they created the same-day delivery, all for that purpose, so that people would spend more and people did.

Speaker 2: 20:38

Yeah, well, you know. That's why Jeff Bezos is one of the five richest people in the world. I don't know exactly where he ranks, but yeah, it's all psychological manipulation. But that's a topic for a different show, the psychological manipulation. So, Prit and Prit, if we got out the time machine now, what advice would you give your younger self if you could go back in time, knowing what you know now about money?

Speaker 3: 21:06

I would say well, it's interesting, when you asked me, when you sent me the notes, I had a different answer. And now I think I would go back and tell myself you're going to be awesome, you're going to be fine, just keep confident in your ability, in your financial habits, and you don't have to achieve that financial freedom to live your dream. Because, if I think back, I didn't need that two million to build my financial confidence to jump on the things that I really want to do. Granted that in those years in corporate finance I built my skill set and network that would set me up for success in launching my new business. But the mindset back then was that I needed a stable job because I have a family, because I had mortgage, because I had car loans. But in reality I could have planned way earlier and started my real life way earlier.

Speaker 2: 22:14

But that's okay. Life is a journey, but you did gain confidence from that and that's really cool and I think for everybody else too, that's listening. I think your message that you're going to be fine is okay, because I think we oftentimes forget that it's a decision to make going forward. That are the important ones in our financial lives, it's not the decisions in the past, because you can't change them. We can't change the past. So it's learning and growing and that's awesome advice. Yeah, absolutely. I think it's hard.

Speaker 3: 22:54

I think I have no regrets. I'm really grateful for everything that's happened in my life, even some are good and some are bad. The important thing is that I had lessons coming out of those experiences and now I'm helping more people to take less detours and get to their destination or reach their goals as fast as they can.

Speaker 2: 23:22

And I think that's awesome to share the knowledge to help others. It's such a great mission to do so. Pridance, you know. Wrap up what is your number one tip in changing the way we think?

Speaker 3: 23:50

So recently I started getting trained on life planning and I believe a lot of it is really the assets of money. Money is intertwined with life. So when you're talking about money, it's talking about your life, your values. So when you're making any financial decisions, make a point that it represents your values. Make a point that, like, remember what you spend money on is a vote for you to change the world. So if you spend money on Amazon, amazon is going to grow and it's going to take over the world and create more trash and make people poorer. Well, that's extreme but that's one of the possibilities. Right, you know what I'm saying. But if you instead by secondhand, then you're helping the environment, helping your wallet. So, essentially, every financial decision you make is a vote to change the world. I think not many people realize how powerful that is, but every day they are making that decision. Either it's like unconscious or it's intentional decision.

Speaker 2: 25:07

That's awesome if I speak because I don't think we think much about that sometimes is that we sometimes, you know, don't put our money where our mouth is. We may say, you know, we're against this or for this and that, and then we end up supporting companies that don't go in that direction. That we are. Maybe we're not always stockholders, but in essence we are stockholders because we contribute to the profits of a company and if we don't agree with the way that they're doing business, spending money there is not going to help them. Or, as you point out, with kid to kid, you're supporting a local business that's going to continue to create a place for other parents to bring their kids to get things, and if you don't support that business, you know I buy books at local bookstores and I know that I pay more at the local bookstores, but I want to support the business.

Speaker 2: 26:05

I want to see bookstores continue.

Speaker 3: 26:08

Yeah, that's great yeah.

Speaker 2: 26:10

So I think but I think you know that's important for people is you know to balance that out? Is you know your desire to save versus your desire to make this a better world and your value? So just curious, is that the George Kinder in a life planning?

Speaker 3: 26:27

Yes, it is.

Speaker 2: 26:29

Fantastic. Yeah, that's great stuff, you know, for the financial planners in the community. I'd encourage you to check out the work that George Kinder is doing with its Life Care Planning Institute. Is that the name I'm trying?

Speaker 3: 26:42

to remember Kinder Institute.

Speaker 2: 26:44

Yeah, the Kinder Institute. It's a very different way of looking at the financial world and for those of you who've been listening to the podcast is you know I've interviewed quite a few people who've gone through the Kinder planning training, so it's exciting that you mentioned that, because it keeps coming back to that.

Speaker 3: 27:05

Yes, yes, at the end of the day, we're all trying to make this world a better place.

Speaker 2: 27:11

Definitely, definitely. And you know it's your money. You can spend it as you want to. So you know, I think that's important and I think for advisors, you know it's important to remember that it's your client's money. It's how they feel about their money that are going to make a difference. And if you want to have a client, help them listen to them?

Speaker 3: 27:32

Yeah, absolutely. That's so important, and I think this emotional side of money needs to be discussed and understood more in order for people to have clarity and have a better understanding of their decisions, and I absolutely encourage you to keep this going, because we do need to change the way we think about money and, at the end of the day, it's your life, it's your decision, and make it matter.

Speaker 2: 28:03

That's great closing words. I appreciate that. Yeah, it's your money. Make it matter, so that's great. Well, prudence, where can people find out more about you? Learn about your company? Check out what you're up to? I know you have a YouTube channel. Tell us a little bit about that.

Speaker 3: 28:20

Thanks. I have a YouTube channel called Invest with Prudence, where I talk about tax and wealth strategies that you can use to live your best life, and, since I'm very engaged in the entrepreneurship world, I'm also providing knowledge and tips for small business owners and people who are thinking of becoming one. So subscribe and let me know what topics you want to hear, and maybe I'll produce a video based on your feedback.

Speaker 2: 28:56

That's awesome. That's awesome. And you're also active on LinkedIn, right? Any other social media platforms?

Speaker 3: 29:03

Yeah, so primarily it's YouTube and LinkedIn. On LinkedIn, you can find me under Prudence Jew. It's JewisZHU. I have weekly news trailers and I have updates on my thoughts and life and business, so it's definitely more comprehensive than YouTube. And if you're interested in my service, you can go to Baoba. That's B-A-O-B-Aus Fantastic.

Speaker 2: 29:38

And for everybody watching and listening. I'll also put all those links into the show notes so you can find Prudence's YouTube channels, as well as connect with her on LinkedIn and back out the website. So, prudence, thank you so much for joining us today. Appreciate your time and your insights.

Speaker 3: 29:54

It's a great pleasure to be here. Thank you, it's a good conversation.

Speaker 2: 29:59

Yeah, this is an amazing conversation, much appreciated, and so everybody. Thank you as well for tuning in to this episode of the Get Ready Money Podcast. Please remember to subscribe and like this video. Thanks, until next time.