After doing this show for the last 5 years, I’ve heard from a lot of people that say they feel like a complete financial disaster. They are making good money, but they are disappointed with what they have to show for it.
Our guest today has dedicated his life to fixing financial lives and helping to transform them into millionaires. Peter Dunn a.k.a. Pete the Planner® is the CEO and Founder of Your Money Line, a corporate financial wellness solution, and Hey Money, a direct-to-consumer solution that connects people to friendly financial experts.
Pete and I discuss how to grab a hold of your financial life and put yourself on the path to becoming a millionaire.
Episode Overview
Pete the Planner and I review the following:
- How getting started is the hardest and most important step
- Why calculating your power percentage will help you build wealth
- The reason you do not want to hesitate when it comes to investing for retirement
Pete the Planner has a wealth of knowledge when it comes to setting yourself up for a comfortable and happy life. You may not be a millionaire today, but follow Pete's advice and you'll be well on your way.
Here's how to take the first few steps that will move you from financial disaster to millionaire.
Why Creating Millionaires Matters to Pete the Planner
Pete the Planner is in the business of a creating millionaires. This mission isn't based on helping people live flashy lives or unlocking a Lifestyles of the Rich and Famous status. In fact, it's the complete opposite of that.
Pete says that the math indicates that most people need to become millionaires. Someone who is currently in their 20s, 30s, or 40s is going to easily need a million dollars to retire comfortably. So that millionaire status Pete is pushing people toward? It's actually all about helping people retire and live comfortably, not excessively or extravagantly.
Are you uncomfortable with saying that you want to become a millionaire? Pete encourages people to get comfortable with these more concrete numbers. Oftentimes, many people start their financial journeys talking about doing the best they can. That attitude is commendable. But it's also incredibly nebulous. Pete says that aiming to become a millionaire is a much easier and more practical target to hit because it's clearly defined.
So you're ready to become a millionaire. What's the first step to get there?
The Hardest Step According to Pete the Planner
The first step to moving from financial disaster to millionaire is to get started. Pete admits that many people are so overcome by analysis paralysis that they delay getting started. Or worse–they never start! Don't make that mistake.
Instead, Pete says that it's important to simply acknowledge that we all have to start somewhere and everyone's beginnings look different. In fact, Pete is utterly emphatic about one thing: we don't shame beginnings.
It's fine if you're not currently putting money into your 401k. It's OK if you're confusing about investing for the future. Everyone's starting point looks different and there's no shame in it. Rather than worry about where you're starting from, push yourself to start.
It's the hardest step, but it's the one that kicks off your journey from financial disaster to millionaire.
Understanding the Two Solutions to Financial Challenges
There are two solutions to most financial challenges: cut expenses or earn more money.
Most people are in the camp that earning more money is the better solution. While that is sometimes the case, more money isn't everything. In fact, a lot of the people Pete works with fall into this trap. They are thrilled to score a bonus and overjoyed to earn a raise. Maybe they're also learning how to monetize a side hustle or passion project. These people are absolutely earning more income, but they aren't keeping it.
That's why Pete says it's key to focus on being resourceful. If you think of earning more income as pulling in more resources, then cutting expenses, tracking spending, and keeping a budget are what allow you to make your resources matter.
To truly transition from financial disaster to millionaire, you need to know how to maximize the resources you bring in.
Unlocking The Power of Power Percentages
That's where Power Percentage™ comes in. These calculations are a helpful way to allow you to see if you are maximizing your resources.
To get your power percentage, you calculate how much money you are putting toward certain financial activities including retirement deposits, 529 contributions, cash savings, loan payments, etc. Then, you divide that number by your gross income. For instance, someone might do this for their savings, their investments, and their debt paydown.
Power Percentage™ Formula
Monthly activities included in Power Percentage™ ÷ Gross Monthly Income = Power Percentage™
Power Percentage™ Key
- 0-10% – Not good
- 11-20% – Okay
- 21-34% – Good
- 35% and above – Great
These percentages help remove some of the distractions of personal finance. You don't focus on how much money you currently have. You also don't focus on how much you earn. Alternatively, you focus on how efficient you are with the money you do have.
It's also important to note that these power percentages can be built up over time. Your power percentage for investing may not be a big number–or anything at all!–at the start of your journey. That's OK. Calculate the percentage anyway. Then, you can track this percentage over time to see how it grows.
What happens when you don't need a particular percentage anymore? Pete has a plan for that as well. Let's say that you've been putting $375 a month toward your car payment. Once your car is paid off, don't allow yourself and your lifestyle to simply absorb that money. Instead, reallocate it to another category, such as retirement accounts or 529 plans for your kids.
Don't Get Comfortable, Get Stable Instead
How come so many people who have good incomes still feel like financial disasters? According to Pete, it's because so many people mistake comfort for financial stability. They say that they are doing well because they can afford their car payment and rent. They might even be able to take a few vacations each year or upgrade their dining out options. All of these things use comfort as a metric to measure financial success.
If you truly want to know how things are going for you financially, use stability as a metric instead. Pete says that it is more important to look at things like being current on bills, paying down debt, and investing for the future. To really keep an eye on your financial stability, write down the numbers.
Personal finance is a lot like fitness. Metrics matter.
By writing things down and tracking your progress, you can more easily see the growth you are making. Think of it as recording your time as you run or logging reps while lifting weights. The ultimate goal is to be able to look back on the numbers you logged and see growth.
That growth is what helps you build and sustain momentum. By staying inspired, this financial journey isn't just something that you do from time to time. Truly, it becomes part of who are you are and how you live.
Why You Need to Invest for Retirement Now
One thing that Pete observes often is how people frequently assume that their situations will change–without them doing anything about it. He says that many people he talks to assume that there will be some type of windfall waiting for them. Perhaps they are expecting an inheritance or maybe they are overly optimistic about excess in Social Security.
Unfortunately, though, the real way to secure your retirement and guarantee a comfortable future for yourself and your family requires action. Investing for retirement now is crucial. Pete says that there are many ways that people can do that.
If you have access to a workplace-sponsored plan, such as a 401k or 403b, you can take advantage of that. These plans are especially powerful if your company offers a match. Additionally, many people open Roth IRAs in order to take advantage of the power of hands-off investing with index funds.
As with anything, don't worry about having the perfect retirement investing strategy out of the gate. Instead, get started and work on fine tuning your plan as you go.
Closing Thoughts from Pete the Planner
Becoming a young millionaire (or a millionaire at any age!) isn't about flashy titles or fast cars. It's much more important than that. Setting a goal to become a millionaire is an important step to ensure that you are properly prepared for your retirement.
Of course, wanting to become a millionaire and actually becoming one are two different things. That's why Pete the Planner says it's so important to take that challenging first step. No matter where you are starting from, the most important thing to do is simply begin. Using Pete's Power Percentage is one way to track your progress as you transition from finding your financial footing to becoming a millionaire.
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Guest Bio – Peter Dunn (aka Pete the Planner)
Peter Dunn a.k.a. Pete the Planner® is the CEO and Founder of Your Money Line and Hey Money. Your Money Line is a corporate financial wellness solution connecting employees to confidential, unbiased financial guidance. Hey Money is a direct-to-consumer monthly subscription that connects people to friendly financial experts. He’s also a USA TODAY columnist and the author of ten books.
He is the host of the popular syndicated radio show and podcast The Pete the Planner Show, and has appeared regularly on Good Morning America, CNN Headline News, Fox News, Fox Business as well as numerous other nationally syndicated radio and television programs.
Pete lives in Carmel, Indiana with his wife and two children.
Peter Dunn (aka Pete the Planner) Resources
- Website: PetethePlanner.com
- Social: Instagram
- Hey Money: CallHeyMoney.com
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Carpe Diem Quote
“Discipline is choosing between what you want now, and what you want most.”
― Abraham Lincoln
Are you a working to become a millionaire? What do you think of the advice from Pete the Planner?
Please let us know in the comments below.
