Jay Shetty & & Codie Sanchez ON How to Get Rich off Your Salary

What if everything you thought about making money in a tough economy was completely backward?

In this On Purpose episode, Jay Shetty welcomed back Codie Sanchez, entrepreneur, investor, and founder of Contrarian Thinking. Sanchez leads a global community focused on ownership, unconventional investing, and shifting people's perception of money. Having worked on Wall Street, she now helps millions achieve financial freedom.

Opportunity Amidst Fear

Many people today believe that now is a terrible time to make money, buy property, or invest. This fear is justified, Sanchez told Jay Shetty, because wages have remained stagnant for decades, while housing prices have skyrocketed. This disparity makes traditional financial frameworks no longer suited for this new reality.

However, Sanchez believes that tough markets shouldn't constitute a cause for discouragement; they should be a call to action instead. She shared with Jay Shetty Warren Buffett's investment strategy, which suggests being fearful when others are greedy and greedy when others are fearful. She points out that many things around us start being on sale. She also added that real money is made when there is blood in the streets, as Baron Rothschild put it. Therefore, you need to look carefully around you and start making smart moves, because money and opportunities already exist.

Rethinking Home Ownership and Negotiating Rent

Codie Sanchez believes that home ownership is mathematically questionable due to several factors: high interest rates, a shortage of 3 million homes in the US, stagnant wages, and rising home prices.

She told Jay Shetty that having your own home may not be the best financial decision for some people. You need to assess your personal situation and understand if renting makes more sense. Moreover, Sanchez believes that now is a great time to negotiate rent prices, because there is excess in the market and landlords want to retain good tenants.

Mastering Financial Language

Before attempting to make more money, it's absolutely necessary to achieve baseline financial literacy, Sanchez told Jay Shetty. To her, understanding money is like speaking a language: if you don't speak the language of money, it will be impossible for you to communicate and win in that relationship. Yet many people's financial education is capped at basic budgeting skills learned in high school.

Sanchez can't stress the importance of understanding the difference between a debit and a credit card. While credit cards are detrimental if you don't pay them monthly, debit cards are worse, she said. Building credit is crucial if you want to accumulate wealth, and debit cards simply prevent you from doing so. Furthermore, credit cards come with extras, such as points, perks, or cash back offers.

Jay Shetty personally experienced this issue when he moved to the US; his lack of credit history prevented him from buying property or a car. Therefore, Sanchez believes young people should get a credit card very early in their lives, as early as high school. It doesn’t matter much which credit card you choose, but it's good to start with one from a major bank that offers consumer protection. 

Knowledge Over Capital

If you want to start a business and don't know how to get the money, Sanchez believes it's more a matter of knowledge than a lack of resources. She explained to Jay Shetty that wealthy people rarely use their own money entirely to fund their endeavors; instead, the money is waiting for the hard-working person with a good idea.

If you are looking for resources to help you finance your venture, Sanchez endorsed the Small Business Administration (SBA), which offers grants and loans, especially for businesses meeting core needs, or owned by women or minorities. Percent is another credit platform that allows small businesses to acquire necessary debt. 

If you are an entrepreneur, she advises against going all in. Sanchez told Jay Shetty that you need to start as a side hustle and, when the flow from it matches your living costs, you can drop your other employment. She notes that financial stress inhibits creativity, which, in turn, doesn't allow the business to thrive. She shared that if you maintain an income source while developing a startup, you'll be more likely to succeed, because you'll make better, more calculated decisions.

The Blueprint for Employee Success

For employees looking to maximize their income, Codie Sanchez outlines a clear, three-step negotiation process:

1. Understand your dollar value to the company, i.e., how you generate revenue. The best way to determine this is by proactively asking the boss, "How do I make you money?"
2. Once your value is quantified, you must figure out how you can increase the company’s profit.
3. Negotiate by requesting a portion of that new profit. For instance, if a company keeps $20 of a $100 sale, you could ask to keep $5 of that $20 you helped bring in.

Sanchez and Jay Shetty agree that leaders welcome this approach because it is often a win-win situation. She advised against the job-hopping trend; she believes you can increase your salary up to 25%-50% by staying and proving your worth internally, rather than skipping and guessing at the next company. Additionally, skipping forfeits the opportunity to develop vital skills such as negotiation, management, and new skills and abilities within one organization.

From Bricklayer to City Planner

As an employer, Jay Shetty uses a framework to foster growth and reward long-term commitment with his team. It is a pathway from entry-level to leadership, comparing the journey to that of a bricklayer transitioning all the way to a city planner. There are four stages of this analogy:

1. The Brick Layer understands how to perform the basic tasks, such as laying a brick next to the next one, following the pattern.
2. The Builder knows how to construct an entire wall, including painting, scaffolding, and connecting walls.
3. The Architect can design and build an entirely new extension of the business, bringing a new idea or system.
4. The City Planner plans the entire ecosystem and overall structure of the business.

Jay Shetty explains that growth is linked to a wider scope, strategic vision, and greater case. Employees want to see a future and know they will be rewarded for their long-term work. Similar to growing your video game character, you can advance in your life by stacking up skills and knowledge to become a better version of yourself and better at your job. Sanchez also believes that if employees choose to leave instead of grow within an organization, it is also a reflection of a poor leader who failed to inspire.

Debunking the Hard Work and Passive Income Myth

Codie Sanchez believes that hustle culture is a lie and that hard work doesn't necessarily equal wealth. She told Jay Shetty that if this were true, a person running a laundromat would earn as much as Jeff Bezos. With AI becoming more prominent in our lives, working hard will no longer be the distinguishing factor.

Instead, Sanchez suggests increasing your knowledge stack, focusing on what you know differently, and prioritizing creativity over mass production. She quoted Naval Ravikant's metaphor, who suggested that we should work like lions, focusing on intense sprints and then rest, rather than the cow, which is doing low-value, but constant work the entire day.

Another myth Sanchez discussed with Jay Shetty was the passive income concept. She explained that it's impossible to make money by doing nothing. For instance, if you own a vending machine, you'll see that they frequently break, are broken into, or require immense volume to start producing real profit. Sanchez stated that people who chase passive income usually dislike their current job. Instead, they want a job that they love, that pays well, and lights a fire inside of them.

Passion, Profit, and the Boring-Sexy-Matrix

Codie Sanchez told Jay Shetty that people advising you to follow your passion to make money are already rich to begin with. Successful entrepreneurs don't obsess over turning a hobby into a profit, but rather learn to love the game of business itself. Regardless of the industry, they will become obsessed with winning the game.

According to Sanchez and her sexy-boring-matrix, the more boring the industry, the higher the income. In a sexy industry, such as acting, 80% of Hollywood union members don't earn enough to qualify for health insurance. On the other hand, in finance, most people earn their income from their jobs. Therefore, it's essential to be able to tell a hobby from a skill and monetize the latter.

You need to fall in love with the game, Sanchez explained to Jay Shetty. But, if you play a game, you also need to respect the rules, even if they may seem unfair. According to her, most successful people are fixers who immediately seek to resolve problems. She added that every problem found in a business or life is where the money, opportunity, and profit reside.

Your Social Circle Determines Your Wealth

Your environment plays a crucial role in your success. Codie Sanchez and Jay Shetty agree that you must surround yourself with people who can help you level up, instead of those who drag you down.

Sanchez quoted a study that found that if you have more friends making over $100,000, you'll have a 10% increased likelihood of making more money and investing more.¹ This speaks volumes about mirroring the behaviors of people you spend most time with, because you will also pick up some of their habits, for better or for worse. Yet some people still struggle to change their social circle for fear of hurting others' feelings or being seen as selfish and bad.

For young people, it's important to use your resources – if you pay for subscriptions, you can share some of them with your friends, and save some money that you could invest. It's no shame to admit you are saving money and not splurging just because of peer pressure. Wealth is accumulated in time, and every small addition may pay off in the long run.

Money, Love, and Partnership

Codie Sanchez told Jay Shetty that married couples tend to earn, on average, 30% more than non-married couples, and their net worth is nearly three times that of singles over their careers.² She explained that finding a partner is important, even though marriage is seen as less and less essential. Yet finding a partner may also free up time you'd otherwise invest in dating, Jay added.

Personally, Sanchez proposes finding a partner that complements you, so you can help each other out and become a strong team. However, regardless of the circumstances, she advises having a prenuptial agreement in place; to her, it's not a sign of distrust but rather a necessary hard conversation that every couple should have.

When working together with your spouse, trust becomes even more important. It's not easy to mix personal and work life, especially in the early years. Therefore, Sanchez believes it's essential to define clear roles and boundaries, the way Jay Shetty and Radhi do, so they can ensure that private time and business time remain separate.

More From Jay Shetty

Listen to the entire On Purpose with Jay Shetty podcast episode “Codie Sanchez: This is How You Get Rich off Your Normal Salary! (Use THIS Easy Formula to Build REAL Wealth NOW)” now in the iTunes store or on Spotify. For more inspirational stories and messages like this, check out Jay’s website at jayshetty.me.

¹Kaplan, Juliana. “If You Want to Get Rich, Make Rich Friends, a Harvard Economist Found in 2 New Studies.” Business Insider, 2 August 2022. https://www.businessinsider.com/want-to-get-rich-make-rich-friends-harvard-reserach-study-2022-8 

²Carpenter, Julia. “Moving In Together Doesn’t Match the Financial Benefits of Marriage, But Why?” Wall Street Journal, 7 November 2022. https://archive.is/20221107125237/https://www.wsj.com/articles/moving-in-together-doesnt-match-the-financial-benefits-of-marriage-but-why-11667761626