Lourens Oberholzer — CEO Retire Rich And Happy The Five Pillars Of Wealth

Monday night, it is time for what's involved, proudly brought to you by Retire Rich and Happy. We got my special guest, Instio, CEO of Retire Rich and Happy Lawrence Urbosa, hello. - Hi Dave, hi listeners, it's good to be back. - It's nice to be back, yeah, 'cause this is, it's this time of the year when this is gonna be like the first of my saying, thanks for chatting, we'll see you next year. - This is actually our last one for this year, so it is. Tonight is, see you next year. - We are, so, we're gonna be chatting about a whole bunch of things tonight, mainly the five pillars of financial literacy, so that's gonna be quite good, I need all the help I can get there. I gotta say though, this time of the year is crazy. I actually came to the studio today and I always make the joke about this is not work, but I needed to come here and just have a chance to, just chill, it's been, so we started Friday with the 21st birthday celebrations for Helena, my fiancee's son in '21. And the party was scheduled for Saturday, but as with 21 year olds, they arrived on Friday. And in the old days, I would have been there, right in the middle, now I'm the one that's going, make sure you've eaten, please pace yourselves, don't drink so much, so there was that.

Then there was rugby, which was-- - It's never a good idea to have a World Cup final at 11 in the morning, if you're South Africans, way too much time after it. - Well, listen, yeah, and then we went from that straight into the evening party in the Spitbray, and it was just, oh my giddy aunt. So yeah, lots of running around, lots of cleaning. Top of that, we got a new social media marketing client, because that's the other bit I do. She's an estate agent, but she's got such a, she calls it a purple car, because she's got a little dog, a little golden Labrador who now sells houses. - Oh, okay. - And it's just such a cool project. But as with everything, it needs to be done now. So that's been a challenge. And then, you're gonna love this, I looked at a quite gangster today, because I'm gonna be interviewing somebody, a lady by the name of Dr. Kristin North, in the next couple of weeks. She's from a company called GeneWays. So what they do is DNA testing. - Oh, yeah, that's so interesting. - And then once they've tested your DNA, they tell you what you're susceptible to do in terms of illness and this and that and the next thing. - So I had to meet the PR lady on my way in today, 'cause we were trying to shuffle everything, in a parking lot.

So I'm sitting in the parking lot, swabbing my cheek, with those things, and I was like, this is so dodgy, I don't know what people were thinking. - Yeah, what are they gonna do with your fingerprint of life? - You know, we still made the joke that they're gonna call me back and go, we found the missing link. It's amazing though, what it can do, it can tell you about diseases that you predisposed to, et cetera, et cetera. So that's gonna be a whole bunch of fun. Looking forward to that. Also for sports, I mean, you're very keen on fitness. It tells you what you can do, what you should do to improve your-- - Probably diet as well. - Very, very, very specific. Very specific. Diet and then what supplementation you should be taking. So that's fantastic, I don't know. We're gonna now live with a little bit of trepidation for the next few weeks, because maybe they're gonna come back and go, you failed your DNA test. (laughing) I don't know. Anyway, so that's what it's all about. It's been busy as heck. And yeah, here we are. Last show for retire rich and happy for the year. - Last forum on Saturday. - Perfect time for it though, because as we go into the new year, this is when we start reflecting on what we're going to do.

And for me, the important thing is, let's not make it just a new year's resolution. Then there's no time like the present. - New life's resolution. - And let's get into this and do it. So we're talking about the five pillars of financial literacy. And we've discussed this so many times, because for me, I think that's one of our biggest downfalls is as people in general, is that we are not financially literate. And we keep giving the responsibility over to other people. And then when things don't work out, we throw our hands up in the air and we blame them. - Exactly. And here's the thing is we are not educated about finances. And there's a whole, we can have a whole conspiracy theory on why the school system doesn't teach us more about money and all of that kind of thing, which we won't go into tonight. But we are not educated. We are not taught the rules of the game. I always use the analogy, and maybe it's a better analogy these days or after Saturday to use the rugby analogy. If I get to 16 years old, and I've never played a game of rugby in my life, and we take a young boy and we say to him, listen, go play with the other boys. And he says, but I don't know the rules. And you say, don't worry, you'll pick it up as you go along.

And he goes onto that field. He's not gonna last very long before they take him off on a stretcher because he won't understand what the hell is going on. And that's sort of what happens to us in life with money. We go through school. They teach us how to be a good employee. We go find a job. And we go into this world and they say, don't worry, you'll pick it up as you go along. And we get to 40, we batted, we bruised our expenses are higher than our income. We're in a lot of debt. And then we turn around and say, and people look at us and say, but why did you make these stupid decisions? You should have never overspent on this, but we never taught. So financial literacy is so, so important that we start educating ourselves to be, and like you say, so that we can become actively involved in our own financial future and not passively involved telling somebody else to do it for you and then expecting them to do all the work. - Well, I've used this analogy before. There's a couple of stages that I believe we go through, and the one is unconscious incompetence, where we don't know what we don't know. And then like when I attended the forum for the first time, then you get conscious incompetence 'cause suddenly you realize there's a lot, look at all the stuff I don't know.

And then as we go on, you get conscious competence, which is, okay, now I've got to do the thing. What we strive for is this unconscious competence where it becomes a habit, becomes something we do. - And the only way you get there is by first going through all the stages. You can't just get to being unconsciously competent. You have to go through all of them, and it takes practice before it becomes a habit. - Listen, and that's the great thing. I mean, and you know, so many of the great people talk about this is this modeling. Find out what works for other people, find out what they're doing. You've taken years of experience. I've been in the industry now for 20 years, so this year. So I sit with some people and then they go, "I've been in this industry for seven years." And I go, "Okay, I'm part of the furniture by now." So I've been in the industry for so many years. And one thing that's always been my strength is to take concepts and ideas from a lot of different people and bring it together to form a unified idea. And that's basically what I've done over the last 20 years. I haven't gone and sat down and created new things for everything. I've just taken all of this information and said, "Let's put it in a sequential process for people so that it becomes simple to follow." - And see what works and what doesn't work.

And that's the amazing thing is, and it worked for me as well. And I'm by no means a financial genius at the moment. If you talk in terms of literacy, I can probably, I'm probably literate to the level of an eight-year-old now, but it's way better than what I was. And it's because you're able to take these concepts and make them understandable. And that was the biggest thing because for me always, you see all of this stuff and go, "Ah, okay, it's too much. I don't understand." - Too much information. I've got analysis paralysis. It's just too much. Another thing, Dave, that I've seen, I saw it in my life. A lot of us, the previous generation, our parents, they didn't talk about money. My parents never spoke about money. They didn't tell me how they manage their budget or do they have debt, don't they have debt. Life just continued and just went on. We never spoke about money. And part of this whole financial literacy that we are trying to teach people is also how to teach the next generation to not make the mistakes we made and our parents made. Because we were not, money wasn't discussed in our house. Very little of it was discussed. - I mean, I had no idea. To a large degree, I still have no idea.

- Yes. - In terms of what my folks went through, what the challenges were, what they'd done and hadn't done. When my dad passed away, I suddenly, I learned a whole lot right there and there. And I mean, we've discussed this a lot of times on the show. My dad was a prime example of a man who worked his whole life, thought he was doing the right thing when he passed away. There was a pension, there was all sorts of things. And for the first 10 years, my mom was styling and she was looked after. But then, and we got this nasty habit now, as we tend to live longer. - Yes. - And suddenly, and it's such a slow, slow, you call it the dead spiral. - The dead spiral, yes. - But it's such a slow, insidious thing. Because after year number five, let's say, then you kind of need to take a little bit extra. And then, you know, cost of living a little bit more. And it just goes down the toilet so quickly. So when we come back, let's start off with these five pillars and work from there. The good news is, there is a forum coming up. This Saturday. - This Saturday, yes. The last one. - We're gonna be giving away some tickets. This is your chance. We are chatting to CEO of Retire Rich and Happy Lawrence.

Oberholzer, Retire Rich and Happy is proudly brought to you by Retire Rich and Happy. That's what's involved, proudly brought to you by Retire. See the brain doesn't recover yet. And we're so happy to have Lawrence on board as one of our sponsors. And to let him have a chance to chat to us and we can all learn from him. When we come back, we'll be chatting about those five pillars. What's involved? Proudly brought to you by Retire Rich and Happy. You can check it out and find out how to get your tickets at retirerichandhappy.co.za. We're back with Lawrence Oberholzer, who is the CEO. We're talking about the five pillars of financial literacy. So, Lawrence, where do we start? - Okay, so there's five. So the first one is earnings. So that's the first pillar that you need to educate yourself on. How do you earn a living? The problem, or one of the biggest problems is, we've been taught since school days that what you do and what you earn has to be connected to one another. If you work, you get paid. If you don't work, you don't get paid. You get paid for the hours you work. Work hard, work long hours. And the problem is that is so limiting. I looked at the other day, I did a calculation.

I can't remember the exact figures, but bear with me. It's in the ballpark. If you look at somebody who becomes a billionaire in 10 years, if that person just had to earn money per hour, if he worked 24 hours a day, seven days a week, 365 days a year, he would have to earn over 10,000 rand an hour for every hour of his life to earn a billion rand over 10 years. - And I don't know that many people that earn that amount of money per hour. - And do it 24 hours a day, seven days a week. So how do these people become billionaires? They use leverage. They make use of the power of other people's efforts. So we need to get away from this idea that my job, my basic salary is what gives me security because it doesn't. Your job doesn't give you security. And that's one of the biggest problems people have is they think that if they go, they get a good job at a good big company, they are secure, but that gets taken away tomorrow. - In the blink of an eye, everything can change. - So you need to go educate yourself on different methods. We talk about PSI and MSI. PSI is your primary source of income. And we're not saying, please listen. We're not saying go quit your job tomorrow, fire your boss and go start a business with your pension fund money.

That's not what we're saying. We're saying is educate yourself on different methods of generating cashflow. So we talk about PSI, which is your primary source of income, and then MSI, which is multiple sources of income. And even if you only start these multiple sources of income with a thousand and a month or 2000 and a month, or whatever the case may be, you need to start somewhere so that you can start slowly disconnecting what you do and what you earn from one another. So the security you have in your income is the security you create for yourself. I know from where I've come the years that I've spent, my business can close down tomorrow and I won't go hungry. I won't sit on the street and go, oh, but I don't get a salary anymore. I will be able to go and generate an income for myself within a month. And that's because the security I created, I created for myself through my abilities, not through a company giving me a salary or a basic. - If we break this down even more, could it be broken down to something as simple as your primary source of income being your job that you go to nine to five? And then to start building multiple sources of income, it's what you do. Like the people that maybe make their own preserves and stuff and go to a market on a weekend or whatever the case may be, pancakes.

- One of the things we talk about on the forum, the last session is about introduction to becoming an entrepreneur. That's our last session we talk about. And we specifically talk about this. What is a transactional business? What is a transformational business? And most businesses get started as transactional businesses. But you need to learn that once you start that business, your first thought must be, how do I convert this from a transactional to a transformational business? How do I convert it from a doing business where I make the preserve, I bottle them, I go and sit there on the market to something that I leverage where I may be manufactured, but I've got salespeople who sell, that kind of thing. But you always have to think on how do I move my business from transactional to transformational? Because again, if you start a business and it's all transactional, it's just you selling your time for money again. And that's always gonna limit you. - And it is because, and that's the sad thing about what we get taught is that that is the way it works, is that you trade your time for money. - And we feel guilty if we get paid more than what we think our time is worth. So if we do something, we create something and people start paying us for it.

And we're not there every day working. We sort of feel guilty because it feels like, but I'm not doing enough to justify the income that I'm earning. We need to move away from that. It's not about you getting paid for what you do. It's you getting paid for the value you add. Whether that is writing a book and getting royalty fees for the next 20 years, you've added value. That is what it's about. It's not about the time and effort that you put in all the time. It's the value. - Okay, so moving along. - So that's the first one. Go and find out about different ways of earning income, of earning multiple or creating multiple sources of income. The second pillar of financial literacy is about budgeting and cashflow management. And I see you already go. And that's the thing. Budgeting is almost a worse swear word than the four-letter ones. - Yeah, no, it's one of those really bad words. It doesn't start with an F. - So here's the thing. And this is what people need to understand. It's no use me giving you more money if you haven't got control of your cashflow. Because it's very seldom, if you're in financial trouble, very seldom is it an income problem. I'm not saying all of the time it's not an income problem.

Sometimes people earn a small amount of money or they don't earn money. But it's, most of the time, it's a financial management problem. It's a problem of you managing your cashflow. So if you get a salary and you are getting deeper and deeper and deeper into debt, and I just add to your salary, I give you a raise, you get the next promotion. I promise you if you don't address the problem that got you there in the first place, six months later you'll be in bigger problems because you'll earn more which means you're gonna spend more and you still don't have control. - Well, if you think about it, and I mean, my next guest, we're gonna be talking to Abed Tal about searching through dustbins. He says one thing that I also experienced is when you're in school or you've just come out of, and you used to get an, I don't know, 200 rain a month in my day was kind of a lot of money. And suddenly you get like the first job and you're getting 800 rain. Four times what I'm used to. I am styling. Six months down the road. Jeez, these guys don't pay me enough. I don't know, I work so hard. I just, I can't make ends meet. What do they think I am? And it's such a, it's a human thing that we do it. - And one of the biggest problems with budgeting is we first get into trouble and then we wanna fix it.

And instead of saying, well, I am getting this extra money and being proactively involved in saying, what is this money going to do for me? At the forum we talk about give every Rand a job. So when that money comes in, that Rand comes in, that Rand needs a job. What is it gonna do? Is it gonna pay for something that gives me the lifestyle? Is it gonna go and create financial security? Is it gonna go and build an asset? What is the job of this Rand? - 'Cause you know the thing where they say you have to have your money work for you instead of you working for money. Everybody says it's one of the biggest cliches, but nobody really knows how to do it. And you do it by being proactive in it. - But this is also one of those things. And the thing I like about your system is it's not necessarily an age-specific thing. - No, not at all. - However, the younger you start, the better. Because if you start training yourself, if you're now listening tonight and you're sort of in your teens, 20s, even early 30s, you kind of, specifically 20s, start to think. Because if I think back now, when I was still living at home with mom and dad and my food and board and everything was taken care of, I would've done a lot more entrepreneurial stuff.

I mean, hindsight's always 20/20. - Of course. - But when you're younger, you're able to take bigger risks. - You want to because, and one of the big things when you're young is nobody's ever taught you that it can't be done. Because you've been taught that it can't be done, you just go and do things that other people look at and say, "We can't believe you achieved this." Now, and that's so important. And if you educate yourself, it's so much easier to educate your children. The youngest person we've had at the forum is a 17-year-old guy. He came on his own, he listened to the radio, he got into a taxi, and he came to the forum. And that education he got there, you know how much that's gonna mean to him moving forward because he's 17 years old. And he's already got that step up against everybody else at 17 years. - But it is, I mean, it gives you such a head start. Okay, so we've covered a couple of them. Should we come back and cover some more? When we do, it is what's involved, proudly brought to you by Retire Rich and Happy. You can find out more at retirerichandhappy.co.za. Also, when you get on there, if you're looking to book tickets for the event happening this weekend, it'll pop up straight away.

You can book your tickets. Now remember this, we're gonna talk about this. Tickets are free, but you can buy the VIP tickets, which I would recommend, 'cause that's what we did. The nice thing there is you get all the financial tools, you get your lunch included, you don't have to worry about that. And if you're like me, you get to Ben Lawrence's ear during the breaks, which is really cool. So we'll be back with more of that in just a little bit. Hey, listen, why don't you just do this, okay? Treat yourself to delicious dinner at the trendy Bistro 407 at Indaba Hotel. The talented team of chefs have put together a menu of their favorite dishes, which are sure to become your favorites. Open Tuesday to Saturday evenings from half past six until 10 o'clock with limited outdoor seating available. Bookings are essential. Call Theresa now on 011-840-6600 to secure your table. Now the good news is, listen to this, okay? Score some brownie points. Thursday is date night at Bistro 407. Spoil your partner to a romantic evening, including a delicious two-course dinner and a glass of wine for only 500 rand per couple. Once again, though, bookings are essential. Well, there we go, unsolicited. So somebody else is, it's not just me waxing lyrical about you.

Somebody else has been there and they've certainly derived benefit from it. You were talking about the 17-year-old, I think that is phenomenal. Let's talk quickly, we're gonna be giving away tickets. Let's talk about that very quickly and then we'll get onto the rest of those pillars. - So as per normal, we're gonna give away five double VIP tickets. So please bring your partner along. It is so important that if you do this journey, you do it with your partner. You can do it on your own. I never say, I don't like absolute, so I'll never say you can't do this or you can do it, but it's so much easier if your partner buys into it. And the big thing about the forum is, and that's something I've always wanted to do and very focused on is to make it as simple as possible for people to walk out and change something, even if it's one thing. But if people can be on the same page with you and your partner, it makes it so much easier to achieve this. So please bring your partner along. - All I'm gonna say is buckets. Once you learn about the buckets, so much became clear. 'Cause you took a concept that was like, huh? And you explained it in buckets and I totally got it. So that's brilliant. So we've given away those five double tickets, okay?

Now all you gotta do is, if you wanna SMS us, it is RRH and your name to SMS number 4509, okay?

It's not the station's SMS and what's up, okay? This one goes directly to Lawrence's team. 4509, RRH and your name. Those SMSs I guess are charged at about 150. Otherwise, what's up us, okay? 082-641-3555. 082-641-3555. RRH and your name. You could win one of those sets of five double tickets for this Saturday's forum. Where's it being held? - It's in Momentum's head office, it's in Turin. 8.34.9 and will be finished by three o'clock. - There we go. And we're not gonna get distracted by rugby 'cause we won just in case. - It's already done, yeah. - Listen, just on that note, if you are listening tonight and if you know somebody, if there is any way, I'm gonna call in all of my contacts. I just don't know if I have the right ones. I want Cia Colisi to come and chat to us. - Oh yeah, that would be awesome. - In this radio station on this show because man alive, what an inspiration. - But Rasi as well. - I'll be happy with Rasi too, for goodness sake. I'm not too sure about Faf though because you know he's dressed in sleeves a bit to be. But I mean, how do you meet Prince Harry? - In your speedo. - In your speedo, hats off to him. There's a lot of detractors for him but he's like a cocky little rooster.

- Oh yeah, he's brilliant. - But not scared, eh? Goes in against those big guys, there's no fear. - No fear. - Hats off to him, he just needs to keep his speedo on. That's all I can say. So five double tickets, who's gonna win them? How are you gonna do this? Gonna randomly, you give me numbers. - Yes, I'll give you numbers. So let's do five, six, nine and 10 and 15. - Five, six, nine, 10 and 15. So if you're one of those people, then somebody from Lawrence's office will get in touch with you, okay? - If the WhatsApp number, if it shows it's not going through, don't stress, it will be switched on tomorrow morning. - And then they'll all go through. Otherwise, it's difficult to see who came through when with the SMS, so it will be switched on tomorrow morning. Last time was the first time that we got more WhatsApps than we did SMS, so people are getting used to the WhatsApp. It's just the number is a little bit longer. - Let me give it to you again. It's 082641355082641355.

R-R-H and your name, you could be one of those lucky winners. Let's move on with what there's-- - Just before I go to the third pillar, there's just one thing I want people to understand about budgeting. Most of us think that budgeting is an exercise of looking into the future. So we tend to go in the beginning of the month, we sit down, we write down our budget and say, so this month, this is what I need to pay. This is how much money I've got left. And then we get to end of the month and we go, oops, that didn't work out. But next month, we're gonna do this and this and this. We need to understand that budgeting is 80% looking backwards and only 20% looking forwards. So one of the things we teach people when we do the coaching as well is to first understand where your money went. Because if you don't know where your money went, it's very difficult to make different decisions. So it's that awareness every month first to check where your money's gone. And like Warren said on the voice note now, it's imperative that you do it every month. You look back and then you look forward because it's not gonna work out perfectly every month. It's not, but you need to understand where the money's gone.

Okay, the third pillar. The third pillar is debt. We need to educate ourselves around debt. 'Cause there's two separate points of view. The one point of view is people that just think that, ah, I'll just buy it on credit. I can buy now and pay later. And then we have this other point of view where people just say, you never ever get into any debt, get out of debt at all. And the reality and the most ideal scenario is sort of in the middle. It's not having no debt at all. So you need to educate yourself on what is good debt and what is bad debt. Because if you have too much bad debt, it's gonna kill your cash flow. It's gonna put you into big trouble. But if you can use good debt, and we call that OPM, using other people's money to create wealth for yourself, you can use debt to create wealth. But you need to understand what is a good debt and what is a bad debt. And that's something we'll teach you as well. - And that is so, so important. Because let's be honest. I mean, you know, banks, financial institutions, they're there to make money. - Of course. - Okay? That's what they do, all right? But you need to credit when you buy. And this, I fell into this trap. And in the older days, it was so much easier just to get credit cards.

So, you know, if the one, you just get another one. But, you know, it's that instant gratification thing that we have. - Yes. - And yeah, you know, buy the sound system, the TV, the lounge suite, whatever the cash flow. Yay, look at this. - It's only 200 rand. It's only 500 rand. - It's all fantastic. You know, but what do you end up paying for it? And this is the thing. And to try and change that mindset, because I saw statistics about how South Africans save in this country, and we are horrible. - It's terrible, yeah. People aren't saving. - No. - At all. And here's the thing. I wanna know a very simple way of checking is something a good date or a bad date. A bad date is anything that you buy on debt that doesn't appreciate in value and doesn't bring income into your life. A good date is something that is an asset that appreciates in value, but that generates income that doesn't cost you money. Like your house is not necessarily a good date. It's not an asset because it's costing you money. It's not bringing money in. But you can use debt to generate income for yourself. So people need to educate themselves around that so that it's not just the question of, I don't want any debt, or I just don't mind.

I'll just keep paying and they must try and get the money out of me. We need to understand that you can use debt to your benefit. It's a very, very dangerous place to be if you're not educated around it. - But don't use debt to pay off debt. 'Cause debt is the worst. - Again, when people get into a lot of unsecured debt, it's usually the problem isn't the debt. There's a bigger problem. So what do we do? We do a consolidation loan to improve our cash flow, but we don't address the cause of the problem. So then six months later, we have the consolidation loan and we have the credit cards again, because we never address the cause of the problem. So it is very important that before you even think about consolidation loans and debt counseling and all of these things, go understand why you got into this trouble in the first place. 'Cause if we cut your debt expense from 6,000 rent a month to 3,000 rent a month, and we haven't addressed the cause, you're gonna be back at that 6,000 rent a month within three to six months. - But it was just so many people, the whole concept of death and, death not death. - Death. - Death, death, same thing, similar. Debt and money issues. It's almost like it's taboo thing to talk about.

- And for people to admit that there is a financial problem or that they don't understand, I think those days are gone. - And we need to be open and honest. I always say to people, my job is to make you face the monster. So if you look at a horror movie, most of the time in a horror movie, the monster is the scariest when you don't see it. When it's running around in the shadows, you hear it, but you don't see it. And that's very much how our money problems are. We don't look at it. We have it here in the shadows, in the back of our mind when we go to bed, we lie at night thinking about it. And it's the scary monster. What we do is we sit with you and we say there it is, go look at it. And once you look at the monster, it's not that scary because suddenly you have a strategy to fix it. - But also, I mean, very often, if you're in financial trouble, it's so easy just to stick your head in the sand and hope it goes away. And the sad part is it doesn't. And let me tell you, as somebody who's experienced this, that whole consolidation thing, if you need to go, if you need to go, I'm stressing this, and this is where you need somebody like Lawrence to advise you, but if you need to go, that consolidation route.

Rather do it with somebody who understands and can advise you, that doesn't mean you're a failure. - Yes. - Okay? Because let's face it, you're taking action. - Yeah. And you're doing something about the problem. But again, don't just put a plaster on the saw. - No, no. - Go fix it first. - Yeah. - And then go forward. Okay, the fourth pillar. - Yes. - Is saving. So here's the thing, a lot of what I teach people is that savings is not the answer to financial independence. Saving is not gonna get you to retirement. But what we don't tell people is don't save. Saving do have a place. But the thing is we need to understand that saving's not gonna get you to retirement. So there's things that you need to save for and things that you don't save for. - Yeah. - So you're not gonna save yourself into financial wealth. That's off the table, it's not gonna happen. I promise you it's not gonna happen. I've done the maths, no, it doesn't happen. But what saving does do is you need to save for emergencies. You need to save for those capital expenditures that you don't usually plan for. Things that happen once a year that comes onto your path and you haven't planned for it in your budget. And that's usually what brings people into debt.

So they go, they have their monthly expenses, they try and be frugal, but then their son has to go on a rugby tour. And now it's 4,000 rand. - Car breaks up. - So what do they do? The car breaks down. So what do they do? Oh, we'll put it on the credit card. We'll just pay it off over time. And slowly that starts building up, building up, building up. So what you save for, and this is where our reserve account comes in one of the buckets that we teach people, is to have money available for three months expenses and any capital expenditure you have planned over the next 12 months. That is what you save for. Anything that you are specifically wanting to plan for in the future. The last pillar. So you mean, yes. - Sorry, I just need to interrupt you 'cause one of our listeners has asked a very interesting question. You say we need to fix the cause in terms of debt. So what causes debt? We did touch on this, but what is the cause? - Okay, so the first cause of people getting into debt is not having a proper budget and having control of their cashflow. That's the first thing. So if you look at a business, and I always say to people, you need to look at your private finances as if you were a business.

So what does a business do? If a business runs into trouble, they need to look at two things. Either increase revenue or decrease expenses or both. Preferably both. And that's the same thing you need to do in your life. If you're running into financial problem, find a way to increase your revenue and decrease your expenses. But to do that, you need to understand what your expenses are. And that's what we don't do. We do so many times, we do this coaching with people, and the first thing that we do is we do a SEP, a Strategic Expense Planning, the budgeting program. And then people send us that SEP and they say, groceries, 10,000 rand. They say, nobody buys 10,000 rand's worth of groceries. Go back to your bank statement and go and check what you spend on groceries. Because we spend 6,755 rand and 24 cents on groceries. We don't spend 10,000 rand. Or we don't spend 6,000 rand. You need to look at your money and actually see what the real figures are. One of the things-- - Sorry, also, Lawrence, just while you're talking about groceries is, a lot of times, and this is what I used to do, is like, okay, groceries, 5,000 rand a month. And then totally forget about every second or third day when you're stopping past the shops.

- 400, 500, 600. Red, milk, cauldron, whatever the case may be, that also adds up. - So what people do is they generalize and they assume. And that's one of the biggest killers of cash flow management. You cannot assume what you are paying for coffee every morning when you drive to work. You cannot assume what you spend on takeaways. You need to look at your bank statement and actually get the true expenses. One of the things we teach at the forum is, embrace your true expenses. And that's very difficult. We love bullshitting ourselves. It's so easy. - But it's also to acknowledge those kind of things, because how often, I'm totally guilty of this. She's like, you know what? We've worked for this. We've worked so long, so hard. It's just, it's one takeaway. One takeaway, which you say, all right? And then in another couple of days' time, it's like, you forget about that. It's like, just, we deserve a treat. Let's do, and it does take discipline, okay? - We've had clients talking specifically about takeaways and eating out, and they say, oh, we only go out twice a year, twice a month. And that's our time out. And I say, okay, so then we do the strategic expense planning and the takeaways and the eating out is over 20% of the income that they spend, and they never knew it.

They're saying, oh, it's only like 1,000 round or 2,000 round a month. They're spending 20% of the income on takeaways and eating out. People don't know where they, and that's what gets us into debt. So the cause of debt starts with cash flow management. And if you get that right, then you start creating a strategy to get rid of the debt. So what we do is we first set, we do the budgeting, we create a positive cash flow, and that positive cash flow, we then build momentum in paying off that unsecured debt over time, okay? - Right. - The last one. - Last one, here we go. - So now we started saving, and the fifth one is, the fifth pillar is investing. And people have the wrong idea of what investing is. Investing is not taking out a retirement annuity from an insurance company. Investing is not putting money into your pension fund. That's all part of saving. It's not investing. You're not gonna save yourself into wealth. Investing is when you start building assets that will generate income. So that is the key to investing, is what you need to go and teach yourself or educate yourself around what is an income generating asset? Because that's where we wanna get. We wanna get you to a point where you have an asset.

That asset gives you a multiple source of income, an extra income. Because you've got cash flow management and your budgeting is sorted out, you don't need to use this money to maintain your standard of living. So that money gets put into a capital asset, you build a capital asset up, you then move that money back into an income generating asset. And then we create what we call a generational wealth spiral where income creates asset, creates an income generating asset which creates more income. And then you start building that. But you need to educate yourself because everybody knows property is an investment that can generate income. So people go and they start investing in property because their uncle, their cousin told them about this great property investment. And then they don't get tenants in the expenses on the property is much more than the income that they're getting. It's costing them 3,000 around a month. But in the long run, it's gonna be a good investment. It's not a good investment if that property is costing you 3,000 around a month. Because remember I spoke about good debt and bad debt. If it's costing you money, it's not good debt. Even if you bought a property, you need to find a way to invest in an asset that will immediately start giving you a positive cash flow because that is what you need to get to income generating assets.

- Alrighty, even if you are doing something this Saturday, make a plan and get to the forum, okay? 8.30 for nine? - 8.30 for nine, up to three o'clock. - Okay, runs up until three. There's a break for lunch, there's a canteen. They got a little canteen service there. You can even bring your own sandwiches and cauldron if you need to. - Your own picnic basket if you want. - But get there, okay? Free tickets, yes, if that's the only option, take advantage. Otherwise, very, very important to get those VIP tickets. Let me give you those numbers once again. So it's R-R-H and your name. On the SMS line, it's 4-5-5-0-9 or on the WhatsApp, 0-8-2-6-4-1-3-5-5. Lawrence will be drawing those winners tomorrow. Numbers 5, 6, 9, 10, and 15 are the ones that he said. Lawrence, we wish you all the best for the forum, last one of the year. I think it's a perfect time though to just get yourself into the new year and you've got a plan. - Plan, get through December. This is where the big spending happens. So get there before then so that you don't overspend, you don't get yourself into debt over December. - Okay, sorry, Rowan is just a message. Rowan, it's not the mixed numbers, okay? I'll give you those numbers again.

It said, Lawrence's team, they've got the numbers. 4-5-5-0-9 is the SMS one or 0-8-2-6-4-1-3-5-5.

It's gonna be the best investment you're gonna make in yourselves. - I promise you. - All right, Lawrence, thank you, man. I can't believe it. It feels like just yesterday we were going into this year and with all sorts of great plans and ideas and now it's done. - So next time I see you, it's 2020. - Yep, and we're gonna start off again in January. Fantastic stuff. Lawrence Roborosa from Retire Rich and Happy. Thank you so much. We wish you all the best. Have a great festive season. We'll see you again next year. - Thanks, cheers. - There we go. That was Lawrence, what's involved, proudly brought to you by Retire Rich and Happy. You can find out more about what they do at retirerichandhappy.co.za. Coming up in just a bit, my next guest. We're gonna go searching through Dusbans with Abed Tal.