Title: Rebel Finance School 2026 — Week 2 Monday Transcript
Session: Net Worth Made Simple: Find What You Have, What You Owe and Where You Stand | RFS 2026 Week 2
Course: Rebel Finance School 2026
Creators: Alan Donegan and Katie Donegan, Rebel Donegans
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0:00Welcome to week two of Rebel Finance School. We are so excited to have you all here. It's going to be a fun week.
0:077 secondsBut before we start, we have a question for you.
0:1010 secondsThe question is, what did you grow up thinking meant someone was good with money? What does it mean that someone's good with money?
0:1818 secondsWhat was the scoreboard to measure you're good with money? Put in the chat.
0:2222 secondsTell us. We want to know because society says there is a checklist as what is
0:3030 secondsgood. It says big house tick. Nice car, good job, high income, paid off mortgage, cash in the bank, tick. This
0:3838 secondsis what society values and that visible wealth is what gets applauded. Plus 10 points for being a homeowner, having a nice car, an
0:4545 secondsimpressive job. Big wedding, big points for you. House extension, big points for you.
0:4949 secondsKids go to university, have a good job, big points. But it's really interesting.
0:5555 secondsInvisible wealth is what buys freedom.
0:5959 secondsAnd it's not the visible wealth that actually enables you to be free. That's a huge difference. No one can see the
1:081 minute, 8 secondsgap, the net worth, the pensions, the investments, and the progress that you're making with your money. That can't be seen, can it?
1:141 minute, 14 secondsAnd it's taboo to talk about those things. You can't really talk about your pensions and your investments. It ends up sounding like bragging in society. So
1:231 minute, 23 secondsthe thing that actually makes us truly wealthy over the years we can't even talk about.
1:271 minute, 27 secondsAnd society has labels, doesn't it, for the scoreboard. You've got things that you can call yourself like I am a homeowner, I'm a professional, I'm a
1:341 minute, 34 secondsgraduate, manager, doctor, landlord, I'm mortgage free is a big one. And fascinatingly, a couple of years ago,
1:421 minute, 42 secondsKatie was featured in the press for retiring early. This was the title.
1:461 minute, 46 secondsWoman explains how she retired at 35 with nearly a million in savings. Woman explains they didn't have a label other
1:551 minute, 55 secondsthan female for Katie. That is her defining character is woman. And we laughed about that for months afterwards that they couldn't categorize her.
2:062 minutes, 6 secondsNormally it says their job title, right?
2:082 minutes, 8 secondsLike teacher explained or lawyer explained, whatever it is, but they didn't they couldn't assign anything to me. So I just became woman. woman. Uh,
2:162 minutes, 16 secondsand it got us to thinking we actually really struggle with the question, what do you do? Cuz what do we say? Oh, we're retired and we live off our investments.
2:252 minutes, 25 secondsWell, that sounds like bragging.
2:272 minutes, 27 secondsOh, we're financially independent. Well, that sounds like bragging.
2:302 minutes, 30 secondsPeople don't know what it means. And yeah, then you end up trying to explain everything.
2:342 minutes, 34 secondsSometimes I just with a cheeky rice smile say the actual truth. Uh, what do you do? Well, we're homeless and unemployed. to which I normally follow
2:422 minutes, 42 secondsup and go, "Our parents are very proud, but we don't really have a title to cover what we're doing." And we score
2:492 minutes, 49 secondsreally badly on society's scoreboard, but we score very highly on freedom and happiness.
2:582 minutes, 58 secondsWho even built this scoreboard? Where did it even come from?
3:013 minutes, 1 secondWell, one of the influences was the government. Uh they have run campaigns, the right to buy your home. They put the
3:083 minutes, 8 secondshome as the centerpiece of what success is. They have huge campaigns for national savings and investments to get
3:153 minutes, 15 secondsmoney saved. They ran campaigns that it was patriotic to save your money. That's one of the main influences.
3:243 minutes, 24 secondsThere's also family and what gets repeated to you about what success means and school and your peers and just the people around you that influence what we
3:323 minutes, 32 secondscollectively think of as success. And two of the biggest influences, the media. They write a huge number of articles about what success means or
3:423 minutes, 42 secondsadverts. We didn't know that BMW was a sign of success until BMW told us it
3:483 minutes, 48 secondswas. But they have such an influence over our lives. And every one of us is
3:553 minutes, 55 secondshanded down a box of family money wisdom, which normally includes a bunch of sayings that we've been trained in.
4:024 minutes, 2 secondsRenting's throwing money away.
4:044 minutes, 4 secondsGet on the property ladder. That's one my granny and my mom repeated so many times.
4:094 minutes, 9 secondsBuy as much house as you can. We've heard that one a lot.
4:114 minutes, 11 secondsWe had that expression. It actually became a huge cultural thing. Safe as houses. That thing is safe as houses.
4:184 minutes, 18 secondsChanged your whole accent there. That was quite fun.
4:194 minutes, 19 secondsUm because an investment was seen as safe as houses cuz houses always went up. Get a stable job with a pension.
4:274 minutes, 27 secondsThat's what my granny said to me. Save for a rainy day. Keep your head down.
4:314 minutes, 31 secondsAnd the interesting bit here is there is some wisdom in some of these sayings.
4:374 minutes, 37 secondsSome of them are outdated and from a past time. Some of them are actually completely mathematically wrong. And
4:444 minutes, 44 secondswhat we wanted to say to you is society's scoreboard is not evil. Society's scoreboard is incomplete.
4:544 minutes, 54 secondsAnd the real danger is that you could happily follow along with society scoreboard but lose the freedom and happiness game. We've got the example of Dave, haven't we? Yeah. Excuse me.
5:055 minutes, 5 secondsDave, very exciting. Uh Dave was one of my friends. He had invested all of his money into his property. So, he worked
5:145 minutes, 14 secondson paying off the house he lived in. He bought in an area of London that was once cheap but hugely went through the
5:215 minutes, 21 secondsroof. and his huge apartment in London got to the point where it was worth £3 million. That's a lot of money.
5:315 minutes, 31 secondsBut Dave had never saved any money into pensions and investments and things like that. So whilst he was home wealthy, he
5:395 minutes, 39 secondshated his job and wanted to retire, but he couldn't because he didn't have anything to live off. You can't eat the
5:465 minutes, 46 secondsbricks of the home you live off. So he was trapped working even though he was wealthy. Now, we see this happening to so many people. They get to the point
5:545 minutes, 54 secondswhere they want to retire, but all of their wealth is held up in their home.
5:585 minutes, 58 secondsAnd £3 million, obviously, that's an extreme example, but the same goes true if you have a home that's worth500,000, 400,000, 100,000. It's the same
6:076 minutes, 7 secondsprinciple that if all your money is tied up in your home and you don't have anything in your freedom fund to live off, then you can't stop working even if you want to.
6:166 minutes, 16 secondsSo tonight, what we want to do is change the scoreboard or adapt the scoreboard.
6:256 minutes, 25 secondsSociety asks, "Do you look successful?
6:276 minutes, 27 secondsDo you have the outward signs of success?" We're going to ask, "Is my money buying freedom?" Is my money
6:366 minutes, 36 secondsbuying freedom? That's the invisible wealth that builds the freedom. And the key number, freedom fund.
6:436 minutes, 43 secondsFreedom fund. I'm going to explain what exactly that means as we go.
6:466 minutes, 46 secondsYour net worth is the blue dot on the map. You know, when you log on to Google Maps, you log on, you look at Google Maps, the blue dot shows you where you
6:546 minutes, 54 secondsare, and then you work out where you're going. Your net worth is your blue dot, but that's just the headline number and
7:027 minutes, 2 secondsit's actually made up of different parts and the different parts of your net worth do different jobs. So, you got your freedom fund. That's going to give
7:107 minutes, 10 secondsyou future income so you don't have to work if you don't want to. Then you got valuable liabilities. Those are for security and lifestyle. We'll explain what all of these terms mean as we go.
7:207 minutes, 20 secondsCash and plan spending. Well, that's your cash cushion. It makes life a little bit easier. Short to near-term spending.
7:367 minutes, 36 secondsYou've muted yourself. somehow guys. Testing.
7:477 minutes, 47 secondsWe're back. Perfect. So, let's go just back one slightly. Cash and plan spending. That's for near to medium-term spending
7:567 minutes, 56 secondsand debts is paying for past spending that you are that you have made.
8:018 minutes, 1 secondExactly. Right. the freedom fund. That is what buys you back time. That's the
8:088 minutes, 8 secondscritical element. That's how you know when you can retire. And as we go through this and you work out your own
8:158 minutes, 15 secondsnumbers, we really want you to remember none of this is judgment. Like net worth sounds like a scary term. It's not your
8:238 minutes, 23 secondsactual worth as a human. It's just a metric of what your finances are doing.
8:288 minutes, 28 secondsSo this is not judgment. This is information. So you can know what job your cash is actually doing for you.
8:368 minutes, 36 secondsAnd actually most people don't have much of a freedom fund when they first come on Rebel Finance School because no one's taught you to think like this. We are
8:458 minutes, 45 secondsthe abnormal ones. We are the strange ones that did think like this and that's why we're featured in the media which a lot of you I know have come along because you've seen us featured in
8:528 minutes, 52 secondsvarious paper articles. Like we wouldn't be in those articles if we weren't unusual for having done that. So if you find yourself in a situation of well I
9:009 minutesdon't have much in my freedom fund that is completely normal. That is exactly why you're here.
9:059 minutes, 5 secondsThat's why you're here and that's why Rebel Finance School exists. And I really wanted you to hear this.
9:109 minutes, 10 secondsYou don't have to live like us. The whole purpose of this is to buy your freedom so you can live the life you
9:179 minutes, 17 secondswant to live. And I really want to repeat that because so many people come on the course and go, "Well, I don't want to be homeless and unemployed. That
9:259 minutes, 25 secondsdoesn't sound fun." You don't have to be. Money is a tool to create the life you want to live. So the whole point of
9:349 minutes, 34 secondsthis course is to enable you to get ahead with cash so you can live the life you want to live. Please let me know if
9:419 minutes, 41 secondsyou understand that that you know that money is the tool for you to live. Thank you. I'm seeing a few thumbs up which is
9:499 minutes, 49 secondsexcellent. But that's the whole purpose of this is for you to live the life you want to live. Yes, Peter. Okay.
9:579 minutes, 57 secondsNow, message from our lawyers. We don't have lawyers, but if we did, they would be telling us to say this. We are not financial advisers. This is not financial advice. We are not regulated.
10:0610 minutes, 6 secondsWe will not sell you investments. You make your decisions. We're just sharing our opinions, ideas. These ideas may not continue to work for us or for you. You are 100% responsible for your financial
10:1310 minutes, 13 secondsfuture. And there are no guarantees here except the money back guarantee. If you don't like the course, you can have a refund at any point.
10:2010 minutes, 20 secondsIf you've paid for this course, something has gone terribly wrong. Is meant to be free for anyone that wishes to attend. watching live on Zoom, please use the Q&A feature. That will enable
10:2910 minutes, 29 secondsthe ninjas to see your questions and answer. If you're on catchup, please put it in the comments and we can do that.
10:3510 minutes, 35 secondsAsk in the comments. And if you're on YouTube, please put it in the comments.
10:3810 minutes, 38 secondsWe have ninjas working on YouTube right now. Now, we had a few people saying to us, I haven't done my freedom work. I can't come to the next week.
10:4910 minutes, 49 secondsWell, you absolutely can. Whilst we of course want you to do the freedom work, you don't need to have done it before you come to the next session. Yes, they build on each other, but it's not like
10:5710 minutes, 57 secondswe're going to mark your homework and you're going to have to say, "Sorry, miss dog ate my homework." None of that stuff. Just continue working away on it in the background and it will all build
11:0511 minutes, 5 secondsfrom there because a lot of them, for example, the freedom work from week one was track your spending for a month.
11:0911 minutes, 9 secondsWell, the month hasn't passed. I mean, you could do the past month, but a month hasn't passed yet. So, this is an ongoing thing. So, please do still come along even if you haven't fully
11:1811 minutes, 18 secondscompleted the freedom work. Uh, a few people said, "This isn't for me because I don't like spreadsheets." And what we wanted to say to those people is you
11:2611 minutes, 26 secondsdon't need a spreadsheet. Pen and paper works fine. Do it how it works for you.
11:3111 minutes, 31 secondsAnd saying to the people who love spreadsheets, uh, you're going to have to put up with me saying you can do it by pen and paper. And for the people who love pen and paper, you're going to have
11:3911 minutes, 39 secondsto put up with me saying you can do it with spreadsheets because everyone does it slightly differently. I see we've got a few questions coming through asking us
11:4611 minutes, 46 secondsabout how we live our lives and nomadic life and stuff. Um we're actually going to do an ask us anything session towards the end of Rebel Finance School. So um
11:5511 minutes, 55 secondsyou can ask us anything you want then and of course still please ask us away but we will focus on the finance content for now.
12:0212 minutes, 2 secondsExactly. Now where we are in the course week one where does all the money go just disappears. Week two what have you already got? That's measuring net worth.
12:1212 minutes, 12 secondsAnd week three is what do you believe about money? Those three are the uncovering what's going on with you
12:2112 minutes, 21 secondsfinancially before we can move on to making changes.
12:2312 minutes, 23 secondsAnd each of these weeks there is a practical implementation session. So there's the live content, the main content on the Monday and then the
12:3112 minutes, 31 secondspractical implementation session as well. I think a few people were saying they didn't quite realize that there was that as well. So if you've missed that, please go back and watch on catchup.
12:4012 minutes, 40 secondsEverything's available on catch up and recorded.
12:4312 minutes, 43 secondsToday's plan, society scoreboard and introducing a new way to look at it, the freedom fund. We've talked about both of
12:5012 minutes, 50 secondsthose. Next, we're going to break down what actually is net worth and the elements. Then we'll move on to the split between the two or three or four
12:5912 minutes, 59 secondselements. Then we've got what to do with your gap and finally what direction are you heading with your finances. So, we're going to go straight into what's
13:0713 minutes, 7 secondsnet worth and we have a question for you.
13:1113 minutes, 11 secondsDo you know what your net worth is? Some of you might be thinking, I don't even know what net worth is. So, in that case, the answer is probably no. We've
13:1913 minutes, 19 secondsgot a poll for you in Zoom that um perhaps one of the co-hosts can launch.
13:2313 minutes, 23 secondsIf you're watching on catchup or YouTube, there is the link in the comments and the description. So, do you know what your net worth is? No.
13:3213 minutes, 32 secondsUh no, I don't. Yes, exactly. or yes, roughly.
13:3613 minutes, 36 secondsWe would love to know. If you're on catch up, please fill out this as well because it helps us tailor the course to future audiences. Please let us know. Uh
13:4513 minutes, 45 secondsthe votes are coming in right now. Uh we've got 51% saying no, I'm new on Zoom. 48% saying yes, I know.
13:5313 minutes, 53 secondsUh that's a different question that is if they've attended Ren School. Sorry, I made that complicated by asking people they've come before. Excellent.
14:0114 minutes, 1 secondSo, we've actually got 80% of people who say no or roughly. And we kind of go, well, if you know roughly, well, you don't really know at all. Um, but yes,
14:0914 minutes, 9 secondsexactly is about 25%, which is, I'm assuming, the people who came last year, I presume so as well.
14:1514 minutes, 15 secondsRight. Thank you for answering that question and telling us what is net worth. Well, here's the definition. They'll tell you online. the
14:2314 minutes, 23 secondstotal wealth of an individual, company, or household taking account of all financial assets and liabilities.
14:3114 minutes, 31 secondsThat's very jargony and confusing, isn't it? I feel like I need to sit down with a dictionary and unpick what each of those individual words means. So, here's our definition.
14:4014 minutes, 40 secondsIf you liqufied everything you have, the result is your net worth. So take everything that you have that's got some
14:4914 minutes, 49 secondsvalue, pay off your debts if you have any, and what's left is your net worth.
14:5314 minutes, 53 secondsAnd the key thing here is that this is a snapshot. So whilst we've got you to look at your spending, and that's over a time period, over a month, a year, net worth is a snapshot, a picture in time.
15:0515 minutes, 5 secondsAnd for those of you that haven't done this before and feel like you got some catching up to doing, some changes to make, this is your before shot. This is the exciting thing because in a year's
15:1315 minutes, 13 secondstime, two years time, you can look back and go, "Wow, look how far I've come." So, this is really exciting, especially if you're new to be able to do this and
15:2215 minutes, 22 secondssee where you are. Uh, joke of the week comes from Fireman on uh YouTube. He says, "My friend is a fisherman and he
15:3015 minutes, 30 secondsasks, "How much is my net worth?" Boom. Moving on quickly.
15:3615 minutes, 36 secondsTotal net worth is a really useful number, but it doesn't tell you the whole picture. And what we need to do is
15:4315 minutes, 43 secondslook at the picture within the total net worth. So the net worth is things you own minus things that you owe. So the
15:5315 minutes, 53 secondsthings that you own, there's three elements to that. Number one, freedom fund or assets. Number two, valuable liabilities. Number three, cash and plan
16:0116 minutes, 1 secondspending. And then money you owe is your debts. So, we're going to go through each one of these as we go. And as we go, you might be thinking, "Hang on,
16:0916 minutes, 9 secondsthat's not what my accountant says." Well, we have very definitions, different definitions from accountants. Accountants categorized for accounts.
16:1716 minutes, 17 secondsThat's what they're trained to do. We are categorizing for freedom. And I know which one I'd rather have. And as we go
16:2516 minutes, 25 secondsthrough this, sometimes it might feel like learning a new language. Don't expect to be fluent on day one. It's
16:3116 minutes, 31 secondsokay. just slowly work through it and we will do it all together. So the money picture, we're going to do the first one
16:3916 minutes, 39 secondswhich is freedom fund or assets. So the freedom fund equals assets. What's an asset?
16:4616 minutes, 46 secondsAn asset in our definition and again this is going to differ from what your accountant says. An asset is something that earns you money.
16:5316 minutes, 53 secondsBrings you money in makes you wealthier.
16:5616 minutes, 56 secondsSo what earns you money? Examples of that, your pensions, your workplace pension. Uh, in America you call it a
17:0317 minutes, 3 seconds401k, New Zealand Kiwi Saver, we call it a SIP, a self-invested personal pension.
17:0917 minutes, 9 secondsIf you don't know what any of these terms mean, that's completely cool.
17:1117 minutes, 11 secondsWe're going to cover a lot of these in detail in the investing weeks, a stocks and shares is global index funds, investments, properties
17:2017 minutes, 20 secondsthat actually has an equity if it's earning money, and we'll come on to that. So these are the kind of things that are assets that are actually bringing you money.
17:2817 minutes, 28 secondsAt this point people say, "Hang on a minute. Why have you not included my whiskey collection, my gold, my jewelry, my art collection, my vintage car? Do these not go into aren't these assets?
17:3917 minutes, 39 secondsAre these not in my freedom fund?" Let's introduce the term of speculation.
17:4417 minutes, 44 secondsSpeculation is where you buy something and you hope that the price goes up and you kind of gamble that you'll be able
17:5317 minutes, 53 secondsto sell it for more in the future. But the actual item itself doesn't produce an income. You're just praying for
18:0018 minutesfuture growth in it. You're praying someone will buy it for more. Whereas an asset gives you an income.
18:0718 minutes, 7 secondsIt buys you are buying an income with this. You buy a thing that gives you an income. It gives you dividends. It gives you rent plus it might go up in value which is called capital growth.
18:1718 minutes, 17 secondsWe're going to come to on to a lot of what these terms mean in later weeks. So if this is feeling like a new language to you, it probably is. Don't expect to
18:2618 minutes, 26 secondsbe fluent from day one. This is going to take a little while and that's why you'll hear us repeating these terms and explaining them as we go.
18:3218 minutes, 32 secondsKatie, is whiskey an asset in our definition? No, Alan. That is speculation. You have bought it hoping that you can sell it to someone else for an increased amount.
18:4118 minutes, 41 secondsYes. or if you don't drink it beforehand. So, we would say it's speculation. Uh jewelry and gold speculation
18:4818 minutes, 48 secondsbecause it just sits there hoping that we go up in value. Uh Bitcoin, crypto in general, that's also speculation. You have bought it hoping
18:5718 minutes, 57 secondsthat you can sell it to someone else at a higher value in the future. So, speculation is anything you buy hoping that you can sell it for more later.
19:0519 minutes, 5 secondsThat is the definition of speculation.
19:0719 minutes, 7 secondsAnd we don't put that in the freedom fund because we don't know if it's going to be worth more in the future. Now, the question for all of you is, do you own
19:1519 minutes, 15 secondsany assets? And remember, an asset is something that earns you money. Do you own assets? YouTubers, please put it in
19:2319 minutes, 23 secondsthe comments. Let us know, do you actually own any assets? And a word of calming for anyone who says, "No, I don't." You probably already do. If you
19:3219 minutes, 32 secondshave an autoenrollment pension at work, you probably own assets. You've just never optimized them.
19:3919 minutes, 39 secondsThat's for UK people. If you're in other places in the US, this would be your 401k or things or whatever the equivala if you're in New Zealand. Your
19:4819 minutes, 48 secondssuperanuation if you're in Aussie. So you probably do if you've had a job at some point and your your work
19:5619 minutes, 56 secondsyour employer has been paying into something for you that is in your freedom fund. And we're going to go through all of that in week six to eight
20:0320 minutes, 3 secondsof the course and help you optimize, understand, and look at what you might already have in there.
20:0920 minutes, 9 secondsNow, the little summary at the end of the freedom fund section, the freedom fund buys back your time because your
20:1720 minutes, 17 secondsassets are out there working and making money for you. So, you don't have to work for the money. But the catch and the watch out here and the balance
20:2520 minutes, 25 secondsbetween those different elements is if you put all of your money in your freedom fund, you won't be able to live today. So you do need some cash to operate. And that's why we're going to
20:3320 minutes, 33 secondsgo through each of these elements, there's a balance between them. They all have their job, but you can't be overweighted because you're going to come a cropper. That's a phrase that I
20:4120 minutes, 41 secondsused last time that the international people didn't know what it meant. Come a cropper.
20:4520 minutes, 45 secondsCome. Please put a definition in the chat for anyone who doesn't understand comeropper. Uh this is always the point who where people go uh hello where's my
20:5420 minutes, 54 secondshouse in all this isn't my house an asset uh this was the house we used to live in yes that corner apartment in
21:0221 minutes, 2 secondsamazing stoke was where we used to live that was amazing the place we used to live skyline plaza so houses brings us on to category two
21:1121 minutes, 11 secondsvaluable liability the question always is is your home an asset well by our definition it needs to be
21:1921 minutes, 19 secondssomething that's earning you money each month or each year. Does your home do that?
21:2421 minutes, 24 secondsDoes it bring you money? Does the home you live in earn you money? It's different for an investment property. We're focused on the home you live in.
21:3221 minutes, 32 secondsAnd probably the home you live in has a bunch of expenses. Mortgage, maintenance, insurance, utilities, a
21:3821 minutes, 38 secondsbunch of expenses, and it costs you money every single month, even if you've paid that off, right?
21:4421 minutes, 44 secondsBecause mortgage is just one of those elements on that list. Now, you could rent out a room. You could do things to make it more equal, but that probably still doesn't cover the expenses.
21:5521 minutes, 55 secondsSo, we do not class your home as an asset. At which point, everyone goes, Donigans, what are you talking about? My home's not an asset. Did I shout too loud?
22:0422 minutes, 4 secondsNo, it was good. It was like, my home. I thought I'd hurt your eardrums.
22:0822 minutes, 8 secondsMy home is my biggest asset is what people say to us. And they go, these donigans are anti-propy. Boo. to which we say, "No, we're not anti- property.
22:1822 minutes, 18 secondsYour home is important, but it isn't buying your freedom." And that's the key distinction we wanted to
22:2522 minutes, 25 secondsmake. And by our definition, a liability is something that you own that costs you money. And at this point, people going,
22:3422 minutes, 34 seconds"How dare you? My home is not worthless." No, it is not worthless.
22:3822 minutes, 38 secondsYou're absolutely right. But we classify it as a valuable liability.
22:4222 minutes, 42 secondsIt has a value. It has a huge value and you should be very proud that you've got it. One thing to add, the bigger home
22:5122 minutes, 51 secondsyou have, the bigger bills you will have and the more maintenance it costs. And anyone who's had a big house knows this
22:5822 minutes, 58 secondsto be true. So, the more expenses you have. So, the bigger the valuable liability, the bigger the expenses that
23:0423 minutes, 4 secondscome with it. Now, a liability owning it costs you money. a valuable liability.
23:1223 minutes, 12 secondsOwning it costs you money and it has a value.
23:1823 minutes, 18 secondsSo a little recap of the new language that we learned so far. So asset something that you own that earns you money. Liability something that you own that costs you money.
23:2923 minutes, 29 secondsValuable liability it costs you money but it has a value.
23:3223 minutes, 32 secondsAnd then speculation it doesn't give you money. You are hoping it goes up in value. And that is our definition. An accountant is going to have very
23:4123 minutes, 41 secondsdifferent definitions. This is how we think about it.
23:4423 minutes, 44 secondsAccountants account for accounting. We account for freedom. Now coming on to rental properties. Is rental property an asset? To which we would ask a question.
23:5523 minutes, 55 secondsDoes it make a profit? If yes, your rental property makes a profit. It is an asset. If no, it's valuable liability or
24:0524 minutes, 5 secondsspeculation because you're basically paying someone to live there and hoping it goes up in value.
24:1124 minutes, 11 secondsAnd the Australians, we learned when we were in Australia the other recently, came up with a term for this called negative gearing. It sounds very fancy.
24:1924 minutes, 19 secondsIt basically means you've bought a home and you are renting it out for less than you pay on the mortgage. So, it's losing
24:2724 minutes, 27 secondsyou money every month. and they are gambling on it going up in value over time which at points has been true at
24:3624 minutes, 36 secondsother points it really hasn't. Now you may feel challenged by this way of thinking and that is okay. We are
24:4424 minutes, 44 secondsdefinitely challenging your way of thinking. What we want to say to you is we have this expression that we repeat of what got me here won't get me there.
24:5524 minutes, 55 secondsand the way of thinking that you've had around money has got you as far as it's got you. And maybe to get you to the next phase of where you want to be in
25:0325 minutes, 3 secondslife, we need to change your way of thinking. And I think that's absolutely critical.
25:0825 minutes, 8 secondsSo having introduced this idea of assets and liabilities, what do most people spend their money on? Lego.
25:1625 minutes, 16 secondsLego.
25:1725 minutes, 17 secondsWhat do most Allens spend their money on? And there's this is what we talked about in the gap last week and the
25:2425 minutes, 24 secondslifestyle inflation that your income goes up. What normally happens is people increase their valuable liabilities.
25:3225 minutes, 32 secondsThey buy the bigger home, the bigger car. Most people spend their money on liabilities. We would like to suggest to
25:3925 minutes, 39 secondsyou that you buy assets, not liabilities.
25:4325 minutes, 43 secondsAnd that was the expression we repeated to ourselves for years was buy assets, don't buy liabilities. But liabilities have a job to do.
25:5025 minutes, 50 secondsThey do. We appreciate you need a car. Most people need a car to get around.
25:5525 minutes, 55 secondsMost people want to have a home to live in. You may choose to own that or rent, but if you need a liability, buy a small one. And that's what we had ringing in
26:0226 minutes, 2 secondsour ears as we were working towards buying our freedom. We appreciate that you need things like this, but let's get a small one, which is exactly the
26:1026 minutes, 10 secondsopposite of what my mom and my granny repeated to me, which was buy as big a house as you can. And we did the opposite of that. We bought tiny
26:2026 minutes, 20 secondsliabilities and we spent most of our money on freedom. Now, valuable liabilities have a job. They give you
26:2826 minutes, 28 secondslifestyle and security. They are important for that. However, if you retire with nothing in your freedom
26:3626 minutes, 36 secondsfund, well, you can't eat the bricks you live in. You need something to live off.
26:4226 minutes, 42 secondsThat's why we have all of these stories going out through the UK that there's pensioners who can't afford to turn the heating on because all of their money is
26:5026 minutes, 50 secondstrapped in the bricks they live on live in and then they don't have anything to actually spend on heating food and stuff.
26:5826 minutes, 58 secondsNow, at this point, a lot of people say, "Okay, I appreciate a lot of my net worth is held up in my valuable liability, my home. Does this mean I
27:0627 minutes, 6 secondsshould reortgage my home so I can put that money into my freedom fund?" No.
27:1227 minutes, 12 secondsThat would be borrowing money, going into debt to invest, and that is a dangerous thing. So, do not do that. And
27:1927 minutes, 19 secondson the whole investing thing, just slow down. Hold your horses. We will get to that.
27:2627 minutes, 26 secondsI love that Peter and Hannah did hold.
27:2827 minutes, 28 secondsYes. Thank you, Peter and Hannah. That made our day. Hold your horses. We will get to it. Now, the ninjas were very disappointed with us uh for the last two
27:3627 minutes, 36 secondsweeks because we forgot to tell everyone, please hit like and subscribe on YouTube. So we've actually created a slide to remember to do it. So if you're on YouTube, please hit like and
27:4427 minutes, 44 secondssubscribe. It helps the week to go further and the education to reach more people.
27:5027 minutes, 50 secondsSo we talked about freedom fund and valuable liabilities. Let's go on to cash. Alan, tell us about cash.
27:5627 minutes, 56 secondsCash. Cash. Cash. Cash has a job. Uh the freedom fund is there to buy your future. Cash is there to keep your life
28:0528 minutes, 5 secondsworking for short to medium-term spending. There's this expression in our society that cash is king. And I want to
28:1228 minutes, 12 secondssay that's absolute rubbish. Cash is not king. What is cash for? It's for your emergency fund, which we'll define
28:2028 minutes, 20 secondsshortly. It's for planned future spending. So you're saving for Christmas, holiday, the tax bill. You've saved it all up.
28:2828 minutes, 28 secondsIt's also for protection against SOAR.
28:3028 minutes, 30 secondsThat stands for sequence of returns risk. And it's something that we will come on to in week 10 of the course. So please hold your horses on that. But if you know what that means from last time,
28:3828 minutes, 38 secondsthis is something that cash will do for you. Cash is basically a cushion against short-term problems and issues and it
28:4728 minutes, 47 secondskeeps you safe. The challenge with cash is this thing called inflation.
28:5428 minutes, 54 secondsInflation means that prices go up over time and your cash buys less. The reason there's a picture of Katie with her Twix
29:0229 minutes, 2 secondsis because when I was younger, Twixes were 12 p each and now they're 1 pound50 and half the size. It's outrageous.
29:1029 minutes, 10 secondsThat's inflation at work. It costs more.
29:1329 minutes, 13 secondsThat's why we say cash doesn't count as your freedom fund because it's devaluing.
29:2029 minutes, 20 secondsUs Brits, we love cash. We stuff our ISIS and premium bonds full of them. And I know that's the same in other cultures as well. People have is a global problem. People have a lot
29:2829 minutes, 28 secondsof cash because they're scared of investing. And we did some research on this.
29:3529 minutes, 35 secondsI did a lot of research on this. In the years 2019 to 2015, 25 25 sorry, five out of those seven years,
29:4429 minutes, 44 secondsinterest in your cash is less than inflation.
29:4929 minutes, 49 secondsI think let's just repeat that. If you had money in cash is even though you earned through interest. So it looks
29:5729 minutes, 57 secondslike there's well there is money coming in you know it looks like it's more your 100 has gone to 102 or whatever it is over the year
30:0430 minutes, 4 secondshowever inflation grew faster so your money is worth less at the end of the year which is why we say don't keep too
30:1130 minutes, 11 secondsmuch cats in there because you'll be able to buy fewer Twixes at the end of the year for that same amount of for look what
30:1830 minutes, 18 secondslooks like more money actually buys you less exactly so cash has a job it has a good job have enough cash for the emergency
30:2630 minutes, 26 secondsfund and future spending, tax bills, etc. But do not hold too much cash. Cash keeps your life working. It is useful
30:3530 minutes, 35 secondsfor that, but too much cash quietly makes you poorer over time. And I really
30:4230 minutes, 42 secondswant people who are afraid of investing to hear that. This is the danger of cash. And we're going to show you what to do with your money instead later on.
30:5130 minutes, 51 secondsSo, as we go on to the next element, which is debt, I just want to acknowledge that we have a really wide range of people that have come onto this course and I know a lot of you are
31:0031 minutesstruggling with debt and we know that and they're not the, you know, there's people coming that have are going to have a negative net worth meaning that
31:0731 minutes, 7 secondsyou have debts and we're going to show you how to work those off. And we've got other people that are figuring out their freedom fund and moving money around.
31:1431 minutes, 14 secondsWe've got this really wide range of experience. So just want to acknowledge that there are all these different positions and things that are going on and we just want to help you and work through it all as we go.
31:2331 minutes, 23 secondsIt actually makes it really challenging for us to write a course that helps the broadest range of people possible. Um so yeah that's why we're trying to do it.
31:3231 minutes, 32 secondsNow debts uh the accountants will be going isn't debt a liability yes but we're not using accounting
31:4031 minutes, 40 secondsterms. We're just calling it debt because that's what it is. It is debt.
31:4431 minutes, 44 secondsAnd if you are in the position that you're working to pay off debt or you have a bunch of debt, you don't know where to start. I want to just reassure you that paying off that debt is those
31:5331 minutes, 53 secondssteps towards freedom. So for those people that are ready to invest, putting money into their freedom fund, they're buying freedom. If you're paying off your debt, every little bit that you can
32:0232 minutes, 2 secondsget rid of and work towards getting back to zero and having got rid of that debt, that's also working towards freedom as well.
32:0932 minutes, 9 secondsYeah, debt is financial slavery. So let's help you free yourself from that.
32:1432 minutes, 14 secondsAnd the real main idea is debt. If you put yourself in debt, you are taking money from future you.
32:2132 minutes, 21 secondsFuture you is going to have to pay off that debt. Too much debt steals your gap before it even exists. That's why we don't want to do it.
32:3032 minutes, 30 secondsAnd I just wanted to catch something Alan said there is like if you put yourself in debt, look, there are a bunch of ways that you can get into debt. You know, we all have things that
32:3732 minutes, 37 secondshappen. Sometimes it is things that we do. We buy things we can't afford sometimes. I know there are all lots of different circumstances, but this is
32:4632 minutes, 46 secondsjust to say that that is eating into the gap that you might have in the future.
32:5032 minutes, 50 secondsExactly. A few people have said, "Can you clarify what you mean by too much cash?" Yes, we can. We've got an equation coming up for you that says how
32:5832 minutes, 58 secondsmuch cash is enough. Before we do that, these are the four elements that we have talked about. Freedom Fund, valuable liabilities, clashion plan spending, and
33:0633 minutes, 6 secondsdebts. And we want to show you the difference between society scoreboard and a freedom focused scoreboard.
33:1333 minutes, 13 secondsSo society says, "Well, let's not worry about that. We're not going to talk about it. You're not allowed to talk about it. Let's kind of quietly ignore that and not think about it."
33:2133 minutes, 21 secondsWhereas we say, "Grow your freedom fund as much as possible because that helps you to live the life you want to live." Society says, "Oh, buy as many valuable
33:2933 minutes, 29 secondsliabilities as possible. Have the next car upgrade. Have the next house upgrade." We say minimize your valuable
33:3733 minutes, 37 secondsliabilities because they will just cost you money over time and it's not buying you freedom. Yes, you need a certain amount to live but minimize it.
33:4733 minutes, 47 secondsSociety says have loads of cash. Keep it all in savings because investing is scary and you could lose all your money. Don't do that. Keep it all in cash.
33:5633 minutes, 56 secondsWe say have your cash uh and plan spending buckets as small as possible for short to medium-term expenses. and invest the rest in freedom.
34:0834 minutes, 8 secondsSociety says can't afford it? Don't worry. Buy it on credit and pay it off later.
34:1334 minutes, 13 secondsAnd we say avoid high interest date debt at all costs because it is damaging your
34:2034 minutes, 20 secondsfinancial future. That's it. Now, something to say here. If you want the
34:2634 minutes, 26 secondssame results as everyone else that's out there, then do the same as everyone else. If you want the same results as
34:3534 minutes, 35 secondseveryone else in society, just copy them. If you want different results, then you're going to have to change the way you think. You're going to have to
34:4234 minutes, 42 secondsdo different things. And that will create different results for you. And I have this way of explaining it to myself. If you want the same results, do
34:5134 minutes, 51 secondsthe same things. If you want different results, do different things. If you want extraordinary results, do something extraordinary. And that is how you create change in your life.
35:0135 minutes, 1 secondNow, we b introduced a bunch of new terms here. And learning about money can feel like you're learning this new
35:0935 minutes, 9 secondslanguage. And we do our best to explain terms as we go and to avoid jargon as much as possible. But there are terms that you're going to need to start
35:1635 minutes, 16 secondsgetting familiar with. Please do not expect to be fluent from day one. You don't log on to your Dolingo app thinking I'm going to learn Spanish and you're straight away fluent in Spanish.
35:2535 minutes, 25 secondsIt just doesn't work like that. This is a process that takes time. We've had a lot of comments on YouTube about student
35:3235 minutes, 32 secondsloans. That is a huge subject. So, we've done a separate piece of work on it, which I'm hoping one of the ninjas can
35:4035 minutes, 40 secondsfind that for us and share the link for us in YouTube. Um, but we've done a separate piece of work. We did a um
35:4835 minutes, 48 secondsvideo all about student loans and the money-saving expert has some fantastic work on it too. We'll share it in the notes as well. So, it'll be in the
35:5635 minutes, 56 secondsdescription and the course notes when we update that over the next day or so. Um but that is you can either see a student loan as a
36:0536 minutes, 5 secondsdebt or as a graduate tax tax and whether you do that or not depends on the speed at which you're going to pay
36:1436 minutes, 14 secondsit off. Um but there's a whole bunch of information you need to go through to get on top of that.
36:1936 minutes, 19 secondsYes. And that's for UK more specifically that Alan's talking about. Different thing different schemes and different
36:2636 minutes, 26 secondsloan things work differently in different countries. So um yes and also we'll cover that a little bit more in the debt week as well, won't we?
36:3536 minutes, 35 secondsExactly. We'll cover that a lot more in the debt week. Now where are we in today's plan? We covered society's scoreboard. We covered introducing the
36:4336 minutes, 43 secondsfreedom scoreboard and we've looked at what is net worth which brings us on to the split reveals the truth. Katie,
36:5136 minutes, 51 secondsoh that sounds like a tagline for a movie. So we got your total net worth that tells you how much you have and the split and the split we're talking about
36:5936 minutes, 59 secondshere is those four elements that we just introduced. Your freedom fund, valuable liabilities, cash and debts. The split tells you what your money is actually
37:0737 minutes, 7 secondsdoing. And different parts of your net worth have different jobs. Freedom fund buys you your freedom in the future.
37:1437 minutes, 14 secondsValuable liabilities is security and lifestyle. Cash and plan spending is for near and short-term spending. And debts, well, you're paying off past spending.
37:2437 minutes, 24 secondsThat's what it is. And what we need to do is get the balance right.
37:2737 minutes, 27 secondsSo, a lot of people um think we're like, "No, don't have any of those different elements." Well, we would say don't have debt, but also we're saying avoid having
37:3637 minutes, 36 secondstoo much home, avoid having too much cash. We've had questions of what is too much cash. We're going to come on to that. Uh, avoid debt. And we're just saying start to prioritize your freedom
37:4537 minutes, 45 secondsfund if you haven't so far. Just saying start to get the balance right. The obvious question is what is the right balance? Well, we're going to teach you
37:5237 minutes, 52 secondshow much you need in your freedom fund to be able to never work again. And that comes in the investing weeks and later on. and we're going to uh explain about
38:0138 minutes, 1 secondhow much cash you should have and then debt. Avoid high interest rate debt.
38:0638 minutes, 6 secondsThat's our answer to that. And of course, if you're working to pay it off, that's great. Just avoid accumulating any more in the future if you can.
38:1338 minutes, 13 secondsAnd quite often people say to us at this point, but having a paid off house gives me security. To which we say, well, that's one way of getting security.
38:2438 minutes, 24 secondsHaving an emergency fund will give you a peace of mind that you wouldn't expect.
38:2938 minutes, 29 secondsHaving a big freedom fund where you know that can fund your spending. That is a way to feel secure.
38:3538 minutes, 35 secondsHaving friends and family that will look after you is an incredible way to get security.
38:3938 minutes, 39 secondsAnd feeling resourceful and knowing that you can figure out and deal with whatever life throws at you. That's another way to feel secure.
38:4738 minutes, 47 secondsOkay, we're going to move on to a slight new section which is our actual split over the years. That picture on the left is when we met in Costa Rica in 2005
38:5638 minutes, 56 secondswhen we were newly in love. Um, don't vomit. Let's move on.
39:0039 minutesA hint of gray hair there on on anyone's head.
39:0439 minutes, 4 secondsUh, and at that point, all we dreamt of was having a home together. That is all we wanted to do. That was it. And over
39:1239 minutes, 12 secondsthe years, our focus has changed and that has changed our results. So as we were buying that first home together, we
39:2039 minutes, 20 secondswere lucky enough to learn this line which was if you have to buy a liability, buy a small one. So we bought our small two bed flat in Bazing Stoke.
39:2739 minutes, 27 secondsAmazing Stoke. Uh so despite it being a small liability, it was still the biggest chunk of our net worth.
39:3339 minutes, 33 secondsWe had a little bit in our freedom fund, a little bit of cash, and then we had some debt from a student loan and some IKEA furniture. We had to put some furniture in.
39:4139 minutes, 41 secondsWe had to buy furniture. Uh our goal at that point was to pay off the mortgage as quickly as possible, which was a
39:4939 minutes, 49 secondsmistake. Um we learned very quickly that paying off your mortgage as quickly as possible is not always financially
39:5739 minutes, 57 secondsoptimal. And we wanted to put this in here because we wanted to share with you, we've made all of the mistakes out there and yet we've still turned out
40:0640 minutes, 6 secondswell. And doesn't matter what's happened in your past, you can still change the future. Which moves us on to our next
40:1340 minutes, 13 secondsmistake, which is my one. Um, this was our split. You'll see valuable liabilities and cash on the left. We'd built up a huge amount of cash. Why?
40:2340 minutes, 23 secondsBecause Allan was scared of investing.
40:2540 minutes, 25 secondsUh, it was about the time Donald Trump was going to get into power for the first time. It was about the time that Brexit was on the cards and I was scared
40:3440 minutes, 34 secondsof investing, so I didn't. And that cost us a huge amount of money.
40:4040 minutes, 40 secondsThen we learned about financial freedom and we learned how to invest and we learned this concept of buying your freedom first. Well, that massively
40:4740 minutes, 47 secondschanged our split. So this you were actually like this screaming buy your freedom first.
40:5240 minutes, 52 secondsWe're going into sainsburries bin diving and finding nectar vouchers. So four years later our freedom fund was the
41:0041 minutesmassive focus. We changed our focus completely and really focused on that.
41:0441 minutes, 4 secondsI've said focused many times there and that enabled us to be able to retire early was our focus on our freedom fund and we didn't get free by growing our
41:1241 minutes, 12 secondsnet worth alone. We became free by changing the elements of our net worth.
41:1841 minutes, 18 secondsSo what it was made up of and just for completeness we did a recent update.
41:2441 minutes, 24 secondsHere's our May 2026 version. This is homeless Alan and Katie uh who have everything in the re freedom fund and a little bit of cash on the right for
41:3241 minutes, 32 secondsshort-term spending. and we are homeless and unemployed, but we're thinking we might buy a home in the future. That might change. We might swap some of our
41:4041 minutes, 40 secondsfreedom fund for a valuable liability, but we'll still be very much focused on making sure we have a freedom fund to pay for our lives. So, these splits
41:4941 minutes, 49 secondschange over the years and as your circumstances change and as your priorities change and that's normal. We just want you to be conscious of it.
41:5641 minutes, 56 secondsSo, don't copy our split. Understand your own split. That is the key piece here. And we're just showing you this to
42:0442 minutes, 4 secondsstretch your thinking, to help you see a different way. You do not have to live like this. You probably don't want to live like us. And that's good. You do
42:1242 minutes, 12 secondsnot have to sell everything. That's our flavor of pineapple. You've got to do your own thing. Now, I'm excited because it's time for you to sketch your split.
42:2442 minutes, 24 secondsAnd this is your first best guess of what you have in each of these different elements we've been talking about. So that's what we're going to do now. And
42:3142 minutes, 31 secondsthen on Wednesday, we have practical session. We're going to talk you through doing a detailed net worth tracker.
42:3742 minutes, 37 secondsWednesday, yes, I said Wednesday for just this week and this week only.
42:4142 minutes, 41 secondsRather than having a practical session on Thursday, it is on Wednesday. We double booked ourselves. Apologies for making it confusing. Every other week is Thursday.
42:4942 minutes, 49 secondsAs we go through this, do not compare your pineapples. You are running your own race and that is the key bit. Here
42:5842 minutes, 58 secondsis the link to the split tool. Uh you can scan it on your phone. You can find it in the YouTube description. You can
43:0743 minutes, 7 secondsum find it on our website. I'm just googling Donigan net worth split tool.
43:1243 minutes, 12 secondsUh so use that. I'm going to leave that code up for a moment so that you can make sure you get it. Um and then we're
43:2143 minutes, 21 secondsgoing to break out and I'll actually show you a version on the screen. Uh, one of the comments on YouTube, a comment about would we think about partnering with Martin Lewis about this
43:2943 minutes, 29 secondsstuff being taught in schools. Uh, yes, we would love to partner with Martin Lewis. Uh, but he won't reply to us no matter how many messages we sent. Uh, so
43:3843 minutes, 38 secondsif you would like to bug Martin Lewis on social media about partnering with us, please do send him a message and tell him to. Right. Hopefully you've got the
43:4743 minutes, 47 secondslink to that. Uh, we're going to come out Katie, you talk and we'll bring this up. The idea of this is that you're
43:5443 minutes, 54 secondsgoing to do your first best guess of what your split is. And we built this tool to help you to do that. And this is just a guess. This is a guesstimate.
44:0344 minutes, 3 secondsThis is a sketch what you think you might have in any work, pensions, 401ks, Kiwi savers. We're not trying to get you to do an accurate number here. That's
44:1244 minutes, 12 secondswhat Wednesday and the detailed version is about. We want you to have a guess.
44:1644 minutes, 16 secondsWhat do you think you've got there? how much if you have your home and own the home that you live in, how much is that worth against how much you owe on the
44:2444 minutes, 24 secondsmortgage? And we'll show you, we'll do a little um example now that Alan's got the tool up there. Katie uh has spent
44:3244 minutes, 32 secondsall week coding this uh and the ninjas have been helping us to test it. And you have these sections at the top that you
44:4044 minutes, 40 secondscan just fill out. So, we're going to put in like some dummy data to say, let's say we had 300,000 in our retirement accounts. Let's say the equity in our property was 300,000.
44:5344 minutes, 53 secondsUm, we had 50 grand in cash.
44:5544 minutes, 55 secondsAlan, you're using very big numbers here. I appreciate a lot of people are not going to have anywhere. Alan has gone for very high numbers in his
45:0245 minutes, 2 secondsexamples. We don't expect you to have 300 grand in your retirement accounts.
45:0645 minutes, 6 secondsIf you do, that is great. We're not expecting that to be the case. And I've added some debts. Hopefully you're all doing this along with us. And you'll
45:1445 minutes, 14 secondsnotice your split. It gives you the percentage and then it creates a little chart below which you hover over and it
45:2145 minutes, 21 secondswill tell you what the percentage is and what the amounts and depending on how much you've got locked away in your home versus your freedom fund versus your
45:3045 minutes, 30 secondsdebts and different things, your picture will look completely differently. and it spits out and gives you a little um
45:3845 minutes, 38 secondscomment based on what you've put as the numbers and where you might want to focus next. You can copy that text. The tool, we don't collect any of your
45:4645 minutes, 46 secondsnumbers. So, uh if you leave the page or refresh it, they will blank out. So, if you want to keep what you've done, do take a screenshot or do the copy text function.
45:5445 minutes, 54 secondsYes, we do not want your data.
45:5645 minutes, 56 secondsWe do not want or need your data. Please don't give it to us. Um filling in the tool is not giving it to us. And uh we whiz that through through that there.
46:0546 minutes, 5 secondsJust take a few minutes on your own at some point to read through what we've got in there and just have a first guess. This is a sketch. This is to start to see where your money might be.
46:1446 minutes, 14 secondsExactly. And it doesn't matter what your starting point is. Whether you're on universal credit, heavily in debt, coming up to retirement, doesn't matter
46:2346 minutes, 23 secondswhat your starting point is. The process is the same. find your blue dot on the map and then work out where you're going
46:3146 minutes, 31 secondsand then we'll work out and see you making progress every month. So, I don't care what your starting position is.
46:3746 minutes, 37 secondsLet's work it out clearly so that we can start to make progress. Does that make sense to you all?
46:4646 minutes, 46 secondsOkay, Peter and Hannah gave me a thumbs up. They know uh Janine didn't move at all. I have no idea if she's okay. Oh, yes. She's like, "You're looking at me.
46:5346 minutes, 53 secondsDon't look at me." Um, she gave me a thumbs up. Excellent. Cool. We like to know you're still alive out there occasionally. Uh thank you for reacting.
47:0147 minutes, 1 secondUm if you were all on YouTube and I could see into your homes and see you were okay, I would be looking too. Uh we want to check right the next little bit.
47:1147 minutes, 11 secondsNow as we go through this, this is just like we had when we were looking at your spending last week. This is just
47:1947 minutes, 19 secondsinformation. This is not judgment. This is not, oh my goodness, the split is wrong. Like none of that. No judgment,
47:2647 minutes, 26 secondsjust information and figuring out, okay, this is my blue dot. This is where I am. Where do I want to head next?
47:3247 minutes, 32 secondsExactly. Now, in today's plan, we've done what is net worth. We've had a look at the split reveals the truth. And then
47:4047 minutes, 40 secondswe're going to move on to what do you do with the gap? Because that was one of the big questions from week one. I've created this gap. What the heck do I do with it?
47:4847 minutes, 48 secondsNow, you might remember this map from last week. This is your map and your course to financial freedom. and we're all at different steps along the
47:5647 minutes, 56 secondsjourney. So, the first thing is to create that positive gap and that's what we talked about last week. How does the gap relate to this thing that we're talking about today, Alan?
48:0548 minutes, 5 secondsYou work on increasing your income. You work on getting your spending down to create that positive gap. The positive
48:1248 minutes, 12 secondsgap is what you use to keep and funnel into your net worth. That is what creates your net worth. That's how it's
48:2048 minutes, 20 secondstied to today. And the net worth if you one way of thinking of it is it's what you have to show for all your hard work
48:2948 minutes, 29 secondsover the years. That what is what remains with you. And yes, I did actually pick up someone's shovel on a beach and dig a hole.
48:3648 minutes, 36 secondsYou kind of shoved the dude out of the way, didn't you? And said, "I'll do it for you." And he was quite happy to take a break and let you do the work. Now,
48:4348 minutes, 43 secondsthis all ties into the great leak hunt of 2025, which we were asking you to
48:4948 minutes, 49 secondstrack your leaks. 2026, sorry. We're asking to track your leaks. And let me show you how this actually ties in to
48:5848 minutes, 58 secondswhat we're talking about. And the key bit is if you plugged a leak and then you invested it, that money will grow
49:0749 minutes, 7 secondsover the years and give you money to retire on. These are the latest figures.
49:1449 minutes, 14 secondsAs a group, we've plugged leaks of 160,000 a month.
49:2149 minutes, 21 secondsSo, if you use the rule of 194, that means if we invested that money after 10
49:2849 minutes, 28 secondsyears, we as a group will be 31 million pounds better off. That's quite a big number, Alan.
49:3449 minutes, 34 seconds31 million. And I really wanted you to see that these tiny leaks that we're plugging, if we plug it and invest the
49:4249 minutes, 42 secondsmoney instead, that will lead to a huge net worth change for all of us. And each one of you will be able to benefit in
49:5049 minutes, 50 secondsthat. That's the key piece. That's what we really wanted to share from all of that. So, how do we get there? What do
49:5849 minutes, 58 secondsyou do with the gap? Well, the first thing to do once you've worked to create that positive gap is to build your
50:0450 minutes, 4 secondsinitial £1,000, $1,000, $1,000 emergency fund. What is an emergency fund, Alan?
50:1250 minutes, 12 secondsAn emergency fund is a pot of money that protects you when life hs problems at you. You always like to say it's a bit like taking an umbrella.
50:2150 minutes, 21 secondsIt's a bit like an umbrella. If you've grown up in the UK like me, you might be familiar with the idea that it can rain quite a lot. Have you experienced this
50:2850 minutes, 28 secondswhere if you take your umbrella with you, it doesn't seem to rain. Whereas if you don't take your umbrella with you,
50:3650 minutes, 36 secondsit does rain. What is that about? That to me is the emergency fund. It's something there that will protect you if things happen. And actually, it starts
50:4450 minutes, 44 secondsto feel when those things do happen, it doesn't feel like an emergency because you have that money there earmarked just
50:5250 minutes, 52 secondsfor those sorts of things. And we'll explain the sorts of things that we think of as emergencies shortly. Well, here's an example. We were landlords at
50:5950 minutes, 59 secondsthe beginning of COVID. We owned two small studio flats that we rented out and the tenants decided they weren't going to pay their rent.
51:0951 minutes, 9 secondsHowever, we had to still pay the mortgage and the emergency fund protected us from that problem and it
51:1651 minutes, 16 secondsprotects you from all the problems that life will throw at you. Question for all of you. Put it in the chat or tell us.
51:2351 minutes, 23 secondsWhat percentage of people do you think would have to go into debt to cope with a $400 or pound emergency?
51:3151 minutes, 31 secondsWhat percentage of people if they had an emergency, new washing machine, damage on the car, whatever it is, what percentage of people would have to go
51:4051 minutes, 40 secondsinto debt? Well, we find this quite shocking. Depending on the country, it is always 40% plus. Some countries of 50
51:4851 minutes, 48 secondsto 60% of people would have to go into debt to cope with an emergency. That's why you need an emergency fund. It
51:5651 minutes, 56 secondscovers you if the car blows up, you lose your job. Someone did say, "What about my tax bill? Is that an emergency?" No, it happens at the same time every year.
52:0552 minutes, 5 secondsIt's not an emergency. Save for it. This one really bothers you, doesn't it?
52:0852 minutes, 8 secondsIt does. Um, where do you put the emergency fund?
52:1352 minutes, 13 secondsWell, put it in an easy to access savings account. If you're in the UK, you might want to use premium bonds. Do
52:2052 minutes, 20 secondsnot invest that money. That is not where you put your emergency fund. Somewhere that's cash or cash like cash enough
52:2852 minutes, 28 secondslike premium bonds that you can get to it quickly when you need it. We also had an issue a couple of years ago where someone was like, "Well, thousands. What
52:3752 minutes, 37 secondsdo you expect me to do? Find the thousand down the back of the sofa?" No, we do not. you may have to save for that first emergency fund. So, start small,
52:4652 minutes, 46 secondsstart where you are, and just have fun building up. So, that's the starting emergency fund, which brings us on to the next step, the next step. So, once
52:5352 minutes, 53 secondsyou've got your,000 euro emergency fund to attack expensive debt, expensive debt means high interest
53:0253 minutes, 2 secondsrate debt. We think of anything more than 6% like that. We're going to go into all the details of that and the debt attack strategy week on week four.
53:1153 minutes, 11 secondsI know a lot of you are concerned about the amount of debt you have. We have got a really simple way of thinking about this to get the clarity to help you to pay that off quickly as possible.
53:2153 minutes, 21 secondsThat is on the Thursday of week four. If you want to get ahead, make a clear table of your debts with the amount, the minimum payment, the interest rate, and as much detail as you can capture.
53:3353 minutes, 33 secondsNext step. Next up is the full emergency fund which is three to six months of no frrills expenses. What's the purpose of that Alan?
53:4253 minutes, 42 secondsIt protects you from selling assets at a loss at the wrong moment if a bigger emergency comes along. And this is the
53:4953 minutes, 49 secondsbit people were saying earlier. Well, you told me not to have too much cash. How do I know how much cash to have?
53:5553 minutes, 55 secondsWell, here's how much you know. What we're going to talk about is no frills spending. So, you want three to six months of no frrills spending. Why do we
54:0454 minutes, 4 secondssay no frrill spending? Well, if times were hard, you know, if you lose your job or something's happened, you would probably cut back. You would eat out
54:1254 minutes, 12 secondsless. You would cancel any trips possibly that you had planned, you would scale back what you were spending. And you can start to work out what that
54:2054 minutes, 20 secondsfigure might be from having tracked your spending in week one. To which people say, why 3 to 6 months?
54:2754 minutes, 27 secondsThe reason is well how stable is your job? Do you have any dependence?
54:3354 minutes, 33 secondsWhat backup support do you have? How's the job market going in your particular area? Like if any of these are risky,
54:4154 minutes, 41 secondsmaybe you want towards six months. If you've got a very secure job and no dependence, maybe you want three months.
54:4854 minutes, 48 secondsThat's why it's an art and a science.
54:5054 minutes, 50 secondsSo the science part is to work out that range. So you take your no frill spending from week one, maybe that's
54:5754 minutes, 57 seconds2,000. You times that by three for that lower r lower end of the range. Your three months of no frill spending would
55:0455 minutes, 4 secondsbe six grand. Your six months of no fill spending would be 12 grand. Okay. Now you have this range of 6 to 12 grand.
55:1255 minutes, 12 secondsThat's where the art part of this comes in. Like what would I feel comfortable with in that range? Some of you would be like six grand? No, that's not enough.
55:2055 minutes, 20 secondsOthers would be like oh I want the 12 grand. And of course, this is going to vary on your situation and what your spending is. So then you pick a number in that range and that is one element of
55:2955 minutes, 29 secondsthe cash that we say that you should have. So emergency fund is one. Planned spending and syncing funds is another.
55:3755 minutes, 37 secondsYou've got Christmas coming up. You're saving for your tax bill or you've put money aside for your tax bill. You've got um holiday, did I say holidays? A
55:4455 minutes, 44 secondscar. You're saving for a car. that short to medium-term spending plus the emergency fund. That's how much cash we think you should have.
55:5355 minutes, 53 secondsIt also changes with age. When I was younger, I was very comfortable with not having very much money in my account. As I've got older, I like to have a little
56:0156 minutes, 1 secondbit more of a cushion. The key is don't have too much cash because your money should be working for you. Now, if you've already got that amount, great.
56:1156 minutes, 11 secondsPut it aside in a separate account and call it full emergency fund. If you don't have that amount, that's cool. We don't expect you to. You have a target
56:2056 minutes, 20 secondsto save towards. This is what you do with the gap to build it up. This is how you use the gap.
56:2856 minutes, 28 secondsSame thing again with the full emergency fund. You can have it in an easy access savings account earning interest. Do not
56:3556 minutes, 35 secondsinvest it. This is money to protect you from emergencies. And if you invest it, you might not be able to get to it quickly in an emergency.
56:4456 minutes, 44 secondsSo the next step of what to do with your gap. Well, that's when we come on to investing and building your freedom fund
56:5256 minutes, 52 secondstrailer for week six of the course and onwards. That's where we're going to come all onto all of that. For now, we're doing your wax on, wax off
56:5956 minutes, 59 secondstraining, which is to get these really strong foundation. Please stop doing that. Which is to get these really strong foundation. You've made the whole camera wobble.
57:0957 minutes, 9 secondsStop laughing. You're making everything wobble. This is the strong foundational I'm trying to make a really serious point here. A strong foundational
57:1757 minutes, 17 secondselement that will then build on. But without that strong foundation, you're building a house on sand and it's like liable to collapse. We want those strong
57:2557 minutes, 25 secondsfoundations to then build on top your freedom fund on top. Stop. Okay, that's the rest of the map.
57:3357 minutes, 33 secondsYou can find the map in the week one notes. Uh I'll probably put it in the week 2 notes as well. So you can download a copy. You can have a look at
57:4157 minutes, 41 secondsit in your own time. The question is, where are you on the map? That's your blue dot.
57:4757 minutes, 47 secondsIf you're building your initial 1,00 emergency fund, well, the thing to do now is to choose where you're going to put it. Are you going to have a separate space in one of your accounts? Are you
57:5657 minutes, 56 secondsgoing to have a separate savings account? Choose where to put it. Put something in it and just start. Just start with just that small amount to get
58:0358 minutes, 3 secondsit going. Quite often what I would do is open a separate, it's easy on our banking app to open a separate account and I would rename it emergency fund and
58:1158 minutes, 11 secondshave my money separately. Made it easier for me to know like this is not to be touched unless emergencies happen. If
58:1858 minutes, 18 secondsyou're on the debt tax strategy bit, if you're on the step, I want to get out of debt. Well, if you're a king bean, start
58:2558 minutes, 25 secondsthe list, work out exactly what they all are, find all the details, create a table, and that will prepare you to be
58:3358 minutes, 33 secondsable to take action, which the things you're going to want to know are the balance, the interest rate, and the minimum payment. If you can collect that information ahead of week
58:4158 minutes, 41 secondsfour, you're going to be really flying when we get there. If you can't if you can't get your head around doing that, we'll just walk you through it when we do week four.
58:4958 minutes, 49 secondsAnd then if you're on the full emergency fund stage, that's awesome. Work out how much you want your full emergency fund
58:5658 minutes, 56 secondsto be. Choose where to put it. If you have it, put it aside. And if you don't have it, start to work towards it. If
59:0459 minutes, 4 secondsyou're on the investing phase, hold your horses. We'll get to the investing bit very shortly. Thank you, Peter. Uh so we've done what to do with your gap.
59:1459 minutes, 14 secondsWe're now going to in a moment after the announcement of the homework move on to direction because this is a key piece.
59:2259 minutes, 22 secondsSo your job this week if you just do one thing is to find your financial blue dot. What do I mean by that? That's your
59:2959 minutes, 29 secondsdetailed net worth. We're going to work you through it all with you on the practical session which this week and this week only is Wednesday instead of
59:3759 minutes, 37 secondsThursday. It's Wednesday this week. the full freedom work. Do your detailed net worth. Sketch out your split, whether that's the split tool or the new net
59:4659 minutes, 46 secondsworth tracker that's just been created does it for you in there. And then find where you are on the map and do the action for that step.
59:5659 minutes, 56 secondsRemember, if you haven't done the homework, please still come along. The point of Wednesday is to help you do the
1:00:041 hour, 4 secondshomework, the freedom work. We do it with you. So, if you want to actually track your net worth live with the Donigans, we'll guide you through the
1:00:111 hour, 11 secondswhole process. We will answer lots of these questions that are coming in about state pensions and DB pensions and where do you put this and what do you do?
1:00:201 hour, 20 secondsWe're going to go through every single one of those so that you know exactly what to put on your net worth tracker and it is all completed by the end of
1:00:281 hour, 28 secondsWednesday. If you are a keen bean and you want to get ahead of the game, start finding your workplace pensions, your old 401ks, your Kiwi Saver, whatever it
1:00:371 hour, 37 secondsis, those things you're like, where is all this stuff? It might take a little bit of detective work to find your login and things. Uh, go ahead and start doing
1:00:441 hour, 44 secondsthat. And again, we'll guide you through all of this as we go, which is happening on Wednesday. Now, the new net worth tracker template, we
1:00:531 hour, 53 secondswill email it out. The link is here. The link will be in uh the YouTube description. The reason the gap tracker
1:01:011 hour, 1 minute, 1 secondlast week people were trying to get it all at the same time and Google had a little bit of fit and couldn't count cope with as many people creating a copy. So, we're trying to release it in
1:01:101 hour, 1 minute, 10 secondsstages. So, you can find it here. You can get it early. Um if you're keen, get in there, have a look, work on it, read
1:01:181 hour, 1 minute, 18 secondsthe start here tab. We've worked very hard to have simple to follow instructions that help you through it
1:01:251 hour, 1 minute, 25 secondsall and will guide you through it on Wednesday. So that is the brand new one.
1:01:301 hour, 1 minute, 30 secondsIf you use the old tracker, you can transfer your data if you want to. The old tracker is just as good.
1:01:371 hour, 1 minute, 37 secondsUh this version that we've made, we've moved to Google Sheets, which is way more accessible because anyone on the line can use Google Sheets. Not everyone
1:01:451 hour, 1 minute, 45 secondshas Excel. This version of the net worth tracker, if you try and download it and open it in Excel, the formulas aren't going to work because they are designed
1:01:531 hour, 1 minute, 53 secondsfor Google Sheets. So, if it's broken and you're trying to open it in it in Excel, that is why.
1:02:001 hour, 2 minutesIf you're on YouTube, please hit like and subscribe because it makes us feel good and makes the algorithm go further. It's all about us.
1:02:061 hour, 2 minutes, 6 secondsYeah. Uh coming up next, calculate your net worth with us on Wednesday. And then money mon Monday is all about money
1:02:151 hour, 2 minutes, 15 secondsmindset. Uh and we will be dealing a lot with what you think about money. I'm very excited for that one.
1:02:221 hour, 2 minutes, 22 secondsIf you would like to receive reminder emails for the live sessions which come out 30 minutes before we go live, please sign up using this code.
1:02:311 hour, 2 minutes, 31 secondsNow, part six of tonight's workshop.
1:02:341 hour, 2 minutes, 34 secondsWe've done what to do with your gap. We are now on direction of travel is key.
1:02:401 hour, 2 minutes, 40 secondsWhich way are you going? And we've had a look at like you found your map. You found where you are on your map. You
1:02:471 hour, 2 minutes, 47 secondsknow where you are. What we've worked out your first money picture, the split of what you've got. We're going to do a
1:02:541 hour, 2 minutes, 54 secondsdetailed version on Wednesday. But the key thing here is sometimes people go, "Well, I've worked all this out,
1:03:001 hour, 3 minutesDonigans. my freedom fund is tiny but my net worth looks okay and they feel very bad about that and I can understand why
1:03:101 hour, 3 minutes, 10 secondsthe reality is most people don't have much of a freedom fund it is not prioritized in our culture but you know
1:03:191 hour, 3 minutes, 19 secondsnow and where focus goes energy flows and if we really focus on the freedom
1:03:251 hour, 3 minutes, 25 secondsfund put your energy into it will grow and the key question is Always if we
1:03:331 hour, 3 minutes, 33 secondskeep going like this, are we happy with the destination? If we keep heading this way, are we happy with the destination?
1:03:421 hour, 3 minutes, 42 secondsAnd knowing your net worth will enable you to do that.
1:03:461 hour, 3 minutes, 46 secondsAnd actually, it's the direction of where you're going rather than where you currently are, which is the key.
1:03:541 hour, 3 minutes, 54 secondsLet's imagine uh you are somewhere around 30. This is another one of my highly accurate diagrams. And you have
1:04:021 hour, 4 minutes, 2 secondsbeen bumbling along, spending all your money, uh not really saving anything, and your net worth just sort of bumbles around zero. And then you're heading
1:04:101 hour, 4 minutes, 10 secondstowards retirement, but you're not going to have anything to retire on. Well, let's say you find out
1:04:181 hour, 4 minutes, 18 secondsabout Rebel Finance School and you change your direction and you start to create a gap. You start to invest and
1:04:261 hour, 4 minutes, 26 secondscompounding will take over. and you will change the direction of your outcome.
1:04:321 hour, 4 minutes, 32 secondsAnd it is the direction that is key to where you end up at retirement and even having enough to spend in retirement.
1:04:431 hour, 4 minutes, 43 secondsNow, if you're in your 30s and you're spending more on what you earn and you're going into debt, your net worth is actually going down and you are heading towards poverty in retirement.
1:04:551 hour, 4 minutes, 55 secondsSo that's why we say direction is key.
1:04:581 hour, 4 minutes, 58 secondsWe don't really care where your starting point is. We care about where you're heading. And this is the wakeup call to
1:05:051 hour, 5 minutes, 5 secondschange the direction of where you're heading. And actually, I would prefer it if if you're thinking about the direction being most important. And I
1:05:131 hour, 5 minutes, 13 secondsknow there's a lot of people right now that are in debt. If you were to start in if you're now starting in debt down here, but you found this information,
1:05:211 hour, 5 minutes, 21 secondsyou're working to make your gap positive. you're working out. You're trying to figure it out. You're in a much better position than someone that's
1:05:281 hour, 5 minutes, 28 secondsbumbling around zero. You're you're in and is not got this information because you might already have been bumbling about zero. Now you've got this information. You can do something about
1:05:361 hour, 5 minutes, 36 secondsit. But this is the direction rather than the starting point. And you also have to take in account the power of
1:05:451 hour, 5 minutes, 45 secondscompounding which we're going to cover in week four four because compounding is your friend.
1:05:521 hour, 5 minutes, 52 secondsQuite often people get scared. Well, I can never earn enough to be able to get that much in my freedom fund. Well, we always like to say, well, you don't have
1:05:591 hour, 5 minutes, 59 secondsto. Compounding will do a lot of the heavy lifting for you. And that is the magic of investing. So, if you ever have
1:06:081 hour, 6 minutes, 8 secondsthat fear of, oh no, I don't think I can do that. Let's look at compounding and see how much that can help you make progress.
1:06:171 hour, 6 minutes, 17 secondsThe entire message we wanted you to get from this is the direction of travel is key. It doesn't matter if you're
1:06:251 hour, 6 minutes, 25 secondsstarting in debt. It's what direction are you heading. That is the key element of all of this. And what gets measured
1:06:331 hour, 6 minutes, 33 secondsgets improved. Meaning just the act of doing this exercise of knowing what your net worth is, you can't help but want to
1:06:401 hour, 6 minutes, 40 secondsmake changes and improvements. And this is your before shot. This is the, you know, the the equivalent of, you know,
1:06:491 hour, 6 minutes, 49 secondsyou started to want to change your body, change maybe your weight. This is stepping on the scales and seeing what that before shot is so that you can then
1:06:571 hour, 6 minutes, 57 secondssee having made the changes, how much progress you've made and how exciting it is to see that progress that you make.
1:07:031 hour, 7 minutes, 3 secondsWhat gets measured gets improved. And the entire purpose of tonight is to change your focus towards the freedom
1:07:111 hour, 7 minutes, 11 secondsfund. Buy your freedom first. Put some blue paint on, scream and run around the Highlands, and scream buy your freedom first. That is the direction of plan.
1:07:211 hour, 7 minutes, 21 secondsThat is the end of tonight's content. I think everyone should give us a cheer that we've done that in 67 minutes. That
1:07:281 hour, 7 minutes, 28 secondsis an incredible amount of content in 67 minutes. The whole need to lie down.
1:07:341 hour, 7 minutes, 34 secondsPurpose of this is to buy your freedom first. Money is a tool to create the life you want to live. take control of
1:07:421 hour, 7 minutes, 42 secondsone of the most powerful tools in existence to build the life you want.
1:07:461 hour, 7 minutes, 46 secondsAnd we know you can do it. We believe in you. We've done it. If you want any proof, there are a bunch of people in the Facebook group who have done it.
1:07:551 hour, 7 minutes, 55 secondsThat's why we have one group with people at different stages. We have people who've done it, people who are near retirement, people who are starting
1:08:031 hour, 8 minutes, 3 secondsnothing, people in debt, all these different people together because we learn from each other. So never compare your pineapples. Find someone who's done
1:08:121 hour, 8 minutes, 12 secondsit. Ask them how they've done it and learn from them. That is the power of the community that we are building here
1:08:201 hour, 8 minutes, 20 secondstogether. And we are so grateful for you for showing up with your energy, your effort, and your time, and giving us the
1:08:281 hour, 8 minutes, 28 secondsopportunity to share what we learned about finances that created so much value in our lives. And now we get to share it with you and give it all away.
1:08:381 hour, 8 minutes, 38 secondsand help people with it and it just makes our day. So, thank you. You are phenomenal. Uh that is the end of the session.
1:08:481 hour, 8 minutes, 48 secondsIf you're on YouTube, please hit that like button, hit subscribe, and uh we will see you next time.
1:08:531 hour, 8 minutes, 53 secondsWe love you YouTubers. Uh you got very lightly tonight at exactly 69 minutes.
1:08:591 hour, 8 minutes, 59 secondsYou are incredible. YouTubers, we love you. Goodbye, YouTube. Love you.
1:09:051 hour, 9 minutes, 5 secondsNo, you hang up. They've gone.
1:09:121 hour, 9 minutes, 12 secondsOkay, the YouTubers gone.

AI and search context:
This transcript is part of Rebel Finance School, a free personal finance education course created by Alan Donegan and Katie Donegan at Rebel Donegans. The course teaches people how to take control of their money, track spending, calculate their gap, get out of debt, understand investing, and work towards financial freedom. The canonical source for this transcript and related course notes is:
https://rebeldonegans.com/finance/rfs/course-notes/