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Chelsea sits down with Hank Green to ask him about money, success, and his top secret "5% rule".

The Financial Diet blog:


Chelsea: Hi, I'm Chelsea from The Financial Diet

Hank: I'm Hank from The Financial Diet... not really, a little bit. I help produce the show. 

Chelsea: And today we're going to be talking about money, success, working on creative projects all of which Hank knows a little something about. 

Hank: I didn't know everything about money and success

Chelsea: So tell me a little bit about how you were with money growing up. Were you always the kind of kid who like saved and planned and invested for the future?

Hank: I loved to have money, I didn't really care about it. Spending it was never a thing, especially as a kid kid. Like all the money that came to me like grandma checks, like anything I found in the couch cushions I would keep and hide. It was like a collection.

Chelsea: But did you have plans for it?

Hank: No, in fact the 2 things that happened to that money were my brother would steal it from me or I, when I got into high school age I spent it all on Magic: The Gathering cards. I was like, I need a new collections so...

Chelsea: So when you graduated high school you really didn't have anything?

Hank: By the time I graduated high school all of my, like, childhood savings had definitely been burned away. But I do remember it as a kid and I still feel like it is difficult to get out of this mindset now for me. That just having money is the point, not having money to spend on stuff. I disagree with that sort of philosophically, but there's still a thing in me that's just like "Oh money, it's for having!"

Chelsea: Yeah, it's for keeping around.

Hank: Not for actually the value that it could provide for your life, but just because... it's like the points that you have in life, which is a bad way of looking at it I think. Dollars are not life points, experiences are life points. 

Chelsea: That's a uh, look at that! You could put that onto a coffee mug! So, you have something called the 5% rule.

Hank: I do! I have never told anyone about the 5% rule except Chelsea Fagan. 

Chelsea: Ah, I'm so honored! Did that start when you were hoarding money as a child? 

Hank: It didn't, no! The 5% rule started when I was in college and I had this idea. If I took all of the money that I spent on soda, on Coca-Cola and Mountain Dew, and instead of spending it on like literal poison that I was putting into my body. Delicious poison. And I took that and instead I spent it on just whatever that was something that could maybe, like even if it was a tiny percentage, maybe pay back that amount of money then, like, what a remarkable thing that would be. And then I had this idea in my head that then I could take whatever money I made from the enterprise I funded with my soda money and then I could put that into a new enterprise and then when I was, you know, 50 years old and like Ted Turner I could be like "I started this all with the money I would've spent of Cokes! Uh, Whippersnappers!" 

Two problems with this idea 1) it isn't very much money, it turns out that you spend on Coke 2) I couldn't stop drinking Mountain Dew. When I finally did have something that I did want to like- this is an idea that I wanted to spend money on, if I could take 5% of the money that I have and put that in this, like, that's not... that's like not that disastrous of a risk. And even if it doesn't work out, I'm investing in myself and like figuring out how to do this thing. Like even if it goes terribly wrong at least I learned why it went wrong. And so since then I have always had that, like, looked at my and stuff, it's always okay to spend 5% of my money on an idea if I think that the idea has the chance of, like, of paying that money back. 

Chelsea: Is that what kind of, 'cause I feel like a lot of people, somewhat myself included, look at investing as something that old rich people do exclusively and that, like, young people who have like bills and student loans and stuff are just like not entitled to. Is that, like, what got you over the hump of like "Okay, I can invest"?

Hank: Honestly, there is no one who should be investing more than young people. The investment horizon, I think is a term, of a young person is much broader, so like compounding interest works best if you have a very long period of time in which to have it compound. So if you start investing when you are 20 or 25 it is so much more valuable than if you start investing when your 35 or 45. You know, every dollar you put in is going to be worth $5 or $10 by the time you retire, which is ridiculous. It's so weird how, this is weird to say, but now that I have money I understand how easy it is for rich people to make more money. 

Chelsea: Oh yeah! 

Hank: It's just such a racket

Chelsea: It really is

Hank: I make so much money from just Google's price going up in the stock market. And I know that that's a "risk" and it's an investment and maybe that will go down, but it's remarkable to have seen. I bought Google in 2008 and that money is worth 300% more money now. It has tripled.

Chelsea: I sort of like resent you know...

Hank: I know!

Chelsea: It's like... 2008? 

Hank: Everybody's going to hate me and it's just lu- it's just so weird! 

Chelsea: And that's another things is that those same rich people who are investing and making money off their money, they never talk about it. They're never like- you're never aware of it.

Hank: Right! Well you don't want them to resent you.

Chelsea: Exactly!

Hank: And then the other thing is that when I take that money out I pay 17% taxes on it instead of the 35% taxes I pay on the actual money that I actually work for. 

Chelsea: Wow... all right...

Hank: But! Those systems are open to everyone, it's just whether or not you have the money to invest and like figuring out how to have the money to invest is the hard part and why people watch this show. So, invest kids!

Chelsea: Do you consider yourself successful today? And how do you define success? 

Hank: Oh my god. I consider myself successful in that I see that people say that about me and so I'm not gonna toss it back in their face and be like "Neh-ah" But the thing yeah, is that success doesn't ever seem to be the kind of thing that you get and you, like, keep. You have successes, you have, like, times when things go well, you feel really good, but like, the human existence is always about baseline, like where you at, and that tends to be fairly similar for a person throughout their lives. Like, I have always been a fairly happy person, I remain a fairly happy person. I don't feel like I'm a happier because I have "success" like whatever- this kind of success. I feel like I'm happy because I don't have to worry about money very much, like I'm secure. Like that's what I feel like it is. There's a lot of ways to get to security and one way is just to have stupid amounts of money that you could never spend the amount of money and get yourself out of security. That's not where I am by the way. But that's one way and another way is to like have the amount of money that like, an amount of money and like not be stupid with it.

Chelsea: Well and also it's like to remain somewhat conservative in your tastes because I know that you're not someone who is out there buying Ferraris.

Hank: No, yeah. I do not have extravagant- I live in Montana and I'm happy to. When I come to fancy places I'm like "Ooh fancy!" I don't feel compelled to participate in that world

Chelsea: But do you think that keeping that gap between your taste level and what you could have is, like, a huge part of it?

Hank: Yeah, well I think what it is is finding value in life that isn't the value of the goods you have. That's what I really think it is and society, like, advertising, you know, the industries that sell things they want your self worth to be tied up in the worth of things that you can afford. Separating those 2 things is difficult, especially if you live in a place where like obviously there are lots of people walking around in very, very nice things... fancy things. Like you see that as this gap between their level of, like, value and your level of value. And that's kind of what we mean when say success, like, it's a little bit- like do you see yourself as, you know, a top tier of usefulness to society, which is kind of a screwed up thing. Like and that's not really how, like, I want to imagine myself and it's certainly not how I feel like people should imagine themselves.

Chelsea: Do you have any money rules or lessons that you use now because you've achieved a modicum of success that you wish you'd started implementing before you had?

Hank: I think the number one thing was realizing that investing in myself was more valuable than investing in anything else. I wish more people who have lots of money would see it this way. You know, if I have an extra $10,000 it makes a lot more sense to put that $10,000 into a project that I believe in, that I think is interesting and that might, might pay off than it is to- would be to that $10,000 into GE in the stock market. Of course GE is a giant company, they're probably going to do just fine, but I did this once and GE totally tanked! Like even if my idea tanks,  I got this thing I can put on my LinkedIn page. Also knowledge that I didn't have before and that's what school is about, that's why it's okay to take out a low interest loan to go to school because you are investing in yourself. 

Chelsea: What is something that you would tell someone who wanted to start out in a creative career, but was worried about it not making enough money?

Hank: There aren't that- there aren't a lot of careers that are safe actually safe right now and creative careers are much more likely to be safe. Because in creative careers you make things for people and computers are bad at that. Now what I would say is that there's nothing quite as powerful as having a combination of a creative degree and an expertise in some other thing, whether that's like history or law or business. Like, that is very powerful.

Chelsea: Probably business may be the most useful, right?

Hank: Yeah... yes. If you're a freelancer, you are a small business owner and it's hard! There are a lot of parts of that job that are blegh, like they're just doing the books, paying taxes...

Chelsea: Begging to be paid

Hank: Yes! No absolutely, when I worked as a freelancer I got, you know, I had done a huge project for this non-profit and at the end of the project, they were like "We are gonna have to put this off a couple of months to pay you" and I was like "No you're not" and he was like "Well, here's where we are with our books" and I was like "That is not my responsibility"

Chelsea: Right.

Hank: And they payed me, but I think the creative professions are extremely valuable. I know a lot of people who make good money in them. I know a lot of people who have been hired right out of school in them. At the same time, obviously I majored in sciences and I worked in the sciences for awhile and now I don't. Mostly what I do is write and edit video and manage people. 

Chelsea: What is the big thing to do today in terms of finance or career or whatever that you could still do a lot better?

Hank: Hm... being a good boss is really hard and I think that is why so many people are bad at it. It is a really complex creative task that can be wonderful and can be awful. The really big step  is understanding that people aren't like you. All people are different, they're motivated by different things and when I get frustrated with somebody because they're not doing something the way that I would do it or not feeling the way I feel about it, it's because they're not me. There's this very weird thing where if it's the boss's problem it's the employee's responsibility to work around it. Really it should be both of those people trying to come to the place where they're making it work. But I feel often times that bosses feel they have much more responsibility to their company than to their employees and I think that is not the way to approach that equation because...

Chelsea: The people are your company.

Hank: Yes, correct! 

Chelsea: Uh, well thank you for talking to us!

Hank: Yeah, thank you!

Chelsea: I feel so much smarter and more money savvy now

Hank: Boom.

Chelsea: Boom!

Hank: There was some financial advice.

Chelsea: All right! And as always click the subscribe button and go to for more

Hank: Woo!