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What if the key to building long-term wealth wasn’t making more money, but keeping your lifestyle in check? In this episode, Sharran dives into the concept of the Lifestyle Tax, explaining how small shifts in spending habits can have a massive impact on wealth creation.
Sharran gets vulnerable, sharing his personal journey from struggling in the early years to growing Teles Properties 10x in 5 years to $3.4 billion while keeping the same operating budget. He teaches the difference between optimization and maximization and why most people are caught in the optimization game.
Sharran also shares practical lessons on how to handle income growth without letting lifestyle creep erode your net worth. If you’re ready to break free from the cycle of living paycheck to paycheck and optimize for long-term wealth, this episode is for you!
“I want to make more money because I know that money is not the answer to everything, but money solves money problems.”
– Sharran Srivatsaa
Timestamps:
01:10 – Living on one income forever
04:13 – The lifestyle tax and lifestyle creep
05:20 – What to do when you make more money
06:16 – Realizing that your job is not guaranteed
08:51 – The real benefit of keeping your lifestyle fixed
11:25 – Understanding how income and expenses impact net worth
Resources:
– The Next Billion by Sharran Srivatsaa
– Board Member: ARC Multifamily Real Estate Investing
– Board Member: The Real Brokerage
Connect with Sharran:
– X
– YouTube
– Threads
Transcript:
[00:00:00] Hey, this is Sharran Srivatsaa. Welcome back to the Business School Podcast. And in this episode, I’m gonna break down for you a vulnerable story and the single most important concept that you need to know when it comes to growing your wealth, growing your money, and growing your financial stability. And it is the concept of optimization and maximization.
[00:00:17] There are two completely different things, and people often get them mixed up and confused. I’m gonna break down exactly what it means step by step, all starting right now.
[00:00:33] One thing is for certain: just because it’s tried and true doesn’t mean it’s working right now. So the big question is this. Where can you learn what is working right now? The strategies, the tactics, the psychology, and the exact how-to. How to grow your business, how to blow up your personal brand, and supercharge your personal growth.
[00:00:55] That is the question, and this podcast will give you the answer. My name is Sharran Srivatsaa, and Welcome to Business School.
[00:01:08] So let me get a little vulnerable here. When I left Goldman Sachs to leave Wall Street and then come to Bill tells properties. Many years ago, my wife, TI, was the only one of us working, and we had just had our first child, Neil, who’s 14 now. And honestly, I made almost nothing for the first couple of years.
[00:01:30] And because of this, we made one really big decision, and that was to live on her income only. And let me explain this. You’re like, well, Sean, that probably makes sense. No. We made a decision to live on her income only, not just for that time, but forever. Now it’s not the fact that we said that she was gonna work forever, Mike.
[00:01:52] But we said we would live on one income forever. And that was a really int important constraint for us, ’cause whatever I made later would go towards our net worth and we would keep spending exactly where it was. Now here’s the crazy part. Some of you know the story. We grew Telus 10 Nick in five years, uh, to $3.4 billion in sales.
[00:02:14] Uh, we were at the time of sale. We were doing roughly the look back was 3.4 billion. We’re probably doing roughly $5 billion in sales in the run rate. The work paid off, as Telus was acquired by Douglas Elliman in probably the largest. Real estate transaction done in the United States by two independent brands.
[00:02:34] At that time, the totally, the work paid off. I, we got super lucky. Yeah. We built the business, and the timing was right, and we all benefited, and it was good. However, police, I want you to realize is we kept the same operating budget even after the sale. So for over 14 years now, we spend exactly what we spend back then, even though our net worth, as you can imagine, is significantly higher.
[00:02:59] And I, what I wanna tell you today is a few lessons, four big lessons that I learned during that process, which I think will help you too. Now, I don’t want you to think that we are. I’m not asking you to skip on anything, and that’s lesson number one, which is, this is not about saving money on lattes. No one ever got rich by skipping their morning coffee or skipping their morning donut.
[00:03:18] Please don’t eat donuts. Or you can eat some donut holes or. By the way, I heard Dunkin’ Donuts is the best coffee. I I, I, I don’t drink caffeine, but putting an extra, I don’t know, $3,000 in your 401k does not change your life. Now, you may say, well, of course it changes life. It may change your son and daughter’s life, your child’s life, because they have 30 years of compounding left.
[00:03:36] But I don’t have 30 years of compounding left, and I, I’m gonna wager you don’t have 30 years of compounding left. So. All I’m saying is this is not about saving money on lattes or putting an extra $4 in your 401k. I’m a capitalist, and I want you to make more money. I want to make more money because I know that money is not the answer to everything, but money solves.
[00:03:54] Money problems, right? Money makes life a little easier. Money gives you optionality. Money is a tool. It is not the be-all, end-all of any, anything and everything. Once you get to the point where your basic needs are melt and you don’t actually feel stressed, you are in a good space to actually take on more risk and be more creative, especially in today’s AI-based world.
[00:04:12] But if you don’t, you have to realize that you don’t keep every dollar that you make. If you made, let me explain that. If you made more this year. So let’s say I’m making up numbers. Let’s say you were making a hundred thousand dollars last year and you made $150,000 this year, and then you bought a new Beamer, Lambo, whatever to celebrate.
[00:04:33] Now you are happy with the car, but you kind of spent what you earned, and that’s the problem. Because there are two levers in how you increase your net worth and how you have a better, you know, financial system that you can work through, which is, it’s what you make and what you keep. And most of the time, people only pull the first lever.
[00:04:53] They just think, I’m just going to keep doing the, doing these, this is what I make lever. And then when I make it, I usually just turn the dial on lifestyle. And that’s why a lifestyle tax is really important. And I’m not telling you. What to do. I’m just telling you, bringing awareness to how all of this works, because I wish I learned this by accident, because we had no choice.
[00:05:14] But if I’d known what I know now, I will teach this exact same thing to everyone else. Right. And which brings me to lesson number two, making more money usually just involves moving the goalpost. And what do I mean by that? When people start making more money, they start spending more money. Well, I guarantee you, when you started spending making more money, you’re like, wait a minute.
[00:05:32] My, you know, my income has gone up. I feel better about myself. I’m gonna get a better house, better apartment, better car, better clothes, better whatever. And so as you dial up your income, you also dial up your lifestyle and you, we all believe that if we earn more, we’ve earned the right to spend more. And I’m telling you that maybe not the right fit at four now, and that is actually just FYI.
[00:05:55] If you believe that you’ve earned more. Do, have you earned the right to spend more? I think that’s totally true, but you end up right back where you started, and now the numbers just look bigger, and that’s no fun. And that’s what I’m trying to say here. I’m just trying to bring you awareness to, just because the income grows, doesn’t mean your lifestyle should grow as well.
[00:06:14] Which brings me to lesson number three, your income can disappear at any time, but your spending habits won’t because you dial up lifestyle, and it’s very hard to dial back lifestyle, meaning most people. We’ll bet that they will just keep making more and more and more and more, and it will all work out at the end.
[00:06:32] And I’m just telling you, the, the, the prey that it, that you make more is not the answer. Everyone will say, oh yeah, you just need to make more income. Well, that’s fine, but at some point if you keep dialing up your income with your lifestyle, it’s, it’s, you’re putting yourself in a really tight position.
[00:06:47] The reason is, especially if your income is not guaranteed. Now, if you feel like your income is guaranteed and it’s going nowhere, and you know that nothing is gonna change, and you can turn up your lifestyle, by all means, please do that. But. In today’s world of AI, where I just read a report that block, which had 10,000 employees by Jack Dorsey. He wrote a public statement on Twitter notifying people that they were gonna lay off 4,000 people, even before internal messages went out.
[00:07:17] Like, that’s crazy if you think about it, right? And. AI may or may not be coming for your jobs, but something massive is happening over the next three to five years. It may be geopolitics, it may be AI, it may be politics, it may be money, it may be recession, it may be rates, it may be whatever. But we are in a, this transformational period where something is happening.
[00:07:36] Uh, people are, you know, the old assumption of. Go to high school, then go to try to get into a good college, get an entry-level job, and then learn a skill. All that’s gone, right? Entrepreneurship is so easily accessible. You can’t even, you can, you can divide code software that you need. You don’t even need most of the tools.
[00:07:51] With a, with a 10, 20, 30, 40, $50 a month, you know, a chat, Claude, or Gemini subscription, you can do everything. Your income, I will tell you right now, is probably not guaranteed, and it doesn’t matter. And if you think you’re like, Hey, I’m a doctor or a lawyer, and my income is guaranteed, I will tell you, not at all.
[00:08:07] Do you know how many contracts I review myself on, on AI, before I even talk to our council? So if you lose your job and your business is in a bad year, you what happens? You still have the same mortgage, you still have the same car, you still have the same payments, you still have the same tuition bills, you still have the same Louis Vuitton.
[00:08:23] You still have the same product, you still have the same everything. And. What I’m asking you here is, when you start making more just for a little bit, could you just keep your spending the same? I’m not asking you to reduce anything. I’m not asking you to go live on food stamps and move to a lower apartment or whatever.
[00:08:40] I’m just saying when you start making more early on. Can you try to keep your spending the same? And it’s never too late to do that. I, I’m a beneficiary of that, having done this for 14 years. And this brings me to lesson number four, which is the real benefit here is not the money, ’cause once you keep your lifestyle fixed, you start to make better decisions because you’re not stressed out about keeping up.
[00:09:01] And now every single dollar that actually turns into your account is over and above your monthly nut. You can take risks, you can. Go on bigger trips if you want to. You could say no to bad deals. If something happens and a COVID shutdown happens, or you know, a deal fell through, or you don’t get your bonus, it’s not, it’s not, it’s not the end of the world because you can wait for the right opportunity because you, you don’t need that money right now.
[00:09:23] I actually, I will not, I am not joking. In one of my past companies I was working, you know, it was, it was end of the year bonus time, and the, that year we had not done very well. And this, you know, this. C-Suite executive, she was working with me, and she said to me, and I, and she saw all the numbers, and she’s like, well, this is really hard because I had already, I had expected this bonus.
[00:09:44] And I was like, what do you mean? The crazy part is, it’s not that she’d expected the bonus. She’d already expected it and spent it. Think about that. Right. So when she told me that she’d expected the bonus, she put herself and myself in a tough spot because she told me that she’s one, she expected the bonus.
[00:10:00] And two, expecting the bonus is one thing, and getting disappointed not getting it, even though you know that the facts is one is something else, but expecting the bonus and pre-spending is something completely different because her lifestyle exceeded her revenue, her. And that’s crazy because at the end of the day, I want to give you this to take away, which is, it’s not what you make, it’s what you keep.
[00:10:20] If your income grows and your lifestyle grows with it, you are doing a little bit better each year. That’s cool. But the gap between what you make right now and what you spend stays the same. That is what we call optimizing. Think about this for a second, let’s say. You make a hundred thousand dollars a year, right?
[00:10:36] And your expenses are $70,000. Well, suddenly, if you, if you make $110,000, 10,000 more, and your expenses go to 80,000, what happens? You’re still only left with the 30,000 delta that is optimizing. You can, you can, you’re optimizing a fixed pie, and that’s okay, but if your lifestyle is fixed, and you may say, Sean, what’s wrong with that?
[00:10:55] Well, I wanna give you the difference. If your lifestyle is fixed and you, your. Income grows while your spending stays flat, the good gap gets wider. So, for example, let’s say you make a hundred thousand dollars. And your income and your spending are $70,000, well, now let’s you make $110,000 and use your spending, and it still says 70.
[00:11:13] Now you have an extra 10,000 to, to work with. That gap gets wider every year, and that is called maximizing. Most people are trying to optimize, and keeping your lifestyle fixed is how you try to maximize in a, in a lot of ways; the money and wealth gain is not an optimization gain. It is a maximization game for most people.
[00:11:30] Probably, I’m not gonna assume, but for you and me, the like. I don’t have, you know, I dunno, buffet or Gates or Rockefeller or Elon or Oprah Wealth status. I don’t. Right. We’ve done fine. I’ve kept my lifestyle flat for 14 years, and we have 50 to a hundred times the net worth that we had before. So I’m very grateful for it.
[00:11:49] But I’d like more ’cause I, I have to buy the Anaheim Ducks, so I’d like more. So my, my point here is that I’m gonna wager that you are in the zone of maximizing, which is how do you get more, because. It’s not what you make, it’s what you keep. And so if you already have $32 billion, then you’re optimizing.
[00:12:06] Like if you have $32 billion, another a hundred grand’s not gonna do anything. But if you only have a hundred thousand dollars, another hundred grand is significant. It’s a, it’s a hundred. It’s a hundred percent of that, right? So people miss this optimization in maximization gain, and I. In the money game, the lifestyle tax crushes you, and it makes you play the optimization game.
[00:12:26] In fact, the game that you wanna be playing is the maximization game, and so you don’t have to keep this fixed lifestyle forever. Just to start, and I call this the lifestyle tax, I wanted to give you this, this kind of vulnerable thought process here because. If there’s, if you can do anything and go three to five years just fixing your current lifestyle expenses, and that is your lifestyle tax, and you don’t change it, you will be amazed at the maximization opportunities that it creates for you.
[00:12:51] And you’re not just optimizing all the time and chasing yourself because the numbers get bigger, but the gap stays exactly the same. So I hope that was helpful to you. Hey, by the way, if this was interesting to you, you may or may not agree this was interesting to you, and you want to send this to somebody, maybe this is your spouse or partner, and maybe this will help them.
[00:13:05] Please do that. I get nothing from this. I just want you to benefit from my, my experience. If you think you like this and you want me to make more like this for you, if you just screenshot of this episode and tag me that way, I can. I’ll know you liked it, and I can make more like this for you. So if you like this, do me a favor: screenshot this and tag me, and I will make more like this for you.
[00:13:29] Hey, this is Sharran. I have an awesome free gift for you just for listening to the podcast. As you may know, I’ve got a chance to build $2 billion companies the hard way. So if you like this episode, you’ll love getting the exact playbooks from those wins. It’s on my Substack, called My Next Billion. It has the exact frameworks I wish someone had given me when I was figuring it all out. Now you get the real lessons from the trenches as I go for a three-peat and build the next billion. So everything’s free at mynextbillion.com. Please check it out at mynextbillion.com.