Certified Financial Planner Justin Krane shares how to make more money by figuring out how to use money.  Everyone learns from mistakes and the lesson of money management was a learning curve even for Justin. Clients become diversified when you develop a system that diversifies amongst asset classes which brings in a customized model portfolio. Get that “I got this” moment by learning how to manage your money in a way that is right for you.

Customized Money Management with Justin Krane

Our guest knows all about money and he has some secrets to share. He didn’t acquire those secrets easily or by accident. He needed to suffer, like we all do from time to time. After a difficult divorce which nearly broke him emotionally and financially, this super CFP, Certified Financial Planner, figured out how to use money to make more money. Introducing Justin Krane, a frequent guest on MSNBC and a money strategist for business owners. He helps you understand the money side of your business. Justin isn’t about cutting back and living a frugal life. That’s no fun. Justin is all about getting the shoes, doing the sushi, living the best life that you possibly can and saving for the future. Justin is the author of the book, Money. You Got This. He shares his every day crazy, funny life stories and gives you a money lesson. Today, I want you to welcome, Mr. Justin Krane. Justin, welcome to the show.

Thanks, Mitch. Long time listener, first time caller.

Justin, you and I have been friends for a while. Your work is legendary. I know what you do. I know who you do it for. It’s incredible to get you on the show and I’m really thrilled to have you because I know we’re going to cover some cool stuff. We’re talking to entrepreneurs. We’re talking to business owners hopefully all over the world.

Our goal today is to help you listeners understand what we learned as we grew our businesses without the pain of having to do it all yourself. Smart people learn from their mistakes, even smarter people learn from other people’s mistakes. Let’s learn from Justin today as he takes us through how he got started. Justin, give us a hint of what you did. How did you get your business started at the very beginning?

I had to get some undergrad credit at the University of Colorado Boulder where I went. There was this internship position that was available through Morgan Stanley. I went and worked there and watched the stockbrokers, that was the term that they all used at that time, call their clients and make money and invest. I was like, “This is cool. It reminds me of baseball cards or comic books,” what I used to do when I was a kid. Then I really learned that as much as it was about investing, the business was really about sales and making outgoing calls and cultivating leads in a pipeline and all that. When I got out of school I immediately went in and started as a financial adviser at Paine Webber and that was later acquired by UBS. I learned to see that I had this recurring pattern going on in my life, which was, “Justin, you’re just not good enough. You’re just going to play a mediocre game. Don’t even get concerned about success. Just settle for being even-keel. Just not having big highs, not having big lows.” That pattern repeated over and over in my life. It took a divorce to really give me a big wakeup call around what I was doing wrong and how much I had my blinders on in my 20’s and 30’s.

Let’s take a look at that process. You know that you’re not alone with those types of thoughts and feelings. In fact, that is the tapes that many people play over and over again. Almost reinforcing all that negativity because in essence they use every tiny little incident that happens as proof that it’s true. We know that it’s not true. We know that we’re human beings, that we all make mistakes, that we all screw up but it doesn’t mean we’re losers. Yet, there’s a part of us that wants to take every one of those little things and interpret it that way. I can imagine that you are probably just like me and like many of our listeners who had that recurring tape as well. How did you stop it?

YFTC 047 | Money Management

Money Management: Growing up in a little bit more of a critical environment made me just want to be mediocre and hide.

It literally took this divorce. It was just so, so hard for me. It was one where my wife basically fell in love with someone else who I knew. It was very, very, very hard for me to move on, to accept what happened. Everyone has a roll in everything. I just was not aware. I wasn’t present. I didn’t have my oxygen mask on first. Mitch, I was a serious ranked tennis player. I could have gone pro. I had all the strokes, everything, but my mindset was not right. I remember losing and playing these tennis tournaments and having my parents who are loving but they were so critical of my game. My whole identity was around my success in tennis. Growing up in a little bit more of a critical environment made me just want to be mediocre and hide.

I played that pattern as a financial adviser at UBS for almost fifteen years. I wasn’t happy. I didn’t want to deal with the fact that I wasn’t happy. It wasn’t the right environment for me and I just settled. I did the same exact thing in my marriage. The day that it all went down with this divorce, I woke up and I felt like I was being birthed again through the womb of my old life and it was a death. There were periods in my life at that point where I couldn’t get through the day. I tried to get through an hour or two. It was so challenging for me to deal with it and to acknowledge and see the pain and to face it. I knew that the only way out was to go through and work on myself, major, crazy.

Justin, you and I have more in common that I think we realized. I went through almost exactly the same thing you did. I was married for fourteen years. I found out my wife was a very, very, serious, very sick alcoholic and she was in fact with another man as well. On top of that, there was a $135,000 missing from my account that I didn’t realize was missing until later. This all happened, this all came crashing in on me almost at the same time and it pretty much crushed me. I can really relate to what you’re saying. Somebody might be listening who hasn’t gone through something like what Justin and I have been through and say, “Hey, buddy. Get over it. It’s a divorce. Everybody gets divorced.” It wasn’t that way and I totally feel you. I really get what you went through. What I’d like to basically do together with you right now is let’s do a little bit of introspection here. We both felt like crap. We both went through this horrible time. Let’s trade stories about what you did to recover. You said that you were rebirthed. That didn’t happen by accident. Tell me your process and I’ll tell you mine.

Mine was going to therapy once a week. Really, this guy is amazing and I still go to him. Someone who could teach me and show me and help me facilitate on my own. Why do I think this way? Why am I doing these things? My whole life is now real. I know that sounds so funny but the conversation that I have over and over with myself is that, “That really happened? What I’m doing right now is really going on? What is I that I really want right now and what am I going to do about it? What’s my action plan? Am I aware of how I’m even feeling?”

That’s basically called self-awareness. That’s what you have accomplished. You’re lucky to have found a therapist as talented as that. That’s a gift.

I’m sure you’ve heard the quote, Mitch, where it’s like, “One of the most successful traits of an entrepreneur is before he or she works on his or her business, they have to work on themselves.”

That’s a recurring story, Justin, with so many of my guests. We had a gentleman, Damion Lupo on. He crashed and burned at the height of his career, lost everything and more. It took him four years to figure out how to get his dignity back, how to stay focused on himself. To go through this at some level, we all seem to need to truly do the self-work, the work on ourselves that we must do. What happened after that? After you finally got the divorce and you started seeing this guy and then you started to do this hard work, what was the breakthrough for you?

I think it was the compound effect of continuing to go every week, thinking about what I wanted. Then I started to think about, “What do I want for my business? What do I like? What do I not like? What am I good at? What do I want to do more of?” The breakthrough I think was just the compound effect about being aware of what I wanted. I was just having lunch with a friend and I told her, “I’ve taken more action in the past seven years than I’ve taken in the 37 years before that literally.” The breakthrough was consistently taking action and getting out of the ‘ready, aim, fire’ to a little bit more of the ‘ready, fire, aim’ but just with a little bit more presence.

I’ve got to tell you, that’s exactly the same plan, I used different tools but the same outcome. For me, it turns out that there were two main things that I really leaned on for support. One was my Al-Anon group. It’s a group for the families of alcoholics. I built some incredible bonds in that group and those folks supported me for all those years. The second thing is going to sound a little hokey, even a little woo-woo, but the second thing was meditation and going inside and truly connecting with myself. It’s hard to say connecting with myself because I am. I don’t have to connect with me, I am me. But it’s that presence and knowing and finally being able to speak through my present self. For me, that was a very big deal.

Mitch, we have more in common than you think because meditation was something that I did in addition. It was very, very hard in the beginning. You’ll get restless. You can’t sit still. You have other thoughts. You want to avoid things. You get distracted. After a while, it’s amazing what you can accomplish and how you feel afterwards.

Entrepreneurs go on a spiritual journey no matter what. I’ve never met a successful entrepreneur, a successful business owner who hasn’t been on a spiritual journey because it’s part of the whole show. It’s the way we’re wired. I love that you said that, it’s so true.

You’re still going on one.

Yes, I never stop.

Which is really cool. I think it’s amazing.

That’s great, thanks. Again, we got to this point, we had to suffer our setbacks. We spent some years getting through them, we got through them and then we got restarted. The amazing thing is here you are today. You are managing $100 million for your clients. That’s crazy money, that’s serious money. You’re just one person. You’re not Morgan Stanley. Show us the steps. Everybody listening to this show says, “He didn’t just turned around and get $100 million to manage.” Tell us the steps that you took to build that type of a business.

For me, it was a system. I had to create a way where I could manage the money and scale it and do it in a way that felt right for me. I took this course when I was in my early 20’s through an executive education program, which was taught by these professors. They basically taught me how they manage money for endowments and foundations. A lot of these professors are connected with endowments of their own university and stuff and where they consult. I just learned some simple money management skills from them and then I made it work for me in a system that works. You’re not going to believe this, Mitch, but I used literally an Excel spreadsheet. I’m considering using some automated software. I’m looking into that but I literally grew my business with money management by using an Excel spreadsheet.

Let’s talk about the term managing money. What does that mean? Does that mean that you are placing money for others? Does that mean that you’re investing money? Are you doing it only in the stock market? Just as a side note, give us an idea of what it is that you do and how you do that part of it.

I primarily manage the money myself. I’m not farming it out to some other separate account money manager. I’m the one that’s managing the money. It’s primarily in index funds. It’s not like stock picking or anything like that. I’m simply diversifying amongst asset classes to try to keep my clients diversified.

You mentioned the word systems, I have to tell you I know a little bit about this stuff. I was a professional options trader for four years and I used a lot of trading software and systems. Here’s what I do know about managing money or running money for clients. Usually what you do is just put together a group of model portfolios and you drop people into each model as they test through your process of tolerance of risk. When you’re ready to make changes in one of your models, it automatically changes the investment profiles and the specific vehicles in every account. Either you don’t have many clients or you found a way to do this in a more automated fashion. Let’s talk about that.

YFTC 047 | Money Management

Money Management: Every single client has their own customized model portfolio.

Number one, there is no automation where there is no triggers and I do not have five-model portfolios for clients. Every single client has their own customized model portfolio. I look at them, I’d say at least once a month with the models. When I feel like they are enough out of balance to rebalance, I will make a buy or make a sell. How am I systematizing this? I have someone below me, like an admin who does data entry. They’re entering in all of the info on the Excel spreadsheets and by only managing money in these five asset classes, I don’t have to look at 100 accounts to follow the stock market. I can just look at the S&P or the international and then begin to look and see, “If the stock market right now is up, then maybe I need to be selling a little bit. Maybe I need to be rebalancing.” Then we have the account set up in various weeks where they’re being analyzed and then we make changes.

We did get a little bit into the weeds here and I’m sort of glad we did because it answers my own questions. For listeners, I think what is relevant here is not necessarily the specifics of this. It’s the concept of systems. Not only just systems but getting people to run your systems for you. Every successful business owner has both of those things. Most business owners didn’t start out that way. They started out doing everything themselves until either they went nuts and had to get people to help and systems in place or they were schooled like with an MBA and knew the necessary processes to move into systems in a planned fashion. Which one were you?

I did everything myself and then began to farm it out as I could afford to do it. Again, after my divorce, I was way quicker to make decisions. Just delegate and systematize it. I actually wanted to ask you a question, Mitch. Everyone who’s listening, they’re like, “I totally get it.” It completely makes sense. Create a system and hire someone else to run it. Why do you think so many people don’t do that?

Here’s why, because it’s a medically known disease. It’s called entrepreneurs’ disease. Here’s what happens with entrepreneurs’ disease. If you’re like me, I had caught entrepreneurs’ disease at an early age and it took years of seeing the right doctors like Tom Peters and Jay Abraham to cure me. Here’s what it comes down to. We think we can do everything better than everybody else so we don’t delegate. It’s not a matter necessarily of money. Of course we’re cheap if we’re business owners because we’re watching every penny. At the same time, it’s really about wanting to get exactly what you want done the way you want it. I remember when I had to train my first sales person. I sat there, I hovered over them and almost had to resist the feeling of grabbing the phone out of their hand and watching as they lost the sale, knowing I could have easily close that sale. This is the sickness of entrepreneurs’ disease. The longer it takes for you to cure yourself, the further success will be from you. I know for me, it took years as I built my company to move me out of the place where I had to do everything myself and really begin delegating to professionals. Does that make sense?

Yeah. It’s almost like you have to experience it and see some success on the other end to be like, “It actually does work. I’ll keep going with it.”

Again, that makes sense, except that it doesn’t always work. Except that many of our listeners and I know myself, we’ve experienced it not working and there’s that little voice that says, “See, I told you so. You shouldn’t have delegated that. Look what happened, they screwed it up.” Those are the things that take a little bit of coaching, a little bit of wisdom to get through. That’s where a great coach comes into play. If you have a good coach, a coach that you trust and a coach that holds you accountable, then it’s going to be far easier than if you have to do this on your own. I’ve had some amazing coaches. I had Tony Robbins as a coach. I had Chet Holmes as a coach. These were the folks who mentored me. Even before that, I had Tom Peters who I followed around like a puppy dog from city to city and listen to him rant on stage. Why? Because it moved me into action, and you said it earlier, if you take action, things happen. When you don’t, they don’t. Let’s go back, Justin, here you are, you got your divorce and now, you’re finally at a point where you are really starting to take action. How did you start to get clients?

What I started to do was basically message to my audience about how I’m no longer going to take care of the world. I’m going to put on my own oxygen mask and be smart with the way that I make money and manage it so that I can earn my way out and manage my way out into a new and better financial life. When I started that messaging, I was literally writing to one person. I wrote down an avatar and I wrote to that person. What I didn’t realize was that who was going to connect with me on that were women business owners because this whole thing of taking care of everyone else and not putting on your own oxygen mask and not wanting to build your own financial independence or wanting to but not having it, are a lot of things that I didn’t know at that time that women wanted and that they still want. Then I uncovered the new problem of, “How am I going to continue with that?” I haven’t look back since that. It was really writing to one person and being real, real and being real transparent about what I’m doing and how I’m thinking and how I’m taking action.

Your avatar started out as Bob but ended up as Bobbie. It’s interesting about that. This again is just maybe coincidence. I find that the people that I attract to my own work are high-powered women executives as well. Not all, I have men clients but most of them are high-powered women executives who are running fantastic organizations but want to get to the next level. It’s the same basic thing. They are driven to succeed and they are looking for ways to get there. What they’re doing is they’re looking for people who have already done it, have already been there. That’s why they’re choosing you because they see that you’ve done this before. I want to get back to scaling because everybody here is interested in scaling. What did you do to scale beyond that first client?

YFTC 047 | Money Management

Money Management: Instead of just working one-on-one with clients, I created a group where I could coach all of them.

I created a group. Instead of just working one-on-one with clients, I created a second business and I created a group where I could coach all of them in one hour rather than just one-on-one. For me, it was liberating.

You created the group. I’m going to get a little tactical here, did you create it on Facebook? Where did you create the group?

The first way I created it was literally on email. I had three people joining at the beginning. I gave them bullet points and what I was going to talk about. Then I created a Facebook group. I had no website, no membership site, no sales pages, zero. Then over time, of course I iterated and made a sales page and all that. Now, it’s on Facebook. We do a Zoom call. We have recorder calls and all that stuff.

You started out and emailed three people, that’s fantastic. Then you moved to Facebook, you obviously got yourself a website and all the other accouterments of an internet business, I get. Where did people come from? How did you attract people to you and to your group?

By hugging them, literally. I was like, “I need to hug as many people as I can,” it’s funny, primarily women and where did I go? I would speak. I would go into mastermind. I still do this. I go into a mastermind and teach money strategy to them by demonstrating. I think the answer is really by demonstrating, but by being real and creating a safe space for people not to feel like they suck around money and that they’re being judged. Remember my whole past in tennis was, “I’m terrible, I’m bad, I’m never going to be pro. I should just stop right now.” I want to heal myself by inspiring others that they can be the best at whatever it is that they want to be. That’s really what I’m trying to do. I have goosebumps when I say that.

It’s so beautifully said. I feel your passion about that and I love the fact that it’s really materializing for you. You built your group, you have people that you’re attracting. I wanted to highlight something that is super critical. You didn’t just sit in your house behind a blue screen and type emails. You got in your car and you drove to locations. You stood on stage, you took a risk. You spoke, you go to masterminds. You probably are a guest at some and probably pay for some and others.

I literally will fly in a plane to go and either connect with someone. I live in LA. If there’s someone who I need to meet, I will get on a plane and fly out to New York to meet that person. That’s the amount of action that I’m trying to take to make up for what I didn’t do for the first 30-ish years of my life.

That’s the kind of action we all have to take, Justin. Whether it’s action in your business or action in your life, if you don’t take this action now, it’s never going to happen. Listeners, be inspired by these words. Don’t waste any more time. Everybody who’s listening to this right now, think of one thing you could take action and do it today. Let’s take some action together. Justin, this has been so far a terrific conversation and I’m so glad we’re talking. How would we advise listeners to take that first step? What is it that they can do?

I’m reading the book, The ONE Thing, right now, and you just came up with that idea of what’s the one thing that you can do. I think it’s really about where are you today, where do you want to be and what’s the one thing that you’re willing to do to get there or how much are you willing to do? It’s like what do you want and just pick one thing to get you in the right direction to where you want to go. What I found, especially dealing with business owners when it comes to money, they think it’s all or nothing. They think they have to do everything by tomorrow. It’s not that way. As I get older, I really see that it’s about perspective and compounding of the actions and stuff like that. If you’re listening and you’re like, “They’re telling us to do one thing.” Yes, do one thing. That’s okay. It’s okay for right now. Then the next day or the next week, build on that one thing. It’s really amazing how much success you can have when you keep building and improving on things in your life and obviously in your business.

To add to what you just said, Justin. I would modify something that you said by just a little bit. You said, “Do something that you’re willing to do today.” I want to modify that. I want to point out that if you look at the things that you’re not willing to do, those are where the most growth lie. If you can finally get to the point where you identify the things you’re not willing to do, then maybe consider doing that in baby steps until you get there. Because that’s where you grow the most, when you get uncomfortable, right?

Yes. You said it more eloquently than I did. Have you read this parable, Mitch, about the trapeze? It’s amazing. It’s called the trapeze and how we swing from bar to bar, but really life is in the transition where we jump from one bar to the next bar and the bars are really imaginary. It’s about making this transition. It’s amazing. It’s called the Parable of the Trapeze. It’s what you’re talking about and I think it’s amazing.

Again, a fantastic example of exactly what we are talking about. Justin, today, we’ve covered quite a bit so far. We have a little bit more to go here because I want to get even more value from you for our listeners. We have a crazy investment environment that we live in right now. We have a president who has made some promises and the guys having some difficulty trying to get them done. A lot of people don’t like him. A lot of people like him, whatever. What I’m asking you is can you give us some tips on what we should do with our money that makes sense, that are easy and that could potentially help increase the amount we earn versus a savings account, and yet are not so dangerous that we have to risk losing it?

First of all, before I say any of these. Everyone’s got to consult with their own personal financial adviser. I am not giving any one specific investment. That’s my disclaimer that I have to say. The bottom line is the way that we need to invest when you think of risk is how much risk you need to take to achieve a specific rate of return that will allow you to fund your goals for your future. A lot of people right now are probably taking a lot more risk than they’re comfortable taking because there has not been a correction for a long time. What people need to think about is are they willing to be down 20% or 30% in their portfolio or even more if there is a big stock market correction? If they’re not, then they need to rebalance and go on to some asset classes that are more conservative.

I want to just take that one element of what you said and I want to add something to it again. What really I’m hearing is start by figuring out where you want to be, then figure out how you’re going to get there. That’s what I heard you say. Start by understanding, “I’m 25 years away from being retired and I want to have $5 million by the time I’m retired. What do I need to do to get there given the fact that I have X dollars today?” These are all the same steps you would take if you were building a business. You might say exactly the same thing, “I want to have this much revenue next year and I need to get it from these many clients. What am I going to sell them? How am I going to get there?” Of course, when you ever are involved in constructing any form of a sales plan, my advice is start with something that people want desperately. Give it to them at a low price and know exactly what you’re going to sell them next so that they have that next step to take with you. If we were to apply that to you, Justin, and you get people into that group and they get interested in what you’re doing, usually, what is the next step that they take with you?

It’s so funny that you ask that. I intentionally do not want people in my group to work with me one-on-one. I don’t want to have them take a next step with me. The only next step that they could potentially take is maybe come to a one-off event that I would have. I don’t have an escalation model for this group. The end-all for this group is this group. At some point in a year or two, I might decide to do a mastermind and have them grow into that. For right now, my focus, start with where I am and where I want to be is growing the group. That’s my one thing for me. Once I get it to a higher number where I feel like it’s great, then I’ll iterate and offer them something on the higher-end. That’s what I’m doing.

It’s basically what I’m doing too with the podcast as well. I think again, we’re very much on the same track. We are both looking simply to give and give and give and deliver as much value as we can. That’s terrific. Justin, this has been absolutely sensational today talking to you. I do have a couple of questions that I want to ask you because listeners are just interested. There are really two questions that I just totally love to ask. The first question really comes down to about your passion. We all have passion and even some of us want to change the world. What is it that you’re doing or would like to do that truly has a potential to literally change the world?

YFTC 047 | Money Management

Money Management: I can change the world by teaching business owners how to understand the numbers.

You hear so much about financial literacy, Mitch. People want to understand what’s an IRA? What’s a 401(K)? How do you balance a checkbook? I want to take that and I basically want to take that to the business and a financial literacy. I want to teach business owners, how do you really understand a profit law statement or a balance sheet or a statement of cashflows without wanting to throw up? How do you take that info that you can now finally understand and then take action on it to either grow your business, to fund the personal goal, to give to charity, whatever it is that you want to do? I don’t think there’s enough literacy around the business numbers. I think it’s a very fragmented space, that’s why I’m in it trying to teach business owners this. You look at someone like an Intuit or a Quickbooks. They are the biggest out there. They are providing the software for analyzing numbers, if you will, but there’s this wide open space that teach people how to understand what they’re actually looking at. I think I can change the world by teaching business owners how to understand the numbers so that they can be like, “Finally, I can take control of my money. Finally, I can make a decision where I’m not guessing. Finally, it’s not an unknown number guess that I really don’t even know what I’m doing.”

Justin Krane, the money whisperer. Thank you again so much for being on the show, Justin. If people want to get a hold of you, if they want to understand more about what you do, how would they be able to do that?

The first place to go would be to go to this URL, CashFlowGift.com. That will be a guide that will help you take control of your money, get yourself on the right path and feel like, “I got this.”

Thank you for that. Before I let you go, I’ve got to give you the last question. Who in all of space and time would you like to have one hour to enjoy a walk in the park, a quick lunch or an intense conversation with?

I think for me, it would be Roger Federer. I’m a big tennis fan and there’s something about him that just makes me so inspired and hopeful and competitive and ambitious. He hit me at the time in my life where he was on fire and he was unstoppable. I would want to ask him questions about mental toughness, belief, resilience, inspiration, action, decision, being alone, figuring it out on your own on the court when there’s no one to coach you, dealing with setbacks, all of that stuff.

He sounds like an incredibly inspirational individual. Justin, thanks again. This has been awesome. I learned so much today with you and I really appreciate you.

Thanks again, Mitch.

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