February 16, 2024 • 33 mins
Join me and my co-host John Pover for a compelling journey through the intertwining worlds of psychology and personal finance. As we dissect the reasons behind our attachment to financial choices that may not serve us in the long term, you'll gain insight into how upbringing and life's unique challenges shape our economic decisions. I'll share a stirring tale from a recent advisory session where ethical considerations took center stage, and we'll tackle the hard truth about the necessity of delayed gratification. This episode isn't just about fiscal advice; it's a deep dive into the emotional currents that influence your financial wellbeing.
Defense isn't merely for athletes on the field—it's a cornerstone of a robust financial plan. We'll draw parallels from the sports world to underscore the paramount importance of a solid financial defense strategy. By examining the gender dynamics of risk-taking and the psychological underpinnings, you'll come away with a nuanced understanding of how to better protect yourself and your loved ones from life's financial uncertainties. From the value of insurance to the benefits of early financial education, this episode will serve as your playbook for navigating the complexities of financial security.
Finally, we'll confront the illusions surrounding financial success and the pursuit of happiness. Through the lens of my conversation with a young entrepreneur, we'll explore how social media can distort our perception of success and self-worth. By reframing the conversation around wealth and contentment, we offer strategies for fostering a healthier relationship with money. This episode is a treasure trove for anyone looking to align their financial goals with their true sense of joy, as we guide you toward celebrating every victory on your journey to personal and financial growth.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Justin Gaines (00:00):
Welcome to the Bounds Blueprints podcast, where
we discuss the optimaltechniques for finances and
health and then break it down tocreate an Individualized and
balanced plan.
I'm your host, justin Gaines,here with my co-host, john Pover
.
In this episode, john and Ibreak down the psychology of
money how to accept where youcurrently are and then make a
plan for where you want to go.
Thank you for listening.
We hope you enjoy.
(00:21):
We talk a lot about the thingsthat we should do and what's
optimal, but then naturally wealso constantly are bleeding
into an episodes.
You know, if you can dosuboptimal and that's just
because you don't have themuscles built.
Yeah, and you'll get to optimaland and all that stuff, but
it's we never really break itdown.
So I figured it'd be good to doan episode on why we, why we
(00:44):
feel more comfortable, even ifwe know on paper it's not the
best option.
Right right so yeah, it'll beit'll be able to be
conversational too, because wecan even like dig into, like you
know, you need some lifeinsurance, but you haven't taken
a step on it.
So we can also dig into that oflike you know, having an actual
one-on-one conversation about,like, what reservations Do you
(01:04):
have?
And, you know, do you actuallyknow that you need it or do you
think you don't need it?
I might break that down.
John Proper (01:10):
Yeah, that actually probably be good, especially
for other people, because I knowI'm sure I'm not the only
person that obviouslyProcrastinates it.
Justin Gaines (01:18):
Yeah, yeah well, and a lot of people do, and a
lot of times it's it's thecomfortability thing.
I had a client this week thatwe literally in the meeting
Meeting.
He wanted me to sell himsomething that was like
completely suboptimal.
I was like we're not doing that, we're not doing that, we'll do
this other suboptimal but stillefficient for you process.
It's always funny, too, whenI'm talking to clients and like
(01:39):
in that situation I'm literallydecreasing my income because I'm
like it's not what works, it'snot the best option for you.
John Proper (01:46):
Yeah.
Justin Gaines (01:47):
So, but that's ultimately, one ends up winning
sales, as they understand thatI'm actually working with
somebody who understands, whoappreciates ethics and
understands the processes and isconcerned about the client and
not about how much they'remaking at the end of the day.
John Proper (02:00):
Yeah, and I think even obviously our shared
interest from a long time ago ofPsychology and just stuff like
that.
That's what helps sell too,because it's it's not just about
the money, it's more of aPerson approach which obviously
always talking about, yeah, Imean ultimately sad.
Justin Gaines (02:17):
And that's that's why, like understanding the
psychology, money is soimportant is because all sales,
regardless of whether or notit's you buying your food at the
grocery store, or buying lifeinsurance policy, or buying a
car, or buying a house, they'reall driven by emotions.
John Proper (02:34):
Yeah, they're all like the marketing on packages
and stuff like that's what.
Justin Gaines (02:38):
It's how does it make me feel, especially in the
culture, in the society we livein now?
It's how does it make me feel?
Does it make me feel good?
Because it makes me feel good,then it's okay.
And that's not necessarily goodyou know it's not necessarily
true and accurate no, yeahthat's.
John Proper (02:51):
That's bittersweet because it's good in terms of
there's so many options.
It's like you almost have tostand out.
You have to make someone feelgood, but yeah, on the other
side of it, yeah, but just makesyou feel good, and that's why
you're doing it.
Justin Gaines (03:02):
Well, I'm feeling good.
I would argue that most of myclient meetings it's not about
feeling good.
Most of my client meetings,that's gonna require you to feel
very uncomfortable.
We have uncomfortableconversations and it does not
feel good.
But, it's going to put you intoa position where, long term,
your life satisfaction is goingto increase because you're
having the uncomfortableconversation now in your 20s,
(03:24):
30s, 40s, 50s, instead of havingthe uncomfortable conversation
in your 60s, 70s, 80s, 90s whenyou're like, oh, I don't have
any money now or you know itcould be.
We're having a comfortableconversation today so that, if
God forbid, you ever had a housefire or a big car accident or,
you know, an employee stolemoney from you.
(03:45):
We're prepared for that and it'sless painful.
It's a matter of having theuncomfortable conversations now
so that we can be in a morecomfortable position, Because
what was comfortable for us whenwe were kids isn't the same
thing that's comfortable for usnow.
That's only because of thethings we've learned the things
we've been taught and that's thebiggest issue with financial
(04:08):
education is that what iscomfortable for us is what we
got taught by our parents.
If our parents weren't in astrong financial position, then
what we're being taught isn'tgoing to be optimal.
The other thing is is yourparents could have been in a
strong financial position, butyou're not taking the same life
paths that they are.
Don't have the same goals andnow you're also making some
(04:30):
optimal decisions.
There's a reason why the richget richer, the poor get poorer.
John Proper (04:35):
Yeah.
Justin Gaines (04:36):
Some of it's economic, some of it's the
system, but a lot of it isunderstanding what you were
taught and the tools you haveabout finances may not be
accurate.
You may need to rewire yourbrain on those things.
John Proper (04:48):
Yeah, that's interesting because I've always
probably understood this, butthis is the first time it's
getting talked about and it'sreally clicking in terms of for
both of us.
I think one of the hardestthings you have to sell is that
ability to see into the futureand say do the hard stuff now,
(05:08):
for you're selling delayedgratification, which is
basically one of the hardestthings to do, especially.
Justin Gaines (05:15):
In a world that loves instant gratification,
you're selling delayedgratification.
John Proper (05:19):
Yeah, how finances you're selling delayed
gratification.
I think there's probably we'lltalk about this too but a
spectrum, because you do toomany health things and everyone
likes to say I've gotten thiscomment so many times, all this
just to be hit by a bus and it'sthe dumbest thing you can say,
(05:39):
but at the same time, I do getit.
You don't want to go too farand just only think about the
future.
That's where I'm at now.
I still want to lean towardsthat way, but it's definitely an
interesting scale to be on andto figure out the right one.
Justin Gaines (05:53):
Well, it's why I use the analogy with my clients
of every professional sportsteam that wins championships has
a strong offense and a strongdefense.
Now, the offense is the one whosells the tickets.
They're the ones that get theviewership.
That's why you watch thesesports games.
You watch the sports games tosee the goals, to see the
(06:14):
touchdowns, to see all of thesethings.
Very few people watch sportsbecause they're like, wow, I
love this defensive tackle or Ilove this center.
Back on the soccer team.
John Proper (06:22):
I love the score being 0-0.
Yeah, the goal is amazing.
Justin Gaines (06:26):
It has all these crazy cool saves.
That's why I watch the game.
A lot of people aren't in thatcapacity, but that's what our
job is.
Our job is to develop thedefensive strategy of your
financial position, of yourhealth position, so that you can
have the offensive performance.
John Proper (06:43):
Yeah.
Justin Gaines (06:44):
Because if you have a really strong offensive
team that scores a ton oftouchdowns or scores a bunch of
goals, but they also let in abunch of goals and allow a bunch
of touchdowns to be scored onthem, they might not be winning,
they might not be getting aheadin life.
Yeah, we're there to say listen, I know it's not glamorous, I
know it's not pretty and I knowit's not fun to talk about this,
but what is your defensivestrategy?
(07:07):
What is your plan?
Because, yes, you could get hitby a bus.
You could do all of your healththings, and you can get hit by
a bus.
What happens, though?
How quickly do you recover fromthat injury?
Are you killed completely?
Because, if you look at busaccidents, most people who get
hit by a bus aren't killed,they're injured.
So how quickly?
John Proper (07:25):
are you recovering from that?
Justin Gaines (07:26):
injury.
Now, if you're physically fitand in good health, you're going
to recover a lot quicker thansomebody who's overweight, not
in good health and hasn't beentaking care of themselves.
So it's because we took alittle bit of a sacrifice here,
had a defensive strategy thatallows us to get back in the
game stronger, faster, quicker.
John Proper (07:44):
It's the same as true in finance, it's run with
the same analogy you get hit bya bus and you're out of work.
Justin Gaines (07:49):
Well, now you have loss of income.
But did you have a defensivestrategy for loss of income?
Did you have a disabilitypolicy in place?
Did you have any of the otherprotective strategies?
Say, you did get killed.
Did you have a life insurancepolicy in place so that now your
kids and spouse don't have totake on the financial burden of
not having your income cominginto the household?
All these things cost you alittle bit of money.
(08:11):
On paper, set you back, or putit so that you can't put things
into investments aggressively.
But at the end of the day, ifyou look at it from a holistic
viewpoint, it's these defensivestrategies that allow you to be
able to stay in the game longer,get back in the game when
things go south and just not beable to get knocked out when you
(08:31):
get punched, but instead getknocked down and be able to get
up much faster.
John Proper (08:35):
Yeah, I don't know why it's, I don't know if it's a
cultural thing or what, but theability to have the deeper,
harder conversations not justabout finances, but almost all
topics seem like so many peopleshy away from it.
Even when you Like, even whenwe say in this conversation it
does kill you, it still givesyou that feeling of like oh, is
(08:55):
this too dark to talk about?
Justin Gaines (08:57):
But it's like Well, the other reaction that
most of us will have is that'snot going to happen to me Right
right.
You know that might happen tosomebody else, not going to
happen to me.
John Proper (09:05):
We all from a lot of.
That's a bold statement.
Justin Gaines (09:08):
But psychologically, that's what our
brains are required to think isit.
We are doing things to preventthat from happening.
Therefore, it won't happen.
That's not reality.
But I think that's what it is,and I think part of it too is we
had a female's perspective inon this conversation.
Their female clients typicallyget these things much faster
than male clients do, and Ithink that has to do with the
(09:33):
psychology of it.
There's the psychology of thefemale brain.
From an evolutionary standpoint,is the protector or not?
The protector is the one who'sgoing to maintain order,
maintain the family structureand protect from inside, whereas
the male dominant structure isgo out, kill and protect from
(09:54):
the outside and protect from anaggressive standpoint.
So we are more likely as malesto want to go do the risky,
dangerous things.
Our female counterparts want todo the opposite.
They want to be moreconservative, more firmly
planted, stable.
So they're going to understandthese topics much faster, much
easier, because they're morerisk averse.
(10:16):
There's a reason why there's allthose jokes of like you want to
do something dumb, go hang outwith the guys.
You want to find a smart way todo it?
Go see how the girls do it.
It's because one's taking on aton of risk and the other one's
not taking on a ton of risk.
There's reasons why you canmake those generalized
statements and, generallyspeaking, they tend to be
accurate, and it's because ofthe psychology, what it has to
do with the hormones and thechemicals released in your brain
(10:38):
that just make you more likelyto have a higher or lower
appetite for risk.
And that's even you go outsideof the gender roles, my appetite
for risk and your appetite forrisk are very different.
John Proper (10:50):
Yeah.
Justin Gaines (10:51):
Very different.
And that's not to say that yourappetite for risk is more
feminine.
That's not what I'm saying atall.
It's the case of what you'rewilling to take on for risk is
very different than mine, and Ialso tell people I'm willing to
take on a ton of risk, but it'scalculated risk.
I'm not just willy-nillyshooting from the hip.
And that's where the psychologyof money starts to play in is.
(11:15):
I wasn't taught these things ata young age.
I taught myself them over alonger period of time, and so as
I grow, as I get older, I amcontinuing to increase what I
call my stress capacity and myrisk capacity, and that's what I
try to do with clients is.
Well, a lot of times, whenwe're talking in our podcast
(11:35):
about what's optimal, what'ssuboptimal, we have to start at
suboptimal in order for you tobuild your risk tolerance and
your stress load of capabilities, so that then you can move into
this higher risk situation.
Higher risk isn't necessarily abad thing if it's calculated.
If you have a defensive and anoffensive strategy working
(11:56):
together, that's managed risk.
If you have just an offensivestrategy with no defensive
strategy, that's just high risk.
With no management of it, it'sall or nothing.
John Proper (12:07):
I think it's always important We've said this
probably before too issuboptimal doesn't mean bad
either, because if you're doingnothing, suboptimal is better
than nothing.
Justin Gaines (12:18):
So we always talk about that, but realistically,
you're always doing suboptimalbecause to achieve perfect
efficiency and perfectperformance, you would have to
have the perfect balance ofstress load and stress capacity.
You'd have to know the mostamount of information.
And then you'd also have to bein a position to actually take
action on all of those things.
(12:39):
And it's very rare for you tobe in a position where you'd
have all three lows.
John Proper (12:44):
It's on your working towards it always.
I don't know if you're everachieving that problem.
Justin Gaines (12:48):
Right.
You're constantly workingtowards increasing those
capacities, increasing yourstrongholds, and that's where I
think this black and whiteviewpoint of I'm either there or
I'm not, it's just really, it'snot realistic.
John Proper (13:02):
Yeah, you run into that in both of our worlds.
So much of it's either this orthat it's hard to get out of.
I mean, I've been in thatthinking a lot, especially for
health stuff, and it's easy toget into, I think probably
because even what we talkedabout before, there's so many
options, there's so much middleground that I think it's just
(13:23):
easy to be like I need a beliefto hold on to and maybe that's
something you grasp on, causeit's like it's yes or no.
That's much easier than it'smaybe, cause there's a million
maybes and I know I'm taking ita little too far.
But yeah, it's hard to get outof black and white thinking
sometimes.
Justin Gaines (13:40):
Well, and it's because of, I'll run us through
an exercise that I do with myclients and I'll use you like
you're the client, and then I'llexplain why you're having the
reactions you are.
But to not get like super deepand not take up a ton of time,
I'll kind of broad brush strokeit.
But how do you feel about yourfinancial position?
John Proper (13:57):
Are we doing like a one to 10?
We'll see easier.
Justin Gaines (13:59):
If you're comfortable with a one to 10, we
can do it that way.
I do a.
You know 10 is optimal, perfect, one is.
I'm struggling and like thereneeds to be major changes
because I just can't live day today like this.
Where on that range do you fall?
John Proper (14:15):
She like a 4.999 repeating of like almost neutral
.
Justin Gaines (14:21):
Okay.
John Proper (14:22):
What are you?
Justin Gaines (14:23):
ranking that against.
John Proper (14:26):
What do you mean?
Like what's causing it?
Justin Gaines (14:28):
Yeah, why 4.99?
You're comparing it tosomething.
What are you comparing it to?
John Proper (14:34):
I guess just the feelings I have of like I have a
good savings but I feel likeI'm at that next step of you can
either use it well or you canuse it poorly.
So there's a little of thatextra stress.
I guess there of you have itright now, but it seems like a
point in my life where it couldbranch very quickly.
Justin Gaines (14:53):
Define good and poorly of using it.
John Proper (14:55):
Using it towards something that will gain me more
or using it towards somethingthat will stop the game, because
we're talking money orexperience.
I could use it in a way thatgains me more experience, but I
lose all the money and that'stechnically good.
Justin Gaines (15:12):
So you don't even like that.
Like technically good meansthat you're trying to justify.
John Proper (15:17):
Yeah, because I hate the feeling of you know,
when you've worked.
So my biggest thing thatprobably ties into what you're
looking for is when you'veworked so long and so hard to
say, pay off debts, get pastzero.
It's almost more paralyzingwhen you have the money than
when you actually don't.
For me, it's you don't loseWell, just because you don't
(15:38):
want to, you're almost morescared to lose it.
If I had nothing and I don'tknow, because I, when I was in
the position before, I justworked, that was the answer.
But now, when I have it, it'skind of like a you know, I want
to use it wisely, I don't wantto go back to where I've been.
Those things start coming intoplay.
Versus if you just had nothing,you'd be like well, I have no
(16:00):
choice, but better just go makeRight.
Justin Gaines (16:03):
So you're between a rock and a hard spot, so you
can only move forward on thatother one versus right now you
have a lot of fear andexcitement kind of playing in.
It's not like we're fear drivingyou.
Definitely I don't want to makethe mistakes, and it's
interesting you said somethingtoo of the answer I'm looking
for which is not uncommon forclients to say, but I'm not
(16:25):
looking for an answer Like.
The answers that I'm looking foris what you genuinely feel,
because if I don't know how youfeel about money and how you
feel about your position, then Idon't know how to coach you to
then make the next step and makethe forward progress, because a
lot of times, what you're doingis you're in your mind, you
(16:49):
have constructed a model of whatyou are capable of and where
you should be today, and thatmodel is always not where you
are today.
That model is always in thefuture.
Now, the problem with that isyou're constantly judging
yourself against.
Does this model what I am today?
(17:13):
We always push that model to begreater than where we are today
, but we always look at it as atoday metric, not where is this
model going to put me in a yearversus where I am today?
The model is based off whateverwe think is normal, whether
that's from a societalstandpoint from a family
standpoint, a relationalstandpoint.
(17:34):
Where are my friends?
we're constantly benchmarkingourselves.
The problem is we'rebenchmarking ourselves against
things that have thousands ofoutside variables that have
nothing to do with what we areor who we are or what we're
doing, but we use that as abenchmark.
The number one thing that'sgoing to hold you down is if the
(17:54):
benchmark you're using youeventually obtain.
You're now going to haveanother problem where your
benchmark is actually holdingyou back because you've met your
benchmark.
You've met whatever the averageis or whatever you're trying to
achieve.
But a lot of times this happenswith people.
Most people will end up in thatsituation because the lower the
starting point as far as networth goes or budgeting goes.
(18:16):
Say, if you're at a negativebudget, you're constantly living
paycheck to paycheck where youwant to get to and what the
model is that you want to movetowards.
Typically, there's only a fewsteps ahead of where you are.
You want to get to it.
If you're living paycheck topaycheck, clients typically want
to get to a spot where they'renot living paycheck to paycheck
and there's a little bit ofbreathing room there.
(18:40):
But when you reach that point,now you take a break and then
you reassess and you're likeokay, now I want more breathing
room.
I want more, I want more, Iwant more.
It's because you're constantlybuilding a model that you're
reaching after, instead ofstepping back and saying where
am I today, where do I want tobe in six months, in a year,
then celebrating that win whenyou actually achieve it, and
(19:03):
then moving on and saying, okay,now let me be honest where I am
today and where do I want to bein six months a year?
I have on my board.
I'm constantly benchmarkingwhere am I today, where do I
want to be in a year, and, basedoff these growth metrics, where
am I going to be in three andfive years?
Three and five years reallydon't matter, because that's all
(19:25):
extrapolation, based off whereI get From the different- what
you're doing to the other day today.
It allows you to have somethingyou're striving towards, but
that is benchmarked, based offof the reality of your situation
and what you actually want toachieve.
Because when I'm asking thoseone to 10 scale questions, it's
not from a perspective okay,this is where I am, this is
(19:45):
where I want to be.
The one to 10 at the beginningjust says okay, where do you
think you are?
Do you think you're really goodfinancially?
Do you think you're not so good?
You were right in the middle,which is a good spot to be,
because it means that yourealize you've overcome things.
But you also realize there'sthings for you still to obtain
Realistically.
On that one to 10 scale, youwant somebody to say that
they're in a five or close to it, because that means that they
(20:09):
recognize they've overcomethings and they're better off
than where they were and thatthey have more room to go
somewhere.
The people are in the ones andthe people are in the tens.
The ones are over critical ofthemselves, the one to three.
They're over critical ofthemselves and they're not
celebrating their wins.
If you take somebody who'sliving paycheck to paycheck and
doesn't have money left over,there are still wins because the
(20:29):
reason they're in that positionis because of some sort of
situation.
It's holding them back andholding them down, but that
they've actually overcomeportions of that because they
still wake up, they still getout of bed, they still I mean
you're living paycheck topaycheck, but you're not in
deficit.
You're still showing up to work,you still have a paycheck, you
still have an income.
You need to celebrate that.
Then you have the person who'smaking, say they're making six
(20:52):
figures and they think they'reon top of the world and
typically they're super arrogantand just buy all these lavish
things and they're like I'vemade it In five years.
They're going to be dealingwith depression, anxiety and
they're going to feel likethey're a one or two because the
lifestyle creep is going tocatch up to them and they're
going to be living paycheck topaycheck, even though they're
making six figures and had a bigbuffer in their budget.
(21:12):
It's because they didn'trecognize that there are still
opportunities for me to grow andI've overcome a ton of stuff.
You have to celebrate the winsand you have to be honest with
yourself and recognize thatthere's still opportunities for
you to go after and to achieve.
If we stop benchmarkingourselves against other people
and we start benchmarkingagainst ourselves and what our
(21:33):
reality position is, that'swhat's going to allow you to
just be honest with yourself,recognize it, accept it and then
work towards actually growingyour financial strongholds.
I think all too often in asociety where we can scroll on
Facebook, we can scroll onTikTok, instagram, all these
social media platforms and justget any endorphin rush that we
(21:56):
want, and also be able tomeasure ourselves against other
people.
I'm not doing that, I'm notachieving this.
I'm not at that level.
Work benchmarking ourselvesagainst the wrong things.
John Proper (22:07):
Yeah, well, that was one thing that you brought
up really to.
That stood out to me also iswhether you're comparing it to
your close friends, your parents, peers around you.
But then you have this fakeworld of fake money online.
That kids I think I saw onethis morning.
It was a 14-year-oldentrepreneur, 170,000 followers,
(22:28):
and you're just looking at it.
You're just thinking, man, Iwould have never seen this, and
good for him.
Nothing, obviously, againstthat, but it definitely affects
you in terms of just sit therelooking at it.
You're like half my age.
I'm almost like what am I doing?
Justin Gaines (22:42):
But you're also boiling that person down to one
number.
John Proper (22:45):
Definitely.
That's why it's fake.
Justin Gaines (22:46):
You're boiling it down to one number.
Their entire life, their entireperson, who they are, is boiled
down to one number.
How many followers do they have?
Because you know that number,you're then extrapolating.
Okay, with that number offollowers you generate this kind
of revenue and it's not takinginto account the whole person.
Psychology has shown that onceyou break $60,000 of income per
(23:11):
year per person, your level ofhappiness does not increase
beyond that point.
So, from $0 of income a year to$60,000 of revenue of income,
your happiness increases as yourpay increases.
But once you break $60,000,there is no increased level of
happiness achieved by pay raisesas a result of that increase in
(23:35):
income.
John Proper (23:36):
Did you know why that is?
Was it because or not?
Justin Gaines (23:39):
From an investment financial, person
standpoint, risk managementstandpoint, I think it's because
at $60,000 a year per person,you can cover your personal
needs.
Without you can't go and buyall the lavish stuff.
You might be able to go on avacation once a year, but it's
not going to be the craziest ofvacations, but it's a case of
(24:02):
once you break that threshold.
Yes, you can go buy more stuff,you can go do more things, but
you can't buy the importantthings in life.
John Proper (24:12):
Yeah, you can't buy family.
What actually bring happiness?
Justin Gaines (24:15):
You can't buy emotional connection with people
.
But below $60,000, you have alot of stress from being able to
cover your rent, your carpayment if you need a car your
budget for food all of thosethings that are bare bones,
basic needs.
You're struggling to coverthose.
(24:36):
Once you hit $60,000, you'reable to cover those and you're
able to have some fun stuff.
Yeah, over $60,000, you're justincreasing the amount of fun
stuff you have.
But you can also buy things tocomfort yourself for not having
the things that actually matter.
John Proper (24:56):
That matter.
Yeah, I was just going to sayso.
I think we've obviously gone alot and great information about
the psychology behind it.
But what are some tips then?
I know you kind of mentionedobviously starting at suboptimal
working up.
Do you have anything else then?
How do you get kind of a betterview on money?
Justin Gaines (25:15):
It's less about the money and it's more about
just being real with yourself,focusing on the mental component
and recognizing.
This is where I am today.
This is who I am.
Strip off the emotion.
Strip off all of the ancillarydetails.
Strip off the benchmarking andthe comparing that you're doing.
Write down on paper.
Who are you actually from astrictly number standpoint?
(25:38):
Where are you today?
Who are you from a numberstandpoint today?
And then accept it.
It doesn't matter what it is.
It doesn't matter if your networth is negative.
It doesn't matter if yourbalance, your income statement,
is negative.
That does not matter.
What matters is that youactually accept that that is the
reality.
Don't make an excuse for it.
Don't do any of that stuff.
(25:59):
Strip it all off.
Break it down to just numbersthat are very black and white,
because it's either going to bea positive or a negative number,
and that's strictly from thefact that numbers are plus or
minus.
In front of it, it's justbecause it's a deficit.
Don't say that that's anegative thing.
Don't say that it's a positivething if you have a positive as
well.
Accept what it is and then askyourself what are the action
(26:21):
plans to take going forward, andthat's what I do with my
clients is we strip you down tojust what are the numbers.
What are the numbers?
And then we say, okay, where dowe want to be?
Because once we have thenumbers and we've accepted that,
we can set that aside.
That is who we are today.
There's no changing that.
That is who we are.
Where do we want to be?
Now let's talk about theemotions.
(26:41):
Now let's talk about what wewant to get to and let's make
that the target.
And then we're going to cancelout all the outside noise, we're
not going to worry about whatour friends want.
And that's the other tough partIs that conversation about what
we want Takes a while.
It's a long conversationBecause I have to ask you you're
going to tell me what you wantand I'm going to challenge it
(27:03):
why do you want that?
One of the best conversations Iever had was my cousin was
going to college and we weretalking about what he wanted to
do, what his interests were, andhe said you know, I'm really
interested in this one thing,that there's no money in that
there's no money in thatfield I can't make a lot of
income.
I go OK, I said how much moneydo you want to have?
(27:25):
How much money do you want tomake?
I mean, throughout a number ofwhatever, I said OK, let's flash
forward, let's just play in thehypothetical world.
Right now, I'm going to writeyou a check for a million
dollars.
It's not that I could actuallydo this in this situation, but
I'm going to write you a checkfor a million dollars.
You get to put it in your bankaccount, but you cannot spend a
single penny of it.
Are you satisfied?
(27:46):
Well, no, I'm not satisfied.
Ok, it's not the money you want.
What are the first thingsyou're going to buy with it?
And this is a lot of times whenI ask the questions, for you
know, I've even done it oncewith a client who was being very
stubborn with me, as I took acheck out and I wrote it.
You know I made sure that itwould never actually be able to
be cashed.
You know, I marked it all up,scratched a whole bunch of stuff
up, but I wrote it in the checkfor a million dollars and I
handed it to him.
I said here you go.
I said you can cash it.
You can put it in the bank, butyou can't do anything else with
it.
You cannot touch it Just sincethey're in the bank.
(28:16):
The only thing you can do is youcan point to it, you can show
your friends you have a milliondollars in the bank.
You cannot spend it, you cannotdo anything with it.
Are you satisfied?
Most people will say no.
Most people say no, I'm notsatisfied.
John Proper (28:27):
What good is it?
Justin Gaines (28:28):
I can't do anything with it, exactly
Because the money is not whatyou want.
You want what the money getsyou.
So now let's talk about that.
And so in this situation it wasyou know I'd love to have a
yacht one day.
I'd love to go.
I'd love to be able to have ahelicopter that I could ride
around on and I'd love all thesethings.
Okay, okay, to rent a yacht.
(28:49):
And you know, go out with yourfriends and go in the
Mediterranean Sea with a rentedyacht for three or four days for
15 grand.
Do you know that you can go ona helicopter ride for 80 bucks
down the Carolinas?
John Proper (29:02):
Cheap.
Justin Gaines (29:03):
You know, and he was like, yeah, but I want to
own it.
I go, okay, well, that's apride thing If the issue there
is yeah, okay, I could do that,I could have that experience,
but I want to own it.
Okay, now we have a pride thingthat we need to talk about
versus understanding that okay,I want to do these things and I
don't have to.
(29:23):
There's a cheaper, moreefficient way that I can do this
.
And recognizing that money isnot what actually makes me happy
.
I'm trying to get to achieveand be able to do something that
I wasn't able to do previously,and then figuring out okay, so
if that's what I actually wantto do now, how can we get there
and how can we use where we wantto get as our rewards along the
(29:46):
way, if we know we're in thisfinancial position?
John Proper (29:50):
and you know, say we're at a death center budget
we're living paycheck topaycheck.
Justin Gaines (29:55):
we don't have any money in there, and so we need
to cut expenses and we need toincrease revenue.
So we're going to sit down,we're going to look at that and
then in six months we're goingto look at it again and say,
okay, did I increase my revenueand did I cut expenses?
Where does my budget sit?
And then, once you have, andwe'll define what a surplus you
need is you know it's $20 apaycheck, $100 a paycheck,
(30:17):
whatever the case may be andthen once we get there, we're
going to take the first time youdo that, we're going to take
that surplus and we're going togo celebrate.
John Proper (30:24):
We're going to go out to dinner Because if you're
planning a deficit, you're notgoing out to eat, or you
shouldn't be, and that's wherewe're going to cut the money
from we're going to make it soyou can't eat out at all.
Justin Gaines (30:33):
You're buying all your groceries.
You're cooking all your meals.
But then the celebratory thingthat you're going to do is
you're going to buy that backbecause you just bought, you
just got the surplus in yourbudget to then celebrate,
because that's the key componenthere is celebrating.
If you're not celebrating, youwill burn yourself up because
you're not giving your cavemanbrain, your limbic brain, you're
(30:53):
not teaching it that when Iachieve these things, when I put
myself through this pain,there's a reward at the end.
If you just go through and youmake these adjustments, you go
from a deficit to break even andyou don't celebrate that and
you don't have to spend money tocelebrate.
Celebrating could be okay.
We're going to go for a familypicnic in the park and so you're
still going to cook your meals.
(31:13):
you're going to do all thisstuff but, instead of eating at
home, you're going to go for ahike and do it at the park you
can do that for free.
You can do these things thatyou don't have to spend money to
have a celebration.
But being able to celebrateyour wins is what's going to
allow your brain to continue tobe hungry to do these things,
and you cannot reward yourselfwith the reward unless you
(31:34):
actually do it.
John Proper (31:36):
Yeah, I think it's always crazy to how it seems
almost everything boils down tothe same answer, Because what
you were talking about before,you need to accept where you are
and I think part one isself-acceptance.
Overall.
We're talking health, we'retalking finances, anything and
(31:58):
then know what you want.
And I look at both of those asnow one is not more important
than the other.
You need both to be strong, andit would almost be great to
have someone weekly be like whatdo you want in life, say
finances goals, because thatgives you so many answers of.
You can't work towardssomething if you don't know what
(32:18):
you want.
And it's very hard to know whatyou want.
And even in the case of yourcousin, does he want to own
those things because he wants itor does he want to own those
things because it makes him lookgood?
Justin Gaines (32:30):
So that's such an important to differentiate and
that's the key, like what you'retalking about there is first
take a time waiting to go intoit deeper, but it was again okay
.
Now you own the yacht, but youcan't bring any friends on it.
You're the only one who can useit.
It ends up being that you wantthe things that are that you
can't buy.
You want more time with yourfriends.
(32:50):
You want more time with yourfamily.
You want more free time to donothing.
You want all these things.
It's like that's what youactually want.
John Proper (32:58):
Thanks for listening to our podcast.
Justin Gaines (32:59):
We hope this helps you on your balance
freedom journey.
John Proper (33:01):
Please share your thoughts in the comments section
below.
Until next time, stay balanced.
Welcome to the Bounds Blueprints podcast, where
we discuss the optimaltechniques for finances and
health and then break it down tocreate an Individualized and
balanced plan.
I'm your host, justin Gaines,here with my co-host, john Pover
.
In this episode, john and Ibreak down the psychology of
money how to accept where youcurrently are and then make a
plan for where you want to go.
Thank you for listening.
We hope you enjoy.
(00:21):
We talk a lot about the thingsthat we should do and what's
optimal, but then naturally wealso constantly are bleeding
into an episodes.
You know, if you can dosuboptimal and that's just
because you don't have themuscles built.
Yeah, and you'll get to optimaland and all that stuff, but
it's we never really break itdown.
So I figured it'd be good to doan episode on why we, why we
(00:44):
feel more comfortable, even ifwe know on paper it's not the
best option.
Right right so yeah, it'll beit'll be able to be
conversational too, because wecan even like dig into, like you
know, you need some lifeinsurance, but you haven't taken
a step on it.
So we can also dig into that oflike you know, having an actual
one-on-one conversation about,like, what reservations Do you
(01:04):
have?
And, you know, do you actuallyknow that you need it or do you
think you don't need it?
I might break that down.
John Proper (01:10):
Yeah, that actually probably be good, especially
for other people, because I knowI'm sure I'm not the only
person that obviouslyProcrastinates it.
Justin Gaines (01:18):
Yeah, yeah well, and a lot of people do, and a
lot of times it's it's thecomfortability thing.
I had a client this week thatwe literally in the meeting
Meeting.
He wanted me to sell himsomething that was like
completely suboptimal.
I was like we're not doing that, we're not doing that, we'll do
this other suboptimal but stillefficient for you process.
It's always funny, too, whenI'm talking to clients and like
(01:39):
in that situation I'm literallydecreasing my income because I'm
like it's not what works, it'snot the best option for you.
John Proper (01:46):
Yeah.
Justin Gaines (01:47):
So, but that's ultimately, one ends up winning
sales, as they understand thatI'm actually working with
somebody who understands, whoappreciates ethics and
understands the processes and isconcerned about the client and
not about how much they'remaking at the end of the day.
John Proper (02:00):
Yeah, and I think even obviously our shared
interest from a long time ago ofPsychology and just stuff like
that.
That's what helps sell too,because it's it's not just about
the money, it's more of aPerson approach which obviously
always talking about, yeah, Imean ultimately sad.
Justin Gaines (02:17):
And that's that's why, like understanding the
psychology, money is soimportant is because all sales,
regardless of whether or notit's you buying your food at the
grocery store, or buying lifeinsurance policy, or buying a
car, or buying a house, they'reall driven by emotions.
John Proper (02:34):
Yeah, they're all like the marketing on packages
and stuff like that's what.
Justin Gaines (02:38):
It's how does it make me feel, especially in the
culture, in the society we livein now?
It's how does it make me feel?
Does it make me feel good?
Because it makes me feel good,then it's okay.
And that's not necessarily goodyou know it's not necessarily
true and accurate no, yeahthat's.
John Proper (02:51):
That's bittersweet because it's good in terms of
there's so many options.
It's like you almost have tostand out.
You have to make someone feelgood, but yeah, on the other
side of it, yeah, but just makesyou feel good, and that's why
you're doing it.
Justin Gaines (03:02):
Well, I'm feeling good.
I would argue that most of myclient meetings it's not about
feeling good.
Most of my client meetings,that's gonna require you to feel
very uncomfortable.
We have uncomfortableconversations and it does not
feel good.
But, it's going to put you intoa position where, long term,
your life satisfaction is goingto increase because you're
having the uncomfortableconversation now in your 20s,
(03:24):
30s, 40s, 50s, instead of havingthe uncomfortable conversation
in your 60s, 70s, 80s, 90s whenyou're like, oh, I don't have
any money now or you know itcould be.
We're having a comfortableconversation today so that, if
God forbid, you ever had a housefire or a big car accident or,
you know, an employee stolemoney from you.
(03:45):
We're prepared for that and it'sless painful.
It's a matter of having theuncomfortable conversations now
so that we can be in a morecomfortable position, Because
what was comfortable for us whenwe were kids isn't the same
thing that's comfortable for usnow.
That's only because of thethings we've learned the things
we've been taught and that's thebiggest issue with financial
(04:08):
education is that what iscomfortable for us is what we
got taught by our parents.
If our parents weren't in astrong financial position, then
what we're being taught isn'tgoing to be optimal.
The other thing is is yourparents could have been in a
strong financial position, butyou're not taking the same life
paths that they are.
Don't have the same goals andnow you're also making some
(04:30):
optimal decisions.
There's a reason why the richget richer, the poor get poorer.
John Proper (04:35):
Yeah.
Justin Gaines (04:36):
Some of it's economic, some of it's the
system, but a lot of it isunderstanding what you were
taught and the tools you haveabout finances may not be
accurate.
You may need to rewire yourbrain on those things.
John Proper (04:48):
Yeah, that's interesting because I've always
probably understood this, butthis is the first time it's
getting talked about and it'sreally clicking in terms of for
both of us.
I think one of the hardestthings you have to sell is that
ability to see into the futureand say do the hard stuff now,
(05:08):
for you're selling delayedgratification, which is
basically one of the hardestthings to do, especially.
Justin Gaines (05:15):
In a world that loves instant gratification,
you're selling delayedgratification.
John Proper (05:19):
Yeah, how finances you're selling delayed
gratification.
I think there's probably we'lltalk about this too but a
spectrum, because you do toomany health things and everyone
likes to say I've gotten thiscomment so many times, all this
just to be hit by a bus and it'sthe dumbest thing you can say,
(05:39):
but at the same time, I do getit.
You don't want to go too farand just only think about the
future.
That's where I'm at now.
I still want to lean towardsthat way, but it's definitely an
interesting scale to be on andto figure out the right one.
Justin Gaines (05:53):
Well, it's why I use the analogy with my clients
of every professional sportsteam that wins championships has
a strong offense and a strongdefense.
Now, the offense is the one whosells the tickets.
They're the ones that get theviewership.
That's why you watch thesesports games.
You watch the sports games tosee the goals, to see the
(06:14):
touchdowns, to see all of thesethings.
Very few people watch sportsbecause they're like, wow, I
love this defensive tackle or Ilove this center.
Back on the soccer team.
John Proper (06:22):
I love the score being 0-0.
Yeah, the goal is amazing.
Justin Gaines (06:26):
It has all these crazy cool saves.
That's why I watch the game.
A lot of people aren't in thatcapacity, but that's what our
job is.
Our job is to develop thedefensive strategy of your
financial position, of yourhealth position, so that you can
have the offensive performance.
John Proper (06:43):
Yeah.
Justin Gaines (06:44):
Because if you have a really strong offensive
team that scores a ton oftouchdowns or scores a bunch of
goals, but they also let in abunch of goals and allow a bunch
of touchdowns to be scored onthem, they might not be winning,
they might not be getting aheadin life.
Yeah, we're there to say listen, I know it's not glamorous, I
know it's not pretty and I knowit's not fun to talk about this,
but what is your defensivestrategy?
(07:07):
What is your plan?
Because, yes, you could get hitby a bus.
You could do all of your healththings, and you can get hit by
a bus.
What happens, though?
How quickly do you recover fromthat injury?
Are you killed completely?
Because, if you look at busaccidents, most people who get
hit by a bus aren't killed,they're injured.
So how quickly?
John Proper (07:25):
are you recovering from that?
Justin Gaines (07:26):
injury.
Now, if you're physically fitand in good health, you're going
to recover a lot quicker thansomebody who's overweight, not
in good health and hasn't beentaking care of themselves.
So it's because we took alittle bit of a sacrifice here,
had a defensive strategy thatallows us to get back in the
game stronger, faster, quicker.
John Proper (07:44):
It's the same as true in finance, it's run with
the same analogy you get hit bya bus and you're out of work.
Justin Gaines (07:49):
Well, now you have loss of income.
But did you have a defensivestrategy for loss of income?
Did you have a disabilitypolicy in place?
Did you have any of the otherprotective strategies?
Say, you did get killed.
Did you have a life insurancepolicy in place so that now your
kids and spouse don't have totake on the financial burden of
not having your income cominginto the household?
All these things cost you alittle bit of money.
(08:11):
On paper, set you back, or putit so that you can't put things
into investments aggressively.
But at the end of the day, ifyou look at it from a holistic
viewpoint, it's these defensivestrategies that allow you to be
able to stay in the game longer,get back in the game when
things go south and just not beable to get knocked out when you
(08:31):
get punched, but instead getknocked down and be able to get
up much faster.
John Proper (08:35):
Yeah, I don't know why it's, I don't know if it's a
cultural thing or what, but theability to have the deeper,
harder conversations not justabout finances, but almost all
topics seem like so many peopleshy away from it.
Even when you Like, even whenwe say in this conversation it
does kill you, it still givesyou that feeling of like oh, is
(08:55):
this too dark to talk about?
Justin Gaines (08:57):
But it's like Well, the other reaction that
most of us will have is that'snot going to happen to me Right
right.
You know that might happen tosomebody else, not going to
happen to me.
John Proper (09:05):
We all from a lot of.
That's a bold statement.
Justin Gaines (09:08):
But psychologically, that's what our
brains are required to think isit.
We are doing things to preventthat from happening.
Therefore, it won't happen.
That's not reality.
But I think that's what it is,and I think part of it too is we
had a female's perspective inon this conversation.
Their female clients typicallyget these things much faster
than male clients do, and Ithink that has to do with the
(09:33):
psychology of it.
There's the psychology of thefemale brain.
From an evolutionary standpoint,is the protector or not?
The protector is the one who'sgoing to maintain order,
maintain the family structureand protect from inside, whereas
the male dominant structure isgo out, kill and protect from
(09:54):
the outside and protect from anaggressive standpoint.
So we are more likely as malesto want to go do the risky,
dangerous things.
Our female counterparts want todo the opposite.
They want to be moreconservative, more firmly
planted, stable.
So they're going to understandthese topics much faster, much
easier, because they're morerisk averse.
(10:16):
There's a reason why there's allthose jokes of like you want to
do something dumb, go hang outwith the guys.
You want to find a smart way todo it?
Go see how the girls do it.
It's because one's taking on aton of risk and the other one's
not taking on a ton of risk.
There's reasons why you canmake those generalized
statements and, generallyspeaking, they tend to be
accurate, and it's because ofthe psychology, what it has to
do with the hormones and thechemicals released in your brain
(10:38):
that just make you more likelyto have a higher or lower
appetite for risk.
And that's even you go outsideof the gender roles, my appetite
for risk and your appetite forrisk are very different.
John Proper (10:50):
Yeah.
Justin Gaines (10:51):
Very different.
And that's not to say that yourappetite for risk is more
feminine.
That's not what I'm saying atall.
It's the case of what you'rewilling to take on for risk is
very different than mine, and Ialso tell people I'm willing to
take on a ton of risk, but it'scalculated risk.
I'm not just willy-nillyshooting from the hip.
And that's where the psychologyof money starts to play in is.
(11:15):
I wasn't taught these things ata young age.
I taught myself them over alonger period of time, and so as
I grow, as I get older, I amcontinuing to increase what I
call my stress capacity and myrisk capacity, and that's what I
try to do with clients is.
Well, a lot of times, whenwe're talking in our podcast
(11:35):
about what's optimal, what'ssuboptimal, we have to start at
suboptimal in order for you tobuild your risk tolerance and
your stress load of capabilities, so that then you can move into
this higher risk situation.
Higher risk isn't necessarily abad thing if it's calculated.
If you have a defensive and anoffensive strategy working
(11:56):
together, that's managed risk.
If you have just an offensivestrategy with no defensive
strategy, that's just high risk.
With no management of it, it'sall or nothing.
John Proper (12:07):
I think it's always important We've said this
probably before too issuboptimal doesn't mean bad
either, because if you're doingnothing, suboptimal is better
than nothing.
Justin Gaines (12:18):
So we always talk about that, but realistically,
you're always doing suboptimalbecause to achieve perfect
efficiency and perfectperformance, you would have to
have the perfect balance ofstress load and stress capacity.
You'd have to know the mostamount of information.
And then you'd also have to bein a position to actually take
action on all of those things.
(12:39):
And it's very rare for you tobe in a position where you'd
have all three lows.
John Proper (12:44):
It's on your working towards it always.
I don't know if you're everachieving that problem.
Justin Gaines (12:48):
Right.
You're constantly workingtowards increasing those
capacities, increasing yourstrongholds, and that's where I
think this black and whiteviewpoint of I'm either there or
I'm not, it's just really, it'snot realistic.
John Proper (13:02):
Yeah, you run into that in both of our worlds.
So much of it's either this orthat it's hard to get out of.
I mean, I've been in thatthinking a lot, especially for
health stuff, and it's easy toget into, I think probably
because even what we talkedabout before, there's so many
options, there's so much middleground that I think it's just
(13:23):
easy to be like I need a beliefto hold on to and maybe that's
something you grasp on, causeit's like it's yes or no.
That's much easier than it'smaybe, cause there's a million
maybes and I know I'm taking ita little too far.
But yeah, it's hard to get outof black and white thinking
sometimes.
Justin Gaines (13:40):
Well, and it's because of, I'll run us through
an exercise that I do with myclients and I'll use you like
you're the client, and then I'llexplain why you're having the
reactions you are.
But to not get like super deepand not take up a ton of time,
I'll kind of broad brush strokeit.
But how do you feel about yourfinancial position?
John Proper (13:57):
Are we doing like a one to 10?
We'll see easier.
Justin Gaines (13:59):
If you're comfortable with a one to 10, we
can do it that way.
I do a.
You know 10 is optimal, perfect, one is.
I'm struggling and like thereneeds to be major changes
because I just can't live day today like this.
Where on that range do you fall?
John Proper (14:15):
She like a 4.999 repeating of like almost neutral
.
Justin Gaines (14:21):
Okay.
John Proper (14:22):
What are you?
Justin Gaines (14:23):
ranking that against.
John Proper (14:26):
What do you mean?
Like what's causing it?
Justin Gaines (14:28):
Yeah, why 4.99?
You're comparing it tosomething.
What are you comparing it to?
John Proper (14:34):
I guess just the feelings I have of like I have a
good savings but I feel likeI'm at that next step of you can
either use it well or you canuse it poorly.
So there's a little of thatextra stress.
I guess there of you have itright now, but it seems like a
point in my life where it couldbranch very quickly.
Justin Gaines (14:53):
Define good and poorly of using it.
John Proper (14:55):
Using it towards something that will gain me more
or using it towards somethingthat will stop the game, because
we're talking money orexperience.
I could use it in a way thatgains me more experience, but I
lose all the money and that'stechnically good.
Justin Gaines (15:12):
So you don't even like that.
Like technically good meansthat you're trying to justify.
John Proper (15:17):
Yeah, because I hate the feeling of you know,
when you've worked.
So my biggest thing thatprobably ties into what you're
looking for is when you'veworked so long and so hard to
say, pay off debts, get pastzero.
It's almost more paralyzingwhen you have the money than
when you actually don't.
For me, it's you don't loseWell, just because you don't
(15:38):
want to, you're almost morescared to lose it.
If I had nothing and I don'tknow, because I, when I was in
the position before, I justworked, that was the answer.
But now, when I have it, it'skind of like a you know, I want
to use it wisely, I don't wantto go back to where I've been.
Those things start coming intoplay.
Versus if you just had nothing,you'd be like well, I have no
(16:00):
choice, but better just go makeRight.
Justin Gaines (16:03):
So you're between a rock and a hard spot, so you
can only move forward on thatother one versus right now you
have a lot of fear andexcitement kind of playing in.
It's not like we're fear drivingyou.
Definitely I don't want to makethe mistakes, and it's
interesting you said somethingtoo of the answer I'm looking
for which is not uncommon forclients to say, but I'm not
(16:25):
looking for an answer Like.
The answers that I'm looking foris what you genuinely feel,
because if I don't know how youfeel about money and how you
feel about your position, then Idon't know how to coach you to
then make the next step and makethe forward progress, because a
lot of times, what you're doingis you're in your mind, you
(16:49):
have constructed a model of whatyou are capable of and where
you should be today, and thatmodel is always not where you
are today.
That model is always in thefuture.
Now, the problem with that isyou're constantly judging
yourself against.
Does this model what I am today?
(17:13):
We always push that model to begreater than where we are today
, but we always look at it as atoday metric, not where is this
model going to put me in a yearversus where I am today?
The model is based off whateverwe think is normal, whether
that's from a societalstandpoint from a family
standpoint, a relationalstandpoint.
(17:34):
Where are my friends?
we're constantly benchmarkingourselves.
The problem is we'rebenchmarking ourselves against
things that have thousands ofoutside variables that have
nothing to do with what we areor who we are or what we're
doing, but we use that as abenchmark.
The number one thing that'sgoing to hold you down is if the
(17:54):
benchmark you're using youeventually obtain.
You're now going to haveanother problem where your
benchmark is actually holdingyou back because you've met your
benchmark.
You've met whatever the averageis or whatever you're trying to
achieve.
But a lot of times this happenswith people.
Most people will end up in thatsituation because the lower the
starting point as far as networth goes or budgeting goes.
(18:16):
Say, if you're at a negativebudget, you're constantly living
paycheck to paycheck where youwant to get to and what the
model is that you want to movetowards.
Typically, there's only a fewsteps ahead of where you are.
You want to get to it.
If you're living paycheck topaycheck, clients typically want
to get to a spot where they'renot living paycheck to paycheck
and there's a little bit ofbreathing room there.
(18:40):
But when you reach that point,now you take a break and then
you reassess and you're likeokay, now I want more breathing
room.
I want more, I want more, Iwant more.
It's because you're constantlybuilding a model that you're
reaching after, instead ofstepping back and saying where
am I today, where do I want tobe in six months, in a year,
then celebrating that win whenyou actually achieve it, and
(19:03):
then moving on and saying, okay,now let me be honest where I am
today and where do I want to bein six months a year?
I have on my board.
I'm constantly benchmarkingwhere am I today, where do I
want to be in a year, and, basedoff these growth metrics, where
am I going to be in three andfive years?
Three and five years reallydon't matter, because that's all
(19:25):
extrapolation, based off whereI get From the different- what
you're doing to the other day today.
It allows you to have somethingyou're striving towards, but
that is benchmarked, based offof the reality of your situation
and what you actually want toachieve.
Because when I'm asking thoseone to 10 scale questions, it's
not from a perspective okay,this is where I am, this is
(19:45):
where I want to be.
The one to 10 at the beginningjust says okay, where do you
think you are?
Do you think you're really goodfinancially?
Do you think you're not so good?
You were right in the middle,which is a good spot to be,
because it means that yourealize you've overcome things.
But you also realize there'sthings for you still to obtain
Realistically.
On that one to 10 scale, youwant somebody to say that
they're in a five or close to it, because that means that they
(20:09):
recognize they've overcomethings and they're better off
than where they were and thatthey have more room to go
somewhere.
The people are in the ones andthe people are in the tens.
The ones are over critical ofthemselves, the one to three.
They're over critical ofthemselves and they're not
celebrating their wins.
If you take somebody who'sliving paycheck to paycheck and
doesn't have money left over,there are still wins because the
(20:29):
reason they're in that positionis because of some sort of
situation.
It's holding them back andholding them down, but that
they've actually overcomeportions of that because they
still wake up, they still getout of bed, they still I mean
you're living paycheck topaycheck, but you're not in
deficit.
You're still showing up to work,you still have a paycheck, you
still have an income.
You need to celebrate that.
Then you have the person who'smaking, say they're making six
(20:52):
figures and they think they'reon top of the world and
typically they're super arrogantand just buy all these lavish
things and they're like I'vemade it In five years.
They're going to be dealingwith depression, anxiety and
they're going to feel likethey're a one or two because the
lifestyle creep is going tocatch up to them and they're
going to be living paycheck topaycheck, even though they're
making six figures and had a bigbuffer in their budget.
(21:12):
It's because they didn'trecognize that there are still
opportunities for me to grow andI've overcome a ton of stuff.
You have to celebrate the winsand you have to be honest with
yourself and recognize thatthere's still opportunities for
you to go after and to achieve.
If we stop benchmarkingourselves against other people
and we start benchmarkingagainst ourselves and what our
(21:33):
reality position is, that'swhat's going to allow you to
just be honest with yourself,recognize it, accept it and then
work towards actually growingyour financial strongholds.
I think all too often in asociety where we can scroll on
Facebook, we can scroll onTikTok, instagram, all these
social media platforms and justget any endorphin rush that we
(21:56):
want, and also be able tomeasure ourselves against other
people.
I'm not doing that, I'm notachieving this.
I'm not at that level.
Work benchmarking ourselvesagainst the wrong things.
John Proper (22:07):
Yeah, well, that was one thing that you brought
up really to.
That stood out to me also iswhether you're comparing it to
your close friends, your parents, peers around you.
But then you have this fakeworld of fake money online.
That kids I think I saw onethis morning.
It was a 14-year-oldentrepreneur, 170,000 followers,
(22:28):
and you're just looking at it.
You're just thinking, man, Iwould have never seen this, and
good for him.
Nothing, obviously, againstthat, but it definitely affects
you in terms of just sit therelooking at it.
You're like half my age.
I'm almost like what am I doing?
Justin Gaines (22:42):
But you're also boiling that person down to one
number.
John Proper (22:45):
Definitely.
That's why it's fake.
Justin Gaines (22:46):
You're boiling it down to one number.
Their entire life, their entireperson, who they are, is boiled
down to one number.
How many followers do they have?
Because you know that number,you're then extrapolating.
Okay, with that number offollowers you generate this kind
of revenue and it's not takinginto account the whole person.
Psychology has shown that onceyou break $60,000 of income per
(23:11):
year per person, your level ofhappiness does not increase
beyond that point.
So, from $0 of income a year to$60,000 of revenue of income,
your happiness increases as yourpay increases.
But once you break $60,000,there is no increased level of
happiness achieved by pay raisesas a result of that increase in
(23:35):
income.
John Proper (23:36):
Did you know why that is?
Was it because or not?
Justin Gaines (23:39):
From an investment financial, person
standpoint, risk managementstandpoint, I think it's because
at $60,000 a year per person,you can cover your personal
needs.
Without you can't go and buyall the lavish stuff.
You might be able to go on avacation once a year, but it's
not going to be the craziest ofvacations, but it's a case of
(24:02):
once you break that threshold.
Yes, you can go buy more stuff,you can go do more things, but
you can't buy the importantthings in life.
John Proper (24:12):
Yeah, you can't buy family.
What actually bring happiness?
Justin Gaines (24:15):
You can't buy emotional connection with people
.
But below $60,000, you have alot of stress from being able to
cover your rent, your carpayment if you need a car your
budget for food all of thosethings that are bare bones,
basic needs.
You're struggling to coverthose.
(24:36):
Once you hit $60,000, you'reable to cover those and you're
able to have some fun stuff.
Yeah, over $60,000, you're justincreasing the amount of fun
stuff you have.
But you can also buy things tocomfort yourself for not having
the things that actually matter.
John Proper (24:56):
That matter.
Yeah, I was just going to sayso.
I think we've obviously gone alot and great information about
the psychology behind it.
But what are some tips then?
I know you kind of mentionedobviously starting at suboptimal
working up.
Do you have anything else then?
How do you get kind of a betterview on money?
Justin Gaines (25:15):
It's less about the money and it's more about
just being real with yourself,focusing on the mental component
and recognizing.
This is where I am today.
This is who I am.
Strip off the emotion.
Strip off all of the ancillarydetails.
Strip off the benchmarking andthe comparing that you're doing.
Write down on paper.
Who are you actually from astrictly number standpoint?
(25:38):
Where are you today?
Who are you from a numberstandpoint today?
And then accept it.
It doesn't matter what it is.
It doesn't matter if your networth is negative.
It doesn't matter if yourbalance, your income statement,
is negative.
That does not matter.
What matters is that youactually accept that that is the
reality.
Don't make an excuse for it.
Don't do any of that stuff.
(25:59):
Strip it all off.
Break it down to just numbersthat are very black and white,
because it's either going to bea positive or a negative number,
and that's strictly from thefact that numbers are plus or
minus.
In front of it, it's justbecause it's a deficit.
Don't say that that's anegative thing.
Don't say that it's a positivething if you have a positive as
well.
Accept what it is and then askyourself what are the action
(26:21):
plans to take going forward, andthat's what I do with my
clients is we strip you down tojust what are the numbers.
What are the numbers?
And then we say, okay, where dowe want to be?
Because once we have thenumbers and we've accepted that,
we can set that aside.
That is who we are today.
There's no changing that.
That is who we are.
Where do we want to be?
Now let's talk about theemotions.
(26:41):
Now let's talk about what wewant to get to and let's make
that the target.
And then we're going to cancelout all the outside noise, we're
not going to worry about whatour friends want.
And that's the other tough partIs that conversation about what
we want Takes a while.
It's a long conversationBecause I have to ask you you're
going to tell me what you wantand I'm going to challenge it
(27:03):
why do you want that?
One of the best conversations Iever had was my cousin was
going to college and we weretalking about what he wanted to
do, what his interests were, andhe said you know, I'm really
interested in this one thing,that there's no money in that
there's no money in thatfield I can't make a lot of
income.
I go OK, I said how much moneydo you want to have?
(27:25):
How much money do you want tomake?
I mean, throughout a number ofwhatever, I said OK, let's flash
forward, let's just play in thehypothetical world.
Right now, I'm going to writeyou a check for a million
dollars.
It's not that I could actuallydo this in this situation, but
I'm going to write you a checkfor a million dollars.
You get to put it in your bankaccount, but you cannot spend a
single penny of it.
Are you satisfied?
(27:46):
Well, no, I'm not satisfied.
Ok, it's not the money you want.
What are the first thingsyou're going to buy with it?
And this is a lot of times whenI ask the questions, for you
know, I've even done it oncewith a client who was being very
stubborn with me, as I took acheck out and I wrote it.
You know I made sure that itwould never actually be able to
be cashed.
You know, I marked it all up,scratched a whole bunch of stuff
up, but I wrote it in the checkfor a million dollars and I
handed it to him.
I said here you go.
I said you can cash it.
You can put it in the bank, butyou can't do anything else with
it.
You cannot touch it Just sincethey're in the bank.
(28:16):
The only thing you can do is youcan point to it, you can show
your friends you have a milliondollars in the bank.
You cannot spend it, you cannotdo anything with it.
Are you satisfied?
Most people will say no.
Most people say no, I'm notsatisfied.
John Proper (28:27):
What good is it?
Justin Gaines (28:28):
I can't do anything with it, exactly
Because the money is not whatyou want.
You want what the money getsyou.
So now let's talk about that.
And so in this situation it wasyou know I'd love to have a
yacht one day.
I'd love to go.
I'd love to be able to have ahelicopter that I could ride
around on and I'd love all thesethings.
Okay, okay, to rent a yacht.
(28:49):
And you know, go out with yourfriends and go in the
Mediterranean Sea with a rentedyacht for three or four days for
15 grand.
Do you know that you can go ona helicopter ride for 80 bucks
down the Carolinas?
John Proper (29:02):
Cheap.
Justin Gaines (29:03):
You know, and he was like, yeah, but I want to
own it.
I go, okay, well, that's apride thing If the issue there
is yeah, okay, I could do that,I could have that experience,
but I want to own it.
Okay, now we have a pride thingthat we need to talk about
versus understanding that okay,I want to do these things and I
don't have to.
(29:23):
There's a cheaper, moreefficient way that I can do this
.
And recognizing that money isnot what actually makes me happy
.
I'm trying to get to achieveand be able to do something that
I wasn't able to do previously,and then figuring out okay, so
if that's what I actually wantto do now, how can we get there
and how can we use where we wantto get as our rewards along the
(29:46):
way, if we know we're in thisfinancial position?
John Proper (29:50):
and you know, say we're at a death center budget
we're living paycheck topaycheck.
Justin Gaines (29:55):
we don't have any money in there, and so we need
to cut expenses and we need toincrease revenue.
So we're going to sit down,we're going to look at that and
then in six months we're goingto look at it again and say,
okay, did I increase my revenueand did I cut expenses?
Where does my budget sit?
And then, once you have, andwe'll define what a surplus you
need is you know it's $20 apaycheck, $100 a paycheck,
(30:17):
whatever the case may be andthen once we get there, we're
going to take the first time youdo that, we're going to take
that surplus and we're going togo celebrate.
John Proper (30:24):
We're going to go out to dinner Because if you're
planning a deficit, you're notgoing out to eat, or you
shouldn't be, and that's wherewe're going to cut the money
from we're going to make it soyou can't eat out at all.
Justin Gaines (30:33):
You're buying all your groceries.
You're cooking all your meals.
But then the celebratory thingthat you're going to do is
you're going to buy that backbecause you just bought, you
just got the surplus in yourbudget to then celebrate,
because that's the key componenthere is celebrating.
If you're not celebrating, youwill burn yourself up because
you're not giving your cavemanbrain, your limbic brain, you're
(30:53):
not teaching it that when Iachieve these things, when I put
myself through this pain,there's a reward at the end.
If you just go through and youmake these adjustments, you go
from a deficit to break even andyou don't celebrate that and
you don't have to spend money tocelebrate.
Celebrating could be okay.
We're going to go for a familypicnic in the park and so you're
still going to cook your meals.
(31:13):
you're going to do all thisstuff but, instead of eating at
home, you're going to go for ahike and do it at the park you
can do that for free.
You can do these things thatyou don't have to spend money to
have a celebration.
But being able to celebrateyour wins is what's going to
allow your brain to continue tobe hungry to do these things,
and you cannot reward yourselfwith the reward unless you
(31:34):
actually do it.
John Proper (31:36):
Yeah, I think it's always crazy to how it seems
almost everything boils down tothe same answer, Because what
you were talking about before,you need to accept where you are
and I think part one isself-acceptance.
Overall.
We're talking health, we'retalking finances, anything and
(31:58):
then know what you want.
And I look at both of those asnow one is not more important
than the other.
You need both to be strong, andit would almost be great to
have someone weekly be like whatdo you want in life, say
finances goals, because thatgives you so many answers of.
You can't work towardssomething if you don't know what
(32:18):
you want.
And it's very hard to know whatyou want.
And even in the case of yourcousin, does he want to own
those things because he wants itor does he want to own those
things because it makes him lookgood?
Justin Gaines (32:30):
So that's such an important to differentiate and
that's the key, like what you'retalking about there is first
take a time waiting to go intoit deeper, but it was again okay
.
Now you own the yacht, but youcan't bring any friends on it.
You're the only one who can useit.
It ends up being that you wantthe things that are that you
can't buy.
You want more time with yourfriends.
(32:50):
You want more time with yourfamily.
You want more free time to donothing.
You want all these things.
It's like that's what youactually want.
John Proper (32:58):
Thanks for listening to our podcast.
Justin Gaines (32:59):
We hope this helps you on your balance
freedom journey.
John Proper (33:01):
Please share your thoughts in the comments section
below.
Until next time, stay balanced.
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