March 5, 2025 • 24 mins
The podcast explores the complexities of the scarcity mindset in individuals, specifically highlighting the challenges associated with spending even after achieving financial security. Through engaging storytelling and practical insights, we dissect how ingrained beliefs affect spending decisions.
• Introduction of the scarcity mindset and its impact on financial behavior
• Personal stories illustrating the transition from saver to spender
• Discussion of psychological factors influencing spending anxiety
• Client success story showcasing the paradox of wealth and spending fear
• Practical strategies to enjoy spending without guilt
• Encouragement to reassess personal values and money relationships
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Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.
“Early Retirement – Financial Freedom” is a podcast produced by Root Financial Partners, an SEC-registered investment adviser. The content provided is for informational and educational purposes only. It should not be interpreted as investment, legal, or tax advice. I may reference planning situations based on real client experiences, but they’ve been simplified for clarity. Always consult your own financial advisor before making decisions.
Listening to this podcast does not create or imply an advisory relationship with Root Financial. Investing involves risk, including the potential loss of principal. Past performance does not guarantee future results. Testimonials and endorsements do not reflect all client experiences and are not compensated. Learn more at our website or by reviewing our Form ADV at https://adviserinfo.sec.gov.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
This episode is all about stories.
You're going to hear differentstories from both my partner,
james, as well as myself, abouthow do you overcome the scarcity
mindset, because a lot ofpeople are good savers and
that's what has put you in aposition where you can retire.
But switching to become aspender isn't that easy.
No matter how many graphs orMonte Carlo analyses you run, or
(00:22):
probability of success, it'shey, why is it?
No matter what I look atfinancially, I still have this
feeling of I might run out.
And so we talk about what's themindset and give you some
stories that hopefully will helpyou out.
Enjoy.
Speaker 2 (00:35):
There's a story I like to tell Larry, where I was
meeting with a client who haddone really well.
Both husband and wife had runsuccessful businesses, sold the
business, great people, goodamount of money, eight-figure
portfolio and we met and we wentthrough some projections that
said, look, you can live apretty great retirement if you
want and still probably have alot more money left at the end
(00:57):
of your lifetime at this currentrate of spending than you have
today which, by the way, todayis a lot of money.
And they're blown away.
And they said, oh, my goodness,we can spend so much more.
Look at these things we can do.
I had no idea.
This is awesome and in theirminds it's all these cool things
we can do is now what they'rethinking about.
And we had this meeting.
They were in NorthernCalifornia, I was in Southern
(01:18):
California, San Diego, and so wehad this meeting virtually, but
they happened to be in SanDiego.
I think it was a week after, acouple of weeks after, and so we
got lunch, maybe a week afterthis meeting, and we were at
lunch and they shared a story.
They said hey, James, youwalked us through these
projections and we left thatmeeting high-fiving, so excited.
Look at all these cool thingswe can do.
(01:42):
Then we took this trip down toSan Diego and we were walking
back to our hotel room and wejust had dinner and we get into
the hotel room and there's, ofcourse, the, the treat box.
You know, there's the waterbottles and the candy and the
stuff.
And I was really feeling.
He said I was really feelinglike having some M&Ms.
And I went to that hotel snackbox and those M&Ms were $5.
And I just could not bringmyself to spend $5.
(02:05):
So I walked out of the hoteldown the street I don't even
know how far to the nearest7-Eleven so I could spend $2 on
a bag of M&Ms and then walk backto my hotel room.
And he said what struck me wasyou had just finished telling us
that we could legitimatelyspend an extra six plus figures
every single year and be goodforever.
(02:26):
But here I was unable to spend$5 on a bag of M&Ms because the
sticker price.
There was something that insideof me revolted against spending
a little bit more for theconvenience of being able to
enjoy them in the room, nothaving to leave, not having to
go through the hassle to walk to7-Eleven, and so it sparked a
great conversation.
(02:46):
It was such a great story thatI think really hits with a lot
of people or connects a lot ofpeople, not necessarily with how
much money they had or how muchM&Ms cost as much, as we all
have those moments where maybewe've done well, We've gotten
out of this phase of feelinglike we're in that scarcity
mindset.
We have the income, we have theassets, but we can't bring
(03:09):
ourselves to spend.
We saw this in a recent commenton a YouTube video you had
posted, and that's what sparkedthis episode.
But what did the comment saythat we were looking at together
?
Speaker 1 (03:27):
says I'm 42.
My husband is 60.
We have 10 million plus networth and he was yelling at me
when he saw me drink a bottle ofFiji water.
I work seven days a weekrunning my own business.
He has his white collar job.
He's not planning to retirewithin 10 years?
Speaker 2 (03:38):
Yeah, A lot to uncover there.
A lot to uncover.
How much does Fiji water sellfor?
A lot to uncover there, a lotto uncover.
How much does Fiji water sellfor.
Maybe I want to say five, sixbucks, five, six bucks for an
airport, eight bucks, yeah, it'swater.
Maybe a lot of money for water,but you see, you know it's
funny.
It's, I think, easy sometimesfor people to hear others people
, as example, that's ridiculous.
(03:59):
Why would you not pay fivebucks for M&Ms when you have all
this money?
That's ridiculous.
Why would you get upset aboutdrinking Fiji water when you
have a $10 million net worth?
Now I'm going to take a stepback for a second.
What I don't know.
You should never yell atsomeone for doing that.
It's probably not the rightapproach, even if you're looking
to change behavior.
We don't know that many detailsabout this.
(04:21):
Maybe that $10 million is allin an apartment building that
they own and their actual incomeis super tight and there's some
stress around money.
We don't know.
Maybe that's the case, but I'mgoing to make the assumption for
the purpose of this episode.
There's a $10 million liquidnet worth.
There's healthy income comingin, yet it's that small purchase
that's really difficult to makeand we see this over and over
(04:42):
and over again, and one of thethings that we try to help coach
people to do is to say, okay,how do you get out of that?
How do you get out of thatmindset and I've got a lot of
thoughts on this.
But what are your?
Any initial thoughts or anyinitial observations as to what
you've seen to identify theproblem or to start to resolve
the?
Speaker 1 (04:57):
problem.
Yeah, two initial thoughts.
So the first one is that is myfavorite story that you tell and
I now know the clients you'retalking about because I was on
that first virtual meeting and Iremember them showing me where
they lived and it was beautiful.
So I know who you're talkingabout.
Number two we have an advisorthat works here at Root and his
name is Jeff and he has thesedegrees in behavioral finance
(05:18):
and one of the questions I askedhim when he first joined us I
was like he's like, why are youan advisor?
Him when he first joined us, Iwas like he's like, why are you
an advisor?
And I just loved his answer.
You might not, you might beconfused as to why I loved his
answer when you're going to hearit, but I'll give you some
insight.
So he said because I gave greatadvice to clients and they
wouldn't take it.
I said that's interesting,that's why you became an advisor
.
He goes yeah, so I would talkto these clients, I would show
(05:41):
them graphs and numbers, showthey're on track to retire.
They would then tell me yeah, Ifeel good, maybe I can retire,
and then they wouldn't and Jeffwould get frustrated going.
Yeah, you know, I have spent alot of time to get these degrees
.
I feel very good at what I do.
I'm telling clients to takeaction but they're not doing it.
I'm missing something.
Either I'm not explaining itproperly or there's a bias the
(06:03):
client has that I'm missing.
I don't know.
But what good is me having allthis knowledge if my clients
don't take my advice?
So he has these degrees inbehavioral finance and the story
he'll tell, which he told on arecent live show I did, was
about this couple that I don'teven remember the cars, but
there were these cars, I guess,that had these old carpeting and
(06:25):
he used to say that a lot ofhis clients used to put covers
over the old carpeting becausethey didn't want to ruin the car
.
And he would talk to thesecouples and say how long have
you had that cover over the nicebeautiful carpet in the car?
And they're like we haven'ttaken it off.
And he's like how long have youdriven this car?
And they're like oh, like 10,15 years.
And he's like so there's allthese people that have these
nice things that aren't evenable to enjoy them because
(06:46):
they're just thinking about whenthey were younger, first
purchasing that car going I gotto keep the value of the car,
but they never got to fullyexperience it.
So I'm thinking about thiscouple here when they say I'm 42
, I'm 60, we have a 10 millionplus net worth.
He's yelling at me when he sawme drink a bottle of Fiji water.
I think we can all agreeyelling to your point is not
going to be the most effectiveway to resolve any situation.
(07:08):
But this is because they'rehumans, they're not robots.
And my first thought is maybethe husband grew up really poor
and never had money and the ideaof drinking Fiji water is
making him think well, what ifthey instead bought Dasani and
could feed the rest of hisfamily with McDonald's or, in
California we'd prefer to sayIn-N-Out Burger?
(07:29):
So those are the first things.
Coming to my mind is the biasesand heuristics we have.
Speaker 2 (07:35):
Yeah, I think all of us, if any of us think we're
totally objective about money,the only person we're fooling is
ourself, because none of us arefully objective about our own
money you and me included, ari,of course.
I think we see that all thetime.
I remember so.
When I grew up, my dad was apastor.
My mom stayed at home raisingfour kids and it was a small
(07:55):
church and so not a lot ofincome, and my parents are maybe
the hardest working people Iknow.
Once he stopped doing that, hewent into business for himself.
Nothing came in for two years.
He does well now.
He does awesome now, butthere's like there was a period
where this money was very, verytight growing up and I remember
that, um, one of the things thatshaped that.
So that's just the backstory,if I remember that of okay, you
(08:16):
just there's this scarcitymindset of it's tight, so you
have to preserve everything.
My dad tells a story if hewould have a single dollar bill
in his pocket for the beginningof the month and he would say,
how long can I go before I haveto spend this?
Like that would just be a game,and I remember in high school
it might you know they weredoing better at that time, the
family finances were better atthat time.
But I remember going to Padresgames with my friends in high
(08:38):
school and I remember at thetime I think it was like five
bucks to park near the stadiumto get.
You know, you park your car,you walk in.
And I would remember we woulddrive around literally for 30,
40 minutes a mile away from thestadium looking for free parking
anywhere, and of course it'sdowntown, so it's nothing.
But we would do that every timeto save five bucks amongst a
(08:59):
handful of friends, becauseyou'd save $5 and you'd park a
mile away, you'd walk in.
And I tell that because stilltoday, if I go somewhere, if I'm
going to valet the car, if I'mgoing to pay for parking,
there's this thing that insideof me comes up of it feels wrong
.
It feels like I'm paying toomuch for M&Ms, it feels like I'm
paying $7 for this Fiji water,when that's wrong.
(09:23):
That just goes againsteverything about who we are.
And so I think the takeaway forme is that mindset probably
served this person at some point.
I don't know what theirexperience was growing up.
I'm sure there was somescarcity with money.
I'm sure there was somechallenges with money.
Money causes all kinds ofhardships lack of money
(09:44):
specifically and that mindset,that scarcity mindset.
We're not buying the Fiji water, we're not buying those M&Ms
for $5.
We're not paying for parkingwhen we could just park a mile
away and walk in.
That serves you at certainphases of your life.
What we are not good at is thatbecomes our identity, that
becomes who we are.
(10:05):
And now we get to this pointwhere this individual commenting
has a net worth of $10 million,working seven days a week, I'm
guessing, has some good, healthyincome coming in and that same
scarcity mindset.
Now, in this case, I think it'sher husband that has it.
But that mindset doesn't justshow itself to the door Once we
cross a certain net worththreshold.
That mindset is who we are andif we're not careful, if we
(10:28):
don't take proactive steps tochange it, it's not miraculously
going to change.
So I think that one of thethings, just practically
speaking, what can you do?
What are some practicaltakeaways?
Well, first and foremost,understand that that is a core
part of your identity that wasformed at some point, most
likely during your childhood.
It was reinforced over yearsand years and years of saying no
to the M&Ms, of saying no tothe paying for parking, of
(10:53):
saying no to drinking theexpensive water bottles.
That identity is a veryfundamental part, and at a point
that identity is no longerhelping you.
It's no longer helping you tosay you're going to save that,
when you've got, objectivelyspeaking, more than enough
resources, that paying for thatwater bottle is a drop in the
bucket compared to your totalnet worth.
And so what you have to startdoing is you have to, first and
(11:17):
foremost, identify what arethose things that are valuable
for me to spend money on.
I think that there's a very fineline here where we encourage
people to spend.
We don't encourage people to bewasteful.
I'm not telling you already gobuy a Corvette if you struggle
spending, if you're like I hatecars In fact, I walk everywhere
so that would be a completewaste of money.
(11:38):
But there is a point where Ithink, if you can recognize that
aspect of yourself as step one,step two is understand what do
I actually value.
Take money out of it.
What's important to me?
Is it health?
Is it family?
Is it experiences?
Is it giving financially tocertain organizations?
Is it creating a more beautifulenvironment where I live?
(11:59):
Is it?
Whatever it is?
Is it pickleball, is it hiking?
Whatever it is, it doesn'tmatter.
But what is important to you?
Step two, step number three howcan I what?
What is one single decision Ican make?
What is one single purchase Ican make that would align my
spending with what I proclaim,with what I say is valuable to
(12:22):
me?
And then, from how can I committo doing something on a regular
basis that slowly but surelystarts to chip away at that
identity, the scarcity mindsetsave every dollar, don't spend
on anything and moves towardsthe identity that I want?
The important thing here isit's the identity that I want,
not I was a spender, now I'm asaver, or I was a saver, now I'm
(12:44):
a spender.
But both of those at theextreme aren't what we're
looking for here.
We're looking for a verybalanced approach.
I tell the story.
My wife helps me to do this.
What's very funny is, before wegot married, she was an
excellent saver.
She was very good at saving,she was very diligent, all those
things, and I'll joke with her,I'll tease with her.
I think that when we gotmarried, she was like okay, well
(13:05):
, james is obviously thefinancial guy, so she, I think,
felt like a little bit of thatburden of having to need to be
the one that was proactivelyputting money away, proactively
doing things.
It was almost like that Okay,I've got a backstop here,
because if I start going toocrazy, james is going to step in
and intervene.
But I also had the opposite.
I had okay, if I'm getting toocrazy on the saving side, if I'm
getting too crazy on the can'tspend money on that.
(13:28):
Look at what we could save here, look what that could grow to.
That's my bias.
And so there's that healthytension of I never had
appetizers or dessert, if weever even went out to dinner.
So all of a sudden we're havingappetizers, all of a sudden we
(13:54):
might order dessert at dinner.
It pulled against every threadof who I was to be okay with it.
But I'm so grateful it did.
Because now it's, how much doesthat enhance the quality of
that meal we're going to havetogether?
It's not everything, but theability to relax and have that
meal.
Now.
We're in a different financialposition now than I was as a
teenager trying to save fivebucks on parking at a Padres
game.
So part of this is you have toalign this, not just what you
want to be.
But what's that phase of lifethat you're in?
(14:14):
Sometimes you need to have thatscarcity mindset, but other
times you don't, and so therewas that nice, healthy tension
of, okay, push me to take thesetrips where we're going to
create awesome experiences andmemories as a family.
Push me to do these thingswhere something as simple as a
dinner not afraid to get anextra appetizer we might not
even fully eat, because,whatever it was one extra thing
(14:36):
we got to enjoy and it's withinthe budget.
And so I think that identifyingwho you want to be and then
having some mechanism In my caseit was my spouse.
In a lot of people's cases,hopefully it's their spouse,
maybe it's a friend, maybe it'swhoever but commit to something
where, slowly but surely, you'regoing to be this person that
gets really upset by spendingeight bucks on a Fiji water.
All of a sudden, you're saying,okay, what do I actually value?
(14:59):
What if that $10 million networth turned to 50 million and
then $100 million, and then youdied and said, well, I never
actually did anything with it.
How miserable of an experiencewould that be?
So you really have to start tohave the perspective of what is
my mindset when it comes tomoney.
Is that current mindset servingwhere I am in life and what I
(15:21):
want to be doing and what Iactually value?
And, if not, how can you committo changing it and have some
forcing mechanism that keeps youcommitted to that change?
Speaker 1 (15:30):
I know we have one advisor here that helps a client
with that appetizer example.
They just didn't have it inthem.
They went through all theprojections, they know they're
in a good spot, it's just notwho they are, and so they felt
really bad.
You don't need to feel bad.
You're a human, You're not arobot.
I know you mentioned your valetexample.
(15:51):
If you were a teenager, James,and you were valeting everywhere
, look, you probably wouldn'thave the business that you have
today.
You probably wouldn't be whoyou are today.
So it's about to your point.
Hey, in different stages oflife, no-transcript.
(16:25):
What if they didn't ask?
What if the prices were justmore?
Would I still feel equally asbad?
Probably not.
That's what's so interestingabout money.
If Chipotle just cost more, Iprobably wouldn't even think
twice.
But it's this idea.
Hey, would you like guac?
It costs extra.
Oh no, I don't deserve extra.
(16:45):
What have I done to deserveextra?
That's what makes us who we are.
Speaker 2 (16:48):
So great points there .
Yeah, two practical takeawaysthat I'll wrap it up on.
I was talking to this guy namedBen, who I host on my podcast,
who he was just sharing hisexperience of retiring early.
He did really well.
He retired I want to say I'mjust remembering these details
by memory so I could be off on alittle bit, but I think he
(17:09):
retired in 2017 because hefinally hit his number.
But then he retired and he justlike I can't bring myself to
actually spending anything and,by the way, my portfolio has
doubled and then some since Iretired and I still can't find
myself.
I can't bring myself toactually spend the money.
I was so focused on hittingthis number, I was so focused on
growing, I was so focused oninvesting that he got to this
point where he was almostparalyzed in his inability to
(17:31):
actually spend it until and thiswas a great practical tip that
he shared with me he said whathe started doing I have no idea
how much he has in his portfolioand what amount he'd pull up
He'd say what clicked in hismind is it was the hardest part
wasn't even just spending it.
It was taking it out of hisportfolio.
So what he started doing on thefirst day of each year was he
(17:53):
said okay, what trips do I wantto take?
Because he had just gotten backfrom I think it was like a
cooking trip in Italy orsomething awesome, and I loved
his example.
Each year he would say thisyear, here's the trips I want to
take.
He would then work backwardsinto the price Okay, it's going
to cost me $20,000 this year totake these four trips I want to
take.
Just hypothetically, he wouldpull that $20,000 out on January
(18:14):
1st.
He wouldn't wait until thetrips came, because he knew his
natural tendency would be ah,I'm going to book the ticket.
Do I really want to pull thisout of the portfolio?
I love seeing my accountbalance climb every day.
His natural inclination wouldbe not to do it.
So by pulling it out, stickingit in a separate savings account
, that's just purely a travelaccount, it was a way of almost
hacking his mind to say I'vealready spent it.
Now all that's left to do isjust transfer the money.
(18:36):
But it's been spent in my mind.
So that's one practical thing.
The other practical thing ismorbid as it sounds.
It's like we're all going todie.
And when you do.
Do you want to look back on yourlife?
Let's assume that you have thegift of being able to reflect on
your life before that actuallyhappens.
Are you going to be glad thatyou skimped on the Fiji water,
(18:56):
that you skimped on theexperiences, that you skimped on
the giving, that you skimped onthe things that you could have
done?
When you're sitting there inyour last day with a portfolio
that's five, 10 times more thanyou ever could have dreamed of?
Are you going to be really gladthat you're taking that money
to your grave, or are you goingto look back with regret,
thinking why didn't I just dothose things?
(19:17):
Why didn't I just spend thatmoney for its intended purpose,
as opposed to tying my net worthand my purpose to that?
And by doing that, I was neveractually able to spend it down?
Speaker 1 (19:28):
Amazing.
Love those practical tips.
That first one, I think, ishuge.
Just, the money's already beenspent.
It's like and I'll this will bethe last story unless you have
another one.
You can think of James.
But I have a buddy in collegewho money was tight for him and
we all knew it and he bought theconcert tickets for all of us
as a gift and he didn't feelwell.
(19:49):
So he was still telling us guys, I'm going to come to the
concert.
And we're like, hey, you're notfeeling great.
I don't know if it makes mostsense to, the money's already
been spent.
And he goes that's exactly thepoint the money's already been
spent, I have to go.
We said the money's been spentwhether you're there or not
there.
So the point here is for thisguy he's going, hey, the money's
been spent.
(20:09):
If it turns out, he doesn'ttake that fourth trip because he
doesn't feel well, okay, he canuse it on something else.
So don't need any of you tofeel like, oh, I have to.
What?
If it turns out, I don't takethe four trips, that's okay, use
it for something else.
But that practice works foreveryone and you don't have to
wait till you retire to startdoing that.
So love that.
Speaker 2 (20:28):
Yeah, awesome.
Well, I think that's a goodplace to wrap.
This is a very common thing,believe it or not.
I think it's hard for people tothink that this is a problem.
They think that once I get tothat $10 million portfolio half
of that, a third of that, afifth of that most people would
feel like everything wouldbecome easier.
Then you get there and yourealize it's not so.
What can you start doing toshape the practices, shape the
(20:48):
identities you want to have foryourself so that when you are
retired it becomes a morenatural transition you can spend
on the things you want to spendmoney on?
So we will wrap with that, ari.
Where can people find you ifthey want to follow every single
thing that Ari Taublieb?
Speaker 1 (21:02):
does Every single thing.
That would be a lot.
I don't think anyone wants todo that.
But early retirement Ari onInstagram if you want to see
soccer clips and silly videoswhere I really try to make light
of a lot of retirement planningconcepts that seem difficult to
understand.
I'll also be on LinkedIn so youcan connect with me there, and
then I'm most active in our rootcollective, which is the
(21:23):
retirement community that wehave here, and that, I think, is
where you'll find morepractical tips, just like the
ones James was sharing today.
Speaker 2 (21:33):
James, how about yourself?
Love it?
Youtube is the biggest place,james Canole.
On YouTube.
We have our Root FinancialYouTube channel, which is where
this actual episode will beliving.
So that's at Root Financial.
Linkedin, I'm more active.
Instagram, I always say it,james Canole, at some point I'll
actually get active on theretoo, and something got to keep
up with you.
But those are the places, thecollective's big.
This is something we're excitedto be doing.
By the time this is airing,it's going to have been out for
(21:55):
a couple plus weeks now, butcheck that out.
Show notes, I think, will be inthe description Is that right,
it will be in the description.
Speaker 1 (22:02):
And my only ask for a lot of you is you listen to
this every week or you watchdifferent videos and topics.
What practical tip can you givesomeone else that you do,
really saying hey, I wish I knewthis earlier.
Where, hey, I just go valet, oryou know what I do by the guac
or whatever it is.
Those are our examples.
What are yours?
Go tell inside the communitywhat it is that you feel.
(22:25):
Hey, I wish I knew this earlier, because there's a lot of
people you can help.
Speaker 2 (22:29):
Awesome, Love it.
Thank you all for listening andwe will see you on the next
episode.
See ya, Bye.
The information presented isfor educational purposes only
and is not intended as an offeror solicitation for the sale or
purchase of any specificsecurities, investments or
investment strategies.
Investments involve risk andare not guaranteed.
Any mention of rates of returnare historical and illustrative
(22:52):
in nature and are not aguarantee of future returns.
Past performance does notguarantee future performance.
Speaker 1 (22:57):
Viewers are encouraged to seek advice from a
qualified tax, legal orinvestment advisor professional
to determine whether anyinformation presented may be
suitable for their specificsituation Once again.
Speaker 2 (23:09):
I'm James Canole, founder of Root Financial, and
if you're interested in seeinghow we help our clients at Root
Financial get the most out oflife with their money, be sure
to visit us atwwwrootfinancialpartnerscom.
Speaker 1 (23:20):
Thank you all, as always, for listening to the
Early Retirement Podcast.
I love getting to host theseshows and make different content
for you guys every single week.
I've not missed a single weekin years and that is because I
love getting to do this.
Now, please be smart about this.
Before you actually execute anystrategy that you see me talk
about or hear me talk about,should I say Please talk to your
(23:41):
financial advisor, your taxpreparer, your estate attorney.
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
Once again, just quickdisclaimer here.
Guys, please be smart aboutthis.
Appreciate you listening, asalways, and you can, of course,
submit a question on my website,earlyretirementpodcastcom, If
(24:05):
you, of course, want me toaddress a specific case study or
topic.
I will not promise I can get toit, but I respond to every
single person and if I find itwill be helpful for a lot of
people, I will absolutely makean episode on it, At the very
least give you some insight.
That's it, Thanks guys.
This episode is all about stories.
You're going to hear differentstories from both my partner,
james, as well as myself, abouthow do you overcome the scarcity
mindset, because a lot ofpeople are good savers and
that's what has put you in aposition where you can retire.
But switching to become aspender isn't that easy.
No matter how many graphs orMonte Carlo analyses you run, or
(00:22):
probability of success, it'shey, why is it?
No matter what I look atfinancially, I still have this
feeling of I might run out.
And so we talk about what's themindset and give you some
stories that hopefully will helpyou out.
Enjoy.
Speaker 2 (00:35):
There's a story I like to tell Larry, where I was
meeting with a client who haddone really well.
Both husband and wife had runsuccessful businesses, sold the
business, great people, goodamount of money, eight-figure
portfolio and we met and we wentthrough some projections that
said, look, you can live apretty great retirement if you
want and still probably have alot more money left at the end
(00:57):
of your lifetime at this currentrate of spending than you have
today which, by the way, todayis a lot of money.
And they're blown away.
And they said, oh, my goodness,we can spend so much more.
Look at these things we can do.
I had no idea.
This is awesome and in theirminds it's all these cool things
we can do is now what they'rethinking about.
And we had this meeting.
They were in NorthernCalifornia, I was in Southern
(01:18):
California, San Diego, and so wehad this meeting virtually, but
they happened to be in SanDiego.
I think it was a week after, acouple of weeks after, and so we
got lunch, maybe a week afterthis meeting, and we were at
lunch and they shared a story.
They said hey, James, youwalked us through these
projections and we left thatmeeting high-fiving, so excited.
Look at all these cool thingswe can do.
(01:42):
Then we took this trip down toSan Diego and we were walking
back to our hotel room and wejust had dinner and we get into
the hotel room and there's, ofcourse, the, the treat box.
You know, there's the waterbottles and the candy and the
stuff.
And I was really feeling.
He said I was really feelinglike having some M&Ms.
And I went to that hotel snackbox and those M&Ms were $5.
And I just could not bringmyself to spend $5.
(02:05):
So I walked out of the hoteldown the street I don't even
know how far to the nearest7-Eleven so I could spend $2 on
a bag of M&Ms and then walk backto my hotel room.
And he said what struck me wasyou had just finished telling us
that we could legitimatelyspend an extra six plus figures
every single year and be goodforever.
(02:26):
But here I was unable to spend$5 on a bag of M&Ms because the
sticker price.
There was something that insideof me revolted against spending
a little bit more for theconvenience of being able to
enjoy them in the room, nothaving to leave, not having to
go through the hassle to walk to7-Eleven, and so it sparked a
great conversation.
(02:46):
It was such a great story thatI think really hits with a lot
of people or connects a lot ofpeople, not necessarily with how
much money they had or how muchM&Ms cost as much, as we all
have those moments where maybewe've done well, We've gotten
out of this phase of feelinglike we're in that scarcity
mindset.
We have the income, we have theassets, but we can't bring
(03:09):
ourselves to spend.
We saw this in a recent commenton a YouTube video you had
posted, and that's what sparkedthis episode.
But what did the comment saythat we were looking at together
?
Speaker 1 (03:27):
says I'm 42.
My husband is 60.
We have 10 million plus networth and he was yelling at me
when he saw me drink a bottle ofFiji water.
I work seven days a weekrunning my own business.
He has his white collar job.
He's not planning to retirewithin 10 years?
Speaker 2 (03:38):
Yeah, A lot to uncover there.
A lot to uncover.
How much does Fiji water sellfor?
A lot to uncover there, a lotto uncover.
How much does Fiji water sellfor.
Maybe I want to say five, sixbucks, five, six bucks for an
airport, eight bucks, yeah, it'swater.
Maybe a lot of money for water,but you see, you know it's
funny.
It's, I think, easy sometimesfor people to hear others people
, as example, that's ridiculous.
(03:59):
Why would you not pay fivebucks for M&Ms when you have all
this money?
That's ridiculous.
Why would you get upset aboutdrinking Fiji water when you
have a $10 million net worth?
Now I'm going to take a stepback for a second.
What I don't know.
You should never yell atsomeone for doing that.
It's probably not the rightapproach, even if you're looking
to change behavior.
We don't know that many detailsabout this.
(04:21):
Maybe that $10 million is allin an apartment building that
they own and their actual incomeis super tight and there's some
stress around money.
We don't know.
Maybe that's the case, but I'mgoing to make the assumption for
the purpose of this episode.
There's a $10 million liquidnet worth.
There's healthy income comingin, yet it's that small purchase
that's really difficult to makeand we see this over and over
(04:42):
and over again, and one of thethings that we try to help coach
people to do is to say, okay,how do you get out of that?
How do you get out of thatmindset and I've got a lot of
thoughts on this.
But what are your?
Any initial thoughts or anyinitial observations as to what
you've seen to identify theproblem or to start to resolve
the?
Speaker 1 (04:57):
problem.
Yeah, two initial thoughts.
So the first one is that is myfavorite story that you tell and
I now know the clients you'retalking about because I was on
that first virtual meeting and Iremember them showing me where
they lived and it was beautiful.
So I know who you're talkingabout.
Number two we have an advisorthat works here at Root and his
name is Jeff and he has thesedegrees in behavioral finance
(05:18):
and one of the questions I askedhim when he first joined us I
was like he's like, why are youan advisor?
Him when he first joined us, Iwas like he's like, why are you
an advisor?
And I just loved his answer.
You might not, you might beconfused as to why I loved his
answer when you're going to hearit, but I'll give you some
insight.
So he said because I gave greatadvice to clients and they
wouldn't take it.
I said that's interesting,that's why you became an advisor
.
He goes yeah, so I would talkto these clients, I would show
(05:41):
them graphs and numbers, showthey're on track to retire.
They would then tell me yeah, Ifeel good, maybe I can retire,
and then they wouldn't and Jeffwould get frustrated going.
Yeah, you know, I have spent alot of time to get these degrees
.
I feel very good at what I do.
I'm telling clients to takeaction but they're not doing it.
I'm missing something.
Either I'm not explaining itproperly or there's a bias the
(06:03):
client has that I'm missing.
I don't know.
But what good is me having allthis knowledge if my clients
don't take my advice?
So he has these degrees inbehavioral finance and the story
he'll tell, which he told on arecent live show I did, was
about this couple that I don'teven remember the cars, but
there were these cars, I guess,that had these old carpeting and
(06:25):
he used to say that a lot ofhis clients used to put covers
over the old carpeting becausethey didn't want to ruin the car
.
And he would talk to thesecouples and say how long have
you had that cover over the nicebeautiful carpet in the car?
And they're like we haven'ttaken it off.
And he's like how long have youdriven this car?
And they're like oh, like 10,15 years.
And he's like so there's allthese people that have these
nice things that aren't evenable to enjoy them because
(06:46):
they're just thinking about whenthey were younger, first
purchasing that car going I gotto keep the value of the car,
but they never got to fullyexperience it.
So I'm thinking about thiscouple here when they say I'm 42
, I'm 60, we have a 10 millionplus net worth.
He's yelling at me when he sawme drink a bottle of Fiji water.
I think we can all agreeyelling to your point is not
going to be the most effectiveway to resolve any situation.
(07:08):
But this is because they'rehumans, they're not robots.
And my first thought is maybethe husband grew up really poor
and never had money and the ideaof drinking Fiji water is
making him think well, what ifthey instead bought Dasani and
could feed the rest of hisfamily with McDonald's or, in
California we'd prefer to sayIn-N-Out Burger?
(07:29):
So those are the first things.
Coming to my mind is the biasesand heuristics we have.
Speaker 2 (07:35):
Yeah, I think all of us, if any of us think we're
totally objective about money,the only person we're fooling is
ourself, because none of us arefully objective about our own
money you and me included, ari,of course.
I think we see that all thetime.
I remember so.
When I grew up, my dad was apastor.
My mom stayed at home raisingfour kids and it was a small
(07:55):
church and so not a lot ofincome, and my parents are maybe
the hardest working people Iknow.
Once he stopped doing that, hewent into business for himself.
Nothing came in for two years.
He does well now.
He does awesome now, butthere's like there was a period
where this money was very, verytight growing up and I remember
that, um, one of the things thatshaped that.
So that's just the backstory,if I remember that of okay, you
(08:16):
just there's this scarcitymindset of it's tight, so you
have to preserve everything.
My dad tells a story if hewould have a single dollar bill
in his pocket for the beginningof the month and he would say,
how long can I go before I haveto spend this?
Like that would just be a game,and I remember in high school
it might you know they weredoing better at that time, the
family finances were better atthat time.
But I remember going to Padresgames with my friends in high
(08:38):
school and I remember at thetime I think it was like five
bucks to park near the stadiumto get.
You know, you park your car,you walk in.
And I would remember we woulddrive around literally for 30,
40 minutes a mile away from thestadium looking for free parking
anywhere, and of course it'sdowntown, so it's nothing.
But we would do that every timeto save five bucks amongst a
(08:59):
handful of friends, becauseyou'd save $5 and you'd park a
mile away, you'd walk in.
And I tell that because stilltoday, if I go somewhere, if I'm
going to valet the car, if I'mgoing to pay for parking,
there's this thing that insideof me comes up of it feels wrong
.
It feels like I'm paying toomuch for M&Ms, it feels like I'm
paying $7 for this Fiji water,when that's wrong.
(09:23):
That just goes againsteverything about who we are.
And so I think the takeaway forme is that mindset probably
served this person at some point.
I don't know what theirexperience was growing up.
I'm sure there was somescarcity with money.
I'm sure there was somechallenges with money.
Money causes all kinds ofhardships lack of money
(09:44):
specifically and that mindset,that scarcity mindset.
We're not buying the Fiji water, we're not buying those M&Ms
for $5.
We're not paying for parkingwhen we could just park a mile
away and walk in.
That serves you at certainphases of your life.
What we are not good at is thatbecomes our identity, that
becomes who we are.
(10:05):
And now we get to this pointwhere this individual commenting
has a net worth of $10 million,working seven days a week, I'm
guessing, has some good, healthyincome coming in and that same
scarcity mindset.
Now, in this case, I think it'sher husband that has it.
But that mindset doesn't justshow itself to the door Once we
cross a certain net worththreshold.
That mindset is who we are andif we're not careful, if we
(10:28):
don't take proactive steps tochange it, it's not miraculously
going to change.
So I think that one of thethings, just practically
speaking, what can you do?
What are some practicaltakeaways?
Well, first and foremost,understand that that is a core
part of your identity that wasformed at some point, most
likely during your childhood.
It was reinforced over yearsand years and years of saying no
to the M&Ms, of saying no tothe paying for parking, of
(10:53):
saying no to drinking theexpensive water bottles.
That identity is a veryfundamental part, and at a point
that identity is no longerhelping you.
It's no longer helping you tosay you're going to save that,
when you've got, objectivelyspeaking, more than enough
resources, that paying for thatwater bottle is a drop in the
bucket compared to your totalnet worth.
And so what you have to startdoing is you have to, first and
(11:17):
foremost, identify what arethose things that are valuable
for me to spend money on.
I think that there's a very fineline here where we encourage
people to spend.
We don't encourage people to bewasteful.
I'm not telling you already gobuy a Corvette if you struggle
spending, if you're like I hatecars In fact, I walk everywhere
so that would be a completewaste of money.
(11:38):
But there is a point where Ithink, if you can recognize that
aspect of yourself as step one,step two is understand what do
I actually value.
Take money out of it.
What's important to me?
Is it health?
Is it family?
Is it experiences?
Is it giving financially tocertain organizations?
Is it creating a more beautifulenvironment where I live?
(11:59):
Is it?
Whatever it is?
Is it pickleball, is it hiking?
Whatever it is, it doesn'tmatter.
But what is important to you?
Step two, step number three howcan I what?
What is one single decision Ican make?
What is one single purchase Ican make that would align my
spending with what I proclaim,with what I say is valuable to
(12:22):
me?
And then, from how can I committo doing something on a regular
basis that slowly but surelystarts to chip away at that
identity, the scarcity mindsetsave every dollar, don't spend
on anything and moves towardsthe identity that I want?
The important thing here isit's the identity that I want,
not I was a spender, now I'm asaver, or I was a saver, now I'm
(12:44):
a spender.
But both of those at theextreme aren't what we're
looking for here.
We're looking for a verybalanced approach.
I tell the story.
My wife helps me to do this.
What's very funny is, before wegot married, she was an
excellent saver.
She was very good at saving,she was very diligent, all those
things, and I'll joke with her,I'll tease with her.
I think that when we gotmarried, she was like okay, well
(13:05):
, james is obviously thefinancial guy, so she, I think,
felt like a little bit of thatburden of having to need to be
the one that was proactivelyputting money away, proactively
doing things.
It was almost like that Okay,I've got a backstop here,
because if I start going toocrazy, james is going to step in
and intervene.
But I also had the opposite.
I had okay, if I'm getting toocrazy on the saving side, if I'm
getting too crazy on the can'tspend money on that.
(13:28):
Look at what we could save here, look what that could grow to.
That's my bias.
And so there's that healthytension of I never had
appetizers or dessert, if weever even went out to dinner.
So all of a sudden we're havingappetizers, all of a sudden we
(13:54):
might order dessert at dinner.
It pulled against every threadof who I was to be okay with it.
But I'm so grateful it did.
Because now it's, how much doesthat enhance the quality of
that meal we're going to havetogether?
It's not everything, but theability to relax and have that
meal.
Now.
We're in a different financialposition now than I was as a
teenager trying to save fivebucks on parking at a Padres
game.
So part of this is you have toalign this, not just what you
want to be.
But what's that phase of lifethat you're in?
(14:14):
Sometimes you need to have thatscarcity mindset, but other
times you don't, and so therewas that nice, healthy tension
of, okay, push me to take thesetrips where we're going to
create awesome experiences andmemories as a family.
Push me to do these thingswhere something as simple as a
dinner not afraid to get anextra appetizer we might not
even fully eat, because,whatever it was one extra thing
(14:36):
we got to enjoy and it's withinthe budget.
And so I think that identifyingwho you want to be and then
having some mechanism In my caseit was my spouse.
In a lot of people's cases,hopefully it's their spouse,
maybe it's a friend, maybe it'swhoever but commit to something
where, slowly but surely, you'regoing to be this person that
gets really upset by spendingeight bucks on a Fiji water.
All of a sudden, you're saying,okay, what do I actually value?
(14:59):
What if that $10 million networth turned to 50 million and
then $100 million, and then youdied and said, well, I never
actually did anything with it.
How miserable of an experiencewould that be?
So you really have to start tohave the perspective of what is
my mindset when it comes tomoney.
Is that current mindset servingwhere I am in life and what I
(15:21):
want to be doing and what Iactually value?
And, if not, how can you committo changing it and have some
forcing mechanism that keeps youcommitted to that change?
Speaker 1 (15:30):
I know we have one advisor here that helps a client
with that appetizer example.
They just didn't have it inthem.
They went through all theprojections, they know they're
in a good spot, it's just notwho they are, and so they felt
really bad.
You don't need to feel bad.
You're a human, You're not arobot.
I know you mentioned your valetexample.
(15:51):
If you were a teenager, James,and you were valeting everywhere
, look, you probably wouldn'thave the business that you have
today.
You probably wouldn't be whoyou are today.
So it's about to your point.
Hey, in different stages oflife, no-transcript.
(16:25):
What if they didn't ask?
What if the prices were justmore?
Would I still feel equally asbad?
Probably not.
That's what's so interestingabout money.
If Chipotle just cost more, Iprobably wouldn't even think
twice.
But it's this idea.
Hey, would you like guac?
It costs extra.
Oh no, I don't deserve extra.
(16:45):
What have I done to deserveextra?
That's what makes us who we are.
Speaker 2 (16:48):
So great points there .
Yeah, two practical takeawaysthat I'll wrap it up on.
I was talking to this guy namedBen, who I host on my podcast,
who he was just sharing hisexperience of retiring early.
He did really well.
He retired I want to say I'mjust remembering these details
by memory so I could be off on alittle bit, but I think he
(17:09):
retired in 2017 because hefinally hit his number.
But then he retired and he justlike I can't bring myself to
actually spending anything and,by the way, my portfolio has
doubled and then some since Iretired and I still can't find
myself.
I can't bring myself toactually spend the money.
I was so focused on hittingthis number, I was so focused on
growing, I was so focused oninvesting that he got to this
point where he was almostparalyzed in his inability to
(17:31):
actually spend it until and thiswas a great practical tip that
he shared with me he said whathe started doing I have no idea
how much he has in his portfolioand what amount he'd pull up
He'd say what clicked in hismind is it was the hardest part
wasn't even just spending it.
It was taking it out of hisportfolio.
So what he started doing on thefirst day of each year was he
(17:53):
said okay, what trips do I wantto take?
Because he had just gotten backfrom I think it was like a
cooking trip in Italy orsomething awesome, and I loved
his example.
Each year he would say thisyear, here's the trips I want to
take.
He would then work backwardsinto the price Okay, it's going
to cost me $20,000 this year totake these four trips I want to
take.
Just hypothetically, he wouldpull that $20,000 out on January
(18:14):
1st.
He wouldn't wait until thetrips came, because he knew his
natural tendency would be ah,I'm going to book the ticket.
Do I really want to pull thisout of the portfolio?
I love seeing my accountbalance climb every day.
His natural inclination wouldbe not to do it.
So by pulling it out, stickingit in a separate savings account
, that's just purely a travelaccount, it was a way of almost
hacking his mind to say I'vealready spent it.
Now all that's left to do isjust transfer the money.
(18:36):
But it's been spent in my mind.
So that's one practical thing.
The other practical thing ismorbid as it sounds.
It's like we're all going todie.
And when you do.
Do you want to look back on yourlife?
Let's assume that you have thegift of being able to reflect on
your life before that actuallyhappens.
Are you going to be glad thatyou skimped on the Fiji water,
(18:56):
that you skimped on theexperiences, that you skimped on
the giving, that you skimped onthe things that you could have
done?
When you're sitting there inyour last day with a portfolio
that's five, 10 times more thanyou ever could have dreamed of?
Are you going to be really gladthat you're taking that money
to your grave, or are you goingto look back with regret,
thinking why didn't I just dothose things?
(19:17):
Why didn't I just spend thatmoney for its intended purpose,
as opposed to tying my net worthand my purpose to that?
And by doing that, I was neveractually able to spend it down?
Speaker 1 (19:28):
Amazing.
Love those practical tips.
That first one, I think, ishuge.
Just, the money's already beenspent.
It's like and I'll this will bethe last story unless you have
another one.
You can think of James.
But I have a buddy in collegewho money was tight for him and
we all knew it and he bought theconcert tickets for all of us
as a gift and he didn't feelwell.
(19:49):
So he was still telling us guys, I'm going to come to the
concert.
And we're like, hey, you're notfeeling great.
I don't know if it makes mostsense to, the money's already
been spent.
And he goes that's exactly thepoint the money's already been
spent, I have to go.
We said the money's been spentwhether you're there or not
there.
So the point here is for thisguy he's going, hey, the money's
been spent.
(20:09):
If it turns out, he doesn'ttake that fourth trip because he
doesn't feel well, okay, he canuse it on something else.
So don't need any of you tofeel like, oh, I have to.
What?
If it turns out, I don't takethe four trips, that's okay, use
it for something else.
But that practice works foreveryone and you don't have to
wait till you retire to startdoing that.
So love that.
Speaker 2 (20:28):
Yeah, awesome.
Well, I think that's a goodplace to wrap.
This is a very common thing,believe it or not.
I think it's hard for people tothink that this is a problem.
They think that once I get tothat $10 million portfolio half
of that, a third of that, afifth of that most people would
feel like everything wouldbecome easier.
Then you get there and yourealize it's not so.
What can you start doing toshape the practices, shape the
(20:48):
identities you want to have foryourself so that when you are
retired it becomes a morenatural transition you can spend
on the things you want to spendmoney on?
So we will wrap with that, ari.
Where can people find you ifthey want to follow every single
thing that Ari Taublieb?
Speaker 1 (21:02):
does Every single thing.
That would be a lot.
I don't think anyone wants todo that.
But early retirement Ari onInstagram if you want to see
soccer clips and silly videoswhere I really try to make light
of a lot of retirement planningconcepts that seem difficult to
understand.
I'll also be on LinkedIn so youcan connect with me there, and
then I'm most active in our rootcollective, which is the
(21:23):
retirement community that wehave here, and that, I think, is
where you'll find morepractical tips, just like the
ones James was sharing today.
Speaker 2 (21:33):
James, how about yourself?
Love it?
Youtube is the biggest place,james Canole.
On YouTube.
We have our Root FinancialYouTube channel, which is where
this actual episode will beliving.
So that's at Root Financial.
Linkedin, I'm more active.
Instagram, I always say it,james Canole, at some point I'll
actually get active on theretoo, and something got to keep
up with you.
But those are the places, thecollective's big.
This is something we're excitedto be doing.
By the time this is airing,it's going to have been out for
(21:55):
a couple plus weeks now, butcheck that out.
Show notes, I think, will be inthe description Is that right,
it will be in the description.
Speaker 1 (22:02):
And my only ask for a lot of you is you listen to
this every week or you watchdifferent videos and topics.
What practical tip can you givesomeone else that you do,
really saying hey, I wish I knewthis earlier.
Where, hey, I just go valet, oryou know what I do by the guac
or whatever it is.
Those are our examples.
What are yours?
Go tell inside the communitywhat it is that you feel.
(22:25):
Hey, I wish I knew this earlier, because there's a lot of
people you can help.
Speaker 2 (22:29):
Awesome, Love it.
Thank you all for listening andwe will see you on the next
episode.
See ya, Bye.
The information presented isfor educational purposes only
and is not intended as an offeror solicitation for the sale or
purchase of any specificsecurities, investments or
investment strategies.
Investments involve risk andare not guaranteed.
Any mention of rates of returnare historical and illustrative
(22:52):
in nature and are not aguarantee of future returns.
Past performance does notguarantee future performance.
Speaker 1 (22:57):
Viewers are encouraged to seek advice from a
qualified tax, legal orinvestment advisor professional
to determine whether anyinformation presented may be
suitable for their specificsituation Once again.
Speaker 2 (23:09):
I'm James Canole, founder of Root Financial, and
if you're interested in seeinghow we help our clients at Root
Financial get the most out oflife with their money, be sure
to visit us atwwwrootfinancialpartnerscom.
Speaker 1 (23:20):
Thank you all, as always, for listening to the
Early Retirement Podcast.
I love getting to host theseshows and make different content
for you guys every single week.
I've not missed a single weekin years and that is because I
love getting to do this.
Now, please be smart about this.
Before you actually execute anystrategy that you see me talk
about or hear me talk about,should I say Please talk to your
(23:41):
financial advisor, your taxpreparer, your estate attorney.
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
Once again, just quickdisclaimer here.
Guys, please be smart aboutthis.
Appreciate you listening, asalways, and you can, of course,
submit a question on my website,earlyretirementpodcastcom, If
(24:05):
you, of course, want me toaddress a specific case study or
topic.
I will not promise I can get toit, but I respond to every
single person and if I find itwill be helpful for a lot of
people, I will absolutely makean episode on it, At the very
least give you some insight.
That's it, Thanks guys.
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