September 26, 2023 • 28 mins
One of the most ironic things about retirement spending is that the people who have saved the most money are often the same ones that have the most difficult time spending that money.
We often think that if we save up enough money or build up enough of a portfolio that in retirement it will open up unlimited fun and enjoyment.
The reality is, for those who have saved well, one of the hardest things you'll find about retirement is the difficulty you'll likely face trying to spend some of that money.
James discusses how you how you can shift your savings mindset to a spending mindset.
Questions Answered:
Why is it so difficult to go from a savings mindset to a spending mindset?
How do we start making the shift with our mindset?
Timestamps:
0:00 Intro
4:57 James' perspective
7:48 Example
10:47 We need to realize this
14:52 How do we reframe?
16:58 Pillar 1
18:38 Pillar 2
19:19 Pillar 3
20:36 Pillar 4
22:25 Pillar5
24:34 Summary
27:18 Outro
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
One of the most ironic things about retirement
spending is that the people whohave saved the most money are
often the same ones that havethe most Difficult time spending
that money.
We all somehow think that if wecan just save up enough money,
if we can just build up enoughof a portfolio, then by the time
we can retire it will open upthis new world of possibility,
with unlimited fun and enjoyment.
The problem, though, is that'sjust not reality.
(00:22):
The reality is this isn't true.
For those who have saved Well,one of the hardest things you'll
find about retirement is thedifficulty you'll likely face
trying to spend some of thatmoney.
So today's episode of ready forretirement, I'm gonna tell you
how you can shift your mindsetto go from a savings mindset to
a spending mindset.
This is another episode ofready for retirement.
(00:43):
I'm your host, james Kanol, andI'm here to teach you how to
get the most out of life withyour money.
And now onto the episode.
This episode and this topic ofhow do we shift from a savings
mindset to a spending mindset.
It was actually prompted by aconversation I recently had with
a client, and these clientsthey had just recently retired,
(01:04):
they had saved Well, they had an, invested well and they had
previously had a financialplanner.
But the financial plannerdidn't really go over some of
the projections and what'spossible and how much can you
spend in retirement.
So at the beginning of ourrelationship, one of the first
things that we did is we wentthrough some of those
projections.
We said, based on yourinvestments, based on your
income sources, how much youwant to spend, let's see what's
(01:26):
possible.
You know what?
Let's see what's possible ofreally comfortable retirement.
And we modeled that out and weshowed year by year here's how
much you can think aboutspending.
And not only is this amountthat you could spend
Significantly more than you'vebeen spending up until this
point, but on top of that, let'sfast forward 30 years.
30 years from now, yourportfolio balance is projected
(01:48):
to be Significantly larger thanthen.
It even is today, even if weextract out the impact of
inflation.
So what that led to was somereally fun conversations about
look, how much more could you doin retirement, how many more
trips could you take, how muchmore impact could you have, how
much more fun could you havebecause you've got the means and
the resources to do so.
So at the end of theconversation, I think, these
(02:10):
clients, they were a bitdumbfounded to see oh my
goodness, you know, we knew wewere in a good spot, but we're
in a fantastic spot to be ableto spend all this extra money
and do the things we want to do.
And that's what they left theconversation thinking.
Here's the irony, though werecently had another meeting and
after this meeting they hadjust wrapped up part of their
trip where they went on vacationand they had dinner together,
(02:32):
nice dinner.
And they said afterwards whendo we want to go for dessert?
And he simply said you know, Ijust want some M&M's for dessert
.
Nothing fancy, just a bag ofM&M's.
To which she said great, youknow, at her hotel bar we
actually have M&M's there.
Why don't you just have some ofthose there?
Well, the first thing that wentthrough his mind was those are
hotel bar M&M's.
(02:53):
Those are five or six bucks.
If we need to take those, I'mnot gonna pay $5 for a pack of
M&M's.
I'm gonna drive down the storeand get a pack for 99 cents or
something like that at the local7-eleven or the local
convenience store.
So instead of eating the M&M'sthat were right there in the
hotel room, he left the hotel,drove to a convenience store,
got the M&M's and saved three orfour bucks in doing so.
(03:15):
And they said, james, you hadjust showed us in our last
meeting how much we could spend.
And what you showed us is wecould spend an Extravagant
amount more than we'vepreviously been spending and
still be just fine for the restof our lives.
So why is it that it's so hardfor us to pay five bucks for the
M&Ms in our hotel room andinstead of we drive down the
(03:36):
street so we can pay one dollarfor that same bag of M&Ms?
What they started to realizeand started internalizing is
something I think so many peoplestart to face when they get
into retirement, as, oh mygoodness, this mindset that
we've had of living within ourmeans, of being frugal, of
prioritizing savings, thatmindset no matter how much money
you have, it just doesn'tautomatically shift as soon as
(04:00):
you're in retirement.
The charts and graphs andprojections that was cool to see
and mentally and rationally, wecould see that we're in a good
position to be able to spend awhole lot more, but we still
can't bring ourselves to buythis five dollar bag of M&Ms.
James, what's up with that?
How come it's so difficult togo from this savings mindset to
the spending mindset.
So, because this is such acommon and such a difficult
(04:22):
challenge for so many people,this whole episode is about how
do we make that shift, how do westart making the shift with our
mindset?
And, at the end of the day,this isn't to say that you
should have or shouldn't haveeaten the M&Ms in the mini bar
versus the M&Ms from theconvenience store down the
street.
It's not even about the factthat they had enough money to
buy all the M&Ms and all themini bars in that entire hotel.
(04:43):
It's about something completelydifferent.
Instead, this is about how dowe view things, what is our
belief about things and how dowe make sure that we have the
proper mindset in retirement toensure we can fully enjoy
everything that we've worked sohard for Before we go any
further.
I know some people listening areprobably saying what on earth?
People have trouble spendingmoney.
How can that be?
(05:03):
That sounds crazy.
Well, it might sound crazy tomany of you listening, but I
assure you that this is one ofthe most important things I like
to work through with many of myclients, because my perspective
is who cares how optimized yourinvestments are how much you
save with your tax strategy, howperfect your withdrawal
strategy is.
If, at the end of the day, theonly impact of doing all that is
(05:24):
that you die with a few moremillion dollars in your bank
account, then we've completelymissed the point.
The point is not to accumulateand hoard money.
The point is how do we alignour spending in a way that
allows us to get the mostfulfillment, joy, contentment
out of our retirement, andthat's why this topic is so
important.
To start with this, I want tomake very clear what I'm not
saying in all this.
What I'm not saying is okay, ifyou're in this position, just
(05:48):
start spending.
Just start spending frivolously.
The wrong way to think aboutthis is okay, I'll just start
buying more expensive cars, orI'll go start buying designer
clothes, even though I don'tlike designer clothes, or I'll
just buy more stuff, more toys Ireally don't care about.
That's not what I'm saying.
I will be the first to say thatmoney does not buy happiness.
More spending doesn'tnecessarily bring happiness, but
(06:11):
better spending does, moremindful spending does.
So how can we start toincorporate that better spending
, that more mindful, that morealigned spending?
That's what we're going to do,because here's the thing I'd
like to point out to peopleEveryone follows some type of a
principle in their spendingdecisions.
Now, we're not often aware of it, but the reality is we are
(06:33):
following something.
We are basing our spending andour decisions on a principle.
Let's look back at the M&Mexample to illustrate what I
mean by this.
My client was following what Iwould call a money focus
principle.
He said there's $5 M&Ms I canget here in my hotel room or I
can simply go down the streetand get a $1 bag of M&Ms.
The principle there is I'm notgoing to make a foolish money
(06:56):
decision.
That principle was likelyinternalized just simply from
childhood and seeing how parentsspent money and how they viewed
money and not making dumbdecisions around money.
But that's something that'ssubconsciously internalized and
we then carry that with us goingforward.
So it's very much a principle,but it's a money focused
principle.
What I like to shift towardsand help people shift towards is
(07:18):
more of a life focusedprinciple.
Here's how I'd frame that Am Iwilling to spend a few more
dollars to enjoy the conveniencethat money can afford me?
So in that M&M example, surethere's more of a cost, a five
times greater cost to enjoy theM&Ms in the room versus the M&Ms
from the convenience store.
But what's my time worth?
(07:39):
What's my well-being worth?
What's my convenience worth,thank you.
I think that everybody shouldhave an aspirational hourly rate
of what is your time worth.
Let's walk through an example.
Let's say your time is worth$100 per hour.
Now, clearly, you're justmaking something up to start.
But let's say your time isworth $100 an hour and you go on
Amazon and you order a t-shirtthat you think you're going to
like and it costs $15.
(08:00):
Well, that t-shirt comes, youtry it on, you don't like it and
you say, okay, well, I've gotto return it.
This cost me $15 to do so.
Well, think about it.
You then have to go print out alabel, drive to the post office
of the UPS store, wait in line,process the return, drive that
home.
Let's say, conservatively, thattakes you 30 minutes.
Well, if your time is worth$100 an hour, then you just
(08:21):
spent $50 to get back $15.
Now, none of us would actuallydo that in real life.
But the problem is we don'tactually think about our time.
Our convenience is having anydollar value.
But if we don't assign somedollar value to our time.
What we're unintentionallydoing is we're devaluing
ourselves, we're devaluing ourtime.
(08:42):
What I would do instead there,if that t-shirt came, I didn't
like it, well, instead of goingthrough the hassle of returning
it, that might go in thedonation bin, sounds absurd,
sounds crazy.
How on earth could you spendmoney just to throw it away?
But I'm not throwing it away.
What I'm choosing to do issaying I'm not going to throw
away more money by go waiting inline, driving to the post
office, doing all these thingsthat I could be spending with
(09:04):
family, spending at the beach,spending doing something fun.
I'm not willing to pay $50 ofmy time that could be really
well spent to get back $15.
Now you can make up your ownnumber for what it is for you,
but as your net worth grows, youshould continually elevate the
hourly rate that you filterthese types of decisions through
.
So, going back to that Eminemexample, if I was to apply more
(09:26):
of a life-focused principlethere, I would say what's my
convenience, my time worth, anddoes it make sense for me to
spend an extra 20 minutes to go?
Save $4 by getting Eminemsomewhere else?
Or should I just open up thebag of Eminems in the hotel room
.
Now again, I'm keep parking onthis specific example and it
sounds absurd.
Maybe it sounds funny, but weall face those things, myself
(09:48):
included.
I remember as a kid we didn'tever pay for parking, at least
as I can remember.
We go to a Padres game.
So we're in San Diego.
I'd go to a Padres game withfriends.
I would park a mile away topark somewhere for free, instead
of paying the five bucks or 10bucks now it's a lot more, but
back then it's a bit lessinstead of paying the $5 to park
right next to the stadium.
That was just a money belief, amental belief of I'm not going
(10:11):
to pay for parking.
That's absurd.
Well, now I do, but now it'sbecause I have a different
mindset of what's my time worth,what's that convenience worth.
But I think all of us canprobably find examples, if we're
honest with ourselves, of whereare we spending money in a way,
or spending time, I should say,in a way that's actually
costing us more than it'sactually saving us from my money
(10:31):
standpoint.
Hey, everyone, it's me again forthe Disclaimer.
Please be smart about this.
Before doing anything, pleasebe sure to consult with your tax
planner or financial planner.
Nothing in this podcast shouldbe construed as investment, tax,
legal or other financial advice.
It is for informationalpurposes only.
Here's the next thing that weneed to realize these principles
that we base our decisions on.
(10:51):
They're not rational principlesthat we can say, okay, well,
I'm just going to start doingthings differently.
They're so much deeper thanthat.
In fact, they're based upon ouridentity and the things we
believe to be true aboutourselves.
Now, these identities are builtup over years.
So my client's example.
It was probably absurd.
He would have never seen hisparents growing up spend more
(11:12):
money on and I'm justspeculating here but if they
were in a hotel, I'm not goingto use a hotel bar.
I'm going to go down the streetand get something and, by the
way, in many cases, depending onyour financial situation, that
is the right thing to do.
If you're in a situation whereyou can't afford the extra money
to spend on convenience or tobuy back time, you need to be
going down the street.
You shouldn't be spendingfrivolously.
(11:33):
I want to make very clear thatI'm having this decision, this
discussion, because of theirfinancial standing, because they
could absolutely afford it.
That's not the case foreveryone.
But, going back to this.
So many of those decisions.
They're based on our, orthey're reflected on our
identity and the way we seeourselves, and so often that
goes all the way back to ourchildhood.
(11:54):
How did we see parents spendmoney?
How do we see those around usspend money or not spend money?
I grew up we didn't have verymuch money.
So, going back to that parkingdecision, we would have never
paid for parking if we couldhave avoided it.
Anywhere that we went as afamily, even little things like
we never ordered appetizers ordessert in the few occasions we
would go out for dinner.
(12:15):
That was just absurd.
That just wasn't a thing we do.
We have these limited number ofdollars.
We're not spending it on.
As a kid, what you think of asfrivolous extra things.
Now, those frivolous extrathings, those appetizers, those
desserts they're not inherentlygood or bad, but as a kid and
you start to internalize thisyou almost see them as such.
(12:35):
Okay, we don't spend money onit.
That must be because it's bad.
Therefore, my identity is basedon something that says I'm only
buying this or I'm not payingfor that.
And if we're not careful aboutthis or if we don't spend some
time in self reflection aboutthis.
What we'll start to see isthose behaviors just continue
for the rest of our lives.
And not only do they continue,but they continue to be more and
(12:56):
more reinforced because thosebehaviors are built upon our
actions.
So as we continue to have thesame action over and over again
of not ordering appetizers, ofnot paying extra for the bag of
M&Ms, of not paying for parking,those actions continue to
reinforce our identity and whatwe believe about ourselves, and
it just makes it harder andharder to change.
(13:17):
Over time and in some seasonsof life, those habits that are
ingrained in you may serve youreally well, but you may come to
a point where that habit nolonger serves you, it's no
longer beneficial to you, andthat's when it's important to
understand that, to recognizewhere that identity lies and see
if it makes sense to takeproactive steps to change it.
I've mentioned many times beforein this podcast that one of my
(13:39):
favorite authors is a guy namedJames Clear.
James Clear has a quote wherehe says it's hard to change your
habits if you never change theunderlying beliefs that led to
your past behavior.
You have a new goal and a newplan, but you haven't changed
who you are".
For my clients.
I can tell them hey, you couldspend another 20,000 per year,
(14:01):
50,000 per year, even 100,000per year, based upon your
portfolio and your financialsituation, but unless we work on
their underlying beliefs andhabits, no actual lasting change
is going to happen.
They may walk away from thatmeeting and say great, I've got
an extra 20,000 to spend, I'vegot an extra 50,000 to spend,
and they might think about it,but then they just revert to who
(14:21):
they are.
That's very natural.
We all revert to who we are.
So the question isn't are we oraren't we?
We're absolutely going to dothat.
The question is how can we bevery intentional, not about who
we are, but who we want to be,and then start taking steps to
become more of who we want to be, unless of who we currently are
and this is an ongoing process,as I mentioned, some of these
(14:44):
habits serve us very well forspecific stages and seasons of
life and at some point, some ofthese habits stop serving us
well.
So how can we start to reframeand think about this differently
so we can start to build newidentities?
Because here's the risk if wedon't If you're listening to
this and this is resonating,saying you know what?
It's no big deal If I can'tever bring myself to spend more.
(15:06):
Yeah, I get it.
It's hard for me to do, but Ijust can't bring myself to do it
.
Here's what's going to happen.
It may sound like there's not alot of risk with that, and if
you're quantifying risk as areyou going to run out of money,
you're probably right.
You probably won't run out ofmoney the less you spend in
retirement.
But here's the bigger risk youmay continue accumulating lots
and lots of money over thecourse of your retirement and
(15:27):
you're going to wake up one daywith a really large portfolio
but feel pretty empty, becausewhat you're going to start to
realize is that portfolio aloneis not what holds value.
What holds value is what thatportfolio can do for you, and
what you're going to realize isgosh, my life has passed me by.
The last 10, 15, 20 years havepassed me by where I had the
(15:48):
means to do some really special,incredible things, but I
couldn't bring myself to do it,and now the opportunity to do so
has passed.
So how can we start doing thesethings when the time is right,
as opposed to procrastinatingand I know this sounds like a
weird thing to procrastinate on,but many people do.
I'll spend later.
I'll do more.
If I can just keep building myportfolio, then maybe it becomes
(16:09):
easier to spend.
I'm here to tell you it's notgoing to be easier to spend.
Your comfort is not going tocome from the size of your
portfolio.
Your comfort should come fromhaving a plan, but also from
changing your identity and yourhabits and the beliefs you have
about yourself.
So in just a bit, I'm going towalk you through a very simple
but a very effective way toactually start to change this
(16:30):
identity.
But before I do so, I want towalk through what should you
spend money on?
A lot of people say well, james, you said I shouldn't just go
buy more cars or more clothes ormore things.
That's exactly right.
More things aren't going tobring you happiness.
But in my experience in doingthis with so many different
clients, there are five corepillars of what I like to think
of as impactful spendingspending that is going to drive
(16:54):
more fulfillment, more happiness, more joy.
So here's those five pillars.
Number one spend money on thingsthat allow you to buy back your
time.
What do I mean by that?
Well, there's all things thatconsume our time, and time is
the only non-renewable resourcethat any of us have.
So how do we preserve that andprotect that with all that we
can?
Well, what does that look like?
(17:14):
Could you hire a house cleaner?
Maybe you already have a housecleaner.
Could they come more frequently?
Maybe it's a gardener?
Maybe you pay for grocerydelivery.
Maybe you pay for someone to doyour laundry or wash your car.
These are just simple, practicalexamples of can we spend money
in a way to buy back the onlynon-renewable currency that we
have, which is our time?
(17:35):
Could you buy a home gym?
Now think of it this way a homegym, that's pretty expensive,
geez.
I got to buy the weight rack, Igot to buy a treadmill, I got
to buy all these differentpieces of equipment.
Well, if we go back to how wevalue our time, let's look at an
example.
Let's assume that you commute30 minutes round trip to your
gym, 15 minutes there, 15minutes back, and let's say you
do that four times a week.
(17:56):
What that means is, every weekyou're saving two hours of time.
If you work out 50 hours a year, that's 100 hours in a year
that you've just saved by havinga home gym instead of having to
drive to the gym.
If you value your time at $100an hour, you just create a
$10,000 of value every singleyear by investing in a home gym.
(18:19):
Now again, I know that somepeople their financial resources
aren't to the point that theycan invest in that.
This is more.
Once you're at a point, you'vedone the saving, you've done the
investing, you have theresources.
How can you now start shiftingto use those resources to buy
back time instead of using yourtime to accumulate more money?
The second pillar of effectivespending is spending money on
(18:41):
health.
Confucius has a quote.
He says a healthy man wants athousand things.
A sick man only wants one.
Wealth without health ispoverty.
It doesn't matter how muchmoney you have in your portfolio
.
If you sacrifice your time andyour health and your well-being
to get it, you're not going tobe able to enjoy it.
How can you spend your money byinvesting in a nice gym, a gym
(19:03):
that you actually want to go to,invest in a trainer, invest in
healthy food.
All these things are actuallytruly investments in your future
health.
Again, it does not matter howmuch money you have in your
retirement if you don't have thehealth to actually enjoy it.
So spend money on health.
The third is spend money onexperiences.
How do you buy good experiences?
(19:23):
Well, the first thing thatpeople talk about is travel.
Well, yes, absolutely.
But what if you take it a stepfurther?
What would it look like if youcould bring your family with you
?
What would it look like if youcould bring your friends with
you?
Again, this depends upon yourlevel of wealth and your level
of call it excess money that youcould spend.
But think creatively.
Sometimes the biggestimpediment to our ability to
(19:45):
spend money is our lack ofimagination.
How can we imagine what'spossible?
How can we think about thingsthat aren't the usual trips,
that aren't the usual vacationsthat we see people take?
But how can we create reallymeaningful experiences and spend
lavishly on those experiences,of course, assuming it fits
within your plan but spendlavishly in a way to create
(20:05):
those experiences and thosememories that are going to serve
you for the rest of your life?
You could also think about thisin the reverse Don't just spend
money on good experiences, alsospend money to avoid unpleasant
experiences.
So maybe you love travel, butthat plane is just really
difficult.
You don't like the plane trip,you don't like being crammed in
there.
Well, do you spend your moneyon a first class ticket or a
(20:26):
business class ticket?
Can you use your money to avoidan unpleasant experience?
Because that's just the inverseof spending money on good
experiences.
The fourth pillar of effectivespending is spend money on
giving.
Now you may have been sayingearlier, james, it's not a big
deal to me if I pass away with alot of money.
That money just goes to my kidswhen I die.
So I honestly really don't careif I have a bunch left over.
(20:48):
In fact, maybe I prefer it.
Well, great, let's play thatout.
Let's assume you live until age90 and say, by that point, maybe
your kids are age 60.
How much will your money reallymean to them at that point?
Sure, more is always better,sure, it's going to mean
something, but that money won'tmean as much to them at that
point as it could have meantearlier.
(21:08):
What if, instead, you've beenable to help them at the home
purchase?
What if, instead, you were ableto help them save for their
kids, your grandkids, college?
What if, instead, when you aretaking great trips around the
world, you paid for all of theirexpenses, their airfare, their
hotel stay, all this again?
I'm going to harp on this, butthis depends upon do you have
the resources to do it.
(21:28):
But assuming you do, instead oftrying to save all this money
until you're 90 or 95 and passit down, then what greater
impact could you have by seeingthat used along the way?
Not to mention how much happierwould you be if you could help
with some of these things andsee the impact of some of these
things during your lifetime, asopposed to waiting until you had
passed.
(21:49):
Or charity spend money on giving, spend money on charity.
Same thing If all or part ofyour money is going to go to
charity when you pass, wouldn'tyou love to see the impact that
could have while you're living?
On top of that, how many needsgo unmet every single day simply
due to lack of resources?
If part of your goal is to givemoney to charity, see that
charity meet that need.
Now make sure that you both getto meet that need and you also
(22:12):
get the enjoyment and thesatisfaction, the fulfillment,
that comes from seeing that needmet.
There's a better way of doingit than just unintentionally
letting that money compound andgrow forever in 20, 30 years
from now, meaning whatever needsexist at that time In the fifth
pillar of effective spendingspend money to improve your
environment.
Have you ever walked into apoorly lit, disorganized office
(22:34):
room or any room for that matter, and then compare that to
walking into a room that hasgreat windows, great natural
light, very open, very light?
How do you feel in each ofthose environments?
I think too often we don'trealize how important the
environment around us is, notjust the physical environment,
but also the people around us.
How important is it to besurrounded by the right people,
(22:57):
to be surrounded by the rightphysical environment.
The right environment has ahuge impact on your mental and
your emotional state.
This is a big factor that Ithink enough people don't think
about.
So where you live, is yourenvironment, both the location,
so where you happen to besurrounded with, was it
naturally beautiful?
Are there cool things to doaround you?
Is it a city or a town thatinspires you, or is it not?
(23:19):
So the location, plus, on topof that, the actual environment
within your home.
How is it decorated?
How is light coming in?
What are your windows like?
I know this maybe sounds alittle bit absurd, but this is
real.
There's any interior designerslistening?
They're probably clapping theirhands right now saying yes,
james, exactly that's right, butthis is so important.
Do you have a beautifulenvironment around you?
So where you live, the layoutof your home and even the people
(23:42):
around you?
So I live in San Diego,california.
It's expensive, taxes are high.
California has its issues.
Why do I live here?
Well, environment is importantto me.
Being around great people.
Now, my family is here, mygreat friends are here.
That's part of environment, butso is the natural beauty around
me.
I love to ride my bike down tothe ocean with my wife and
(24:02):
daughter, and we like to spendtime splashing the water,
running around in the sun.
Those are memories that arecreated because of the
environment we're in that Icouldn't get in many other parts
of the country.
I could save way more moneyliving in a different area.
But the environment that welive in is so important to who
we are and what we enjoy doingthat San Diego is a great place
for us.
(24:23):
So those are the five pillars ofeffective spending.
But how do we actually do it?
Well, it's not easy, but it'spretty simple.
I'm going to read you anotherquote by James Clear.
James Clear has a quote wherehe says every action you take is
a vote for the type of personyou wish to become.
No single instance willtransform your beliefs.
As the votes build up, so doesthe evidence of your new
(24:46):
identity.
This is one reason whymeaningful change does not
require radical change.
Small habits can make ameaningful difference by
providing evidence of a newidentity, and if a change is
meaningful, it is actually big.
That's the paradox of makingsmall improvements.
End quote.
This is so simple but soprofound.
(25:07):
What do you need to do to changeyour identity?
Choose one thing you want tospend money on, not just to
spend money, but hopefullysomething that corresponds to
one of the five core pillars ofspending that I mentioned just
before this.
How do you buy back time?
How do you invest or spend onhealth, experiences, giving or
environment?
Choose something and commit toregular activity, regular
(25:29):
spending on that activity.
For example, grocery delivery.
I used to hate going to thegrocery store.
I don't know what it was, butthe drive there, spending the
time going up and down theaisles, I did not like it.
It was the worst part of myweekend.
I know life could be a lotworse than simply having to go
grocery shopping on the weekend,but one thing that we committed
to?
Is we committed to saying let'sjust order groceries online we
(25:51):
pay a few bucks to do it, but ifthat saves an hour and a half
of time an hour and a half oftime that we didn't really enjoy
spending then that's aninvestment we'd gladly make.
So commit to something thatmakes sense for you, something
that buys back your time,something where you're investing
in health, investing inexperiences, giving or creating
a better environment around you.
Commit to doing that for thenext 30 to 60 days.
(26:13):
If it's not improving yourquality of life, even just a
little bit, then stop.
But if it is, then recognizethat by doing this, you're
starting to recreate youridentity, and that identity is
something that's going to allowyou to spend in a way that
allows for more fulfilling andenjoying retirement.
So all you have to do to changeyour identity, it's no big grand
action.
It's little changes, but thereare little changes that you
(26:36):
commit to.
So you start small, you buildthe habits and over time, you'll
start valuing your time andyour money in a different way,
and you'll stop looking at moneyas the almighty dollar that
must be preserved and grown atall costs, and instead you'll
start looking at it as a toolthat you can use to get the most
out of life.
So that is it for today.
So, whether you're strugglingto buy M&Ms at the hotel bar or
(26:58):
pay for parking or anything elselike that that we've mentioned,
there is a simple solution.
But what you have to realize isit starts with your identity.
It's not about the actualactions and the difficulty in
spending or not spending.
It's about your identity andthe beliefs you have about
yourself that have simply beenreinforced over years and years
and years of doing something thesame way.
So I hope that was helpful foryou.
(27:20):
If you've enjoyed this podcastor any of the other podcasts
we've done, I would reallyappreciate it if you take a
little bit of time and leave afive star review, letting
everyone know that you enjoy it,and if you haven't already, be
sure to check us out on YouTube.
The channel name is JamesCannell, c-o-n-o-l-e.
You'll find this episode.
You'll find a lot of othergreat content there as well.
As always, I appreciate youlistening and I'll see you all
(27:40):
next time.
["the Time At Podcasts"].
Thank you for listening toanother episode of the Ready for
a Time at Podcast.
If you wanna see how RootFinancial can help you implement
the techniques I discussed inthis podcast.
Then go torootfinancialpartnerscom and
click Start here, where you canschedule a call to one of our
advisors.
We work with clients all overthe country and we love the
opportunity to speak with youabout your goals and how we
(28:02):
might be able to help.
And please remember nothing wediscussed in this podcast is
intended to serve as advice.
You should always consult afinancial, legal or tax
professional who's familiar withyour unique circumstances
before making any financialdecisions.
One of the most ironic things about retirement
spending is that the people whohave saved the most money are
often the same ones that havethe most Difficult time spending
that money.
We all somehow think that if wecan just save up enough money,
if we can just build up enoughof a portfolio, then by the time
we can retire it will open upthis new world of possibility,
with unlimited fun and enjoyment.
The problem, though, is that'sjust not reality.
(00:22):
The reality is this isn't true.
For those who have saved Well,one of the hardest things you'll
find about retirement is thedifficulty you'll likely face
trying to spend some of thatmoney.
So today's episode of ready forretirement, I'm gonna tell you
how you can shift your mindsetto go from a savings mindset to
a spending mindset.
This is another episode ofready for retirement.
(00:43):
I'm your host, james Kanol, andI'm here to teach you how to
get the most out of life withyour money.
And now onto the episode.
This episode and this topic ofhow do we shift from a savings
mindset to a spending mindset.
It was actually prompted by aconversation I recently had with
a client, and these clientsthey had just recently retired,
(01:04):
they had saved Well, they had an, invested well and they had
previously had a financialplanner.
But the financial plannerdidn't really go over some of
the projections and what'spossible and how much can you
spend in retirement.
So at the beginning of ourrelationship, one of the first
things that we did is we wentthrough some of those
projections.
We said, based on yourinvestments, based on your
income sources, how much youwant to spend, let's see what's
(01:26):
possible.
You know what?
Let's see what's possible ofreally comfortable retirement.
And we modeled that out and weshowed year by year here's how
much you can think aboutspending.
And not only is this amountthat you could spend
Significantly more than you'vebeen spending up until this
point, but on top of that, let'sfast forward 30 years.
30 years from now, yourportfolio balance is projected
(01:48):
to be Significantly larger thanthen.
It even is today, even if weextract out the impact of
inflation.
So what that led to was somereally fun conversations about
look, how much more could you doin retirement, how many more
trips could you take, how muchmore impact could you have, how
much more fun could you havebecause you've got the means and
the resources to do so.
So at the end of theconversation, I think, these
(02:10):
clients, they were a bitdumbfounded to see oh my
goodness, you know, we knew wewere in a good spot, but we're
in a fantastic spot to be ableto spend all this extra money
and do the things we want to do.
And that's what they left theconversation thinking.
Here's the irony, though werecently had another meeting and
after this meeting they hadjust wrapped up part of their
trip where they went on vacationand they had dinner together,
(02:32):
nice dinner.
And they said afterwards whendo we want to go for dessert?
And he simply said you know, Ijust want some M&M's for dessert
.
Nothing fancy, just a bag ofM&M's.
To which she said great, youknow, at her hotel bar we
actually have M&M's there.
Why don't you just have some ofthose there?
Well, the first thing that wentthrough his mind was those are
hotel bar M&M's.
(02:53):
Those are five or six bucks.
If we need to take those, I'mnot gonna pay $5 for a pack of
M&M's.
I'm gonna drive down the storeand get a pack for 99 cents or
something like that at the local7-eleven or the local
convenience store.
So instead of eating the M&M'sthat were right there in the
hotel room, he left the hotel,drove to a convenience store,
got the M&M's and saved three orfour bucks in doing so.
(03:15):
And they said, james, you hadjust showed us in our last
meeting how much we could spend.
And what you showed us is wecould spend an Extravagant
amount more than we'vepreviously been spending and
still be just fine for the restof our lives.
So why is it that it's so hardfor us to pay five bucks for the
M&Ms in our hotel room andinstead of we drive down the
(03:36):
street so we can pay one dollarfor that same bag of M&Ms?
What they started to realizeand started internalizing is
something I think so many peoplestart to face when they get
into retirement, as, oh mygoodness, this mindset that
we've had of living within ourmeans, of being frugal, of
prioritizing savings, thatmindset no matter how much money
you have, it just doesn'tautomatically shift as soon as
(04:00):
you're in retirement.
The charts and graphs andprojections that was cool to see
and mentally and rationally, wecould see that we're in a good
position to be able to spend awhole lot more, but we still
can't bring ourselves to buythis five dollar bag of M&Ms.
James, what's up with that?
How come it's so difficult togo from this savings mindset to
the spending mindset.
So, because this is such acommon and such a difficult
(04:22):
challenge for so many people,this whole episode is about how
do we make that shift, how do westart making the shift with our
mindset?
And, at the end of the day,this isn't to say that you
should have or shouldn't haveeaten the M&Ms in the mini bar
versus the M&Ms from theconvenience store down the
street.
It's not even about the factthat they had enough money to
buy all the M&Ms and all themini bars in that entire hotel.
(04:43):
It's about something completelydifferent.
Instead, this is about how dowe view things, what is our
belief about things and how dowe make sure that we have the
proper mindset in retirement toensure we can fully enjoy
everything that we've worked sohard for Before we go any
further.
I know some people listening areprobably saying what on earth?
People have trouble spendingmoney.
How can that be?
(05:03):
That sounds crazy.
Well, it might sound crazy tomany of you listening, but I
assure you that this is one ofthe most important things I like
to work through with many of myclients, because my perspective
is who cares how optimized yourinvestments are how much you
save with your tax strategy, howperfect your withdrawal
strategy is.
If, at the end of the day, theonly impact of doing all that is
(05:24):
that you die with a few moremillion dollars in your bank
account, then we've completelymissed the point.
The point is not to accumulateand hoard money.
The point is how do we alignour spending in a way that
allows us to get the mostfulfillment, joy, contentment
out of our retirement, andthat's why this topic is so
important.
To start with this, I want tomake very clear what I'm not
saying in all this.
What I'm not saying is okay, ifyou're in this position, just
(05:48):
start spending.
Just start spending frivolously.
The wrong way to think aboutthis is okay, I'll just start
buying more expensive cars, orI'll go start buying designer
clothes, even though I don'tlike designer clothes, or I'll
just buy more stuff, more toys Ireally don't care about.
That's not what I'm saying.
I will be the first to say thatmoney does not buy happiness.
More spending doesn'tnecessarily bring happiness, but
(06:11):
better spending does, moremindful spending does.
So how can we start toincorporate that better spending
, that more mindful, that morealigned spending?
That's what we're going to do,because here's the thing I'd
like to point out to peopleEveryone follows some type of a
principle in their spendingdecisions.
Now, we're not often aware of it, but the reality is we are
(06:33):
following something.
We are basing our spending andour decisions on a principle.
Let's look back at the M&Mexample to illustrate what I
mean by this.
My client was following what Iwould call a money focus
principle.
He said there's $5 M&Ms I canget here in my hotel room or I
can simply go down the streetand get a $1 bag of M&Ms.
The principle there is I'm notgoing to make a foolish money
(06:56):
decision.
That principle was likelyinternalized just simply from
childhood and seeing how parentsspent money and how they viewed
money and not making dumbdecisions around money.
But that's something that'ssubconsciously internalized and
we then carry that with us goingforward.
So it's very much a principle,but it's a money focused
principle.
What I like to shift towardsand help people shift towards is
(07:18):
more of a life focusedprinciple.
Here's how I'd frame that Am Iwilling to spend a few more
dollars to enjoy the conveniencethat money can afford me?
So in that M&M example, surethere's more of a cost, a five
times greater cost to enjoy theM&Ms in the room versus the M&Ms
from the convenience store.
But what's my time worth?
(07:39):
What's my well-being worth?
What's my convenience worth,thank you.
I think that everybody shouldhave an aspirational hourly rate
of what is your time worth.
Let's walk through an example.
Let's say your time is worth$100 per hour.
Now, clearly, you're justmaking something up to start.
But let's say your time isworth $100 an hour and you go on
Amazon and you order a t-shirtthat you think you're going to
like and it costs $15.
(08:00):
Well, that t-shirt comes, youtry it on, you don't like it and
you say, okay, well, I've gotto return it.
This cost me $15 to do so.
Well, think about it.
You then have to go print out alabel, drive to the post office
of the UPS store, wait in line,process the return, drive that
home.
Let's say, conservatively, thattakes you 30 minutes.
Well, if your time is worth$100 an hour, then you just
(08:21):
spent $50 to get back $15.
Now, none of us would actuallydo that in real life.
But the problem is we don'tactually think about our time.
Our convenience is having anydollar value.
But if we don't assign somedollar value to our time.
What we're unintentionallydoing is we're devaluing
ourselves, we're devaluing ourtime.
(08:42):
What I would do instead there,if that t-shirt came, I didn't
like it, well, instead of goingthrough the hassle of returning
it, that might go in thedonation bin, sounds absurd,
sounds crazy.
How on earth could you spendmoney just to throw it away?
But I'm not throwing it away.
What I'm choosing to do issaying I'm not going to throw
away more money by go waiting inline, driving to the post
office, doing all these thingsthat I could be spending with
(09:04):
family, spending at the beach,spending doing something fun.
I'm not willing to pay $50 ofmy time that could be really
well spent to get back $15.
Now you can make up your ownnumber for what it is for you,
but as your net worth grows, youshould continually elevate the
hourly rate that you filterthese types of decisions through
.
So, going back to that Eminemexample, if I was to apply more
(09:26):
of a life-focused principlethere, I would say what's my
convenience, my time worth, anddoes it make sense for me to
spend an extra 20 minutes to go?
Save $4 by getting Eminemsomewhere else?
Or should I just open up thebag of Eminems in the hotel room
.
Now again, I'm keep parking onthis specific example and it
sounds absurd.
Maybe it sounds funny, but weall face those things, myself
(09:48):
included.
I remember as a kid we didn'tever pay for parking, at least
as I can remember.
We go to a Padres game.
So we're in San Diego.
I'd go to a Padres game withfriends.
I would park a mile away topark somewhere for free, instead
of paying the five bucks or 10bucks now it's a lot more, but
back then it's a bit lessinstead of paying the $5 to park
right next to the stadium.
That was just a money belief, amental belief of I'm not going
(10:11):
to pay for parking.
That's absurd.
Well, now I do, but now it'sbecause I have a different
mindset of what's my time worth,what's that convenience worth.
But I think all of us canprobably find examples, if we're
honest with ourselves, of whereare we spending money in a way,
or spending time, I should say,in a way that's actually
costing us more than it'sactually saving us from my money
(10:31):
standpoint.
Hey, everyone, it's me again forthe Disclaimer.
Please be smart about this.
Before doing anything, pleasebe sure to consult with your tax
planner or financial planner.
Nothing in this podcast shouldbe construed as investment, tax,
legal or other financial advice.
It is for informationalpurposes only.
Here's the next thing that weneed to realize these principles
that we base our decisions on.
(10:51):
They're not rational principlesthat we can say, okay, well,
I'm just going to start doingthings differently.
They're so much deeper thanthat.
In fact, they're based upon ouridentity and the things we
believe to be true aboutourselves.
Now, these identities are builtup over years.
So my client's example.
It was probably absurd.
He would have never seen hisparents growing up spend more
(11:12):
money on and I'm justspeculating here but if they
were in a hotel, I'm not goingto use a hotel bar.
I'm going to go down the streetand get something and, by the
way, in many cases, depending onyour financial situation, that
is the right thing to do.
If you're in a situation whereyou can't afford the extra money
to spend on convenience or tobuy back time, you need to be
going down the street.
You shouldn't be spendingfrivolously.
(11:33):
I want to make very clear thatI'm having this decision, this
discussion, because of theirfinancial standing, because they
could absolutely afford it.
That's not the case foreveryone.
But, going back to this.
So many of those decisions.
They're based on our, orthey're reflected on our
identity and the way we seeourselves, and so often that
goes all the way back to ourchildhood.
(11:54):
How did we see parents spendmoney?
How do we see those around usspend money or not spend money?
I grew up we didn't have verymuch money.
So, going back to that parkingdecision, we would have never
paid for parking if we couldhave avoided it.
Anywhere that we went as afamily, even little things like
we never ordered appetizers ordessert in the few occasions we
would go out for dinner.
(12:15):
That was just absurd.
That just wasn't a thing we do.
We have these limited number ofdollars.
We're not spending it on.
As a kid, what you think of asfrivolous extra things.
Now, those frivolous extrathings, those appetizers, those
desserts they're not inherentlygood or bad, but as a kid and
you start to internalize thisyou almost see them as such.
(12:35):
Okay, we don't spend money onit.
That must be because it's bad.
Therefore, my identity is basedon something that says I'm only
buying this or I'm not payingfor that.
And if we're not careful aboutthis or if we don't spend some
time in self reflection aboutthis.
What we'll start to see isthose behaviors just continue
for the rest of our lives.
And not only do they continue,but they continue to be more and
(12:56):
more reinforced because thosebehaviors are built upon our
actions.
So as we continue to have thesame action over and over again
of not ordering appetizers, ofnot paying extra for the bag of
M&Ms, of not paying for parking,those actions continue to
reinforce our identity and whatwe believe about ourselves, and
it just makes it harder andharder to change.
(13:17):
Over time and in some seasonsof life, those habits that are
ingrained in you may serve youreally well, but you may come to
a point where that habit nolonger serves you, it's no
longer beneficial to you, andthat's when it's important to
understand that, to recognizewhere that identity lies and see
if it makes sense to takeproactive steps to change it.
I've mentioned many times beforein this podcast that one of my
(13:39):
favorite authors is a guy namedJames Clear.
James Clear has a quote wherehe says it's hard to change your
habits if you never change theunderlying beliefs that led to
your past behavior.
You have a new goal and a newplan, but you haven't changed
who you are".
For my clients.
I can tell them hey, you couldspend another 20,000 per year,
(14:01):
50,000 per year, even 100,000per year, based upon your
portfolio and your financialsituation, but unless we work on
their underlying beliefs andhabits, no actual lasting change
is going to happen.
They may walk away from thatmeeting and say great, I've got
an extra 20,000 to spend, I'vegot an extra 50,000 to spend,
and they might think about it,but then they just revert to who
(14:21):
they are.
That's very natural.
We all revert to who we are.
So the question isn't are we oraren't we?
We're absolutely going to dothat.
The question is how can we bevery intentional, not about who
we are, but who we want to be,and then start taking steps to
become more of who we want to be, unless of who we currently are
and this is an ongoing process,as I mentioned, some of these
(14:44):
habits serve us very well forspecific stages and seasons of
life and at some point, some ofthese habits stop serving us
well.
So how can we start to reframeand think about this differently
so we can start to build newidentities?
Because here's the risk if wedon't If you're listening to
this and this is resonating,saying you know what?
It's no big deal If I can'tever bring myself to spend more.
(15:06):
Yeah, I get it.
It's hard for me to do, but Ijust can't bring myself to do it
.
Here's what's going to happen.
It may sound like there's not alot of risk with that, and if
you're quantifying risk as areyou going to run out of money,
you're probably right.
You probably won't run out ofmoney the less you spend in
retirement.
But here's the bigger risk youmay continue accumulating lots
and lots of money over thecourse of your retirement and
(15:27):
you're going to wake up one daywith a really large portfolio
but feel pretty empty, becausewhat you're going to start to
realize is that portfolio aloneis not what holds value.
What holds value is what thatportfolio can do for you, and
what you're going to realize isgosh, my life has passed me by.
The last 10, 15, 20 years havepassed me by where I had the
(15:48):
means to do some really special,incredible things, but I
couldn't bring myself to do it,and now the opportunity to do so
has passed.
So how can we start doing thesethings when the time is right,
as opposed to procrastinatingand I know this sounds like a
weird thing to procrastinate on,but many people do.
I'll spend later.
I'll do more.
If I can just keep building myportfolio, then maybe it becomes
(16:09):
easier to spend.
I'm here to tell you it's notgoing to be easier to spend.
Your comfort is not going tocome from the size of your
portfolio.
Your comfort should come fromhaving a plan, but also from
changing your identity and yourhabits and the beliefs you have
about yourself.
So in just a bit, I'm going towalk you through a very simple
but a very effective way toactually start to change this
(16:30):
identity.
But before I do so, I want towalk through what should you
spend money on?
A lot of people say well, james, you said I shouldn't just go
buy more cars or more clothes ormore things.
That's exactly right.
More things aren't going tobring you happiness.
But in my experience in doingthis with so many different
clients, there are five corepillars of what I like to think
of as impactful spendingspending that is going to drive
(16:54):
more fulfillment, more happiness, more joy.
So here's those five pillars.
Number one spend money on thingsthat allow you to buy back your
time.
What do I mean by that?
Well, there's all things thatconsume our time, and time is
the only non-renewable resourcethat any of us have.
So how do we preserve that andprotect that with all that we
can?
Well, what does that look like?
(17:14):
Could you hire a house cleaner?
Maybe you already have a housecleaner.
Could they come more frequently?
Maybe it's a gardener?
Maybe you pay for grocerydelivery.
Maybe you pay for someone to doyour laundry or wash your car.
These are just simple, practicalexamples of can we spend money
in a way to buy back the onlynon-renewable currency that we
have, which is our time?
(17:35):
Could you buy a home gym?
Now think of it this way a homegym, that's pretty expensive,
geez.
I got to buy the weight rack, Igot to buy a treadmill, I got
to buy all these differentpieces of equipment.
Well, if we go back to how wevalue our time, let's look at an
example.
Let's assume that you commute30 minutes round trip to your
gym, 15 minutes there, 15minutes back, and let's say you
do that four times a week.
(17:56):
What that means is, every weekyou're saving two hours of time.
If you work out 50 hours a year, that's 100 hours in a year
that you've just saved by havinga home gym instead of having to
drive to the gym.
If you value your time at $100an hour, you just create a
$10,000 of value every singleyear by investing in a home gym.
(18:19):
Now again, I know that somepeople their financial resources
aren't to the point that theycan invest in that.
This is more.
Once you're at a point, you'vedone the saving, you've done the
investing, you have theresources.
How can you now start shiftingto use those resources to buy
back time instead of using yourtime to accumulate more money?
The second pillar of effectivespending is spending money on
(18:41):
health.
Confucius has a quote.
He says a healthy man wants athousand things.
A sick man only wants one.
Wealth without health ispoverty.
It doesn't matter how muchmoney you have in your portfolio
.
If you sacrifice your time andyour health and your well-being
to get it, you're not going tobe able to enjoy it.
How can you spend your money byinvesting in a nice gym, a gym
(19:03):
that you actually want to go to,invest in a trainer, invest in
healthy food.
All these things are actuallytruly investments in your future
health.
Again, it does not matter howmuch money you have in your
retirement if you don't have thehealth to actually enjoy it.
So spend money on health.
The third is spend money onexperiences.
How do you buy good experiences?
(19:23):
Well, the first thing thatpeople talk about is travel.
Well, yes, absolutely.
But what if you take it a stepfurther?
What would it look like if youcould bring your family with you
?
What would it look like if youcould bring your friends with
you?
Again, this depends upon yourlevel of wealth and your level
of call it excess money that youcould spend.
But think creatively.
Sometimes the biggestimpediment to our ability to
(19:45):
spend money is our lack ofimagination.
How can we imagine what'spossible?
How can we think about thingsthat aren't the usual trips,
that aren't the usual vacationsthat we see people take?
But how can we create reallymeaningful experiences and spend
lavishly on those experiences,of course, assuming it fits
within your plan but spendlavishly in a way to create
(20:05):
those experiences and thosememories that are going to serve
you for the rest of your life?
You could also think about thisin the reverse Don't just spend
money on good experiences, alsospend money to avoid unpleasant
experiences.
So maybe you love travel, butthat plane is just really
difficult.
You don't like the plane trip,you don't like being crammed in
there.
Well, do you spend your moneyon a first class ticket or a
(20:26):
business class ticket?
Can you use your money to avoidan unpleasant experience?
Because that's just the inverseof spending money on good
experiences.
The fourth pillar of effectivespending is spend money on
giving.
Now you may have been sayingearlier, james, it's not a big
deal to me if I pass away with alot of money.
That money just goes to my kidswhen I die.
So I honestly really don't careif I have a bunch left over.
(20:48):
In fact, maybe I prefer it.
Well, great, let's play thatout.
Let's assume you live until age90 and say, by that point, maybe
your kids are age 60.
How much will your money reallymean to them at that point?
Sure, more is always better,sure, it's going to mean
something, but that money won'tmean as much to them at that
point as it could have meantearlier.
(21:08):
What if, instead, you've beenable to help them at the home
purchase?
What if, instead, you were ableto help them save for their
kids, your grandkids, college?
What if, instead, when you aretaking great trips around the
world, you paid for all of theirexpenses, their airfare, their
hotel stay, all this again?
I'm going to harp on this, butthis depends upon do you have
the resources to do it.
(21:28):
But assuming you do, instead oftrying to save all this money
until you're 90 or 95 and passit down, then what greater
impact could you have by seeingthat used along the way?
Not to mention how much happierwould you be if you could help
with some of these things andsee the impact of some of these
things during your lifetime, asopposed to waiting until you had
passed.
(21:49):
Or charity spend money on giving, spend money on charity.
Same thing If all or part ofyour money is going to go to
charity when you pass, wouldn'tyou love to see the impact that
could have while you're living?
On top of that, how many needsgo unmet every single day simply
due to lack of resources?
If part of your goal is to givemoney to charity, see that
charity meet that need.
Now make sure that you both getto meet that need and you also
(22:12):
get the enjoyment and thesatisfaction, the fulfillment,
that comes from seeing that needmet.
There's a better way of doingit than just unintentionally
letting that money compound andgrow forever in 20, 30 years
from now, meaning whatever needsexist at that time In the fifth
pillar of effective spendingspend money to improve your
environment.
Have you ever walked into apoorly lit, disorganized office
(22:34):
room or any room for that matter, and then compare that to
walking into a room that hasgreat windows, great natural
light, very open, very light?
How do you feel in each ofthose environments?
I think too often we don'trealize how important the
environment around us is, notjust the physical environment,
but also the people around us.
How important is it to besurrounded by the right people,
(22:57):
to be surrounded by the rightphysical environment.
The right environment has ahuge impact on your mental and
your emotional state.
This is a big factor that Ithink enough people don't think
about.
So where you live, is yourenvironment, both the location,
so where you happen to besurrounded with, was it
naturally beautiful?
Are there cool things to doaround you?
Is it a city or a town thatinspires you, or is it not?
(23:19):
So the location, plus, on topof that, the actual environment
within your home.
How is it decorated?
How is light coming in?
What are your windows like?
I know this maybe sounds alittle bit absurd, but this is
real.
There's any interior designerslistening?
They're probably clapping theirhands right now saying yes,
james, exactly that's right, butthis is so important.
Do you have a beautifulenvironment around you?
So where you live, the layoutof your home and even the people
(23:42):
around you?
So I live in San Diego,california.
It's expensive, taxes are high.
California has its issues.
Why do I live here?
Well, environment is importantto me.
Being around great people.
Now, my family is here, mygreat friends are here.
That's part of environment, butso is the natural beauty around
me.
I love to ride my bike down tothe ocean with my wife and
(24:02):
daughter, and we like to spendtime splashing the water,
running around in the sun.
Those are memories that arecreated because of the
environment we're in that Icouldn't get in many other parts
of the country.
I could save way more moneyliving in a different area.
But the environment that welive in is so important to who
we are and what we enjoy doingthat San Diego is a great place
for us.
(24:23):
So those are the five pillars ofeffective spending.
But how do we actually do it?
Well, it's not easy, but it'spretty simple.
I'm going to read you anotherquote by James Clear.
James Clear has a quote wherehe says every action you take is
a vote for the type of personyou wish to become.
No single instance willtransform your beliefs.
As the votes build up, so doesthe evidence of your new
(24:46):
identity.
This is one reason whymeaningful change does not
require radical change.
Small habits can make ameaningful difference by
providing evidence of a newidentity, and if a change is
meaningful, it is actually big.
That's the paradox of makingsmall improvements.
End quote.
This is so simple but soprofound.
(25:07):
What do you need to do to changeyour identity?
Choose one thing you want tospend money on, not just to
spend money, but hopefullysomething that corresponds to
one of the five core pillars ofspending that I mentioned just
before this.
How do you buy back time?
How do you invest or spend onhealth, experiences, giving or
environment?
Choose something and commit toregular activity, regular
(25:29):
spending on that activity.
For example, grocery delivery.
I used to hate going to thegrocery store.
I don't know what it was, butthe drive there, spending the
time going up and down theaisles, I did not like it.
It was the worst part of myweekend.
I know life could be a lotworse than simply having to go
grocery shopping on the weekend,but one thing that we committed
to?
Is we committed to saying let'sjust order groceries online we
(25:51):
pay a few bucks to do it, but ifthat saves an hour and a half
of time an hour and a half oftime that we didn't really enjoy
spending then that's aninvestment we'd gladly make.
So commit to something thatmakes sense for you, something
that buys back your time,something where you're investing
in health, investing inexperiences, giving or creating
a better environment around you.
Commit to doing that for thenext 30 to 60 days.
(26:13):
If it's not improving yourquality of life, even just a
little bit, then stop.
But if it is, then recognizethat by doing this, you're
starting to recreate youridentity, and that identity is
something that's going to allowyou to spend in a way that
allows for more fulfilling andenjoying retirement.
So all you have to do to changeyour identity, it's no big grand
action.
It's little changes, but thereare little changes that you
(26:36):
commit to.
So you start small, you buildthe habits and over time, you'll
start valuing your time andyour money in a different way,
and you'll stop looking at moneyas the almighty dollar that
must be preserved and grown atall costs, and instead you'll
start looking at it as a toolthat you can use to get the most
out of life.
So that is it for today.
So, whether you're strugglingto buy M&Ms at the hotel bar or
(26:58):
pay for parking or anything elselike that that we've mentioned,
there is a simple solution.
But what you have to realize isit starts with your identity.
It's not about the actualactions and the difficulty in
spending or not spending.
It's about your identity andthe beliefs you have about
yourself that have simply beenreinforced over years and years
and years of doing something thesame way.
So I hope that was helpful foryou.
(27:20):
If you've enjoyed this podcastor any of the other podcasts
we've done, I would reallyappreciate it if you take a
little bit of time and leave afive star review, letting
everyone know that you enjoy it,and if you haven't already, be
sure to check us out on YouTube.
The channel name is JamesCannell, c-o-n-o-l-e.
You'll find this episode.
You'll find a lot of othergreat content there as well.
As always, I appreciate youlistening and I'll see you all
(27:40):
next time.
["the Time At Podcasts"].
Thank you for listening toanother episode of the Ready for
a Time at Podcast.
If you wanna see how RootFinancial can help you implement
the techniques I discussed inthis podcast.
Then go torootfinancialpartnerscom and
click Start here, where you canschedule a call to one of our
advisors.
We work with clients all overthe country and we love the
opportunity to speak with youabout your goals and how we
(28:02):
might be able to help.
And please remember nothing wediscussed in this podcast is
intended to serve as advice.
You should always consult afinancial, legal or tax
professional who's familiar withyour unique circumstances
before making any financialdecisions.
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