The Emotions and Money Connection with Mike Perez, CFP, CKA, CAP

How can individuals cultivate a sense of contentment and focus on personal financial goals without falling into the trap of comparing themselves to others?

Eric Pennington talks with financial planning expert Mike Perez, CFP, CKA, CAP, to discuss the critical connection between our emotions and money decisions.

Throughout the conversation, they tackle the challenges of financial planning, including managing emotional influences.

The episode also covers practical advice on managing finances during politically turbulent times, the pitfalls of emotional spending, and the importance of honest financial disclosure akin to a medical consult. Mike and Eric discuss the science of reducing client anxiety and the essential role of financial advisors in helping clients avoid emotional pitfalls in investment decisions.

This episode reveals how emotional intelligence plays a pivotal role in achieving financial peace, contentment, and smart decision-making.

Top Takeaways

1. **Timing and Deals**: Mike Perez advises the importance of finding deals at the right time, advocating for strategic patience in financial decisions.

2. **Contrarian Investment Strategy**: The discussion highlights Sam Zell's approach of investing against the norm, suggesting this can often lead to better financial outcomes.

3. **Historical Wisdom**: Mike recounts a story about Joseph Kennedy who exited the stock market before the Great Depression, illustrating the value of recognizing when to step out of the market.

4. **Client Engagement and Fit**: Effective financial planning requires clients who are coachable, open to sharing information, and have legitimate needs. Ensuring a good fit between advisor and client is crucial.

5. **Impact of Emotions**: Both Eric and Mike emphasize how emotions heavily influence financial decisions, often leading to poor financial choices if not properly managed.

6. **Communication in Couples**: Financial planning often involves mediating between couples to ensure shared goals and effective money management, crucial for preventing relationship strain and divorce.

7. **Spending Plans and Emotional Regulation**: A structured spending plan and taking breaks to curb emotional spending can lead to better financial decisions and less impulsive spending habits.

8. **Forward-Thinking Over Comparison**: Mike recommends focusing on future goals instead of making decisions based on comparisons with others, to avoid dissatisfaction and financial missteps.

9. **Behavior Over Information**: In the age of accessible information, Perez stresses that personal beliefs, behaviors, and emotional intelligence are more valuable than mere knowledge.

10. **Integrating Faith with Finance**: The integration of faith into financial practices can lead to greater peace, joy, and contentment, as exemplified by Mike's personal journey and insights shared in his book on faith, finance, and generosity.

Key Moments

00:00 Early money beliefs impact adult financial behavior.

05:39 Financial planners assess clients' money beliefs.

09:51 Focus on contentment, avoid comparison and regret.

13:50 Invest without emotion; prioritize long-term objectives.

14:40 Rely on certified financial planners for advice.

19:07 Coachable and vulnerable clients are essential for success.

22:55 Stress-free zone; assess working relationship fit.

25:04 Full disclosure essential in challenging relationships.

28:26 Forces busy couples to address financial planning.

31:41 Balance spending: Pause before emotional purchases.

35:12 Money management: owe, grow, live, give categories.

40:04 Education fails to teach healthy money habits.

42:10 Behavior tied to emotions is very powerful.

47:32 Faith-inspired financial journey fosters peace and generosity.

49:25 Politics feels...