February 23, 2023 • 25 mins
Amy shuts down when it comes to finances, so she was excited for this chat with personal finance expert Paco de Leon. They talk about the roots of our financial fears, money saving tips, why it feels so good to spend money, joint accounts vs. separate accounts in relationships, emergency funds and so much more!! Changing your relationship with money starts by first examining your thoughts, beliefs, biases, and emotions around money. Paco believes you can’t change your relationship with money until you acknowledge the role those things have played on your views and beliefs on money. Paco, the author of Finance for the People: Getting a Grip on Your Finances and host of ‘Weird Finance’ podcast. Learn more about her work at TheHellYeahGroup.com and she is @TheHellYeahGroup on IG.
Link to tickets for the ‘4 Things’ LIVE in Nashville at Franklin Theater HERE!!
Best places to find more about Amy: RadioAmy.com + @RadioAmy
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Okay, cass up rope a little food for you. So
life ain't Oh, it's pretty much, it's pretty beautiful than
beautiful laugh a little mouth tight said, he you're kicking four.
(00:33):
Happy Thursday, Amy here and real talk. I am someone
that has feared finances for much of my life, Like
it's something that gives me anxiety, so much so that
I spent years just avoiding it as much as I
possibly could. And I'm at a point in life where
I'm having to grow up a little bit and take
charge of things, and the process has been a little exhausting.
(00:55):
It's caused tears, which is why I'm thankful to have
Poco Day on with us. She's a personal finance expert,
author of Finance for the People, and host of the
Weird Finance podcast, So Paco. When it comes to finances,
I am definitely excited to get your money saving tips,
but I also love that you dig deeper with why
(01:17):
we are the way that we are with money. It's
not as simple as just knowing information and executing. So
let's start there. Absolutely, let's face it. With the Internet,
we have the information, and what I've learned is it's
more about our own psychology and our own emotions, and
everybody gets in their own way, and that really fascinates me.
(01:39):
It fascinates me to try to understand why we are
the way we are and how do we become who
we want to become. And I happen to study finance,
I happen to be in this industry, so I'm going
down that path. But what I've really learned is that
how you behave with your money, that relationship you're in
with your money, it can be replicated it across other
(02:01):
relationships that you have in your life, So your relationship
with your mom, and your relationship with your partner, relationship
to food, your relationship to your body, to spirituality. We're
all learning how to be better, and I want to
help people do it through their finances so that they
can apply it to other areas of their lives. I've
spent years and years uninvolved in my finances, probably since
(02:21):
I was a late teenager and I got a checking account.
I was like, oh man, this is not for me.
I'm overwhelmed, and I think it has to do with
some things that I saw my dad go through money wise,
and then as a young adult, I just coasted by
I tell you what, when I got married at twenty five,
I fully passed the torch. I wanted nothing to do
with money, not my lane. But here I am at
(02:42):
forty one, trying to figure it all out and take
control of my finances, and it's so empowering. But it
has not been easy. I mean seriously, the way that
my body reacts to it is not normal. But I
also have compassion for myself because I'm doing the best
that I can. Wait, we got a double click. The
dad thing, Amy, Well, I guess a theory would be
(03:03):
that when I was a kid, my dad went bankrupt,
and I would definitely say that the stress of that
was one of the reasons that my dad ended up
moving out and then ultimately my parents got divorced. So yeah,
that's an example of money changing the trajectory of my
life in a negative way and probably my earliest memory
(03:26):
of fear around it. Have you worked on, like explored
in the kind of wounding and the trauma that came
when your life was completely uprooted and changed forever after
your dad filed for bankruptcy, Because that, to me seems
like a very obvious thing that happened that created a
(03:49):
domino effect of your life changing. And I definitely think
that you probably have a complicated relationship to money. If
you sat down and you wrote a letter to money
and you let money know how you felt, there would
probably be a lot of pushing and pulling and a
lot of confusion. I need you, but I hate you.
(04:10):
You weren't there for me. You know, like understanding that
it's necessary in your life, but it's caused you so
much pain. And that's probably where I would think that
a lot of your issues begin with. And it feels
big to me. Bankruptcy feels big. Your parents getting divorced
feels big, And to me it makes sense that you
(04:31):
would turn away from it and you would avoid it
rather than do the hard thing of like really sitting
down and facing the fact that what happened was painful
and it's a ball of wax to really unpack. And
you don't know where that's going to lead you, right,
You're going to like blow up your life in a
way sometimes when you force yourself to look at these things.
Therapy has forced me to look at areas where I
(04:53):
shut down. Then you know, thankfully it showed me where
I need work. And I'm waking up like I can
log into all of my accounts now. I know what
money is coming in, I know what money is going out.
I'm thinking of creative ways to feel good without spending
money so that I can save more. I'm paying attention
(05:14):
to my four oh one K. It's awesome knowing that
I'm capable, and also that these actions are taking care
of future me too. I think it's important to really
care about your future adorable, wrinkly gray hair self. They're
counting on you. They're counting on this version of you
(05:35):
with your able body and your sharp mind, while you
can to earn a lot of you know, earn enough
money to not just nourish and take care of your
current self, but to put some money away for your
future self. That's like one psychological trick that I've learned,
And there's been studies about this where they'll take participants
and they'll know they'll have a form, and the form
(05:55):
will say would you like to elect to contribute money
to year four O one K, And half the participants
will just have the form and maybe a picture of
their current self or no picture at all, I can't remember.
And then the other half of participants they'll have this
like CGI like forward looking older version image of themselves
on the form, and the folks who have the form
(06:16):
with their old face on it tend to contribute towards retirement.
So for anyone who's struggling about, you know, to put
money away for retirement. On the emotional side, I would say,
think about your job picture of or or to use
one of those filters, or you age yourself and look
at yourself and really care for that person, right, think
about your future self. And then practically, I mean, we
(06:39):
have such wonderful technology these days where we can just
take the money out of our paycheck before it hits
our account. So that's what a four one K is right,
it's a forced savings plan. So I definitely think people
should leverage that technology and really take away the like
you're not even making a decision anymore. The decision is
made for you, and I think that's the best better
(07:00):
right there, removing yourself from the equation. It's going to
lead me into Paco's law, yes, which I want you
to share with people about this law named after you.
I call this law Poco's law, And it was an
observation that I've made anecdotally within my own life, with
my behavior, with my partner's behavior, with all the people
who I worked with. And the law states that however
(07:21):
much money you have in your account, is what you
will spend. And so if you put all of your
paycheck into your checking account, you're probably going to spend it.
And so through that thinking and through observing that with
other people, I came up with this concept called splitting
the check. And it is one action that you can take,
(07:43):
one way of managing your finances that you can implement
literally today, that I think will eliminate a whole bunch
of decisions that you have to make down the line.
It's one decision that you make that helps. It's like
the Pereto principle of your this Peretto's law, where you
know eighty percent of your results come from twenty percent
of your actions. This is the twenty percent of your
(08:05):
actions that are going to create that eighty percent of results.
Splitting the check. We are all familiar with this concept.
We've gone out to dinner with folks and we've split
the check amongst a few people. I want you to
split the check with your paycheck, and I want you
to split the check only into three broad categories. There's
your essentials, which I call your bills in life. There's
(08:25):
your non essentials, which I call your fund and your
bs And there's everything that goes into saving for the future,
from your emergency fund to your retirement and I call
that future and goals. Now, when you get your paycheck,
in a perfect world, your future and goals money never
it just gets pulled from before it even hits your
account and goes to your that your four one K.
(08:45):
But what I want people to do is I literally
want them to have two separate checking checking accounts. But
what I want people to do is I literally want
them to have two separate checking checking accounts, one for
(09:08):
the essentials and one for the non essentials. And you
fund those accounts according to how much you need for
the essentials. And if you're just starting out and you
don't have a lot of extra money, truly, what'sever leftover
would go into the fun account. And then you don't
have to think about it, right, You don't have to
think if I buy pizza or beer or a gift
(09:30):
for my friend with this money, am I gonna in
my check it abounts? Or am I gonna have enough
to pay for that other bill. You don't have to
think about that because that's already taken care of in
your other checking account. So it's like a way of
understanding that Paco's law is a real thing, but like
doing jiu jitsu and setting up your accounts so that
you'll become victim to it. So if you're fun bs
(09:54):
account is low, then you're done having fun for that
month or till your next paycheck. Yeah. The other reason
why I like this is because you know you can
take all this action, you can do all the planning,
and then you have to face the reality of what's
going on. And that was hard for me. I did
this with my business accounts, and I remember being like, oh,
(10:14):
very clear, it's very obvious that I just have to
make more money in my business, which nobody likes being
told that, right, Like if I sat down with somebody
and they're like, I have financial problems to fat go,
and I looked them in the eye and I was like, well,
simply you need to make more money. You know, it's
like the right. A lot of people feel that way.
A lot of people feel that way. But if I
(10:34):
give you a tool that allowed you to feel like, Okay,
I have some control right now. Cool, it's working. But
later on that tool allowed you to come to your
own conclusion, which is, if I want more of something,
if I want to get out of debt faster, if
I want to retire sooner, if I want to retire
at all, I need to look at what these numbers
are telling. What does the data say. And that's why
(10:54):
I like this this tool splitting the check, because it
gives you autonomy. It puts the power in your hands.
Then it also allows you to come to that conclusion
when you're ready to come to that conclusion. You mentioned
emergency fund. What is the rule behind how much we
should have set aside? Yeah? Yeah, the textbook definition of
an emergency fund is three to six months of your
(11:16):
fixed expenses. So again, when we're thinking about splitting the check, right,
we think about what our essentials are. We have that number,
we know that nut, we multiply that by three, four
or five up to six months, and that's how much
we should have in our emergency fund. A lot of
people will quibble about this, like financial experts now are
revising up. They're saying nine months, twelve months. If you
work for yourself. They say, have a rule year. That's overwhelming,
(11:39):
And of course I recommend that having that mrich cash
is going to feel a lot more secure than having
three months. But what I want to say to people is,
if that feels scary, if you feel lump in your throat,
if you feel like, oh no, I'm very far away
from that first, just take a deep breath with me here.
I know it's a lot, and it's unfortunate that in society,
(12:03):
society that we live in, that a lot of the
personal responsibility falls on us. Right there's not all these
social safety nets that are helping us. But no matter what,
even if there were, we would still have to have
our own agency. We would still have to make good decisions.
And so the thing I want people to focus on
is to make savings a habit. You just have to
(12:23):
make it a habit, no matter how much you can save,
even if it's twenty dollars. You want to make that
a habit, and you want to get used to the pain.
That's it. You just want to get used to the
pain of not being able to spend all of your
own money. And slowly, over time, as your income goes up,
you'll be able to put more away. And I think
once you see at the end of the year or
after six months of saving, it's going to feel good
(12:45):
and it's going to feel bad. It's going to feel
good because you put money away, but it's going to
feel bad because you think, man, how can I do more?
And everybody's on our own journey, we're all on our
own path. But really just fall in love with that
process of saving a little bit of everything you were.
And I want to say, you know, life is full
of problems in pain, and I don't want to say
that in a way that's like, you know, it just
(13:07):
sucks and you know, put on your pants and go.
I'm just saying that it's the deal. It's the deal
that we make when we will come here and where
human beings on planet Earth. Life is full of problems
in pain, and I think one of the best things
we could do is recognize and accept that and then
look at it from another angle. What problems do you
want to have and what ways can this, you know,
(13:30):
pain turn into something that in the end serves greater purpose.
I think a big problem, at least for me, is
sometimes just that natural human drive for more. Yeah, we
live in a society where we want more. I think
there's a lot that drives us to feel that that way.
I think naturally, as human beings, we want better, right,
(13:52):
we desire progress, And that's great because that's literally what
creates progress. Right, That's why we invent things, and that's
why we built bridges, and that's why we figure out
ways to have clean water. And so we want things
to be better and we want more, But then we
have all these other quirks happening in our minds where
some psychologists believe that human beings are hard wired to
(14:13):
have this tendency to compare ourselves to one another. And
that makes sense when you think about it, because human
beings were social creatures. We need to belong to groups.
We need to belong to a society in order to survive.
And so being able to compare myself to somebody in
my group to make sure that I'm strong enough, or
I'm gathering enough, or I'm hunting as much as they are,
(14:34):
so that I belong so that they'll protect me so
that I'll survive. That makes sense. But in the modern
world that looks different. It looks like I go to
my friend's house and they have an extra room, or
a nicer carpet or a beautiful lamp, And I think, well,
don't I want to be the kind of person that
fits into this group that can afford the extra room,
the extra carpet, the bigger lamp or whatever. And so
(14:55):
I think there's that going on that's driving our desire
for war. And then we have this concept of thedonic treadmill, right,
which is also called human adaptation, and it's again it's
lovely quirk in the human brain. It's where we get
really on this treadmill. And the treadmill is our brain
being flooded with feel good chemicals like dopamine and serotonin,
(15:17):
and that comes from again, things that we've created. Like
we can get caught up in this cycle with online shopping, right.
We feel bad scrolling because we're comparing ourselves to others
on social media. And then low and behold, the remedy
to our pain is a sponsored ad. So we buy
that thing from the sponsored ad. We immediately feel better.
(15:37):
The package comes, we get flooded again with this response,
and we're trapped in this cycle of consuming more. You know.
The way to counteract this is Aristotle basically came up
with this other way to look at holistic happiness and
a general sense of well being. And it's not this
hadonic treadmill. It's he calls it udaimonic well us. And
(16:01):
it's more about, like what you were saying, really or amy,
finding other creative ways to feel feel good without spending money.
And it's like being challenged. And that could be anything
from running marathons to trying to make a pavlova to
doing pasta handmade to learning how to build a fire,
to you know, riding your bike ninety miles. These challenges
(16:24):
there are there a way for us to struggle. We
feel better in a larger sense. It's not just a
quick dopamine hit that makes us feel better. It's this
struggle and this progress that we watch ourselves make, which
I guess full circle allows us to achieve more, but
in a much more balanced, healthier way. I feel like
I get a dopamine hit when I go to Target.
(16:46):
I always end up with more than I went there
for and it feels good in the moment, but I
normally regret some of the purchases. It's much harder to
take the time and ask yourself, what is it that
you either want to feel or you want to avoid
feeling by going to Target and getting that quick fix,
(17:06):
you know, double click on that and trying to figure
out what's going on there, and oftentimes has nothing to
do with money. It has to do with something else,
with you wanting to feel a different way. And I
think that's worth exploring because those like you said, those
are the things that are just they're going to feel
more meaningful in the long run. Let's pivot to finances
(17:39):
in a relationship. What are your thoughts on one person
being the designated money and finance person and then also
should couples have joint accounts or separate accounts in your opinion,
great questions, Amy. I which that more people would want
to engage in their finances, but I'm in a partner
(18:00):
ship and it's not it's not going to shock anyone
to hear that I'm the one that really pays the
most attention to the finances. And you know, I noticed
this with partnerships is whatever you're good at, you get
better at, and whatever you're not good at, you tend
to get worse at. And it's because like when you
come together, right, My wife's a great project manager and
(18:22):
anything that involves project management in our lives. She just
takes the wheel and I just get crappier and crappier
project management, and I watch that happen with our finances,
and I really do try to encourage her to engage.
I mean, you're asking a really hard question. It's like,
how do you create this intrinsic desire within people to care?
If I knew that answer, I probably president in the world,
(18:45):
right So I don't know that answer. I think a
lot of my work is wrapped up in trying to
remind people that this is important. And there's a lot
of different ways we can approach having conversations about money.
There's a lot of different ways that you can conceptualize
what money means to you in your life and how
to practically handle that. And so I think my job
(19:07):
is to highlight finances in this way and to get
those people who were felt excluded before feel included in
this conversation. Money is for everyone, Investing is for everyone.
I know that, Like it was only a few generations
ago where like you Will had to be like literally
only a dude to be able to open up an
investment account. But it's not like that anymore. And I'm
(19:29):
jumping up and down saying this is for everyone, let's
all get engaged, you know. So, I guess I don't
have the clear answer to that, except if you're the
person who's handling the finances in your partnership, maybe try
to engage your partner. Try to ask them, hey, can
we set up an appointment or a money date every
other week on the calendar where we just kind of
(19:50):
sit down and we could talk about our financial goals
and I can show you what I've been doing with
our finances so that you can feel much more engaged.
And I will say that I think everybody should have
some of their own personal savings, especially because women have
women in heterosexual relationships. Especially. There's dynamics that are and
(20:11):
have happened throughout history. Right, it hasn't been that long
since women could have a credit card, since women have
been working, and so we're seeing this tension right now. Right,
we're seeing things like the wage gap, and we're talking
about it, we're jumping up and down about it. And
it's because we're going from how things used to be
to how things are going to be, and we're caught
(20:31):
in this in between. We're crossing this rickety bridge together.
And when we think about this, we think about how
things we're very different only a generation to three generations ago.
I think it's really important for women to have their
own emergency fund because we don't know what's going to happen.
You just don't know. And I don't think that this
(20:51):
is secret money that you have to keep from your partner.
You can say, hey, I have my own personal emergency
fund and it's bine and if and if you have
a problem with that, maybe we have a larger problem
here to talk about. Maybe it's a greater issue to
talk about. But I would encourage everyone to have their
own personal emergency fund. Now, your other question is how
(21:12):
do we combine in finances? What do I think about
joint accounts. I think that you're going to know your
partner best, you're going to know your self best, and
the way to approach this is to first look at that.
But I do think it's really healthy for partners to
have something that they have together so that they're working
(21:32):
towards the same financial goals, right, so that they're on
the same team. So a joint checking account where they
both put money into it and they pay for joint expenses.
I'm all for that, but I do think partners should
have their own separate fund and vs. Accounts. And the
reason why is because I think it will remove a
lot of friction and it will eliminate a lot of
(21:53):
conversations that just don't need to happen. If my partner,
you know, if she has let's say one hundred dollars
a month that she can spend freely however she wants, great,
she can spend that all on the first day and
we never have to talk about the fact that she
spent it all on the first day. That's how she
chose to spend it. Right. Me, on the other hand,
I'll hold my money for months and then I'll buy
(22:14):
like a guitar or something, right, or I'll put it
into the crypto just to see what all the fuss
is about, and we don't have to have that conversation
because we've earmarked that money for ourselves, right. So it
eliminates that friction, that tension of like do we have
to talk about everything? And then it gives partners autonomy.
So having a joint account that they put money in
(22:34):
towards shared expenses, while having separate accounts. It's like two
birds one stone, right, You're you still have autonomy, you
get to spend money freely on your own, yet you're
on the same team when it comes to joint things.
I love that approach and I'm taking notes. I'm definitely
grateful for this conversation and Paco, I would love to
do four things gratitude with you, and here are four
(22:55):
things that you are currently thankful for in this moment.
Grateful for water, and I'm really really grateful that it's
warm here in Los Angeles. And I'm really grateful for
this chair supporting my body. And I'm really grateful that
I'm not afraid to use my voice. You know, as
(23:17):
you were talking, I was thinking about how I'm also
thankful for you pausing earlier in the episode for us
to take a deep breath if we're feeling overwhelmed. I
always love to pause and breathe, and I love that
you led listeners through that as well. So as breathwork
or maybe even meditation part of your daily practice. Yeah,
(23:38):
I've been a meditator since somewhere between twenty ten and
twenty twelve. I don't remember exactly when I got started,
but I've been a pretty regular practitioner or meditation, and
I wanted to give you more advice on ways that
you can prepare to deal with your finances right before
you log into your account or before you sit down
(23:58):
and do a spreadsheet, because you find yourself closing down,
you know, shutting down and freezing. Whatever gets you hype
right like maybe it's the new Taylor Swift album, or
maybe it's splashing gold water on your face, or maybe
it's taking your shoes off and you know, walking on
the grass, whatever it is that's going to make you
(24:18):
feel ready to deal with something that is still difficult
for you. I would encourage you to incorporate that as
part of your ritual before you deal with your finances.
That way, you've regulated your nervous system and you're taking
care of yourself and you're letting yourself know. This hasn't
felt safe in the past, but it's safe now, and
(24:40):
I'm gonna you know, I'm going to show you that
we're going to be okay. Oh I'm all about anything
that affirms that we are going to be okay. So
thanks for helping us feel safe with our finances. I
know that you put out a weekly newsletter with other
thoughtful insights and more practical advice, so to anyone listening
(25:01):
right now, if you think that that would be a
helpful resource for you, then check out poco's website, the
hell yeahgroup dot com. I appreciate you coming on Poco.
Thank you so much. Thank you. Amy
Okay, cass up rope a little food for you. So
life ain't Oh, it's pretty much, it's pretty beautiful than
beautiful laugh a little mouth tight said, he you're kicking four.
(00:33):
Happy Thursday, Amy here and real talk. I am someone
that has feared finances for much of my life, Like
it's something that gives me anxiety, so much so that
I spent years just avoiding it as much as I
possibly could. And I'm at a point in life where
I'm having to grow up a little bit and take
charge of things, and the process has been a little exhausting.
(00:55):
It's caused tears, which is why I'm thankful to have
Poco Day on with us. She's a personal finance expert,
author of Finance for the People, and host of the
Weird Finance podcast, So Paco. When it comes to finances,
I am definitely excited to get your money saving tips,
but I also love that you dig deeper with why
(01:17):
we are the way that we are with money. It's
not as simple as just knowing information and executing. So
let's start there. Absolutely, let's face it. With the Internet,
we have the information, and what I've learned is it's
more about our own psychology and our own emotions, and
everybody gets in their own way, and that really fascinates me.
(01:39):
It fascinates me to try to understand why we are
the way we are and how do we become who
we want to become. And I happen to study finance,
I happen to be in this industry, so I'm going
down that path. But what I've really learned is that
how you behave with your money, that relationship you're in
with your money, it can be replicated it across other
(02:01):
relationships that you have in your life, So your relationship
with your mom, and your relationship with your partner, relationship
to food, your relationship to your body, to spirituality. We're
all learning how to be better, and I want to
help people do it through their finances so that they
can apply it to other areas of their lives. I've
spent years and years uninvolved in my finances, probably since
(02:21):
I was a late teenager and I got a checking account.
I was like, oh man, this is not for me.
I'm overwhelmed, and I think it has to do with
some things that I saw my dad go through money wise,
and then as a young adult, I just coasted by
I tell you what, when I got married at twenty five,
I fully passed the torch. I wanted nothing to do
with money, not my lane. But here I am at
(02:42):
forty one, trying to figure it all out and take
control of my finances, and it's so empowering. But it
has not been easy. I mean seriously, the way that
my body reacts to it is not normal. But I
also have compassion for myself because I'm doing the best
that I can. Wait, we got a double click. The
dad thing, Amy, Well, I guess a theory would be
(03:03):
that when I was a kid, my dad went bankrupt,
and I would definitely say that the stress of that
was one of the reasons that my dad ended up
moving out and then ultimately my parents got divorced. So yeah,
that's an example of money changing the trajectory of my
life in a negative way and probably my earliest memory
(03:26):
of fear around it. Have you worked on, like explored
in the kind of wounding and the trauma that came
when your life was completely uprooted and changed forever after
your dad filed for bankruptcy, Because that, to me seems
like a very obvious thing that happened that created a
(03:49):
domino effect of your life changing. And I definitely think
that you probably have a complicated relationship to money. If
you sat down and you wrote a letter to money
and you let money know how you felt, there would
probably be a lot of pushing and pulling and a
lot of confusion. I need you, but I hate you.
(04:10):
You weren't there for me. You know, like understanding that
it's necessary in your life, but it's caused you so
much pain. And that's probably where I would think that
a lot of your issues begin with. And it feels
big to me. Bankruptcy feels big. Your parents getting divorced
feels big, And to me it makes sense that you
(04:31):
would turn away from it and you would avoid it
rather than do the hard thing of like really sitting
down and facing the fact that what happened was painful
and it's a ball of wax to really unpack. And
you don't know where that's going to lead you, right,
You're going to like blow up your life in a
way sometimes when you force yourself to look at these things.
Therapy has forced me to look at areas where I
(04:53):
shut down. Then you know, thankfully it showed me where
I need work. And I'm waking up like I can
log into all of my accounts now. I know what
money is coming in, I know what money is going out.
I'm thinking of creative ways to feel good without spending
money so that I can save more. I'm paying attention
(05:14):
to my four oh one K. It's awesome knowing that
I'm capable, and also that these actions are taking care
of future me too. I think it's important to really
care about your future adorable, wrinkly gray hair self. They're
counting on you. They're counting on this version of you
(05:35):
with your able body and your sharp mind, while you
can to earn a lot of you know, earn enough
money to not just nourish and take care of your
current self, but to put some money away for your
future self. That's like one psychological trick that I've learned,
And there's been studies about this where they'll take participants
and they'll know they'll have a form, and the form
(05:55):
will say would you like to elect to contribute money
to year four O one K, And half the participants
will just have the form and maybe a picture of
their current self or no picture at all, I can't remember.
And then the other half of participants they'll have this
like CGI like forward looking older version image of themselves
on the form, and the folks who have the form
(06:16):
with their old face on it tend to contribute towards retirement.
So for anyone who's struggling about, you know, to put
money away for retirement. On the emotional side, I would say,
think about your job picture of or or to use
one of those filters, or you age yourself and look
at yourself and really care for that person, right, think
about your future self. And then practically, I mean, we
(06:39):
have such wonderful technology these days where we can just
take the money out of our paycheck before it hits
our account. So that's what a four one K is right,
it's a forced savings plan. So I definitely think people
should leverage that technology and really take away the like
you're not even making a decision anymore. The decision is
made for you, and I think that's the best better
(07:00):
right there, removing yourself from the equation. It's going to
lead me into Paco's law, yes, which I want you
to share with people about this law named after you.
I call this law Poco's law, And it was an
observation that I've made anecdotally within my own life, with
my behavior, with my partner's behavior, with all the people
who I worked with. And the law states that however
(07:21):
much money you have in your account, is what you
will spend. And so if you put all of your
paycheck into your checking account, you're probably going to spend it.
And so through that thinking and through observing that with
other people, I came up with this concept called splitting
the check. And it is one action that you can take,
(07:43):
one way of managing your finances that you can implement
literally today, that I think will eliminate a whole bunch
of decisions that you have to make down the line.
It's one decision that you make that helps. It's like
the Pereto principle of your this Peretto's law, where you
know eighty percent of your results come from twenty percent
of your actions. This is the twenty percent of your
(08:05):
actions that are going to create that eighty percent of results.
Splitting the check. We are all familiar with this concept.
We've gone out to dinner with folks and we've split
the check amongst a few people. I want you to
split the check with your paycheck, and I want you
to split the check only into three broad categories. There's
your essentials, which I call your bills in life. There's
(08:25):
your non essentials, which I call your fund and your
bs And there's everything that goes into saving for the future,
from your emergency fund to your retirement and I call
that future and goals. Now, when you get your paycheck,
in a perfect world, your future and goals money never
it just gets pulled from before it even hits your
account and goes to your that your four one K.
(08:45):
But what I want people to do is I literally
want them to have two separate checking checking accounts. But
what I want people to do is I literally want
them to have two separate checking checking accounts, one for
(09:08):
the essentials and one for the non essentials. And you
fund those accounts according to how much you need for
the essentials. And if you're just starting out and you
don't have a lot of extra money, truly, what'sever leftover
would go into the fun account. And then you don't
have to think about it, right, You don't have to
think if I buy pizza or beer or a gift
(09:30):
for my friend with this money, am I gonna in
my check it abounts? Or am I gonna have enough
to pay for that other bill. You don't have to
think about that because that's already taken care of in
your other checking account. So it's like a way of
understanding that Paco's law is a real thing, but like
doing jiu jitsu and setting up your accounts so that
you'll become victim to it. So if you're fun bs
(09:54):
account is low, then you're done having fun for that
month or till your next paycheck. Yeah. The other reason
why I like this is because you know you can
take all this action, you can do all the planning,
and then you have to face the reality of what's
going on. And that was hard for me. I did
this with my business accounts, and I remember being like, oh,
(10:14):
very clear, it's very obvious that I just have to
make more money in my business, which nobody likes being
told that, right, Like if I sat down with somebody
and they're like, I have financial problems to fat go,
and I looked them in the eye and I was like, well,
simply you need to make more money. You know, it's
like the right. A lot of people feel that way.
A lot of people feel that way. But if I
(10:34):
give you a tool that allowed you to feel like, Okay,
I have some control right now. Cool, it's working. But
later on that tool allowed you to come to your
own conclusion, which is, if I want more of something,
if I want to get out of debt faster, if
I want to retire sooner, if I want to retire
at all, I need to look at what these numbers
are telling. What does the data say. And that's why
(10:54):
I like this this tool splitting the check, because it
gives you autonomy. It puts the power in your hands.
Then it also allows you to come to that conclusion
when you're ready to come to that conclusion. You mentioned
emergency fund. What is the rule behind how much we
should have set aside? Yeah? Yeah, the textbook definition of
an emergency fund is three to six months of your
(11:16):
fixed expenses. So again, when we're thinking about splitting the check, right,
we think about what our essentials are. We have that number,
we know that nut, we multiply that by three, four
or five up to six months, and that's how much
we should have in our emergency fund. A lot of
people will quibble about this, like financial experts now are
revising up. They're saying nine months, twelve months. If you
work for yourself. They say, have a rule year. That's overwhelming,
(11:39):
And of course I recommend that having that mrich cash
is going to feel a lot more secure than having
three months. But what I want to say to people is,
if that feels scary, if you feel lump in your throat,
if you feel like, oh no, I'm very far away
from that first, just take a deep breath with me here.
I know it's a lot, and it's unfortunate that in society,
(12:03):
society that we live in, that a lot of the
personal responsibility falls on us. Right there's not all these
social safety nets that are helping us. But no matter what,
even if there were, we would still have to have
our own agency. We would still have to make good decisions.
And so the thing I want people to focus on
is to make savings a habit. You just have to
(12:23):
make it a habit, no matter how much you can save,
even if it's twenty dollars. You want to make that
a habit, and you want to get used to the pain.
That's it. You just want to get used to the
pain of not being able to spend all of your
own money. And slowly, over time, as your income goes up,
you'll be able to put more away. And I think
once you see at the end of the year or
after six months of saving, it's going to feel good
(12:45):
and it's going to feel bad. It's going to feel
good because you put money away, but it's going to
feel bad because you think, man, how can I do more?
And everybody's on our own journey, we're all on our
own path. But really just fall in love with that
process of saving a little bit of everything you were.
And I want to say, you know, life is full
of problems in pain, and I don't want to say
that in a way that's like, you know, it just
(13:07):
sucks and you know, put on your pants and go.
I'm just saying that it's the deal. It's the deal
that we make when we will come here and where
human beings on planet Earth. Life is full of problems
in pain, and I think one of the best things
we could do is recognize and accept that and then
look at it from another angle. What problems do you
want to have and what ways can this, you know,
(13:30):
pain turn into something that in the end serves greater purpose.
I think a big problem, at least for me, is
sometimes just that natural human drive for more. Yeah, we
live in a society where we want more. I think
there's a lot that drives us to feel that that way.
I think naturally, as human beings, we want better, right,
(13:52):
we desire progress, And that's great because that's literally what
creates progress. Right, That's why we invent things, and that's
why we built bridges, and that's why we figure out
ways to have clean water. And so we want things
to be better and we want more, But then we
have all these other quirks happening in our minds where
some psychologists believe that human beings are hard wired to
(14:13):
have this tendency to compare ourselves to one another. And
that makes sense when you think about it, because human
beings were social creatures. We need to belong to groups.
We need to belong to a society in order to survive.
And so being able to compare myself to somebody in
my group to make sure that I'm strong enough, or
I'm gathering enough, or I'm hunting as much as they are,
(14:34):
so that I belong so that they'll protect me so
that I'll survive. That makes sense. But in the modern
world that looks different. It looks like I go to
my friend's house and they have an extra room, or
a nicer carpet or a beautiful lamp, And I think, well,
don't I want to be the kind of person that
fits into this group that can afford the extra room,
the extra carpet, the bigger lamp or whatever. And so
(14:55):
I think there's that going on that's driving our desire
for war. And then we have this concept of thedonic treadmill, right,
which is also called human adaptation, and it's again it's
lovely quirk in the human brain. It's where we get
really on this treadmill. And the treadmill is our brain
being flooded with feel good chemicals like dopamine and serotonin,
(15:17):
and that comes from again, things that we've created. Like
we can get caught up in this cycle with online shopping, right.
We feel bad scrolling because we're comparing ourselves to others
on social media. And then low and behold, the remedy
to our pain is a sponsored ad. So we buy
that thing from the sponsored ad. We immediately feel better.
(15:37):
The package comes, we get flooded again with this response,
and we're trapped in this cycle of consuming more. You know.
The way to counteract this is Aristotle basically came up
with this other way to look at holistic happiness and
a general sense of well being. And it's not this
hadonic treadmill. It's he calls it udaimonic well us. And
(16:01):
it's more about, like what you were saying, really or amy,
finding other creative ways to feel feel good without spending money.
And it's like being challenged. And that could be anything
from running marathons to trying to make a pavlova to
doing pasta handmade to learning how to build a fire,
to you know, riding your bike ninety miles. These challenges
(16:24):
there are there a way for us to struggle. We
feel better in a larger sense. It's not just a
quick dopamine hit that makes us feel better. It's this
struggle and this progress that we watch ourselves make, which
I guess full circle allows us to achieve more, but
in a much more balanced, healthier way. I feel like
I get a dopamine hit when I go to Target.
(16:46):
I always end up with more than I went there
for and it feels good in the moment, but I
normally regret some of the purchases. It's much harder to
take the time and ask yourself, what is it that
you either want to feel or you want to avoid
feeling by going to Target and getting that quick fix,
(17:06):
you know, double click on that and trying to figure
out what's going on there, and oftentimes has nothing to
do with money. It has to do with something else,
with you wanting to feel a different way. And I
think that's worth exploring because those like you said, those
are the things that are just they're going to feel
more meaningful in the long run. Let's pivot to finances
(17:39):
in a relationship. What are your thoughts on one person
being the designated money and finance person and then also
should couples have joint accounts or separate accounts in your opinion,
great questions, Amy. I which that more people would want
to engage in their finances, but I'm in a partner
(18:00):
ship and it's not it's not going to shock anyone
to hear that I'm the one that really pays the
most attention to the finances. And you know, I noticed
this with partnerships is whatever you're good at, you get
better at, and whatever you're not good at, you tend
to get worse at. And it's because like when you
come together, right, My wife's a great project manager and
(18:22):
anything that involves project management in our lives. She just
takes the wheel and I just get crappier and crappier
project management, and I watch that happen with our finances,
and I really do try to encourage her to engage.
I mean, you're asking a really hard question. It's like,
how do you create this intrinsic desire within people to care?
If I knew that answer, I probably president in the world,
(18:45):
right So I don't know that answer. I think a
lot of my work is wrapped up in trying to
remind people that this is important. And there's a lot
of different ways we can approach having conversations about money.
There's a lot of different ways that you can conceptualize
what money means to you in your life and how
to practically handle that. And so I think my job
(19:07):
is to highlight finances in this way and to get
those people who were felt excluded before feel included in
this conversation. Money is for everyone, Investing is for everyone.
I know that, Like it was only a few generations
ago where like you Will had to be like literally
only a dude to be able to open up an
investment account. But it's not like that anymore. And I'm
(19:29):
jumping up and down saying this is for everyone, let's
all get engaged, you know. So, I guess I don't
have the clear answer to that, except if you're the
person who's handling the finances in your partnership, maybe try
to engage your partner. Try to ask them, hey, can
we set up an appointment or a money date every
other week on the calendar where we just kind of
(19:50):
sit down and we could talk about our financial goals
and I can show you what I've been doing with
our finances so that you can feel much more engaged.
And I will say that I think everybody should have
some of their own personal savings, especially because women have
women in heterosexual relationships. Especially. There's dynamics that are and
(20:11):
have happened throughout history. Right, it hasn't been that long
since women could have a credit card, since women have
been working, and so we're seeing this tension right now. Right,
we're seeing things like the wage gap, and we're talking
about it, we're jumping up and down about it. And
it's because we're going from how things used to be
to how things are going to be, and we're caught
(20:31):
in this in between. We're crossing this rickety bridge together.
And when we think about this, we think about how
things we're very different only a generation to three generations ago.
I think it's really important for women to have their
own emergency fund because we don't know what's going to happen.
You just don't know. And I don't think that this
(20:51):
is secret money that you have to keep from your partner.
You can say, hey, I have my own personal emergency
fund and it's bine and if and if you have
a problem with that, maybe we have a larger problem
here to talk about. Maybe it's a greater issue to
talk about. But I would encourage everyone to have their
own personal emergency fund. Now, your other question is how
(21:12):
do we combine in finances? What do I think about
joint accounts. I think that you're going to know your
partner best, you're going to know your self best, and
the way to approach this is to first look at that.
But I do think it's really healthy for partners to
have something that they have together so that they're working
(21:32):
towards the same financial goals, right, so that they're on
the same team. So a joint checking account where they
both put money into it and they pay for joint expenses.
I'm all for that, but I do think partners should
have their own separate fund and vs. Accounts. And the
reason why is because I think it will remove a
lot of friction and it will eliminate a lot of
(21:53):
conversations that just don't need to happen. If my partner,
you know, if she has let's say one hundred dollars
a month that she can spend freely however she wants, great,
she can spend that all on the first day and
we never have to talk about the fact that she
spent it all on the first day. That's how she
chose to spend it. Right. Me, on the other hand,
I'll hold my money for months and then I'll buy
(22:14):
like a guitar or something, right, or I'll put it
into the crypto just to see what all the fuss
is about, and we don't have to have that conversation
because we've earmarked that money for ourselves, right. So it
eliminates that friction, that tension of like do we have
to talk about everything? And then it gives partners autonomy.
So having a joint account that they put money in
(22:34):
towards shared expenses, while having separate accounts. It's like two
birds one stone, right, You're you still have autonomy, you
get to spend money freely on your own, yet you're
on the same team when it comes to joint things.
I love that approach and I'm taking notes. I'm definitely
grateful for this conversation and Paco, I would love to
do four things gratitude with you, and here are four
(22:55):
things that you are currently thankful for in this moment.
Grateful for water, and I'm really really grateful that it's
warm here in Los Angeles. And I'm really grateful for
this chair supporting my body. And I'm really grateful that
I'm not afraid to use my voice. You know, as
(23:17):
you were talking, I was thinking about how I'm also
thankful for you pausing earlier in the episode for us
to take a deep breath if we're feeling overwhelmed. I
always love to pause and breathe, and I love that
you led listeners through that as well. So as breathwork
or maybe even meditation part of your daily practice. Yeah,
(23:38):
I've been a meditator since somewhere between twenty ten and
twenty twelve. I don't remember exactly when I got started,
but I've been a pretty regular practitioner or meditation, and
I wanted to give you more advice on ways that
you can prepare to deal with your finances right before
you log into your account or before you sit down
(23:58):
and do a spreadsheet, because you find yourself closing down,
you know, shutting down and freezing. Whatever gets you hype
right like maybe it's the new Taylor Swift album, or
maybe it's splashing gold water on your face, or maybe
it's taking your shoes off and you know, walking on
the grass, whatever it is that's going to make you
(24:18):
feel ready to deal with something that is still difficult
for you. I would encourage you to incorporate that as
part of your ritual before you deal with your finances.
That way, you've regulated your nervous system and you're taking
care of yourself and you're letting yourself know. This hasn't
felt safe in the past, but it's safe now, and
(24:40):
I'm gonna you know, I'm going to show you that
we're going to be okay. Oh I'm all about anything
that affirms that we are going to be okay. So
thanks for helping us feel safe with our finances. I
know that you put out a weekly newsletter with other
thoughtful insights and more practical advice, so to anyone listening
(25:01):
right now, if you think that that would be a
helpful resource for you, then check out poco's website, the
hell yeahgroup dot com. I appreciate you coming on Poco.
Thank you so much. Thank you. Amy
Feeling Things with Amy & Kat News
Host
Amy Brown
Popular Podcasts
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.