Overcoming Financial Anxiety – Episode 547 

This transcript was auto-generated and may contain errors.

[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers. In this episode, we’re going to be talking about overcoming financial anxiety. And before we hit the record button, I said, Kim, this isn’t a language that I’m fluent in. I’m going to have to learn how to do this. Yes. I’m sure we’ve all felt anxiety or whatever that could be, but I choose not to. But at the end of this lesson, I’m hoping that others say I choose not to. So how do you interpret that? Well, that choice is a wonderful distinction and just helping people know that they really can have it. And we also said it’s the overcoming part that we’re going to be focusing on here, not the anxiety part. You get what you’re focused on. And as I’ve said a million times, cash flow issues do not go away.

[00:54] They just get bigger zeros on them. And I think it’s cash flow issues that cause people the anxiety. And so it’s super important to have cash flow structure in your life, a structure, whether it’s automated, whether you do it by hand, whether you use our system currents or your own system that enable you to control the cash flow. And controlling cash flow is not about budgeting. In fact, I would say it’s the exact opposite. It’s saving first. This, too, will help you overcome financial anxiety. Controlling cash flow is also about paying attention to the money coming in as well as the money going out. But I don’t mean for your expenses in this conversation. I mean, yes, that’s an obvious one. That’s part of controlling cash flow.

[01:49] But what I mean is the money going out for investments. There are so many people that get set up on an automated plan at work, for example, or an automated plan at their stockbroker or they’re just doing something because their neighbor said that they should do it. So it’s, you know, again, sort of an automated step that they’ve taken. And they’re just continuing to do it without a lot of purposeful thought. And that can actually create financial anxiety. You end up with a whole bunch of financial products that are not working together. And you may have your stockbroker giving you opinions about things. You may have insurance people giving you opinions about things. You may have your accountant giving you opinion about things.

[02:34] You may have attorneys giving you opinions about things. This can create anxiety. And so when we use the term financial anxiety, it’s not just somebody worried about paying their bills. It’s somebody that is dealing with a lot of different pieces and parts that may not be working together well. It could also be somebody that has a big bucket of finances and there’s a lot of holes in the bottom of that bucket. I see that happen a lot. Inefficiencies start to come in and or there are literal holes where dollars are draining away from them and they’re not even aware of it. Or there’s duplications like in the arena of insurances or products that were purchased when you didn’t have a lot of money.

[03:25] And now you do. And so you’re thinking maybe you need something else. All of those things can create financial anxiety. And so what do we do about that? That’s really where I think the question remains for us to talk about today. And you started one example of what we can do. And that is choose a different perspective, choose a different approach. Now, before we get into other things that you could do or how to do that. Have we laid the landscape clear enough? Do you think? Yeah, I believe we have because you’ve been able to set up the big building blocks, not the pieces that people tend to get lost in the weeds. Well, so let’s dig into that choice. And I think at the beginning of the endeavor,

[04:19] it’s the quality of someone with a mental perspective that says I can make this choice. I know that I can make it. And if I don’t know how to make it, I know who I can go to to help me make it. And Spencer knows this well. We’re big fans of Dan Sullivan’s strategic coach thought process of finding who’s to get help as opposed to always trying to figure out how to do something ourself. And that’s where the role of a financial guide, which I consider myself a financial guide, can come to play is helping make the choice that financial anxiety is not the way that we’re going to go. Instead, we’re going to dig in, get the information, solve the problems, take the action that can get us on the other side of that anxiety into a place of financial peace, financial confidence,

[05:27] knowing that our dollars are efficient, knowing that all of our financial products are working together to serve us, knowing that we do not have holes in the bucket of our personal financial arena. And when all these things are in place, again, very easily done with a who, then those feelings, that mental perspective is much, much easier to take a stance about and actually get results with. So if we’re looking at that perspective and we’re approaching it the way that you’re talking about, what we have here is something that most people are dealing with a certainty issue and challenge and problem. Is that what you’d say? Yes, I think that’s a great word. Certainty around our monies is a very valuable thing.

[06:27] And it always blows my mind when I look at people’s finances. Usually ninety six, seven, eight percent of their dollars are in uncertain spaces. Now, why is that like you? You’ve had years and years to be able to see that. I’m asking the why, because the why is actually pretty important. Yes, absolutely. It’s because us Americans want something for nothing. We want to put a little bit in and get a lot out. We want to eat at McDonald’s and have, you know, Jim GYM bodies. And those two things don’t go together. And we know that. But it doesn’t mean that we follow that. And yet, because we want something for nothing, we tend to do our investments first. We tend to speculate. We tend to gamble.

[07:18] And we hope that those dollars succeed. And that uncertainty is a good thing. We need uncertainty in our lives and we need an uncertainty with some of our money. But I’m going to stand with Patrick Donahoe. I know he has a hierarchy of wealth that indicates maybe it’s 40 to 50 percent of your monies should be in certainty assets. And then the other 40 to 60 percent should be or 40 to, you know, 40 opposite 60 and then 50 50 should be in those uncertain spaces instead of 95 percent. OK, so you’ve been able to take these pieces right here, the certainty pieces. We’ve taken the called your operating system. You found that we’re going to have the who someone like you that’s able to do that. Let’s go into the financial anxiety and let’s go into age blocks because it’s going to be a little bit different

[08:19] for people that are towards the tail end of their career than we’ve got middle career and starting career. So we’ve got those three gaps. So, you know, we take the top layer of end of career does not mean retire, doesn’t mean they have to be out. It just means that they’ve probably accumulated enough wealth and certainty that they’re OK. What does that look like? And let’s go through each of those categories. So when let’s just we’ll split it up age wise and 60 and above 30 to 60 and zero to 30. So 16 above inflation and longevity, those are the uncertainties and inflation of expenses, inflation of governmental type, you know, where they’re inflating the money supply, which is causing the value of our dollars to go down and then longevity.

[09:06] Literally, a 60 year old could easily live another 30 years, which is why those blocks are good. And it could be more like 40 or 50 years for that 60 year old to live. So there are lots of things that somebody can do in that space to develop certainty. And there are products that will pay lifetime income so that the longevity risk is off the table. And there are products that will help them control their cash flow so that their expenses do not keep rising as fast as inflation does. And there are other things that they can do to increase their certainty to protect their peace of mind. So that is the most important thing for people in that space in the 60 and older space, the 30 to 60 space. They absolutely need to be building their wealth.

[09:59] And it is amazing how many people try to put more in the bucket, fill the bucket more with uncertainty assets, usually investments, before they plug all the holes in the bottom of the bucket. And so there are holes like too many taxes, like opportunity costs that are draining monies out of that bucket, term insurance that will never pay because they will outlive it, car insurance that is not optimized, and other holes in the bottom of the bucket or in the sides of the bucket, things like extra mortgage payments, too much money going into retirement plans that is going to cause all of your income to be fully taxed. Those types of things are all holes in this bucket of personal financial spaces that are not efficient.

[10:52] They would do better if they plugged the holes and increased the efficiency before they spent money and time seeking investments. But again, Americans don’t tend to do that. So that’s something that I would recommend. And then that’s that zero to 30. So, you know, probably 20 to 30 year olds. In most cases, it’s the foundation that they want to be building a foundation of liquidity, a foundation of that emergency opportunity fund that we have talked about so many times. Store it in a bank, store it in a life insurance policy. At this point in the discussion, it’s not important. What’s important is that that liquidity is built, that that foundation of wealth, which will exist for the rest of their life, is so, so valuable.

[11:45] I was just speaking with somebody earlier, 29 years old, eight hundred thousand dollar net worth. Good jobs, both of them, all investments, no liquidity. Now, a lot of the investments are stock market, so they think they’re liquid. But the first time the stock market goes down is the last time that they’re going to want to liquefy those assets. And so here you have somebody that’s built a second and an even third story home without any foundation. Now, of course, the guy’s goal is to build a 10 story building. Right. But he has no foundation. And so the liquidity space is so important. Now, these people happen to be accredited investors because of their income. They cannot get involved in alternative investments until they have developed one hundred and fifty thousand of liquidity.

[12:35] Beyond the amount of money that they’re going to invest in their alternative investments, which is normally fifty to one hundred thousand dollar minimum. So we have to spend the next two or three months figuring out how we’re going to get one hundred and fifty thousand of liquid monies before they can do what they really want to do, which is invest. And I get it. This guy’s chomping at the bit. Nevertheless, he’s not going to qualify for the big investments that he wants to do without that liquidity. He has no foundation. And so that’s the area that the 20 and early 30 year olds want to be focused on. Oh, that’s excellent. We’ve got the three categories going into the flip side of the, you know, called that first category, the zero to 30.

[13:22] Needing in the client example of one hundred and fifty thousand dollar. The emergency savings is the red pill. It is the silver bullet that solves so much. And I’ve seen it time and time again where people don’t see the importance of that. And then it’s again, the old American way of doing it, not the new American way. And because to have that emergency savings means that you had discipline, you worked hard, you were focused. Then the payoff of that is once you have it, you have the opportunity to do all the other things. So, Kim, this was really helpful for our listeners. Give us one, a one sentence snapshot and call to action for listeners regarding this episode. It all starts with your thinking, which is the first principle of prosperity that we’ve had for many, many years.

[14:22] And so your action is to check every thought that comes to your mind for prosperity or poverty. And if it’s a poverty thought, toss it out the window. And if it’s a prosperity thought, be grateful, take the action and go on. That was awesome. Kim, thank you for sharing your wisdom today. Yeah, fun stuff to do. Look at that. We’re right at the hour. Beautiful. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.