The New Emergency Fund? – Episode 502   

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[00:01] Welcome to the Prosperity Podcast. Podcast listeners, we are so excited because in this episode of Prosperity Thinking, we’re going to be talking about some of the hidden benefits from the Currents app. And we waited just a little bit to share this because we now have users on it and you’re getting the feedback. We want to hear what they’re saying. There’s something in there that they’re going, it works. And I didn’t think it would. Tell us about it, Kim. Well, it’s absolutely been fun. We did a blast effort of inviting a whole bunch of people. And for some people, it’s not the right step, which is totally fine. For those that it is the right step. What they are seeing is this beginnings, because we’re still brand new into it, although

[00:53] I do want to state that my friends have been using the system under a different name for two years. So I know the kinds of results that they’re getting. And what we’re starting to see with our clientele who are just beginning on it is already the ahas. I can hear it in people’s voices when I talk to them about it. If I happen to be on Zoom, I can see the ahas of the value of converting unconscious spending into unconscious savings. What’s been really interesting actually are the few people that have decided not to take advantage of the structure. So it’s an app plus an account. And we’ll talk about why that is. I just want to pause for a minute. Did I answer your question? I think you did. And the reason why I’m asking this is because whenever we’re creating something

[01:51] new, we start with an assumption. And then we typically get a different result, the validation. And then we have to make the decision. How do we iterate and where do we go? And so you’re in the process where you have seen the validation and it’s the iteration, but there’s those ahas. And that’s what we’re so excited to hear. Absolutely. Well, I’ll just give a quick example. So we have a client that’s earning just super simple. They were spending about $6,000 a month and they absolutely knew that they could live their life on $5,000 a month. So the $6,000 a month is net after taxes and retirement plan and other things that are taken out of their paycheck. And they were spending $6,000 a month and they were trying to budget and trying

[02:42] to figure out, well, I know my numbers are $5,000, so where is extra $1,000 going? How can I tweak my budget so that I can get a little bit of savings going? And I said, let’s stop the budgeting exercise. It’s just going to continue to frustrate you and it’s difficult to actually make it happen. Like budgets work on paper, but they don’t work in life. And instead, let’s rearrange the order of operations. So what was happening is the $6,000 was coming into their checking account and they were spending $6,000, even though $5,000 was the number they could live very comfortably on. And so we inserted a account between their income and their regular checking account. They still kept their regular checking with all their automated bill

[03:40] coming and going, everything that was set up, all that left alone. But by changing the order of operations for the income to go into the current reservoir account, that then sent their regular checking account $5,000. Well, it doesn’t take long to do that math, $6,000 in and $5,000 out. And in a couple months, they had a couple thousand dollars and they literally saw no change in their life. And that’s because we spend unconsciously. And furthermore, we get a dopamine hit every time we hit the buy button on Amazon or whatever other things we’re buying activities on or items on. And the current account and looking at the reservoir and seeing it grow like literally 1,000 to 2,000. That’s how long it’s been.

[04:42] They felt that same high of a dopamine hit because of the progress that they were making and the current app demonstrated to them that progress and it literally met their savings. That is so awesome to hear, like the liftoff that they had. It actually had me think of a few different scenarios and stories. And I’ll try and share one that works for me. And I shared this with my family the other day. So I saw this skit. It was on one of the social media platforms and I thought it was hilarious because it was talking about people with ADD and people with ADD, they say that they can be forgetful and they’re always waiting to the last minute or they’re not organized. So this is how the skit goes.

[05:37] The guy answers the phone and his friend says, hey, I’m going to be there in 30 minutes. He goes, OK. So the guy gets off the phone and he quickly cleans up his house and he waits 45 minutes, goes by, calls his friend and says, hey, where are you? And his friend goes, oh, that’s right. Don’t you remember me telling you to call every two weeks and say I’m going to come by in 30 minutes just so that you go and clean your house? Because, you know, you’d forget and you’d actually never clean your house. He goes, oh, that’s right. You’re so smart. So I thought of that story with currents because the person didn’t have to change their life to get some amazing results. And it felt easy. That’s what’s so cool about it.

[06:25] Like, it’s changing a life without having to do a ton of work. And most of the time, we see people flood into the gym at the beginning of the year and a week or two later, it’s back to the old habits, whereas this changes it completely. And it really does. It is an accountability coach right on your phone without having to do anything. And what’s amazing is we could add zeros to that story and tell it again because I have clients that make 60 grand a month and spend 60 grand a month and know that they could live their lives on 50 grand a month, but it doesn’t happen. So I have a quote from a mathematician to share. His name is Carl Pearson. And he says, what’s measured improves. OK, we all know that, right?

[07:23] You measure your health. You measure your money. If you measure it, it improves. Here’s the second part of the quote. What’s measured and reported improves exponentially. And so here you have this little app that’s reporting your savings behavior, not your spending behavior. Go spend the money. It doesn’t matter to me whether you spend 100 bucks a month at Starbucks or none. That’s all up to you in your checking account, not seen by me or the app at all. All we’re interested is the positive side, right? The prosperous side of saving as a verb and using that good momentum and that good measuring and that good reporting to improve exponentially. I love it. That’s awesome. I don’t remember all the details, but I’m going to ask.

[08:19] Your son, Robbie, and his girlfriend were sitting on the couch. You told them about Currents. They set it up with laptops. How long did it take them? Eight minutes. OK, so laptops on their lap, phone in their hands. They signed in to payroll. They moved their income into the Currents reservoir. They identified the target emergency account number that they wanted to shoot for. And then they also chose the baseline number, which goes on into their checking account to pay all the bills. They did that entire process in under eight minutes. OK, that is pretty amazing. So they’ve done it that fast. From the users that you’re seeing in Currents, is there a certain age range that is a majority or are you seeing all over the board?

[09:12] All over the board. Definitely, for somebody that’s just not comfortable with apps, regardless of their age, it’s not going to be a good match. Also, for somebody that feels like they have a system set up already, they may have some type of Quicken or QuickBooks or Excel spreadsheet or you name it. And that’s fine. They don’t need to take the app on just because I wanted them to. Yet, as we know, most people do not have a system. They don’t have a structure. And even those that do, I’ll come back and lean on in about six months, because I think the app will actually save them a lot of time. And I would rather they spend their weekends out hiking the mountains or playing with the dog or hanging out with the kids or whatever it is that they do

[10:01] than working through their Excel spreadsheet, because the app automates so much of the good measuring about savings and parity. And then stop trying to measure what you’re spending. Just pick that number. We all usually kind of have that baseline number in our head of, I know it takes X to get me through the month. So you pick that number, and you pick that target emergency fund number, and the app does the rest of the work. That is absolutely amazing. The way I think is often with strange hooks and benefits to it, and one thing that I’ve noticed is this, that this is a preparatory type of app and process to get you ready for understanding how to use life insurance in your everyday life. And so what happens is often people, they don’t know,

[11:01] but as an example, the income that we make from our job, we’re going to be taxed at a certain percentage, whereas money that we use from a loan, be it life insurance, Uncle Sam will just say, hey, you guys figured out the cheat code. That’s cool. You’re not paying taxes on this, which is nice. Caveat, like do your own research and stuff. So what that means is we’re teaching people to learn the cheat codes now when you’re younger. And so let’s stop you on the cheat code thing. I find it as that, but I would love to hear it. Well, and this is the fun thing about our podcast, right, is our listeners get to hear you and I debate things. This is not a cheat code. Life insurance is to act exactly

[11:48] like it’s supposed to be taxed. Think about it this way. When you have car insurance, and you get in an accident, and you get money from the insurance company to repair or replace your car, that is not tax. When you go to a bank and get a loan for a car or a home or any other thing, that money is not taxed. And so whether you’re talking about the life insurance from its income tax-free death benefit standpoint, which is replacing an asset, that’s what insurance does, replaces a human being that’s providing value in life. Or when you talk about borrowing against the cash value and you get the loan from the life insurance company or from a bank who has used your life insurance policy as collateral, that is not taxed.

[12:43] And you brought up one of the most valuable points that I actually forget to tell people about as it relates to currents, which is, yes, we can start to work you towards earning income that is not taxed, whether it’s life insurance loans, it could be life insurance dividends, it could be real estate deals, it could be muni bonds, it could be a business, there’s a whole side of personal finance that is not taxed as income. And people can start to learn about that, become open-minded about that and head in that direction, but not until they have their emergency fund funded and their opportunity fund starting to be built. So, currents is now the emergency fund, the life insurance is the opportunity fund,

[13:39] whereas in the past, I have talked about just the life insurance cash value as the emergency opportunity fund. And that works, but I think it’s more valuable to really pin clients down on what is that emergency number that you want to keep, because in the past, I’ve asked about it, but not pinned them down. And so, they didn’t get its good results. You know, that’s really insightful there. One, when they have it inside of currents, they’re gonna quickly figure that out themselves. And two, I appreciate you pushing back on the cheat code. See, I look at that just the same way when, I hate it when people say, oh, here’s a tax loophole. You’re like, no, this is understanding the tax code and following it, that’s all it is.

[14:24] There’s no loopholes here. You know, to me, it’s like understanding at a whole new level, and you’re making it a lot easier for us to do. And when a habit is easy, we’re gonna actually implement and then stick with it. You got it. We’ve both read that your account grew in. Yay, I made my target fund, and now what’s my next goal? Are all of the good that I truly want every single one of our clients to have. And there’s 20% that it will not be right for. Either they’re not comfortable with apps on their phone, they have a structure that works for them already, or they just plain don’t want that much detail shared because I do see whether they’ve hit their target emergency fund. I don’t have any ability to do anything else

[15:22] with the app, but I can see if they’ve hit that. Some people don’t want that accountability call telling them to clean up their house in 30 minutes, right? So those people are not a good match, but for everybody else, this is what’s available. And it is a cell phone app, so I need cell phones. People are welcome to email in the hello at ProsperityThinkers.com and have the subject be currents, and it will become part of conversation. I’ve tried to figure out how can I train Google to spell currents right? So we’ll get there. Perfect. Well, for you listeners, we’ll make sure to put a link to that reference in the show notes, which is send an email to hello at ProsperityThinkers.com currents, C-U-R-R-E-N-C-E.

[16:14] And Kim, thank you for helping all of us establish better habits, understand the emergency fund, the opportunity fund, and see some of the hidden benefits. This is cool. Thank you, Spencer. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.