Essential Habits For Financial Success #614

had on on Monday with economist Katie Milkman. During that convo, she dived into the science behind why it is that there are certain decisions, certain changes that we're able to make that we stick with, and why there are other changes that we make and when the first bump in the road comes along, we just immediately fall off that wagon, throwing the towel exactly. But the fact is, when it comes to some of the larger financial goals that we have in our lives, there aren't a lot of folks

that have like this grand tenure plan. They're like, I don't know, like I don't even know what I want to do by the end of this year, let alone at the end of ten years. But they do know that they need to make some healthy changes in their lives. When it comes to how it is that they handle their money. They don't know exactly where they want to go, but they know they need to start taking some positive steps, you know. And this is exactly where this episode comes in.

This is this episode is especially for the folks who are saying, like, just tell me what to do, Like I don't exactly know what it is I'm pursuing, like the big things are gonna bring about happiness in my life, but I do know I need to be smarter with my money. Tell me what I need to do. I think this episode is definitely going to connect with those folks, but just for for everyone out there who is looking

to get better with their money as well. They might not have like a big, hairy, audacious goal of achieving fire by the time their thirty three or something like that, but it doesn't mean that they don't want to make progress and leave themselves more options. And so yeah, we think these these habits, implementing some some of the habits that we're gonna talk about today are going to help put you on the right path, even if you don't

know where that path is going to lead exactly. But before before you get to that, man, I wanted to mention something in one of our listeners told us about the other day via email. Thanks thanks to listener Nate, by the way a listener who has some inside knowledge when it comes to how the insurance industry works. Yeah,

and so he is an independent insurance agent himself. And and you and I always talked about how great independent insurance agents can be for individual consumers because they're not

beholding to a specific company. And so instead of saying, like, yeah, let me quote you prices from Progressive only or All States only or whatever it might be, they say, no, I'm gonna I have the ability to shop with eight or nine companies on your behalf, and I'll tell you what the best prices are, which I think is super valuable, including a bunch of companies you've never heard of. Because they don't put any money towards marketing, right, they're also

able to offer sometimes the best rates. Yeah, they don't have a cute green get go or something like that, like, which means they can offer you better rate sometimes because they're not spending so much on marketing exactly. And the website that Nate mentioned, I've not heard of this website before. We've talked about finding an independent local insurance agent, but he mentioned the site trusted choice dot com, which is a great site for finding a local agent. Where you are.

So if you're like, hey, one of my goals this year is to save money on insurance. I know, like my insurance cost just went up big time. How am I going to be able to lower that cost in a meaningful way? Well, one of the easiest ways to do that is to find a local independent agents and so, yeah, we will link to that site in the show notes

for this episode. But finding a local agent having them shop on your behalf is one of the easy things that you can do to potentially save hundreds or maybe even a thousand dollars or more in the coming year on on insurance costs, definitely without giving up a ton

in coverage in order to do so. About exactly that, that's where we don't want you to cut corners in order to save There are other ways and one of the reasons he pointed out to local agents oftentimes they know the specific nuances and the laws associated with the state where you live, and so they oftentimes can provide better coverage because they know exactly what it is that you are going to be required to have, but then also what you don't necessarily need to have, and uh,

they'll probably ask more about your specific situation sometimes, and I think that's helpful totally. All right, let's introduce the beer that you and I are going to enjoy during this episode. Uh, this is a liquid Hop Magma. This is our last beer donated to the show by Mutation Brewing. A big thanks to Jack and all of our friends over there at the brewery. But I'm looking forward to enjoying this one and we will share what we think about it at the end of the episode. For sure,

we're like happy beers. We'll keep our thoughts on this one in just a bit. But Matt, but let's get onto the subject at hand. Let's talk about the essential habits for financial success. And it just makes me think of high school for some reason that like, remember we were always told back to school essentials, right, remember, well kids are going back to school for the second semester in just a couple of days. But like, uh, in high school, we were always told that we needed to

get good grades. But it always thought a little arbitrary to me, like nobody was connecting the dots and so

I was. I personally was more than happy to trade like hours of studying for a solid be instead of like busting my butt to getting it always felt like the gap in effort needed between getting a B in an A was significant, so I was just always content to get a slightly lower grade, but it was still solid right, And I think I choked it up to the fact that I had no desire to attend a prestigious school like the IVY leagues were out of the question for me. No, no Yale for Joel Little Little

High School JOLS. No. I wasn't thinking about Yale or Harvard or Standford or any of that stuff. But it turns out, though, I think there were good reasons that my parents were pushing me to try harder, even though I wasn't planning on going to Colgate or one of those nice schools. Right, and better grades meant a wider range of options and the potential for more financial aid

to no matter what school I went to. It makes me think recently, I was talking to my wife Emily one of her cousins, and he talked told me about getting a thirty two on his A. C T took it three times and he just couldn't get past that that mark. But if he'd gotten a thirty three, he would have gotten all his housing paid for at the school he went to. So it's just like one point man costs him a lot of money. But he said, man, I just I couldn't stomach taking that test again at

that point in time. And I don't think he realized at the time, when he was eighteen how much it was gonna cost him. And so both his parents and my parents, I think, could see past our lethargy, my you know, lack of focus and dedication and his lack of wanting to take that test again, and they knew that that trying just a bit harder would have long term positive financial consequences for both of us, not to mention a stronger work ethic right that would provide dividends

for years to come. So your parents wanted to see your full potential, Joe. They knew that you were capable of so much more. But but but what you're saying, though, is like, I mean, you're not just going to focus on getting good grades because you know that you have to achieve a certain g p A to get into a specific school, Like that is not the only reason

that you're doing it. And you know, when it comes to like the big financial goals that we have in life, it can be overwhelming, you know, like when you hear Life Grows out there saying that like, you've got to start with the end in mind. And I'm pretty sure that that's something we've even said before, even though we don't at all consider ourselves gurus. And the reason though that that can be overwhelming, I think is because sometimes you just have no idea what end it is that

you're actually pursuing. And plus, you know, we think this is also a great way to tackle the new year, because you know, you may not even know what you want to accomplish by the end of three let alone by the end of the decade. You might not have a specific crystallized goal yet. And that's okay, But it's about moving in the right direction. It's about getting that momentum started, getting that ball rolling, even if the end

goal is subject to change. And so just like with you, Joel, so you didn't know exactly where it was that you wanted to go to college, but by having a good g p A, by giving it your best shot on the on the s a T. That was going to open up the potential for you to go to some different schools that you might have changed your mind to

down the road and developing the right financial habits. We think that that will similarly help folks to start moving in the right direction, even if you don't know what your ultimate destination is going to be. Yeah, And the truth is that most of us have goals that are subject to change right now. None of our goals are are very few of our goals are set in stone. This is and we know them on like a multi decade long timeline, and life throws us curveballs and we

have to adapt. That doesn't necessarily mean that you've failed, right. It's often that as you grow up and evolve as a person that what you want out of life changes, which is totally fine and totally understandable, and it's actually a good thing. What it feels like we live a new life, something like every seven years, we're turning over a new leaf. Matt. There are certain things that people might have told me three years ago, but pre pandemic, and they would have said, Hey, you're gonna end up

doing this, this and this, making these choices. You're even gonna move from the neighborhood that you can love so much right now, and you're gonna end up in a new place and I would have been like, you're crazy, like there's no way out of your mind. But life here we are throws us her balls. We have to react accordingly. And you and I we moved our families right last year, but we want you to have the financial ability to be able to make those changes without

freaking out. And the earlier you adopt the financial habits that we're gonna cover in today's episode, the quicker, you're gonna be on your way to increase levels of margin and financial flexibility, which directly equates to the likelihood that money isn't going to be the thing holding you back from the lifestyle you want to lead and the changes you want to make. Man, it would have been so much more stressful if we felt like we wanted to move our families somewhere else, but we didn't have the

financial backstop to make that decision exactly. And so that's what we want for people. Like, as goals start to crystallize, you're like, Hey, the habits I've been implementing are you know, have gotten me to the place where I can now achieve that without having to to fret, without having to like freak out that you don't have the financial wherewithal to to make those decisions you want to make. That's right, man, Yeah, I can agree. More so let's get into it. Where

do you start? And we would argue that gathering the facts that that is step number one. Uh, and that means tracking your spending. We think that this is the number one habit that folks who handle their money do without fail. Last month, actually we talked about how people underestimate what it is that they spend on their monthly subscriptions, and not just by like a little bit of money, like almost always it was by at least a hundred bucks.

And so the reason I bring that up is we is, if you don't know where your money is going, it becomes really easy to let those precious dollars slip through the cracks, and that makes it harder to actually reach whatever goals it is that you are either currently pursuing or that you might end up pursuing at some point. Every dollar counts when we're looking to make changes, uh. And if you don't track where those dollars are going, it's like you're on a ship with a perpetual leak.

You gotta fix that leak in order to get where you're trend to go. It makes me think of that. So the conversation we had with Katie on Monday, one of the things she wrote about in the book, she one of the similarities between Benjamin Franklin and Jerry Seinfeld was that they were incredibly disciplined in tracking their progress. There were changes that they both I would say probably very different changes that they both wanted to implement in

their lives. Uh, and they were both able to basically chart their progress and that allowed them to achieve the results much faster. And specific to Jerry Seinfeld, one of the things she said that he would often do um is that he would maintain these streaks, and so I think maybe it was something like every night he was trying to do and like an open mic nights somewhere

in order to just hone his craft. And once he got that going, he didn't want to stop, specifically because he didn't want to break break the streak that he had going to like in a sense, he was almost kind of gamifying it. And when I read that, I realized that's one of the reasons why I track my spending every single penny, every single month, and I've done

that since two thousand and seven. Like literally, for I'm on, I'm on like a fifteen year streak where every single month that that is something I've been able to maintain. There's no way I'm gonna break that streak. I'm not gonna let a busy month allow me to not do this thing that I've done for so long that has allowed me to achieve the financial progress and the financial

success that I have. And you're living up now to the moniker that everyone has for you, which is the Jerry Seinfelder personal finance if only No, I think you're right. I mean, I think those things, those things matter, right, And the longer we do something, the more habitual it becomes.

But something as simple as tracking your money is crucial, Like it's it's like the first building block really personal finding so many ways, and if you're not doing that basic thing, the likelihood of you being able to achieve bigger goals that you've set out for yourself becomes a lot more unlikely if you're not willing to do the

small stuff. Exactly. Yeah, I think I mean that's worth sharing too, because I think they're gonna are saying, oh great, how the money, guys, They're they're talking about tracking or spending, but like, this is something that folks who have accomplished a lot in their lifetimes. This is what they do. This is where you start. Yeah, and it sounds basic, but the realities most people don't do it, and so they don't know where the leaks are. They don't know

how to go about plugging them. And the truth is there are lots of ways to track. Right. You can go old school spreadsheet like you do, Matt, and we can link to your budget spreadsheet that people can copy and use however they like. In the show notes for this episode, if you're like, hey, I do like I do like the Matt's grandpa approach to budgeting and tracking. That's cool. Feel free you go use it. Or you

can use a software like Mint or wineap. If you're like, I'm hip, I'm with it, then go for that, like sign up for one of those sites Mints free, wineap costs money, But whatever system works best for you is all good with us. But if you opt to avoid tracking your spending, your progress, it's just it's gonna be stunted. Just like if Jerry Sinnel wasn't if he wasn't tracking those open mic nights, and he's like, I think I've done it like the last thirteen days, but I'm not

a shure. There's something about, yeah, documenting it that helps keep that progress alive. And then the next step after tracking is budgeting. It was once you know you know where those funds are going, it's so much easier to then tweak your spending to better align with your values, and you start asking questions like do my current expenses makes sense for what I care about? How do I feel about the money that I'm spending? Do I feel good about it? And if not, it's time to readirect

where those dollars are going? And again like they're you know, excellent software packages to help you out with this, but you don't need software to help you do this either, like pen and paper write. It can be as simple as that. But yeah, tracking and budgeting are like two unavoidable p's in a pod if you're doing those things consistently. We actually we have a new article up on our

website at how money dot com. There's like different budgeting methods I think that work better for different personality types, and so will link to that so you can hopefully find a budgeting method that works for you how you think about money, and then kind of like how you personally handle it. It's not necessarily it doesn't have to be a one size fits all approach. That's right, And I will say I'll give a slight caveat because I said that this is something that everybody who's successful with

their money, this is something that they do. And while I think it would be helpful for the majority of folks, I will say, there are folks out there who don't budget as much. I mean, I think you would even kind of fall into that camp. But that's actually the fourth budgeting style in that article I referencing is is people who don't budget. But like my favorite budgeting style is to not budget. But what I wanted to say though,

is you, I think initially it is incredibly helpful. Yes, like maybe in the day to day, like the month a month, you're not you know, you're not doing like a zero some budget where you're tracking every single penny,

which is one of the other ones in there. But I think initially, at least at the very beginning, like you gotta face the facts, you know, like you got to face the music and be shocked with the reality of your spending because you might think that you've got a certain level of spending, you know, going on in your life, but guess what. Lifestyle inflation happens in conjunction with actual inflation, which is caused a lot of are

are spending to increase. And so I think it's so important to truly face the facts, and at the very least doing that once at the beginning can help you to get sort of like, uh, I don't like, almost like a tune up, Like when you go into and you take your car in, if you take it to somebody who knows what they're doing, they're hopefully able to

give you a good diagnosis. Uh. And I think that that I can tell you what you can do, what's coming up with your carly Hey in maybe like a few thousand miles, those front brakes might need to be looked at again. And I don't know, maybe you're gonna need that ninety mile check up where we do this, this and this, prepare for it. Yeah, exactly, start thinking ahead, which is great, And I think that's what kind of

tracking and budgeting can do for Yousolutely. It's also true that somebody like Jerry Seinfeld doesn't need to do an open mic night every single night at this point because of all the work he's put in throughout the years. So exactly, if you're that far along, you don't need to necessarily feel guilted into continuing a system that helps set you up for success, and it might continue to help you be success. But he also might not need

it in the same way that somebody's just starting. Yeah, I mean it's trade offs because like simultaneously, like even the best coaches out there and the best players, they're watching tape, you know, like they are reviewing and looking back over their performances and like, and so I think even Jamaican a sports reference. But yeah, I don't want

to do that off. But I get I think even the folks who are crushing their financial goals would see an increased level of performance were they to track and budget. It's just it just kind of comes down to whether or not that that is enough of a priority for them to want to do that. I remember seeing a Kobe Bryant interview where he talked about just out working everybody else, and he's like, they's say, the average athlete

works out, has two good workouts in a day. Well, what if I wake up earlier in the morning, and I'm getting somewhere between three and four workouts in every single day. He's like, it doesn't matter if they were their butt off over the summer, because for the last five years, I've been doing an additional workout or two

more than they have for years now, which in compounds. Yeah, and it's like those the kind of things, those actions really matter, right, That's a that's a habit that he got into that paid massive dividends, making him one of the best basketball players of all time. But you gotta you gotta let your body rest, though, too, write like, aren't you faced with like the reality of science? Yeah, I think that now that I've been working out. I mean, the guys that's a guy to work for Kobe, I'm

gonna trust it. But there's there's certain guys that like work out every single day. I'm just like, how are you not sore the next day? Like when I work out, I can't I feel like I can't do Jack squad the next day. But we definitely don't need to turn this into physical fitness sports metaphor of an episode. We're going to continue to talk about the essential habits for financial success. And we have a handful more of different habits that we are going to cover right after this.

All right, Matt, let's keep going. Of course, you and I we want everybody listening to this. We want them to be financially successful. We want them And that doesn't mean and you and I've talked to talk about this all the time. That doesn't mean having like Bill Gates levels of wealth. That doesn't mean being on the four List or something like that, like that is uber insanely rich and wealthy. That we don't care about that. But we do want people to have more choice in our lives.

We do want people to have more money in their bank account to allow them to have more choice over over the years, more autonomy over their lives and the decisions that they're able to make in the future. And so that often means having better habits, making better choices, even if the end goal isn't and for most of us probably isn't going to be to be, you know, to become one of the uber wealthy elites. But another habit that's successful financial nerds partake in is to regularly

assess and cut their spending. And so this kind of aligns with tracking your spending. But it's a little different because this is like when you're actually not just seeing the holes in the boat, but you start plugging the leaks and you make it a habit. We would say to institute a waiting period before buying something, something like a forty eight hour rule where you're shopping and you

see something and you're like, oh, I need that. Well, if you have a forty eight hour rule, you don't buy it, and maybe you forget about it, or maybe you come back to it knowing, hey, that's actually something I really want to buy. Or if you're shopping around for items that you're definitely going to purchase, you know you want that thing, you've been like thinking about it for a while, Compare prices before you actually take the plunge and buy that item and add it into your

life as well. Also, you know, work to spend less on recurring expenses. These are all habits that you're going to want to develop in order to grow the gap in your life between incoming and outgoing. So we would say start with those big expenses, right like housing. What are some ways that you can keep this one to a minimum. Do you really need a big, fancy apartment for all the stuff you're tired of keeping up with. Or let's say you own a house, maybe it's time

to start house hacking. Can you, uh, can you rent out a room in your house to turn that expense into less of an expense or maybe maybe even into a little bit of profit. How can you trim um what you're spending on transportation? Can you get rid of a car from your life? Matt? How are big advocates for this? If there's a lot more people who could

afford to ditch your car then think they can. In the average price of owning one single car for a a year or something like ten thousand dollars, that's insane. That's a lot of money. Can you cut that back in your life? Also, like shop insurance rates, we talked about that at the beginning of that episode. They're all of these little leaks that are in our lives, these ways that we can address them. But the habit that's

important to develop is to regularly assess and cut. Assessing and cutting spending is going to go a long way when it comes to moving the needle creating more margin, more financial margin in your life. Yeah, but don't forget about the all those little leaks as well, you know, because like the successful money habits, like like saving in small ways, that is also going to propel you down the path of financial success as well. I'm starting to

sound like Ben Franklin. A penny saved as a penny earned, you know, I feel like, uh me have been Franklin, would we would have gotten alone. But like, you know, just like the small tweaks that were able to make right, Like, as we adopt, say a more positive view of frugality, I think that's the cherry on top as we're working to optimize our money. Uh, and these are moves that

most any anyone out there can do. We're talking about things like biking more often as opposed to getting in the car, Like that's one of the ways that you are able to downsize the second largest line item on the Americans monthly budget. But then something as simple as saving, storing, and actually eating your leftovers. I'm I'm like the King of leftovers, man, don't just scrape it into the garbage can. Like literally today my leftovers I had, um, there's just

like too much brown rice in there. And so I like the pork and the mushrooms and the spinach, but I scraped the rice back into the container. That's like that back in the fridge because now I've got leftovers of leftovers and later this week I'll be able to bring some vegetables, some protein, uh and complete that meal. But you know, even something as basic as we're using as the black bags, financially successful folks realize the value of a dollar and like they're just always doing just

the little things that add up. And you kind of you touch on this a little bit, but like finding ways to keep those smaller recurring expenses minimal as important as well, because you're not looking to bring in new expenses into your life just on a whim, right, because those that's that's how those small expenses really add up when you multiply times twelve and you get you kind of get used to the action of doing those little things and not thinking a thing of it, and they grow.

Like it's not just the one ten dollar subscription, but it's the fact that, like you're the kind of person however many years that you did that, that you maintain

that subscription. But then just what you're talking about, Yeah, the frame of mind that you enter into as a consumer, and it's like, now, cool, Yeah, that's not if ten dollars isn't a big deal, the next time the twenty dollar decision isn't a big deal, and then we need to make them big deals in our lives, right, yeah, Keeping, we want you to basically keep this recurring payments as low as possible because that's going to open up the

widest range of financial possibilities for you in the future, and that's what we want for you. And plus, you know, keeps your stress levels lower, which is massively underrated. We're not even gonna talk about stress and mental health. We're just talking about like the nuts and bolts today, but keep that in mind as well. Yeah, it's like these habits do have a ramification on your mental acuity right on the bandwidth that you have to tackle other more

important things in life. That's not the focus of this episode, but it's h Yeah, it literally loads your key points having a lot of debt on hand. Right, there's like studies the show that it's something like a twelve to fourteen point i Q drop and we want you to avoid that because we want you to be smart and happy. But another habit that you're gonna want to adopt is

to avoid high inter straight debt like the plague. And so yeah, when you when you take on debt, what you're doing is you're giving your future self fewer options. And so you want to be darn sure that the debt you're taking on is fueling the future you want, not preventing future possibilities. And the problem is most debt sucks, right.

Personal loans, revolving credit card debt, car loans like these are the kind of things that allow you to consume more now, leaving future you though on the hook for those payments potentially seven, eight, nine years in the future.

When you're talking about something like all those kinds of debt, but spec like, say car loans, there's a lot of people taking out eight nine year car loans now, Matt, and so like, yeah, by the time you're done with that car, hate it, you're halfway through the car payments and not sending you up for the opposite of financial success. And so yeah, savvy financial folks they make it a

habit to avoid all the above debts. They don't want to mess with any of them, and they don't want to play with fire because they don't want to get burned. So we also stress on this show that not all debt is bad. It's possible to use debt wisely to give yourself more options in the future. For talking about like a smart mortgage or a reasonable amount of student loans to get a degree that's going to improve your earning potential. Those things, you know, those aren't bad versions

of debt. But avoiding the worst debts and keeping even the potentially helpful debt in check is a wise habit to get into. Honestly, another reason too that it's good to avoid debt. And we we've talked about this towards the end of last year when we were talking about pursuing happiness in all the wrong ways. We're just poor predictors of what it is that is going to make us happy. We think that this is going to be something that's gonna make us happy, it's gonna make us fulfilled.

And when those items oftentimes uh that we have to purchase when we finance them, we are stick in our future selves. Like you said, Joel, with those payments, we are like, I don't trust myself today to make something like the right decision on when it comes to taking on debt oftentimes, so still be something that I think is going to be worth it down the road. It's it's I mean, that's why student loans and mortgages are typically the only things that we like to see financed.

If there's one thing I feel like I've learned about myself over the years is that I changed my mind sometimes and again there's it's I've had this one path in my mind and I think, oh, this is gonna make me happier. Oh, this is gonna make life easier. But then as time progresses, as I'm mature, as different events present themselves and the facts on the ground change, well,

oftentimes that warrants changed the game plan as well. And anytime you are looking to take on any serious amount of debt, we think you should probably think long and hard about bringing that debt into your life. Yeah. I think that the habit of reflexively avoiding debt is a good one to get into. It's not that, like we said, occasionally, some kinds of debts and small amounts aren't you know,

they're they're not rible for you. But kind of not buying into the popular American notion that taking on debt isn't that big of a deal is a good thing. Yeah, we're saying no is probably like a good knee jerk

reaction when it comes to take taking on debt. So I feel like that we've kind of covered them, like the frugal portion of our episode where we're just talking about cutting expenses and saying no to yourself and uh, but that being said, we're not opposed to splurging occasionally, right, finding your craft beer equivalent in finding ways to amplify the joy that you receive from certain expenses in your life.

Let's move on from expenses and shift our focus to investing, because another habit that financially successful folks emblement in their lives is to invest with regularity, right, Like, they don't care much about what the market is doing with what it did yesterday, what is doing today, but they want to take advantage of the market's wealth generating capabilities over time.

And so with that mind, they suck money away with each and every paycheck into an employer sponsored retirement plan like a four one K, or by contributing without fail to their own retirement account, their individual retirement account, their IRA, and doing that regularly means that they're often opting for the dollar cost averaging approach, which you know, ensures that you're doing the right thing on repeat, no matter what the current micro trends are going on in the financial world.

And so when it comes to the specific types of investments that we once you invested, we're not talking about single stock investing, we're not talking about crypto. We want to make sure that you're invested in widely diversified, low cost, if not free, index funds that represent the entire market, or or something like the SMP five funder, which is where like percent of my all of my investing dollars

are in are in different indexes that track the SMP. Yeah, and I think it's important to make investing a regular habit, and that is what is going to lead to financial success down the road. As those dollars compound on top of each other, that's what's gonna help you build wealth. Just like it's the small lends constantly overtime, Well, it's

gonna do a whole lot more. Not that having money to say, news account isn't important, but it's gonna do a whole lot more because your money is going to grow into much more, much quicker pace being invested in the economy as a whole as opposed to just sitting there in static saving stuff. Right, Yeah, we want we want to move you beyond being a saver and instead of taking those dollars and actually investing. Yeah yeah, but automating your investments is is one of the most surefire

ways to actually be able to achieve that success. And and so I like this. We are going back, going back to referencing our episode with Katie on Monday. But it means you're able to take action one time and then you don't really have to think about it again or revisit that choice really like you set it and forget it. And so automation helps us do the right thing without having to continue to decide to do that thing, which I think is really important. It makes us less

reliant on our own discipline. It sets us up for success when we'd otherwise be much more likely to become

our own worst enemy. Automation is just crucial on the investing front, so that you don't have to Like, habits are great, but uh, a habit that you can set and forget so that you don't have to tenually have the willpower to push yourself in the right direction is massively important to exactly, and that's where setting that percentage of your paycheck that comes out every two weeks that too, to go into investments is definitely the easiest way to

go about it. But then for all the folks who don't have a work sponsored retirement account, I think one of the best nuggets of advice that Katie was able to give us on Monday, based on research is to make it fun and that jold this is like one of the things I think this was your big takeaway from that episode. But find a way to to transform something that feels like drudgery or even as like deprivation. Right, it's like you're thinking, oh, this is money that I'm

not able to spend on the fun things here and now. Well, hey, remind yourself that this is actually something that you are doing for future you. But there are very small ways that you can make investing that money fun in the here and now where you are able to take advantage of that sort of immediate gratification that you would realize. And like, one of the things that Kate and I do is at the beginning of every single year that like we don't do dollar cost averaging, we saved out

the previous year. That way, we're able to release those dollars now basically at the beginning of every single year. And we just did that recently, and we mark the occasion by me going out and buying an extra fancy beer. And that night, after we put the kids down, we correct that bad Boy open and Kate was just like, Okay, why we what's what's what's the special occasion? And I remind her that, like, hey, this is knocks out this or this is what we just did, and it's just

a very small way just to mark the occasion. Um. But also by associating this fun thing that we do, it's not again, just this thing that works in the background without us realizing that is happening, is something that we are actually enjoying and partaking in the here and now,

just via something like a delicious craft beer. Yeah. I do think that attachment to fund is important, but and I think it's important to mention too that automation it doesn't just apply to investing, like I think that is one of the best easiest places to implement automation into your life, but it also applies to paying your bills

on time hopeful as well. Right, because if you have to manually pay your credit card bill every month, there's a chance that you're going to forget right, which might incur you penalties and rist and so for a lot of folks, it's gonna best to set up recurring payments that pay off the statement in full, right. And so the more we automate, the less we have to rely

on our flawed selves to make smart decisions. Habits, they're important, but automation is just the best tool for folks who who think of themselves as weak willed, which I do, Matt, I'm not. I don't feel like I've gotten the most discipline guy in the world. I certainly no James clear who wrote the book Atomic Habits and well, and even for the most strong willed person, they're always gonna be

times when they fail. Yeah, you know, you just that's just how it is, forget right, which happens, which is one of the things we talked about as well on Monday. But while I'm all for cultivating better habits in my life, I'm certainly I'm more than open to taking those easy automation wins wherever I can. Sure, But with that in mind, I think I think this is gonna sound like the exact opposite of what you just said about automation. Nothing.

It's not contrarian, I promise us not. But we also want you to revisit the things that you've automated, and often times on an annual basis, because we don't want

you to over rely on automation. And the reason for that is because, like mostly so they you can crank up at that savings in that investing rate, right and so, for instance, going back to the work sponsor retirement account, if you're contributing three automatically now and you're not getting the full match, well, we want you to have a plan to raise that in the coming months and in

the coming years. Uh. And so automation is great, but we just don't want you to completely forget about it to the point that you're never increasing those amounts, that you're never challenging yourself to sock away more for retirement. That being said, there are some for win K providers actually that uh that lets you schedule increases in advance as well, which is super cool. You can automate your automation exactly. It's got this escalator built in. And so

that's the downside of automation. On the investing front. But there's the downside when it comes to your expenses as well, because if you have automatic payments, you're also to a certain extent, you're being insulated from fluctuations that you might see in your bill. And this is specifically, let's say, on utilities, which is something I still have it set up on automatic payment, but I look at that bill every month because I want to know my want to feel that pain. I want to feel the pain even

though I'm still auto paying it. I don't just like forget that it exists exactly and forget how much I'm spending. And this is kind of an argument again for tracking and budgeting again because because I too all of my utilities are set up on auto pay that way, I'm never going to get a late payment, uh, any sort of fee associated with not paying that on time. But because I manually enter all my expenses into the budget, that allows me again to to kind of feel that pain.

Um And because of that, like, this is something I did recently, Joel, like once it's started getting cold a few months ago, and I was shocked to see the amount that we're paying when it came to gas, our our energy bill and so since we've been in the new house, I've never uh programmed the thermostat. But you know what, seeing that bill caused me to say, oh, it's time to fit. And partly it is because it's not a nest thermostat, which makes it so stink and

easy to like schedule the week. It's one of the traditional ones where you have to like go to program it are wake up time, leave home, arrive at home, sleep, like that whole thing. They don't make it easybe at some point you replace. But but that they said that caused me to be like, you know what, I'm going to spend a few minutes figure the stupid thing out and guess what. The next month's gas bill reflected that change.

There you go. I like it well. And okay, so we talked about investing in automation here, but we say, like another habit that financially successful people partake in is investing in themselves, right, which that would say that contributes to a whole lot of financial success over time. And this this doesn't mean that you've got to fork over like forty or fifty dollars for an advanced degree. That doesn't mean you got to go back to school for

three more years. I mean that time for that n b A. I mean that might be what you opt to do, and that might be the best choice for you, but we're also talking about spending the time, the energy, and sometimes the cash to grow as a person and to learn the skills that are going to allow you to earn more money. Investing in yourself it's not just good for your bottom line, but it's also super rewarding

right at the most basic human level. It feeds your thirst for knowledge and growth, and not to mention, it's fun because it means often making new social connections, which allows you to widen your network. And so we would say make it a habit to find multiple ways each year to grow as a person, and that can be something directly related to your current career or the one you want, or just embarking on a new hobby, because stretching yourself in new ways is a game changer for

us as humans. And this is the habit, this stretching yourself habits and growing yourself and investing in yourself that

we think is is something worth continually partaking in. And plus I think folks would be surprised too at what i'll call the spillover effect, which is they start participating and like it's like maybe a hobby that they think is completely unrelated to their nine to five, but then they find there are certain little lessons that they're learning from their new hobby, or there's certain new friendships that are able to be made while they're working out, Like

there are all these additional unexpected in direct ways that ultimately it really can boost your bottom line and it really can boost your income over time. But similar to investing in yourself in order to make more money, we think it's also important to prioritize financial education as well.

And so you know, whether that's doing exactly what you're doing right now, which is listening to a personal finance podcast a few times a week, or like just picking up one money book to read each and every quarter of the year. But folks who are successful with their finances are all about regularly upping their knowledge. It's interesting because money it's his fascinating space because it's not like there are a bunch of like new rules, Like there's not a bunch of new things that you need to

learn on an ongoing basis. It's not constantly changing or something No, Yeah, it's it's it's kind of like astronomy. It's like maybe every now and then they're gonna decide that Pluto is not a plane anymore, uh, and then they'll change it back port Pluto. I miss it. But you can go far, you know, just by knowing and

practicing the fundamentals. But that doesn't mean that the world of personal finance isn't isn't changing and involving uh in particular, whether that's like the focus on like the behavioral psychology of personal finance. I feel like that's something that's gotten a lot more attention given to it over the the past few years. But yeah, continuing education and looking at the different sources of personal finance information out there, it'll allow you to just make some subtle changes that will

help you in your progress. So we're going out all these different sports and analogy sports analogies, Joel, But just like like sports go through different phases like this as well, Like makes in the NBA, like back in the day, you're looking for these dudes that could freaking dunk the ball, Like do you go down the lane? Is it go up the lane? Is that? Is that how it goes in the paint maybe, yeah, But like I know, down voters were all the rage twenty years ago, and now

it's more of the shooting guard. You're looking at the guides that can that can shoot the three pointers. Well. Personal finance also has some similar shifts that we've seen recently. For instance, for years, if you were a saver, it felt like, uh, you were totally getting the shaft. But now there are a lot of different places that savers can put their money, and like, specifically I'm thinking about I bonds, the different high yield savings accounts that are

available to a lot of savers out there. Given the high amount of inflation, uh that we are now experience. Ye, spend less than you earn is like duh, right, And that's like basic, the most basic of basic personals in the middle. Yeah, but you're right, as different things change, as inflation soars in one area and not as much in another, like it should influence our habits, how we buy things, and it should influence how we save and where we save and stuff like that too. So you're right.

It's like it's not like the the uh generic advice changes, but sometimes the specific actions that we take do need to shift based on what's happening so totally. I think it's a good point. But there's some less tactical habits that are worth implementing as well, that are going to help I think our listeners in massive ways in the coming years when it comes to achieving their financial goals. Let's get to those. We'll talk about that right after this.

All right, we are that, Joel, and you know, we're continuing our discussion on the essential habits for financial success, and so let's kind of keep that gravy train roll man. Another thing that financially successful folks do is they hang out with like minded folks. And not only that, but they also avoid comparing themselves to folks who they don't want to be like. The folks we spend most of our lives with are going to influence us more than

we think we are. We're social beings, and you know what we think of just as normal day to day decisions and our world views like they're often a construction of what the like the four or five people that were closest to what it is that they are doing, what it is that they think about those things. And so if our best friends are downsizing their car fleets, in order to save money. Well, guess what, that's gonna influence us in a positive way as well, helping helping

us to curb consumption. But on the contrary, if they're buying a lake house that's out of the price range and they're buying a boat or something like that, if they're draining the four oh n K in order to make expenses like that happen, while we're also going to be more likely to follow suit. And so it's just

important to keep that in mind. Right, It's not that we can't be friends with folks who think about the world definitely, who handled money differently than we do, but just make it a habit to spend maybe more time with folks who handled their money well and who will also motivate you to do the same. I just recently hung out with a friend who hadn't seen in quite a while. And you have other friend I know, right, shock,

but it's not allowed. But he has a brand new Ribby and sub we have talked, we have talked on this show that there's like only eight and something of them in existence, and so goodness, it was pretty impressive to see, Like I've been obsessed with ribbians for ever since I heard about them. Basically, I think they're now you're gonna get one, right, one of the most beautifully

designed vehicles in the world. And so I was like, man, I'm excited to hang out with him, but I'm also excited to use in this far and they are dope. I got a chance to write in it, and I was like, man, if I hung out with this buddy too much, I would be so enticed to do to spend the money differently to buy a fancy new car. But I actually walked away from that being like, man, it's I'm not I don't care anymore, Like like, I'm

so glad that we're not closer. I'm so glad that I made about not to see him again for at LEAs two more years. You got to get your ratios and check right. But it's I mean, it's cool, but I get I totally understood after that hang how just spending more time together would lead me down this path. And so you have to be cognizant of who you're spending time with because it does impact the decisions that you make. And and part of that means I think, uh, we need to be we need to be making it

a habit to talk about money more in general. And it is like it's obviously it's a taboo topic for a lot of people. Most people try to avoid it. Most of your friends probably don't want to talk to you about money if you try to bring it up. But whether you're making it something like a formal monthly conversation amongst friends over a beer, like a money club, yeah, something like that. Yeah, I mean, however you can, you can even use that name. It can be like formal

or informal, like however you want to tackle it. But we would say like having money conversations is going to move the needle for you over time. So offer it up an opinion, share a struggle, or discuss the money goal that you're trying to achieve this year with some people you care about, some people that are close to you. You might find encouragement, accountability, or insight that you'd otherwise be missing out on. But I think that's a habit

that also has lasting impacts. The more we kind of avoid this topic, the more it's like an elephant in the room that we just like never ever brooch broach the subject of the more we relegate it to like and never being spoken of, the less likely we are to to make progress in our own lives. I think we it just shows how uncomfortable we are with money

as a whole. Totally. Yeah, I mean, And while like, if you're listening to the show, like there's a chance that you might make pretty decent decisions when it comes to your money, if you're not opting to talk about it with your friends who aren't listening to our show, there's a good chance that they're going to make poor decisions because of that. They say that, like sunshine is the best disinfectant, right, and so in that way, we

want to bring these financial conversations to light. And we I mean, we talked a lot about this, like during the early days of our podcasts. By the way, this does not mean beating your friend over the head with the book or something like that, but it does mean, like like I said, there's all sorts of soft ways

to get discuss, casual ways to go about it. And we just want folks to talk more about money because the more you talk about it, the more interesting is going to become, and the more you'll be able to challenge each other to make wiser financial decisions. Like there's a degree of accountability and honestly, just the ability for

you to provide a differing opinion. You know, like somebody they might be surrounded by their four or five people in their neighborhood and they're being encouraged to make certain purchases in life because that's just what everybody in the neighborhood is doing. But what they really need is that

frugal contrarian that you might be. Uh, that might be the role that you need to play in their life, and that's going to allow them to perhaps get much fur their along with the different financial goals that they've got in their life. Yeah, I mean, I think the truth is we're social beings, right, and there's there's a reason that lots of folks have to work out at

the gym instead of at home. There's a reason folks whore willing to pay a ton of money to go to a concert or to go see like, uh, let's say an NFL playoff game, right, how much how expensive? Or Super Bowl tickets every year they're they're not cheap. And part of that is not just seeing the game, but it's it's being around like a bunch of people cheering in the same direction that you are and that

can be kind of an experience. And I think the same is true of money progress, right, There's something magical about incorporating other humans even as we're striving towards accomplishing distinctly personal and unique goals with our money. There's something about the accountability, but also like being able to make progress forward together together. Ye dude, absolutely, Like I'm gonna butcher, I'm not. I don't have a specific quote here, but I think it's it was C. S. Lewis who actually

was speaking about friendship in this way. I think it was him, uh, And one of the things he said was that, like, what is at the core of our friendship is being able to stand next to somebody and for both of you to look at something and point to that and be like, oh, look at that. Isn't that awesome to kind of have a shared interest or passion about something you're basically both agreeing that the thing

you're looking at is lovely. Uh. And you know this sounds maybe a little too mushy and poetic, but you can also do that about money, Like that is something that you can do with your friends, with your coworkers. And I think that's that's just super cool. It's just really and that doesn't mean lording your fur oh one k balance over them. Look at how gross way of doing it. You know, it's other way, better ways of doing We've talked about that in the past, maybe lining

to that episode in the show notes. But yeah, you don't have to give even specific numbers. There's ways to have that money conversation without being like, look at my income, here's my pace stub, and instead you can talk about instead of specific numbers, percentages. That's a great way of talking about the general habit and the behavior without getting overly specific or goals or maybe a piece of personal finance content you've come across that kind of change your

perspective on something. Those are good ways to initiate the conversation without making someone else who's not where you are feel like an idiot exactly. But another financial habit we would say would be important to implement this year would be to write your goals down because in this habit really can make a massive change when it comes to actually take the action. If you're putting pen to paper, if you're outlining what you're working towards, the likelihood that

you're going to prioritize that thing goes up substantially. There's something about like penda paper and how it affects our memory, Like if you're listening to someone speak and you're taking notes, you're going to retain more information. And it's the same thing when you write down your goals, like there's no waffling and guessing what you should be doing when extra

money comes into your account. Let's say another stimulus check worre to occur unlikely, but let's say let's say did or a tax refund that's kind of similar for a lot of people. That's like an annual stimulus check that comes along. A lot of people make or get like a multi thousand dollar tax refund, and that is a way for you to jump start financial progress in your life. But being in tune with the goals to the point that you have committed them to writing is a method

of personal accountability. It shows that you take your own hopes and dreams seriously. And like we said earlier, a lot of these habits can be implemented even if you're unsure about your larger money goals. But this one is a game changer. Once you've kind of started to figure out those out. Once you've decided where it is you want your money to go, like writing that goal down, and it almost ensures that your money is gonna follow

suit us. Right, But you also want to limit the number of goals that you're striving after as well, right, because yeah, like successful financial nerves, they set goals, but not too many of them, because it's gonna be hard to achieve thirty two different goals that you've got set in. In fact, the person I think who sets a fewer goals is more likely to then accomplish the goals that they didn't call out from the from the outset. Right.

And so just simply by limiting your scope by by narrowing your focus that that laser like attention on on just like one, two, three different goals that that you have on, you know, on the biggest wins that you want to see that is going to translate to a higher success rate, uh, and you know, to doing it more quickly, I think, so that you can then just move on to the other goals that you have more quickly.

And one of the other things that that Katie had talked about was basically implementing a plan to achieve these different goals, because we don't want you to just stop at writing down your goal, but literally right out some of the steps necessary in order to break down that big, so somewhat overwhelming goal down into small, bite size actions. Right those enlist those things, those steps out as well.

So for instance, if you're thinking, by the end of this year, I want to have a fully funded emergency fund set up, cool, what does that leaven look like? That's a great goal to have. I bet you can have five, six, seven steps easily take absolutely ward. Step one, track your expenses. Figure out how much it's it costs for you to survive on this planet over a thirty day period. Step two, uh, multiply that by three or four or five or six, depending on how many months

of reserves that you want to have. But then beyond that, right like figuring out how much you need to sit aside, Like divide that out by twelve uh, so that you know that each paycheck, I want to make sure I set this amount of money aside. But figure out and

literally start solving the problems. Start cracking that nut now by not just writing up the goal, but some of the specific steps that are going to allow you to achieve that ultimate goal, and like the truth is ultimately matt like habits make or break us, and uh, it's it's not the self discipline is dumb or a waste of time. But thinking that greater levels of willpower are going to elevate us to where we want to be,

it's kind of naive, right. It's one of those things where I've said that a lot over the years, like hoping that I would rise to the occasion. You can't just will it into existence, like the emergency fund, like no, like there are very some very practical steps as opposed to just being like I gotta figure that out. Yes,

it's like, well, well what does that mean? Like that is a response and and we've all had at different times, especially on the subject of money, where it feels like we need more information where we can always say like we don't know enough, or there's all sorts of excuses we can give for not doing the thing that we need to do and for not implementing the tactics that are gonna help us get where we want to be.

But like we would say, implementing just a few of these habits, it's gonna put you on the path to progress, making it so much more likely that you're going to take strides, and you're gonna take them more quickly. You don't even have to have specific goals like ac crewing a million dollar net worth by the time you're forty five or something like that. It doesn't have to be that intense or that ridiculous. But those goals are going to come into focus as you habitually make smart moves

and gain confidence. I think that's actually going to give you the confidence to make and set goals that are bigger and more audacious. And uh a quote that stuck out to me about from James clear Actually he said, tell it to me. Action relieves anxiety. And I think that the habits that we choose to implement are directly there, directly under our control, and implementing even just one or two of those could really kick start a financial transformation

in our lives. So action is the key getting these habits started, at least a few of them. Is. You know, we might look back at the end of this year and say, Wow, those three habits took me a long way. It took me a long way towards the goals I wanted to I wanted to reach. That's right, man. Yeah, hopefully folks have been encouraged to take some practical steps, steps that lead to action when it comes to their

personal finances. Let's shift back to the beer during this episode, You and I enjoy it a liquid hop Magma Austin Powers reference. What were your thoughts on this beer? Uh? So this one leaned in the fruity direction, I say, and I pa, that's definitely more fruit forward, even though

done have fruit in the making of this beer. It's like, literally, that's what I'm all constantly amazed at hops and how different combinations of those hops can can create a completely different flavor profile and and and it kind of makes me think of is it the different jelly beans where they've got all the different flavors, but by the different combinations of putting together you can make like different dishes.

Uh yeah, that's right, that kind of I think. Let's combine this hop with this op with this hop, and all of a sudden it tastes like a key line. That's true. I mean yeah, And that's that's what's crazy about these little green They like Brussels sprouts, but somehow they make beers taste fantastic, and this one was like more passion fruit. Um, I'm notes that I'm getting way more citrusy. Yeah, for sure, So I will say I

liked it. It was fantastic. And this is probably even more up your alley because you like the sweet the sweet or yeah, this is I mean it's not like an orange cream sickle or anything like that, but it definitely kind of had those smooth, creamy vibes going on. And this is our last beer that we are going to enjoy from Mutation. But more than anything, man, I am just glad that we have yet another fantastic craft brewery here in the city of the Atlanta. The merrier

the more, the merrier, for sure. The guys over at Mutation are doing a great job and we still look forward to heading up. I mean they just opened up, yeah, just a few months ago. Go soon. It hasn't been that long. I will say, we haven't been there yet. We need to make it a habit to go to more breweries, but we've already made it a habit to drink beer on the show, and we've had something close to five beers on How the Money Now in our five years, five plus years of existence, so it makes

it sound like romaniacs, but but we're not. What do you think, Well, that's the thing is like when you break it down into smaller increments, that's two beers a week. Alright, guys, that's not that's not intense, that's not overwhelming. But we are thankful that we get to do this job every single week, that we get to hang out with each other talk about money and and really it's you, listeners

who make this podcast possible. So thank you and we wish you the best of success this year informing salad money habits that are going to change your future. That's what we want to see for you. That's right, and we would love for you to hear our next episode, which comes out on Friday. So if you are not already a subs griber, mash that subscribe button so you

don't miss the next episode. But if you are a long time listener and you haven't left us a solid review yet, head over to Apple Podcasts or wherever you listen, give us a solid rating, solid review over there, and a big thank you in advance for that. Will make sure to link to any of the different resources that we mentioned up on our website at how to money dot Com Joel, it's going to be a buddy for this episode until next time. Best Friends out, Best Friends Out,