Podcast Summary: "The NUMBER ONE Reason People Don't Save Money" with Andy Elliott and Josh Rose
Episode: The NUMBER ONE Reason People Don't Save Money
Host: Andy Elliott
Guest: Josh Rose
Release Date: February 10, 2025
Introduction to the Episode
In this insightful episode of Andy Elliott's Elite Mindset Motivation and Sales Training, host Andy Elliott delves into the crucial topic of personal finance, specifically focusing on the primary obstacle that prevents individuals from saving money. Joining him is Josh Rose, a specialist in Infinite Banking and the CEO of Factum Financial.
Understanding Infinite Banking
Josh Rose begins by explaining his expertise in Infinite Banking, a strategy that utilizes whole life insurance policies to create a personal banking system. This method allows individuals to retain more of their income by controlling their financial environment.
Josh Rose [01:34]: "I teach infinite banking. So what is that? It's... I sell whole life insurance. I teach people how to build their own banking system so they can keep more of the money that's flowing through their hands every day."
He further simplifies the concept using an analogy from his colleague Becca Wilhite's children's book, "Beaver Bankers." He compares an individual's cash flow to a river and a whole life insurance policy to a dam that regulates and collects a portion of that money, ensuring it grows over time.
Josh Rose [02:41]: "A whole life policy collects the money that's already flowing through your life, keeps it forever, earning you dividends and interest the rest of your life."
The Muscle Behind Saving: Parkinson's Law
The core discussion centers around Parkinson's Law, identified as the number one reason people struggle to save money.
Josh Rose [03:34]: "Number one reason people can't save money is Parkinson's Law."
Parkinson's Law posits that "work expands to the time allotted." In financial terms, this means that as an individual's income increases, their expenses tend to rise proportionally, often negating any potential savings.
Josh Rose [03:38]: "Financially, no matter how successful you are, how much money you're making, Parkinson's law is when your income starts to increase, your expenses increase to the level of your income."
To combat this, Josh emphasizes the necessity of discipline and behavioral control. Without actively managing expenses and saving behaviors, increased income merely leads to increased spending.
Josh Rose [04:25]: "To beat that, when your expense or your income is increasing, beating Parkinson is fighting those expenses, rising with it."
Practical Savings Strategies
Josh introduces a straightforward saving guideline based on age:
Josh Rose [02:50]: "A good baseline is your age times 10. That's a good monthly place to start saving."
For instance:
- 25 years old: Save $250 monthly.
- 45 years old: Save $450 monthly.
This method adapts to an individual's lifespan, encouraging higher savings as one ages to ensure sufficient growth and security.
Josh Rose [03:03]: "Start saving. In a whole life policy, we can design it based on your need for cash today and desire to grow in the future."
Overcoming Behavioral Barriers
The conversation shifts to the psychological aspects hindering financial discipline. Josh highlights the lack of financial education as a significant barrier.
Josh Rose [08:33]: "And that is strictly due to education."
He advocates for making saving money appealing and integrating it seamlessly into one's financial routine to counteract the innate tendency to overspend.
Josh Rose [09:35]: "If I can educate you about the environments to save your money, you're going to make the best decision for your life."
Andy reinforces the importance of financial education, comparing the misunderstanding of compound growth to missing out on exponential financial gains.
Andy Elliott [08:25]: "The penny a day doubled every day for 31 days is 11 million. But if most people would take a million cash today... they miss out on the 11 million just because they wouldn't be patient enough."
Long-Term Vision and Multigenerational Impact
Josh emphasizes the significance of long-term planning and the potential multigenerational benefits of disciplined saving.
Josh Rose [11:02]: "I'm big on long term thinkers. I love to think multi generationally even."
By implementing robust saving strategies, individuals not only secure their financial future but also create a lasting legacy for subsequent generations.
Key Takeaways
- Parkinson's Law is the primary barrier to saving money, causing expenses to rise with income.
- Infinite Banking through whole life insurance is an effective strategy to retain and grow personal income.
- Implementing a savings rule based on age can provide a structured approach to financial discipline.
- Financial education is crucial in overcoming behavioral tendencies to overspend.
- Long-term and multigenerational financial planning can lead to sustained wealth and security.
Notable Quotes
- Josh Rose [03:38]: "Financially, no matter how successful you are, how much money you're making, Parkinson's law is when your income starts to increase, your expenses increase to the level of your income."
- Andy Elliott [08:25]: "The penny a day doubled every day for 31 days is 11 million. But if most people would take a million cash today... they miss out on the 11 million just because they wouldn't be patient enough."
- Josh Rose [11:02]: "I'm big on long term thinkers. I love to think multigenerationally even."
Conclusion
This episode offers a profound exploration of the psychological and structural barriers to saving money. Through the expertise of Josh Rose, listeners gain actionable insights into overcoming these challenges via disciplined saving strategies and informed financial planning. By addressing Parkinson's Law and promoting Infinite Banking, Andy Elliott and Josh Rose provide valuable guidance for individuals striving to achieve financial stability and long-term prosperity.