Essential Habits For Financial Success (Bestie Ep) #1002

Summary

Summary of "Essential Habits For Financial Success (Bestie Ep) #1002"

by iHeartPodcasts

Introduction

In episode #1002 of How to Money, co-hosts Joel and Matt delve into the essential habits that pave the way for financial success. Building upon previous discussions, including insights from economist Katie Milkman, the hosts provide listeners with actionable strategies to improve their financial health, regardless of their long-term goals.

1. Tracking Spending and Budgeting

Joel and Matt begin by underscoring the importance of tracking expenses as the foundational step toward financial awareness. Matt emphasizes, “If you don't know where your money is going, it becomes really easy to let those precious dollars slip through the cracks” ([10:04]). They discuss various methods for tracking finances, from traditional spreadsheets to modern budgeting apps like Mint and YNAB. Joel adds, “Tracking and budgeting are like two unavoidable peas in a pod,” highlighting that consistent monitoring is crucial for identifying unnecessary expenditures and optimizing spending habits.

2. Cutting Expenses and Embracing Frugality

The hosts advocate for regularly assessing and reducing expenses, particularly in major areas such as housing and transportation. Joel shares a listener’s tip about using independent insurance agents to save on insurance costs, stating, “Finding a local independent agent is one of the easy things that you can do to potentially save hundreds or maybe even a thousand dollars or more” ([05:42]). They encourage habits like implementing a 48-hour waiting period before making purchases and exploring options like house hacking or reducing car ownership to increase financial margin.

3. Regular Investing and Dollar Cost Averaging

Investing consistently is highlighted as a pivotal habit for building wealth over time. Matt explains the concept of dollar cost averaging, noting, “We’re not talking about single stock investing, we’re not talking about crypto... index funds that represent the entire market” ([30:23]). Joel reinforces the idea by stating, “Making investing a regular habit... that’s going to lead to financial success down the road” ([33:28]). They stress the importance of automating investments to ensure consistency and minimize the influence of market fluctuations.

4. Avoiding High-Interest Debt

A significant portion of the discussion focuses on the detrimental effects of high-interest debt. Joel advises, “The habit of reflexively avoiding debt is a good one to get into because... you don’t want to mess with any of them and you don’t want to play with fire” ([31:35]). They differentiate between bad debt (like credit cards and personal loans) and good debt (such as mortgages and student loans), cautioning listeners to carefully evaluate the necessity and impact of any debt they consider taking on.

5. Investing in Oneself

Joel and Matt highlight the importance of personal development as a pathway to financial success. Joel mentions, “Investing in yourself... it’s not just good for your bottom line, but it’s also super rewarding” ([34:03]). They encourage continuous learning and skill development, whether related to one’s career or personal interests, to enhance earning potential and adaptability in a changing economic landscape.

6. Building a Supportive Social Circle

The hosts emphasize the influence of one’s social environment on financial habits. Matt notes, “The more we spend time with folks who handle their money well... it’ll motivate you to do the same” ([48:12]). They advocate for surrounding oneself with like-minded individuals who prioritize financial health, as this can lead to better financial decisions and increased accountability.

7. Setting and Writing Down Goals

Joel and Matt discuss the power of writing down financial goals to increase commitment and clarity. Joel states, “If you’re putting pen to paper, the likelihood that you’re going to prioritize that thing goes up substantially” ([55:02]). They recommend limiting the number of goals to maintain focus and breaking down larger goals into actionable steps to make them more attainable.

8. Automation and Regular Reassessment

Automating financial processes, such as bill payments and investments, is presented as a key habit to ensure consistency and reduce reliance on personal discipline. Matt explains, “Automation helps us do the right thing without having to continue to decide” ([37:25]). However, they caution against becoming overly reliant on automation by regularly reviewing and adjusting these processes to align with evolving financial goals.

Notable Quotes with Attributions and Timestamps

• Matt ([10:04]): “If you don't know where your money is going, it becomes really easy to let those precious dollars slip through the cracks.”

• Joel ([31:35]): “The habit of reflexively avoiding debt is a good one to get into because... you don't want to mess with any of them and you don't want to play with fire.”

• Joel ([34:03]): “Investing in yourself... it’s not just good for your bottom line, but it’s also super rewarding.”

• Matt ([48:12]): “The more we spend time with folks who handle their money well... it’ll motivate you to do the same.”

• Joel ([55:02]): “If you’re putting pen to paper, the likelihood that you’re going to prioritize that thing goes up substantially.”

Conclusion

Joel and Matt wrap up the episode by reiterating the significance of cultivating these financial habits to achieve long-term success. They encourage listeners to take actionable steps, no matter how small, and to remain committed to their financial well-being. By adopting habits like tracking spending, cutting unnecessary expenses, investing regularly, avoiding high-interest debt, investing in personal growth, building a supportive social circle, setting clear goals, and leveraging automation, listeners can create a solid foundation for financial freedom and flexibility.

Final Thoughts

This episode serves as a comprehensive guide for anyone looking to enhance their financial health through practical and sustainable habits. Joel and Matt provide valuable insights and relatable anecdotes that make the journey toward financial success both achievable and engaging.

Transcript

[Joel]

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[Matt]

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[Joel]

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[Matt]

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[Joel]

Welcome to how to Money. I'm Joel. And I am Matt and today we're discussing essential habits for financial success.

[Matt]

All right, Joel, you know this is going to be a great episode. In particular a great episode to follow up our conversation that we 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.

[Joel]

Throw in the towel.

[Matt]

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 10 year 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 10 years.

[Joel]

Yeah.

[Matt]

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 going to 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 everyone out there who is looking to, to get better with their money as well, they might not.

[Joel]

Have like a big hairy, audacious goal of achieving fire by the time they're 33 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 habits, implementing some of these habits that we're going to 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.

[Matt]

Exactly.

[Joel]

But before we get to that, Matt, I wanted to mention something that one of our listeners told us about the other day via email. Thanks to listener Nate, by the way.

[Matt]

Yeah, A listener who has some inside knowledge when it comes to the insurance industry works.

[Joel]

Yeah. And so he is an independent insurance agent himself. And, and you and I, we've talked about how great independent insurance agents can be for individual consumers because they're not beholden to a specific company. And so instead of saying like, yeah, let me quote you prices from progressive only or Allstate only or whatever it might be, they say, no, I'm gonna, I, 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.

[Matt]

Including a bunch of companies you've never heard of because they don't put any money towards marketing. And they're also able to offer sometimes the best rates.

[Joel]

Yeah, they don't have a cute green gecko or something like that, like, which means they can offer you better rates sometimes because they're not spending so much on marketing. Exactly. And the website that Nate mentioned, I'd not heard of this website before. We've talked about finding an independent local insurance agent, but he mentioned the site trustedchoice.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 agent. 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 insurance costs.

[Matt]

Most definitely.

[Joel]

Without giving up a ton in coverage in order to do so, by the way, too.

[Matt]

Oh, yeah, exact. 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, too, 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 a going to be required to have. But then also what you don't necessarily need to have.

[Joel]

They'll probably ask more about your specific situation sometimes.

[Matt]

Exactly.

[Joel]

And I think that's helpful.

[Matt]

Totally. All right, let's introduce the beer that you and I are going to enjoy during this episode. 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.

[Joel]

For sure, we like hoppy beers. We'll give our thoughts on this one in just a bit. But Matt, 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. For some. Like, remember we were always told, back.

[Matt]

To school, essentials Right, right.

[Joel]

Well, kids are going back to school for the second semester in just a couple days. But like, in high school, we were always told that we needed to get good grades, but it always felt 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 B instead of, like, busting my butt to get an A. It always felt like the gap in effort needed between getting a B and 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 chalked 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.

[Matt]

No, no. Yale for Joel Little. Little high school Joel?

[Joel]

No, I wasn't thinking about Yale or Harvard or Stanford 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, too, 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 to, told me about getting a 32 on his act. He took it three times and he just couldn't get past that mark. But if he'd gotten a 33, he would have gotten all his housing paid for at the school he went to, snap. So it was just like one point man. Cost 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 18, how much it was going to 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.

[Matt]

So, yeah, your parents wanted see your full potential, Joel. They knew that you were capable of so much more. Yes, 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 GPA 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 gurus 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 somet 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 2023, 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, you didn't know exactly where it was that you wanted to go to college. But by having a good gpa, by giving it your best shot on the, on the sat, 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.

[Joel]

Yeah. And the truth is that most of us have goals that are subject to change. Right. None of our goals are. Very few of our goals are set in stone like this is, and we know them on like a multi decade long time. And life throws us curve balls 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 you 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 going to end up doing this, this and this, making these choices. You're even going to move from the neighborhood that you love so much right now, and you're going to end up in a new place. And I would have been like, you're crazy. Like there's no way y of your mind.

[Matt]

But life throws us curveballs.

[Joel]

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 going to cover in today's episode, the quicker you're going to be on your way to increased 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. Matt it would have been so much more stressful if we felt like we wanted to move our family somewhere else, but we didn't have the financial backstop to make that decision. 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 have gotten me to the place where I can now achieve that without having to fret, without having to freak out that you don't have the financial wherewithal to make those decisions you want to make.

[Matt]

That's right, man. Yeah, I couldn't 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, 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 because 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. And if you don't track where those dollars are going, it's like you're on a ship with a perpetual leak. You got to fix that leak in order to get where you're trying to go. It makes me think of the. So the conversation we had with Katie on Monday, one of the things she wrote about in her book, 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, and they were both able to basically chart their progress, and that allowed them to achieve their results much faster. And specific to Jerry Seinfeld, one of the things she said that he would often do is that he would maintain these streaks. And so I think maybe it was something like every night he was trying to do like an open mic night 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 his. Break the streak that he had going. 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 2007. Like, literally, I'm on like a 15 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 have done for so long that has allowed me to achieve the financial progress and the financial success that I have.

[Joel]

And you're living up now to the moniker that everyone has for you, which is the Jerry Seinfeld of personal finance.

[Matt]

If only that was my moniker, I would love that.

[Joel]

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, of personal finance in 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.

[Matt]

Right, Exactly. Yeah, I think. I mean, that's worth sharing too, because I think they're gonna. Folks are saying, oh, great. The how to money guys are. They're talking about tracking your spending. But, like, this is something that folks who have accomplished a lot in their lifetimes, this is what they do.

[Joel]

This is where you start. Yeah. And it sounds basic, but the reality is 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'd 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 to tracking, that's cool. Feel free, go use it. Or you can use a software like Mint or ynab. If you're like, I'm hip, I'm with it, then go for that. Like, sign up for one of those sites. Mint's free YNAB 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 is just, it's going to be stunted. Just like if Jerry Seinwald wasn't, if he wasn't tracking those open mic nights. And he's like, I think I've done it like the last 13 days, but I'm not 100% sure. There's something about, yeah, documenting it that helps keep that progress alive. And then the next step after tracking is budgeting. And 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 make 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 redirect where those dollars are going. And again, like, they're excellent software packages to help you out with this, but you don't need software to help you do this either. Pen and paper, right? It can be as simple as that. But yeah, tracking and budgeting are like two unavoidable peas in a pod if you're doing those things consistently. We actually, we have a new article up on our [e-mail] there's like different budgeting methods I think that work better for different personality types. And so we'll 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, yeah, how you personally handle it. It's not necessarily, it doesn't have to be a one size fits all approach.

[Matt]

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 a little bit.

[Joel]

That's actually the fourth budgeting style in that article I'm referencing is people who don't budget, but they're like.

[Matt]

My favorite budgeting style is to not budget. But what I wanted to say though is you, I think initially it is incredibly helpful.

[Joel]

Yes.

[Matt]

Like maybe in the day to day, like the month to month, you're not, you know, you're not doing like a zero sum budget where you're tracking every single penny, which is one of the.

[Joel]

Other ones in the article.

[Matt]

But I think initially, at least at the very beginning, like, you gotta face the facts, you know, like, you gotta 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 has caused a lot of our 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 almost like a tune up. Like when you go in, you take your car in. If you take it as somebody who knows what they're doing, they're hopefully able to give you a good diagnosis. And I think that they can even.

[Joel]

Tell you can do what's coming up with your car. Like, 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 going to need that 90,000 mile checkup 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 you.

[Matt]

Absolutely.

[Joel]

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.

[Matt]

Exactly.

[Joel]

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 successful, but you also might not need it in the same way that somebody who's just starting.

[Matt]

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.

[Joel]

And so I think even making a sports reference.

[Matt]

Yeah, I don't do that often. But 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 is enough of a priority for them to want to do that.

[Joel]

I remember seeing a Kobe Bryant interview where he talked about just outworking everybody else, and he's like, let'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 work 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 compounds. Yeah. And it's like, those are the kind of things, those actions really matter. Right? That's a. But that's a habit that he got into that paid massive dividends, making him one of the best basketball players of all time.

[Matt]

But you gotta. You gotta let your body rest, though, too, right? 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.

[Joel]

Rest with the wrong guy. They work for Kobe. I'm gonna trust it.

[Matt]

But 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 squat 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. The first step in solving any problem that we have in life, whether we're talking about a conflict in a relationship, why the check engine light is on. Right. Flashing on the car, or even why we can't seem to set aside enough money for different goals we have. The first step is to clearly define the problem. We've got to assess the situation, what's going on with your spending. And that is where Monarch money comes in. But Monarch is more than just a budgeting app. It works as your own personal cfo, giving you full visibility and control over all your accounts, investments, and financial goals.

[Joel]

Monarch is truly a game changer, and I love how you can choose goals that you want to hit and then you can rank them in order of priority. It's pretty rad. It makes those goals a lot more concrete and tangible. My top goal has been funding our family summer travels.

[Matt]

Nice.

[Joel]

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[Matt]

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[Joel]

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[Matt]

Yeah, when you're young and life is simple, getting a trust or will in place is not a high priority. But life gets more complicated when you start throwing throwing kids into the mix. Once you add an investment property or two, once that's a part of the equation, I know I've got the peace of mind knowing that I've got this checked off my to do list and you can too. Because Trust and Will's website is easy to use, it's simple to navigate. Plus all your information and documents are securely stored with bank level encryption. Each will or trust is state specific, it's legally valid and it's customized to your needs.

[Joel]

Yeah, we can't control everything, but trust and will can help you take control of protecting your family's future. Trustandwill.com howtomoney and get 20% off. That's 20% [e-mail] howtomoney looking for a smarter way to teach your child to ride a bike and support American jobs at the same time? Most kids bikes are just cheap imports. They're heavy, clunky, hard for kids to control. Guardian Bikes is changing that. They're assembling bikes right here in the USA with plans for full US manufacturing in the next few months. It's a commitment to higher quality and American craftsmanship you can trust. Each bike is lightweight, low to the ground. And built to help kids learn to ride faster, many in just one day. No training wheels needed.

[Matt]

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[Joel]

That's guardianbikes.com built in the USA, made specifically for kids. Guardianbikes.com 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 have talked about this all the time. That doesn't mean having like Bill Gates levels of wealth. That doesn't mean being on the Forbes 100 list or something like that. Like that is uber ins rich and wealthy. We don't care about that. But we do want people to have more choice in their lives. We do want people to have more money in their bank account to allow them to have more choice over, over.

[Matt]

The years, more autonomy over their lives and the decisions that they're able to make in the future.

[Joel]

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 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 48 hour rule where you're shopping and you see something and you're like, oh, I need that. Well, if you have a 48 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. 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 what you're spending on transportation? Can you get rid of a car from your life? Matt and I were big advocates for this. If there's a lot more people who could afford to ditch a car than think they can, and the average price of. Of owning one single car for a whole year is something like $10,000. 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.

[Matt]

Yeah, but don't forget about the. All those little leaks as well, you know, because, like, the successful money habits, like saving in small ways, that is also going to propel you down the path of financial success as well.

[Joel]

You're starting to sound like Ben Franklin. A penny saved is a penny earned.

[Matt]

You know, I feel like me and Ben Franklin, we would have gotten along, but, like, you know, just like the small tweaks that we're 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. And these are moves that most 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 American's monthly budget. But then something as simple as saving, storing, and actually eating your Leftovers. I'm like the king of leftovers, man.

[Joel]

Don't just scrape it into the garbage can.

[Matt]

No, like, literally today, my leftovers I had. There's just like, too much brown rice in there. And so I ate like, the. The pork and the mushrooms and the spinach, but I scraped the rice back into the container. I stuck 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, and complete that meal. But, you know, even something as basic as reusing Ziploc 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 touched on this a little bit. But, like, finding ways to keep those smaller recurring expenses minimal is 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 it times 12.

[Joel]

And you get used. 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 $110 subscription, but it's the fact that, like, now you're the kind of person.

[Matt]

However many years.

[Joel]

Yeah.

[Matt]

That you did 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.

[Joel]

Yeah. And it's like, now.

[Matt]

Cool.

[Joel]

Yeah. That's not. If $10 isn't a big deal the next time the $20 decision isn't a big deal, and they. We need to make them big deals in our lives. Right.

[Matt]

Exactly. Yeah. Keeping. We want you to basically keep those 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, it keeps your stress levels lower, which is massively underrated. We're not even going to talk about stress and mental health. We're just talking about the nuts and bolts today. But keep that in mind as well.

[Joel]

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 100% true.

[Matt]

Yeah. It literally lowers your IQ points.

[Joel]

Makes you dumber having a lot of debt on hand. Right. There's studies that show that that it's something like a 12 to 14 point IQ 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 interest rate 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 7, 8, 9 years in the future. When you're talking about something like all those kinds of debt, but specifically say car loans, there's a lot of people taking out eight and nine year car loans now, Matt. And so like, yeah, by the time that's terrible, you're done with that car.

[Matt]

I hate it.

[Joel]

You're halfway through those car payments. And that's setting you up for the opposite of financial success. And so, 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. If we're 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.

[Matt]

And honestly, another reason too, that it's good to avoid debt. And we've talked about this towards the end of last year, when we're 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 going to make us happy, it's going to make us fulfilled. And when those items, oftentimes that we have to purchase, when we finance them, we are sticking our future selves, like you said, Joel, with those payments. We are like, I don't trust myself today to make the right decision on when it comes to taking on debt. Oftentimes to still be something that I think is going to be worth it down the road. 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 change my mind sometimes. And again, I've had this one path in my mind and I think, oh, this is going to make me happier. Oh, this is going to make life easier. But then as time progresses, as I mature, as different events present themselves and the facts on the ground change, well, oftentimes that warrants a change to the game plan as well.

[Joel]

Yeah.

[Matt]

And anytime you are looking to take on any serious amount of debt, we think you should probably think long and hard about bringing bad debt into your life.

[Joel]

Yeah. I think that the habit of reflexively avoiding debt is a good one to get into because it's not that like we said, occasionally some kinds of debts in small amounts are, you know, they're not terrible 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.

[Matt]

Yeah. Where saying no is probably like a good knee jerk reaction when it comes to taking on debt. So I feel like that we've kind of covered the like the frugal portion of our episode where we're just talking about cutting expenses and saying no to yourself. And but that being said, we're not opposed to splurging occasionally. Right. Finding your craft beer equivalent and finding ways to amplify the joy that you receive from certain expenses in your life. But let's move on from expenses and shift our focus to investing. Because another habit that financially successful folks implement in their lives is to invest with regularity. Right. Like they don't care much about what the market's doing with what it did yesterday, what it's doing today. But they want to take advantage of the market's wealth generating capabilities over time. And so with that in mind, they sock money away with each and every paycheck into an employer sponsored retirement plan, like a 401k, 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 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 want you invested in, 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 something like the s and P500, which is where like 98% of my, all of my investing dollars are in, are in different indexes that track the S and P. Yeah.

[Joel]

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 going to help you build wealth.

[Matt]

Just like Toby, it's the small wins constantly over time.

[Joel]

Well, it's going to do a whole lot more. Not that having money in a savings account isn't important, but it's going to do a whole lot more because your money's going to grow at a much more, much quicker pace. Being invested in the economy as a whole as opposed to just sitting there in static savings.

[Matt]

That's right. Yeah. We want, we want to move you beyond being a sav and instead taking those dollars and actually investing.

[Joel]

Yeah, yeah. But automating your investments is one of the most surefire ways to actually be able to achieve that success. And so I like this going back to referencing our episode with Katie on Monday. But 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, 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 a habit that you can set and forget so that you don't have to continually have the willpower to push yourself in the right direction is massively important too.

[Matt]

Exactly.

[Joel]

Yeah.

[Matt]

And that's where setting that percentage of your paycheck that comes out every two weeks 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. Joel, this is like one of the things, I think this was your big takeaway from that episode.

[Joel]

Yeah.

[Matt]

But Find a way 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, a, 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 up 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 marked the occasion by me going out and buying an extra fancy beer. And that night after we put the kids down, we cracked that bad boy open and Kate was just like, okay, why we what's the special occasion? And I remind her that like, hey, this is.

[Joel]

We max out this for such a calendar.

[Matt]

This is what we just did. And it's just a very small way just to mark the occasion, 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 it's happening. It's something that we are actually enjoying and partaking in in the here and now, just via something like a delicious craft beer.

[Joel]

Yeah, I do think that attachment to fun 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, in full as well. Right. Because if you opt 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 interest. And so for a lot of folks, it's going to be best to set up recurring payments that pay off the statement in full.

[Matt]

Right.

[Joel]

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 think of themselves as weak willed, which I do. Matt, I don't feel like I've got. I'm the most disciplined guy in the world. I certainly know James Clear, who wrote the book Atomic Habits.

[Matt]

And even for the most strong willed person there are always going to be times when they fail. Yeah.

[Joel]

Or you just.

[Matt]

That's just how it is.

[Joel]

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.

[Matt]

But with that in mind, I think this is going to sound like the exact opposite of what you just said about automation.

[Joel]

Nothing if not contrarian.

[Matt]

I promise it's not. But we also want you to revisit the things that you've automated and oftentimes on an annual basis because we don't want you to over rely on automation. And the reason for that is because mostly so that you can crank up that savings and that investing rate. For instance, going back to the work sponsored retirement account, if you're contributing 3% 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. 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 401k providers actually that that let you schedule increases in advance as well, which is super cool.

[Joel]

You can automate your automation.

[Matt]

Yeah, 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.

[Joel]

And this is specifically, let's say on utilities, which is something like I still have it set up on automatic payment, but I look at that bill every month because I want to know my usage.

[Matt]

You want to feel that pain?

[Joel]

I want to feel the pain. Even though I'm still auto paying it, it I don't just like forget that it exists exactly. And forget how much I'm spending.

[Matt]

And this is kind of an argument again for tracking and budgeting again because I too, all of my utilities are set up on autopay. That way I'm never going to get a late payment, 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 kind of feel that pain. And because of that, like this is Something I did recently, Joel, like, Like once it started getting cold a few months ago, and I was shocked to see the amount that we were paying when it came to gas, our energy bill. And so since we've been in the new house, I'd never programmed the thermostat. But you know what? Seeing that bill caused me to say, oh, it's time to fit. And partly it's because it's not a nest thermostat, which makes it so stinking easy to, like, schedule the week. It's one of the traditional ones where.

[Joel]

You have to, like, go to program it. Yeah.

[Matt]

Wake up time, leave home, arrive home, sleep. Like that whole thing. I hate that. They don't make it easy.

[Joel]

Maybe at some point you replace the thermostats. Maybe, maybe, maybe.

[Matt]

But that being said, that caused me to be like, you know what? I'm going to spend a few minutes, figure this stupid thing out. And guess what? The next month's gas bill reflected that change.

[Joel]

There you go. I like it. We talked about investing and automation here, but we say another habit that financially successful people partake in is investing in themselves, which contributes to a whole lot of financial success over time. This doesn't mean that you've got to fork over like 40 or $50,000 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 mba, I mean, that might be what you have 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 that 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 something worth continually partaking in.

[Matt]

And plus, I think folks would be surprised too, at what I'll call the spillover effect, which is they start participating in, like, is it like, maybe a hobby that they think is completely unrelated to their 9 to 5, 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, indirect ways that ultimately, it really can boost your bottom line. 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 is this 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.

[Joel]

It's not constantly changing or something.

[Matt]

No, yeah, it's. It's kind of like astronomy. It's like, maybe every now and then, they're gonna decide that Pluto's not a planet anymore, and then they'll change it back.

[Joel]

Poor Pluto. I miss it.

[Matt]

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 changing and evolving. 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.

[Joel]

It over the past few years.

[Matt]

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 doling out all these different sports analogies. Sports analogies, Joel. But just like. Like, sports go through different phases like this as well. Yeah. 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? Does it go up the lane? Is that. Is that how it goes in the paint, baby? Yeah, but, like, I know seven footers.

[Joel]

Were all the rage 20 years ago, and now it's more the shooting guard.

[Matt]

You're looking at the guys that can. That can shoot the three pointer. 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 you were totally getting the shaft. But now there are a lot of different places that savers can put their money. 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 that we are now experiencing.

[Joel]

Yeah. Spend less than you earn is like, duh, Right. And that's like basic, the most basic of basic personal finance.

[Matt]

Fundamental.

[Joel]

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 generic advice changes, but sometimes these 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.

[Matt]

The first step in solving any problem that we have in life. Whether we're talking about a conflict in a relationship, why the check engine light is on. Right. Flashing on the car, or even why we can't seem to set aside enough money for different goals we have, the first step is to clearly define the problem. We've got to assess the situation. What's going on with your spending? That is where Monarch money comes in. But Monarch is more than just a budgeting app. It works as your own personal cfo, giving you full visibility and control over all your accounts, investments and financial goals.

[Joel]

Monarch is truly a game changer. And I love how you can choose goals that you want to hit and then you can rank them in order of priority. It's pretty rad. It makes those goals a lot more concrete and tangible. My top goal has been funding our family summer travels.

[Matt]

Nice.

[Joel]

So start managing your finances to build the life you actually want. The truth is, without a clear financial picture, your financial dreams really can feel out of reach. And Monarch makes managing money simple, even for busy lives.

[Matt]

That's right, man. Get control of your overall finances with Monarch money. Use code how to [e-mail] in your browser for half off off your first year. That's 50% off your first [e-mail] with code how to Money running your own.

[Joel]

Business hits different in the summer because we take more time off to be with our family, it means we have to be even more thoughtful ahead of time so things run smoothly. But just like having the right plan helps us to avoid podcast nightmares, well, you can ensure that you and the people you care for most are prepared for anything too. Trust and Will makes estate planning simple and secure so you can confidently create a will designate power of attorney, secure your digital assets and more. Visit trustandwill.com howtomoney to get 20% off their simple, secure and expert backed estate planning services.

[Matt]

Yeah, when you're young and life is simple, getting a trust or will in place is not a high priority. But life gets more complicated when you start throwing kids into the mix. Once you add an investment property or two, once that's a part of the equation, I know I've got the peace of mind knowing that I've got this checked off my to do list and you can too. Because Trust and Will's website is easy to use, it's simple to navigate. Plus all your information and documents are securely stored with bank level encryption. Each will or trust is state specific, it's legally valid and it's customized to your needs.

[Joel]

Yeah, we can't control everything, but Trust and Will can help you take control of protecting your family's future. Trustandwill.com howtomoney and get 20% off. That's 20% [e-mail] how to money Looking for a smarter way to teach your child to ride a bike and support American jobs at the same time? Most kids bikes are just cheap imports. They're heavy, clunky, hard for kids to control. Guardian Bikes is changing that. They're assembling bikes right here in the USA with plans for full US manufacturing in the next few months. It's a commitment to higher quality and American craftsmanship you can trust. Each bike is lightweight, low to the ground and built to help kids learn to ride faster, many in just one day. No training wheels needed.

[Matt]

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[Joel]

That's gu. Guardianbikes.com built in the USA, made specifically for kids. Guardianbikes.com.

[Matt]

All right, we are back, Joel. And we're continuing our discussion on the essential habits for financial success. And so let's kind of keep that gravy train rolling, 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 worldviews, like, they're often a construction of what the, like the four or five people that we're 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 going to influence us in a positive way as well, helping us to curb consumption. But on the contrary, if they're buying a lake house that's out of the price range, if they're buying a boat or something like that, if they're draining the 401k in order to make expenses like that happen, well, 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 differently, who handle money differently than we do do, but just make it a habit to spend maybe more time with folks who handle their money well and who will also motivate you to do the same.

[Joel]

Yeah, I just recently hung out with a friend who I hadn't seen in quite a while and he have other friends, Joel. I know, right? Shock, but that's not allowed. But he has a brand new Rivian suv. We have talked, we have talked on this show that there's like only 800 and something of them in existence. And so, oh my goodness, it was pretty impressive to see, like I've been obsessed with Rivians for ever since I heard about them. Basically. I think they're.

[Matt]

And now you're gonna get one, right?

[Joel]

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 see his new car. And they are dope. I got a chance to Ride 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 my money differently to buy a fancy new car. But I actually walked away from that being like, man, it's. I'm not interested. I don't care anymore.

[Matt]

I'm so glad that we're not closer. I'm so glad that I made a.

[Joel]

Vow not to see him again for at least two more years.

[Matt]

Gotta get your ratios in check.

[Joel]

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 part of that means, I think we need to be making it a habit to talk about money more in general role. 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.

[Matt]

A beer, like a money club.

[Joel]

Yeah, something like that. Yeah. I mean, however you want to.

[Matt]

You can even use that name.

[Joel]

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 offering 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 broach the subject of. The more we relegate it to, like, never being spoken of, the less likely we are to make progress in our own lives. I think it just shows how uncomfortable we are with money as a whole.

[Matt]

Totally. Yeah. I mean, and while if you're listening to the show, 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 gonna make poor decisions because of that. They say that 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 podcast.

[Joel]

And by the way, this does not mean beating your friend over the head with a Dave Ramsey book or something like that, but it does mean, like. Like I said, there's all sorts of soft ways to get into this discussion.

[Matt]

So 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 it's 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, that might be the role that you need to play in their life, and that's going to allow them to perhaps get much further along with the different financial goals that they've got in their life.

[Joel]

I mean, I think the truth is we're social beings, right? And there's a reason that lots of folks opt to work out at the gym instead of at home. There's a reason folks are willing to pay a ton of money to go to a concert or to go see, like, let's say, an NFL playoff game, right? How much. How expensive are super bowl tickets every year? They're not cheap. And part of that is not just seeing the game, but 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.

[Matt]

Together. Yeah, dude, absolutely. Like, I'm going to butcher. I don't have a specific quote here, but I think it was CS Lewis who actually was speaking about friendship in this way. I think it was him. And one of the things he said was that, like, what is at the core of a 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. 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 co workers. And I think that's, that's just super cool. It's just really awesome.

[Joel]

And that doesn't mean lording your 401k balance over them.

[Matt]

No.

[Joel]

Look at how awesome.

[Matt]

That's a total jerk, gross way of doing it.

[Joel]

There's other way, better ways of doing. We've talked about that in the past. Maybe we'll link 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 pay stub.

[Matt]

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. Sure.

[Joel]

Or goals. Or maybe a piece of personal finance content you 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.

[Matt]

Exactly.

[Joel]

But another financial habit we would say would be important to implement this year in 2023 would be to write your goals down. Because this habit really can make a massive change when it comes to actually taking 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 pen to 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 were to occur. Unlikely. But let's say it, let's say it 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 jumpstart 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 almost ensures that your money is going to follow suit.

[Matt]

That's right. But you also want to limit the number of goals that you're striving after as well. Right. Because yeah, like successful financial nerds, they set goals, but not too many of them. Because it's going to be hard to achieve 32 different goals that you've got set in 2023. In fact, the person, I think, who sets fewer goals is more likely to then accomplish the goals that they didn't call out from the outside. Right. And so just simply by limiting your scope, by narrowing your focus, that laser like attention on just like 1, 2, 3 different goals that you have, you know, on the biggest wins that you want to see, that is going to translate to a higher success rate 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 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 write out some of the steps necessary in order to break down that big, somewhat overwhelming goal down into small bite sized actions. Write those and list 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 even look like? That's a great goal to have.

[Joel]

I bet you can have five, six, seven steps to take.

[Matt]

Absolutely.

[Joel]

And you can work backwards to the big goal.

[Matt]

Step one, track your expenses, Figure out how much it costs for you to survive on this planet over a 30 day period. Step two, 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 set aside. Like divide that out by 12 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 problem. Start cracking that nut. Now by not just writing out the goal, but some of the specific steps that are going to allow you to achieve that ultimate goal for sure.

[Joel]

And like, the truth is, ultimately, Matt, habits make or break us. And 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 is 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.

[Matt]

You can't just will it into existence like the emergency, like. No, there are some very practical steps as opposed to just being like, I gotta figure that out.

[Joel]

Yes.

[Matt]

It's like, well, what does that mean?

[Joel]

That is a response. If we're all honest. We've all had at different times.

[Matt]

Sure, sure.

[Joel]

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 wanna be. But like we would say implementing just a few of these habits is gonna put you on the path to progress, making it so much more likely that you're going to take strides and you're going to take them more quickly. You don't even have to have specific goals like accruing a million dollar net worth by the time you're 45 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 a quote that stuck out to me out from James Clear, actually, he said action relieves anxiety. And I think that the habits that we choose to implement are directly. They're directly under our control. And implementing even just one or two of those could really kickstart 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. They took me a long way towards the goals I wanted to. I wanted to reach.

[Matt]

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 enjoyed a liquid hop Magma Austin Powers reference.

[Joel]

Right?

[Matt]

There you go. What were your thoughts on this beer?

[Joel]

So this one leaned in the fruity direction. I would say an IPA that's definitely more fruit forward, even though it doesn't have fruit. In the making of this beer, it's like, literally, that's what I'm all constantly amazed at. Hoping hops and how different combinations of those hops can create a completely different flavor profile.

[Matt]

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 them together, you can make different dishes.

[Joel]

Yeah, that's right.

[Matt]

That's kind of what I think of hops. Combine this hop with this hop with this hop, and all of a sudden tastes like a key lime pie.

[Joel]

That's true. I mean. Yeah. And that's what's crazy about these little green. They look like Brussels sprouts, but somehow they make beers taste fantastic. And this one was more passion fried fruit notes that I'm getting.

[Matt]

Way more citrusy.

[Joel]

Yeah, for sure. So I. I will say I liked it. It was fantastic. And this is probably even more up your alley because you like the sweet, fruity stuff.

[Matt]

The sweet or. Yeah, this is. I mean, it's not like an orange creamsicle 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 Atlanta.

[Joel]

The Mar.

[Matt]

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.

[Joel]

We'll go soon.

[Matt]

It hasn't been that long.

[Joel]

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, what, 500 beers on how to money now in our five years. Five plus years of existence.

[Matt]

So it makes it sound like we're maniacs, but. But we're not.

[Joel]

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. All right, guys, 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 really it's you listeners who make this podcast possible. So thank you and we wish you the best of success this year in forming solid money habits that are going to change your future. That's what we want to see.

[Matt]

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 subscriber, mash that subscribe button so you don't miss the next episode. But if you are a longtime 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. We'll make sure to link to any of the different resources that we mentioned up on our [e-mail] Joel that's going to be it, buddy, for this episode. Until next time, Best friends out. Best friends out. Did you know using your browser in.

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Did it occur to you that he charmed you in any way? Yes, it did. But he was a charming man. It looks like the ingredients of a really grand spy story because this ties together the Cold War with the new one. I often ask myself now, did I know the true Jan at all? Listen to Hot Agent of chaos on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts.

[Joel]

This is an iHeart podcast.