#2 - Your Brain and Your Financial Future
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You are listening to episode 2 of the Money Owners Podcast with Morgen Rochard. Money Owners is a group financial coaching program that takes all the information in this podcast to the next level, providing you with live help for all your financial needs. The Money Owners Podcast is designed to help you sort out who you are financially, the issues you are having with money and how to tackle them to be the best financial version of you (not all in one episode!). You’ll get some good ole fashioned information on being financially awesome. As a side note, this podcast does not provide any investment advice and nothing in this podcast should be misconstrued to be investment advice. If you’d like more information on Money Owners and everything I have to offer, visit www.moneyowners.com
Welcome back! I hope y’all had a great couple of weeks. I’m excited to build on the last episode’s concepts of beliefs in this podcast on your financial future.
So, spoiler alert – your financial future will look a lot like your present if you don’t start making some changes. That’s cool if your present is awesome, but it’s probably discouraging to hear if your present isn’t as great as you’d like it to be.
The good news is: your future can be whatever you want it to be (within reason). I’m not saying its going to be raining money all day and you can flip off your boss and spend 6 months in Tahiti. But you can make some basic changes now to ensure that your financial future looks how you want it to look.
You have many levers to pull to get to your desired financial future. 1st lever is your brain. 2nd lever is your income. 3rd is your spending or savings lever.
Let’s start with your brain! Your brain is a beautiful thing. It does so much for you every single day. It controls all your body’s actions. It helps you be the amazing person you are right now. And it also tells you lots of lies. All the time. Lies, lies, lies. Constant LIES. Lies like, I’m not good enough, I can’t save money, I’m a failure, I don’t make enough money, I expected to make more money, all my friends are more successful than me, if I only had more money my life would be better, money sucks, money is unfair, money is hard, I hate money, money is evil, money makes my life bad, money makes all people’s lives bad... I can keep going! We spin a web of lies in our brain and then we go about our day with our brain playing tricks on us, letting us make decisions on faulty information. Don’t believe me? Observe your brain for a day. It doesn’t even have to be financially related. I guarantee you’ll hear yourself telling yourself a whole bunch of crap all day. Your brain is so filled with crap and you’re on autopilot. You don’t even know all the crap your brain is telling you, because you haven’t taken the time to notice it. We talked about this quite a bit in the last episode and hopefully you did the homework to start gaining some awareness about your thoughts.
That said – you may have all these past beliefs causing your current thoughts, but simply knowing what those beliefs are doesn’t make them change. You have to catch yourself in the act. Here’s a good example: If you only had more money, your life would be better. This is a lie you are telling yourself. Money in and of itself doesn’t make you more or less happy. The thought you have about making more money and what you’re making that mean to you is what’s making you unhappy.
Let’s unpack this:
Thought: My life would be better with more money
Feeling: Discouragement, my life obviously sucks since I don’t have more money, so I feel down and bad about myself.
So what do I do when I feel down and bad about myself? Probably something to either confirm how much I truly suck OR something to fix this sucky feeling temporarily. Here are two examples of things I may do after I think that my life would be better with more money:
1. I sit on the couch and watch TV, woe is me. I suck, no money.
2. I spend some of my money because it doesn’t really matter anyways, I don’t make that much money, what’s the point of saving, and spending money releases a small amount of dopamine in my brain and makes me feel better (albeit temporarily).
None of the things I just listed actually help my life (in this example), to be better, which is what I ultimately want right? I said that I want my life to be better. My thought is that more money will make it better. That may or may not be true, depending on my income level, what I’m doing with my life, how I’m spending my money, whether or not I feel fulfilled in my work, and many other things we can add to this list. Does sitting on the couch indulging in my sadness and not experiencing my feelings really help me live a better life? Not likely. Does spending some money (that I may or may not have) just to feel better actually make me feel better? In the moment, sure – it’s why we do anything for short term gains. It makes us feel temporarily better.
So what would actually work? This goes back to our last episode – remember, when I gave you that homework assignment to write down all your money beliefs? And you probably didn’t do it because work is hard and you didn’t think I would notice. I noticed!! But I’d really like to encourage you to do the work, it really does help!
In case you want more homework, here you go! Also, if you visit moneyowners.com/2 you can get download a worksheet that gives you all the homework to do. And if you want to do last week’s homework you can visit moneyowners.com/1. Ok, homework: Pay attention to your lying, stinking brain! What are the thoughts that keep coming up? What are the feelings you feel when you think those thoughts? What actions do you find yourself repeatedly taking as a result of those feelings and thoughts?
Ok, on to the second lever – your income! Everyone likes this lever. It makes you feel really good inside when you get paid. You get a thrill when the money hits your account – I hear ya, I feel it too! It’s one of the reasons we have thoughts like, “I should make more money”. More money means more good feels when the funds hit. It’s also the reason why you stay with the job you hate – you love getting money in your account and don’t want to feel the bad feels when no money is coming. Well, I’ve got some bad news, and you probably know where I’m going with this: your brain has a hold on your income lever. I wish it were just as simple as “make more money all is well”. But unfortunately, it just doesn’t work that way. ‘Cause your stinking brain doesn’t know when enough is enough unless you tell it. It thinks you have to go through life making more and more money to be happy.
I have some great news! You can think happy thoughts right now. You don’t have to wait for more income. In fact, if you’re not happy right now, then no amount of income will make you happy. You’ll always be that person who needs more to feel better. There’s this concept that I truly believe – money makes you more of who you are. If you’re happy, you’ll continue to be happy and be more happy. If you’re unhappy, you’ll keep going down that road regardless of your income level. If your stressed, money will cause more stress. And if you’re a slew of emotions in between, you’ll keep being those emotions. It’s because it’s not your income level that’s making you happy or unhappy. It’s YOU.
My day job is being a financial planner (not a podcaster!). I’ve run my own RIA for the past 4 years and been in finance for over a decade now. The number one goal I hear most often from my clients is this:
I want to feel less stress around my finances.
Now, for me as a planner – this is a hefty goal! I want all my clients to feel less stress, for sure. But it’s completely unmeasurable. Sure, I can rank stress from 1-10 and keep having my clients rank their stress throughout our work together. But it’s SUCH a subjective measure. Plus, stress from other factors in their lives can cause additional financial stress And, at the end of the day, it’s also simply not about that. There’s a point at which the stress level just declines. It’s stress, stress, stress, stress and then one day they wake up without it. It’s a beautiful thing. Magical you may think! And it happens 100% of the time after doing at least 6 months of work together.
Why does this always seem to happen and how can YOU do this right now? Well – I’ll tell you right now, it’s not more income that’s driving down stress. I haven’t done a scientific study on why my clients become less stressed after working together, but this is what I think it is: continuous exposure to financial concepts until they become subconscious. Plus, having a plan in place and someone holding you accountable to the plan, really helps. The new concepts and the plan replace the old lies your brain is telling you. You become less stressed because your thoughts have changed. That’s all. No magic. Just changing our thoughts.
Ok on to lever 3 – spending and savings! So it really is just math, make more income, spend less money, have more savings, life is good. Except you already know what I’m going to say: life is not good because our stinking, lying brain has to put its grubby brain folds all over everything. Sure, everyone knows in concept that if they spend less they can save more. OR if they make more income and spend the same they can make more. OR the elusive make more AND spend less (I know very few people who do this one). Concept, easy. No problem.
In practice, not so much. Lever 3 has some tricks up it’s sleeve (all thanks to our brains). See spending money feels REALLY GOOD. And it feels even better when we spend on others. Ever wonder why you spend piles of money on your kids? Spending on yourself is like having a glass of wine after work. Feels good. Buying something for your kids or spouse is like taking some Vicodin, feels pretty good and definitely feels better than spending on yourself. Buying your kids their college experience is like free-basing heroin. We get SERIOUS good vibes from spending on others, especially when experiences are involved. There are a number of reasons why our brain loves this. Without going into too much detail, we love a good story. We love things to be memorable, unique and social. We feel happier when we feel a connection, make an impact on others or feel like we have a choice in our spending.
These are all good things to remember when you think about your spending. Connection, impact and choice. These things will lead you to feel happiness when it comes to your spending.
So this leads me to the second part of your homework: What are you spending money on that you currently enjoy? What are you spending money on that you do not enjoy? What are you spending money on that you absolutely detest? What are you spending money on that you don’t even realize you’re spending money on? (Check your credit card statements, you’d be amazed what’s in there). Are there some things that you used to purchase because they once brought you joy but now you no longer notice them? (my example of this is Kombucha. I used to buy and drink a Kombucha every day. I loved every minute of that drink. I paid $4 a pop, daily! That works out to $1,460 in Kombucha per year!! And then I noticed myself sucking them down and not really enjoying them. I cut them out. I don’t miss it. And when I occasionally have one now, it feels really good). What can you cut out of your life and not miss?
I know you must be thinking – but you didn’t give us homework on the income lever. YES! That is true, I did not! Know that there will be a long episode on income in the future (not next time though) and what to do about it. This episode was really to further introduce you to the idea that your brain rules house when it comes to your money and pretty much anything else in your life. So pay attention to your stinking, lying brain!
That’s all I have for you today. I hope you enjoyed this episode of Money Owners. The transcript and homework for this show can be found at www.moneyowners.com/2. If you want to get more information and updates from Money Owners visit www.moneyowners.com/subscribe. If you liked the show, please give it a good review on iTunes, it really helps. And I hope you’ll tune in again next time!