Episode 3

April 15, 2022


003 - Financial Wellness – a guide to get you there

Hosted by

Vincent Heys
003 - Financial Wellness – a guide to get you there
Financial Wellness with Vincent Heys
003 - Financial Wellness – a guide to get you there

Apr 15 2022 | 00:22:26


Show Notes

In this episode we’re sharing some basic principles to kickstart your financial wellness journey and set you up with healthy money habits. Join Daniel Clark and Vincent Heys as they explore the route to optimum financial health and the markers along the way.

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Episode Transcript

Speaker 1 00:00:06 From wealthstack.ca. Welcome to the financial wellness podcast series, where we discuss all kinds of financial principles, concepts, and products. Our aim is to make money matters simple again. Have you ever thought what it means to be financially healthy or have you ever wondered why you just don't get ahead in this show? We are unpacking the hard issues behind finances. Our finances can trip us up and what habits we can implement to move forward and create a hopeful future I'm Vincent Hayes. And with me in the city of today, I have a friend and financial advisor at Farber wealth Daniel Clark. Hi Daniel. Speaker 2 00:00:46 Hi Vincent. Thank you for having me on the show today. It's a pleasure to be here. Speaker 1 00:00:49 It's great to have you Daniel, maybe just give us a quick introduction about your background. Speaker 2 00:00:54 Yeah, it's a, it's a varied one and, uh, a path, uh, a long and winding road that took me into financial services. I, uh, much like yourself, uh, am not from Canada, have an, have an accent that listeners, uh, may or may not have picked up on. I, uh, originally am from Australia, moved to Canada, um, almost 20 years ago now and spent a number of years in the hospitality industry as a, as a business owner, before moving into finding financial services in the world of giving financial advice in the last, uh, few years. Speaker 1 00:01:26 Well, it's great. We have you, unfortunately, we don't pay that much cricket here. So, uh, but listen, I, I spoke to a client this last week. Uh, we went through his financial planning dashboard and he changed jobs and he, he gave his new salary to me and immediately he said, the salary that I earn now is less than the salary I earned in the previous job. And so off the cuff, the guy just said to me, what I've learned is that my salary is not an indication of what, what my self worth is. And I thought, you know, that was such a great comment that the guy gave. So on the back of that, Daniel, I, we spoke this last few about financial wellness and we thought, what a better way to start this, to give our listeners a little bit of a sense in terms of the principles around financial wellness and really talk about the hard issues. And before we start, I do wanna give credit to Ron blue Institute for some of the principles that we are gonna talk about today. Before we get into the principles, myths, financial myths, what are the stuff that we incorrectly believe about money? Speaker 2 00:02:30 One that stands out for me is the more I have the happier I will be when I think in reality, the more we have, the more we tend to spend is probably what happens for a lot of us. Speaker 1 00:02:38 Yeah. You know what, uh, what I also kind of feel in my own life is there's that sense that I can control all money. Doesn't matter how well my plan is. Sometimes it just doesn't work out. Speaker 2 00:02:49 Yeah. And I think life happens. Right. And so, um, we need to be prepared for as best we can any and every eventuality, another one that I think as well is that money can give me a sense of security. Mm. Is a method. I think that a lot of us believe Speaker 1 00:03:05 With that, let us look at some of the stats that we've, that we've discovered, especially when it comes to these belief systems. Speaker 2 00:03:12 Yeah. I mean, a couple that stand out for me, uh, 40% of Canadians or working Canadians feel over owned by their level of debt, 35% spend all of their net pay or even more. And I mean, those for me are some really telling just a couple of the really telling stats about, um, I guess just how the economy works and, and that idea of need to make more yet spend more, right. Another one that's Springs to mind is that almost half, uh, the people, uh, presented in this statistical, uh, surveys say that they, they lose sleep because of financial worries. Almost half the population. Speaker 1 00:03:47 Yeah. Daniel, if I, if I'm, uh, true about myself, it also happened to me, you know, uh, where I sometimes worry about not having enough or in times when I do have enough is how do I protect that it's just happens. And, and it's not, not the best thing that we can do. Speaker 2 00:04:03 Yeah, absolutely. You know, and I think that's where the value of a plan comes into play. Right. Is that, that reference to go back to, and, and adjust if needed, but without a plan you're, you're kind of lost at sea in a way, right. In, in all of these thoughts and, and concerns. Speaker 1 00:04:18 Okay. So let's dive you the four principles when it comes to financial wellness that we have, the first one is a heart issue. So what is going on in my emotions, uh, and what I believe. So there are four things here that we just want to touch on. The first one is stewardship, and it really comes back to this idea that I stewarding what I've been given and the resources and relationships, health, and finances, uh, have been given to me. And I need to steward it the best I can. You know, Dana, when I think about this thing, it's, we are mortal <laugh> and it's like, we all gonna pass away. And it's, uh, it just makes, you know, when I think about this one, if I can be a steward of the things that I have, then I can hold it lightly. I'm not, I'm not, uh, squashing it and I'm not trying to protect it, but it's more like a farmer being a steward of someone else's farm. Speaker 2 00:05:14 Uh, I really like this, uh, principle here, when you think about what we come into the world with, which is essentially nothing and what we leave this world with, which is also nothing, you're exactly right. We're, we're merely passing the Baton, we're accepting it and passing it along. And so really everything that we think we have in this world, in our lifetime, we never truly really own. We're just having it for a period of time. Yeah. I think that, that, that idea of not holding onto things to tightly, um, for our hopes, our dreams, the possessions we have is, uh, a really important, um, a really important principle. The other principle that we want to, uh, mention and talk about is contentment. You know, 90% of people feel that they are not achieving what they are supposed to achieve. It reminds me of a, of a study or a, a survey that I had heard, uh, once I believe it was done by the, uh, I wanna say happiness Institute, and I could be wrong on this one, but we'll have to do some research after the, after the show. Speaker 2 00:06:09 But essentially it was a survey that was conducted globally on general populations of, of different countries around the world. And, uh, the results were three of the top five, I believe happiest countries in the world were Scandinavian countries. Um, and part of the reason for this was that because they had very low level of expectation for what it took for them to, to be happy. And I think when you compare that to say, you know, north American culture, it's a really interesting idea and that, you know, when you're waking up every day and have these really high expectations about what you need to have in your life to be happy, you're setting the bar really, really high, which makes it that much more difficult to achieve. Right. So, you know, the, the converse side of that, or the flip side of that is if your expectations are quite low, it's relatively easy to be, to be happy on a day to day basis, which I thought was just a, a really interesting sort of take on that. Speaker 1 00:06:59 Yeah. And I think also if, if we are able to travel to different countries that, uh, whose GDP is lower than ours in Canada, it also makes it easier to kind of see, you know, this is the way that we live, but actually 90% of the people, 95% of, of the people in the world live with a lot, few things around them. Yeah. You know, kind of just to bring what you send into perspective, you know, it's to be content and then to be appreciative in terms of what we Speaker 2 00:07:26 Have. And I, and I wonder post COVID how that will be changed for some populations. Um, especially, you know, Canada and north America, where I think a lot of people realize they didn't need as much as many, um, to be happy. And they found ways to gain more contentment out of just spending time together as family and outdoors in nature. Hopefully getting back to some more, you know, simpler things that, that gave them a lot of joy Speaker 1 00:07:52 And you know, what this, this level of contentment it's, it's something that I, you know, sometimes I'm good. And sometimes I, I, I do feel that I struggle with it wanting what other people have <laugh>, you know, just to be, just to make sure that, um, be appreciative, what I have and not, and not trying to get what other people have. Another one is really interesting is our world view. So, uh, when we talk about money and heart issue use, it also really speaks about our faith and our worldview. You know, how do I feel about money? What do I, what do I think about it is money confirming my, my internal belief system. So if I can believe the things that I'm doing is worthwhile, it really puts the amount of money that I get into perspective. Uh, I think the challenge here is, is how do we, he chase after our purpose as opposed to chase after money? You know, I read a book the other day and the, the guy said to be financially secure or well is when you have enough money coming in to support your purpose in life. And I thought that's a good definition because, you know, what is my purpose is, is different Daniel to what your purpose is. Speaker 2 00:09:01 Yeah, absolutely. And, and I think that sort of speaks to your, your point as well about, you know, always, uh, striving to, to have more right. And so when you can find, uh, your, your purpose and recognize that you only needs so much, that that idea of comparing yourself to others kind of becomes irrelevant in a way, because as you just said, what's, what's important to you is not necessarily important to the next person and, and so on and so on. Right? So I think when you can find meaning in your own endeavors, you really just need the amount of money to support those endeavors. I, and to allow you to pursue them to your best of your abilities, right. And that's gonna be different for everyone. So comparison game does not work because we all have different goals, different world views and, and different perspectives. Speaker 1 00:09:48 Daniel, you mentioned earlier something about, uh, what you've studied. Can you maybe just take us through that again? Speaker 2 00:09:53 Yeah. I have a background in exercise science and one of the, or kinesiology as, as it's turned here. And I often think back to one of the earlier, uh, learnings that I had, and it was a very basic principle or just a basic, uh, diagram about sort of health and, and wellness scale. And I kind of liken it to, to financial wellness and, um, the human body, uh, his goals is to maintain a state of homeostasis. Right. And if we, um, get sick or if, uh, we're, you know, exerting ourselves, the body always tries to self-regulate right. And so for the majority of us, we're, we're always in that, that comfort zone or that homeostasis point. Now when we get sick or, or we're unwell, we go and see a doctor, or we go and see specialist in a specific field to help us get back to that state of, of wellness or, uh, of homeostasis. Speaker 2 00:10:42 When we wanna move to, uh, an optimal place of health or financial wellness, we need to take a different approach, right? We need to be more proactive. I, I always think about, you know, Olympians and someone who's at the very pinnacle, the, the fitness world or the health world. You know, if you decide in your life at some point you want to be a world champion or a gold medalist, you have to move from that state of homeostasis or, or wellness to a, the, the, the very tip of the optimal range. And to do that takes first step is a plan. I mean, before the first step is just the shift in mindset. It, and so I think when you think about financial wellness or fitness in the same way, it all starts with firstly, a shift in mindset, recognizing that I want to move from one place to another. Speaker 2 00:11:28 And we talk about the, what if to the, what is, but then what do I need to support my journey to get me there? A plan is a great first step. That's where financial advisors can come in. You know, coaching support, maybe I need tax and accounting, or, uh, legal support. There's any number of different areas that you can be supported. But I, I really love that analogy of, you know, instead of just accepting that we're gonna go along in the state of homeostasis or general wellness, let's aim for optimal, you know, and especially, uh, from a financial perspective, Speaker 1 00:12:02 Let us look at practical things. The first one is how do we set priorities in the previous one of the previous podcasts that we did, uh, we, we talked about the 70, 20 10 principle and the bread and seed money. And so really just to recap on that very quickly, 70% goes towards taxes, reduced debt, and we live from, and that's what we call the bread money. That's what we eat 20% is our seed money. And that demonstrates financial maturity by giving up to today's desires for a future benefit. And then finally, uh, the 10% is giving. So those are the priorities. Okay. So let's talk about the five habits. So what is interesting is I, I read a book the other day on, on habits. Actually, they said that 85% of our decisions are purely based on habits, which is phenomenal. If you think about your life, the routine of going to bed, brushing teeth, the root that you take to work, it's mostly the same things. Speaker 1 00:13:09 Most of the things that we do, you know, what we do on Saturdays, what we do on Sundays are all routine. One of the things that they mentioned is if you can latch a new idea to an existing routine, the likelihood of getting there is much better. So for example, if, uh, if you brush your teeth, obviously in the mornings and evenings, what are the things that you can latch onto that routine, uh, to my make sure that they're embedded into your system, which I thought was really helpful because just by learning a new routine is kind of difficult. Speaker 2 00:13:42 I think a really fundamental and really simple one to start with is spending less than you earn sounds really, really easy and principle. Uh, but it's a great starting point when trying to re reach financial wellness or optimization. Secondly, I'd say avoiding debt. Now, I think it's important to recognize that for most of us who are all gonna carry some form of debt throughout our lives, I primarily thinking about a, a mortgage on our, on our homes. And I think that's a, a, a really good place to start when thinking about debt, because there's two types of, uh, there's good debt and there's bad debt. And certainly in most instances, a mortgage on, on your home would be considered a good debt. Assuming that the, the interest rates are within line with where they should be something like a credit card debt would obviously be falling more into the, the bad debt category. So I think a lot of people have anxieties and fears on debt, but as long as we understand the type of debt that we're engaging in, or that we're choosing to take on, um, there's definitely nothing wrong with carrying, uh, good debt, especially if it's used the right way. Speaker 1 00:14:48 An interesting one that we, that we talked about was, um, a margin and I'm, and I'm sometimes guilty of this where I normally plan my day completely full. This is one that Dan and I talked about was to say, you know, how do we need to create margin in our budget and margin in, in our daily life to make sure that we have time and money for things that may creep up. So for example, if you plan a trip and you have a budget of, I don't know, let's say $2,000, uh, is to make sure that you plan the trip, that you will only spend 1,800, that there might be 200 bucks left if, if something happens. Speaker 2 00:15:24 Yeah. I mean, look, the idea of, uh, the margin and, and even just the, you know, creating flexibility, you know, in your day to day a work life or just life in general, really, it just allows for spontaneous things to happen in life. Right. And allows us a bit of breathing room. The last thing, you know, thinking back to the vacation example or the holiday example last we want to be doing on, on holiday is the last couple of days, be really concerned about how much money we have to last as, right. So, you know, if you can build margin into, into everything that you're doing, then it just allows for more good things to happen in, in our lives and allows for more spontaneous things to happen. And just gives you that bit more freedom, I think. Yeah. And look, you know, time is money's best friend, right? Speaker 2 00:16:07 So if we can set ourselves some long term goals, you know, when you say them out loud, you're talking about sometimes big numbers can be really daunting, but if you, you know, look at a long term plan of 5, 10, 20 years, you can really break it down into a pretty small, a pretty incremental amounts that you can, you know, chip away at over time. And if you let time and money, uh, work together and, and that old friend compound interest, you can get some pretty incredible results. But, uh, again, it starts with a plan and, and setting those long term goals and understanding that you don't have to save that a hundred thousand dollars in a month. Yeah. Give yourself 10 years. Uh, and it becomes very, very achievable. Speaker 1 00:16:46 So when we talk about, uh, those long term goals, we, the way that we look at it is to say, you know, what do I need to have for emergency fund? You know, what is a home deposit goal, for example, a goal for education, the goal for retirement, obviously those are all investment goals. And then the other ones on the insurance ones, which are also really important is how much do I need for critical illness coverage for disability in case of, you know, if, if I won't be able to earn the income anymore. And then the last one is life insurance. Speaker 2 00:17:17 Yeah. And I really like the idea of every dollar having a purpose and being given a task. Right. And so if we're talking about investments and we have emergency funds, home deposit goals, education, retirement, they all have very different time horizons or timelines with which we want to have those funds available, which means there gonna be very different risk profiles for the type of investment you want to place that, that, that dollar in, right. And, and same for insurance, you know, setting those long term goals, understanding what each goal is and giving some clarity or quantification around each goal will allow you to make sure that every dollar is working with a purpose, uh, for the specific goal or goals you've, you've set out. And I think the, the, the last habit that we really want to create, uh, or give some time to and give some thought to, is this idea, or being generous with what we have, right. Speaker 2 00:18:07 You know, I've read a, a few books on the psychology of money and, and if I'm speaking, honestly, Vincent, the reason I got into financial advice is because I had my own struggles with, with understanding money and my relationship to it. And so I thought, what better way to heal or solve my own problems than be able to help others as well. And so now I've got this desire to learn more and more or about, you know, how I can help others. And I think, you know, giving generously ties into that and, and, and sort of back to your point about stewardship in that, you know, we don't truly own anything where we're holding onto it for a period of time. And so giving generously allows money to flow out of our lives, but opens the door to receive as well. And it, and it's basically a cyclical thing, right? And so giving generously is, is a way to allow money to continuously flow in and out of our lives and, um, allows us to give to others that may need it most likely more at, at that point in time. Speaker 1 00:19:05 Let's talk about the last point and that's casting hope for the future. The first thing here is we need to do an audit of not just our bank accounts, but also just in general, how we feel and think, and, and manage our money at the moment. So five stages. So if you could identify when you listen to this, just, you know, where you at at the moment, the first one is, am I struggling or am I surviving? My finance is stable. Am I starting to save for a long term goal? Or is there a surplus? And there's more than enough so we can see the progression there. And each of us are in different spot and it's, it's just good to say, okay, well, I'm surviving at the moment or I'm stable. And then where you want to be going forward. Uh, I want to be in a certain place in a year's time, but then it's all about habit. How the heck do we get there? Speaker 2 00:20:00 Yeah, for sure. And I think with any, with any starting point like this, uh, it always feels a little bit daunting at first. And so let's just focus on one habit, right? One step going <affirmative> and let's think about one habit that our listeners can implement this coming week. That will start to move them further. Along that scale of wherever they are, whether they're struggling, surviving, stable, saving for the long term, or if they're in, uh, surplus good for them. Speaker 1 00:20:26 So if I say I'm gonna save more going forward, what would you say to their habit? Speaker 2 00:20:32 Yeah, I'd say that's a great starting point. I feel like it needs a little bit more clarity. Uh, I think we should try to quantify that habit that you wanna start. So maybe you could give a dollar value for how much you would actually like to start saving and be realistic. It's gotta be something that is achievable. Uh, we want to give some positive reinforcement and, um, it's really important that we can measure the, that, that goal. And you can reflect and see that, yes, I've done this, right? Because some positive reinforcement will, will push you, encourage you along your journey. You want to tell someone about this habit in the next 24 hours. If you can tell one person about the habit that you're looking to implement, that's gonna give you a little bit of accountability to the, to the goal that you've set, which I think partially is just saying it out loud. But when you can talk about it to someone else as that little extra layer of accountability, which is very helpful, Speaker 1 00:21:23 Daniel, thank you so much. I, um, I need to conf firm with my wife, my one small step this week, but, uh, no, this is great. Daniel, thank you so much is I'm gonna finish off with one quote that I read as well. And it goes like this thoughts, produce actions, actions become habits, habits for my character and character determines our destiny. Speaker 2 00:21:46 Fantastic. Great, and pleasure to be here on the show and thank you so much for having Speaker 1 00:21:50 Me. Thanks Daniel. Speaker 2 00:21:51 Thanks Vincent. Speaker 1 00:21:56 Hey, thank you so much for listening to our podcast today, you can find our content on wealthstack.ca or on LinkedIn I'm Vincent Hayes, and you've been listening to the financial wellness podcast series.

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