The Get Ready Money Podcast
The Get Ready! Money Podcast with Tony Steuer features insightful conversations with financial experts who are changing the way we think about money. Listen each week to catch up on the latest financial trends and hear practical advice from Tony and his expert guests aimed at demystifying the complexities of finance, so you can build healthy habits that ACTUALLY work.
Each episode will leave you with tips for implementing small changes that can have a big impact on your financial future. Tony’s podcast is perfect for listeners seeking to get ready, be prepared, and transform their financial future.
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The Get Ready Money Podcast
The Get Ready Money Podcast with Anne Lester: Your Best Financial Life
On the latest episode of The Get Ready Money Podcast, I spoke with Anne Lester, author of “Your Best Financial Life” about changing the way we think about money and living a better life.
In this episode we discussed:
- Why it’s okay to say no to other people.
- The value of compounding.
- The importance of paying yourself first.
- How there is never a perfect time.
- How you can establish guardrails.
Anne Lester is a retirement expert, author of Your Best Financial Life, media commentator, top-rated speaker and former Head of Retirement Solutions for J.P. Morgan. Hailed as a “pioneer and innovator” by the esteemed financial services company Morningstar, Anne has worked on all aspects of retirement for the past 28 years. Anne holds patents for her progressive design to automate and simplify the retirement planning process. She is a regular contributor on an array of retirement issues for industry as well as public policy. Coverage includes CNBC, Bloomberg TV, The Wall Street Journal, New York Times, and countless industry publications; Barron’s featured Anne on their cover for her outstanding work. Anne’s policy-related work includes testifying for the US DOL and SEC. In partnership with AARP, she has founded the Aspen Leadership Forum on Retirement Savings whose goal is to find breakthrough solutions to Americans’ far-reaching problem of inadequate savings. Anne is on a mission to help rising leaders retire on their time and target.
Connect with Anne Lester:
Book:
Your Best Financial Life: Save Smart Now for the Future You Want
Are you looking to get ready, be prepared and transform your financial future? Then you've come to the right place. This is the Get Ready Money Podcast with Tony Stewart, where Tony has insightful conversations with financial experts who are changing the way we think about money. Catch up on the latest financial trends and hear practical advice from Tony and his expert guests so you can build healthy habits that work, Be empowered with tips for implementing small changes that can have a big impact on your financial future. So sit back and get ready to hear from today's guest.
Speaker 2:Welcome to the Get Ready Money podcast changing the way we think about money. I'm pleased to be joined today by Anne Lester. Anne is a retirement expert and author of your Best Financial Life. In this episode, we'll be discussing how we change the way we think about money and living a better life. And welcome to the Get Ready Money podcast. Well, thanks so much for having me, tony. Yeah, glad to have you here today, so you know, let's jump in. What is your origin story?
Speaker 3:Oh, you know, I grew up my dad was a college professor. I grew up in Honolulu, actually, which is a lovely place to grow up college professor. I grew up in Honolulu, actually, which is a lovely place to grow up, and my parents were both born in the early mid-30s, 1930s that is, and never had a lot of money growing up as kids in the Depression. So they never learned how to budget. They just never spent what they didn't have. And I realized growing up, you know, when I was on my own, that I literally didn't have any budgeting skills, like the whole idea of spending less money than I had and thinking about a framework to managing it is. It sounds ridiculous, but I was.
Speaker 3:I wasn't taught it, and what I was taught by my parents was, you know, if something was a good purchase, right, it was in alignment with our values, there was money to be had for that, and if it wasn't in alignment with my parents' values, it didn't get bought. So that's a good money lesson and, I think, a fabulous one for people to live their lives by, but it has to be inside you know the amount of money available. And something else that happened that my parents, I think, didn't have as young adults. Were credit cards right? They didn't exist when they were starting out in the 50s. So you know, I ran into a bunch of credit card debt and it took me a decade or more to dig out from kind of under all that. And so for me, you know, taking that experience that I had and then applying that in my professional life to helping other people think about how they save money is really why I do what I do and why I've written the book that I wrote.
Speaker 2:That's awesome and that resonates with me, because I ran into some credit card issues as well. You know, coming out of college you know it's like, hey, this is free money and not really I can make the minimum payment.
Speaker 3:It's fine, right, yeah?
Speaker 2:Yeah, you know I'm 18 years old and you know 18 year olds are known for making quality decisions. I think so, yeah, and fitting in the framework, I think, as you talk about values, I think people don't think about that applying their values to their money. So I think that's such an important thing to consider. So, you know, let's talk a little bit more about your book. So what inspired you to write a book? You know people say you know it'd be great to write a book. What was that inspiration? What was the spark for you to write your best financial life?
Speaker 3:There are several sparks, right, or maybe a spark, a pull and a push. I have always wanted to write a book. I mean literally. That has been a dream of mine ever since I was a child.
Speaker 3:I'm a huge, huge reader, mostly of fiction, and I have an unpublished novel I wrote in my twenties, which I don't think is very good, but it's still sitting there languishing and I felt so strongly, especially as my children, you know, were going into college themselves and entering the workforce that they're, and then doing the job I did, which was managing target date funds. I know a lot about the way people save and spend and know and hear a lot from consumers and I did this throughout my career, understanding why it was hard for them to save, and I also learned a lot about behavioral economics and the sort of wiring that each of us have and makes us more prone to saving or less prone to saving in my case. So, as I was sort of thinking about all this, I started working on this book before I retired from my job at JP Morgan and quickly realized that it was going to be very hard to write a book while I was working full time. And when I was retiring, I very publicly said I'm writing a book. So the poll was always wanting to do it and wanting to do it for my kids and maybe for my young self.
Speaker 3:The push was, you know, publicly saying I'm doing this, and then I kind of shamed myself into actually doing it, like I'd been so public about doing it, and that was a reason I wanted to stop working, which is true. To have time for this stuff, right, um, to have time for this stuff, right, uh. But I really did sort of back myself into a corner, which you know was, was, was a push I needed to make sure I actually did it. So there's there's.
Speaker 2:There's both sides of that one. Well, that's great. So what would you say to other authors you know are thinking like, oh boy, is this the right time to write my book? You know.
Speaker 3:Hmm, I would say and you may have your own opinion on this as an author yourself, right, that there is never really a good time to write a book, just like, I think, for anybody who's planning, you know, a parenting or a move, or like there's never a good time or the perfect time, it doesn't exist, you just do it and you figure it out. I will say that it was significantly harder than I thought it would be, which is true for probably everything I've done in my life, like, how hard can this be? Well, actually it's kind of hard. I think it definitely takes a village, and I had this image and I guess when I wrote this novel in my twenties, it was by myself, you know, at a I guess I was on a very, very old computer but like a little tiny desktop with floppy disks you had to push in and out of the computer, but it was a very solitary endeavor.
Speaker 3:I think a book like this, you know, certainly drawing on all the experience of the colleagues and the networks that I have and all the information I've amassed, and then the process of getting it to a publisher, my agent right, it's definitely my team who's helping me with the marketing. It's definitely a village. Pulling the book proposal together, writing the book was. I had someone who was helping me source stories and helping me with some of the writing, and now the sort of post book writing phase is even more of a village. So I had no idea how much time, energy, work, some money was involved in this process. So it's been a huge eye-opener for me. I will say I had no idea what I was getting into, which is maybe good, but once you start, you start and off you go.
Speaker 2:Well, and I think it's important that not only did you start, you start and off you go. Well, and I think it's important that you know not only did you start, you finished, but I think for other authors out there, you said something that I think people underestimate is that it's a continual process. It's not just writing a book and hoping for the best is you know, there's a whole plan and strategy out there.
Speaker 3:Yeah, and spending the time up front, which is what I this is actually my third shot at this book. I did one while I was working full time that I ripped up after showing the first the outline and proposal in the first couple of chapters to some trusted friends and they were like, well, this looks interesting, but this is not what you said you were going to do. And I'm like, yeah, you're right. Ditched that, started all over again, wrote something I actually actively disliked but was good enough to get an agent interested in representing actually two agents interested in representing me. And I hired the one who looked at me and said I mean, it's fine, but you could do better. And I'm like you're so right, I could make this much better. So ripped that up completely.
Speaker 3:And then this is the third effort. So I probably wrote and threw away like at least one and a half or two books that are the length of the book that I have now. And then I spent about six months just ideating with my agent and decanting everything in my head, and we covered the kitchen in these huge giant white sticky notes I still have them rolled up here and really spent a lot of time that I wish I'd spent at the very beginning right Really making sure I knew what I wanted to say and how I wanted to say it. And then the writing actually was, you know, I wouldn't say easy, but it certainly flowed right, but I didn't know how to do it right, and so I really needed a lot of help.
Speaker 2:And I suspect, you know, writing a book is really different than writing an article, yeah, but I think what you say there is really important, for you know people are considering it as a planning. It's such an important part. But once you get the planning down, the actual completing the book I guess that's not quite the right word, but you know it flows a lot better yeah, and I hadn't ever done something big enough to need what I'm going to call a real outline.
Speaker 3:And I I'm a pretty serious musician or was, and somebody once told me that there's the Mozart's and the Beethoven's, and the Mozart's, like do all the work in their head and then what they write is like what you all hear. And then Beethoven, you know, wrote everything out and even before he went deaf, rewrote and rewrote and rewrote and rewrote. And so you know, I've always been kind of a Mozart person. I kind of get it all baked in my head and then if the first draft wasn't pretty good, I just have to rip it up and start again, cause I couldn't. I couldn't fix it very well.
Speaker 3:And this book you cannot write a book like that Like it does not work at all, and so I had never really understood how to craft like the arc of something so substantial. So I I have, uh, looking back on it, really enjoyed the process and really learned a lot from the process, no matter how frustrated I was at parts of that process. And as I contemplate, like second and third books, which I'm already doing right, I have so much more confidence in my ability to execute that with much less hair pulling than I did the first one.
Speaker 2:Yeah, it's like that you write your first book sometimes and then you feel like you have a little more in you. And to bring this back to money, as you talk about the arc of the journey and I think we can apply that to someone's financial life I mean, would you agree, is that when people are thinking about their money, they should think about the arc of the story?
Speaker 3:Oh, I love the way you just said that, yeah, there is definitely an arc of the story. And you this is not an original thought right, you are the hero of your story and I think you know when you say that it frames for me kind of the challenges that you face and overcome along the way, the distractions, the temptations that happen, right, like I said, I like to read a lot of fiction and always I think someone who does one of these hero's quest kind of journeys is where are you trying to get to right at the end and what's your vision right of yourself, of your future? And I think when we put a money lens on that, it really kind of boils down to how well do you know yourself, right, and as you think about all the choices that you have to make with money, that those are very testing choices really, and the better you know yourself, the more easily you can navigate those. And that's frankly what a lot of my book is about. And a lot of my book is also knowing what you don't do. Well, and instead of trying to grit your teeth and do it right, it's like that one's really hard for you. Maybe you should set up some guardrails around yourself so you don't wander off the path, right? So I have a lot of tricks and tips on how you put some guardrails out, but the end of the journey right to me, especially with money, it's like where are you going?
Speaker 3:It's in a money context to retirement and how do you use that power of that vision, even if it's kind of fuzzy, to help yourself make the financial sacrifices that you have to make in order to save for that future? Right, because you have to not do today some things that you want to do, so that you have to make in order to save for that future. Right, because you have to not do today some things that you want to do so that you can do them tomorrow. And that is, I think, one of the hardest ideas to get your arms around, especially when you're in your 20s and 30s, because you haven't seen the payoff in your life of that kind of long-term planning, at least with money. Maybe you've done something like music or a sport that you've seen that pay off of all the work pay off, but it's a little different with money, I think.
Speaker 2:Yeah, I would definitely agree, and I think you said so many amazing things in there. But I think one of the things, too, is it is your own personal journey and that people need to remember that. But you know, as you point out, if you don't have a vision, how are you going to end up somewhere? You know it's just like starting to drive and you don't have a destination. You could end up anywhere. So I think that's powerful that you outline that in your book. You mentioned behavioral economics earlier. I think behavior fits into all this. How can people you know you got to that a little bit how would you integrate behavior into people's thinking?
Speaker 3:Well for me, right? We talked a little bit about my origin story and why this was so important for me to write about For me. I hadn't realized how much I was just trying to grit my teeth and do the right thing and repeatedly setting myself up to fail over and over and over again. And then all that did was make me feel ashamed and stupid, frankly, right, like how hard can this be? It's not that hard.
Speaker 3:Well, it was pretty hard for me, like money really does burn a hole in my pocket and even to this day, right, I get a windfall, I get a something, and I'm like, oh goody, what can I do with this money? Save it. But it's really hard for me to do that. And I only started letting go of some of that shame and blame when I realized that it's not because I'm stupid or bad or irresponsible, it's because that's the way I'm wired. And to repeatedly set myself up to run against that wall and fail, you know, doing the same thing over and over again and expecting a different result is someone said I can't remember who a definition of insanity. Like why am I doing this to myself? And I couldn't let go of. Well, I should just make the right decisions. Because you know, I had framed it in this like if I were a better person I could, and understanding that it's literally the way my brain is wired. Just let me let all of that go.
Speaker 3:And then it was like, all right, well, that's not going to work.
Speaker 3:What can I change?
Speaker 3:And it was, you know, it's something I learned in all the research I did for building the JPMorgan Target Date Funds, which was automate, automate, automate, and that just having to make fewer decisions gives you the mental space to make better decisions. So I talk a lot about this in the book in the hopes that other people who might be listening to this or reading my book and feeling some of that shame and fear and sort of beating themselves up for making poor decisions, like when you understand more how you're wired and I go into some, some types of behavior in the book, I think it lets you understand. You know one, some of this is just the way you're you're made in. Like your height, you can't really fight it. I mean you could wear heels, but like you can't, you can't do a lot about it and the other thing you can do is, once you know right how you're made, you can start to come up with coping mechanisms that are going to get you back in in on your path to that journey that you want to be on.
Speaker 2:Well, that's so powerful because I think money shaming is not something we talk about a lot, yeah, or talk about enough.
Speaker 3:Why do we?
Speaker 2:do it. Oh, it's so easy to do, you know. To say, oh, you know, I shouldn't have done that or I should have made this decision. Or I think for people they oftentimes feel like they should know something, and I think that's the thing about money. The financial services community, I think, makes consumers feel like they should know something. And you're stupid if you don't know it.
Speaker 3:I was just going to say.
Speaker 3:I think the financial services industry not on purpose, I will highlight makes people feel stupid.
Speaker 3:And when you feel stupid and scared stupid, and when you feel stupid and scared because you know you're dealing with a really big thing, it puts you in a very bad place to make rational, intelligent decisions, like you're already behind the curve.
Speaker 3:When you start in that mental space, right, and I think a reason the financial services kind of falls into that trap is most people who work in financial services and I put myself in this camp think like money is kind of cool, like and interest rates are cool, and you know we can start talking about all kinds of complex, crazy stuff and it's kind of fun, right, the way some people think baseball scores are fun, like I do not, but I think people who are attracted to financial services and financial management, right, and money management, have brains that geek out on this stuff and so, without even realizing it, you start using concepts and framing and stuff that just leaves audiences in the dust, no matter how careful you try to be about that.
Speaker 3:So you know, that's something I felt very strongly and I could see it happening when we try to talk to our end customers, the individual who's investing in a product that I manage or and I don't want to make a mistake. So it's better not to ask a question and actually it's better just not to do anything, because it would be worse to make a mistake than to do to do nothing, and that is the biggest mistake you can make with your money, I think. But you know, it's easy to see how people end up there.
Speaker 3:Yeah, 100 percent, and I agree with you no-transcript Funds are funds that were originally sort of launched and designed over 25 or 30 years ago now and they're products that you can find. Most people can find them in their 401k plan, them in their 401k plan. You can also buy them from a brokerage house, a bank, and they're what's called a balanced fund that has a mix of both stocks and bonds and sometimes some other stuff like real estate in there, and they're designed to change the level of investment risk that they take. So now I'm saying all kinds of stuff, right, investment risk is basically a concept that will describe how likely it is that your investment will go up and down a lot, right? So equities, right, go up and down a lot. We've certainly seen that in the last couple of years. We're just at record highs now as we chat today. You know, six, nine months ago we were really not anywhere near those record highs. You can make money quickly and you can lose money quickly. Bonds are typically, although not always, lower risk, right, they don't tend to move as quickly or violently as equities do, and so most people who manage money suggest a mix of these two things stocks and bonds to come up with a level of risk that's appropriate for the goal that you have. So when we talk about risk, right, the reason it's important is, if you don't risk your money, you don't make any money. So people think about putting their money in a savings account, right, that typically has very low returns, typically below inflation, so your money is going to be shrinking, but it's really safe, right? You're not going to wake up and find that it's gone down 25%, like sometimes the stock market does.
Speaker 3:Target date funds, right? Assume that you're investing your money in the target date fund, like in your 401k plan for retirement, and so when you're 25 years old, that retirement is 40 plus years away. So you can take a lot of risk. Most people think should be taking less risk. And so as you go from 25 to 35 to 45 to 55, the target date fund that you're invested in and the target date name refers to the date that you think you might retire or close to it.
Speaker 3:So let's say you're 25 and you're going to retire in 2065, kind of mind blowing right? In 2060 or 2055, right? That fund is going to be a lot less aggressively invested than it might be today. So the target date fund automates all of the investment decisions that otherwise you or someone else would have to be making to make sure that your money is going to grow as quickly as it can, but also as safely as it can money is going to grow as quickly as it can, but also as safely as it can, and I think that's wonderful for people to think about.
Speaker 2:is you know there's so much out there about like you know here's how to invest and here's how to do all this thing. But I don't know if you saw this study or I'm sure you saw the study recently that, like what, only seven of stop seven stocks have outperformed S&P 500 over what the last 40 years or something like that Seven funds, not stocks. Oh, seven funds, I'm sorry, seven stocks.
Speaker 3:So active management right, which is what I used to do for a living. So I'm going to get a little. I don't know how much detail we want to go into here, because this is a lot of detail.
Speaker 3:Sort of high level right that people often say that the most efficient market in the world right where most people understand what's going on, there's a lot of transparency into what companies are doing is the US stock market. So it's very hard for any individual fund manager to have an idea about the US stock market and to make money every single year, year in and year out, right, just statistically. As you point out, there are very, very few people who've done it successfully, or firms or teams. Once you get out of US large cap stocks like the S&P actually there are a lot of categories of investments like small companies, international companies, emerging market companies that it actually is a lot easier to consistently beat the market. But one of the reasons why indexing has become so popular right where you don't try to hire someone who's going to do a better job picking individual companies than just the whole market is because, first and foremost, the largest part of anybody's portfolio is typically that S&P 500, whereas we've just said, it's really tough to do the expenses right. What you have to pay someone to do the research and the analytics and the modeling is not cheap, so you're paying higher fees and those higher fees right there eat away some of the return that you might make.
Speaker 3:So I think for most and I say this in my book right, if you're going to be investing your own money for yourself, I think it's very, very appropriate for people to look at investing in index funds and into looking into low cost index funds. A, because it's hard to find someone who consistently outperforms and, b, there's actually a lot of skill involved in trying to find those people who will outperform skill involved in trying to find those people who will outperform. So you're signing up to do something that's pretty difficult for professional investors to do. A lot of people do it I think my team and I did it quite successfully but it's something that requires a lot of time, a lot of resources, a lot of data to do well, and those are things that the average individual doesn't typically have at their disposal.
Speaker 2:Yeah, and I think that's something that people miss is that you're competing against professionals. If you're trying to pick individual stocks and other securities, is that, as you point out, you have a team of professionals. You all went to school to learn how to do this. You all have professional designations. You, you know, eat, sleep and drink this stuff and you know somebody else is, you know, be like playing pickup basketball against. You know an NBA pro.
Speaker 3:You know you might be able to win, but but I think I actually I actually think you'd have an individual. I'm going to say that I think the pickup against the pro team is going to probably have a harder time, but partly because some of this is random right, there's always an element of chance involved in all of this. The problem is you don, even if it's not picking an individual stock, they'll say, well, you know, the market was going down just a little while ago. I think it's a little scary. Now it's just hit a new high. I don't want to buy now. Maybe it'll go down again. There are all these things on the horizon there's wars, there's elections, there's oh, it's too scary, I'll just wait. And they're going to be smart and wait, and that's again.
Speaker 3:One of the biggest mistakes you can make is trying to time that entry point, and that's something, you know, part of my old team used to do. We had like 15 people running quantitative models and looking at macro signals and talking to people and you know we'd get it right two out of three years or something like that, which was, you know, pretty good on average, right, like you do that two out of three times and you make money. But it was a lot of work and a lot of time and a lot of data and a lot of computing power and a lot of meeting time and talking and discussing and debating, and again, your gut feeling right is much more likely to tell you to do the wrong thing than to do the right thing.
Speaker 2:Yeah, and I think that's important is you know again, you know when you start talking about quantitative modeling. That's the other thing. Wall Street has some of the smartest mathematicians in the world who are constructing these models and running these crazy complex algorithms. And you know, and you're just sitting there picking stocks, maybe using a research program that you know it's just hard to compete.
Speaker 3:You know you could learn how to do it and and the wall street professionals are happy if it works six out of 10 times. Like, all you're trying to do is make it work six out of 10 times and that's a good year, right, if six out of the 10 decisions you make are good. So I would say you know, if you really are interested and curious and think this stuff is fun, then by all means take a little bit of your money and do that right. It's a great way to learn. Again, if you're the kind of person that finds this stuff interesting and cool, I don't think there's anything wrong with doing it, but don't do it with all of your money. Take a little bit aside and make that the place that you focus on.
Speaker 3:And I would say, secondly, you've got to be ruthlessly honest with yourself and compare how you did versus the pros. Because if you're not doing that comparison, let's just say you bought a stock and it went up 15% and you're a hero and you feel great, and then you compare it to the market, which went up 20%. You didn't actually do that well, right? So you can't look at your absolute performance. You need to look at it versus what you could have done.
Speaker 3:And I think that's another place where people who try to do this kind of investing for themselves aren't necessarily understanding. You know we call it the opportunity cost, right, the cost that maybe what you did worked, but it could have worked a lot better. You had a different opportunity to make more money somewhere else, so keeping track of that is also really important if you want to try to do this by yourself. So again, I wouldn't say never, never do it. I would just say make sure you put guardrails around it so that you're not risking everything and you let some of your money grow the old fashioned boring way too.
Speaker 2:Yeah.
Speaker 2:And I think that's powerful advice and I know most of the financial planners I've worked with management advisors, you know is that's what they say take a very small portion of the portfolio two to two to five percent, do whatever you want with it, we're going to invest the rest. Yeah, and I think one other thing I want to make sure that we highlight that you mentioned is low cost investing, and that is one of the beautiful things about index funds. I think people oftentimes, you know, are so focused on the return that they overlook the expense side, and the expense side can really make a huge difference, as you point out, in your net return in the long term.
Speaker 3:And if the markets they won't. But let's say hypothetically, if the markets were going to go up 25% every year, you might not care about paying 1% away in fees. But if the markets are going to go up on average 7% a year after inflation, which I think is like a number that I think is a pretty safe one to use Maybe it's a little high, but maybe it's okay that 1% in fees is suddenly like taking an enormous bite of your returns away. So some of this is a little bit dependent on how much you think the markets will go up. And then just think how painful it would be if the markets went down 10% and then actually you're down 11% because of those fees.
Speaker 3:So I think keeping an eye on those fees makes sense. I don't agree that the cheapest thing is always the best thing. I do think that there's some firms and some kinds of financial services products that may be low cost but have other risks inside of them or have poor customer service interfaces right, or maybe there's no human being you can talk to if you want to ask a question. So it's not only about the money and the fees, but that's got to be a huge part of how you think about your decisions.
Speaker 2:Yeah, I think you know. I want to make sure we get to our other questions, but I think what you said there is so important is that there are other factors. It's just like you know, buying the cheapest item, let's say, at the grocery store, it's not necessarily going to be the highest quality. You do oftentimes get what you pay for, and so it's the education. But as you talk about the guardrails and thinking about your overall strategy and all these other components and being able to balance them, you know, but, as you point out, that's why something like a target date fund is helpful, because it takes out so many of those decisions for you. It's like I know, like a lot of CEOs, you know, like I think that's what I heard Steve Jobs why he wore the same thing every day is so he didn't have to decide what he was going to wear that morning.
Speaker 3:I am a huge, huge, huge believer in eliminating as many decisions as you can so that you simplify the amount of sort of drag on your brain and your emotions your brain and your emotions. And that's one reason I think why automating investing with something like a target date fund or a balanced fund is so powerful. Or a robo advisor or a human advisor right. But if you're making yourself not have to keep making decisions that maybe you don't feel good about making anyway, right, that's good.
Speaker 3:The act of saving itself, I think, should be automated so that you don't put yourself in the position of having to say I really want this thing right now, but I know I should Like. The should word is a bad word in this context. Like should is tough, because once you start saying should, you've already kind of decided not to do it, right. So you know, don't put yourself in that position. And if you automate more of this, it makes it easier right to put yourself in that place where you have to make a decision that's going to cause you pain, not spending money on something you want.
Speaker 2:Yeah, well, and I think you know, just to elaborate on what you're talking about, is you know, with that, automating, saving is your savings is then coming before you're doing your discretionary spending. And I think that is such an important concept for people to think about, because so many people save money after they've spent their money. You know whatever's left over at the end of the month is what goes into their additional savings, instead of, like you pointed out, is to save that money first before you go out and you know, spend whatever you want to spend.
Speaker 3:So you know, I was never taught that right, that conversation, or if it was a conversation I had with my parents, I never heard it right, which maybe I don't think that's true, maybe it is, but it was like you pay yourself first. Right Is such great advice Pay yourself first right is such great advice, and if you do that, then those decisions, those choices you have to make, are less difficult.
Speaker 2:Yeah, that's powerful advice. So let's get into the get ready questions. What is one simple thing you can do each year to set yourself up for financial success?
Speaker 3:I think, really, as you say, thinking about long-term goal. And then, what are you trying to accomplish this year? Maybe, like New Year's Day is not the time to do this right. You might not be feeling great about choices you just made, but certainly I think either December or January is a great month to think about taking stock of things.
Speaker 3:It's often when people get raises or bonuses at work. Around that time, I think, if you are lucky enough to get a raise, one thing you can do to commit to yourself, to set yourself up for success is to save half of that raise. And if you do that right, you find yourself increasing the amount that you're saving without really noticing it so much, because you actually do have a little more money in your checking account every month when you get paid. So I think that's one thing you can do to set yourself up for success is absolutely, you know, think about that long-term goal and then commit to saying any increase in income, any windfall that I get, any tax refund that I get, I'm going to save half of it and that will automatically put you in a better place.
Speaker 2:Yeah, that's awesome, and that also applies to bonuses, which usually come, you know, early in the year. So, anne, what is one habit that people can change when it comes to their money?
Speaker 3:I think saying yes too quickly, right. When somebody says do you want to do something? Right, you always feel pressure to say yes or no quickly. Right, I need to. You know. Do you want to go out for drinks tonight? Sure, let me look at my calendar. Of course I want to go. Do you want to? If you're shopping, right. Do you want to say yes to something? Right? I'll modify that a little bit and say having a list, right.
Speaker 3:Getting into the habit of making a list, whether it's how you're socializing with friends, I'm only going to go out once a week If I want to see friends, that's great, but I'm only going to go pay money with that once a week. We got to figure out how we're going to do it. I'm not going to go into a store without a list. Like you, may not always stick to the list, but having a list really decreases the odds that you're going to find yourself spending money that you didn't intend to spend. So I think list making is really underrated. I think that's true around the holidays, particularly when you can find yourself getting lured into spending all kinds of money. Holidays, particularly when you can find yourself getting worded to spending all kinds of money. That is something I practice for myself rigorously when I'm even grocery shopping, but also when I'm clothes shopping or shoe shopping. Like I have a list, I know what I need.
Speaker 2:I'm going to stick to that list and I think that gets back to your whole message about guardrails. That creates guardrails for you when you're shopping, thinking about your money. And also that gets back to what you were talking about decision fatigue is because you have a list, you're eliminating some of those decisions and, like you talk about about socializing with friends, there's nothing wrong with going out to have drinks with your friends, but if you're doing it every night and spending a lot of money, then maybe that's not good for both your social and financial health, right? Yep, absolutely. So what money myth are you trying to break?
Speaker 3:I hear so much from people, especially in their twenties, but also in their thirties, that savings. It doesn't make sense for me to save because it won't matter, like it won't matter because. And then the becauses are all a little different. Right, because houses are so expensive, I'll never afford one. Because inflation is so high. It doesn't matter why am I saving it? Because this is when my son said the world will be on fire in 30 years. So it won't matter if I haven't saved, because, right, and I think, especially when you're young, you haven't had yet the visceral lived experience of seeing compound returns work, right, and so it's hard to have faith in that when you haven't seen it in action with your own money and you know what it's kind of painful and boring to wait for it to really take off for 10 years, like that's really kind of boring and painful.
Speaker 3:But the one good thing that might be true about the higher inflation environment that we have today is that they're also high yield savings accounts now and you can see that money compounding there in almost real time. Right, if you're getting 5% compounded monthly, like you're gonna see more money building up in that account like month in and month out. So I think that that myth of it's not going to work for me because the world is different, like stuff is different. Some things are harder, and I think social media has a lot to blame for this. I think the speed of information makes it harder and noisier for us to stick to our goals. Those are both true, and yet I don't think compound interest doesn't work anymore. So I just I wish people would not tell themselves that story, because it is a myth.
Speaker 2:That's awesome, and I don't know what percentage, but it's a pretty high percentage of my guests who talk about compound interest, and so people who've watched or listened to this podcast, you've definitely heard compound interest before, so there's something there to think about the value of compound interest. So, ann, let's get out the time machine. Is what advice would you give your younger self if you could go back in time, knowing what you know now about money?
Speaker 3:That it's OK to say no To other people. It's okay to say no to myself for things that I want and I am strong enough to live with the temporary discomfort that comes with saying no, right, I love that.
Speaker 3:That's what I wish. If I'd known one thing then that I know now, it's that, like, actually, that's okay, you'll be fine tomorrow. My grandmother once said something to me when I was stressing out about something I was already in my 20s, I think and she said, ann, do you think that'll matter a hill of beans in 30 years? And I was like, I don't think it'll matter a hill of beans tomorrow. What am I doing, right? So, but but just that like reality check, right? I wish I'd really understood that.
Speaker 2:Yeah, and I think that applies to so many areas of our financial life. But I think that that's what you know. It crosses over into what you were talking about earlier with behavioral economics and your mindset and all those things for people to think about. That you know that it's more than just that financial decision. It's. You know there's a lot that goes into it and, to not be ashamed to bring up what you were talking about earlier, you know to say no. There's no shame in saying I don't want that investment or I don't want that financial service or product. I think people need to be strong in saying that.
Speaker 3:I will add to that and I write about this If you feel like you're going to be stupid, if you ask a question in my book, that is a sign to run from whatever you're thinking about doing, because if the person you're going to be stupid, if you ask a question in my book, that is a. That is a sign to run from whatever you're thinking about doing, because if the person you're talking to makes you feel stupid or ashamed or pressured, you don't want to be working with them. So whether you're buying a car, whether you're buying an appliance, I have a stove. I regret buying a fancy one and I wish the sales guy like totally did a sales job on me and I was like I feel too stupid to ask to see the customer reviews. I'll just buy the stove because it's in all the magazines. Terrible decision. If you don't feel comfortable asking any question, right, you really need to stop and pause and not do it asking any question, right, you really need to stop and pause and not do it.
Speaker 2:Yeah, and I think that's so important. I encourage people to ask questions. I've had some experience with litigation, consulting and best practices, and that's usually. Something I've seen quite often is that people didn't want to ask questions or they felt like they couldn't or they were rushed or isolated, that those are, all you know, red flags for potential financial fraud and abuse. So that's wonderful advice for people. If you get that feeling, and maybe that's somewhere where I think you can trust your gut a little bit.
Speaker 3:Oh, I absolutely believe you. Yes, that is a good place to trust your gut. If it says you're not ready to make a decision, listen to your gut. That is a good place to trust your gut. If it says you're not ready to make a decision, listen to your gut. Something else I would add. Actually, it just went flying right out of my head. Never mind, I'll stop there, sorry.
Speaker 2:So, anne, what is your number one?
Speaker 3:tip on changing the way we think about money. Oh, I think I already shared it, which is I don't know about thinking the way we think about money. Like, my number one tip is promise yourself you'll save more tomorrow, because it's not painful to give away what you don't have right now and if you get more money you can commit to doing it and then it's easier to do. So that's like the easiest way. If you need to save more money, try to do it today. That's good, but if that feels too hard, then do it tomorrow and then follow through. So that's, that's a little easier.
Speaker 3:I think I don't know if that's actually answering your question how we think about money. I mean, to me money is not a symbol or a proxy for our success. It is just a means to do fun stuff. Like money is there to use. It does not reflect anything about us, right, and you know we are the choices we make, the people we spend time with, the way we improve the world, the way we invest in the future for our friends and our children and our families, right, we are not like the shiny car future for our friends and our children and our families, right, we are not like the shiny car, and I wish it was easier to resist the lure of all the stuff we see out there by marketing that wants to convince us that in fact we are the shiny car.
Speaker 2:You're not the shiny car. That's awesome, and I think you said well multiple things there that you know it's well worth it for people to think about. But you know, go ahead. You know, save today if you can save more tomorrow Doesn't matter what you did in the past, it's what you do going forward. And then money is a tool, and you know we ascribe all these other things to it, but that it really is a tool to meet our goals, you know, which brings us full circle to what you talked about at the very beginning it's about meeting your goals, living out your vision. So, anne, to wrap up, where can people learn more about you and, most importantly, where can they pick up a copy of your Best Financial Life?
Speaker 3:Well, my book, your Best Financial Life is on sale everywhere books are sold, so you can buy it online. You can buy it from you know your local bookstore, and they can find more about me on my website, which is annelestercom A-N-N-E-L-E-S-T-E-Rcom, and I'm on all the social media Save Smart W-N, Save Smart with N, and I'd love to hear from people. So shoot me an email, drop me a DM on Instagram or TikTok or something, and it'd be great to hear what's on your mind too.
Speaker 2:That's wonderful and for everybody watching and listening. As always, there will be links to Anne's website, to her book, you know, on Amazon and bookshoporg in the show notes so you can check out those links and to get in touch with Anne and Anne. Thank you so much for joining us today on the Get Writing Money podcast.
Speaker 3:Well, thank you so much. It's been a really really fun conversation, tony, and I've really enjoyed it. Yeah, I have as well.
Speaker 2:You know so many great points. I hope you know everybody watching or listening picked up something today. Remember. If you picked up something today, please subscribe to the podcast or share the podcast with somebody else. And, as always, thanks for tuning in to this episode of the Get Ready Money podcast. Until next time you.
