Maybe I Can with Debbie Weiss

Ep. 114: The Psychology of Money

• Debbie Weiss

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In this episode, we dive into the insights from Morgan Housel’s The Psychology of Money, uncovering how our behaviors and emotions shape financial success far more than mathematical formulas. We explore the importance of long-term thinking, the true meaning of wealth as freedom, and how to align money with personal happiness. By redefining our relationship with money, we can make thoughtful choices that lead to greater financial peace and fulfillment. Listeners are invited to reflect on their money habits and take steps toward a more intentional financial life.

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Speaker 1:

The shift is about to get real. Rediscover the power within and transform your life. Tune in to Shift Happens. Discover the Leader Within with Leah Rowling and Keri Kenzie every Friday at 11 am, central on Transformation Talk Radio. Each episode offers insights, inspiration and actionable strategies to help you reconnect with your inner leader. Hello and welcome to Maybe I Can exploring possibilities one sprinkle at a time. If you've ever found yourself asking is this all there is to life, then you're in the right place. I'm Debbie author, speaker, entrepreneur and coach, and every Tuesday, I'm here to share a sprinkle of hope and inspiration. Together, we'll uncover the more More joy, more fulfillment, more prosperity, more fun. We'll share stories of transformation, actionable tips and that little nudge you need to take the next step. So let's embark on this journey of discovery and say maybe I can to a life filled with more. Ready to find out, let's get started. The Maybe I Can Show starts now. Hi, everyone, and welcome to the Maybe I Can Podcast. I'm your host, debbie Weiss, and thank you so much for joining me today.

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Today, I want to ask you a question. When I say the word money, what happens to you? Because I know when I hear that word money, my insides clench, everything tightens up, because, to me, money equals stress. I don't want money to equal stress. What does it mean to you? Does it make you feel secure? Do you equate money with freedom? Are you like me? Is it stressful? Do you find the whole topic of money stressful? That money is so much more than the knowledge of how to invest and having the right job to earn the right amount all the things that I feel that we were taught, and so I've been kind of going through my own therapeutic journey over money the last several years, and today I want to do something that I haven't done before.

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I thought I'd share with you a book that I've read that really impacted me. I have no affiliation to this book. I don't know the author, I don't have nothing. I just thought, hmm, this impacted me and so I thought maybe it would have the same impact on you. So the name of the book and it's actually I meant to look before I came on the air. It's not a recent book, it's called the Psychology of Money by Morgan Housel, and let's see, oh, it was first published in 2020. So I guess it really isn't as old as I thought it was. Here it is, with my little stickies for anyone who's on YouTube and the psychology of money. The author really talks about that.

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Financial success is not about intelligence. It's not about knowing what's right, what's wrong, what's the best investment, all the things. It's really about your behavior around money and I've talked about it before. But I have so much shame around money because my background is that for 10 years I was a practicing CPA and for the last 30 years I've been an insurance agent and I've had different investment licenses and whatnot and so I know stuff. Let's just say that on paper. Let's just say that on paper I would get 100 percent On what you should do and and being risk averse and timelines and and all of that. But behind the scenes, with my own personal life, no, I wish I could say the same, but it's not so.

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And when I actually went to write my memoir, I wasn't going to talk about my money issues because I was ashamed, I was embarrassed and I didn't want anyone to know. My closest, closest friends and family had no idea. Closest friends and family had no idea. It literally is amazing that I'm alive because the stress that I carried around money was unbearable and it almost didn't make it into the first draft, and then I thought to myself I'm all about transparency and what you see, what you hear. This is really me, whether I like to share it or not, because that's the way that you have an impact on someone else is sharing something that's relatable.

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If someone goes out there on social media or a podcast or wherever, wherever in the public, and they appear to have it all together, it just makes you feel worse about yourself and there's nothing that you can relate to in hearing their story. And so what's the point? What's the point of being inauthentic? And so what's the point? What's the point of being inauthentic? Nothing made me feel better than me listening to another podcast host to share their truths, even if they were ugly. The uglier they were, the happier I was, because at least I knew it wasn't just me, I wasn't alone, and so that's why, eventually, I did put in the book my chapter on money and my money dark, deep, dark secrets. And so, ever since I've been evolving, I like to read different perspectives, and this one was interesting, all right, so I'm going to just kind of flip around and talk about for me what were the highlights of this book.

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One of the first things that he talks about is that, you know, money is more about behavior, is that money is more about behavior? And what we don't realize is that our views on money really can vary greatly on the period of time that we grew up in. Right, people who lived through the depression had a much different association with money than someone who grew up in the tech boom era. Money is also tied to emotions, and so he talks about the emotion of fear can lead to either excess saving or avoiding investing because you're so scared about losing your money. What about greed? I mean, I hate to think that mine has to do with greed, but I guess it did. It causes impulsive spending or risky investments. For me it was the first, I think. Not necessarily impulsive spending. Well, maybe just sticking my head in the sand, it would be a better terminology.

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Insecurity. Insecurity makes people chase financial milestones for validation. Right, it's when I drive that car. My father always wanted to be driving a Cadillac because back then, the Cadillac that was your status symbol. You made it and if people saw you driving that car, they knew that you had done it Overconfidence. A lot of times you think, oh, I can never fail, right, someone who maybe hit the lottery, I don't know, and they thought, oh, this is easy. And then they make reckless decisions because they don't realize that easy come, easy go.

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All right, Let me turn to my first little snippet here. And Housel talks about the difference actually between lottery winners and we've heard about it all the money they think they'll have an endless supply because it seems like so much and they spend excessively and they just don't have an understanding of what to do. And then, on the other hand, there are some quiet investors like Warren Buffett. Warren Buffett who grew their wealth over time through discipline, patience and the ability to avoid impulsive decisions. So let me read you a little excerpt from this chapter that's called Confounding Compounding. More than 2,000 books are dedicated to how Warren Buffett built his fortune. Many of them are wonderful, but few pay enough attention to the simplest fact Buffett's fortune isn't due to just being a good investor, but being a good investor since he was literally a child.

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As I write this, warren Buffett's net worth is $84.5 billion. Of that, $84.2 billion was accumulated after his 50th birthday. $81.5 billion came after he qualified for Social Security in his mid-60s. Warren Buffett is a phenomenal investor, but you miss a key point if you attach all of his success to his investing acumen. The real key to his success is that he'd been a phenomenal investor for three quarters of a century. Had he started investing in his 30s and retired in his 60s, few people would have ever heard of him.

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Consider a little thought experiment Buffett began seriously investing when he was 10 years old, but the time he was 30, he had a net worth of $1 million, or $9.3 million adjusted for inflation. What if he was a more normal person, spending his teens and 20s exploring the world and finding his passion? And by age 30, his net worth was, say, $25,000. And let's say he still went on to earn extraordinary annual investment returns. He's been able to generate about 22% annually, but quit investing and retired at 60 to play golf and spend time with his grandkids. What would his rough a rough estimate of his net worth be today? Not 84.5 billion, but 11.9 million, not that I wouldn't take it as an aside. His skill is investing, but his secret is time. Investing but his secret is time. That's how compounding works.

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Now I've got to tell you. When I first read that I thought oh crap, I'm 61. I don't have the luxury of time and I'll get to that a little later. But what I did realize is that, hey, I've got these kids and of course my parents said the same thing. Don't make the same mistake that I did. But I think in this case, instead of saying it, I am going to make this book required reading somehow for my children. I don't know how to make required reading. I've tried. They're not great readers If I have to sit them down in front of me and read this book, or, better yet, just show them the math on paper, just so they understand.

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Funny thing is, I have one son who takes it too far, to the extreme. He won't spend a dime or he spends money, but he gets very anxious over spending money and he won't spend anything that he feels is frivolous, which is probably a good thing. And I have the other son who, if I thought that I spend it a little excessively, oh my goodness, he makes me seem like a penny pincher. So it's so interesting how the two. I feel like my older son, just you know I don't know if he got that from Gary and I, my husband and I so much as to he just likes excess, excess of everything. And then I wonder where did my younger son get it from? Did he watch me struggle? Did he know I was struggling? Because, I hate to tell you, he didn't read my book, so he never read that chapter and I really was not honest with him because I was embarrassed. I don't know where he got it from. I know he always tells me that the mistake I made as a parent was being too easy on him and giving him too much of what he didn't need. So he is wiser than his years.

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All right, moving on this gosh, this one really resonated with me. The name of the chapter is called Wealth is what you Don't See, and the little tagline, spending money to show people how much money you have is the fastest way to have less money. And there is a line in here. The truth is that wealth is what you don't see. Wealth is the nice cars not purchased, the diamonds not bought, the watches not worn, the clothes foregone and the first class upgrade declined. Wealth is financial assets that haven't yet been converted into the stuff you see. But that's not how we think about wealth, because you can't contextualize what you can't see. Singer Rihanna nearly went bankrupt after overspending and sued her financial advisor. The advisor responded was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money? You can laugh, and please do, but the answer is yes.

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People do need to be told that what most people say they want to be. When most people say they want to be a millionaire, what they might actually mean is I'd like to spend a million dollars, and that is literally the opposite of being a millionaire Investor. Bill Maughan once wrote there is no faster way to feel rich than to spend lots of money on really nice things. Feel rich than to spend lots of money on really nice things, but the way to be rich is to spend money you have and to not spend money you don't have. It's really that simple. It's excellent advice, but it may not go far enough. The only way to be wealthy is to not spend the money that you do have. It's not just the only way to accumulate wealth, it's the very definition of wealth.

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We should be careful to define the difference between wealthy and rich. It is more than semantics. Not knowing the difference is a source of countless poor money decisions. Rich is a current income. Someone driving a $100,000 car is almost certainly rich, because even if they purchase the car with debt, you need a certain level of income to afford the monthly payment. Same with those who live in big homes. It's not hard to spot rich people. They often go out of their way to make themselves known. But wealth is hidden. It's income not spent. Wealth is an option not yet taken to buy something later. Its value lies in offering you options, flexibility and growth to one day purchase more stuff than you could right now. And let me just. I have to continue because this really resonated with me.

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Diet and exercise offer a useful analogy. Losing weight is notoriously hard, even among those putting in the work of vigorous exercise. In his book the Body, bill Bryson explains why. One study in America found that people overestimate the number of calories they burned in a workout by a factor of four. They also then consumed on average about twice as many calories as they had just burnt off. The fact is, you can quickly undo a lot of exercise by eating a lot of food, and most of us do. Exercise is like being rich. You think I did the work and I now deserve to treat myself to a big meal. Wealth is turning down that treat meal and actually burning net calories. It's hard and it requires self-control, but it creates a gap between what you could do and what you choose to do. That accrues to you over time. The problem for many of us is that it is easy to find rich role models. The problem for many of us is that it is easy to find rich role models. It's harder to find wealthy ones because, by definition, their success is more hidden.

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When I read that, it reminded me of when my husband and I first bought our house that I'm living in. It's been almost 26 years since we've lived here and it was at a time where we all of a sudden had a huge bump in our income I would say two to two and a half times our income. And so when we start looking at houses, I was looking at more expensive houses than he was, and he fought me on it and I said to him come on, even though it might be a little difficult for us now to afford this, we're just starting. It's only going to go up from here, Our income is only going to go up from here. And he finally gave in to me.

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And wouldn't you know? I don't even know if we were living here yet we were probably living here about a year, maybe two, and something completely unexpected could never have predicted happened to us in our industry and all of a sudden, our income declined 30%, 30%, and that was well, like I said, 26 years ago. So let's say it's 25 years ago, 25 years ago. Just now I'm getting close to what we were making at that time, 25 years later, and now I understand. You think I thought what could happen. Now we've got this under control, but it just goes to show that something is always going to happen, because that's life.

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It might not have been something like that, it could have been anything, but if I had listened to him and not thought, oh, this is how much money we're making, let me spend below, let me get a smaller house, maybe in not the exact neighborhood, dream neighborhood that I wanted, not a brand new house, not so many different things. Now, like I said, I've been living here all these years and I so many times have wanted to sell my house not really wanted to sell my house, but knowing that I should sell my house, that I should take the bullet, bite the bullet and downsize. I knew financially that's what we needed to do so many different times over the last 25 years, but I could never do it, and it wasn't for show, at least I don't think it was. Maybe actually, maybe partially, it was because I was so embarrassed and felt such shame in the fact that, you know, maybe this wasn't the best use of our finances. And I also think, when I'm reading this, I guess this makes sense because Gary's parents were older than mine.

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I think they were probably children in the depression. They were raised differently than my parents were, when it was probably a little bit post-war. You know World would say low to middle of the road wage, but yet I can't speak for them. But they did it right. From what I see and saw, they did it right. They stayed in their smaller home. They saved their money, they were able to spend it on things. It's not like I remember. You know, my mother-in-law had lovely jewelry that my father-in-law had purchased over the years. They would vacation and they eventually retired to Las Vegas, which is where they wanted to go, and even there they had it right down to the penny, like they like to go to their little casinos, and they didn't gamble a lot because they had control. And I can't guarantee it, but their life, I think with money. They didn't view it as stress because they didn't live above their means. They actually lived below their means.

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Time is running out, so you know what I'm going to do. I knew this was going to happen to me. You know, when you plan for a podcast, you think, oh, I've got all this time. Instead, let me highlight, I'm going to go back to the back of the book where he has some little tidbits. All right, skipping that. Manage your money in a way that helps you sleep at night. Gosh, isn't that great, because for each of us it's something different, right? Some people won't sleep well unless they earn the highest returns. Others will only get a good night's rest if they're conservatively invested To each your own be spending. How am I making these decisions, the decisions I make with my money today? Is that going to allow me to sleep tonight? That is a great, great way to think about it. Before you make a purchase, a purchase of any kind, use money to gain control over your time.

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The older I get, I realize money does mean freedom. What do most of us want out of life? Is it the fancy stuff? I don't know. I never wanted the fancy stuff. For the most part, it is the freedom to do what I want. I want the freedom to do what I want with my time in my days, especially now as I get older. I would be happy, very happy, in a smaller house. I don't have fancy cars, I don't have fancy clothes. I yeah, I realized I spend money, especially with Amazon boy, right, I mean, realized I spend money, especially with Amazon boy, right, I mean, oh, it's so easy. You see the ad, click, boom, it's yours the next day. Really, now trying to make a conscious, conscious effort, and you know, let me skip to that. After reading the book and compounding and I really had to really focus on not making this book make me feel even worse about myself and in the end, what I took away from it is yes, I can teach my kids, but I can also teach them now by example, because even at 61, my life's not over I still am making decisions with my money every single day.

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And as I was preparing for this episode, and I was gonna say to you take a look, take a look in your subscriptions, in your apps and what we each pay money for, and that's only 9.99 and this is 2.99, and all the things I was thinking to myself. Well, I kind of did that and then I thought you know what? I just looked and I pay for Apple TV and I gotta tell you I never watch it. I always say, oh, I gotta go back and watch the morning show. I watched the first season. I never watched it. So okay, guess what? If I decide that I'm gonna watch it, then I can purchase the app at that point. In the meantime, I've just been giving them my 10 bucks, month after month after month.

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I don't know how many years has the show been out. Two years, that's $220. What else have I done that with? Where else? Can I just be more mindful? I know now that I want to spend my money on experiences, not things. I'm done with the things. I want to drive my car until it doesn't make sense anymore anymore and I want to take my money and have it to use to travel, to spend time with my friends and family and to have that freedom. Have that freedom.

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So, as I get to a quick close here, I want to ask you can you identify one financial habit today that you can change? Just one thing Maybe it could be starting to set aside I don't know $5 more a day. The other thing I want you to think about stop comparing your lifestyle to others, because think about the difference between rich and wealthy. You're seeing these people on social media. You're seeing people in your neighborhood, wherever all around, and you're kind of judging them by what they wear, where they vacation, what they're driving. One who cares that's them, not you, but it means nothing. They might be rich, but you don't know if they're wealthy. Please, how do you personally define your wealth and what can you do to change it? From today forward? Let me know, because I would love to hear your suggestions, but as soon as I sign off sorry, apple TV, your history.

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If this episode inspired you, please share it with someone else who needs to hear it. And, as always, remember, maybe you can See you next time. Thanks for spending part of your day with me here on. Maybe I Can exploring possibilities one sprinkle at a time. It's been great having you and I hope you're leaving with a spark to light up your journey to more. Remember, every big change starts with a single maybe. If you're ready to kickstart that change but not sure where to begin, I've got just the thing for you. Head over to download my free guide, the One Critical Step to Kickstart Change and take that all-important first step. Let's make those maybes into reality, one sprinkle at a time. Catch you next Tuesday at 4 pm Eastern, 1 pm Pacific, with more stories, tips and that extra push you might need. I'm Debbie saying goodbye for now, but always remember maybe, just maybe, you can.

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Debbie Weiss

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