A hearty welcome to “Grandma’s Wealth Wisdom” with your neighborly hosts, Brandon and Amanda Neely. This is the only podcast that helps you take charge of your cash flow and leverage your assets, simply and sustainably, the way Grandma used to.
Brandon: Hey, I’m Brandon, and welcome to our Grandma's Wealth Wisdom, where we help you break through to a smart, stable financial future, with the tried and true wisdom Grandma used.
Amanda: Hey, I'm Amanda, and this is Episode 78, titled, “How to never be poor.” Today we're going to break down the top three things that you wish every person could know to ensure they never experience poverty.
Brandon: Now, we can't promise any of these things are going to make you rich, but they are our best ideas for never being poor. Now, that's a big distinction there. [00:59.7]
Amanda: Yeah, and, Brandon, then tell us, why should we even think about how to never be poor? Why is this an important topic?
Brandon: I think it's an important topic to us and why we got into this whole industry is because we both experienced poverty before. You had a family that was on assistance, right? And then, my mom was a single parent, so it was really hard growing up in those places and we wish that no one ever would have to experience poverty, in general, but those kinds of things, I'm like, I could or we could change that. If we are able to, we want to be able to be a force of change, so that's why we care about this.
Amanda: Yeah, and I would just add, there are two extremes that are particularly concerning to us in 2021 and what trends we see happening. One trend is the poverty amongst seniors in retirement. Especially with those who are single and living alone or living with non-relatives, the official poverty rates have been increasing, if you just look at census data and people that analyze it, especially concerning there. [02:16.5]
Brandon: And I think it's going to just keep increasing, too.
Amanda: Right, and it's not just because there are a lot more people in retirement. There's something happening, particularly with single individuals who are living alone or with non-relatives.
Then, secondly, we're also concerned about poverty among younger people, whether it's being unable to find a living-wage job, a job that will pay a living wage, or being strapped with huge student loans, so a huge portion of your paycheck is gone before you even get it kind of. Some younger people have a hard time to build assets for themselves for their medium and long-term needs. They actually go into further debt because they don't have money when something comes up, all those kinds of things, and that in particular is pretty concerning to us for now, but also for the future. [03:06.8]
Brandon: And I think a big thing we want to talk about is the definition of poverty or what is poverty. It's not just somebody hanging on the street in downtown, but poverty has all kinds of forms.
Amanda: Yeah, of course, the first thing that comes to mind is the official poverty line that is all about income and your family size, and you either fall below it or above it and it's a pretty distinct line, but also we like to think of poverty as more than just that. It's more than just the amount of your income based on your family size. We kind of came up with these pet nicknames for different kinds of poverty to help illustrate how poverty can come in lots of different shapes and sizes.
Brandon: Pet nicknames, really?
Amanda: They're kind of nicknames for different kinds of poverty, yeah. You might know the poverty because, yeah, sure, you have a higher income, but you also live in a place with a high cost of living. The nickname for this kind of poverty is “the rent is too high” poverty. [04:07.0]
Brandon: I think that was actually a slogan for somebody's campaign for running for office, I believe.
Amanda: That's how it came up with it, for sure. The next one is poverty because 30% or more of your income is going to pay off debt other than a mortgage. I call this “the working for the banks” poverty.
Brandon: Right, yeah, you're working free labor for them.
Amanda: Yeah. Poverty because you depended too much on aid programs or the stock market growing and don't have enough income in your retirement years, “retirement poverty” for that one, not a fun nickname.
But this one might sound familiar. Lots of people talk about this. Poverty because you have all you need, but you don't have the knowledge and discipline or maybe the courage to make it work for you is kind of a poverty mindset.
Brandon: I think we all face that at some level, oftentimes.
Amanda: And then there's poverty because of something like a job loss or a medical emergency or a natural disaster, a temporary poverty that is the experience for a short amount of time, but hopefully it can be recovered from pretty easily. [05:13.0]
Brandon: And I have family from the South, so they've experienced it a few times when there are hurricanes.
Amanda: Then there's poverty because the jobs available to you are too low, but you have to keep working instead of doing some kind of job training program and this is kind of a training poverty. There's no ability to advance, so you're kind of stuck where you are.
Poverty because of systemic injustice of all sorts, this is where there needs to be some development in our world with our laws, with the systems in place, those kinds of things. I call this developmental poverty.
And we could go on and on with different kinds of poverty.
Brandon: The important thing is that all poverty is not created equal. There are different types for different people in the same circumstances even. One might be poor and the other not because of the circumstances that happened to that person. [06:10.7]
We invite you to define for yourself. What is the poverty that you want to avoid for the rest of your life? You have control on this. You can do something about that. That could be your journaling prompt for today. As you're thinking through that, what is some kind of poverty that you want to avoid?
Amanda: Yeah, and let me just jump in there for a second. That might even be a step to how to never be poor. It’s to look at that poverty in the face, define exactly what poverty to you is and know it. That could be a journaling exercise or whatever. What types of poverty do you never want to experience for the rest of your life?
As much as we like to think positively and manifest something and do that kind of thing, we think it's at least helpful to also look at the flip side, too, and hopefully as we go through the discussion, you'll kind of see some benefits as you do that. [07:11.8]
Brandon: Yeah, so whatever your unique definition of being poor is. Let's dig into the three ways that we believe could help you to never be poor, so listen to the end for how these might help you create wealth as well. Not just staying in a I'm barely breaking even and I'm not poor, but how do we then go from the stability side to building wealth?
Amanda: Yeah.
Brandon: This is Grandma's wealth wisdom.
Amanda: We promise we'll get to that, so be sure to listen all the way to the end.
Okay, so No. 1 today is to live by these words. If you want to never be poor or be poor again, these I think are important words that we live by that give us a huge sense of certainty as we look toward our future. Here are the words: “A portion of all I earn is mine to keep.” For every dollar that goes through your hands, a portion is yours to set aside and keep safe for yourself. [08:15.3]
Brandon: And I think the keywords are “it's yours” and “keep safe”, right?
Amanda: Yep.
Brandon: This is also commonly referred to as “pay yourself first.” It's something that we like to think about oftentimes, right? It's also common for people to pay themselves first and then spend it regularly when, quote, “something comes up.” We're not saying that, but pay yourself and don't just spend it.
Amanda: Yeah, this is why we like to use the phrase, “A portion of all I earn is mine to keep.” The emphasis is on the keep. Too many people pay themselves first and then end up spending it, a month, two months, six months later, when, quote, “something comes up” because something always comes up. [09:05.3]
But when you're trying to live by “a portion of all I earn is mine to keep,” then only in a truly emergency situation are you able to tap into a portion that's there for you to keep, right? Sure, you might need to use some of what you're setting aside for major expenses, a home or car repair or whatever. You might even use most of your nest egg as retirement comes eventually, but still even in retirement, a portion is kept aside and there for you for your entire life. You never actually spend it except in a real true emergency situation.
Brandon: Now I can hear some of our listeners saying right now, But how can I set aside a portion of all I earn? I don't have anything leftover at the end of the month. That's the whole a month is too long or something like that. [10:01.5]
Amanda: And the paycheck is too short or whatever. Yeah, and if you've been a regular listener to the podcast, can you guess what we're going to say now?
Brandon: I know I could guess it. Start with 1%. If you're currently living on $1,000 per month, you're not likely to miss $10. If you're currently living on 3,000 per month, you're not likely to miss $30. Start with 1%. Set it aside immediately when you receive it. Then increased by 1% at regular intervals quarterly. Again, it's not putting it into the market. It's into savings and something that you can control and keep.
Amanda: Yeah, because the market doesn't guarantee that you can keep any of it and there could be fees that will guarantee that you don't keep a portion of it. Right? And this is a portion of all you earn is yours to keep. [11:00.8]
Okay, now for No. 2 and this is all about making a plan for mitigating risk.
Brandon: Oh, no, mitigating risks. That's what people hate to talk about.
Amanda: I know.
Brandon: But it’s important.
Amanda: And I'm totally going to warn everyone. I'm going to go on a quick rant here because what we're going to talk about in this segment is probably not what you expect us to talk about, but it's super important to me. I share this not to cause undue anxiety or fear. I share this because I believe a lot of us have these kinds of thoughts and feelings currently or we've had them at one point, and I want you to know you’re not alone. There's also no judgment here because this was a big mindset shift for me, too, and wherever youre at in the story I'm going to tell, I've been there, all right? I want you to know there's no judgment.
Let's say, you pass a homeless person on the side of the street or the side of the road, and a lot of us immediately think they're homeless because they're lazy or addicted to drugs or something. They just need to pull themselves up by their bootstraps or get into rehab or whatever and just fix it. We think there's something wrong with them, when, in fact, their stories could be totally different. [12:13.3]
Let me tell you Sam’s story. Let's pretend you just passed Sam on the street. A few years ago, Sam was the victim of a hit and run. He didn't have any medical insurance, so he mounted up huge medical bills. Both the physical and financial effects of the incident caused a downward spiral of worry and fear and unhealthy eating, and the spiral got so out of control that Sam couldn't focus at work and he lost his job. Unable to pay us bills, Sam was evicted from his apartment. With no one to go to, Sam was out on the streets, trying to figure out what to do. He's confused and he doesn't know who to trust, all because of a hit and run accident.
Now, I don't know this for sure, but I wonder sometimes if many, if not, most of those experiencing homelessness are like Sam. They didn't just set out one day to be homeless. There was a slow spiral, perhaps caused by one major happenstance that could occur to any one of us. [13:13.4]
I mean, Sam could have been debt-free. Sam could have been setting aside 3% and getting a 3% match from his employer into his 401(k). Sam could have been doing everything, quote-unquote, “right” that the financial guru is trying to tell us to do, but then the medical bills, the emotional trauma or the emotional impact of that trauma, things that could happen to any one of us at any time, just so happened to have happened to Sam.
Now, what if every time we encountered a person experiencing homelessness, we think that could just have easily been me. How might our lives and the world be different if we took on this perspective? And I hope we won't all stay home all the time out of fear that something could happen to us and we could end up being homeless. That's not the point here. [14:00.0]
The point here is I hope this kind of perspective could help each of us have more compassion for others when we encounter them and do some smart things to protect ourselves, because, in all honesty, we face risks each and every day. My dad liked to say that every time you get into a car, you're gambling with your life, and that's why we have things like car insurance, right? The risk is real and acknowledging and planning for that risk as crucial to make sure that you'll never be poor.
Grandma always said, “Eat your vegetables. Look both ways before crossing the road. And never risk your financial future on elements of the market you can’t control.” That Grandma, always good for some tried-and-true advice. And although some of her wisdom seems to have skipped a generation, you don't have to be left behind.
Download “Grandma's Top Tips for an Independent Financial Future” absolutely free, when you visit Grandma’sWealthWisdom.com. Don't wait. Get Grandma's best tips today.
Brandon: I have a few takeaways from Sam’s story. [15:06.8]
No. 1 is getting out of debt doesn't mean you'll never be poor. Getting out of debt doesn't mean you'll never be poor, right? Having no debt doesn't give you the money if you get hit in a hit-and-run accident, right? You still need the money if that happens, right? No. 2 is contributing enough to get your match in your 401(k) doesn't mean you'll never be poor either.
Amanda: Yeah, I think about what if your 401(k) is a 201(k), right? The market just had a big dip when do you need it most when that hit and run happens or something like that, are you going to sell when it's down?
A 401(k) is not a safety net or an emergency fund. It's actually like a speculation fund. It's a “here's one way that I can try to make some money for my retirement,” but it's not there when you really need it always or it could not be there. You can't hundred percent rely on it. [16:04.7]
Brandon: So, creating a unique strategy for yourself that could mitigate whatever risks you could face might keep you from large bills and stress in the future. Those might be a key way to make sure you are never poor.
Amanda: Yes, and it doesn't have to be that you buy every single type or all the different kinds of insurance available either. High insurance premiums aren't the cure. For us, we mitigate a lot of risks by using our money to create safety nets of various sorts.
For example, our most important safety net is that we maintain a large enough cushion of funds in case of large bills or no income for a while, and this was created by following No. 1, a portion of all you earn is yours to keep, that we've been doing for over seven years.
Brandon: And another note is mitigating stock market risks is another key financial strategy consideration. It's not just diversification, but also about having enough for that volatility buffer. [17:08.8]
If things go down, if everything is on the same truck, you're diversified amongst the market and the truck goes off the cliff, you're not really diversified, so how do you have a volatility buffer in place?
Amanda: And we should totally do a whole volatility buffer episode. I'll put that down for a future idea. But another safety net we do is creating passive income that doesn't stop as long as we live. If there's always some type of flow of money guaranteed to come in, we feel like we could make it work, even if it means changing our lifestyles dramatically. And I use that word, “guaranteed”, very particularly because things like social security are not guaranteed. That's not what we mean by creating passive income.
Brandon: Don't get us wrong. We're not perfect. We're not totally protected from every imaginable risk. If zombies come after us, we're not protected for that. We have to figure that one out. [18:04.6]
The point here is to transfer as much risk as possible and create a plan and strategy to keep mitigation of other risks as you're able, like we're able to mitigate the risks if we're able. And we have thought about it if zombies do come and we've shared about this in the previous episodes, we kind of have a plan of where we would go a little bit.
Amanda: Yeah, at least the direction we would head. But think about it this way. If kids in elementary school, right, are taught what to do in case their home catches fire and part of their homework is they come home and create a home fire emergency plan, if you remember doing that in elementary school, and then when they're at school, they do fire drills there and tornado drills, or maybe there are earthquake drills if you're in California, I don't know. But there are all kinds of things that kids are taught with what to do in the case of risk or if a risky thing happens.
Brandon: Or in the case of an emergency, right?
Amanda: Right. What if you could do the same with the risks that you face as an adult? [19:02.3]
Brandon: Yeah, I think we should do those kind of exercises with our finances. Now, we chat with people all the time who think they are invincible and will live forever. I swear, I've talked to so many people, Oh, it's never going to happen to me, and then I call them about six months later and, lo and behold, something crazy happened and they're like, I did not think this was ever going to happen. I bet all of us know, at least one person who experienced the unexpected and wished they would have been prepared for it. Raise your hand if you know somebody like that. Who's to say that couldn't be you or us?
Amanda: Yeah, and again, we bring this up not to cause undue stress or worry. The truth is, whether consciously or not, a lot of us are already worried about these types of things, even just a little bit, right? Some of us, a lot more.
Perhaps like the characters in the TV show, This Is Us, if you've ever watched that, there's one episode where they play this game, “What's the worst that could happen?” and they imagine the worst thing and that actually makes them feel better about what is actually happening, and sometimes that's kind of fun to play, and then to also create a strategy to mitigate that worst case scenario. That might actually even help you sleep better at night. [20:20.2]
Brandon: I think that's how the zombie plan came about for us probably.
Amanda: Probably.
Brandon: We love playing that game, so message us if there's a worst case scenario that you'd like to strategize together.
Amanda: Or if you want to hear our zombie plan.
Brandon: Finally, No. 3, it's simply this: control every penny.
Amanda: Yeah.
Brandon: I'm a big fan of control as a business owner and I think it's important for us to control every penny.
Amanda: Yeah, you track the money coming in, where it's going, you see it, and even more importantly, you take control by evaluating it at regular intervals and making adjustments, so it's more in line with your goals, telling your money what you want it to do and making sure it does it. [21:05.0]
Brandon: This will help you do No. 1 and it's better at keeping a larger and larger portion of all you earn if you know where your money is going.
Amanda: Yeah, and this will also show you ways where you might be at risk. You'll notice what might be missing from your financial strategy. You'll see a potential place where a major expense could sneak up out of nowhere.
Brandon: In fact, some people are tracking every dollar. They begin to separate funds for separate major expenses. Rather than keep them in one big emergency fund, they'll have a new car fund, a new roof fund, a vacation fund, a major medical expense fund, etc. All of these little funds almost replace an emergency fund, because when you're prepared, there are fewer true emergencies that are there.
Amanda: Even beyond those things, though, even beyond the benefits to controlling every penny to helping you keep a portion of all you earn and to mitigate risk, tracking every penny and telling it what it should be doing does two other really important things. [22:10.4]
First, I believe it gives you a better sense of what can change and what can't change when life throws you a curveball.
Brandon: If what your money is currently doing, do you think it's easier or harder to change it up if the unexpected happens? It's easier to move on the fly if you know where things are at, right?
Amanda: Yeah, and then, secondly, when you're tracking every penny, you're telling it what it should be doing. It gives you a sense of confidence and power that builds your fortitude for whatever life might throw your way.
Brandon: If the unexpected happens, do you want to approach getting through it from a solid mental and emotional grounding or do you rather be confused or clueless? I mean, it's a serious question. I think we need to ask ourselves, do we want to be confused and clueless or do we want to have some stability in place? [23:05.8]
Amanda: Yeah, so this underscores that no matter how prepared you are financially with a financial cushion, you've transferred or mitigated your risk, you have mental, emotional, and spiritual fortitude, that can also play a key role in making sure you're never poor, or you can get back on your feet as quickly as possible and make that poverty super temporary as you can.
Brandon: In fact, bad things happen to most people. I mean, it's just the way life is. As humans, we love to celebrate those who have overcome some of the worst of life's circumstances. That's why we are drawn to those kinds of movies. They do that through having the confidence to carve their own path. We're asking, what if you started to build that confidence now before any of life's circumstances come at you? What if you could start building that mindset early? [24:05.0]
Amanda: Yeah. Brandon, you said something to me while we were preparing for this episode that I think everyone listening also needs to hear. How do these three things that we're talking about, a portion of all I earn is mine to keep, mitigating risk, and building fortitude through tracking every penny, how does all of that relate to building wealth? I mean, like you said, at the top, this is Grandma's wealth wisdom after all.
Brandon: Amanda, thanks for reminding me. The cool thing is that when you're keeping a portion of all you earn and you're mitigating risks, and you're controlling your money, you're likely to have the ability to take better advantage of positive opportunities as well.
We're not just looking at the negative, but also the positive. It's not just about if something bad happens, but also if an opportunity comes your way, you're able to then maybe make more money because of it. I hope you'll agree that taking responsibility for your own financial future, again, taking responsibility for your own mishaps and successes, is always a good idea. [25:12.3]
Amanda: I love that, and that through all of this, we have to conclude with one super important thing. This is the most important thing we're going to say today by way of that, and it's kind of our recap here. All of these things we've been talking about, the ways to never be poor, work best in relationship with others. Let me say that again. These all work best in relationship with others.
Brandon: Now, think about it. Would you be more or less likely to set aside a portion of all you earn if you were doing it with others who do the same and with a guide to help you figure out how when it's hard?
Amanda: Yeah. Would you have more or less risk if you lived with more and deeper relationships, and have a guide to help you see the risks and strategize how to mitigate them? [26:02.5]
Brandon: Would you agree that those who do thrive in the midst of challenges never do it alone? Sure, they look like a lone hero and, yes, they need to play an active role, but how many other people had to play their parts, too, to help them?
Amanda: Yeah, and as one of my favorite sayings goes, if you ever see a turtle on a post, you know she has had some help.
Brandon: And I think that's just a weird saying.
Amanda: No, you’ve got to think about it. If you ever see a turtle on a post, you know she has had some help. The next time you see that person that just comes through despite a huge challenge in their life, you’ve got to remember, they're a turtle on a post. You know they’ve had some help.
Brandon: I think your dad probably said that because he's from that generation.
Amanda: No, I think I read it in a book or something one time.
Brandon: Weird. I've never seen a turtle on a post ever, just saying.
Amanda: But we see people that are like turtles on posts all the time. [27:01.3]
Brandon: Yeah, you can.
Amanda: And we know they couldn't have gotten there on their own.
Brandon: Yeah. So, to include us in your team, helping and encouraging you to keep a portion of all you earn, mitigate your risk, and build your fortitude, visit us at Grandma’sWealthWisdom.com and schedule a call with us there.
Amanda: Quick PSA. Please don't go, find a turtle, and put it on a post. It can't get down at. That is not good for the turtle. Please don't go, do that.
Then, we quickly glanced over an important item in today's episode. Be sure to subscribe for next week's episode, where we're going to dig into a related topic that we briefly mentioned today, how to create passive income for life. Do not worry. There are no MLMs or pyramid schemes involved, but, yes, you too can create passive income for life.
Brandon: I think that's a big thing, passive income. People love that stuff. Until next time, keep building your wealth, simply and sustainably, so you can break through to a smart, stable financial future. [28:03.8]
The topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting or investment advice. On such matters, please consult a professional who knows your specific situation.
This is ThePodcastFactory.com
