(00:05): Here's the thing about overspending that most financial professionals are afraid to say, it's not your fault. Seriously. It's not your fault, but you do have an opportunity to stop it. And we're gonna show you how,
(00:22): Hey, I'm Brandon and welcome to wealth wisdom, financial podcast, episode 1 0 2. How to stop overspending without budgeting
(00:33): And Hey, I'm Amanda. The financial industry likes to keep you confused when you're confused. You lack efficiency, and guess what? You overspend, you lack confidence and control. And so many other things that are ingredients for building wealth ingredients is actually a great word because it's tied to a helpful overspending analogy that we're gonna share today.
Are you sick and tired of hearing the same old conventional financial advice? We feel you. We're fed up with those same old truisms that fall flat when you get into the unique opportunities and challenges of specific situations. This show is all about bringing you historic wisdom around wealth-building with practical insights on how to apply it to your journey. When conventional financial thinking doesn't get you where you want to go, you need wealth wisdom. Let's master wealth-building together.
(01:33): So if you go to a search engine and you look up how to stop overspending, you're gonna see very typical advice, like create a budget, make it inconvenient to spend by freezing your credit cards in a cup water in your freezer or not saving them in your favorite online portal. We're not gonna tell you any of that today. You gotta stop buying lattes. None of that, but we do wanna start with a helpful grocery store analogy. We all know when you go to the grocery store, you spend less, when you have have a meal plan and a list, you spend way more when you have an empty cart and no strategy for what to put into it. But why is it because you have no willpower? Is that the reason? Is it because you lack discipline? Maybe that's it maybe a little bit, but really it's it's the grocery store's fault in, in all of this. Yeah. And it, you know this already. If you've been to a grocery store at any point, they arrange the grocery store to highlight items. They want you to buy and you have to trudge the entire store. Almost every single trip. They put the basics like milk and bread on opposite sides of this stores. You have to pass all the snacks and desserts and temptations to get just bread and milk in our store that we shop at the cookies, chips and soda are all right by the checkout outlines. You have to go buy them in order to pay for it for the other items that you picked up.
(03:01): And then on top of that, there are low levels. So if you bring a toddler, it makes it even challenging. Cuz they can see all of it. Right. That's why you gotta put 'em in the cart, keep 'em in the cart. Don't let 'em run around. Yeah. So how many times have you gone into the grocery store for something basic like bread and milk, but ended up passing other items. But by the time you hit the checkout, you've got more than you came for, went in for two items, you got four. It happens to everyone at one point or another, especially if we make the mistake of going to the store while hungry, then that that's double trouble There. Yeah. Double whammy. And it's also why Brandon does not go to the grocery store with me. He will always put something into the cart that I did not have on the list or you that why you don't bring the toddler with you, true or preschooler. There you go. But having a list, doesn't always work because there's still temptations right front of you everywhere you look. I mean, wouldn't it be hilarious if you saw a grocery shop or wearing blinders, like they put on horses, like literally they just could go one direction and that's it cuz they had those blinders on.
(04:13): Yeah. I don't think any of us are gonna do that anytime soon. And for our online shopping listeners, you know, they still use tricks to get you to buy more. When you shop online, they show you discounts. You can add it checkout. They have recommended items to pair with what you're putting into your cart and so on and so so forth. You might spend more when shopping online than in a store, you don't see it as much. It can seem like we're powerless against all these types of manipulations that are set up to get us to empty our wallets or charge more than we planned whenever we go shopping. That's why there's a whole movement of no spend days you might have. You could look it up, right? No spend days. The idea is that if you go near these places less often, then you'll stop overspending. It's a great idea, but it doesn't always work. Shopping less often means more planning so that you don't end up with more waste, right? More spending then life changes and you end up going out to eat or doing a last minute shopping run because there isn't time to cook what you planned. Right? It's can also feel like we're set up for failure by the very companies we trust to bring us healthy, fresh quality foods because of all of this coming together.
(05:40): So enough about the problem. I hope you're convinced by now that it's not your fault that you're overspending, it's the clever marketers and people that set up the stores or set up the online shopping centers to make it easy to overspend. What we wanna do is share three big ideas to help you stop overspending. That appeal to that same part of you that hates budgeting hates going through, you know, saying what you're gonna spend and where and feeling restricted. Are you ready for this? Okay. The I'm the first two are gonna be related to overspending while shopping and the is gonna make it seem like we're not financial professionals cuz it's actually a bit dangerous for most financial professionals to say. So Brandon, how about you jump into number one and we'll leave the most controversial to number three. Yeah. Number one is own your subversiveness. Now that's a big word. Subversiveness. Can you give us the definition of that? I
(06:39): Mean, I mean it is like a quality of being subversive of saying you're fed up with the status quo and the way things are and you wanna subvert that system. Yeah. So, you know, the big business system is set up to make you spend more be part of the revolution to put power act into the hands of the people and away from big business, see their tactics and say, this is my active defiance to walk right on by and to say no thank you to that ma that offer that they're putting in front of you. Yeah. Having this attitude of, I'm not, I'm gonna do a it's right for me and not for the billionaire CEO of this business and what they want me to do can get you really far in terms of stopping overspending. Literally I hear in my head all the time, don't feed the billionaires. So I mean you can think about this has some historical routes that are really awesome. Think about it like segregation, if that helps you take it more seriously. A big part of the civil rights movement was putting was hitting economic powers where it hurts their wallets. Boycots were a powerful weapon to bring greater equality and maybe that's what we can do in our efforts to stop overspending.
(07:56): So anytime you see the clever tactics of big business today, here's what we've found is helpful to think the economic powers of today want to segregate me from my potential to build wealth. So I want you to say that the economic powers of today want to segregate me from my potential to build wealth. So try it out. See if thinking about it this way, doesn't help you keep more of your money and aid in your efforts to build wealth for yourself. And if you need to get a t-shirt like I did that says don't feed the billionaire. Okay. Number two, increase your income. Does that actually closely related to number one? Cuz we all know it's because wages have been so low for so long and yet inflation keeps happening that many Americans almost have to overspend just to buy the money that should have been in our pockets in terms of wages is in the same place our overspending would go.
(09:01): Yes. So many Americans are demanding higher wages from companies that can totally afford them. And it's working as you own your subversiveness. Also make sure you're advocating for higher pay for and your coworkers. If you need some data to back up your calls for better pay, just look at Walmart. Really Walmart Walmart started raising wages within the past few years and from the sources that I've gathered, they did it to stay competitive in the marketplace and actually say cost. And think about the difference between Costco and Sam's club. Costco has amazing customer service and loyal customers because they pay their workers well and even provide health insurance for part-time employees that gives them a competitive advantage in the hiring marketplace. Sam's club was losing market share to Costco because they couldn't get the workers who would help them do well. And they were losing lots of money on turnover and so forth. There's plenty of examples out there. How increasing wages actually benefits everyone, including saving costs for the company. We'll put a link to one of our favorite sources in the show nets. If you wanna explore that more and get some ammunition to bring to your boss.
(10:16): Yeah, it's a good podcast called Pitchfork economics. So check out that link there. And if you are a business owner, take heed and pay yourself and your employees, well, it might just save on other costs. Actually. This is a powerful part of the profit first method of running your business. Overspending as a business owner is real, just the same way as it is in the grocery store happens in our business. Profit first is a great way to stop overspending in your business. Without budgeting, you can learn more about building wealth when you're self-employed at wealth wisdom, dotn.co that's a new community that we have wealth wisdom.mn.co. This link will be in the show notes to join this intentional community of self-employed and business owners who are mastering wealth building together.
(11:14): So go check out those two links we just shared. But one more warning here. There's a bit of wisdom called Parkinson's law with time. Parkinson's law says that the task expands to the time allotted. If you have a month to do something, it'll take you a month. If your deadline is only a week, you'll get the same task done in a week. Parkinson's law applies to money as well, expenses and to income as income increases, most people spend more as well. That's why this is number two. If you've mastered number one and own your own subversiveness, then you are more likely to put additional income to work, to build your wealth rather than feeding the billionaires or keeping up with the Joneses. When you know Parkinson's law, you know how to manage cash flow. It can be as simple as putting more and more of your in income to towards wealth building. Instead you can keep more and more of what you make as you make more. It's that simple.
(12:18): Yeah. Okay. So own your subversiveness. Focus on increasing your income that helps with the budgeting thing. Just be careful that you don't spend as your incoming increases. And now number three is probably gonna get us into even more trouble. The financial services industry works similarly to the grocery store. The entire system is set up to get you to buy what they'd like you to buy. If you've been around the block a few times, you probably have seen this a time or two. It dawned on me recently that the, that one reason the stock market is doing well is because they've got amazing marketing and sales and have can in so many people that they are the only option when that's totally not true. So how do you stop overspending on financial services with this question, we're talking about fees and expenses, but also about volatility and taxes and other things that take your wealth out of your pocket and put it somewhere else. Like we said, at the top of the episode, the financial industry likes to keep you confused when you're confused, you lack efficiency. You also lack confidence in so many other things that are ingredients for building wealth.
(13:30): So there are at least four ways that people overspend on product that are supposed to help you build wealth. We can't cover all the finer points of each one, but we're gonna try to share these four cuz we feel like they're important to know. And then you can dig in and find out more about these four and look for other ways so that you're able to spot when the financial industry is acting like a grocery store. The first one is fees. There are a bunch of supposedly no fee options being promoted, but there are still hidden fees in small prints that add fees. When you thought you didn't have any. In researching this episode, I went to a website of a very popular company that promotes zero fee brokerage accounts. Every once in a I'll see their ads on Hulu or you know, different places. So I just went to their website and the very first fine print at the bottom of the page says this quote standard online $0 commission does not apply to over the counter equities transaction fee mutual funds futures fixed in come investments or trades placed directly on a foreign exchange or in the Canadian market service charges apply for trades placed through a broker $25 or by automated phone, $5 exchange process ADR and stock borrow fees still apply. And we'll put a link to that if you no, we, we won't, we, we're not gonna reveal who that is. And I stopped there. So it's not to reveal the company cuz then it, it goes on and it goes on for 21 different footnotes on a landing page. That's public on the, our website. I can't imagine all the fine print once someone's a customer.
(15:14): So the bottom line is to be aware when there's a 0% fee accounts, there are often limited investments available for no fee. And even those have other fees that still apply. So it might still have fees and you don't know it, or you might be the, the fee there. And we won't get into all the fees involved in qualified retirement accounts like 401ks and IRAs, a fine print. There is even worse and no one reads it. It, you know, like, and I was actually reviewing someone's statement recently that they, all that was on the statement was their court management fees. And this is an individual who is like earning less than their expenses. So they're trying to figure out how to increase their income, but also reduce their expenses for now. And they were paying over $500 a quarter on their brokerage accounts in management fees. And yet they're focused on little things and you know, feeling strapped and all those things. So look, actually that means you gotta look at a statement. You gotta dig into it to find out, but enough about that, let's go into number two
(16:29): And number two is expenses. So let's break these down into two different categories. First there's the professional cost for CPA accountants bookkeepers. And we actually have to pay someone to make sure we pay the right amount in taxes and don't get into trouble with the internal revenue service. And if they do it wrong, they are protected and we pay for it, right? There's not even a refund of their cost if they get it wrong or do it a bad job or cause extra work. Right. and so then we have to pay that expense for the expense of paying taxes. And then the second is interest is a major expense charged in the financial service industry. They're pretty good at hiding it too. If you ever wanna know the rate on at your credit card, it's often very deep in the statement and nowhere else in your online account access currently about nine to 10% of American household income goes to servicing debt. That's like four hours of your 40 hour work week going to the bank. Oh, over spending in this category of interest is real.
(17:39): I thought it was a little higher than that actually. But well a, a lot of debt's been paid off with the economic stimulus. So right now we're between nine and 10. So as of right now today, but it could change real quickly. Right. And not as many people have mortgages anymore because they can't afford to buy a home. So they're not paying the mortgage. They're just paying rent and that's not considered debt. Oh, gotcha. Okay, cool. So, yeah. And then there's volatility when you're 401k or brokerage account or wherever you have stuff, when the account balance goes down and you lose money that erodes your wealth. If the market goes down 10%, you can't just make up 10%. You have to get to 11.1% to get back to even plus the growth you missed in the meantime. So when people are like thinking, oh yeah, I made it back. Well, no you didn't. You had to actually make more than that.
(18:36): Yeah. In addition, we have to mention here that often the 10% you lost, doesn't just disappear. When there's volatility, someone always makes money. The 10% wealthiest Americans own 89 of all us stocks held by households. Where do you think your loss, 10% went? And this even applies to cryptocurrency, but we're not gonna go into all of that. Let's move to the fourth one taxes. This is a major place of what that can feel like overspending within things. And we've heard of folks who end up losing a lot of wealth that they've built because their financial professional was solely focused on getting them the biggest ROI, but didn't realize the tax consequences of their strategy. So you have to be really careful here, but also remember what Brandon's gonna,
(19:31): Yeah. The internal revenue service often changes the rules for when they can dip into your pocket and get a portion of your wealth. Here's a powerful question. Let's say you were going to start a business with a partner and invest about $300,000 personally over time. Let's say that the $300,000 is going to grow to 1 million. By the time you sell the company, but your partner says you invest the 300,000 and I'll tell you later, how much of the 1% or 1 million is mine. Would you do that partnership? I mean, I wouldn't. Yeah, I wouldn't. They would tell you later what those rules are. I hope not, but that's exactly what you're doing with uncle Sam when you're, when you, in essence partner with him in your 401k or traditional IRA. And he'll tell you later what cheers to send to the internal rev, a new service by what the tech code says at that point, not what it says when you started the business. And I don't know about you, but I wouldn't want to go into a business where I they're gonna make the terms of service in the future.
(20:47): Yeah. We, it, even Brandon and I signed a partnership agreement when we were starting a business. That was very clear. Here's how much each of us has. So, but let's, let's cut. Bring it back in here. Remember Parkinson's law. Even if you stop overspending on fees, expenses, volatility, and taxes, you could easily spend that money somewhere else. Conquer your cash by turning Parkinson's law on its head. Here's a bit of wisdom for you conquer your cashflow by turning Parkinson's law on its head, as your income and subversiveness increase, use a greater and greater portion of your income to build your wealth and to avoid overspending on financial services. I think, think about it was a 1% asset under management fee or a 22% tax greater or smaller when you have a million dollars or when you have a thousand dollars.
(21:38): Oh, that's a good one. So before we wrap up, we do have to mention that we specialize in a strategy where you can put some of your wealth and in, into, and protect it from all four of these way. I need to go back, man. So before we wrap up, we do have to mention that we specialize in a strategy where you can put some of your wealth and protect it from all four of these ways. Most Americans are overspending on financial services to learn more, check out the link in the show notes, or go to grandma's wealth, wisdom.com and request a meeting. Now, the people who take us up on that offer and complete our complimentary financial analysis tell us that they often have more clarity on where they wish to go. Even if they don't end up with us, it's kind of like the financial analysis helps them construct a meal plan or a grocery shopping list for their money and for how they're going to build their own wealth. But in this case, it looks like it looks more like getting clearer on goals and what financial tools will help them reach those goals. So we'd love to help you construct your financial goals, find the right tools to help you reach those goals. The first step is to go to grandma's wealth wisdom.com, schedule a 15 minute intro call with one of us to see if we are indeed the allies for you. As you go about mastering wealth building,
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