When Saving More Money Might Actually Hurt You

Saving money is a vital part of building wealth, but there are five specific situations where it can actually work against you. Financial Advisors, Brian Preston and Bo Hanson, walk through everything from why 28% of IRA rollovers sit in cash seven years later to how extreme frugality can poison your relationships, running case studies comparing Average Allen and Manny the Mutant to show who comes out ahead. Saving is still a good thing, but you might be surprised by just how much the order of your decisions can change your financial future. ⁠Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18 plus.

• 0:26Speaker 01

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 0:55Brian Preston?

  Saving money is a vital part of building wealth, but there are certain circumstances where saving more could actually be hurting you.

• 1:03Speaker 03

  Brent, I am so excited because today we're covering five situations where saving money could have real negative effects on your finances and potentially on your life. And we're going to show you how to avoid making these five mistakes.

• 1:18Brian Preston?

  So I'm Brian, he's Bo, and we're financial advisors showing you how to save today for your great, big, beautiful tomorrow. And with that, let's dive right in.

• 1:33Speaker 03

  Brian, saving is obviously a good thing. We talk about it all the time. We talk about how powerful it can be and how if you do it well, it can change your life. But in certain circumstances, there could be too much of a good thing.

• 1:47Brian Preston?

  Yeah, look, we're not trying to create some rage bait or click bait type thing. This really is, we wanted to highlight where a good behavior like saving can get you in trouble if you're not careful. With that, Bo, give us number one.

• 2:02Speaker 03

  Yeah, number one mistake we see is when you are holding too much cash. And we say holding too much cash, we actually mean instead Of investing and actually putting those dollars to work for.

• 2:12Brian Preston?

  Yeah. And by the way, if you think, well, nobody does that. No, let me tell you, this is a big problem. You know, one of the big custodians out there, Vanguard, actually shared this, this data point. We've, we've done content on this in the past. Close to 30% of IRA rollovers are actually just sitting in cash seven years later. Guys, seven years is long-term investing. So that is, the opportunity cost on that is huge.

• 2:37Speaker 03

  And look, this was a specific study done in 2015, from 2015 to 2022, but it doesn't stop there. Vanguard also found that 55% of direct contributions into employer-sponsored retirement plans actually stay in cash for 12 months. Rather than going to be invested, going to buy mutual funds, indexes, ETFs, it actually just sits in the plan in cash once it comes out of your paycheck.

• 3:03Brian Preston?

  So, and by the way, we have a lot of our comments section and you guys, you're such financial mutants. People, because we use the word savings sometimes when we're talking about investing.

• 3:12Speaker 03

  Yep.

• 3:12Brian Preston?

  And that's why I love that this is the kind of the perfect arena where we get to share. You're right, guys. You financial mutants who are highlighting this fact is that, yes, there is a difference between just saving versus investing. And the reason we want you to go beyond just saving is that inflation can completely gut your money in the long term.

• 3:31Speaker 03

  That's right. We have this general concept, this understanding that a dollar today will be less than a dollar tomorrow. The reason is, is because of inflation. Inflation is just the general increase in the prices of the goods and services that we buy over time, thus reducing the purchasing power of our money. And it's amazing, if you stretch it out, not just over a year or two years or three years, but you stretch it out over decades, that eroding power is very, very strong.

• 4:03Brian Preston?

  We want to give you some numbers to kind of put some perspective on this because a hundred dollars in cash today. Fast forward 10 years, now it's only worth $74. Fast forward 20 years, it's only worth $55. The purchasing power is getting diminished. And in 30 years, now it's worth $41. But it's worse than that, Bo. It's not just what the purchasing power. It's also the opportunity cost of what you're tabling by not getting the compounding growth.

• 4:30Speaker 03

  Yeah, you miss out on that compound growth. There's an error of commission, what you are doing, you're putting it in savings. There's also an error of omission. You're not allowing your dollars to work for you. If you've been watching or listening to our content for any period of time, you know that we talk about the wealth multiplier. And it's this idea that when invested, when properly put to work, $1 for a 20-year-old has the opportunity, has a chance to turn into $88 by the time that person retires. But that only works, that only happens if you put the money to work. If you do not invest it, you're not going to recognize that 88 time multiplier.

• 5:10Brian Preston?

  I always feel like it's a PSA. Whenever we show the wealth multiplier, all my 20 and 30-somethings who are watching this content, just do something. Look at this chart we have right here. Better than that, go to moneyguy.com/resources. You look at your specific age, see what your wealth multiplier is. You might not have a lot of resources, but you literally are a billionaire of time. Leverage that powerful tool and you will be better for it. Now, Bo, I think this also is a good time for us to give a case study on what the typical American is doing and seeing how just putting the money in a bank, earning absolutely nothing versus somebody who's proactive and actually puts their army of dollars to work, compare and contrast.

• 5:51Speaker 03

  Yeah, if we think about average Alan, let's say that average Alan starts with $0, but he's going to put $10,000 into a savings account and he's going to earn the average rate of interest that the average savings account at a bank is paying right now, which is 0.38% per year. You heard that right, it's less than half a percent. If Alan were to leave that $10,000 in that savings account for 10 years, he's going to end up with $10,300. $187.

• 6:20Brian Preston?

  Bo, I know a lot of you will be like, wait a minute. You guys only paid him 0.38%. How many people come through the doors as prospects and so forth? That their checking accounts that are loaded up beyond what they need to be as just having as liquid cash for a clearing account are actually earning zero.

• 6:36Speaker 03

  That's right, all the time.

• 6:37Brian Preston?

  So we're actually being generous when we say 0.38% because most of your brick and mortars are paying you absolutely nothing on your checking accounts. So this is why you have to be proactive with your money. Don't let life just happen in your financial decision making. I want you to be more like Manny the Mutant.

• 6:56Speaker 03

  Yeah, when we think about Manny, let's say that Manny also starts with $0, but instead of putting $10,000 just in the savings account, Manny's going to invest those dollars. He's going to put the $10,000 into an index fund. And let's assume that over the next decade Manny can average an 8% rate of return on those dollars. Well, that $10,000 that he deposited would now be worth $22,196. That's 113% more than what Alan had.

• 7:28Brian Preston?

  That's why I think a lot of people, when we're trying to train you to become a financial mutant, it's those incremental, small decisions that you're making. The dollar amounts are not changing. It's your behavior, it's your actions. Little tiny actions can create big results. In this case, actually putting that extra cash to work is 113% improvement. And by the way, over time, that compounds even bigger.

• 7:52Speaker 03

  So what do you do instead of just stocking it in savings? Well, you got to put your army of dollars to work. You have to recognize that I need my money, my dollars, working harder than I can. And if I put them in the savings account, they're not doing that. So I want to make sure that I get them invested.

• 8:08Brian Preston?

  And I want you, look, we talk about the three to six months emergency reserves, but actually do the exercise of seeing what you need in emergency reserves. Because we just showed you, if you're boosting your sinking funds or your emergency funds bigger than they need to be, you're sitting on dollars that could be in your army of dollar bills that are working for the future. And then the second part of this was kind of back to that Vanguard study. Don't forget that it's a two-part transaction. Just because you saved the money, you now need to select the investments so that your money can actually work hard for you.

• 8:41Speaker 03

  And we actually have, Brian, we have the thing, we actually have a financial order of operations to tell you what you should do and where you should put your next dollar. So start with the tax advantage accounts where you can get the most bang for your buck. We're talking about Roth IRAs, HSAs, 401Ks. Make sure those dollars are finding themselves in the right homes.

• 9:02Brian Preston?

  I think a lot of people also, you're brand new, you've found our content, you have a big motivation to start letting your money work, but you just don't come from a household where you knew anything about money, you don't know where to go invest. That's A-OK, you know, and it's easy. We often are saying, just go get it into an index fund. And a lot of you are like, okay, an index fund, that sounds great. And yes, usually we're talking about like a total market index or an S and P 500, but even that can sound daunting to a lot of people. Guys, you don't have to sleep on even index target retirement funds from the big providers like Charles Schwab, Fidelity Investments, Vanguard. Go out there and you can log in, if you can answer how much you can save and when you

• 9:41Brian Preston?

  need it, they have a product that leverages not only index funds, but also diversification. Get out there and do that. And then in the background, you can be educating yourself and get even better with your investment knowledge. But in the meantime, you're not squandering that powerful component of compound and growth because you have time on your side.

• 10:00Speaker 03

  All right, Brian, we're talking about when saving can actually hurt you, when it can be detrimental. And mistake number two that we often see, and I think this is because, again, people are approaching this from a noble place, we actually see people making mistake when they begin saving and investing while they still have high interest debt on their balance sheet.

• 10:20Brian Preston?

  Well, I see people, and like you said, you said the word noble. Look, you guys realize we all sometimes carry sins of the past and, you know, and for a lot of people, it starts in college or right after you get out of high school, you get your first credit card. And because you lack some discipline initially, you run up a little credit card debt, but then maybe you come across our content and you go, oh my gosh, these guys are talking about the power of Compounding growth, I gotta get in there and get that. But the problem is if you don't do it in the right order of operation, you're actually still turning compounding interest against you and only making the bank rich. If you're not paying off that high interest debt, it's back to why the financial order of operations is your friend. And what do I mean by this? Let me give you the proof.

• 11:05Brian Preston?

  The average interest rate on credit cards right now is 23.75%.

• 11:10Speaker 03

  It's insane.

• 11:11Brian Preston?

  If you don't pay off that in step three of the financial order of operations, you'll never be able to leverage and maximize the power of compounding growth.

• 11:19Speaker 03

  And what you don't recognize is how widespread this is. According to the Federal Reserve, 45%, one in two US adults actually carried a credit card balance at least one time in the past year. And I don't mean like they used a credit card and paid it off. They like carried a balance month over month and they were subjected to that on average 23.75%. So it's pretty obvious, like why is this bad and why can't it hurt you? Well, it's not mathematically optimal. If I'm paying an exorbitant amount of interest, but I'm investing and earning a lower rate of return, that is a reverse negative, bad arbitrage situation.

• 11:59Brian Preston?

  I want people to visualize this, literally you're strapping this weight to you and then walking into the ocean. And I don't care how good of a swimmer you are, if you're, if you were walking into the ocean with weights like credit card debt, you will drown, you will never get ahead. So that's why we have to get you to pay off the high interest debt because it's going to slow down your progress. It's going to drown you. You gotta get out from underneath this. And then once again, we have a case study because what, what drives me crazy is people lose their perspective. They lose their focus and like I said, they find our content and they'll say, well, you know what? I'll throw a few hundred bucks towards the credit cards. I'll throw a few hundred bucks towards my Roth IRA. That's how I'm going to get out of this. That is, that is foolish.

• 12:44Brian Preston?

  That's not using food. That is being foolish and still letting compounding interest work against you.

• 12:49Speaker 03

  And if, don't just take our word for it. Let's show you the actual numbers again. Let's take two investors. Let's take average Alan and Manny the Mutant. And their goal is to have a $20,000 emergency fund built up. But they're both going to be starting with debt. They both have $10,000 of, let's assume it's credit card debt. And let's assume that they both have that credit card debt at a 24% interest rate. We're going to assume that average Alan and Manny both are going to put their money into a high-yield savings account that can earn 4%. So they have debt that's costing them 24 in a savings account that makes them 4%. They both have the same amount of margin. They have $500 a month with which they can pursue their goal. So average Alan says,

• 13:34Speaker 03

  "You know what? I'm going to split it nice and easy. I'm going to put $250 per month towards my emergency fund, and I'm going to put $250 a month towards my credit card debt." Well, what we find is that after five years or 60 months, average Alan has been able to build up his emergency fund. Remember, the goal was $20,000. He has about $16,500, but he's still carrying a $4,300 credit card balance. So if you net those two out, his net position is about $12,250. That's where Alan sits. Manny, on the other hand, says, "You know what? I understand the financial order of operations. I understand that if I have high-interest debt, I should extinguish that first. So what I'm going to do is I'm going to pay $500 a month, every single month, on my credit

• 14:18Speaker 03

  card until I wipe that out. So I will not have anything going towards my emergency fund. But, once I get my debt completely knocked out, then I'm going to start saving $500 a month into my emergency fund." Well, now, after five years, Manny actually has a savings account's balance just over $18,000, has no more credit card debt. So he is almost $6,000 better off than Alan was, even though they spent and deployed the exact same amount of dollars.

• 14:51Brian Preston?

  I think it's worth repeating and drawing attention to the fact that, yes, you have close to $6,000 more, but you're also close to 50% better with the same pot of money.

• 15:01Speaker 03

  That's right.

• 15:01Brian Preston?

  That's why it's all back to the incremental decision-making. What small decisions are you making and stacking on a daily basis to live your best life? And that's where you will one day wake up, all of you people in your 20s and 30s, and if you're making the right decisions, and even though you're going to have regrets, or you're going to say, "Am I doing this the right way?" You're going to get to be my age, and you go look around and be like... Why do none of my peers have money? And it's all these things that we're covering right now. So I'm telling you, please, listen to us. Make these decisions in your twenties and thirties so that you can wake up and be on the good side of decision making versus having regrets in the future.

• 15:38Speaker 03

  So what do you do instead? We want you to pay off that high interest debt before you start investing. With the exception of your employer match. Do your employer match? If you're getting a 50% or 100% match or return on those dollars is greater than what you're paying on the high interest debts. We want you to get that, but once you get that, then we want you to attack that high interest debt aggressively and get it off of your balance sheet.

• 16:04Brian Preston?

  Now, a lot of you are saying, what is high interest debt? You all know, we bring up the slide that draws a little controversy because of that car loan column. But I don't mind saying, we want you paying cash for cars. But we all know, I've been broke as a joke. Getting out of college more, you know, aspirational with a good job versus having any money and I needed, you know, the reliable transportation to get there. That's why we've created rules. Yes, have some higher interest rates on there, but we want you focusing on the things that will get you out of debt. So we put these thresholds in there on student loans, on car loans and credit cards. And a lot of you are looking at those credit cards and go, wait a minute, I'm a financial mutant, shouldn't I be leveraging that 0% interest rate offers at all the credit cards?

• 16:49Brian Preston?

  Guys, those are gateway opportunities. The credit card is hoping you walk through those thresholds, fall on your face, and then you end up like the rest of America where you're in credit card debt. Don't be like everybody else. Stay away even from the gateway credit cards with a 0%. That's not what financial mutants do.

• 17:08Speaker 03

  So if you don't know what to do, follow the foo. Brian, hold the thing up for me. It's why we put this together. If you don't know what to do with your next dollar, you don't know how to appropriately attack your financial situation, go to moneyguide.com/resources, download our free deliverable, and you can truly know exactly what to do with your next dollar. If you're paying, kind of paying off the high interest, but kind of doing a Roth and kind of have some money going into 529, that's not following the foo. That is foo-ish, which is foo-lish. Follow the foo and let it be your guide.

• 17:47Brian Preston?

  You almost got it.

• 17:48Speaker 03

  I did it.

• 17:49Brian Preston?

  You said it. It just, there was a little, little...

• 17:52Speaker 03

  I put the emphasis where I wanted it. No, that's a, that was by, that was by design. Foo-lish.

• 17:58Brian Preston?

  Moving on to number three.

• 18:01Speaker 00

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration blog, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up, required compatibility and availability varies 18 plus.

• 18:27Speaker 01

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 18:56Speaker 03

  Mistake number three, and this is again, we're talking about mistakes that can come from saving too much. And we see this oftentimes, the financial mutants. This is when you save, but the saving caused you to delay some very important life milestones.

• 19:11Brian Preston?

  This is where I probably have turned into the old man, the sentimental old man on the front porch. It's because we do so many studio tours or we come across people in our lives. And we'll say, hey, if y'all start, you know, where are you at? And, you know, with your journey, like, well, we want to have a family, but we're waiting until we can do this. Like get this promotion or afford this, or even, and some people, it's been like a step in the financial order of operations. And the version of myself now is like, ooh, because look, I think you're going to be shocked. I don't want you to miss out on the experiences of life. If you want a family, have a family. Don't wait until you have everything tied down. Because, you know, I have two daughters,

• 19:54Brian Preston?

  but I'm at the age now where my oldest has graduated college. My youngest is, you know, we're, we're working through things with her. I wish we'd had another. And I think that sometimes I was so organized with my finances that, you know, it's one of those things where I might have had the priorities in the wrong place. I also think about people, you get to be my age and you start noticing that some of your key loved ones, they're just not here anymore. And you're like, man, maybe I should have gone on more vacations. Maybe I should have traveled to go visit this person more. But sometimes we as financial mutants, we don't do these things because we think, hey, I'll save that money. You've got to be careful that there is a huge difference between the financial mutant versus making miser type decisions.

• 20:34Speaker 03

  You know, Brian, my oldest daughter's, she's about to be 11 years old. And my wife and I have begun having this conversation that, man, 11 years old, that means, you know, Lord willing, she's going to be seven more summers, seven more Christmases, seven more Easter. So we're like, holy cow, we cannot waste this time. Surely, could we, could we save more money? Could we invest more? Could we do another? Sure. We don't want to let even the future financial goals that we have, a financial independence and all those things derail us from the present experiences that we cannot get back. Once the kids are grown, once the kids are out of the house, you don't get to go back and let them be little kids again. So even if you're someone in the messy middle and you're just trying to do the best that you can, like, okay, well, I'll think about that in the future, in the future, in the

• 21:18Speaker 03

  future. I would encourage you to slow down and pause. And you can still create experiences and do wonderful things that don't have to cost a ton. But even if they cost something, and it's not the perfect ideal financial plan that you modeled out for yourself, that's okay.

• 21:37Brian Preston?

  So that's experiences. We had a studio tour just yesterday that was talking about opportunities. They were fortunate enough that they bought their first house through our teachings. They'd only saved up 3% and right before the pandemic, bought their first house. And they were saying, all their friends that were listening to other talking heads that were telling them they had to save 20% before they updated their rules, they missed it.

• 22:01Speaker 03

  Yep.

• 22:01Brian Preston?

  They missed out on the financial opportunity to get in on housing. We've tried to create systems that reflect what we've seen with our financial advisors, with ourselves. We have a No hypocrisy policy here. And that's why we understand that there are different rules for other things, you know, for different parts of your life, so that you can live your best life, maximize your army of dollars, but also try to enjoy and experience every decade you're on this

• 22:26Speaker 03

  Yeah, we talk about sacrificing a little bit of today for a great, big, beautiful tomorrow, not sacrificing all of today. There has to be some sort of balance. So what do you do instead? How do you figure this out? Well, number one, you have to consider the cost. Have you actually sat down with, okay, well, I know that there's the mathematics, the mathematically optimal decision here, but is there an opportunity cost that I'm not measuring? Is there something that I'm going to spend, whether it be time, resources, effort, or energy, that I'm not going to be able to get back? I'm not going to be able to create? And make sure that if you are making that sacrifice, that that sacrifice is actually worth it.

• 23:06Brian Preston?

  And then prioritize what matters. As we was talking about, if you're doing family planning, you don't have to wait until you afford everything. Kids, they're not as expensive as you think they are. Now, look, down the road, they get really expensive with college and so forth. But in the beginning, if you think that you're going to be broken by diapers and baby food, I think you're going to find out it's not. Don't hold off so many years that you miss the opportunity.

• 23:29Speaker 03

  And if you want to be a homeowner, if you want to buy a house, that's okay. You don't have to wait till everything is lined up. That's why we come up with rules that allow you to experience that in a reasonable manner. If you're not familiar, when it comes to buying a home, we want you to follow three, five, 25. You don't have to put down 20%. You can put down as low as 3% so long as you can be in that house for at least five to seven years, and the total housing costs that you incurred do not exceed 25% of your monthly gross income. If those are all true in the affirmative, then I think you can get in the house. You can begin establishing roots. You can begin whatever this phase of life for you needs to be. It doesn't have to be something that keeps getting pushed further and further and further out into the future.

• 24:13Brian Preston?

  And then this this last tip is kind of an umbrella that sits on top of it. I want you to enjoy your life. You know, I think back, you know, I talk about the concept of Dazzling your basic life, good memory building, blossoming memories don't have to be expensive. One of the fun things I get to do now, my wife and I went to Europe in our twenties and we did it on the cheap. I mean, it was embarrassingly cheap. It created a lot of funny things we laugh at now. But I get to compare and contrast that experience now to what the, you know, doing it, the, the, the lux way that we get to do it, the bougie way. But I would never, never, never take away all those great opportunities to enjoy life, to make memories with loved ones.

• 24:55Brian Preston?

  Who were there, you know, available then, but now we just had the blossoming memories. Don't let life get ahead of you, all because you're trying to be a financial mutant, but maybe you're, you're, you're straying into financial miser territory.

• 25:09Speaker 03

  Brian, I think about our, our own little story, you know, we sit here now, we have 50 plus employees here. We have billions of dollars under management as a firm. But I think back to, you know, we just last week had this team building event where it was like, we had all these amazing hors d'oeuvres and trivium. It was this wonderful thing and we rented out a place. I remember back in the day when you and I want to do a team building event, we would grab us two and maybe one or two other employees that would work for some. And we would go to Golden Corral and that was the team building event and I look back so fondly. That was what we should have been doing. That was what memories we should have been creating. And you're exactly right. It is so fun to sit here now and get to look back at how we bedazzled it then. It's an amazing thing and I think it even makes it more valuable, the stuff that we get to do and that we get to experience now.

• 25:54Brian Preston?

  Yeah. Well, by the way, we probably didn't talk about, this is what's great about blossoming memories. We don't remember the, the kid who was probably reaching into the buffet. Instead, we just remember how great it was to be there as a team. That's what's great about blossoming memories. The memories get better and the bad stuff tends to fall off.

• 26:11Speaker 03

  And one of the things that is a natural repercussion of that is you end up building relationships. Because when you think about mistake number four, and this is one unfortunately, we see in pretty bad in a lot of circumstances is that oftentimes you can be saving so much or so aggressively that it actually begins to create relationship friction.

• 26:31Brian Preston?

  Yeah. And by the way, This is a, this is a condition that is just all over the place. Thirty-four percent of couples fight about how much they should save. And this is one of those foundational issues that you see that leads directly to divorce and all kind of havoc within households.

• 26:49Speaker 03

  And so, why does this hurt you? Or how can this hurt you? Well, it can make your spouse, or your kids, or your loved ones miserable. If you are constantly micromanaging, if you're constantly collecting receipts, if you're constantly saying, "No, no, no, no, no," and every single conversation you have is about money, it creates a pretty toxic environment. I have a, someone who's very close to me, when she was growing up, Brian, every time that a friend wanted her to like, "Hey, my friend's gonna..." Her mom would always say to her, "Will they give you gas money?" They give you, like every, like, it was never about creating memories, never about having experiences, always about the financial implications. And it made her miserable.

• 27:33Speaker 03

  That is not a good way to live.

• 27:35Brian Preston?

  Well, even like that stat that we had up, the thirty-four percent of couples fighting about money. What's crazy is when you dive into the research, the study was showing, and this was on close to five thousand couples, these types of agreements, these were the strongest disagreement types to predict divorce, stronger than any other common marital disagreement. So that's why if you can't get the money right, guys, and the way you look at money and relationships, you can really do yourself a lot of trouble in the long term. Because it can literally make you miserable. If you're the person, and tell yourself, do you resemble any of these things? Are you going on sixteen-hour road trips where you can't afford, but you're just too cheap or tight, that you're doing road trips instead of buying the plane ticket for your

• 28:20Brian Preston?

  family members? Are you asking your spouse? I mean, I've had people come to me in my life, and I'm not talking about when you're in the budgeting. We all start the journey. You need to be disciplined. You need to have accountability. But after you've conquered the budgeting and you're now in kind of a cash management plan, if you're still asking your spouse for every receipt... You literally are probably growing a kernel inside of them that's going to become more and more caustic and poison your relationship if you're not careful.

• 28:50Speaker 03

  You, you've already said this. You have to understand that there is a difference between a fin- being a financial mutant and being a financial miser. Being someone who's using money as a tool to optimize and maximize versus someone who's using money as a weapon to harm those that they love. So what do you do instead? How, how do you do this better? One of the very first things that you need to do is figure out, how do I communicate with money? How do I have healthy, robust conversations with my spouse, with my friends, with my family members, my colleagues, whoever it may be? How do I communicate about money in a positive and healthy way?

• 29:28Brian Preston?

  And look, don't mishear us. I do want you to take, if you're the financial person in your household, it's okay that you can try to get your spouse on the same page as you, but it has to come through good communication. It has to come in a very healthy way because you can create strange power dynamics if you're just trying to impose your will on your spouse. We just recently did a Making a Millionaire and this couple, this was a strong dynamic. And look, and I'll tell you, a lot of you financial mutants who are out there leaving comments, you are hard on the spouse, the, the non-working spouse. And I, I'll tell you, as the advisor who, who was actually in the room with this couple, this was mutual.

• 30:09Speaker 03

  This is a communication issue.

• 30:10Brian Preston?

  This was a communication issue because yes, he was noble in the fact that he was trying to get them on the same page and reach some long-term financial goals, but he was not doing a good job with his wife of empowering her with the money as well, to where it felt very restrictive and created a lot of strange power dynamics. You have to create a system to where you have good communication, where you have some flexibility and where you're both on the same page.

• 30:36Speaker 03

  Yeah, you have to be able to be flexible and recognize, okay, I may be right mathematically, but I need to understand and be able to connect with my spouse, my significant other, my kid, my whoever that might be more emotional, or you might say, hey, I am right emotionally. We need or we should do these things. But if it doesn't make sense mathematically, you have to figure out where you're going to marry those two ideas. You have to figure out what concessions you're going to come to. Brian, in my first year of marriage, I had to learn so much about meeting my wife, where she was at in the middle. And once we were able to figure that out, we were able to have much healthier, much better conversations about money.

• 31:21Speaker 03

  And it led to us actually being able to use money as a tool to accomplish the goals.

• 31:26Brian Preston?

  We've known each other for decades now, and I remember you having simple fights over like shampoo purchases.

• 31:32Speaker 03

  Oh, yeah, absolutely.

• 31:32Brian Preston?

  And that's why, look, you really do need to be flexible. And you also need to be a little self-aware of where you are in your journey is because I think a lot of you financial mutants, the kind of, you teeter back and forth between financial mutant and sometimes financial miser with your loved ones, is you run up the scoreboard. I think you will reach a point. Look, there's a reason I turned in my tightwad card. You know, I used to market this show off of us being so good that we could pinch our pennies so tight. But I realized that there was a point, a transition point in my own personal life, where I was not going to die a poor person. And that some of this discipline that had served me so well in the beginning, was now actually squeezing the life out of my loved ones and the happiness out of the relationship.

• 32:14Brian Preston?

  So guys, be very purposeful to understand where you are in your journey, because you're not going to get to take it with you anyway. Use money as only a tool. Now, let's maximize the memory building and all the things you can do with this powerful tool. But let's not squander it through miserly actions that is squeezing the life out of your relationships.

• 32:35Speaker 03

  All right, Brian, so we've talked about four mistakes so far of what can hurt you or what can go bad if you save too much. This fifth one is a little interesting, but I think it might even be the most common one. And this mistake is folks who save without a plan. They don't have any sort of plan in place. And okay, well, why is this bad? How might this manifest? What might this look like? Well, it could take a couple of different forms. Maybe you have an emergency fund. That's too big or too small because you don't have a plan. Or maybe you're saving more than you need, or maybe you're saving less than you need because you don't have a plan. Or maybe you're saving in the wrong place. The money that you're putting to work isn't actually going to work in the right place because you don't have a plan.

• 33:19Speaker 03

  Or maybe you're a good saver, but what you've designed is a system where you can constantly dip into that honey pot. You can always reach in and pull money out because you don't have a plan for those dollars. If you find yourself in one of these places, there's a really good chance that you don't actually have a plan. You have the discipline and you're able to save, but you don't have a plan for what you're doing and why you're doing it.

• 33:42Brian Preston?

  And then the last point I'd say on this and why it can hurt you is that all of you who are financial mutants, you're going to reach the stage like I did where you realize in the beginning of your journey, you're literally trading your time for money, you know, so because you have to go to work out of obligation to pay the bills to provide. But there will come a time as time gets less and less in your life that you will start trading your money if you've done it right. So you own your time that much sooner. So it's very important if you want to own your time to know when you've crossed over that threshold. And if you don't have a plan, you will pass that point. And that's literally the definition of running up the scoreboard.

• 34:22Brian Preston?

  And I just don't want you to die or leave this planet with regrets because you didn't get to maximize that component of time to live the best version of your life.

• 34:31Speaker 03

  So what do you do instead? Well, obviously you should build a plan and part of building that plan is okay. Well, knowing how much should I save? Should I do three to six months in my emergency fund? Am I someone who's approaching retirement? Maybe I should have 18 to 24 months. Am I someone who based on where I'm at, I need to be saving 25% of my gross income so that I can live the life that I want to live on my terms, the way that I want to live in. If you don't know how much to save or you don't even know where to start, we have a great resource for you. Go to moneyguide.com/resources and download our deliverable, how much should you save? And how many, it's not how much should you shave? We haven't released that one. Yeah, that one's coming out in the future. This one is how much should you save?

• 35:15Speaker 03

  And it'll show you based on your age and based on when you want to reach financial independence, what your savings rate should be to be able to get there.

• 35:23Brian Preston?

  And then, you know, we want you to own your time that much sooner. So where you save matters. That's why we've created the better mousetrap, the better system that just naturally through the financial order of operations, we're going to be in a very tax efficient way. Help you put, not only are we going to keep you out of the ditch with the emergency fund, but we're also going to be very tax incentivized or favored with how we structure it. And then that's going to allow you to land on the three bucket strategy. Cause when you get to step seven of the financial order of operations, you're going to start thinking about not only am I saving for the tax purposes, but how am I going to actually use this money? We've got you covered with the three buckets, three tax buckets where you know what to do with the pre-tax money. That's the employer match and so forth, the tax free money, the Roth. That's going to be your favorite child. How do we maximize that thing?

• 36:07Brian Preston?

  And then you think about your after tax, that's the bridge account to get you into retirement. Each of these things is going to have a time and a place and it will be built into your plan.

• 36:15Speaker 03

  So again, we're talking about building a plan. It's knowing how, how much to save and then where to save. And then I think a thing you have to always stay reticent of is why am I saving? What's the purpose behind the things that I'm doing? Maybe that purpose might be the motivation you need to keep you going even when things get hard, or maybe even when things get messy, or maybe knowing why you're saving is hey, I'm actually behind the curve. I'm saving so aggressively so that I can get caught up to where I want to be. Cause ultimately in the future, I want to be able to do exactly what Brian said. I want to be able to trade my money for time so that I can own my time and live the life that I want to live.

• 36:54Brian Preston?

  Yeah. So knowing, I mean, I love how we've done this like a journalist with the how, the when, the why, the where. This is why it's so important to take control of your life is because you'll know when to do the right decisions, when to maximize things. And look, guys.

• 37:11Brian Preston?

  I get it. You're watching financial content. It's probably because you're doing a lot of things yourself. And in the beginning, your goal should be to keep your finances as simple as possible. But if you do this right, and you're investing early and often, and you're maximizing the value of your time, you're also not sitting on too much cash, you're deploying your cash instead of letting it build up in the background, that will reach a point where your simple life, through your success, creates complexity. We're going to leave the porch light on for you. We'll be there instead of you having to face this. You're going into your retirement, or you're going into your seven-figure portfolio and going, "I've never done this before. I don't know what I don't know. I don't know where my blind spots are. I just don't have the time to maximize this." We are here. We work

• 37:54Brian Preston?

  with clients in 49 states. Come on, Vermont. Get in there and get some of that. We want you guys to know there's a better way to do money, and we'll help you get there. So go to moneyguy.com, become a client. Let us show you there is a better way and what the abundance cycle looks like. I'm your host, Brian, joined by Mr. Bo, Money Guy team, out.

• 38:15Speaker 04

  The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.

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