5 Financial Advisers Reveal: Why You're Broke On A Good Salary (And What To Fix!)

0:00These five financial advisors have sat across from people earning an incredible amount of money, but potentially in a lot of places still feeling skint. So why is that? And by the end of this podcast episode, you're going to know because every single one of them says the same thing. Your salary isn't the problem. So what do you do to actually make it count? You're going to hear exactly why a pay rise is usually terrible news for your finances unless you do this one thing. How to play the system that's quietly built to take your money and a financial advisor who says you probably don't need one.

0:32Plus what to do instead. Now, first up is Jason Butler. He's advised over two and a half thousand high earners and wealthy people, and he grew up with debt collectors at the door. Now, listen to what he says separates the rich from the broke. But you spent over 30 years in financial services and you've built a wealth management firm. You've advised many wealth families along the way. You've written books. You've educated millions of employees. After all of that, though, what does financial well-being actually mean? Because I think most people hearing that phrase think, oh, I just need more money.

1:04Yeah, it's a good question, actually. And I think it means different things to different people, if I'm totally straight with you. To me, what financial wellbeing means is that money is not a source of anxiety or worry, and that you have enough in however you define it, so that you've got choice, freedom and options in your life. And you can live a life on your own terms and with dignity and to be true to yourself. That's it. And in terms of, you know, if you're always chasing money, I think the research shows us that if you define yourself by your net worth or lack thereof, then you're always going to be unhappy.

1:40Now, the research also shows that having more as opposed to less, generally all other things being equal is a good thing. But just more and more and more for the sake of it is not really the issue. So someone who has loads of debt and gets out of debt is probably going to have a bigger increase to their happiness than someone who goes from 1 million to two million. Okay. So it's all about relative to where you are and what matters to you and what makes you have a, what I call a flourishing life. Flourishing is a lot more than happiness. It's, it's being the best version of you and also those people around you.

2:14So if you look at that from the outside perspective in, are you looking at from say, it's not just about the money, it's what you're doing with that money along the way that will give you that kind of overall feeling of financial wellbeing? Yeah, I mean, you know, take this from someone who grew up in a poor family, okay? So I don't know any, I'm 57, I don't know anyone else, I've never met anyone who, until the age of eight, had an outside toilet and a tin bath on a Sunday, okay? There's very few people in my generation who actually experienced that. That's what I call real poverty, and 10ps for the electric and the gas.

2:45Loads of films we'd never seen the end of, because we run out of money on the electric, and it just went out, and we couldn't find any money because our mum was at work. I always say, you know, there's loads of war films that I wish I'd knew the ending to. And I can also remember the anxiety of growing up, of my mum never having enough. And my mum and dad split up when I was five. It was always a struggle paying the rent. We had debt collectors knocking on the door. We had a big glass door and it was always a big fella. They used to send big fellas around and it all went dark, like the sun had gone in, you know.

3:15And I can still remember that anxiety, my mum worrying that we'd never have enough. And so I think the whole thing about finances, it's a mixture of what happened to you when you were growing up and including as you became a teenager and a young person. What happens in this society, I was growing up in the 70s and we had the three-day week and you think things are bad now. Jesus, I mean, we lived in black and white in the 70s. Everything was dirty and horrible. And it's also about the messages that you hear from other people and more importantly that you tell yourself. So everyone is different, but there are certain success leaves clues in terms of how you can have a good relationship with money so that it's your servant and not your master.

3:59Yeah, yeah. And there was that study done, I think it's going back a few years, so obviously with inflation that's increased, it's like your material happiness doesn't really increase drastically past the wage. I think it was$73 ,000. Yeah, there's been some more research done since then that said, actually, that's bollocks. Actually, it does keep going up, but it goes up a lot slower. In other words, people who've got 200 grand a year, all other things being equal are happier than people who've got 40 grand a year, 50 grand a year. There is a massive increase, but it doesn't keep increasing at the same rate.

4:33So in other words, beyond a certain level, you don't get the same happiness bang for your pound or your buck or your euro. That's the point. So yeah, I think it was just in blowers. I could be getting wrong, boers or blowers who did these studies that said, actually, we can't find any satiation point.

4:52We But, you know, I mean, you can be earning£150 ,000 in this country and still feel hard done by it because you've got high rent or a high mortgage or your cost of, you know, we all know the cost of living. We're all feeling poorer because, you know, we're having to use our money in lots of different ways. But I must share with you this relative story. They were interviewing some people, I think it was last week, and I don't watch television, but I saw this on YouTube. And they were talking, you know, you interviewed a family coming out of Costas about the cost of living crisis. and they all had what must have been like, how much is a coffee now?

5:24Three, eighty, four quid in London? Five quid sometimes. Or whatever, four or five quid. And all of them, the two kids and the parents, and they all had a cost of coffee, must have come to 20 quid. And they're going on about how difficult things. Now, if things are difficult, and they are for many people, you wouldn't be paying 20 quid for coffees, would you? You take a flask with you. Now, I know that sounds a bit, sort of a bit austere, but I do think each generation resets its expectation of what poverty is or what difficulties are. And I said to you earlier, didn't I, Samuel, when I first got here, it's not how much you earn, it's how much you keep.

5:56And for some people, that's hard. For some people, they're not actually focusing on how much they keep because it's not on their thing. And I always say wealthy people say how much and poor people say how much a month. I love that because it's really interesting. It flagged that in my head. we did a video recently about the study into IQ and net worth essentially over time. And you would think that an increase in IQ would mean direct correlation to wealth. And actually it's completely the opposite. It's completely scattered, sorry. So there's no, like you're not, just because you're smarter or you earn more.

6:32And being smarter does increase your income quite drastically in kind of a Lillian line, but net worth is all over the place. So you're right. It's about what you do and you keep because that someone earning that£100 ,000 versus someone on their£50 ,000 salary could be materially, like the person on£50 ,000 could be much more wealthy because of what they've done with their money. And here's the interesting thing. I've met so many people who, despite earning, and you know I've interviewed over 2 ,500 high earners and wealthy people when I was a financial advisor. I've met people who I thought, well, how could you be this poor when you earn this amount of money?

7:07You know, it's because you're just pissing it up against the wall. stuff. Now, I'm not here to judge people. What I'm saying is that's the diagnosis. You need to stop doing what you were doing, otherwise you're going to keep getting the same results. And one of the things I think it's very important for people to realise is that you are not defined by your net worth, okay? It's just a measurement. And there's many people who want to do vocational jobs or things that aren't high earning. Okay, it just means you've got to be a better budgeter. It just means you've got to be more conscious and intentional where you put your money.

7:38And that means even, you know, paying attention to it, not obsessing, but paying attention to it. Just because you're an artist doesn't mean you don't need to look at your bank account. Just because you're a free spirit doesn't mean you've got to put a limit on the fun money. I say have fun, but just not too much. So it's not how much you earn, it's how much you keep. And yes, that sounds obvious. But think about what Jason has just actually said. He sat with people on 150 grand who feel hard done by because the money comes in and then it goes straight back out on stuff that shows everyone else in the world that they're doing really, really well.

8:10And the line that I can't shake from this, wealthy people ask how much and poor people ask how much a month. Now, think about the last thing that you bought on finance. Did you know the actual total price with the interest on top? So if keeping it is the game, surely a pay rise will help in this. More coming in, more to keep. Well, Andy Hart doesn't necessarily think so. He asks financial advisors this exact question and most of them get it wrong. I got it wrong. Andy reckons for most people, a pay rise is actually terrible news for their financial plan. And once he explains why, you'll never look at a payslip the same way.

8:44Now here's Andy.

8:50Quick one on GainsApp, which is the app I built. If you're anything like me, you've got your Monzo over here, your Halifax over there, a savings account there, a credit card there, a business account there. And it's very, very complicated and difficult to stay on top of your finances. You tap for a coffee over there, you've got your meal deal, you'll get your bits that you pick up on the way home. And if I actually asked you how much you spent today, it's very difficult to do that. But Gaines is pulling all of your accounts into one easy to manage dashboard. From there, you can see everything, all of your spending laid out visually for you.

9:17You can move spending into different categories and you can set up budgets across multiple accounts. We also offer instant cash back by gift cards, saving you three to 20 percent at every single major retailer in this country right now, which can add up to over a thousand pounds a year for a 30 second step. So not money that you can sniff out as Christmas covered flights, holidays, whatever that might well be. The average household also overspends on bills by roughly 500 pounds a year. And that is something that we built into gains to track your upcoming bills, tell you when you're overpaying and give you options to switch your bills onto a much cheaper tariff.

9:52You can download gains for free and connect your first bank today The link is in the show notes or you can scan a QR code on screen and let's make life less expensive together.

10:07Again, the thing I ask financial advisors is, do you think a pay rise is good for your financial plan? So I'm asking you, is a pay rise, let's say you were a normal employee on a wage and you got a pay rise. Is that good or bad news for your financial plan? Depends. Correct? on what? What threshold? Are you getting technical about tax rates and weird stuff like that? Yeah, I'm sorry. Right, let's just put that aside. So I'll add some more meat to the question. Okay. I've worked it out and you're going to get, after tax, £1 ,000 a month net. So is this good news for your financial plan? Absolutely, of course it is.

10:48Does it not? Depends still. Okay. Well, it depends what you do with it. Correct. So if you go and lifestyle inflate, well, you might as well never have the pay rise. No, no, it's really bad news for your financial plan here. Yep, so if typical person, pay rise is a bad news for your financial plan. That's the headline. Because typical person gets a pay rise, we'll work off£1 ,000. I know that's very high for a typical pay rise, but we'll just work off that. If let's say the pay rise after tax was£1 ,000, is this good or bad news for your financial plan? The answer is it depends. It depends on what you do with it.

11:22if you only invest 200 pounds of that, which will be quite a typical but still punchy number, because they've already earmarked the thousand pounds for who knows what, lifestyle creep, a load of other stuff, new car, holidays, new gym. So if you only invest 200 pounds of that for your future self, your current self is now spending 800 pounds of it. So 20 % is invested and 80 % is spent. so now you are aiming for a bigger number in the future your target has got bigger because your now new lifestyle includes that extra 40 percent that you're spending oh i see the way you're looking at that yeah yeah yeah because you paid more things to the things yes yes yeah your lifestyle costs have now gone up so you're technically if you've done 600 400 you'd have been better off yes so if you invested 501 pounds into your isa and spent 499 pounds on your current self, that pay rise is good news for your financial plan because your future number's gone down minimally by a percent.

12:25Most people are not financial robots. A financial robot would go, right, I've got a thousand pounds pay rise. All of it's going in. But who's going to ever say that? Typically, I ask this question to financial advisors all over the country. And these are financial advisors. You think they should know. And they all say pay rises are great news for financial plans. And then we break down the numbers like we've just gone through and they're actually no they're so a typical person would probably invest 100 pounds of that believe it or not a typical person if that okay so 100 150 200 we'll be kind for 99 of people pay rises are terrible news for their financial plan you know my biggest pay rise ever in my life probably similar to yourself was going from uni generally having no job let's keep it simple.

13:12I did work at uni to my first job. My first job was£750 after tax a month. I went from zero to£750. That's the biggest jump I'm ever going to have in my entire life. And I thought, my God, when I'm earning£1 ,000, I'm going to be, you know, a month, I'm going to be definitely saving the difference between the£750 and the£1 ,000. Do you hell, you know, when it starts coming in, you quickly readjust. So yeah, generally pay rise is the bad news for your financial plan because you're going to consume more of it now, which means you need to aim for a bigger future number that you then need to live off can i play level's advocate to that yeah oh andy i'm definitely gonna like lower my lifestyle when i get to that right again good luck with that most people don't um again when we plan with people in their early 50s like the big question is um how much money needs to be coming in every single month uh for you to live a comfortable and dignified retirement?

14:11That's the question. How much money needs to come in every month for you to live a dignified and comfortable retirement? Assume the mortgage is gone. Assume the kids are gone. And they go, good question. I've never really been asked that before. Blah, blah, blah, blah, blah, blah, blah. Seven grand a month or whatever the number is. Three grand a month, 20 grand a month. You know, people come out of all different numbers. When we build plans, long-term forecasts, we generally take what they're spending now on lifestyle so lifestyle excludes mortgage excludes contributions and excludes kids because they've got a finite um length of time in the plan and what's left we generally forecast that going forward uh most people find it very hard to reduce their lifestyle spending um funny that especially the couple uh heterosexual male female couple they find it very hard to reduce their their expenditure I think the only people I've seen do it is single males are the only people I've seen that can do it quite successfully I was just about to say my dad and my stepdad have definitely gone backwards I talk about it I wrote an essay about it OPM, you've heard of OPM, other people's money so when you are working, usually you're employed you're an employee or even if you're a business owner like ourselves when you're working, money just flows in.

15:33You know, you send invoices, you've got recurring clients, or you've got a paycheck. So whilst you're in your working stage of life, money flows in. It's your money, you've earned it through being an employee or running your own business. You've earned it, but it feels like other people's money, OPM. Just flows in, flows in, flows in. You think this is fantastic. You know, this is a great life. When you hit retirement and you've built up this amount of capital, pensions, ISAs, general accounts, and then you think, oh, I've got to withdraw some money from this, from my stash, from my pot, to sustain my lifestyle.

16:09Weirdly, it feels like your own money for the first time. That's when people become a lot more conscious of their spending. Whilst they're working, they're busy, the kids are causing hassle, you know, money's flowing in, they don't really worry about it that much. When you say how much you're spending per month, it's like, all of it. I've never really thought about it. obviously the key thing is they need to be investing and increasing that every single month what they're spending i'm i'm not bothered about it's all kind of pushing that away and then when they're doing the other thing they're pulling it towards them yes yeah so so so the the wages your own business feels like opm other people's money whereas when you're retired and you're drawing down on the capital it feels like om own money for the first time ever frugal and exactly so literally you have this high-flying couple that don't give the monkeys what they spend if i say look you can go online and do some comparison as if i'm doing that when they start getting retired they spend three hours trying to save 40 pounds a year on contents insurance because it first for the first time it feels more painful um so this is what i've noticed with working with people for like the last 20 years whilst they're working it feels like other people's money when they retire it's oh my god it's my money for the first time and it is a real um a heavy impact on clients.

17:24They just become a lot more conscious of stuff. Okay, so there was Andy, and he says every pay rise moves the finish line. And that is what got me. You earn more, you spend more, and the life that you get used to gets more expensive. So the pot you need to retire on grows faster than you're investing it. You feel richer, yes, but actually you are further away. So bank most of the rise before you get used to it. Push up your investing until it feels a touch uncomfortable. Then you can live on what's left. Even when you know all of this, though, it's still very hard. And that's not you being weak.

17:59There are companies spending fortunes working out exactly what buttons to press and when you're most likely to spend. Now, Eman is up next and he sees this every single day. He looks after people who earn more in a week than most of us earn in a year. And some of them still end up with absolutely nothing to show for it. In this next bit, he breaks down the system that's built to take your money. and the simple one you could build to protect it. Now here's E-Man. There's no shortcuts to this success thing. You've got to put in the work. You can only reap where you sow. And I think a lot of people want to reap, but they don't want to do the sowing.

18:36They don't want to do the farming part. Think about a farmer. You're out there planting the seeds, looking after the cattle, doing the work. When you see the ground, there's nothing there. But you know in 12 months time, there's going to be a harvest. You know it over time. so you continue to look after it. Pesticides, get rid of all that, any animals. You're doing the work. And people are not doing that for their finances. They're not doing the work. But yet they hope that I'm going to become a millionaire all of a sudden. And this is why we're seeing so much people doing the lottery. But if you understand how the lottery works, if everybody was winning, it wouldn't be working.

19:11People now go into gambling. If you understand how gambling works, the house wins. Otherwise, they wouldn't have a profitable business. so we get desperate we see payday loans all of these things that now come in and it just takes over because we're trying to find the shortcut to get the thing that we want instead of doing the work and then getting it when we deserve it because the problem is we live in an instant gratification generation where we think we deserve it everything now and actually that's not how it was I remember growing up we had the Argos catalogue you know it was so good it was so good you flip the Argos catalogue and yellow pages all of their stuff you look at it pick what you want rip that page up tell you this is what I want and then you wait you have to wait all the way till Christmas that's it it's the waiting you have to wait and guess what that first Christmas you might not even get it so you might have to wait till next Christmas and then you're thankful because you know how hard your parents had worked to give you this thing that's taken them two years to buy now they're working it on Klarna and it's going out of control I know this is what I did I've done this like deep expose type video on like the digitization of money and like how e-commerce and like the internet essentially just exploded this like now yeah thing because it's like um it's gone from basically it was literally i talked about like you'd have the catalog you'd want it you'd save up for like six months you'd be putting two pound 50 away on your paper round and then you could afford the game or whatever you wanted now it's like i want it can i get it credit access boom it's and I've got it next day.

20:49It's at my house. Something in Amazon is on the same day. So it's like that kind of like barrier to friction is gone. And they've just spent billions of pounds removing these layers. So now we just whack it on our phone. You don't feel anything. Yeah, exactly. You just, how much have I spent? I don't know. Come on. You know what? I always tell people, when you used to pay by cash and then they didn't have a fiver and they give you back coins. Yeah. It hurt. The worst feeling ever. Yeah. and now your wallet's heavy and it's just like but you can feel it I remember you giving someone a£20 note and then getting like £7 back you feel the pain like okay you really thought about it you go does this provide me value I have to hand it over I have to actually I actually look at my wallet remember them if you're doing a big purchase you have to actually count the money like you said there's friction while you're counting the money there's time for you to say no actually no I'm not going to do this yeah or take those two off I don't need them yeah exactly I don't need that actually you know what i don't want my wallet to be too empty so i want to keep so what's this okay yeah i'll spend this amount like you've got time to think about it when you're tapping it's just tap you're gone and then when you've got overdrafts when you've got kalana when you've got all of these buy now pay later all of a sudden it's like you are so distant now now we're buying pizza yeah yeah so you just click yeah and it just goes bing oh it's you and it arrives the next day yeah it's mad and so like we i'm i'm trying to figure out ways that how can we put friction back in now if we don't um then you've got to have visibility yeah visibility is a key well and if you can be visible then you kind of know what you're spending yeah i mean my clients they all my clients on a 48 hour rule yeah so they can put in a basket but you can't you can't go you gotta wait for your hours before you buy it yeah you know that because of that rule most of them it's about 70-80 % of the time they don't buy it.

22:43They realise they don't need it. We have to understand that as humans we think we're so individual but actually the way our brains work has been programmed already and people of scientists have studied it. So a lot of the stuff the reason you just want to buy something is not by accident. Remember I always say you haven't got a system to protect your money but every day there's a system trying to take your money from you. You wake up you've got emails. Remember they're sending look at your emails you'll see why did I receive an email at 6 o 'clock 5 o 'clock in the morning because they know when you wake up that'll be the first email you're going to see why do I receive an email the last day of the month or the first day of the month because they know that it's payday and so they know you've got money it's like Martin Lewis sends us at 9pm which always really messes with my head I'm like why is it 9pm it must be because it's the last email before you check it going to bed the deals then your guard's down exactly come on so they know everything is planned.

23:39So someone's planned to take your money from you. Someone's planning every single day. You watch TV, you watch YouTube, you watch, you go outside on a bus. There's adverts. Wherever you go, somebody's advertising at you, trying to take your money from you. But you have no system to keep your money. Guess what? You're losing the game. So the biggest thing I tell my clients is, before we talk about investment, we need a system. You need a system to protect your money. I always say, it's like when you start a job, you have an induction. They'll tell you, this is your desk. This is the kitchen. This is the fire exit.

24:15An emergency. This is where you go. You have an induction. Why have you never given your money an induction? Download Gains app. It will solve it. Yeah, exactly. Visibility. Visibility. Have a process so that when your money comes in, you say, oh, you, this portion of my money, you're going to pay my bills. This one, you're going to save. You're going to invest. Oh, you're my spending money. that give it give have a plan for it if not it will flow in and it will flow out and if you leave it all in one then you're way more likely just to tap into it so systemization or automation and it will just run like clockwork this is the thing people think this stuff takes ages to set up it doesn't you can be done in half an hour and you've set up the right banks you set up all the like the cross promotions to each one what am i sending x y and z and then it's done and then it's about mini check-ins here and there like am I on track am I did I go a bit nuts last weekend but okay I messed up like now I've got to move some things around like that's the what you should be doing because it's much more easier to do that rather than sitting down and going I've got to do a whole budget like every single month it's going to take me an hour like no one wants to do it no one does it so it's just like set a system up that you know is going to run and do mini check-ins here and there yeah and I said that especially with it like the AI now put your last three months bank statements into AI to create a spreadsheet and tell it to create a document explaining what you do good, what you do bad, what you can improve on.

25:39And then analyse it. Do it another three months. Put it, oh yeah, you've improved from the previous. You spent less on this. You spent less on that. You've done better on. You don't need to go and start filling out the spreadsheet yourself. Do you know what I mean? No. You can, the computer can do that for you. So that's great. But do something. Yeah. Like so much people moan and complain and I can't do this and the system's against me and this. You are against yourself. I've got so many people like you know Christians that we say oh you know the devil the devil don't even know you like you are your own devil like you are the one putting yourself in this situation do you know what I mean like the poor guy is minding his own business and you're just blaming him for stuff that he ain't even he ain't even doing nothing to you you are the one making these decisions you are the one not being responsible with your money I see people I want to buy a house but I just don't have enough money I did a show we did a show with Channel 4 and this person's like I can't have enough money we went to their wardrobe By the time he added up their clothes, their shoes, their bags, they had over£80 ,000.

26:42Yeah, I can see that too. I can see that. That's mad, isn't it? It's crazy. Yeah, yeah, yeah. So you haven't got a system to protect your money, says E-Man, but every day there's a system trying to take it. One click buying emails, you know, emails landing the moment you wake up and then again on pain day. Spending in today's day and age has never, ever been easier. So steal Eman's fixes. Wait 48 hours before you buy anything you don't need. Split your money up into pots so every single pound has a job or most of it has a job. Automate as much as you can so you're not relying on willpower. And if you brave it, chuck three months of bank statements and actually have a look at what is going on with your money.

27:26It is not pretty, but it works. And that's exactly why we ended up building gains, to give people that financial picture. Protecting your money, though, is one thing. But what does it look like when someone on a good salary actually gets it right? Holly Gusco is a financial advisor at LCH Wealth. She walks through a real couple on a hundredth grand and the big decision that they made. And I don't know if you spent any time in the comments section on any of these financial posts recently, But everyone always says, oh, why bother saving? You know, you could get hit by a bus tomorrow. What's the bloody point?

27:58Well, this is exactly what we tackle in this bit. So here's Holly. Now they're someone in their 40s. Yeah. But they still haven't done anything. They're still struggling. Yeah. They've been meaning to sort this out now for 15 years and they never did. Yeah. I get this question all the time. Okay. Is it too late for me to start investing into my pension? Absolutely not. Yeah, it's definitely the wake up cool decade. So we get a lot of people that come to us in their 40s. And I mean, and 50s as well. They're definitely thinking, is it too late? But yeah, 40s, I think they're starting to think, okay, retirement's actually not that far away now.

28:39I really need to make sure I'm on track. Or if I haven't started, I really need to start doing something about it. and in your 40s you could be kind of at the peak of your career and your earnings so this is where pensions become a really powerful tool to manipulate how much tax you pay if you really you know plug a lot into the pension over that time frame you might have to take slightly more risk if you've not been investing you might have to really go for it and put a lot into your pension in order to achieve what you want in the future but it's definitely um not too late um and I think this is where financial advice can become really valuable as well because we do this thing called cash flow modeling so I mean you'll you'll know what it is um but it's a really good way to visualize kind of where you're at now and what more you might need to do um and I think I think 40s is you know you have to be intentional um and you have to work out what's actually important to you so I had a couple um the other week and to start with we were we were saying you know you earn 140 let's put 40 ,000 into your pension to be as tax efficient as we possibly can be um and then that way you can retire by 55 but then they went away and kind of thought actually that's that's not the priority I don't want to I could put 40 ,000 into my pension but I'm going to be sacrificing you know some of the holidays with the kids now um and yeah they decided they'd actually rather work maybe five ten extra years and not make those sacrifices now um and i think that's definitely fine it's just knowing what the impact of that decision is yes absolutely it's opportunity cost yeah and just factoring that into your decision making yeah and there's no right or wrong answer exactly like um for example you could like really dislike your job and not be okay with if someone turned around to me and said another five years and you're like no chance like I just can't yeah um and I'm okay with taking less like and then you've understood that opportunity cost at that point yeah exactly um and how do you model that with someone like do you do you go into the human side of it too yeah so we always ask a few questions at the beginning of the meeting to truly like truly understand what's important to that person we get a lot of people cry at these questions as well really um yeah they're called kinder questions if you want to have a google after kinder questions yeah they're american so i think you have to adapt how they get you in here yeah is that why kinder right um but um so that really helps us at the start of the meeting to understand you know what the priorities are what's actually really important to that person um and we can model different scenarios as well so we can model like the dream scenario where you get everything that you want so that's why we want people to dream big in a way um but then we might make a more realistic plan as well of okay well if you you know you might be able to retire then but you might have to spend less money in retirement if that's really important for you to spend more then you might have to work a bit longer you might have to spend less now there's kind of lots of different levers that you can pull but yeah we'll model different scenarios for people

32:02A little break in the episode here. Have you guys been meaning to write or update your will, but just keep putting it off? You might have done everything right to protect your financial future while you're here. Your savings are building, your ices are ticking over, maybe you own a home and you've been contributing towards your pension. But what about after you're gone? And that is where a will comes in to make sure the people you love are protected when you are not here. financially and emotionally too, saving them time and stress when they're going to need it most. Without a law, the laws of intestancy decide what happens and that does work for some people, but for others, they want to say in something this important.

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33:12To claim your free will today, head to will.octopuslegacy.com forward slash money gains, or you can follow the link in the show notes below. And if you are watching on video, you can also scan the QR on screen. Offer ends soon. So sign up now before appointments get booked up. And now back to the episode.

33:33And how do you get past like this is becoming more and more prevalent, especially on the videos that we put out? Like a lot of people just go like, what's the point in having a big investment portfolio when you could get hit by a bus tomorrow? like how do you handle that because it's that we are moving like the where things are getting more expensive and it's getting harder for people they are becoming a lot more like oh just sod it we'll do it now um and we'll live for now because the future's not looking too bright yeah they see it that way when they look forward they can't imagine 20 30 years then yeah how do you deal with that individual and how and what would you say to someone if they said that to you I think the first question I'd be asking is like is it just an individual or do they have a family like do they have a partner um do they have kids um because you might die but what are you leaving behind in that scenario um and then I mean also who knows what the state of the state pension's going to be like so we can't rely on that either I don't think so um yes you might die tomorrow but you also might not you might live until you're 110 yeah so we on our cash flow we do till age 100 do you yeah and i keep saying i think we need to maybe we need to increase this even more um but most people you speak to will say there's no way i want to live until age 100 so i'm 80 i do 80 and i'm done you know i think a past 80 it doesn't look too fun yeah um but yeah we've got to plan that that could happen um and we want to make sure that you know your money doesn't run out before you do um so yeah we just want to plan we don't want you to die with too much money but we also want to make sure that you don't run out of money so we're cautious in the modeling so for that individual that's spending spending spending spending live for today and you know it comes back to that old cliche saying of like you can be 30 000 and wealthy or 100 000 and completely flat broke yeah just what you're doing with it yeah but how do you balance those with them so i'm a spender and i just want to just i just want to go on the holiday holly just want to go on the holiday so it's again it's about being intentional so we have to show the impact of them doing that now and how that's going to potentially affect their future because they they could get there um and then we don't want them to just be in a rubbish situation so i think it's it's really important to understand the budget and in the first instance so what's your essential spending and then what's your discretionary spending so the holidays and the things like that they might be important but you could potentially go without them um and then with those sorts of people what we try and do is you know take away the spending a little bit by automating what goes into the investment so oh interesting cool yeah so when they get paid we'll say well straight away money goes into the pension you know they say like pay yourself first pension um ices whatever it may be savings um and then what's left is then for them to spend essentially so i think that's a really good way for people that um struggle um with spending um just to automate everything because a lot of the time you won't even realize that it's gone i understand this is totally harder for some people than it is for others because of how their life is and the amount they earn and they be struggling or whatever but what i've done recently is i i've called it the anti-budget and it's basically it's 400 pounds a month yeah and within that 400 pounds a month i can literally do whatever the hell i want with it yeah everything else is very well meticulously laid out and at 400 quid i just don't care yeah like and if it goes in two weeks well that's my fault and i but it doesn't blow everything else apart and i think having that separation even with a small portion of your money just allows you to sort of live a bit freer and spontaneity and not everything is so formulaic and like we have to do all of this all of the time with all of our money and every penny has to be counted because there does need to be an element of like yeah I'll come for a drink yeah do you know what I mean otherwise what are we doing yeah and and I get some people way more regimented than others but largely they're not yeah yeah you need to have guilt free spending because it is true to some extent like some we don't know we just don't know how long we've got left so you still want to be able to enjoy your life now um but there's definitely a balance with also planning for the future as well and yeah we have couples where they've got completely different um financial personalities that was my next question that was my next question because you get the spender of the saver or sometimes they're both savers and that's equally as hard yeah exactly um so that's a really good way in in a couple where you have got someone that's you know they want to make sure that everything's going into the investments and working as hard as it can be and that they're also saving loads of money and you've got the other person that you know is is the spender in the relationship um and by allocating a certain amount each month that is that like fun money for them to do whatever they want with it um it just allows them to have a bit of that guilt-free spending and enjoyment as well totally i completely agree the anti-budget i love it yeah all right so you could be on 30 grand and wealthy or an 100 grand and flat broke what i love about holly's couple is that they didn't do the perfect thing right they could have had 40 grand they could have thrown 40 grand a year into their pensions and stopped working early instead they chose holidays with the kids and a few more years of work and that's fine right because they made the choice knowing the trade-off that they are taking there.

39:10And that's what it is. Personal finance is all about trade-offs. And that's what a financial plan can give you. It's not a lecture, guys. It's a choice that you are making with your money. Now, the earliest you can usually touch a private pension goes up from 55 to 57 in April 2028. So you're factoring those things into your plans, right? Paying yourself first, automating it, giving yourself guilt-free money to spend. That's the kind of systems that we need in place every single week. Now, you might be thinking, great, well, I need myself a Holly Earn. I need myself a financial advisor. Well, last up is Pete Matthew from Meaningful Money.

39:45Now, Pete is a very well known YouTuber and financial advisor who's basically built a career telling people that they probably don't need one up until a certain point. And his firm is busier than ever. He's going to tell you why money isn't actually rocket science and the most dangerous money advice out there and when you should actually be paying for help and when you actually don't need it now here's pete um but i think what i really liked when i first came across you is like um you're a financial advisor but you were a lot for a lot of people you were just being like you don't need one yeah which i quite liked yeah good because it was like it was a financial advisor telling you people that look a lot of this is simple and and it's kind of like the dentist saying you don't need to come see me because your teeth are all right and they're not yeah yeah it is and honestly i built a career on that man and it served me very well but one thing i loathe about the financial services industry and about advisors not all clearly most advisors are good people right but so many advisors still think that we have some kind of magic secret source that is uniquely ours and you know with they're like they take us into a dark room and make us swear an oath like it like this is how you must handle your money of course it's just bollocks managing money is not rocket science in fact it's as simple as anything the thing that gets in the way is people it's ourselves it's our behaviors it's our kind of preconditioning and programming that comes from our childhood and all the million factors involved and that's really hard to get over but the mechanics of money management are not difficult now we don't teach them in school so they're not difficult but you know it's like driving a car is not difficult once you've been taught no exactly right so andrew craig says that it's like it's no it's no more difficult than driving a car but you just need to learn how to drive you need to learn how to do it we're not born with the innate knowledge knowing how to do it so if we didn't have a good guide or mentor you know parent or somebody else uh that taught us that stuff i don't know how we're supposed to know it so for me it's just been like you know when i started meaningful money it was 2010 right I started thinking about it in 2009.

41:57And that was about three years after the original RDR consultation paper, which for those who don't know, was the Retail Distribution Review abolished commission and elevated the minimum level of qualification for advisors. So it was unreservedly a good thing. But any idiot could see that it would disenfranchise a huge swathe of the population from getting decent advice. Because those ordinary working people used to go into their bank, they didn't pay anything for the service, They'd come out with life assurance or pepper and ISA back in those days or whatever. And that outcome was better than they're not doing anything at all.

42:33But they didn't pay anything because the advisor got commission. Now, commission on the flip side is the root of many ills, right? Endowment, mis-selling, you know, so many things I could think of through my career that have been bad outcomes driven by commission. But the RDR abolished all that, which was a good thing. but you could see that it would leave a lot of people lacking advice. And so it hadn't come in yet, but all the signs were saying that it was going to. And so I thought we need to teach people this stuff. And I love messing around with cameras and microphones and stuff. So it was like the perfect thing for me to do.

43:12And I just basically set a camera up one day and said, I'm going to teach you how money works because it's not difficult. But you need to do a few simple things, but do them consistently and regularly and you'll be all right. follow these steps and you are guaranteed financial success it is i'm more than happy to say that if you misstep on any of them you can derail yourself so i think if we give people the tools where an advisor can really add value of course is in helping clients overcome those behavioral issues keeping them in their seats when the media is screaming at them that the markets are going to tank further um you know all those sorts of things uh basically guarding them against themselves and of course plenty of people are too busy and don't have the interest or inclination and that's why advisors have a job so you know i but yeah i've built a career on telling people not to come and see me and yet we're busier than ever it's just how the internet works i think and the universe works you put good stuff out there and it'll come back to you um and i've proven that many many times Zig Ziglar help a million people there help you yeah totally right and I just firmly believe that and I like that because it just means that and you're totally right like a lot of advisors it's 10 ,000 even 100 ,000 minimum and for the average person it's like well well you just need to know the basics to get you to that point yeah and actually the time best spent is getting that person to that point because that material difference from 0 to 10k is enormous and then the 10k to 100k 100k for that individual.

44:43You're off to the races then. Exactly. And then some complexity might creep in because by then you've got kind of into it and you're starting to understand it. And then you're thinking, oh, you know, I'm starting to look at funds. And before you know it, you end up with an ISA with 15 funds in it and you're now not keeping track of it. And then you either need to reset and simplify or you need to basically hand it over to somebody who can do it for you because it's got beyond your time and inclination or energy to deal with. And that's why there'll always be advisors. I'm certain of it. I mean, I'm sure an incredibly powerful financial AI will rise, which will be a good thing fundamentally because it will help more people do this stuff.

45:20You know, I'll be redundant before too long. But I do think that making big and complex and difficult decisions with multiple kind of factors at play, balancing different needs and wants, hopes and dreams and fears, that will always be, at least for God willing, for as long as I'm alive. That will be the preserve of human interaction. Yeah, because people need a coach every now and then. And it was just need an accountability partner. That's why I've done gains with two co-founders, which some people were like, why have you done that? I'm like, well, because I don't want to do it on my own. And I need something to keep me sane, you know.

45:59And I think it's the same with finances. But I think as well, one of the core things is that when you come in, say you come into money or you are coming up, It's the bigger life moments. That's when advice can really be so beneficial because Aunt Julie lives in New York, has passed away and left a mansion to you and the kids and whatever. And suddenly you're like, whoa, that's more money than I've ever handled in one transaction. I really don't want to mess it up. That's a good time. I hear that all the time. And yes, most people seek out advice for the first time at some major life transition.

46:36so it's either new family new or breaking relationship um a death of a loved one and maybe an inheritance of course maybe a lottery win these are sort of and the big one of course is retirement the ultimate financial transition pretty much apart from dying right retirement's the ultimate transition i think and so it tends to be at these big life events that most people seek out advice for the first time yeah most people don't just kind of wake up one day and I think I'll go and have a chat with the financial advisor whose window I saw on the high street. Most people just don't do that. They've got other far more interesting things to do with their time.

47:14And so, yes, it's driven usually by the big life transitions. And those are usually the things that sort of make us sit up and think, you know, I really need to get a handle on this. Really important. What do you think is like the most dangerous piece of money advice out there that's from your years of doing this? that's a good question um there's i mean then you know i suppose i could sum that up in get rich quick right it's not advice that it's a promise but of course it's an empty one and actually getting rich quick is dangerous there's plenty of sort of bankrupt footballers and lottery winners that fast money testament to that fast money is dangerous so i guess that would probably be my answer to that the rest will be different sort of shades of gray so honestly It doesn't matter what fund you pick, ultimately, for the most part.

48:05Occasionally it might do. You know, it doesn't matter whether you tilt your contributions 60-40 into pensions or into ISAs, or whether you have a 5 % or an 8 % allocation to emerging markets. None of that makes a whole difference. But the flip side, when I say that financial success is guaranteed if you do these things regularly and consistently, The flip side to that is if you don't, or if you try and kind of hack the system and accelerate it, it will probably bite you. Because you won't be equipped to deal with the money. Money is a deeply psychologically intertwined thing. It can really fuck up your mind if you allow it to.

48:50A lot of it comes from desperation in a lot of ways, doesn't it, to get to that next step. I mean, there's just endless things weighing it down. It can be, you know, if you inherit money, it can come with guilt. You know, I can't sell those shares because dad held them and he'd always talked about them. Nonsense, your dad's gone. But I mean, you can't say that to somebody. You know, well, you can, but you're a bit more gently perhaps. But, you know, it's like, well, actually, that money could transform your family's life if you actually sold those shares and used it, moved house. you know, or whatever, fix what needs fixing, change the car so that it's safer.

49:28But, you know, money is laden with baggage and we are as individuals. And we're just, I mean, I'm 28 years in, man. I'm only just kind of scratching the surface of what that really means for real people. And a good advisor can help people sort of tiptoe through that. But yeah, money's a powerful thing, but it can really mess with your mind if you let it. And so those are the times to seek help. So let's pull all of this together, right? Jason, it's not what you earn, it's what you keep. Andy's was every pay rise moves the finish line, so bank it before you get used to it. E-man, there's a system trying to take your money, so build one to protect it.

50:10Holly is pay yourself first and make choices on purpose and be okay with the trade-offs. And Pete is it's not rocket science. The thing that gets in the way is us. If you do one thing after this, set yourself up a standing order that leaves on payday before you've had the chance to spend it, even if it's small. Then you can nudge that up every single time you get yourself a pay rise. Now, all five of these conversations on this channel are in full in the description below. If you liked what any of them said and you want to explore it more, we go much deeper on those episodes. And if this helps, send it to a friend who you feel like you could help with their finances a little bit.

50:44You know the one that needs that help. Honestly, I've loved this, guys. If you're not subscribed, please do follow the channel. It really helps us grow the show. And if you haven't left us a review, if you're listening on Spotify or Apple, please do leave us a review. It really does help. And we do love getting your feedback as well. I'll see you next week. Catch you on the next one. It's been a real pleasure. So I've been working on something super exciting for the last 12 months, and I am very, very proud to finally bring it to you. And it is called Gains App. My whole thing with this was we've been speaking to many of you guys about the rising costs of living and how hard it is to actually manage your money.

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