PODCAST EPISODE 279 – Thinking Accurately About Money



      • 00:00 – Episode begins
      • 00:05 – Paul welcomes listeners and explains what the episode is about
      • 01:20 – John Patterson introduces Paul and the topic of the focus lecture
      • 06:41 – Paul’s credibility and experience
      • 07:31 – Money is an inescapable, unavoidable condition of life.
      • 11:57 – How much money you actually need to retire
      • 14:47 – Market narratives
      • 19:46 – A formula to calculate how much it takes to have work optional lifestyle
      • 31:42 – Episode ends, thank you for listening.


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[Tweet “I don’t know if I’ll ever have enough money to retire. So I’ll probably just work forever. Like, they get a choice in how long they work. the Marketplace makes that call. #YourBusinessYourWealth”]


[Tweet “But you are going to owe the 65-year-old you X amount of capital so that you can continue to live the life you’ve been living or some semblance of it. #YourBusinessYourWealth”]


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Full Episode Transcription



Hello, and welcome to your business your wealth. My name is Paul Adams, CEO and founder of sound financial group. And I am so glad you could join us today. You see, just recently I had a chance to appear on the influential you focus lecture series. Now I had a chance to chat with their CEO, John Patterson about what it takes to think accurately with money. Now influential us and organization myself, my partners have learned from, we continue to be members of their organization. And they do an amazing job of teaching something called transactional competence, you’re going to hear a little bit about that, the team is going to put some links below that you guys can look at, feel free. For those of you who are clients or friends of ours and you have questions about it. Don’t hesitate to reach out to core your eye, or Jeff, we’d be happy to answer any questions or what our experience has been like, super thankful, John Patterson, for letting us reuse this and share it with all of you, you’re gonna get a chance to get exposed to a calculator that you can use that will also be linked below to just test your own retirement scenarios that we put up on our website for you. I hope you enjoy it. And I look forward to seeing you for part two. All right, well, good


morning. Good afternoon. Good evening, wherever you are in the world. My name is John Patterson. Welcome to the influential you focus lecture, called Thinking accurately, about money. In today’s session, we’re going to talk about how you could take control of your financial future, and learn how to avoid making some of the mistakes that people make along the way. First of all, to welcome you, I want you to know that a focused lecture is one of our very specific focus lectures, that’s not only available to our current members, but also to invited guests and the public at large. This webinar will be available as really a replay for seven days after it’s recorded. And then it’ll go into our library of E coaching sessions that we call thrive. And we’ll say a little bit more about that as we go along. Before I introduce you to our guests, for today’s session, our illustrious guests for today’s session, I’m going to do a few things and make sure to a proper orientation to who we are. So if you are new to influential you, we are a global professional development and training organization. And we provide innovative, customer focused content and tools to enhance performance. We have faculty certified faculty and consultants offering programs all around the world. My name again is John Patterson, I’m the CEO and co founder of influential you, I’ve developed and managed hundreds of leaders, managers and mentors, I have facilitated courses and conferences, for many 10s of 1000s. I think Paul, I was getting to almost 100,000 10s of 1000s of business professionals since 1987. I know some of you may not have been born, but that’s okay, so just as a quick orientation to influence your you. At influential you we say you’re always transacting The question we always ask is do you do it powerfully? Now, when we first invite people to consider transactions and what transactions are all about? One of the things that we ask is can you draw one, and most people have a difficult time doing that. We know that they leave some things out. And it’s that abridged interpretation of a transaction, that may be the root of your problems. It’s why you struggle with career. It’s why you struggle with money. It’s why you struggle with people. And the reason satisfaction is always just beyond your reach. So a way to get a sense of what we do here to help you thrive, we introduce you to an entire framework that you can see here. It includes things like how you behave in transactions and what you transact for we’re going to hear a little bit about this today. And in fact, how to build steps for successful transactions and finally, how to expand your skill and ability to transact for what you want. Today’s special guest is long time influential student and esteemed alumni Paul Adams. He’s the founder and CEO of sound financial group. Paul began as you begin in 2016 I believe that you’ve completed our entire curriculum. You’re an esteemed alumni. And you’ve formed a friendship also with Kirkland. Tibbles. Well, before influential you and you met co founder Kirk was able the in are the co founders of this company. And that was back when 20, at the beginning of 2016.


And we found out after I registered for fo T, they both intentionally didn’t talk to each other, because he wanted the offer of influence colleges to stand on its own without the relationship. And I had the same mindset of not wanting to be influenced by how much I like. And so we didn’t talk again, after those years ago, we got to know each other. So well, we didn’t talk again until after I was registered.


Wow. It’s very cool. All right,


well, so it’s great to have you with us here, man. Before I do for those of you again that are new to influential you, then I want to make sure that we give you something that you can use to find out a little bit more about us. And Liz, I’m going to have you put a two minute video into the chat. This is just a video that you’re welcome to watch on your own, it’s a way for you to find out a little bit more about what we do and the framework that we offer. I’ll also make that available for people down in the link below if you’re watching this as a replay or is recorded that Paul’s there anything else that you want to say to let people know who you are, especially in terms of your own authority around the topic for today?


You know, I think probably the thing that people could keep in mind is I’ve been doing this 25 years, worked with 1000s and 1000s of clients. But that accumulated knowledge of not taking like a cookie cutter approach. Approach from a financial institution stead giving holistic wealth building advice to people 1000s of times over that long period of time. It’s, it’s almost like I’ve lived hundreds of years of finance, managing people’s finances for 25 years meeting with countless clients every year has really put me and my firm in a position where we have more knowledge than most people could actually assemble even if they studied really well on their money, because they just haven’t seen as many circumstances as we have. That’s really great. All right.


Well, it’s it really is a privilege to have you here. I love working with you in so many different ways. So for our guests today, for everybody else that’s here today, I want to let you know, you can ask questions that let me tell you when to ask questions. So first of all, you can ask questions, and be a little bit as we get down the road here. Secondly, is that what we’re going to do is we’re first going to talk about money as an inescapable unavoidable condition of life. We’ll say some things about that. But you’ve got to address accurate thinking, because we’re going to talk about thinking accurately about money. So we’ve got to talk about accurate thinking and what we mean by that, then we’re going to hear a little bit about how to think accurately about money in terms of my plan, my strategies, my you know, my, my future, and so forth. And then, finally, near the end, we’re going to open it up for lots of questions that you may have that are specific. And Paul, I personally don’t have any problem with any questions like I’ll I’ll say, I don’t know how to answer that. Or you’ll say, I don’t know how to answer that. I will both answer it, whatever. But we’ll take all the questions we can get. Even if you do have questions, and you know, you’ve got questions, and they’re formulating, you may want to begin to put them in the chat. But don’t press ENTER yet. Right. You may want to begin to craft whatever those questions may be. And then we’ll see if we can get to as many questions as possible. So first of all, one of the things that’s important to know is money is an inescapable condition of life. It’s unavoidable. And money is, first of all, one of those things that represents the value of our health in the marketplace. We can talk about currency, we can talk about all kinds of different ways that money is represented. But money are as we study it is two things. One, it’s a tool and number two, it represents the value of our health. It’s how we try and help with one another. So that’s one of the first things that I’ll say about it. Secondly, when we take a look at the conditions of life, generally speaking,

there are conditions of life that we point out, are sort of fundamental they they either support or threaten a team Yes, I’m going to ask you not so great to have you here, but I’m gonna turn you off, there we go. So, we find that these four conditions that are highlighted support or threaten the satisfaction of all the other conditions, tell you what, when health is threatened, it is tough. When money is threatened, it is tough, it’s tough to satisfy all the other conditions, it takes its toll. So we’re going to address money today, because it is one of the primary primary conditions of life that people maybe satisfy or frankly, you will suffer. And Paul, anything he wants to satisfy or suffer on that note.


Then the suffering is real. That I think sometimes people say things like, Well, I don’t know if I’ll ever have enough money to retire. So I’ll probably just worked forever. Like, like, they get a choice in how long they work, the Marketplace makes that call, or people will be like, well, I guess you know, I’m living a pretty good life. Now, I’ll just have to live on Social Security, meet someone trying to get their medication, when they’re just got Social Security, or look at the neighborhood, they’re forced to live in as a weaker, more elderly person. And while they were in their career, that when you mentioned, it will threaten, and there could be suffering, it’s bad. And even the people who kind of chalk it up and maybe didn’t make the best financial stewardship decisions over their career. They don’t live in, I messed it up. You’ll hear their narratives as Oh, the stock market did this to me, or if it hadn’t been for the real estate market dropping, or that tax code change that changed whatever. There’s always an outside influence, and not in internal ambitious adult responsibility. And that’s part of the reason why they’re where they are right now. That was a little. That was a little tough. Sorry about that, John?


No, it’s okay. Because I’m famous for saying something that goes something like, I don’t want to make you feel bad, I want to make you feel really bad. What I mean by that, you’ve heard me say that, right? What I mean by that is, is if we can support you and wake you up, about the need to address this, we want to, and that goes for all of the conditions of life. So today, again, we’re just talking about money. Now, one of the things that I often do in workshops around the world, is I will say to people, let’s do a little experiment, let’s see if we can make you feel really bad. I’ll say imagine the amount of income that you would like to have available to you to live your life, you’re here. For many people, the easiest way to think about it is an annual salary.

Now let’s calculate something, let’s just take a real easy back to the napkin simplified version of something and say, All right, well, if we take that number, say it’s 100,000, right, double it and add a zero, we end up with 2 million.

That’s the amount that you might need. By the time that you’re 65. To retire on that sort of font. That’s a basic back of the napkin, it’s real rough. And we’re gonna get into that now, if you’re if you know, you need 150 or two, or 350 or four, then you do that math. And for some people, they go, that’s great. I am on track. And for others, it gets very scary, very fast. So again, want to make sure that we give you some tools to move forward with this. The poll anything else about that?


Just that another way to think about it metaphorically, is that you owe you some amount of capital. And we’ll go deeper into how you calculate the amount. But you are going to owe the 65 year old you X amount of capital so that you can continue to live the life you’ve been living or some semblance of it. And if you’ve ever run into somebody where they owe you money, or you owe them money, it’s super uncomfortable. Just imagine that the person that owed you money is you and then you got to live with yourself for the next decades to come. Having not prepared that future you for the current situation that is almost entirely inevitable. Great.


All right. So we are going to talk about accurate thinking. Accurate thinking is something that involves a few things. First of all, there is a narrative in the mainstream market we call the current. Now we’re not going to do as I unpack what we mean by the current, that fundamentally it is the narrative or the narratives, the total of the narratives that sweeps you out to see. And it’s sometimes very strong has a very strong undertone. So some of these narrow narratives can be incredibly compelling. Because they have a strong influence, they have a really strong influence when the entire herd herd H, E, RD, people are running in this direction or running in that direction. And so you have to know how to think accurately. And as we teach it, there are a couple of things that we have to dress. So one is that, to think accurately, you have to separate facts from mere information. Now, there’s a lot of information out there, tons of it. And most of it’s not based on facts. Secondly, you must separate facts and that you classes, the important and unimportant, and they’re relevant and irrelevant. So let’s give you an example of this if we can real quickly, let’s just say that you came across a new story that claims a new study shows that coffee is harmful to your health. So if we’re going to apply thinking accurately about this, you would first you need to separate the facts from the information. In this case, the fact would be the existence of the study, and its scientific finding, while the information would be the news story


And next, you’d need to separate the facts into two classes, the important and the unimportant, the important facts would be the details of the study, such as its methodology, its sample size, its results, as well as the potential conflicts of interest among the researchers and the source of the study to begin with. And then the irrelevant facts would be any sensational, or clickbait elements of the news stories such as, you know, its headline or accompanying images. So if we apply the principles of accurate thinking, you can begin to evaluate the news story objectively and make an informed decision about whether you believe its claims. I don’t see people do this too often. With that kind of rigor, we will often form an opinion about something we see or read or hear,

based on.

I would call it a bias we may have. And Paul, you may want to say something about that you said that big beautiful about this before we started?


Well, one of the things that is missed a lot is some of the narratives that are very, very common out there are untrue. Now sometimes they would be classified as Bs, and sometimes they’d be classified as lies. That’s a that’s a focus lecture series for a different day. But if someone is telling us something, that is not true. The reason they’re telling us that is because we want to hear it. It’s what makes it so difficult for people to resist lies. And in any kind of marketing, not just financial. And you could see it for those of you that have seen like the made off Docu series on Netflix, there are so many times that people were they were very hesitant, like, Can he really be doing this? Could he be making us this kind of money, but they wanted it to be true? Yeah. And that’s what causes so much of these narratives. And the current to be so easily believed is they might not be accurate, but they are what we want to hear and make some hard to buck off and no add to that the bias and everything else, but you actually want the new you want to hear you’re going to be okay in retirement. And that feels much better for 20 years, at least until you find out you don’t have enough that it feels great.


All right. Well, I think that’s a really good segue into let’s let’s now dig into the facts about our money. And one of the best ways to go about this is let’s just look at a calculator Challis. So Paul, I’m gonna have you steal the screen and share the calculator and we’re gonna get into this

just a little bit.


All right, well, so before, in fact, I’m going to stop here for a moment because I don’t want people to be distracted by all the buttons etc.

I just want to share one premise and John gave you a great rubric. John’s rubric of add a zero and multiply by two will replace 80% of the income that you’re making now. But the easy math for you is to think right now. And I’m actually just gonna give you a second and think it through. Think right now I want x to be the amount of money that gives me the opportunity to have a work-optional lifestyle. So it’s financial independence for the sake of a work optional lifestyle, how much do you need every year, and just jot that number down,

and then multiply it by 25. So that’s similar to what John shared with you double it, add a zero, and then add half of it back in, and you’re going to be about there. So I would throw out that if you’re not prepared to at least know right now how much money it’s going to take. We interview clients, our clients go through an application process to work with us. And really successful people top 1% income and assets don’t actually have an answer to that question. So don’t feel bad that you don’t know, nearly every, even the financially sophisticated clients we work with don’t know when they walk in. That’s why we’re giving you all this calculator. So you can use it to your heart’s content. And it’s not meant to predict, you can’t predict 20 years. That’s why businesses don’t have 20 year business plans, they might have a 20 year vision. But they don’t have actual

business plans, they have those three to five years, it’s very similar with our money. So we have to run our money based upon principles. So one of those principles is it’s going to take x amount of capital at work in order for me to have to be financially independent. And so we can look at that now. I don’t know if you want to John, throw out ages, income, etc. For our fictional person, we’ll give people a sense of how they can use this calculator to better understand the financial mechanics of them.


Yeah, absolutely. I’ll offer some things here in just a moment, I happen to know a little bit about many of the students that study here. First of all, if you now have the retirement calculator in your hands, before you leave us entirely and you stop listening. Because you’re clicking buttons and playing with levers, I would not, I would not lose, I meant to have that be posted after this, not at the beginning of it. So don’t pay attention to it at the moment. Take a moment to learn because there’ll be some things that get revealed in the use of the calculator. And if you’re not paying attention, you will miss it. I promise you. My experience in this conversation, Paul, is that there’s, you know, several different revelations that happen, because this tool you are very familiar with. And for many people, you will use the tool based on your limited knowledge. And you’ll just start to put some info in there. So please hold off on doing that until a little bit later. Here. I, Paul, so let’s just do this current age 44. That’s perfect. My experience is people start to worry about retirement about 42 years old, but the sweet spot 42, right. Yes. That’s been our experience with new clients. Yes, absolutely. 42 Something happens biologically you start to go wait a second. Time’s running out the runway. Yes. Hi. Now, let’s say something about retirement in the US you use that particular term. I loved it. You You didn’t say retirement, you said instead what the age in which financial independence for the sake of a work optional lifestyle. Work optional left. Okay, great. So I love that because number one thing people say and, and and applications that we have for our programs is I don’t plan to retire. Which say, well, let’s just say, alright, so work optional lifestyle by age 65. We’ll say yeah. And by the way, as Paul said before, it’s important to know that that number is not just, you know, picked out of a hat. It happens to be currently about the age in which you start to age out of the market. In other words, the market starts to shop for younger, cheaper options for the same

work. It’s not personal to you. I know you’d like to stick around until you’re 90 and get your diamond watch. But the market will move as the market does not personally, it will move that way. So 65 is a good age there. All right. So annual household income. Let’s put it in there. Let’s put in 150. It’s not too high. It’s not too low.

We’ll call that a nice little sweet spot. And then percent of income to say so saying something about the So I know you have your recommendations, I know that you have that sort of thing. And then there’s what people normally do. So say something about that. And let’s put the number that you think we should in there.


So it’s, it would be very, very normal that household to be at 150 would be, it would be exceptional if they were saving 10%. Yeah, most people, I think default somewhat to that idea of 10%. And I think goes back to some of the Judeo Christian roots of our country, it’s like I tithe 10%. At church, I should put 10%, at least toward my future. And even 10% might have worked back when we all had pensions, but we’ll walk through the math 10% is wildly inefficient. And the percentage that will be the right amount has to be of your gross income, not your after tax income, one of the biggest errors people make and trying to do this calculation. So for the sake of what we’re going to talk about today, we’ll say this person setting aside six.


All right, current retirement savings says my retirement savings might includecash, and what else.


So we’re just gonna we call it capital at work in organizations, that’s going to be not the equity in your home, but could be equity in income producing properties, like a vacation property, it would include 401, K balances all that. And if the cash somebody has on hand is like that six month emergency fund, I wouldn’t count that as their investment capital, because it’s not going to grow that way. So we might look at someone like this, and they’ve been talking money away in their 401 K, at least somewhat diligently for years, maybe they have 150,000 of investments.

Okay. Now, in this next section, I’ll leave it blank for now, so that it just doesn’t confuse how you guys can see the client, the calculator can work. But you can put in here, your expected income increases. So if you like, well, a great example would be like a physician might come out of school, in their specialty making 400 a year, but they’re not going to get a lot of extra bumps they’re going to kind of keep up with inflation is how their careers typically go. Yeah, if you’re a young salesperson making 150, at 32, you might need to build in more income increase, then what it’s going to do, if I add inflation here, it’s going to inflate this income. And then it is going to say you need x percent of the income you’re making at age 65. So let’s say for this person, that they want to be in spot that they are replacing 80% of their income.

Okay, and they need to plan to live to age 100.

So that’s 35 years. And what we see right down here, you can see these withdrawals, it works now why? Remember, I just said that we wanted 80% of our pre retirement income, I was making this much more wire the withdrawal so low because we have social security. So it didn’t take a huge amount of money. Now before we’re done, John, we should go back up and show what this looks like for somebody making say 400 a year, exactly. Or income you make, the less different social security makes. So somebody’s making $80,000 Every year, they can actually replace a decent chunk of their income with Social Security benefits.

They still sorry, they they still need to save. But Social Security will replace a bigger percentage of their income than the person making 400. So there’s, if you think about, there’s the people that make like two $3 million a year, they’re like, unless you’re incredibly careless, you’re going to have enough to save, if you make very, very little, so security is going to replace a bunch of it. It’s actually the people that are doing work, like the folks in this ecology that are increasing their incomes actually have a bigger risk of not being able to retire. Because now we have to resist the current to consume, we have to resist the current to jump our investments from one place to another and stay disciplined in the future, which does, it’s not small. It’s like you need to save a certain amount of money every single month. You need to be judicious in choosing your investments. You need to be patient letting them work out all of that it are skill sets that have to be developed and your results will be diminished to this to the extent you don’t have those skills. So we’re gonna say 80% 35 years and we can see here very quickly that it’s like, oh, I’m taking out you know, money every single year but right here life gets real bad real fast. Just like Brian’s added 86? Yeah, if I died, maybe right at the end of Age 85. Yeah, if I timed it right now my spouse is in big trouble, my wife, Kristen, will have spent all her money. And I’m like, hey, my deathbed. Best of luck. And that’s it. So we, of course, will not do that. In fact, here’s what actually happens to people, they don’t spend and run out of money. In fact, I’m going to make this calculator just a little bit more clean, I’m going to get rid of marriage and Social Security, and give you a sense of how much that impacts. So for those of you in here, you’re gonna see this little arrow will let you met with things like inflation, rate of return during retirement before retirement. Okay. So when I leave Social Security off, we go from our money lasting into our 80s to being done by age 72. Again, people don’t spend down like that, usually what they end up doing, is they end up taking a lot less income. So I’m just going to say take less and less income.



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