Relevant Research and Articles:
- Ramit Sethi – I Will Teach You to be Rich
- Scarcity Brain by Michael Easter – Book
David Pace 0:01
Hi, my name’s David Pace.
Alex Barilec 0:03
And I’m Alex Barilec, and this is Pace Yourself, a University of Utah College of Science podcast on Wellness.
David Pace 0:09
So we’ve been talking about the eight dimensions of wellness. We’re going to continue today with financial wellness. So put on your helmet. I’m sure it’s a little daunting for some of us. I’ll include myself in that, but I will start with a definition. And this comes from the National Institute of Health. Financial Wellness is managing your resources to live within your means, making informed financial decisions and investments, setting realistic goals and preparing for short-term and long-term needs or emergencies. They also add to this something kind of interesting, which I think might be a good place to start being aware that everyone’s financial values, needs and circumstances are unique. So we don’t all want to be a Jeff Bezos someday.
Alex Barilec 1:01
No, we don’t. And I don’t think that we should strive for that. And we’re certainly not here to, you know, clarify for people what is important to them or what that could look like.
David Pace 1:13
Or how to do it even.
Alex Barilec 1:14
Exactly. And I think that’s a disclaimer we want to throw out that right up front that we are not financial advisors, but like we’ve been doing with these eight dimensions of wellness, our aim is to help you maybe think about them differently in your life, maybe to begin to approach them or re-approach them. And when I approach the area of financial wellness, I think about it through this question that I learned from this gentleman named Ramit Sethi, who has this book called I Will Teach You to Be Rich, very clickbaity title, and he gets people’s attention with that and good for him. But he has a really good question. And the question is, what does a rich life look like and mean to you?
David Pace 1:56
Hmm. That is something that probably I would have had a different answer for 20 years ago than what it is now.
Alex Barilec 2:05
And I think that’s real, right? That’s a different-
David Pace 2:08
It’s a moving target, really.
Alex Barilec 2:08
David Pace 2:10
I think that. Hmm. Well, what did you think was a rich life when or what do you think is a rich life? Or should we should we go back into the deep, dark past or should we talk now about where we are?
Alex Barilec 2:25
Yeah, I think we can talk about maybe some questions that people can ask their self. Right. So we’ve got this like we’ve laid out this theme of exploring, okay, what does it look like to me? But really what’s under there is what is important to me, what is not important. And then where have we been spending our money and how does that help us to understand what is really important to us? We kind of make decisions and we act with how we spend money. So for me personally, a big part of that looks like freedom and how I get to choose and spend my time and I’m really grateful to have the opportunity to think about that. But spending time with my wife or outside in nature or learning, you know, we talked about intellectual wellness. That’s a something that looks like freedom for me, having the ability to travel and have interesting experiences to meet interesting people. Like that’s really important to me. And then also having this opportunity to cultivate continued learning opportunities for myself, for my wife, and, you know, one day for our family. And it’s taken me some time to really distill those things down. And I also understand, what’s not super important to me, though. So like, I am not a car guy, I don’t desire to drive a Porsche. I love them I think they’re beautiful to look at, but I don’t desire to have that in my life. And that’s just like a personal decision for me. I would rather spend my money traveling or, you know, learning. And so that might change at some point in my life, as you said, which I’m open to. But I’m curious when you think about, you know, some of these questions of what a rich life means to you, I think I have two questions for you. One, what does it look like today? But then also maybe share a little bit about how it’s changed for you over your life? I think there’s some ways we can illuminate for people how these things might move and shift as we grow.
David Pace 4:23
Yeah, I think the first time I noticed that there was a difference in lifestyle and I think we’re talking about lifestyle here to some degree is when as a young man I moved to Boston and New England in general. I lived in Maine for a while, which is where I met my wife. But what I noticed, and I hope I’m not stereotyping but living, having grown up in the West, and maybe it’s because there’s so much sunshine, there’s so much outdoor recreation and wide open spaces. You’re not crowded at all. You can see vistas just by standing on top of your house, you know, is that there were very different priorities back east. It wasn’t about, in my view, conspicuous consumption. Not that people didn’t have really lovely homes and lovely cars and blah, blah, blah in Boston, but it wasn’t as extravagant, it just didn’t look extravagant to me. And what I found out later was that there was a tradition of, well, it’s Yankee, it’s Yankee tradition, which is very, you know, conservative in terms of what you use your money for. And education was a huge part of that. Saving money so your kids could get into a good college, having two modest homes rather than one gigantic home up on the bench with a boat and seven snowmobiles. Of course, you know, in Boston, you do have to take those seven snowmobiles out of town quite a ways to New Hampshire. So it was a little more difficult. But anyway, so all I’m trying to say is that I saw an alternative to what I was seeing out here. And it was good for me because it gave me an appreciation for the fact that everybody is unique in terms of how they see the world and what they think a rich life is. So yeah, that was the first kind of in my face view of what people consider to be financial wellness.
Alex Barilec 6:42
And, you know, I’ve had that similar experience moving out west and maybe there’s just something about novelty and living in a different environment that kind of brings you in tune with this area. But you started by saying, Hey, guys, buckle up, put your helmets on. This could be a rocky conversation. And really our aim is for this to be informative, but also open in sharing our stories. Because the truth is, is a lot of us didn’t learn how to understand our finances growing up. You know, in school, even in the broader, you know, culture we live in, Money is kind of a weird thing to talk about. It’s just, well, you can’t put that on the table to talk about.
David Pace 7:26
Yeah, you’re not supposed to talk about that. Politics, sex and yeah, money.
Alex Barilec 7:29
And I grew very much grew up in a house where that was, you know, kind of the rule, those three things. But I don’t subscribe to that anymore because I think things that we just kind of push to the side like they still need a life of their own. And we talked about how intellectual wildness can maybe be put on the shelf. Financial wellness is buried in the cupboard underneath.
David Pace 7:50
Underneath the sink with all the cleansers and poisons and everything.
Alex Barilec 7:54
Yeah. And maybe we could share a little bit about our journey to understanding, like financial wellness and financial literacy and how those two things are different through the lens of maybe how we cracked into it. So what was your introduction to realizing that this was an area of wellness in your life that needed to be tended to.
David Pace 8:17
Necessity is the mother of invention. When I got married the first time, well, let’s just start by saying that the biggest thing that couples fight about is money, followed by sex and then followed by money again. So it’s a big, big issue. And we’re going to talk a little bit later about the culture that we live in of materialism and consumerism. So my approach to financial
literacy, which I think leads to financial wellness, hopefully, is to ignore it. And so I never kept a checkbook. I mean, I did because I needed checks back in the eighties, right? We don’t do checks anymore, but I never balance my checkbook and getting married to somebody who was a little bit more diligent and financially literate was painful because I just wanted her to be my mommy and tell me how much money I could spend that day. And, you know, that’s the way a lot of us grew up. And I didn’t have a model for financial literacy growing up. So I had to learn. And yeah, when when I wanted certain things like a house and when I wanted a retirement and I wanted to pay off my student loans, then I had to really buckle down and I had to put that helmet on, which yeah, I didn’t mean to scare everybody away, but that’s what it felt like for me, was that this is something that I don’t want to do. This is like eating spinach and I’m going to have to eat some spinach and then eat some broccoli afterwards. And I don’t want to do it. I want to go out and play, Mom.
Alex Barilec 10:10
Yeah. I appreciate you sharing that because I think that’s a really relatable story and I certainly can relate to that as well. But I think what our hope is and we start with that idea of what is a rich life because that’s a hopefully I would like a bit of a question that helps you think to yourself, like, Hey, you, you can take responsibility for this area. You can get really clear on what it is that you want your life to look like and you’re fully responsible for that and starting to understand and take, you know, accountability and answer those questions. I think it gives people agency and it puts them in the driver’s seat in their life where a lot of people don’t really know where to start with this area. And so, you know, just as you said, we want someone else to take care of it for us. But if we’re honest, we kind of live, you know, we’re being human beings and living in a world where consumption is rampant and our emotions drive our decisions. If we leave our decisions to the default, there are plenty of avenues and companies out there that will gladly take our financial resources, even if they don’t add up to things that we value and that can put people in a challenging spot.
David Pace 11:32
Yeah, tight spot, as they say. One of the podcasts that I just listen to was right here at the University of Utah Radio was with Doug Fabrizio and it was just last week and he was talking to this Michael Easter, who’s published this book called Scarcity Brain. And I found it interesting because it kind of let me off the hook while at the same time kicking me in the butt saying, you know, you can do this. And where Easter comes in is that we live not only live in this materialistic world, animated by capitalism, for better and for worse, but it’s baked into our evolution because we for 50,000 years had to hunt and gather and never knew where our basic necessities were going to come from and when they were going to come. So we have this kind of mental engine kind of constantly believing that we live in a scarce world and that everything is it requires that we constantly be looking kind of like the birds that we see out there. They eat all day. That’s their job. So but we don’t live in that world anymore, clearly. And so Easter is talking about how to get out of that scarcity loop, he calls it. And the biggest scarcity loop that we can find that’s very embodied is in a casino.
Alex Barilec 13:07
You don’t say, yeah.
David Pace 13:09
So without going into too much of that and dissing our sister city across the desert here, you know, I mean, we saw this when the pandemic hit and we all rushed to the grocery store and picked up toilet paper. And anything that was a can with something in it. We didn’t even look. We just were just mortified and so buying stuff has become what Americans do and I think other developed countries have found themselves doing. And so he talks about the four reasons why we buy. When we need something to accomplish something like a tool, for status, to belong, That’s an interesting one. And finally, boredom and the biggest example of how we buy through boredom is online buying, impulse buying, and it gets us into so much trouble. It used to be credit cards and it’s still credit cards, but now it’s online buying. We get something in our head that we want. We don’t have to wait. We just go to Amazon and buy it in the next 10 minutes and we don’t even have to enter our credit card anymore.
Alex Barilec 14:29
Or what you’re looking for because Amazon knows what you’re looking for.
David Pace 14:32
And it will tell you what you need.
Alex Barilec 14:33
And as much as we love that and they’re right, a lot of the times I think when we think about financial wellness, I think what you’ve really presented here, David, is like an onramp to literacy. So this area, is just like you can learn about particle physics or, you know, cellular biology, financial literacy is also an area to learn about. And what you started to create is like, okay, at the base of financial literacy, we need to understand who we are as human beings and how we make decisions, particularly how we buy, and then what the environment that we live in is. And unfortunately and fortunately, as you said, we live in an environment where there’s a kind of an asymmetrical relationship with these companies know a lot about us. They know about human buying behavior. And so what we need to do is we need to understand all these things. Then if we stack the question on top of that of saying, okay, what does a rich life mean to me now we’re starting to give people, hopefully some areas for them to explore how literacy and financial wellness relate. And financial wellness really is your ability to take action and responsibility in this area, to create a plan to create balance and have a strategy going forward. And so you talked about reasons why we buy, but if we think about four key areas of- and we do want to keep these high level- but if we keep think of four key areas of our finances, we think about saving. We think about investing, we think about budgeting, we think about paying taxes. Do you want to talk a little bit more about maybe some questions or some tools that you’ve found helpful in those couple of areas?
David Pace 16:18
Well, I think everybody agrees with all all of those. And I wanted to mention briefly about budgeting. There’s the 50, 30, 20 rule, which is kind of a common way of thinking about how we distribute our money in our budgeting. And the way they look at this is that half of your income should go towards things that you need and then 30% towards wants and then 20% towards saving. So you pay yourself through savings when you get your paycheck. And then it’s it’s perfectly common to have at least 50% of your salary or your income going towards the things that you actually need. And then there’s the other thing that you were talking about, that before we started the podcast about wants. Now all of these are open to interpretation and this is where marital things come in, like, does your spouse agree with you what a need is as opposed to a want?
Alex Barilec 17:26
David Pace 17:27
And what do you do with the savings, quite frankly. So these are all conversations that you have to have. And I want to just make a make a quick disclosure here or say that there are a lot that you and I are speaking from a somewhat privileged position here, because we have a job that is relatively adequate for our needs and our wants. A lot of people don’t. There’s a huge disparity in income across even our blessed country here. So I just want to recognize that there are a lot of people that are 100% of what they earn or bring in or can get goes towards towards needs. But it’s not a bad budgeting plan. This 50, 30, 20 rule. And we try to do that, my wife and I, and we also make sure that we are never leveraged beyond a certain percentage point. And that’s hard to tell people right now because their housing, their mortgage is going to be off the charts. So we’re fortunate. You know, we sold a co-op apartment in Brooklyn to move out here for an outrageous I mean, it was just like we bought our house in cash in Salt Lake. And so we had a windfall and we were grateful for that. So our leveraging is very low. What we’re willing to have leverage, and that’s car loans, credit card debt, mortgage, any other loans that you may have. So if you can keep in mind, oh, I’ve got $30 in my checking account that I need, I have to spend because, of course, paycheck is coming in tomorrow. Don’t think of it that way. Think of it as how much leverage, how much are we leveraged right now? Because that’s the real wealth indicator, not just cash.
Alex Barilec 19:31
Totally. So you talked a lot about budgeting and that 50, 30, 20 rule. Actually, I mentioned Ramit Sethi earlier. He cites the same rule. And if you’re looking for some budgeting tools, if you just type in budgeting from Ramit Sethi, he has a bunch of different online Excel spreadsheets that he’s created and what these tools allow you to do is to put down real objective terms like, where is the money going? Right? And it can help have some of those conversations, whether with yourself or with your spouse, to get a little bit more clear. I’m like, okay, what do I really mean by a need? What do I really mean by a want? And what are we saving towards? And something that you had cited earlier that I think, you know, from my perspective is we’re at different quarters of our life. Right? So for me right now, that budgeting area is is certainly important. And if I had to share, the most simple thing that I’ve learned in that area is really understanding my fixed expenses has been really freeing. Like, okay, what are the things every single month that I know I’m paying for, getting a really solid grasp on that number has been super important, but saving and investing are really important. I’m at an earlier stage in my life. We’re looking to have kids in the future. We’re looking to, you know, build or buy a home. And so when I think about, what does a rich life mean to me? And I think about freedom and I think about cultivating these continued learning opportunities for my wife and my family, we’ve decided that the best decision for us right now is really to continue renting. Yeah, I had shared with you earlier this summer that I wanted you to hold me accountable. And so we’ve decided that continuing to rent is the best decision for us at this time because it allows us to save, it allows us to invest. But if I’m honest, it also allows us that freedom. Like I don’t particularly love household projects. I’m not the best with my hands and knowing that, you know, I don’t have to take care of those overhead costs fits into my values. And I share that because I think sometimes, because we don’t have great understandings or cultural stories about how to understand this, we can approach this as black and white. Well, buying a house is always good, right? And renting is always bad. And it’s just not that simple. This area is not only nuanced and detailed, but it also is very specific. And so that’s a place we find ourselves today. I know that’s not true for everyone. Wouldn’t pretend that it is, but I think that, we have tried to illuminate different ways in which our stories blend into this. What are some other tools and best practices that you think to be financially well in your life?
David Pace 22:24
Well, I think to acknowledge what quarter you’re in, in life is really critical because it’s different. You and I are in different ends of that spectrum. I’m in my fourth quarter, I like to say. And so your financial advisor is going to tell you that depending on what quarter of life you’re in. And that should determine, for example, how you invest and how you look at your retirement accounts. And for me, it’s more conservative because I’m getting closer to retirement. When I was younger, my financial advisor suggested a more aggressive stance towards investing, and then I went to moderate. And now, like I say, it’s gone to more of a conservative thing because we can’t afford to lose, you know, our investments right now as we approach retirement. So this 50, 30, 20 rule is what we use and also the leveraging thing. I wanted to mention that, but I think that it always comes back to the other elements and dimensions of wellness. What does it tell us? How you spend your money tells you who you are and tells other people who you are, and it’s a self-defining act. And so if I think about that, then it pushes me into my comfort zone, which is a much loftier philosophical view, rather than I need to save this money today and I need to make this investment over here. That’s the kind of stuff that I need to put a helmet on for. That’s the broccoli that I have to eat. But when I think of it as a value proposition, then I’m able to honor that because that’s what I found. That I find valuable is character and accountability and being the kind of person that I want my grandchild to be someday by modeling that. So yeah, it all comes back to values for me when it comes to money, and that’s a constant conversation that I’m having with myself now. I am participating in my financial life, thank goodness. But it’s also a conversation that I’m having with the broader world, including of course, my significant other. So I don’t really have a lot of really great tips per se. One of the best things I ever did was I got a financial advisor, one who was not, you know, clickbait type guy, and they tend to be a lot of guys, but somebody who was very sensible and even then I have a healthy skepticism when I listen to him talk because I understand that this is a moving target and that I’ve got to be constantly on my game, if you will, to be rich.
Alex Barilec 25:26
And to define what that means for you. Right. And you talked about character and you talked about engaging with us. And I think we choose to ignore and to not engage with this in our own peril of who we can be as people. Right. This is really baked into who we see ourselves as and the ideals that we have for our life. And so hopefully we’ve been able to to paint a picture of ways for people to open this door and to explore it a bit more. I think something that I do as a reminder to this, just as I’ve shared with many other dimensions, is I carve out some time to sit down and to engage with this regularly. So this isn’t something that we can set and forget. It changes as you’ve used the word in quarters of our life, but it also changes day to day and month to month. So I take some time every month to sit down and say, okay, like where are we at this month? And I do it at the end of every quarter. I do it at the end of every year. I don’t save these things for tax season because I find that just like if we ignore any other area of wellness in our life for too long, like the physical comes to mind, if we ignore it for a long period of time, to re-engage with this can be really overwhelming. So I find as engaging with this in small little ways, just like I might run short distances a few times a week. I engage with this in small ways, maybe for like 15, 20 minutes just to see, hey, where, what’s coming in, what’s going out every month? What’s that looking like every quarter? And I found this as a way to keep my stress down. Like we do know to a certain degree that, you know, it seems like $75,000 adjusting for inflation at certain points. That number seems to be what research has cited as helping us to meet our needs and then be able to think about these other areas of wellness. And so having that as a target is a good place to to start. But then, and only then can we begin to explore these deeper questions.
David Pace 27:22
Yeah, absolutely. And speaking of keeping stress at bay, that’s your emotional component, emotional wellness component. So, yeah, very interrelated. And I’m sorry now that I said something about the helmet because I don’t want to sound like a downer, really. My wife and I as we have leaned into this, as we have taken time to do this every month, every week, it’s freed up money, like we’re going on a vacation for Thanksgiving and Christmas now that we-
Alex Barilec 27:56
Where are you going?
David Pace 27:57
Yeah. Glad you asked. We’re going down to Vegas. Speaking of that scarcity loop, I’m not a gambler, but we are seeing a show. And so that there’s the theater thing coming back. We’re going to see a Cirque du Soleil show. And then for Christmas, we’re going to Bryce Canyon and doing some snowshoeing. So we haven’t had vacations for a long time because of money and because of the pandemic. But now because of these saving strategies that we have, we’re able to do that. So this is a joyous thing, right? To save money, to have money, it’s a blessing. We can give money away in charitable causes that we couldn’t before. So that’s the payday, if you will, of financial wellness is that you can express your values through giving money, spending money and ways for your loved ones and others and yourself.
Alex Barilec 28:53
Yeah, it sounds like, you know, those two places are part of living a rich life for you guys. And so, you know, this is not been maybe an easy conversation in some ways for us to share, you know, our stories and our experience with this. But I appreciate you kind of just shedding some light on these areas and for getting in the ring and having this conversation and hopefully our ability to have this conversation not being financial advisors, not being professionals in this field, just being, you know, individuals that are committed to understanding these areas for ourselves. Hopefully there’s been something here that can help people at any stage of the game engage or re-engage with understanding how their financial wellness really is tied in with all other areas of wellness and start from there.
David Pace 29:42
Yeah, absolutely. I’m pumped. I’m going to go out and save some money.
Alex Barilec 29:46
And I can’t wait to hear and see some pictures from you guys down in Bryce Canyon Snowshoeing. What a beautiful place.
David Pace 29:51
Yeah, it’s gorgeous. Thank you very much for your insight and your tips. And we’ll see you next time.
Alex Barilec 29:58
Look forward to talking soon. David.
David Pace 29:59