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How My Dad Survived Tough Financial Times
I am so glad to be back with you for another episode of the show. This episode is to be a story. I have an interesting story that has hyper-relevance to the environment that we are all dealing with. What I mean by that is we have political upheaval going on, a great division between these two parties politically. We have an election happening which creates great turmoil and the economic environment we’re all dealing with. There’s hyperinflation that’s been happening as a result of COVID and spending things that took place with our government choices. All the printed money that’s been happening. I want to bring some insight into how to deal with that stuff because it’s not the first time it’s happened. In
fact, during my lifetime, it’s the second time that this has happened or something similar to it. Prior to that, it’s happened before and it’s happened before. We have to know about the economy and politics is that things are cyclical. We’re not the first to go through it. If we look historically at what has happened, we can in effect make better choices moving forward and know that if others have gone through it, so can we.
Lessons From My Dad
I had an opportunity to go to lunch with my dad. In those lunches, we typically just shoot the bowl, have some nice conversation, have a nice meal, and spend some time together. It’s a nice bonding experience. This time, however, I felt impressed. I needed to ask a question. The question I asked my dad was related to exactly what I described, “Dad, how have you handled over the years during your adult life tough financial times? How have you dealt with inflation? Have you dealt with political upheaval? How have you dealt with economic changes?” We had Nixon in the late ‘70s who took us off the gold standard which led to hyperinflation for about a decade and lots of concerns about the economy, supply of food and fuel. There were times when there was fuel rationing happening. How did you deal with that? What about times in your life when you were raising us as kids, how did you deal with times that were difficult financially? If things got tight with work or you’re transitioning between work or something like that, what happened? The divorce of my parents when I was twelve, how did that impact things? It was fascinating as we had this discussion where he simply said, “I don’t know what you’re talking about. It wasn’t a difficult time, financially. It was emotional but, financially, it was a non-issue for me.” I said, “Dad, what do you mean it was a non-issue for you? Everyone had troubles financially during that time.” He said, “Not really. I don’t remember feeling worried about money.” I said, “What are you talking about? I’m in my 40s with a family of six children and I have felt some of that. I’m a money coach. What did you do differently?” He said, “I just follow the principles that I taught you.” He reminded me of this little box that he gave me when I was about 3 years old or 4 years old. That little box was a piggy bank, but it wasn’t just a piggy bank with a single deposit into it. It had three different components. One of those components was giving, saving, and spending. I said, “I have always lived by those principles. In that order, I give, save, and then I live off the rest. The spending money is what’s after.” I’ve set money aside to give back to the society and church. The savings component of setting aside money for a rainy day, a car repair, a new car purchase or down payment on a car, repairs around the house, or dealing with a health crisis. I always had money set aside. It was important to me to do that. I said, “Dad, where did you learn that?” He thinks back as a youth like what was it like in his house growing up? He said his parents were a little bit less stable. His dad never had a steady consistent paycheck, but his mom did. She kept the bills paid while his dad tried to figure things out. This is me speaking, my view of that is that home life probably led him to have a greater desire for stability. My dad’s work life was not entrepreneurial. He did not teach me about entrepreneurship. He taught me about stability. As an adult looking back over my upbringing from him, the stability he brought to my life gave me the possibility of being a little more entrepreneurial knowing that I had the principles in play that if I followed them I could deal with some of the difficulties of the ups and downs of being in the entrepreneurial space, having a variable income, choosing my own path as opposed to working for somebody else and hoping that I can keep a salary coming in. Maybe a mild increase of 3% to 5% a year cost of living increases. Back to my father and the system that he followed. He said, “Wade, spend, save, and give. Wrong order. Give, save, and spend.” I address this in my prior episode guys. The systemized show dealt with this exact thing. I said, “Dad, I hear you. What did you do day-to-day?” He said, “I had a green ledger sheet for a time. I had a physical piece of paper. I had physical envelopes that I put cash in to help divvy out the purposes of my money so that I wouldn’t overspend. I literally lived off of cash.” I said, “Dad, in this world now that isn’t easy to do. We have credit cards, Venmo, PayPal, and debit cards. Hardly anyone uses checks anymore, but sometimes those take place. We have cash. We have at least six different ways that were transacting. I don’t see envelopes working that well. What are other ways to do that?” He said, “Eventually I started to use a spreadsheet and I was pretty religious about keeping track of every penny on my spreadsheet knowing that I set money aside for this, this, and this. Those from my different reservoirs for different purposes, including setting money aside for retirement. I only spent what I had left. I knew what I had and I only spent what I had. I was very careful about that.”
Reservoirs
Folks, what’s interesting to me is personal finance is that simple. It’s that simple. The system is to set some money aside to give, help, and give back and some money aside for your own benefit. This goes back to nature. I’ve used the water cycle and my analogies over many years of talking with people. If you look at the water system, we have a cycle where water evaporates up into the clouds. The clouds then form into raindrops and give us a nice rain in the summer and the winter. For those who live in mountainous regions like myself, we have tons of snow that falls and gets stored up temporarily in the snow caps then when the spring weather comes, it starts to melt off. If it’s done properly, there’s enough water to get us through the summer, grow our crops, and create the nice green yards that we all enjoy or most of us in the world. Some people in parts of the country like Arizona and Southern Utah and so forth, have more arid landscapes, but when we need water to sustain life. As the water flows down, it doesn’t all go away. It doesn’t all go through the streams and rivers. Some of you get stored up. There are ponds there. There are natural bodies of water like lakes. There are also man-made bodies of water we call reservoirs. Those reservoirs, we have come to know as a society. Reservoirs are necessary, particularly in areas that are prone to drought like the desert area of Salt Lake City and Salt Lake Valley. We’re a mountain desert. We’re 4,500 feet above sea level but largely, we’re a desert-type climate. We are concerned regularly for the summer drought. The past decade or more has been seriously in a drought-type environment. If we didn’t have reservoirs to capture that melting snow and preserve it so that we could have water available to fill our personal needs and our households. We would be in a difficult place.
Financial Life
Those are man-made resources. Those are purpose-built reservoirs recognizing that there are challenges that we all deal with. If we turn that back into money, a savings account is a reservoir. It’s a man-made reservoir. It’s a choice. It has a specific purpose. We need to have cash set aside for that exact purpose because we don’t know when things will go badly. Now, back to my dad again. It’s not to say things didn’t go badly at some point, but he had reserves and because he had reserves, he was in a position of power and choice. He didn’t have to go to credit cards. He didn’t have to go back to a bank or their family members. He had set some money aside to deal with that unforeseen or forced upon him challenge, the economic environment, hyperinflation, increasing costs, and high interest rates. All that stuff was happening in the ‘70s and early ‘80s. It’s again happening now in the early ‘20s. Folks, I want you to be empowered by this. I hope that you hear the story and don’t say, “Oh my gosh, my situation is so different.” It’s not. It’s as simple as tracking your financial life. It’s that simple, track your financial life. Again, go back to personal health. If we’re dealing with health, we might be gaining some weight that we don’t want. The only way to know whether or not we’re overeating is to track it. The only way we know if we’re overspending in our business is to track it. This personal finance essentials course that I have that’s about to launch deals with this. It talks about the basics of business finance. What is the journal or the company books? What is an income statement or a profit loss? What’s a balance sheet? What’s a cashflow statement? How does that all fit together? How does that then apply to personal finance? It’s a simple course. Very powerful, though.
The only way we know if we’re overspending in our business is to track it.
When we follow the simple things, great things come to pass and great things come about. Simple ordinary things bring great things about. One of those simple things is tracking and planning your spending, give, save, then spend. It’s about the ratio of 10% to give, 10% to 20% to savings, then live off the remaining 70%. If you can live within that, that’s an objective. That’s a goal. You may have to manage that according to where you live in the world, but that’s the ideal. That’s what we know works. If you’ll follow that, at least give it a try. Test this out. Test my word. Test my father’s experience. If you don’t have the same type of experience, I’d love to see you leave some comments for me. Let me know what your challenges are or what your experience has been because I’m talking about a 75-year-old. This guy’s had a lot of experience. He’s nearing the end of his life. Ten or twenty years, in that range, statistically is about how long it has left to live. There’s enough experience there to teach us a few lessons. I’m just proud to have had an upbringing like that. I recognize it’s not normal. Apparently, not everyone gets that upbringing where they have that little box that says spend, save, and give or taught from a young age the way I was but I’m grateful for that. I’m trying to impart that to you so that you can have a better financial future. You won’t have the same worry, doubt, and fear that your peers will have because you are sound with how you manage money. You are consistent with how you track and plan your spending and you have money in savings.
Client Success Story
In fact, I thought I might do this in a separate episode but I feel inclined that this needs to come out here in this episode. I was with a client meeting and that client meeting was lamenting about the first two quarters of 2024 because from 2008 to the present time, everything has been hunky dory. They’ve always been on an increasing trajectory with their business. Things have been going very well. They had their peak in 2023year last year then come around 2024. They anticipated having the same or better year because inventory they’re in, their very well established in their business where they’re at. They said, “The environment has changed. Jobs that we would normally get were getting undercut by newbies who were less skilled and were going to do inferior work than we would be doing but they’re letting other people do the jobs that we would normally get. It’s been frustrating. People are delaying their payments to us. The economy’s different. Things are different.” I said, “That’s tough to deal with. What have you done?” They said, “Wade, we’re very grateful that we followed your advice when we first started working with you to stop overpaying our debts.” They were heavily focused on paying down one particular mortgage and I said, “You’ve got $4,000 a month going to that mortgage.” I was asking my client, what did you do about this? They said, “Wade, we’re just so grateful we followed the advice from when you first started with us about a debt.” They were paying down $4,000 a month towards one particular mortgage and had very limited amounts of money in the bank. I said, “I know that’s a great objective for you and I’m not opposed to it. What I am concerned about though is the timing and the method was which you’re doing it. Wouldn’t it make more sense to take that $4,000 a month you’re putting toward the extra principal on your mortgage and set it aside in a savings account so that it builds up and builds up? If you happen to have an even better opportunity, it will earn you a lot more such as reinvesting in your business and hiring somebody. You can have that money available to do it and have multiple choices with it rather than just one, which is put it toward the mortgage and lose access to it completely.” They said, “Wade, that makes a lot of sense. We’re going to do that.” They stopped making extra payments toward their mortgage. Fast forward now, about a year. They said, “Wade, because of that choice we had cash that we’ve been able to deal with this crisis. It’s been hard still. We’ve been concerned about making payments, but we’ve been able to draw on that reserve. It has been a non-issue. It’s been emotionally taxing, but it’s been a non-issue financially. We had the money there available.” So Folks, I reiterate reserves are crucial. A lot of people in the world will tell you cash is wasteful. Don’t have money in cash. It’s not earning anything. It’s not outpacing inflation. That’s not its purpose and the reservoir isn’t to be a lake of enjoyment. It’s to be there in case something happens because it always does. We just don’t know when. Follow the system. Get some reserves in place and have great confidence. You’re free when you’re spending less than you’re making when you’re living within your means. You’re literally free when you’re spending less than you’re making. I love you, folks. Thanks for reading.