The Psychology of Money (Part 4) – Keith Kurlander & Will Van Derveer – HPP 132
During the last few episodes, we talked about the role that money plays in our lives, past experiences that have shaped our views around money, and the importance of preparing financially for the future. In today’s episode, we wrap up this series by sharing some practical tips that can help you get on the way.
Invest In Your Future Self – 3:18
But the statement to yourself of I’m going to do this first, you know, I’m going to invest in my vision for how I want money to be in the future first, and how I feel in my nervous system about money in the future. Once we invest in that first, it’s a whole different psychology that we’re walking around with every day.
Like A Plant In A Pot – 3:59
I think of it as a pot that’s holding a plant like a plant that doesn’t grow well without a pot. You need containment, just like I need a schedule and accountability to go to the gym to work out physically, I need the same thing for financial fitness and health. And so you can think about money as a system that flows from places of disorder to places of order.
Having A Safety Net – 6:05
And it’s also again, it’s showing yourself that you care enough to put some money aside, right? And not just consume it. So this is different from investing money, so to speak, for your long term future. This is money for the rainy day and it’s showing yourself that I’m gonna also take care of that part of myself. Because you probably have a rainy day in your life, right? Yeah, financially.
Saving Builds Momentum – 8:25
there’s always some way to allocate a small amount of money, kind of, like you said, it could be $5 a month, let’s say $100 a month, and then, you know, five years now, whatever it’s accumulated, and you’ve got, you know, your $5,000 to $8,000, right? So that amount of money for some people who have $0 in savings and $0 invested, now you have $5,000, you’re starting to build confidence.
Financial “Entropy” – 11:08
It’s sort of like in physics, there’s a force of entropy that always wants to create more and more disorder. And it’s part of the expanding universe as we know it. And, you know, I’ve noticed in my life, and I think a lot of people can relate that there’s a, there’s a feeling of entropy in life, like, the pile of laundry gets bigger and wider if it just sits there. Yeah. And it’s kind of the same phenomenon you’re talking about with depreciable assets versus appreciable assets.
Is Budgeting Right For You? – 13:29
Every year, I set a strict budget for myself, and like, you know, 10 categories of spending and all this and that, like, I actually don’t have one year that I actually followed it just because that’s because I’m like, you know, I’m a little undisciplined and lazy there. But that’s just me. So it doesn’t work for me to budget that well. What actually works for me better, now I do like setting intentions of what I want to spend on in a year. That works really well for me.
Keith Kurlander, Dr. Will Van Derveer
Keith Kurlander 00:09
Thank you for joining us for The Higher Practice Podcast. I’m Keith Kurlander with Dr. Will Van Derveer and this is the Podcast where we explore what it takes to achieve optimal mental health. That’s right. And eventually what happens is, even if you start small, eventually what happens is, if you’ve committed to it, eventually you have to earn more money, you may choose to consume less to deal with that. But eventually, you can’t consume that much less. And then you have to start earning more. Now, for most people, when they get really honest with their financial freedom goals, what typically happens is they realize over time, they do have to earn more, most people in a job or career or more over their lifetime, that’s just what happens for most people. But this really pushes the agenda, that you have to keep up to do that. So that changed my life. It’s powerful, but it’s also like, if you don’t commit to it, then you know, you fake it, and then you don’t increase one quarter, and then you stop increasing, or you stop even doing it. I think the key here is automation. You gotta set this all up in automation, so you can’t mess with it unless you actually have to go in and cancel the automation.
Dr. Will Van Derveer 01:35
Yeah. To me, it’s so similar to getting into a disciplined rhythm with workouts, you know, it’s like physical fitness, you put in the time you do the reps, it’s not glamorous, you have to do it, when you don’t want to do it, you have to just show up 99% of showing up, it’s the same exact thing with this. you automate it, so you get your emotions out of it and get the ego out of it. So you can’t mess with it.
Keith Kurlander 02:06
Right? And I think it’s very wise from an energetic and psychological perspective. Let’s say you live on a paycheck. Now, not everyone does. Okay? Not everybody has a paycheck. But let’s just use the concept of a paycheck. It’s very wise for the first thing you pay is your investment in yourself from that paycheck is the savings account, before you pay everything else, you know, in the automation cycle of a month, and that you’re investing in your future, and then everything else, all the bills and the lifestyle that’s paid after that. But not like, oh, do I have enough now that I’ve paid everything else, right? Because then you’re not actually prioritizing it over everything else, you’re actually putting it on the lowest end of consumption, then it’s like below consumption. It’s below everything else, like, well, I’ll invest in myself, if I get what I want this month, you know, or if I pay my bills or so again, you might be starting out with a number that you’re investing in yourself. Like you said, it’s five bucks, right, like really low. That’s what you can afford. So it’s not about being irresponsible with these expenses and things. But the statement to yourself of I’m going to do this first, you know, I’m going to invest in my vision for how I want money to be in the future first, and how I feel in my nervous system about money into the future. Once we invest in that first, it’s a whole different psychology that we’re walking around with every day.
Dr. Will Van Derveer 03:40
Absolutely, yeah. Yeah. And it’s also about creating order in your systems, like when you said, automating the savings plan. That’s an important example of developing order to hold them. I think of it as a pot that’s holding a plant like a plant that doesn’t grow well without a pot. You need containment, just like I need a schedule and accountability to go to the gym to work out physically, I need the same thing for financial fitness and health. And so you can think about money as a system that flows from places of disorder to places of order. It becomes a priority to get your house in order, you know, to clean up your room to actually have a space in your financial world that’s organized, where you’re keeping track. You’re actually looking at what you spend every month, and what you take in and ratcheting up your savings.
Keith Kurlander 04:45
Well so that leads me into the next concept. So let’s say you come up with your plan. And again, like ultimately, you know, we’re not financial advisors. People need a financial advisor to help them with this. So let’s say get your strategic plan around for accelerated savings. We can even call forced accelerated investing, because you’re going to do something with that money. So it’s doing something for you, versus sitting idle. And then the other concept is having your reserves, right? Like money you can depend on if you need it. So that’s the concept of sitting on some money that is very liquid, very accessible, that the cushion is big enough that if your money went away tomorrow, your active earning or slow down if there was a big recession, which people have been talking about for years, and, you know, they’re still talking about we might be heading into in 2023. And let’s say your business slows down or your paycheck, or you get laid off, that you have this cushion to rely on or there’s an emergency. And the reason for this is one, we don’t want to get in a bind where we don’t have money to rely on but it’s also about psychological stability around a relationship to money.
Dr. Will Van Derveer 05:56
Yeah, so not being in a pinch, where you have to make an emotional decision, or a decision that’s driven by a lot of stress.
Keith Kurlander 06:05
Right. And it’s also again, it’s showing yourself that you care enough to put some money aside, right? And not just consume it. So this is different from investing money, so to speak, for your long term future. This is money for the rainy day and it’s showing yourself that I’m gonna also take care of that part of myself. Because you probably have a rainy day in your life, right? Yeah, financially. Almost everyone does. So it’s also like, I’m going to take care of all of me financially, I’m going to try and take care of the rainy day part of me. And I’m going to care that much about myself or my family, or whatever this concept is, right? So that’s another piece. And, you know, generally speaking, it’s typically anywhere from 3 months to 12 months that people like to plan for that of living expenses, basic living expenses that would get you by and people have different formulas for that. Was that an important milestone for you doing that practice?
Dr. Will Van Derveer 07:16
Oh, definitely. Definitely. It has me feeling I think you said it the right way is how it resonates for me is emotional stability and just knowing, I think there’s another milestone for me in the future which is having my house paid off. Like that, I think it’s gonna also give me emotional stability. I’ve heard people who have achieved that say that the bank can’t take away their house if they have a rainy day situation that happens. But yeah, having a sum of money to cover me and my wife for a period of time, definitely has me feeling like I can not be worried about that. Yeah, that’s covered.
Keith Kurlander 08:01
Yeah. And it’s important to know, like, depending where you are, and your lifestyle, where you’re, you know, what you’re earning, like, these numbers might not be big. And there’s always a little money somewhere in the budget to allocate away from typical Hill allocate away from toward these activities, right? Yeah, whether it’s, you know, you’re going to the coffee shop, or whatever it is, there’s always some way to allocate a small amount of money, kind of, like you said, it could be $5 a month, let’s say $100 a month, and then, you know, five years now, whatever it’s accumulated, and you’ve got, you know, your $5,000 to $8,000, right? So that amount of money for some people who have $0 in savings and $0 invested, now you have $5,000, you’re starting to build confidence, and you’re starting to relax a little, and you’re in that relationship to scarcity. Right?
Dr. Will Van Derveer 08:54
Right. Yeah. I mean, one low hanging fruit that people often talk about as the first step, if you haven’t considered these ideas before is, you know, the four to $5 latte that you get on the way to work every day. You think about that, times 300 or however many work days there are, and you’re looking at over $1,000 in coffee that you’re spending per year. And, you know, it doesn’t mean quitting coffee, maybe it means making your own coffee, those little things that can really add up and matter quite a bit over time.
Keith Kurlander 09:25
Right. Right. It’s also a concept of investing in or consuming depreciable versus appreciable, right? That, you know, many things we consume depreciates. For instance, you know, like, things you might buy at the store, there’s a lot of items we might buy that depreciates and the value goes from $100 to $0 in a year. You couldn’t even sell it for you know, maybe you can sell it for a few bucks. And that’s fine. We have a lot of things we need to consume that depreciate right. And then there are things that appreciate like a house typically appreciates over time. And so there’s this concept of just being mindful and starting to take an inventory in your way that you purchase things of, are you buying highly depreciable items only? And you have very little appreciation in the way you buy things? Or are you buying things that, you know, the depreciation curves on them are slower. And you’re also trying to buy appreciating items in your life, like houses or whatever it is, over time. It’s an important thing to pay attention to. Because I think that when we, if we get in super high consuming loops, which all of us can, and we buy items that depreciate very quickly, all the time, you know, that’s a message to yourself, is that message to ourselves, if that’s the only loop we’re in is, I want to get rid of my money as fast as possible. That’s the message to ourselves, yeah. And to the world around us. I want any money that comes toward me, I want it to go back to zero as fast as possible.
Dr. Will Van Derveer 11:08
It’s sort of like in physics, there’s a force of entropy that always wants to create more and more disorder. And it’s part of the expanding universe as we know it. And, you know, I’ve noticed in my life, and I think a lot of people can relate that there’s a, there’s a feeling of entropy in life, like, the pile of laundry gets bigger and wider if it just sits there. Yeah. And it’s kind of the same phenomenon you’re talking about with depreciable assets versus appreciable assets, that you’re, you’re actually buying things that go into as much disorder as possible in the shortest amount of time. You know, if it goes from X amount to zero in a year, that’s a pretty high level of entropy and your financial world that you’re creating. Right? Versus like, something that goes into more appreciation has the opposite effect.
Keith Kurlander 12:01
Exactly. Yeah. And even, you know, we’re gonna have to consume a lot of things that depreciate, I mean, at least financially depreciate, there’s other ways that they appreciate about, for instance, food, right? Like, it will depreciate to $0 as soon as we eat it. And it appreciates inside of us in a different way, changing form.
Dr. Will Van Derveer 12:20
It depends on if it’s healthy food or not. But yeah.
Keith Kurlander 12:23
Well, exactly. That’s true. It does depend on that. Well, that’s a good point. Right? So, you know, it’s just about being mindful around. How much are we putting into depreciable is how quickly and I think it’s again, like, for me, it’s sort of the middle way here. It’s like, I personally have tried to be rigid with myself with finances, it’s never worked for me. That’s just not how I’m designed. It doesn’t work well for me. So I think it’s about mindfulness here, and actually caring enough to ask the questions of like, what am I doing here? Do I want to shift this somehow? That alone, if you’re willing to engage that process and stay committed to the process, your whole financial reality will change. But that’s actually hard to do, if you have never done it, and you’re, you know, you’re not willing yet and it won’t happen.
Dr. Will Van Derveer 13:12
Keith Kurlander 13:13
Dr. Will Van Derveer 13:13
I think it’s just about being honest with yourselves. Right?
Keith Kurlander 13:17
Right. Yeah. And I think that, um, you know, I think for me, there’s another piece to talk about, which is budgeting. Some people swear by budgeting, and it works really well for them. Every year, I set a strict budget for myself, and like, you know, 10 categories of spending and all this and that, like, I actually don’t have one year that I actually followed it just because that’s because I’m like, you know, I’m a little undisciplined and lazy there. But that’s just me. So it doesn’t work for me to budget that well. What actually works for me better, now I do like setting intentions of what I want to spend on in a year. That works really well for me. Do I want to buy anything new this year? Do you know how much I want to spend on my home this year? Like that actually works well for me. How many trips do I want to take this year? It’s loose, though. I don’t, you know, have a big budget. I look at it once a month and make sure I did it and so for me that works well. But what works better for me is committing to what I want to invest in a year. Maybe I don’t need it. But that works much better for me just with my mentality versus committing to only spending a certain amount every month.
Dr. Will Van Derveer 14:27
Keith Kurlander 14:27
I don’t know about you. Are you a budget person and commit to a monthly spend?
Dr. Will Van Derveer 14:32
Like you I haven’t been able to, that hasn’t worked well for me. What has worked well is similar to what you’re describing, I think is going into a bigger why, like a deeper why of why do I want to spend X, Y or Z, you know, I want to take this number of trips or, you know, if I need a new car because my car is 10 years old, or whatever the thing is, like doing, for me it’s actually a lot more helpful to think about, well, I need this so that I’m not going to have to be stressed out about getting to work. I need a new car so I’m going to feel comfortable on my way to work or something like that. So that I can arrive with a fresh nervous system that’s going to be able to face the challenges of the mission based work that, you know, that we care about, we’re so passionate about. Like, I want my deck to be as clean as possible. And so I linked the investments in my health and my stability, and you know, my financial world, all into that because those are my highest values is that mission based work. And also, the quality of my relationship at home is really important to me. And so I feel like there are higher levels that have fulfillment that I can get to if I invest in myself and take good care of myself to the best of my ability.
Keith Kurlander 15:56
Yeah, I mean, I feel like, you know, my home life is very important to me also and a lot of my financial goals are, you know, path is about my family’s life. It’s also about my mission, obviously, because I believe I can accomplish more of my mission by being well resourced. I just believe that, but it’s also for my family. And there’s an element of just, you know, I have a child and all that, right? I think that when you were talking, I was like, what I say to my 20 year old self, you know about this stuff. I don’t know why that came up for me. But I, I would I want to just speak to that for a moment, which is, if I could speak back to my 20 year old self, I would be saying, because I was slow at this, like I waited till I was really late 30s to 40, which is late for some, I mean, some people start going towards this in their 70s, I’ve actually met some of those people, that’s fine, too. So but it was late for me, compared to some of my peers that I grew up with, what I would say to my 20 year old self is like, you’re going to earn money anyways, for the next 20 years, all you have to do is put these principles into play now. And you’ll be 20 years ahead, even if you don’t know your mission yet, or whatever. So I think I just want to speak to that for a moment, which is, for people who are younger, just setting the intention and putting these principles into play when you’re younger, you know, you’re you’re so much more likely to actually start living into the desires you have here much sooner if you act on them earlier. And if you’re like me, or somebody who’s waiting even longer, like there’s never better than right now. And it’s never too late, honestly, I mean, I’ve met people in their 70s that did this set from 70 to 80. That’s when they did it. Cool. You know, great.
Dr. Will Van Derveer 17:59
I also think that there’s a season in life for every curriculum that we prioritize, you know, and I know for me when I was in my 20s, taking care of finances was the last thing on my mind. The last thing on my mind, and, you know, getting a really good education and trying to find the right partner to live with were the two, you know, kind of main things that I was focused on. And I got a lot of value out of focusing on those things. Yeah, 20s. You know, and I don’t write, I don’t regret the timing of that. But I do think about it, what you just said of like, well, if I had only known a few of these very basic secrets, you know, and hacks to begin the process, I think, I would love for my 20 year old daughter to know these things and start acting on them sooner than later. Just because it’s so much easier. The steps you have to take when you’re 20 are much different from the ones that you have to take when you’re 50.
Keith Kurlander 18:57
That’s right. That’s right. The steps that if you start taking the steps at 20, also, you probably will have to earn less in your lifetime.
Dr. Will Van Derveer 19:05
Keith Kurlander 19:05
Then if you wait till you’re 50. And that’s okay. If you wait, like again, I focused in my 20s solely on mission. I mean, I had relationship things going on whenever I wasn’t thinking about money at all, it was a mission. And that was great for me. And if I would have put these things in play for those, you know, to age 20 to let’s say 40, it would have been different for me, and that’s okay, that wasn’t but it would have been different. And it’d be nice to have known a couple basic things. I mean, I knew how to balance a checkbook. Some people don’t know how to do that. Right? Well, you don’t even have a checkbook now. But I do have, I actually had a high value around putting money into a savings account. So I had like one of these pieces that just came along with me from my childhood. But I was missing a bunch of the other principles. Yeah, you know, my wife met me and she’s like, Oh, you’re a good saver. And I was like, I didn’t know that. Am I? And you know, I was because I wasn’t making that much money when she met me. But I put away some money and it was just sitting in an account. But I knew I had no other principles, because that was sort of what I was surrounded by where I grew up, like putting some money in an account somewhere. Yeah, well, what, what do we want to wrap up with here?
Dr. Will Van Derveer 20:20
I think we already invited people to ask the first question, which is just to get curious about you and yourself and to be really honest, as you appraised what your values are, and how important it is to have a plan for your financial future. If that is a priority to you, then there are ways to do that that don’t have to be stressful, and can actually be quite joyful. In the practice of it. I think that there’s always, in my mind, an anxious, obsessive mind, there’s always ways to make something stressful, that doesn’t have to be stressful, right? So, but that’s not the only way to do this at all. And that’s another way to think about it’s like, is it fun, when you develop physical fitness, when you’re doing something that you enjoy? It can be the same way with any fitness in any level in your life. It can be stressful, or it can be joyful. So yeah, it’s gonna be, it’s really about the mindset.
Keith Kurlander 21:17
Well here’s another, I think a good place to end is what about the person who says, I’m so overwhelmed like I want to do this, but I can’t seem to do it. Right? I think about these things from time to time but I can’t seem to get my life in order in this area of my life. Like, I’m too overwhelmed, I’m scared, I’m, you know, this is only for rich people. Like, you know, there’s attitudes of like, there’s nothing to do here. Like, that’s, that’s a privilege conversation only, right? But you think about it, and you want to do something but yet you feel too burdened by your circumstances and how you’re living your life that you can’t do anything about it. Right? It’s the attitude. Yeah. Well, what would you say to that person?
Dr. Will Van Derveer 22:08
I guess my answer to that is that the first and often biggest missing resources are time and what I mean by them in this context is, why won’t you give yourself time to consider yourself here? Why won’t you privilege yourself?
Keith Kurlander 22:28
Yeah, I like that answer a lot.
Dr. Will Van Derveer 22:31
And why are you putting whatever the thing is that’s overwhelming you in front of yourself and your regulation?
Keith Kurlander 22:38
Yeah, it’s a great answer. It’s like, why are you, you say that and like, but then why are you scrolling social media for two hours a day? If that’s really true, right?
Dr. Will Van Derveer 22:48
Keith Kurlander 22:48
When you could be using that time to go learn and watch YouTube videos and, you know, really study and you know why? And then the answer is, I’m too overwhelmed. Well, then, I think my answer to that is well, then you need therapy, to help your nervous system, or something, you need something to help your nervous system at that point. Because I think you’re on time, time is a big factor for people. There are a lot of people, you know, they’re working a lot of hours a day, they’re barely getting by, and they’re really and they have families, and there really isn’t a lot of time. But I think that the answer to that is then how can you become more efficient with your time? Where can you become efficient to start learning about this? Just you know, five minutes a day.
Dr. Will Van Derveer 23:29
Keith Kurlander 23:30
Like, just like brushing your teeth. Where can you put this in?
Dr. Will Van Derveer 23:34
Keith Kurlander 23:35
Yeah, I like that. Well, thanks for the conversation.
Dr. Will Van Derveer 23:38
Keith Kurlander 23:39
Dr. Will Van Derveer 23:40
See you next time.
Keith Kurlander 23:44
We look forward to connecting with you again on the next episode of the Higher Practice Podcast where we explore what it takes to achieve optimal mental health.