[00:00:00] DANIEL: Hey there, Spacemakers. I'm Daniel Sih, joined by my good friend and co-host, Matt Bain. We bring you The Spacemakers, a podcast to help you shift the way you live and work. More than a podcast, this pod course will take you on a carefully curated journey around a simple but profound idea, that the habits and practices that fuel success in our 20s and 30s.

[00:00:25] DANIEL: Are the very barriers that hinder maturity in our forties and fifties. Big thanks to our sponsor, Bulk Nutrients. Enjoy a 5% discount on protein powders and health supplements for orders over $45. At bulknutrients.com.au just enter the code spacemakers.

[00:00:42] PROMO V/O: The Spacemakers with Daniel Sih and Matt Bain.

[00:00:48] DANIEL: Hi, this is Daniel.

[00:00:49] DANIEL: Welcome back to the Spacemakers podcast, and we are in our penultimate episode for season two. And welcome, Matt. We're going to talk about the Midlife Money Reset.

[00:00:58] MATT: We are. It's fantastic [00:01:00] to be here as always. Yeah. Penultimate. I love it when you get a chance to use that word. I know. It's a good word, isn't it?

[00:01:05] DANIEL: It's a good word. And we're nearly done. Yes. But we're going to talk about the Midlife Money Reset and how the habits that set us up for success, resets in midlife in terms of finances and savings and delaying gratification, actually need to be reimagined, and for our habits to shift as we enter, let's say the mid forties, fifties, and beyond.

[00:01:27] DANIEL: And every type of habit shift is hard. It fits. It fits within our broader season topic, which is how to make space for life's inevitable resets and how the habits and practices that set us up for success in our 20s and 30s often need to be rethought and unlearned in our midlife squeeze.

[00:01:46] MATT: Yeah. I love that.

[00:01:47] MATT: And to be honest with you, this, I'm really interested in this particular topic about how even with money and finances, that stuff has to be unlearned because I found it, don't know about you, but I found it pretty counterintuitive.

[00:01:58] DANIEL: Mmm. It, it is [00:02:00] counterintuitive and we've had some really long discussions about this.

[00:02:02] DANIEL: So it'll be good to bring these to air, particularly because you and I have such different money personalities or at least money mindsets, from the way we approach things. We are a little different. We are a little different. That's right. So when we were thinking about money and the midlife reset, I was thinking about a picture book I had as a young boy.

[00:02:22] DANIEL: We had a number of picture books and one was an Aesop fable, The Ant and the Grasshopper. Now, Most listeners have probably heard that fable before, but, you know, in, in The Ant and the Grasshopper, you have two main characters. You have a grasshopper who is kind of bohemian, you know, in the, in my picture book, he, he looked a bit like a hippie grasshopper, played the violin and, and spent all of his summer sitting in his, it's in the sun, warming himself, eating good food, drinking wine, not working hard and just enjoying.

[00:02:53] MATT: I just like this guy already.

[00:02:54] DANIEL: I know, I know. He's great. He looks a bit like you actually, Matt. But then you had this awesome character, [00:03:00] the ants, you know, they were type A, responsible, hardworking like firstborn sons, you know, and, uh, and they worked hard and all summer they would be slaving away, collecting food and the grasshopper in my Aesop favourite book made fun of these.

[00:03:13] DANIEL: Poor little type A ants, working hard. And he said, you know, why don't you guys relax and just chill out a bit, enjoy the music, enjoy the sunshine, you know, life's too short to work hard. But they obviously said, no, they have to prepare, prepare for winter. You know the end of the story, uh, winter came and this poor bohemian grasshopper ended up freezing and had no food and had no friends, looking at you Matt, no just joking, and yet the ants were partying away in their nests and they were full of food and they were warm, anyway.

[00:03:51] MATT: Smug. Smug's the word that you're looking for. Smug. Smug ants. They were smug.

[00:03:55] DANIEL: The funny thing is, actually, in my book, my mum, being a good postmodern mum, [00:04:00] didn't like the ending. Because in the ending, in my actual book, the grasshopper died a lonely, sad, starving death. Not so good for kids books. So she typed up an alternative ending where the ants were compassionate on the grasshopper.

[00:04:13] DANIEL: And they welcomed him into their little cozy home. They fed him, and then he promised to amend his bad way. He saw the error of his ways. And the next summer he worked with the ants so it was a happy ending. But look, the moral of the story wasn't lost on me as a kid. The way to use money is to delay gratification, is to work hard.

[00:04:35] DANIEL: It's to save for the future, and then you'll set yourself up for a healthy life. And I must admit, I think that book and other messages like it have really shaped me so much. I can see the trajectory. I can see it. Yeah, yeah. And it's nice. And it's good. Yeah, yeah, yeah.

[00:04:53] MATT: And you are the first guy I like to stoop down from your high moral ground to help out those bohemian mates of yours.

[00:04:58] DANIEL: Well, only if you work hard [00:05:00] next time, I'll be sure. No, but seriously. But seriously, it, it has shaped my money mindset in the sense of I can see the value of putting in money into super, in not spending everything I earn, in actually saving for a rainy day, maybe not taking out loans for like a car or a stereo, except for, you know, take a loan out for a house, for example, because it builds longer term capital.

[00:05:21] DANIEL: But, but that's been very helpful for me. And yet what's interesting as you and I have reflected on the mid, midterms, the midterms life reset. There is a point where delaying gratification stops being healthy. Yeah. And where actually we need to flip our money mindset from being an ant to a grasshopper if that's how we've been wired, or potentially flip our money mindset.

[00:05:42] DANIEL: The other way around, if you spend all your money and now you're in your mid forties, but that flip in money mindset and habits is important and what, um, what is necessary is that we do change how we approach our wealth. Yeah.

[00:05:58] MATT: Um, yeah. So Dan, I got this [00:06:00] fantastic quote by this beautiful elderly nun called Joan Chidester.

[00:06:05] MATT: And I think it sums up both this entire conversation and it's particularly pertinent to the theme of finances and money. And it goes like this. Life, it seems, follows a relentless cycle. In our early years, we accumulate, but in our later years, we divest. Both of them have a place in life. Both of them are a struggle.

[00:06:22] MATT: Both of them are liberating.

[00:06:24] DANIEL: Hmm. Yeah, I really like that. So, uh, the early part of life is to accumulate. And we talked about friendships and we talked about experiences. Money would be another aspect, obviously. And then at some stage we have to let go. We have to start to decumulate.

[00:06:39] MATT: Probably one of those things where either you voluntarily let go or to some degree you have stuff forcibly, taken away from you.

[00:06:44] DANIEL: Yeah. Yeah. And actually what was nice about this book, The Gift of Years, she does talk about decumulating even in terms of friendships as they pass away. You know, she wrote this when she was quite old and it's, it's quite beautiful to, to hear this story about letting go, but the, the gift of, [00:07:00] experiencing life through the decumulation.

[00:07:02] MATT: And that's what we're going to talk about. Brilliant. So as usual, we want to check in with people and with each other about how we went with the exercises that we set last episode. So you may recall we had two. So it was like, there were two options depending upon your age and your stage. So for people in that kind of younger adult phase of life, we ask people to, to concentrate on developing and thinking about rare and valuable skills that are going to set them up for a meaningful career and that's going to involve deliberate practice.

[00:07:34] MATT: Yeah. Yeah, and then for people more in our age bracket, so again looking at that kind of classic midlife squeeze. It was more about actively doing nothing. So it takes the opportunity to stop, to slow down, making some space to think deeply about what comes next. Yeah. Which is something that doesn't come easy to me at all.

[00:07:54] MATT: But how'd you go for starters?

[00:07:55] DANIEL: Yeah, look, I have to admit that I [00:08:00] failed. First one so far. Okay. Yeah. Um, in the sense of, you know, I was hoping to make space for actively doing nothing to have a bit more time to reflect and think, but I've been flat out. Yep. Just had heaps of work on and have not had time to reflect and make space.

[00:08:18] DANIEL: I've just had my head above water. When I do think about it, this week and the next two weeks are super busy, but then I'm taking my son away to Queensland for 10 days and we're going to do a rite of passage retreat. We're going to go whitewater rafting and snorkel the Great Barrier Reef together. So I'm in part, I'm frantic now because there's a greater yes that's happening and that'll be a good time to make space in line with my values and wanting to connect.

[00:08:44] DANIEL: So, I don't know, I'm failing now, but hopefully in lieu of something for the future.

[00:08:49] MATT: Mate, look, I appreciate your vulnerability, Dan. And it's good to just, I suppose, emphasise this is a safe space. So I appreciate, again, like, yeah, it's good for you being, I really dig [00:09:00] your authenticity. Excellent. And we can also edit this in the future if we need to.

[00:09:05] DANIEL: What about yourself? How'd you go?

[00:09:07] MATT: I can't, I can't, I can't throw any stones because I too failed. I too failed. I'm in, as we talked about before, at this point in time, just in the throws, the final throws of a heavy course of study. So yeah, I thought, man, like there's no way that I could carve out the time and actually do this exercise without it being completely tokenistic.

[00:09:23] MATT: You know what I mean? It just wasn't going to be, even if I had the time on my calendar, my headspace would not be there. It'd just be too, too distracted. So what I did, and this is partly because I was motivated by just assuming that you were actually going to have done it. I thought, okay, I've got to give Dan something.

[00:09:36] MATT: So, so I have put a time in my diary because I've got a hard end date for my course of study. Yep. And I'm going to come back to it and do it then. And like, literally like the week after. So that will translate to about eight weeks time from accountability in season three.

[00:09:46] DANIEL: Mm hmm. No, that sounds good. Look, the reality is making space is hard in the midlife squeeze.

[00:09:54] DANIEL: That's why we call it midlife squeeze. And there are months or weeks [00:10:00] where you're just surviving. You just don't want it to be your set and reset. Yeah, that's it. Yeah. So like all things, Matt, we're going to talk about some theory. We're going to talk about a book that we read, we liked, but we would want to critique as well by Bill Perkins called Die With Zero.

[00:10:13] DANIEL: But before we get into a, like a theoretical framework. The reality is money's tough, right? It's hard to navigate finances and make hard choices in the midlife squeeze, which is why we want to talk about money. Yeah. Yeah. And you and I struggle in different ways. Yeah. Like I was thinking, you know, what are the pressures on me?

[00:10:32] DANIEL: And I think what are the pressures on us, you know, Yeah. In terms of the midlife. Because, because I remember when I was in my 20s and 30s, you know, being an ant, saving was pretty simple. You know what I mean? Like, I didn't have any assets, uh, and so I didn't have a lot of money, but I had disposable income.

[00:10:47] DANIEL: I didn't have kids. I didn't have a mortgage. And, you know, in some ways, money decisions were pretty simple because all I had to do was, I don't know, I want to save for this, you Backpack. I want to save for my first car. You know, eventually I want [00:11:00] to save a deposit for a house. So the goal was to save a bit more than I spent.

[00:11:05] DANIEL: That was about my strategy, you know, which is actually pretty simple, but now it's a lot tougher to manage money. Ironically, even though I have more and I think there's a number of pressures in midlife that are difficult. So one, just everything is just expensive, you know, a lot of people are struggling in terms of, you know, the changes with inflation and the cost of living have gone up.

[00:11:28] DANIEL: We're lucky. We have a a low mortgage, but even still I've got orthodontics for three kids, I've got private school fees, the boys eat me out of house and home. Yeah. And I wish they would just eat Weet Bix, but they want more expensive stuff. So like, when I look at how much we spend, we're like, oh wow, I just have to earn a lot of money just to get by in this season with, kids and power and all that kind of stuff.

[00:11:51] DANIEL: But on the other hand, I'm also concerned about the future because, you know, I'm nearly 50. I know that in terms of saving for the future and [00:12:00] having enough, let's say superannuation or enough to retire on, time is the biggest factor. You know, when you have 15, 20 years, you can invest in ways that are fairly low risk, that have a high likelihood of returning compound interest.

[00:12:14] DANIEL: But once that window shrinks, then your options for using your money well and investing significantly shrinks with it. So I feel like I have one more window left where I can actually invest in a way that sets me up for the future. So I'm thinking about my future self and the money I have for that rainy day when the grasshopper gets kind of cold and hungry, but at the same time, I'm also really super aware that time is running out in terms of.

[00:12:42] DANIEL: experiences with my family because I mean, my daughter's almost an adult already. My sons will be there very soon. And I can't have amazing, let's say overseas experiences, or I can't even do small day to day experiences like going bowling, which is expensive or going to zone [00:13:00] three and playing laser tag.

[00:13:01] DANIEL: Do you know what I mean? Like these kinds of experiences cost money, which we probably could put aside for the future. But then I'm going to lose my ability to experience really meaningful moments with my kids or friends right now, when I'm healthy, when they're connected with us. Does that make sense? So, so there's this tension with how do I spend money to build experiences now when those experiences might not be available?

[00:13:25] DANIEL: How do I save for the future when that's important? Knowing that I'm going to live until 91, I think we talked about in the second episode.

[00:13:32] MATT: Or your money back.

[00:13:33] DANIEL: Yeah. Or my money back. The reality is it's just tough to live full stop because there's heaps of expenses right now because right now where I've got three kids.

[00:13:42] DANIEL: who are teens is probably the most expensive time of life. And so I have to make money choices in that midlife squeeze. And I think that's the same with most of us in different situations.

[00:13:52] MATT: Yeah. Yeah. Well, you know, just reflecting upon where you're at, it just dawned on me then like you and I are in a remarkably similar [00:14:00] spot.

[00:14:00] MATT: So again, I've got, I've got kids who are getting older. One's 14 and one's 11. So they're not, you know, they're not too far away from becoming young adults. I've got in laws and parents who are also elderly. So that's kind of like coming into play as well. So I feel that tension between, you know, on the one hand, um, I'd like to be a bit more financially independent and squared away, but I'm also super aware of the time crunch.

[00:14:20] MATT: I guess I haven't got too much time left with the boys. So I think you and I have landed in a remarkably similar spot, but the way that we got there is just so different, right? Just so different. Like here and you were, you know, with your short list of like only five or six, seven, eight, nine, 10 goals that you were aiming for as a young, as a young man all I wanted, man, when I was younger was like, uh, like just enough money for a violin and a snappy suit.

[00:14:41] MATT: That was it. Like, that's all, that's all I wanted, you know, that's all I wanted. I am certainly, I think like, again, reflecting on my own experience, I'm just like a kind of like a, a lucky, a lucky unconscious grasshopper. So, and I think it's important to like, to say some of this stuff. Cause again, I really want to keep it realistic and so much of my.

[00:14:58] MATT: Attitude towards money has been [00:15:00] informed by my family of origin, really, really fortunate, didn't want for anything at all, whether that be material goods, food, shelter, or love, didn't want for any of that stuff. So that's all I kind of knew growing up, you know, and then probably like a key kind of anecdote that sums up my entire attitude to money occurred not long after I got married and my wife and I, UK, we did about six months there.

[00:15:23] MATT: We had our accommodation paid for because of my wife's job, which is fantastic. I had a car, so that was great. She was getting paid in Australian dollars back then. But again, her end of the deal meant that we had the roof over our head for nothing. And I was earning pounds doing like casual, casual social work there in the justice system.

[00:15:37] MATT: So I was great. So just like, we're just, you know, just heaps of disposable income raking in these pounds. Yeah. Right. So, you know, we, so we kind of, we did a little bit of traveling, but we lived pretty frugally for about six months. Right. Cause we, we had this three month window afterwards. We're just going to travel around Europe with all the pounds that, you know, we don't.

[00:15:51] MATT: So it gets to like our first big step out of our holiday. It was the Contiki tour on a bus. And it was like, literally we jumped on the bus with a bunch of [00:16:00] strangers on, you know, Friday morning and we're in Paris by Friday night. Don't know anyone. And we're at this Parisian bar and we've got, you know, all this money and my wife, cause she's a bit more, I'd say very responsible.

[00:16:10] MATT: And so she's like, she's a nice lady. She's smart. So she's calculated, you know, how much we should spend. Spend you know, per week or whatever. And I find myself in this bar just like doing the Australian thing and wanting to like get off on the good foot. So I'm just like shouting, rounds of drinks for people, the drinks of people.

[00:16:26] MATT: And then the next morning we come back through the bank account and I've like depleted virtually half of all the money that we had budgeted for this trip. And the point of that story is to say, it's not because I was conscious at all thinking, you know, this would be a really smart strategic social move.

[00:16:41] MATT: I just buy like a bunch of people drinks. I didn't even think about it. And that I think just encapsulates my attitude towards money. Cause again, the family of origin, fantastic. We were just, it was just providence really that we were in Tassie before the boom, blah, blah, blah. That went up in value, all that kind of stuff.

[00:16:57] DANIEL: So you got lucky.

[00:16:58] MATT: Yeah, that's right. Right. [00:17:00] Yeah. Cool. A lot call it serendipity, call it like what you will. It's, and it's really important when it comes to talking about money that you can plan and you can have an attitude and you can have a strategy, but so much of it, a fair chunk of it, I think is still beyond our immediate control and comes a lot down to kind of circumstances.

[00:17:16] MATT: So, so all that to say we're very, because I am someone who's probably been a grasshopper and I didn't even know it. So my big challenge now is I've got to flip.

[00:17:23] DANIEL: Yeah. Okay. Yeah. In fact, when we were talking about the fact that I'm concerned about the future and how I'll save for super and how I'll maybe provide for my kids, you're like, I don't think about that at all.

[00:17:33] MATT: Well, I probably think about it more now, to be honest with you, because of, because of the kids. Okay. And because of that, I can't ignore that shrinking time window that you talked about before, I know that is a hard and fast reality coming my way. Okay. Yeah.

[00:17:44] DANIEL: Yeah. Yeah. And we've reached the same spot in different ways.

[00:17:45] MATT: But I'm not, again, like I'm not, I'm not, I'm seriously not considering it a likely prospect. I will come knocking on your door, penniless and friendless when I'm like 60 saying, Dan, Dan, I've seen the error in my ways. I repent, please let me in. Like that's not

[00:17:57] DANIEL: I'm not really considering letting you in.[00:18:00]

[00:18:10] DANIEL: Alright Matt, so look, we want to talk about some of the theory and some of the ideas about how you make a flip from, let's say, being a saver to a spender, from saving to dissaving in your midlife squeeze, and the book that's informed this conversation most has been Die With Zero by Bill Perkins, which I didn't really like, you liked more, but they, it does have some great ideas.

[00:18:32] DANIEL: Yes. Die With Zero is the idea that most people who accumulate wealth end up over accumulating and they spend way too much time delaying gratification indefinitely, beyond the point where it's helpful. So obviously when you save when we're young, we need to have a certain amount put aside, but there comes a pivot point, and Bill Perkins suggests it's often around mid 40s, 50s, if you've saved well when you're young, [00:19:00] where actually the habits of continuing to save and put off the future will actually bite you and you'll regret it.

[00:19:08] DANIEL: So much so that most people who have that type of mindset end up dying with way too much, when it's much more sensible to die with zero, which is the purpose of the book, to give it away, to spend it, to give your inheritance early, rather than actually waiting until you pass away. So tell me about the book.

[00:19:28] DANIEL: What did you think about it? What did we learn?

[00:19:31] MATT: Yeah. So look to, to be fair, from a purely pragmatic standpoint, it's hard to argue with because the guy is like largely data driven, right? And everything that he kind of promotes consistent with his worldview. So he puts a lot of emphasis on, I guess, experiences.

[00:19:45] MATT: So he, he wants to be really conscious about what you enjoy. And making your money track with that, you know, so whether it's giving, giving it away to charitable causes, whether it's like giving it to your kids, again, when they're still around as an inheritance, so you can see them enjoy it and benefit from it, [00:20:00] or whether it's like basically buying great experiences, particularly ones that you, that you can enjoy with friends and family.

[00:20:05] MATT: He puts a lot of cash on that.

[00:20:06] DANIEL: Yeah. He talks about experience capital, the idea that if you have an experience with your children when they're young, then the benefit of that memory accumulates as opposed to if you're

[00:20:18] MATT: Yeah, that's great. So, so it's good to acknowledge all that. It's also good to acknowledge that he's, he's like talking for some pretty rarefied air.

[00:20:23] MATT: So again, the guy’s worth, I think we, you know, we saw online is public knowledge, over a hundred million dollars. He's a professional investor. He's played a lot of professional poker in his life. He threw like that 45th, birthday party where he basically rented like most of a small tropical island and literally got like Natalie Merchant.

[00:20:39] DANIEL: So this is where he lost me. Yeah.

[00:20:40] MATT: You're not a Natalie Merchant fan or what?

[00:20:41] DANIEL: Yeah. It was just the Natalie Merchant thing. No. He lost me where I don't think he acknowledged how much of an outlier he is, you know, it was speaking to people who are just crazy wealthy where in my mind, it's a whole lot easier to start thinking about divesting your wealth when you've got [00:21:00] enough, whereas you and I aren't, aren't in that position.

[00:21:02] DANIEL: We still actually have to save for our retirement. We don't have enough to stop saving now. And yet a lot of the wisdom in the book still makes sense because there comes a point where you have to also start de saving early enough so you don't miss out on those experiences, particularly before your health goes down.

[00:21:21] MATT: I think to be fair, whilst he would, like he's certainly an outlier, so like he's on the extreme, I think from memory he, like he tried to make most of his arguments fit for the kind of like the regular typical middle class person in America, you know, so his, his argument about still having most of us still dying with way too much money in the bank and overestimating how much money we need, particularly from 60 onwards, I think that kind of holds.

[00:21:45] MATT: But the thing that I liked and appreciated most about the book is that he does this great job of kind of saying, you can kind of, there's a lens through which you can view your life through really, you know, zero to a hundred years old. Right. And that lens involves like quantifying your life in, via [00:22:00] three different areas, and these three different areas are always going to be in play and they're always going to be connected to each other.

[00:22:06] MATT: And they are time. So like how much free time do you have? The second one is money. So how much wealth do you have at the moment? And the third one is health. He says health is the most important, and obviously that's the one that is most likely to decline over time with age, and the one that to some degree you can really do, particularly, you can't, you can't stop it from declining ultimately.

[00:22:25] DANIEL: Yeah, I remember he had triangles, so he said when you're in your twenties and thirties, the triangle skewed towards time. Yeah. So you've got more free time and health. Yeah. Health and time, right? But the money's fairly low. You hit your midlife and it’s a triangle because health, money, and time are all squeezed, essentially.

[00:22:42] MATT: Particularly time. Particularly time, right?

[00:22:44] DANIEL: But there is this kind of, and this is the experience that you and I are having, that we're right in this kind of squeeze where we have to address our health, we have to address time, we have to address finances. And the, the interplay. Based on our values and personality is really hard.

[00:22:59] DANIEL: [00:23:00] And then of course, he has a triangle which is skewed towards money. When you get older, so I've got more money, but my health disappears. And what he's saying is you absolutely want to make sure your time is used valuably and not just spent accumulating wealth before that happens because there are experiences in life.

[00:23:18] DANIEL: You cannot have once your health declines. Yes, and most wealthy people over save.

[00:23:23] MATT: Yeah, that's really pragmatic, but I find it really useful. Yeah, it's useful.

[00:23:27] DANIEL: Yeah, it's useful, and I think it explains why I find, well why we find money hard in the midlife because you're juggling lots of different things.

[00:23:35] DANIEL: Yes. Yeah. So let me look at a stat. So, um, Bill Perkins says in America, retirees who had more than 500, 000 us dollars before retirement only spent down on average, 11. 8 percent of that money 20 years later. And by the time they died, there was 88 percent leftover. In fact, one third of retirees actually increase their assets after they retire, which is crazy.

[00:23:57] DANIEL: So what he's saying is the majority of people who have [00:24:00] saved well, end up dying with like hundreds of thousands of dollars of super leftover. And then they give their kids their inheritance when the kids are like, in their mid sixties, now, by the time you're in your mid sixties, you probably don't really need the money.

[00:24:15] DANIEL: Whereas actually, if you could give your kids like one or 200,000 when they're 30 or 40, oh my gosh, what a difference that would make in their lives in their grandkids lives. Do you know what I mean? Like that's when the money really makes a difference.

[00:24:28] MATT: Exactly. That's it. As opposed to your sixties.

[00:24:32] DANIEL: Exactly the other. Yeah. So why save perpetually when you can actually be such a gift to your family or likewise, what if you were to give to charities early when they really need the money and be part of the experience of seeing how that money could change their lives. So there's really tough interplay of, you need to save enough, so you've got enough, but you don't want to over save.

[00:24:51] DANIEL: So that was one of his points. And I really, really liked that. It's certainly, my mum's been a great example of that. She's always had a lot less money than my dad, but whenever she had the [00:25:00] ability, she would actually help us with like, just, getting a little bit off the ground with a mortgage and things like that.

[00:25:05] DANIEL: And, and we, we, we value that tremendously. So I'd, I'd love to be able to have that point where I divest wealth earlier rather than wait until I, I cock it. Yeah. Yeah. Yeah. Yes. It's, it's, it's a gift. It's a gift. So lots of theory, but what does it mean for you?

[00:25:24] MATT: Does it change any of the way that Mr.Grasshopper locks up money in me? Yeah. Yeah.

[00:25:27] MATT: It's, it's certainly, it's, uh, how do I say this? I think that like to some degree, it's an act of almost faith to perhaps think that you don't need, that you won't need so much money later on in life because there's that, there is like to be honest, that element of fear that's thinking, man, I just got to prepare for that rainy day.

[00:25:47] MATT: You know? So even I, and I'm not a very kind of fear driven person, I'm not naturally anxious. I still like, I guess I kind of tie that up with responsibility as well. I'm not wanting to be a burden on, um, people, all that kind of stuff. But his [00:26:00] points, I think, are solid in that to some degree, the scope of activities that someone will undertake, that later in life will shrink.

[00:26:05] MATT: So you just don't need as much money. And particularly if you're kind of fortunate enough to live in a country like ours with a good health system, a bunch of that stuff will kind of get looked after as well. So for me, yeah, for me, I've, I still battle a little bit to think, okay, it's okay. It's okay.

[00:26:21] MATT: Probably to spend more money. Now, as on things to do with the kids and experiences, because again, that is really time bound and that's hard and fast, but the challenge is again, so whilst there's that, like that element of being more of an ant, there's still a part of me where I probably feel I've got to at least change a little bit and evolve and be less of a, just a completely unselfconscious grasshopper.

[00:26:43] DANIEL: And look, we'll get practical in that last section that we're going to lead, but I just think it's a complex interplay because there are a lot of listeners who don't have enough super and actually will need to save a lot more. You know, the stats show that a vast majority of Australians don't have enough super and we underestimate [00:27:00] how much we'll need, particularly if the health system crashes and things like that.

[00:27:03] DANIEL: And I just think this is why it's tough. I, even if we don't have the answers, it's worth acknowledging this and to make sure people are talking about these ideas. Because that's how you make informed decisions.

[00:27:13] MATT: Yeah, that's it. The big takeaway for me, I can't afford to ignore it. I can't afford to put it in the too hard basket.

[00:27:18] DANIEL: Makes sense. Yeah. So let's finish with some quotes. Love to. These are both from Bill Perkins, Die With Zero. He says, if you want to die with zero and make the most of whatever health you have at every point in your lifetime, you will need to spend more in your fifties than in your sixties and more in your sixties than in your seventies, let alone your eighties and nineties.

[00:27:37] DANIEL: So that's a complete reverse way of how we often do it. We actually need to get better at spending in our fifties if we're going to experience those life dividends that he talks about.

[00:27:49] MATT: Again, it just seems so, it sounds like counterintuitive, but he makes a good case. And speaking of experiences, so, and experiential dividends, this is like a, like, this is the start of a good definition.

[00:27:58] MATT: His definition. He writes, [00:28:00] invest in experiences that yield long lasting memories. Always bear in mind that everyone's health declines with age. Give your money to your children before you die instead of saving for their inheritance and learn to balance current enjoyment with later gratification. So that's, I think to some degree, that's his philosophy in a couple of sentences.

[00:28:17] MATT: Love it.

[00:28:18] DANIEL: I just want to acknowledge the role of habit change, because this is easy philosophically. Yeah, okay, you need to spend more, you need to go from being a saver to a spender and make that pivot from accumulating to de accumulating your wealth. But the reality is, what you're actually saying is you have to do a massive change.

[00:28:32] DANIEL: Mindset and habit based money shift and that is super hard and this is where it fits really well with our overarching season theme that the habits that set you up in your twenties and thirties need to be unlearned and flipped over when you're in your midlife. And money is the same.

[00:28:48] DANIEL: You're doing your best right now to, again, just embrace that violin.

[00:28:52] MATT: Embrace the violin. And be a bit more chilled out. So I'm really keen, I'm sure people at home are as well, to hear about like [00:29:00] how, how's it going? How are you actually like, what are some of the practical steps you're taking to try to achieve?

[00:29:04] DANIEL: Yeah, look, it sounds, it sounds so, I don't know. Self indulgent, you know, the idea that I'm struggling to spend money and enjoy life.

[00:29:12] DANIEL: Do you know what I mean? Like, it sounds ridiculous, but I mean, that, that is the shift. So I, um, so there are a few things. I mean, some big ticket items. We, we went overseas last year, spent a ton of money, and had one of the best experiences of our life as a family. You know, the kids still talk about it. I know it was one of those kind of amazing experiences we had in the Solomon Islands.

[00:29:31] DANIEL: Uh, so that was definitely a decision to, you know, forego future savings in order to get this experience and we plan to go again next year. But even in other ways, I've been thinking about where do I save and where do I spend? Where do my values align with practicing becoming more like a grasshopper? So um, you know, we went out for drinks the other day and I shouted people and I would normally not shout.

[00:29:55] DANIEL: Everyone out to a drink but it felt great and I was like, I'm so grateful. I've got [00:30:00] the wealth to do that. And so I'm practicing that because I believe in friendship and I want to invest in friends, I'm taking the kids bowling and we're going out to dinner sometimes, you know, like where it's gonna help with connection and relationships. So that's spending money where that matters. And I'm spending money on good hotels when I travel.

[00:30:16] DANIEL: I'm just, I want to stay in a place where there's a pool and where there's a gym and where I'm comfortable because I really like that. Uh, but I'm also still saving. You know, I can't flip everything and nor should I because I still have to save for retirement. So, uh, we're still really careful with what we spend in terms of our, uh, supermarket budget.

[00:30:33] DANIEL: Uh, we eat at home almost exclusively because that's good for, you know, you get healthy food and it's, it's cheaper. Uh, I drive a 1998 Camry. You know, I've got the shittiest car on the street and I'll keep driving it until it breaks down. So in that sense, like, I'm, I'm still saving and being thoughtful about where we hold money back in order to, keep investing in the future, but at the same time, I'm trying to loosen the strings.

[00:30:59] DANIEL: [00:31:00] And the big decision we made is we're not going to accumulate wealth in the next three years, because when we look at our finances, the next three years until our kids start leaving private schooling are the most expensive periods of our life. Things will actually get cheaper in the next five to 10 years.

[00:31:16] DANIEL: And the good thing is actually I get to draw on my wife because she's always been more of a spender and she's drawn on me for helping us save and get into a better position but now I need to lean on her to learn to actually practice being more relaxed with money and enjoying it. Yeah,

[00:31:29] MATT: yeah, yeah, let that hair down.

[00:31:30] MATT: It's good. Yeah, which is good. So, let's, uh, wrap up this section with a final quote from Perkins book. He writes, the psychological shift from savings mode to spending mode won't be easy. Changing one's deeply entrenched habits never is. If you spend all your life as a good, solid, and committed saver, it's hard to suddenly shift gears and start doing just the opposite.

[00:31:49] MATT: For people used to accumulating wealth, decumulation doesn't come naturally. Old habits die hard.

[00:31:55] DANIEL: Old habits die hard. Yeah. Mr. Grasshopper.

[00:31:57] MATT: Mm. Mm. Mm. Mm. So [00:32:00] Dan, let's, uh, let's, as we, uh, want to do, let's take 30 seconds or just a moment at home to think about what we've discussed so far. And I think it'd be particularly interesting, kind of, you know, just to see if there's a continuum where you land in terms of ant, grasshopper.[00:33:00]

[00:33:12] DANIEL: All right. So hopefully that's been helpful to have some time to think and reflect on your money mindsets, uh, and your habits, no matter where you are in life right now. Let's get practical. We thought we'd finish with a few, I don't know, tidbits of wisdom knowing that we're not financial advisors, but this is stuff that's been helpful for us from what we've read.

[00:33:35] DANIEL: Uh, and we particularly do like the work of Morgan Hussle from The Psychology of Money. It's a great book. Fantastic book. Definitely worth reading. Uh, I am a fan of it. Uh, but look, I was having a chat with our kids and my neighbour's kids, so we eat every Monday night together as a community. And I remember asking the kids, so how do you get wealthy?

[00:33:54] DANIEL: You know, how do you build wealth? And, you know, they pick the obvious ones. Well, get a good job, so [00:34:00] earn money, so the tap turns on. Uh, and spend less than you earn. You know, that, that makes sense. Uh, but I said, you've missed the big one. Uh, and this is, this is really important. And it's to put downward pressure on your desires.

[00:34:14] DANIEL: And what I mean by that is you can earn more money if you increase your desires and your wants in line with that increased income or even exceed your income with more wants and needs, well then you'll always be broke. You know, I've worked with a lot of leaders, senior leaders, people in wealthy areas, particularly in Melbourne, Sydney, for example, uh, who tell me that they, cannot get by with less than five hundred thousand dollars a year as an income.

[00:34:41] DANIEL: No, that's, that's their base level, uh, that's just to service their debt. You know, and they're constantly stressed with money, they would need eight hundred thousand a year just to kind of not feel like they're always behind. That type of money is like, so different from what I earn and that makes sense.

[00:34:58] DANIEL: So, you know, because the [00:35:00] kids are in crazy expensive schools, they're keeping up with the Joneses in one of the most expensive suburbs. They have a massive amount of debt. Plus, they just keep spending and, and so you can always outspend income no matter how much you earn. At the same time I've got some other amazing friends who earn less than a hundred thousand a year between them and it's tight but they're frugal. but they're not, they're not frugal in a nasty way in the sense of, that they're constantly generous that they're just open welcoming you can tell that they give what they can and yet they're incredibly happy.

[00:35:33] DANIEL: because they've managed to keep a downward pressure on their desires. And they invest in friendships. They invest in holidays still, but they, they know what they value and they don't worry so much about money. Hmm.

[00:35:46] MATT: Interesting. Yeah. Look, I dig all that. I probably only qualified perhaps by saying, cause I'm the kind of person I think, and this comes down to my psychology and temperament and that kind of stuff.

[00:35:57] MATT: If I, if the blanket recommendation is to kind of [00:36:00] down pressure my desires. Eventually I want to kind of distort that into self flagellation to the point where I break and just go completely 110ks in the opposite direction of probably being super excessive. Yeah. So I like the idea of bringing it back to clarifying and a bit like we talked about last season, particularly Great.

[00:36:18] MATT: Yes. Is helping us to say no. So I think if I've got an idea, if I can clarify my values and what's really important, really, really important, what I think Remit Sethi, one of the, you know, one of the current finance gurus, he talks about what is it that kind of makes you feel wealthy and actually tailor it to you.

[00:36:34] MATT: If you can get a handle on that, then I think it's okay. It's almost like you've got an outlet and permission to direct funds and money towards that and to kind of feel wealthy in that sphere whilst at the same time turning down other particular outlets.

[00:36:48] DANIEL: That makes sense. And I think that's where I've landed in terms of where I spend money and where I don't.

[00:36:52] DANIEL: Like I said, what I'm not saying is it should always act like you're a poor 20 year old student when you're suddenly earning, you know, 200,000 a year. [00:37:00] That, that's kind of unusual. But I'm saying that as your income increases, don't automatically increase your desires and needs in line with it. Because if you do, you'll always be broke and you'll always want more.

[00:37:11] DANIEL: Yes. So I think there has to be a point where from a psychological point of view, you say that's enough. I know what makes me truly happy and it's not more stuff. Uh, you know, there is a great TED talk that money can buy you happiness if you invest it in building relationships and if you give it away, but if you just keep accumulating stuff and accumulating debt and responsibilities in terms of finances, well then that doesn't make you happy.

[00:37:35] DANIEL: So, it's just being aware that there's a psychological component and not to always want more. So, I think we're saying the same thing in that sense. Oh, I wouldn't believe that. So, uh, so Matt, why don't we shoot for the second principle?

[00:37:48] MATT: Yeah. So, so this is what, again, like going back to, to my, I suppose, like particular psychology and I really liked this idea of again, having tools and systems in place that forced me to be more conscious and intentional [00:38:00] about where my money is going.

[00:38:02] MATT: And I remember years and years and years ago, like I read this great book called Are You Money Or Your Life? And again, this is, it had a, had a pretty profound effect on me, obviously, like I haven't kind of implemented it enough, but the author's big point was that you can really translate it. Every, you know, every minute that you work.

[00:38:18] MATT: to a particular like dollar value. So every minute of your time that you're working has a dollar value. So right there, you're feeling the tension between money and time. And so again, you don't want to kind of give away your time unconsciously. So ever since then, I've been, you know, reading like a bunch of other books about the same principle of becoming more conscious.

[00:38:38] MATT: And I've seen there's a whole gamut. So there's basically a continuum. You've got people who advocate giving every single dollar that you earn, um, a home. So you know exactly where your time translated into money has gone.

[00:38:50] DANIEL: Okay, so like true budgeting spreadsheet.

[00:38:51] MATT: Yeah, true budgeting, yeah. The next extreme over here is like say, you know, Scott Pate, the barefoot investor, he talks about buckets.

[00:38:57] MATT: So categories. So it's not as detailed as again, [00:39:00] having to give every dollar a home, But it's still giving you some sense of where the money is going and how much you're going to spend on a particular kind of category of stuff. So again, this is pretty common. Sethi, Dave Ramsey, the total money makeover guy, again, huge in that world.

[00:39:14] MATT: And also Scott Paid. They say that you take your entire income and you basically, I think, chop it into say three sections or three broad categories of buckets. And one of those buckets will be necessary expenses. So that's one bucket. So the, maybe that's like say 60 percent of your income and then maybe devote say 20 percent of your income to say splurging.

[00:39:30] MATT: So that's just, you know, spending money on leisure activities and going out and that kind of stuff, like just having fun. And then the last 20 percent is more say saving for long term goals. So this is like the overseas holiday and that kind of stuff.

[00:39:41] DANIEL: Yeah, that makes sense. And the point of buckets and I would do something similar, not exactly those buckets, but we have four or five different buckets and the point is when I receive my income, I automatically divert.

[00:39:51] DANIEL: A pot, A particular percentage? Yeah, or a particular amount to, let's say bills and expenses versus everyday spending versus long-term saving versus short-term holidays. [00:40:00] Yeah. Yeah. Uh, the point is you separate your income from the start and then you work from those buckets. I think that is a pretty smart way of, it's great.

[00:40:08] MATT: Yeah. Because again, it forces consciousness. And the thing that I, well, the two things that I really like about these approaches is that A, if you need a, the hard and fast, like the pretty heavy duty intervention of every dollar has a home, or maybe you're someone like me who, again, I'd find that soul destroying.

[00:40:21] MATT: I can't do that consistently as well, but I can make the bucket system kind of work. Like that's enough. That's enough intentionality and consciousness without it breaking me. That's sustainable. Absolutely. But like the big point of all that, I think is that like, whilst it can seem a bit onerous, it can sound onerous at first glance to think, well, I have to have some kind of system, whether it's, every dollar gets a home or some buckets.

[00:40:40] MATT: Once you've got that set up in place, it's actually liberating. Cause you don't have to stress or think about what you're spending and how you're spending it so much anymore.

[00:40:47] DANIEL: So the first principle is to down pressure your desires essentially to practice having enough rather than always needing more.

[00:40:54] DANIEL: The second one was to use buckets to manage your money, hopefully in line with your values. Well, the third thing I think is [00:41:00] really important and we all, we just touched on this a bit is the importance of giving the percentage, uh, you and I are both big fans of giving and I think it's really important.

[00:41:09] DANIEL: Even if you're an, and, and even if you're trying to save, to build in a habit right from the beginning of giving a percentage of your income away, and I'm a big fan of giving percentages, just like I'm a big fan of saving percentages. I remember hearing a talk once from, you know, a motivational speaker and they said, I think the aim in life with money is to be a millionaire.

[00:41:30] DANIEL: And everyone's like, yeah, you know, and he's like, but I don't mean what you mean. I don't mean that we should save a million dollars for ourselves. I think the true millionaires in our society are the ones who have given a million away by the time they die. And that really struck me. I really liked that idea.

[00:41:48] DANIEL: That wouldn't it be cool if I could give a million dollars away by the time I die? Yeah. As, and that is kind of a true millionaire, do you know what I mean? So I've always, so as part of that, you know, I've always saved 10 percent of my income and [00:42:00] I've always given 10 percent of my income. It's always been something I've done from like when I was an ice cream driver and as my income has increased.

[00:42:07] DANIEL: Yeah. Well, I just give 10 percent away and I save 10 percent and then obviously I do other stuff with buckets with my other 80 percent but what's kind of cool is I've realised that actually that 10 percent saving will lead to a million dollars of super when I'm older and you know while that is obviously higher because of interest and capital gains in some ways, you know maybe it's kind of like I've given a million dollars away. Even though it won't be a million in cash, but maybe you could say that social capital accumulates. And, and I think that's a nice feeling but it hasn't, you know, obviously it's cost me. But it was more a strategy and there's definitely something about giving that frees you from the need for more.

[00:42:48] MATT: So I think every time you give like that, it's almost like a small act of faith in the sense that you're, you're actually trusting that you don't need to grasp and grab and maintain and keep [00:43:00] every bit of income stream or wealth that crosses your path, you know, that you're going to be okay. You don't need it all, you're going to be okay.

[00:43:07] MATT: You can actually afford to give it away.

[00:43:09] DANIEL: So my advice, I suppose, is to give as a percentage, just like you save as a percentage and don't wait until you have enough to start giving.

[00:43:21] MATT: So as per usual, Dan, we've got a couple of exercises for people to undertake. Money exercises. Money exercises. Yeah, yeah, yeah, yeah. And again, as usual, we, we've got two options. So depending upon your age and stage. So for those of you who are getting that early adulthood stage, here's our, here's our exercise slash challenge.

[00:43:39] MATT: If you're in your 20s particularly, what we'd like you to do is get, is to grab a thousand dollars as soon as you can and invest it. So like invest it in a super or shares. So again, doing this early in life will give you the benefit of compounding interest over time. So whether you got to sell stuff, put some stuff on gum [00:44:00] tree, get rid of that drum kit that's been lying around the house for far too long.

[00:44:03] MATT: Or you'll be saving a percentage of your income for a couple of weeks or months or whatever to get that thousand dollars. Get that grand and invest it.

[00:44:10] DANIEL: There are two things on that. One, it's really helpful just to have something in the bank. So to get that first thousand and to let's say put it into super or shares or something where you're getting compound interest.

[00:44:18] DANIEL: And the second is the, the small practices or habits that get you there. Because if you can save a thousand dollars through 50 a week, well then that'll be 2000 and then 3000 if you continue that habit. So let's both get there quickly. But also get there in a way that you can continue because you're building the habit of being a saver and an investor early.

[00:44:39] MATT: Early. Yeah, that's right. That's right. But what about if you're again, like in that kind of classic midlife squeeze, like more like us, forties, maybe even fifties, our exercise, our challenge for you is really think and consider an activity or an experience that you'd like to have that is going to be, time bound, as in if you keep on delaying and postponing that, chances [00:45:00] are because of time or health, you won't be able to actually undertake it.

[00:45:04] MATT: So what is that thing? What's that thing that would be so easy to kind of put off or postpone, but really, if you're going to do it, you should be doing it sooner rather than later.

[00:45:10] DANIEL: So that sounds good. And like, like, we always do have an action trigger, so if you're someone who, you know, wants to save 1,000 and actually build that habit of saving, well, what is your plan?

[00:45:22] DANIEL: When and where will you do it? How much will you save? Similarly, if you're in your 50s and you've been putting off that trip or that experience and you think, actually, I can afford it. It might, might be a stretch, but let's do it now before it's too late. Well, then what's your action trigger? What will you do?

[00:45:38] DANIEL: When will you put time aside? You know, start planning that change as soon as possible. Yeah. Like always, Matt, I think one of the big shifts that happen in midlife around money, so we talk about being generative and really the big flip in midlife is to go from it being about you to being about others.

[00:45:57] DANIEL: And that's what I did like about Bill Perkins book and our [00:46:00] conversation. I think the flip, no matter which way you're flipping, I think it needs to be about others. Meaning, you know, how can I give money to my kids? How can I give generously to causes? How can I maybe downshift my expectations and take that job that pays less in order to free up more time or to have a more satisfying life where I can give to those in need?

[00:46:21] DANIEL: Does that make sense? So it's about making, using money as a tool to actually build community, build relationships, and actually invest something in the world.

[00:46:29] MATT: Yeah, that's good. But like that makes complete sense. And going back to our original quote via Sister Joan Chita, um, I think that ties in nicely with this idea of divesting.

[00:46:40] MATT: Divesting and it being natural. There's just something about the life cycle that again, it involves deaccumulating with time. And I think there's a lot to be said for almost embracing that voluntarily, rather than being in this position where it's going to be like your health, perhaps, and like your sphere of activities.

[00:46:56] MATT: It's going to be to some degree taken away from you regardless. So [00:47:00] embrace it. So again, she writes, life, it seems follows a relentless cycle in our early years, we accumulate. But in our later years, we divest. Both of them have a place in life. Both of them are a struggle. Both of them are liberating.

[00:47:13] DANIEL: Alright, so Matt, our last episode of season two comes up next week.

[00:47:18] MATT: We are our post penultimate

[00:47:18] DANIEL: Our post penultimate. So we are exploring what it looks like to invest in your inner life to make the shift from maybe more of an outer life, being a doer to more of an inner life. Um, I'm going to talk about the three stages of faith, uh, according to the research and finish with some of our reflections about what you and I have learned by maybe having this counselling session in midlife in front of thousands of people.

[00:47:46] DANIEL: Again. Yeah. Again. Yeah. Hey, if you haven't downloaded the uh, our handout and our Season 2 kit, go to spacemakers.au/s2. We've got not only a summary of the stages of life and all the [00:48:00] seasons, but a whole heap of fantastic resources to help you make this pivot. But until next time. Make space.

[00:48:07] DANIEL: See ya.

[00:48:08] PROMO V/O: The Spacemakers with Daniel Sih and Matt Bain.

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[00:48:25] PROMO V/O: Need space to achieve your priorities? Priority Samurai is an online course to help you set goals, break down tasks, define your week, and achieve what truly matters.

[00:48:34] PROMO V/O: Visit PrioritySamurai.com for free videos to help you become a Priority Samurai. Until next time, make space.