5 Financial Advisers Reveal: Why You’re Broke On A Good Salary (And What To Fix!)

[0:00] Sammie: These five financial advisors have sat across from people earning an incredible amount of money, but potentially in a lot of places, still feeling skinned. So why is that? And by the end of this podcast episode, you’re gonna know because every single one of them says the same thing. Your salary isn’t the problem. So what do you do to actually make it count? You’re gonna hear exactly why a pay rise is usually terrible news for your finances unless you do this one thing. How to play the system that’s quietly built to take your money, and a financial advisor who says you probably don’t need one, plus what to do instead. Now, first up is Jason Butler. He’s advised over two and a half thousand high earners and wealthy people, and he grew up with debt collectors at the door. Now, listen to what he says separates the rich from the broke.

[0:46] Sammie: But you spent over 30 years in financial services and you’ve built a wealth management firm, you’ve advised many wealth families along the way, you’ve written books, you’ve educated millions of employees. After all of that, though, what does financial well-being actually mean? Because I think most people hearing that phrase think, oh well, I just need more money.

[1:05] Jason Butler: Yeah, it’s a good question, actually. And I think it means different things to different people, if I’m if I’m totally straight with you. But to me, what financial well-being means is that money’s not a source of anxiety or worry, and that you have enough in however you define it so that you’ve got choice, uh, freedom, and options in your life, and you can live a life on your own terms and with dignity and uh to be true to yourself. That’s it. Um and in terms of you know, if you’re always chasing money, uh, I think the research shows us that if you if you define yourself by your net worth or lack thereof, then you’re always gonna be unhappy. Okay. Now, now the research also shows that having more as opposed to less, generally all other things being equal is a good thing. But just more and more and more for the sake of it is not really the issue. So someone who has loads of debt and um uh gets out of debt is probably gonna have a bigger increase to their happiness than someone who goes from one million to two million. Okay. So it’s all about relative to where you are and what matters to you and what makes you have a what I call a flourishing life. Flourishing is a lot more than happiness, it’s it’s being the best version of you and also those people around you.

[2:15] Sammie: So if you look at that from the outside perspective in, are you looking at from say it’s not just about the money, it’s what you’re doing with that money along the way that will give you that kind of overall feeling of financial well-being.

[2:27] Jason Butler: Yeah, I mean, you know, I take this from someone who grew up in a poor family, okay? So I don’t know any, I’m 57, I don’t know anyone else. I’ve never met anyone who, until the age of eight, had an outside toilet and a tin bath on a Sunday. Okay, there’s very few people in my generation who actually experienced that. That’s what I call real poverty and 10 P’s for the electric and the gas. We loads of films we’d never seen the end of because we ran out of money on the electric and it just went out and we couldn’t find any money because our mum was at work. Um I also, you know, there’s loads of war films that I wish I’d knew the ending to. Um, and I can also remember the anxiety of growing up um of my mum never having enough. And my mum and dad split up when I was five. Uh, it was always a struggle paying the rent. We had debt collectors knocking on the door, we had a big glass door, and it was always a big fella. You they used to send big fellas around and it all went dark, like the sun had gone in, you know. And I can still remember that anxiety, my mum worrying that we’d never have enough. And so I think it’s it the whole thing about finances is it’s it’s it’s a mixture of what happened to you when you were growing up, and including as you became a teenager and a young person, what happened in the society. I was growing up in the 70s, and we had the three-day week, and and you think things are bad now, Jesus. I mean, we lived in black and white in the 70s, everything was dirty and horrible. Um, and it also about the messages that you hear from other people, and that you more importantly, that you tell yourself. So everyone is different, but there are there are certain success leaves clues in terms of how you can have a good relationship with money so that it it’s your it’s your servant and not your master.

[3:59] Sammie: Yeah, yeah. And there was a study done, I think it’s going back a few years, so obviously with inflation that’s increased, it’s like your material happiness doesn’t really increase drastically past uh wage. I think it was $73,000.

[4:12] Jason Butler: Yeah, there’s there’s been some more research done since then that said actually that’s bollocks. Um actually, actually it does keep going up, but it goes up a lot slower. Okay, in other words, the rate you know, the people who’ve got 200 grand a year, all other things being equal, are happier than people who’ve got 40 grand a year, 50 grand a year. There is a massive increase, but it uh it doesn’t keep increasing at the same rate. So, in other words, beyond a certain level, you don’t get the same happiness bang for your pound or your buck or your euro. That’s that’s the point. So uh yeah, that and I think it was Justin Blowers. I I could be getting right. Boers or blowers who did the study that said actually we can’t find any satiation point. We can’t, it does keep increasing, it just slows down the rate of increase. Yeah. Um, but do you know what I mean? Um uh you can be earning £150,000 in this country and still feel hard done by it because you’ve got high rent or a high mortgage or your cost of, you know, we all know with the cost of living, we’re all feeling poorer because, you know, we’re having to use our money um in lots of different ways. But I I must share with you this relative story. They were interviewing some people, I think it was last week, and I don’t watch television, but I saw this on YouTube, and they were talking, they interviewed a family coming out of costas about the cost of living crisis, and they all had what must have been uh how much is a coffee now? 380, four quid in life.

[5:25] Sammie: Five or five quid something.

[5:26] Jason Butler: Oh, whatever, four or five quid. Now they’re all in the two kids and the parents, and they all had a cost of coffee, must have come to 20 quid. And they’re going on about how difficult things. Now, if things are difficult, and they are for many people, you wouldn’t be paying 20 quid for coffees, would you? You take a flask with you. Now, I know that sounds a bit sort of a bit uh austere, but I I do think each generation resets its expectation of what poverty is or what difficulties are. And I said to you earlier, didn’t I, Samuel, when I first got here, it’s not how much you earn, it’s how much you keep. And for some people that’s hard, but for some people, um uh it they’re not actually focusing on how much they keep because it’s not on their thing. And I will say wealthy people say how much, and and poor people say how much a month.

[6:11] Sammie: I love that. Because uh it’s really interesting, it flagged that in my head. We did a video recently about the study into IQ and net worth essentially over time, and you would think that an increase in IQ would mean direct correlation to wealth, and actually it’s completely the opposite, it’s it’s completely scattered, sorry. So there’s no like you’re not it just because you’re smarter or you earn more. Um, and um being smarter does increase your um income quite drastically in a kind of a line and line, but net worth is all over the place. So you’re right, it’s about what you do, what you keep, because that’s someone earning that £100,000 versus someone on a £50,000 salary could be materially like the person on £50,000 could be much more wealthy because of what they’ve done with their money.

[6:54] Jason Butler: And and here’s the interesting thing, I’ve met so many people who despite earning uh and you know I’ve interviewed over two and a half thousand high earners and wealthy people when I was a financial advisor. I’ve met people who I thought, well, how could you be this poor when you earn this amount of money? You know, it’s it’s because it’s you’re just pissing it up against the wall. That’s stuff. And I’m not here to judge people. What I’m saying is that’s the diagnosis. You need to stop doing what you were doing, otherwise you’re going to keep getting the same results. And one of the things I think it’s very important for people to realise is that you are not defined by your net worth, okay? It’s just a measurement. And there’s many people who want to do vocational jobs or things that aren’t high earning. Okay, it just means you’ve got to be a better budgeter. Um, it just means you’ve got to be more conscious and uh intentional where you put your money. And and that means even, you know, uh paying attention to it. Not obsessing, but paying attention to it. Just because you’re an artist doesn’t mean you don’t need to look at your bank account. Just because you’re a free spirit doesn’t mean you’ve got to put a limit on the fun money. I say have fun, but just not too much.

[7:52] Sammie: So it’s not how much you earn, it’s how much you keep, and yes, that sounds obvious, but think about what Jason has just actually said. He sat with people on 150 grand who feel hard done by because the money comes in and then it goes straight back out onto stuff that shows everyone else in the world that they’re doing really, really well. And the line that I can’t shake from this: wealthy people ask how much and poor people ask how much a month. Now, think about the last thing that you bought on finance. Did you know the actual total price with the interest on top? So if keeping it is the game, surely a pay rise will help in this. More coming in, more to keep. Well, Andy Hart doesn’t necessarily think so. He asks financial advisors this exact question, and most of them get it wrong. I got it wrong. Andy reckons for most people a pay rise is actually terrible news for their financial plan. And once he explains why, you’ll never look at a pay slit the same way. Now here’s Andy.

[9:59] Andy Hart: Again, the thing I ask financial advisors is do you think a pay rise is good for your financial plan? So I’m asking you, is a pay rise, let’s say you were a normal employee on a wage and you got a pay rise, is that good or bad news for your financial plan? Depends. Correct. On what what what threshold you’re what so if you are you getting technical about tax rates and weird stuff like that? Yeah, absolutely. Right, but let’s just put that aside. So I’ll I’ll add some more I’ll add some more meat to the question. Okay. I’ve worked it out, and you’re gonna get after tax a thousand pounds a month net. So is this good news for your financial? Absolutely, of course it is. Does it not depend still?

[10:43] Sammie: Okay, well, it depends what you do with it. Correct. So if you if you go and lifestyle inflate, well, you might as well never have the pay rise.

[10:50] Andy Hart: No, no, it’s really bad news for your financial plan, for your financial plan here. Yeah, so if typical person pay rises are bad news for your financial plan, that’s the headline. Because typical person gets a pay rise or work off a thousand pounds. I know that’s very high for a typical pay rise, but we’ll just work off that. Um, if let’s say the the pay rise after tax was a thousand pounds, is this good or bad news for your financial plan? The answer is it depends, it depends on what you do with it. If you only invest £200 of that, which would be quite a typical but still punchy number, because they’ve already earmarked the £1,000 for who knows what, Lifestyle Creep, a load of other stuff, new car, holidays, new gym. So if you only invest £200 of that for your future self, your current self is now spending £800 of it. So uh 20% is invested and 80% is spent. So now you are aiming for a bigger number in the future, your target has got bigger because your now new lifestyle includes that extra 40% that you’re spending.

[11:53] Sammie: Oh, I see why you’re looking at that. Yeah, yeah, yeah, yeah. Because you paid more things to the things that you need to get.

[11:58] Andy Hart: Yeah, your lifestyle costs have now gone up.

[12:00] Sammie: So you’re technically if you’d have done 600, 400, you’d have been better off.

[12:03] Andy Hart: Yes. So if you invested 501 pounds into your ISA and spent £499 on your current self, that pay rise is good news for your financial plan because your future number’s gone down minimally by a percent. Um, most people are not financial robots. A financial robot would go, right, I’ve got a thousand pounds pay rise. Uh yeah, all of it’s going in. All of it’s going in. But who’s gonna ever say that? Typically, I ask this question to financial advisors all over the country, and these are financial advisors, you know, they you think they should know. And they all say pay rises are great news for financial plans, and then we break down the numbers like we’ve just gone through, and they actually know they’re so a typical person would probably invest £100 of that, believe it or not. A typical person. If that. Okay, so £100, £150, $200, we’ll be we’ll be kind. For 99% of people, pay rises are terrible news for their financial plan. You know, my biggest pay rise ever in my life, probably similar to yourself, was going from uni, generally having no job, let’s keep it simple. I did work at uni to my first job. My first job was £750 after tax a month. I went from zero to 750. That’s the biggest jump I’m ever gonna have in my entire life. And I thought, my God, when I’m earning a thousand pounds, I’m gonna be, you know, a month, I’m gonna be definitely saving the difference between the 750 and the thousand. Do you hell? You know, when it when it starts coming in, you you quickly readjust. Um, so yeah, generally pay rises are bad news for your financial plan because you’re gonna consume more of it now, which means you need to aim for a bigger future number that you then need to live off.

[13:38] Sammie: Can I play devil’s advocate to that?

[13:40] Andy Hart: Yeah.

[13:41] Sammie: Oh Andy, I’m definitely gonna like lower my lifestyle when I get to that point.

[13:47] Andy Hart: Yeah, right. Again, good luck with that. Yeah, most people don’t. Um, again, when we plan with people in their early 50s, like the the big question is um, how much money needs to be coming in every single month uh for you to live a comfortable and dignified retirement? That’s the question. How much money needs to come in every month for you to live a dignified and comfortable retirement? Assume the mortgage is gone, assume the kids are gone. And they go, ah, good question, never really been asked that before. Blah, blah, blah, blah, blah, blah, blah. Seven grand a month, or whatever, whatever the number is, three grand a month, twenty grand a month, you know, people come out of all different numbers. Um, when we build plans, long-term forecasts, we generally take what they’re spending now on lifestyle. So lifestyle excludes mortgage, excludes contributions, and excludes kids because they’ve got a finite um length of time in the plan. And what’s left, we generally forecast that going forward. Uh, most people find it very hard to reduce their lifestyle spending. Um funny that I especially in a couple, uh, heterosexual male-female couple, they find it very hard to reduce their their expenditure. You know, you’ve gone two different things. Single males are the only people I’ve seen that can do it do it quite successfully.

[15:02] Sammie: My my my dad and my stepdad have definitely gone backwards and I’ve fair flag.

[15:07] Andy Hart: I I talk about it in um I wrote an essay about it. Uh OPM, you’ve heard of OPM, other people’s money. So when you are working, usually, you know, for you know you’re employed, you’re you’re an employee, or even if you’re a business owner, like like ourselves, uh, when you’re working, money just flows in. You know, you send invoices, you’ve got recurring clients, or you’ve got a paycheck. So whilst you’re in your working stage of life, money flows in. It it fee it’s your money, you’ve earned it through being an employee or running your own business. You’ve earned it, but it feels like other people’s money, OPM, just flows in, flows in, flows in. You think this is fantastic, you know, this is this is a great life. When you hit retirement and you’ve built up this uh amount of capital, pensions, ICEs, general accounts, and then you think, oh, I’ve got I’ve I’ve I’ve got to withdraw some money from this, from my stash, from my pot to sustain my lifestyle. Weirdly, it feels like your own money for the first time. That’s when people become a lot more conscious of their spending. Whilst they’re working, they’re busy, the kids are causing hassle, you know, money’s flowing in, they don’t really worry about it that much. When you say how much you’re spending per month, it’s like oh my god, all of it. Like I’ve never really thought about it. Obviously, the key thing is they need to be investing and increasing that every single month. What they’re spending, I’m I’m I’m not bothered about it.

[16:26] Sammie: Because they’re kind of pushing that away, and then when they’re doing the other thing, they’re pulling it towards them. Yeah.

[16:31] Andy Hart: So, so, so the the wages, your own business feels like OPM other people’s money. Whereas when you’re retired and you’re drawing down on the capital, it feels like OM own money for the first time ever. Exactly. So literally, you have this high-flying couple that don’t give the monkeys what they spend. If I say, look, you can go online and do some comparisons. If I’m doing that, when they start getting retired, they spend three hours trying to save £40 a year on contents insurance. Because at first, for the first time, it feels more painful. Um, so this is what I’ve noticed with working with people for like the last 20 years. Whilst they’re working, it feels like other people’s money. And when they retire, it’s like, oh my god, it’s my money for the first time. And it is a real um uh heavy impact on clients. Um, they just become a lot more conscious of stuff.

[17:19] Sammie: Okay, so there was Andy, and he says every pay rise moves the finish line. And that is what got me. You earn more, you spend more, and the life that you get used to gets more expensive. So the pot you need to retire on grows faster than you’re investing it. You feel richer, yes, but actually you are further away. So bank most of the rise before you get used to it. Push up your investing until it feels a touch uncomfortable. Then you can live on what’s left. Even when you know all of this, though, it’s still very hard. And that’s not you being weak. There are companies spending fortunes, working out exactly what buttons to press and when you’re most likely to spend. Now, E-Man is up next and he sees this every single day. He looks after people who earn more in a week than most of us earn in a year, and some of them still end up with absolutely nothing to show for it. In this next bit, he breaks down the system that’s built to take your money and the simple one you could build to protect it. Now, here’s E-Man.

[18:20] Emmanuel Asuquo: There’s no shortcuts to this to this success thing. You’ve got to you’ve got to put in the work, you’ve got to, you’ve got you can only reap where you sow. And I think a lot of people want to reap, but they don’t want to do the sowing, they don’t want to do the farming part. Like, think about a farmer. Like, you’re out there planting the seeds, looking after the cattle, doing the work. That you when you see the ground, there’s nothing there, but you know in 12 months’ time there’s gonna be a harvest. Like you know it over time, so you continue to look after it. Pesticides, get rid of all that any animals, like you’re doing the work, and people not doing that for their finances, they’re not doing the work, but yet they hope that I’m gonna become a millionaire all of a sudden, and this is why we’re seeing so much people doing the lottery. But if you understand how the lottery works, if everybody was winning, it wouldn’t be working. People now go into gambling. If you understand how gambling works, the house wins, otherwise, they wouldn’t have a profitable business. So we get desperate, we see payday loans, all of these things that now come in, and it just takes over because we’re trying to find the shortcut to get the thing that we want instead of doing the work and then getting it when we deserve it. Because the problem is we live in an instant gratification generation where we think we deserve it everything now, and actually that’s not how it was. I remember growing up, we had the Argos catalogue, you know? So good. So good. You flip the Argos out of it pages, all of their stuff. Yeah, you look at it, pick what you want, tell it, rip that page out, tell you how one. Yeah, and then you wait, you have to wait all the way till Christmas. That’s it, is the waiting. You have to wait. Yeah, and guess what? That first Christmas, you might even get it. So you have to wait till next Christmas. And then you were thankful because you know how hard your parents had worked to give you this thing that’s taking them two years to buy.

[20:04] Sammie: Now they’re working it on Clarona and it’s going out of control. I know. This is this is what I did. I’ve done this like deep expose type video on like the digitization of money and like how e-commerce and like the internet essentially just exploded this like now thing. Because it’s like, um, it’s gone from basically it was literally. I talked about like you’d have the catalogue, you’d want it, you’d save up for like six months, you’d be putting £2.50 away and paper round, and then you could afford the game or whatever you wanted. Now it’s like, I want it, can I get it? Credit access, boom, it’s and I’ve got it next day. It’s at my house. Yeah, something in Amazon, it’s on the same day. So it’s like that that that that kind of like barrier to friction has gone. And they’ve just spent billions of pounds in removing these layers till now we just whack it on our phone, you don’t feel anything. Yeah, exactly. You just uh how much have I spent? I don’t know.

[21:01] Emmanuel Asuquo: Come on, you know what? I always tell people when when when you used to pay by cash and then they didn’t have a fiver and they give you back coins, yeah, it has the worst feeling ever. Yeah, and now your wallet’s heavy, and it’s just like, but you could feel it. I remember you giving someone a £20 note and then getting like seven pounds back, you feel the pain. You’re like, okay. You really thought about it. You go, does this provide me value? Hand it over. I have to actually look at my wallet. Remember them if you’re doing a big purchase, you have to actually count the money. I feel like you said there’s friction. While you’re counting the money, there’s time for you to say, no, actually, no, I’m not gonna do this. Yeah.

[21:36] Sammie: Or take those two off. I don’t need this.

[21:38] Emmanuel Asuquo: Yeah, exactly. I don’t need that. Actually, you know what? I don’t want my wallet to be too empty, so I want to keep so what’s this? Okay, yeah, I’ve got I’ll spend this amount. Like you’ve got time to think about it. When you’re tapping, it’s just tap. It’s gone. And then when you’ve got overdrafts, when you’ve got Kelana, when you’ve got all of these buy now, pay later, all of a sudden, it’s like you are so distant. Now we’re now we’re buying pizza. Yeah, Ted. Yeah.

[21:59] Sammie: So you just click, yeah, and it just goes bing, oh, it’s you, and it’s done. And it arrives the next day. Yeah, it’s mad. And so, like, we I I’m I’m trying to figure out ways that how can we put friction back in if we don’t, uh then you’ve got to have visibility. Yeah. Visibility is a key. 100. Um, if you can be visible, then you you kind of know what you’re spending.

[22:21] Emmanuel Asuquo: Yeah, I mean my clients, they all my all my clients on a 48-hour rule. Yeah. So they they they can put it in a basket, but you can’t, you can’t, you gotta wait 48 hours before you buy it. Yeah. Do you know that because of that rule, most of them it’s about 70, 80% of the time, they don’t they don’t buy it. Yeah, they realise they don’t need it. We have to understand that as humans, we think we’re so individual, but actually, uh the way our brains work has been programmed already. And people of scientists have studied it. So a lot of the stuff, the reason you just want to buy something is not by accident. Remember, I always say you haven’t got a system to protect your money, but every day there’s a system trying to take your money from you. You wake up, you’ve got emails. Remember, they’re sending I look at your emails. You’ll see, why do I why did I receive an email at six o’clock, five o’clock in the morning? Because they know when you wake up, that’ll be the first email you’re gonna see. Yeah, why do I see it? Email out the last day of the month or the first day of the month because they know that it’s payday. And so they know you’ve got money.

[23:17] Sammie: It’s like Martin Lewis sends us at 9 p.m., which always really messes with my head. I’m like, why is it 9 p.m.? It must be because it’s the last email before you check it out. The deals, then your guards down.

[23:29] Emmanuel Asuquo: Exactly. Come on. So they know everything is planned. So someone’s planned to take your money from you. Someone’s planning every single day. You watch TV, you watch YouTube, you watch you what you go outside on a bus. There’s adverts. Wherever you go, somebody’s advertising at you, trying to take your money from you. But you have no system to keep your money. Guess what? You’re losing the game. So I the biggest thing I tell my clients is before we talk about invest, we need a system. You need a system to protect your money. I always say it’s like when you start a job, you have an induction. They’ll tell you this is your desk, this is the kitchen, this is this is the fire exit, an emergency, this is where you go. You have an induction. Why have you never given your money an induction? Download Gaze app. It was sold. Yeah, exactly. Visibility. Visibility. Have a process. Yeah. So that when your money comes in, you say, Oh, you, this portion of my money, you’re going to pay my bills. This one you’re going, you’re going to save, you’re going to invest. Oh, you’re my spending money. Yeah. Give it, give, have a plan for it.

[24:34] Sammie: If not, it will flow in and it will flow out. And if you leave it all in one, then you’re way more likely just to tap into it. So for systemization, automation, and it will just run like clockwork. This is the thing. People think this stuff takes ages to set up. It doesn’t. You can be done in half an hour. And you’ve set up the right banks, you’ve set up all the like the cross promotions to each one. What am I sending, X, Y, and Z, and then it’s done. And then it’s about mini check-ins here and there. Like, am I on track? Am I did I go a bit nuts last weekend? But okay, I’m messed up. Like now I’ve got to move some things around. Like that’s the what you should be doing. Because it’s much more easier to do that rather than sitting down and going, I’ve got to do a whole budget. Like every single month. It’s going to take me an hour. Like, no one wants to do it. No one does it. So it’s just like set it, set a system up that you know is going to run. And mini check-ins here and there.

[25:19] Emmanuel Asuquo: Yeah, and I said that, especially with it like the AI now. Put your three month last three months’ bank statements into AI. Tell it to create a spreadsheet and tell it to create a document explaining what you do good, what you do bad, what you can improve on. And then analyse it. Do it another three months. Put the, oh yeah, you’ve improved from the previous, you spent less on this, you spent less on that, you’ve done better. You don’t need to go and start filling out the spreadsheet yourself. Do you know what I mean? Nah. You can the computer can do that for you. So that’s great. But do something. Yeah. Like so much people moan and complain, and I can’t do this, and the system’s against me, and this. You are against yourself. Like, I got so many people, like, you know, Christians that we say, oh, you know, the devil. The devil don’t even know you. Like, you are your own devil. Like, you are the one putting yourself in this situation. Do you know what I mean? Like, the poor guy is minding his own business. Yeah. And you’re just blaming him for stuff that he ain’t even doing nothing to you. You are the one making these decisions. You are the one not being responsible with your money. I see people, I want to buy a house, but I just don’t have enough money. I did a show. We did a show with channel four, and this person’s like, I can’t, I can’t have enough money. We went to the, went to their went to their wardrobe. By the time we added up their clothes, their shoes, their bags, they they had over 80,000 pounds.

[26:35] Sammie: Yeah, I could see that. I could see that. That’s mad, isn’t it? It’s crazy. Yeah, yeah, yeah, yeah. So you haven’t got a system to protect your money, says E-Man. But every day there’s a system trying to take it. One click buying emails, you know, emails landing the moment you wake up, and then again on pain day. Spending in today’s day and age has never ever been easier. So steal E-Man’s fixes. Wait 48 hours before you buy anything you don’t need. Split your money up into pots so every single pound has a job or most of it has a job. Automate as much as you can so you’re not relying on willpower. And if you brave it, chuck three months of bank statements and actually have a look at what is going on with your money. It is not pretty, but it works, and that’s exactly why we ended up building gains to give people that financial picture. Protecting your money, though, is one thing. But what does it look like when someone on a good salary actually gets it right? Holly Gusko is a financial advisor at LCH Wealth. She walks through a real couple on a hundredth of grand, and the big decision that they made, and I don’t know if you spent any time in the comments section on any of these financial posts recently, but everyone always says, Oh, why bother saving? You know, you could get hit by a bus tomorrow. What’s the bloody point? Well, this is exactly what we tackle in this bit. So here’s Holly.

[27:57] Sammie: Um, now they’re someone in their 40s. Yeah. But they still haven’t done anything. They’re still struggling. Yeah. They’ve been meaning to sort this out now for 15 years and they never did.

[28:09] Holly Guscott: Yeah.

[28:09] Sammie: Uh I get this question all the time. Okay. Is it too late for me to start investing into my pension?

[28:15] Holly Guscott: Absolutely not. Um, yeah, it’s definitely the wake-up call decade. So we get a lot of people that come to us in their 40s and I mean, and 50s as well. They’re definitely thinking, is it too late? But yeah, 40s, I think they’re starting to think, okay, retirement’s actually not that that far away now. Um, I really need to make sure I’m on track. Or if I haven’t started, I really need to start doing something about it. Um and in your 40s, you could be kind of at the peak of your career and your earnings. So this is where pensions become a really powerful tool to manipulate how much tax you pay. Um, if you really, you know, plug a lot into the pension over that time frame, um, you might have to take slightly more risk if you’ve not been investing. You might have to really go for it and put a lot into your pension in order to achieve what you want in the future. But it’s definitely um not too late. Um, and I think this is where financial advice can become really valuable as well, because we do this thing called cash flow modeling. So I mean, you’ll you’ll know what it is. Um, but it’s a really good way to visualize kind of where you’re at now and what more you might need to do. Um, and I think 40s is, you know, you have to be intentional and you have to work out what’s actually important to you. So I had a couple um the other week, and to start with, we were, we were saying, you know, you earn 140, let’s put 40,000 into your pension to be as tax efficient as we possibly can be. Um, and then that way you can retire by 55. But then they went away and kind of thought, actually, that’s that’s not the priority. I don’t want to sac, I could put 40,000 into my pension, but I’m gonna be sacrificing, you know, some of the holidays with the kids now. Um and yeah, they decided they’d actually rather work maybe five, 10 extra years and not make those sacrifices now. Um, and I think that’s definitely fine. It’s just knowing what the impact of that decision is.

[30:14] Sammie: Yes, absolutely. It’s opportunity cost, yeah. And just factoring that into your decision making.

[30:20] Holly Guscott: Yeah.

[30:20] Sammie: And there’s no right or wrong answer. Exactly. Like, um, for example, you could like really dislike your job and not be okay with if someone turned around to me and said another five years, and you’re like, no chance. Like I just can’t.

[30:35] Holly Guscott: Yeah.

[30:36] Sammie: Um, and I’m okay with taking less like and then you’ve understood that opportunity cost at that point.

[32:08] Holly Guscott: Yeah, exactly.

[32:09] Sammie: Um how do you model that with someone? Like, do you do you go into the human side of it too?

[32:14] Holly Guscott: Yeah, so we always ask a few questions at the beginning of the meeting to truly like truly understand what’s important to that person. We get a lot of people cry at these questions as well. Really? Um, yeah, they’re called kinder questions, if you want to have a Google after.

[32:29] Sammie: Kinder questions.

[32:30] Holly Guscott: Yeah, they’re Americans, so I think you have to adapt how you’re in here. Yeah.

[32:34] Sammie: Is that why?

[32:35] Holly Guscott: Kinder.

[32:37] Sammie: Right, right.

[32:38] Holly Guscott: Um, but um, so that really helps us at the start of the meeting to understand you know what the priorities are, what’s actually really important to that person. Um, and we can model different scenarios as well. So we can model like the dream scenario where you get everything that you want. So that’s why we want people to dream big in a way. Um, but then we’ll we might make a more realistic plan as well of okay, well, if you, you know, you might be able to retire then, but you might have to spend less money in retirement. If that’s really important for you to spend more, then you might have to work a bit longer. You might have to spend less now. There’s kind of lots of different levers that you can pull. But yeah, we’ll model different scenarios for people.

[33:18] Sammie: And how do you get past like this is becoming more and more prevalent, especially on the videos that we put out? Like a lot of people just go, look, you’re what’s the point in having a big investment portfolio when you could get hit by a bus tomorrow? Like, how do you handle that? Because it’s that we are moving, like the where things are getting more expensive and it’s getting harder for people, they are becoming a lot more like, oh, just sod it, we’ll do it now. Um, and we’ll live for now because the future’s not looking too bright.

[33:49] Holly Guscott: Yeah.

[33:50] Sammie: They see it that way. When they look forward, they can’t uh imagine 20, 30 years then.

[33:54] Holly Guscott: Yeah.

[33:54] Sammie: How do you deal with that individual and how and what would you say to someone if they said that to you?

[33:59] Holly Guscott: I think the first question I’d be asking is like, is it just an individual, or do they have a family? Like, do they have a partner? Um, do they have kids? Um, because you might die, but what are you leaving behind in that scenario? Um, and then I mean, also who knows what the state of the state pension’s gonna be like. So we can’t rely on that either, I don’t think. So um, yes, you might die tomorrow, but you also might not. You might live until you’re 110. Yeah. So we on our cash flow, we do till age 100.

[34:32] Sammie: Do you?

[34:33] Holly Guscott: Yeah. And I keep saying I think we need to, maybe we need to increase this even more. Um, but most people you speak to will say there’s no way I want to live until age 100.

[34:41] Sammie: So I’m 80. I do 80 and I’m done. You know, uh I think a past 80, it doesn’t look too fun.

[34:48] Holly Guscott: Yeah. Um, but yeah, we’ve got to plan that that could happen. Um, and we want to make sure that you know your money doesn’t run out before you do. Um, so yeah, we just want to plan, we don’t want you to die with too much money, but we also want to make sure that you don’t run out of money. So we’re we’re cautious in the modelling.

[35:07] Sammie: So for that individual that’s spending, spending, spending, spending, live for today. And you know, it comes back to that old cliche saying of like you can be 30,000 and wealthy or 100,000 and completely flat broke, yeah. Just what you’re doing with it. Yeah, but how do you balance those with them? So I’m a spender and I just want to just I just want to go on a holiday, holy. Just want to go on the holiday.

[35:27] Holly Guscott: So it’s again, it’s about being intentional. So we have to show the impact of them doing that now and how that’s gonna potentially affect their future because they they could get there. Um, and then we don’t want them to just be in a rubbish situation. So I think it’s it’s really important to understand the budget in in the first instance. So what’s your essential spending and then what’s your discretionary spending? So the holidays and the things like that, they might be important, but you could potentially go without them. Um and then with those sorts of people, what we try and do is, you know, take away the spending a little bit by automating what goes into the investments. So interesting.

[36:07] Sammie: Cool.

[36:07] Holly Guscott: Yeah. So when they get paid, we’ll say, well, straight away money goes into the pension. You know, they say, like, pay yourself first, pension, um, ICEs, whatever it may be, savings. Um, and then what’s left is then for them to spend essentially. So I think that’s a really good way for people that um struggle um with spending um just to automate everything because a lot of the time you won’t even realise that it’s gone.

[36:32] Sammie: And I I I understand this is totally harder for some people than it is for others because of how their life is and the amount they earn and they could be shoveling or whatever. But what I’ve done recently is I I’ve called it the anti-budget, and it’s basically it’s 400 pounds a month. Yeah, and within that 400 pounds a month, I can literally do whatever the hell I want with it. Yeah, everything else is very well meticulously laid out, and at 400 quid I just don’t care.

[36:57] Holly Guscott: Yeah.

[36:58] Sammie: Like, and if it goes in two weeks, well, that’s my fault. And I but it doesn’t blow everything else apart, and I think that having that separation, even with a small portion of your money, just allows you to sort of live a bit freer and spontaneity and not everything is so formalaic and like we have to do all of this all of the time with all of our money, and every penny has to be counted. Because then does need to be an element of like, yeah, I’ll come for a drink.

[37:24] Holly Guscott: Yeah.

[37:24] Sammie: Do you know what I mean? Otherwise, what are we doing? Yeah, and and and I get some people way more regimented than others, but largely they’re not.

[37:31] Holly Guscott: Yeah. Yeah, you need to have guilt-free spending because it is true to some extent. Like some of we don’t know, we just don’t know how long we’ve got left. So you still want to be able to enjoy your life now. Um, but there’s definitely a balance with also planning for the future as well. And yeah, we have couples where they’ve got completely different um financial personalities.

[37:52] Sammie: That was my next question. That was my next question. Because you you you get the the spender or the saver, or sometimes they’re both savers, and that’s equally as hard.

[37:59] Holly Guscott: Yeah, exactly. Um, so that’s a really good way in in a couple where you have got someone that’s, you know, they want to make sure that everything’s going into the investments and working as hard as it can be and that they’re also saving loads of money. And you’ve got the other person that, you know, is is the spender in the relationship. Um and by allocating a certain amount each month that is that like fun money for them to do whatever they want with it, um, it just allows them to have a bit of that guilt-free spending and enjoyment as well.

[38:24] Sammie: Totally. I completely agree. The anti-budget, I love it. Yeah. All right. So you could be on 30 grand and wealthy or an 100 grand and flat broke. What I love about Holly’s couple is that they didn’t do the perfect thing, right? They could have had 40 grand, they could have thrown 40 grand a year into their pensions and stopped working early. Instead, they chose holidays with the kids and a few more years of work. And that’s fine, right? Because they made the choice, knowing the trade-off that they are taking there. And that’s what it is. Personal finance is all about trade-offs. And that’s what a financial plan can give you. It’s not a lecture, guys. It’s a choice that you are making with your money. Now, the earliest you can usually touch a private pension goes up from 55 to 57 in April 2028. So you’re factoring those things into your plans, right? Paying yourself first, automating it, giving yourself guilt-free money to spend. That’s the kind of systems that we need in place every single week. Now, you might be thinking, great, well, I need myself a Holly earn, I need myself a financial advisor. Well, last up is Pete Matthew from Meaningful Money. Now, Pete is a very well-known YouTuber and financial advisor who’s basically built a career telling people that they probably don’t need one up until a certain point. And his firm is busier than ever. He’s gonna tell you why, he’s gonna tell you why money isn’t actually rocket science and the most dangerous money advice out there, and when you should actually be paying for help and when you actually don’t need it. Now, here’s Pete. But I think what I really liked when I first came across here is like um you’re a financial advisor, but you were a lot for a lot of people, you were just being like, you don’t need one.

[40:07] Pete Matthew: Yeah.

[40:08] Sammie: Which I quite liked.

[40:09] Pete Matthew: Yeah, good.

[40:10] Sammie: Because it was like it was a financial advisor telling you people that look, a lot of this is simple. Um and it’s kind of like the dentist saying you don’t need to come see me because your teeth are all right and a lot of people.

[40:21] Pete Matthew: Yeah, yeah, it is, and honestly, I built a career on that, man, and it served me very well. But one thing I loathe about the financial services industry and about advisors, not all, clearly, most advisors are good people, right? But so many advisors still think that we have some kind of magic secret sauce that is uniquely ours, and you know, we’re they’re like they take us into a dark room and make us swear an oath. Like, like this is how you must handle your money. Of course, it’s just bullets. Managing money is not rocket science. In fact, it’s as simple as anything. The thing that gets in the way is people, it’s ourselves, it’s our behaviours, it’s our kind of preconditioning and programming that comes from our childhood and all the million factors involved. And that’s really hard to get over. But the mechanics of money management are not difficult. Now, we don’t teach them in school, so they’re not difficult, but you know, it’s like driving a car is not difficult once you’ve been taught.

[41:16] Sammie: No, exactly. Right. So Andrew Craig says that he’s like it’s no more difficult than driving a car, but you just need to learn how to drive a car.

[41:24] Pete Matthew: We need to learn how to do it. We’re not born with the innate knowledge, knowing how to do it. So if we didn’t have a good guide or mentor, you know, parent or somebody else uh that taught us that stuff, I don’t know how we’re supposed to know it. So for me, it’s just been like, you know, when I started Meaningful Money, it was 2010, right? I started thinking about it in 2009, and that was about three years after the original RDR consultation paper, which for those that don’t know was the retail distribution review abolished commission and elevated the minimum level of qualification for advisors. So it was unreservedly a good thing. But any idiot could see that it would disenfranchise a huge swathe of the population from getting decent advice. Because those ordinary working people used to go into their bank, they didn’t pay anything for the service, they’d come out with life assurance or a pepper and iceber back in those days or whatever, and that outcome was better than they’re not doing anything at all. But they didn’t pay anything because the advisor got commissioned. Now, commission on the flip side is the root of many ills, right? Endowment misselling, uh you know, so many things I could think of through my career that have been bad outcomes driven by commission. But the RDR abolished all that, uh, which was a good thing, but you could see that it would leave a lot of people lacking advice, and so it hadn’t come in yet, but all the signs were saying that it was going to. And so I thought we need to teach people this stuff. And I love messing around with cameras and microphones and stuff, so um, it was like the perfect thing for me to do. And I just basically set a camera up one day and said, I’m gonna teach you how money works because it’s not difficult. You but you need to do a few simple things, but do them consistently and regularly, um, and you’ll be all right. Follow these steps, and you are guaranteed financial success. It it is I’m more than happy to say that if you misstep on any of them, you can derail yourself. So I think if we give people the tools, where an advisor can really add value, of course, is in helping clients overcome those behavioural issues, keeping them in their seats when the media is screaming at them that the markets are going to tank further. Um you know, all those sorts of things, uh basically guarding them against themselves. And of course, plenty of people are too busy and don’t have the interest or inclination, and that’s why advisors have a job. So, you know, I but yeah, I’ve built a career on telling people not to come and see me, and yet we’re busier than ever. It’s just how the internet works, I think, and the universe works. You put good stuff out there and it’ll come back to you. Um, and I’ve proven that many, many times.

[43:58] Sammie: It’s it’s gonna help a million people there, help you. It’s totally works, right? Like, and I just firmly believe that. And I I I like that because it just means that, and you’re totally right, like a a lot of advisors, it’s 10,000, even 100,000 minimum. And for the average person, it’s like, well, well, you just need to know the basics to get you to that point.

[44:19] Pete Matthew: Yeah.

[44:20] Sammie: And actually, the time best spent is getting that person to that point because that that material difference from zero to 10k is enormous, and then a 10k to 100k for that individual.

[44:28] Pete Matthew: Right for the races, then exactly. And then some complexity might creep in because by then you’ve got kind of into it and you’re starting to understand it, and then you’re thinking, oh, you know, I’m starting to look at funds, and before you know it, you end up with an ISA with 15 funds in it, and you’re now not keeping track of it, and then you either need to reset and simplify, or you need to basically hand it over to somebody who can do it for you because it’s got beyond your time and inclination or energy to deal with, um, and that’s why there’ll always be advisors, I’m certain of it. I mean, I’m sure an incredibly powerful financial AI will rise, which will be which will be a good thing fundamentally, because it will help more people do this stuff. You know, I’ll be redundant before too long. Um, but yeah, I do think that making big and complex and difficult decisions with multiple kind of factors at play, balancing different needs and wants, hopes and dreams and fears, that will always be, at least for the God willing, for as long as I’m alive, that will be the preserve of uh human interaction.

[45:29] Sammie: Yeah, because people need a coach every now and then, like and also just need an accountability part. That’s why I’ve done games with two co-founders, which some people were like, Why have you done that? And I’m like, Well, because I don’t want to do it on my own. Yeah, and I need someone to keep me sane, you know, otherwise, and you know, and I think it’s the same with finances. Um, but I think as well, one of the like the core things is that when you come in, say you come into money or you are coming up to it’s the bigger life moments that’s when advice can really be so beneficial because Aunt Julie lives in New York, has passed away and left a mansion to you and the kids and whatever, and suddenly you’re like, Whoa, that’s more money than I’ve ever handled in one transaction. I really don’t want to mess it up. That’s a good time.

[46:14] Pete Matthew: I mean that all the time. And it’s yes, most people seek out advice for the first time at some major life transition. So it’s either new family, new or breaking relationship, um, a death of a loved one, and maybe an inheritance, of course, maybe a lottery win. These are sort of but and the big one, of course, is retirement, the ultimate financial transition, pretty much. Much apart from dying, right? Retirement’s the ultimate transition, I think. And so it tends to be at these big life events that most people seek out advice for the first time.

[46:47] Sammie: Yeah.

[46:48] Pete Matthew: Most people don’t just kind of wake up one day and think, you know, I think I’ll go and have a chat with the financial advisor whose window I saw on the high street. You know, most people just don’t do that, they’ve got other far more interesting things to do with their time. And so, yes, it’s driven usually by the big life transitions. And those are usually the things that sort of make us sit up and think, you know, I really need to get a handle on this.

[47:10] Sammie: Really important. What do you think is like the most dangerous piece of money advice out there then? That’s from your years of doing this.

[47:19] Pete Matthew: That’s a good question. Um there’s I mean, then you know, I I suppose I could sum that up in get rich quick. Right, it’s not advice that it’s a promise, but of course it’s an empty one. And actually getting rich quick is dangerous. There’s plenty of sort of bankrupt footballers and lottery winners that fast money testament to that. Fast money is dangerous. So I guess that would probably be my answer to that. The rest will be different sort of shades of grey. So honestly, it doesn’t matter what fund you pick, ultimately, for the most part, occasionally it might do. Um, you know, it doesn’t matter whether you tilt your contribution 60-40 into pensions or into ISIS, these you know, or whether you have a five or an eight percent allocation to emerging markets, none of that makes a fuck all difference. But what will what what the flip side, when I say that financial success is guaranteed if you do these things regularly and consistently, the flip side to that is if you don’t, or if you try and kind of hack the system and and accelerate it, it will probably bite you because you won’t be equipped to deal with the money. Uh money is a deeply psychologically intertwined thing, it can really fuck up your mind if you allow it to.

[48:35] Sammie: And so you become some like desperation in a lot of ways, doesn’t it? To get to that next step.

[48:40] Pete Matthew: Uh I mean, there’s just endless things weighing it down. It can be, you know, if you inherit money, it can come with guilt. Um, you know, I can’t sell those shares because dad held them and he’d always talked about them. Nonsense, your dad’s gone. But I mean, that you can’t say that to somebody, you know. Well, you can, but you’d be more gently, perhaps. But you know, it’s like, well, actually, that money could transform your family’s life if you actually sold those shares and used it, moved house, you know, or whatever, fixed what needs fixing, changed the car so that it’s safer. But you know, it money is is laden with with baggage, and we are as individuals, and we’re just I mean, I’m 28 years in, man. I’m only just kind of scratching the surface of what that really means for real people. And a good advisor can help people sort of uh tiptoe through that. Um, but yeah, man, it’s it money is a powerful thing, but it can really mess with your mind if you let it, and so those are the times to seek help.

[49:40] Sammie: So let’s pull all of this together, right? Jason, it’s not what you earn, it’s what you keep. Andy’s was every pay rise, moves the finish line, so bank it before you get used to it. Eman, there’s a system trying to take your money, so build one to protect it. Holly is pay yourself first and make choices on purpose and be okay with the trade-offs. And Pete is it’s not rocket science. The thing that gets in the way is us. If you do one thing after this, set yourself up a standing order that leaves on payday before you’ve had the chance to spend it, even if it’s small, then you can nudge that up every single time you get yourself a pay rise. Now, all five of these conversations on this channel are in full in the description below. If you liked what any of them said and you want to explore it more, we go much deeper on those episodes. And if this helps, send it to a friend who you feel like you could help with their finances a little bit. And you know the one that needs that help. Honestly, I’ve loved this, guys. If you’re not subscribed, please do follow the channel. It really helps us grow the show. And if you haven’t left us a review, if you’re listening on Spotify or Apple, please do leave us a review. It really does help, and we do love getting your feedback as well. I’ll see you next week. Catch you on the next one. It’s been a real pleasure.