A Clean Slate

If you're like many Americans, August can be a brutal month for your finances. It's a wild cocktail of end-of-summer travel, experiences with friends, back-to-school expenses, and the transition from summer to fall clothes. When all these factors combine forces, it's easy to implode our monthly budget.

This past week, I met with frustrated family after frustrated family, each feeling guilty and defeated by a busted budget and sudden financial stress. It's an easy mistake to make, and it happens to the best of us. Here's the good news if you're a family who budgets healthily. Somewhere between 1 and 30 days from now, we get a clean slate. Even when we mess up, the month eventually concludes, and a new one begins.

This may feel like splitting hairs, but it can make a huge psychological difference. Something powerful happens when we wipe the slate clean at regular intervals. Mistakes will happen (they always do), but they don't define us.....and they certainly don't need to haunt us.

This clean slate perspective can work wonders for us. My wife and I regularly have financial months we'd like to forget. Once the month wraps up, we take inventory of what happened and simply move on. With every passing month comes the opportunity to learn, adjust, and try again. This is our 168th monthly budget since getting married. We've had many bad months in there, but we've learned every step of the way. Some months are amazing, while others end with us counting down the days until the slate is wiped clean. But every time, we eventually get to start afresh.

On the flip side, even when we nail our finances in a given month, the clean slate provides us yet another opportunity to bring our dreams to life. There's a pool of money to account for this month, and therein lies the opportunity for us to live out our values through our budget. Sarah and I have a handful of fun priorities this month, ranging from future international travel, to generosity, to the kids. As we put the budget together, it's been fun to see these aspirations come to life. And next month, we get to do it again.

We don't need to budget forever......just until we die. #dadjoke. Budgeting isn't something we have to do, but rather something we get to do. It's a blessing, not a curse. It's an opportunity, not an evil. It doesn't tell us what to do.....we tell it what we're going to do. It's a beautiful tool to plan our dreams, then put one foot in front of the other to make them come alive.

Embrace the clean slate. Make the most of it. Use this opportunity to live out your values. You won't regret it.

Cutting What Doesn't Add Value

In last night’s workshop in Los Angeles, one of the topics I discussed was the idea of leaning into OUR values when making financial decisions. So often, we absorb the culture’s values and do things (i.e. spend) in accordance with what everyone else is doing. For every dollar we spend on something we don’t care about, it’s one less dollar we have to spend on something we do. One of the questions I asked is this, “What do you spend money on that DOESN’T add value to your life?” A handful of people publicly answered, but one, in particular, caught my attention. A woman jumped in and said, “Netflix.”

I think this is the perfect example of how values are personal and unique. For this woman, a $15 monthly subscription to a massive streaming service doesn’t add much value for the $15 price tag. For me, on the other hand, I think it may be one of the best cost vs. value propositions in the entire world. But that’s where this money stuff gets personal. She probably needs to cut this expense from her budget, whereas I need to make sure it remains a priority. But there’s a high likelihood that there’s something in her life that adds a ton of value that would be absolutely ridiculous for me to spend money on. She has her things and I have mine. That’s how it’s supposed to work.

This idea is a big driver of whether we have a healthy relationship with money or not. If we’re being healthy, our spending aligns with our values. When our spending doesn’t align, we often create an unhealthy relationship with money. We’re not always going to get it right (like that one time I spent a ton of money for sweet rims on my Acura Integra), but we can continue to get better each day. When we do, life will be richer, we’ll be more content, and we’ll feel far less guilt in our spending.

Sometimes Surviving is Thriving

We’re in the middle of a tough financial season for many. Between groceries, fuel, vehicles, and housing, inflation has been squeezing people from all sides. I’ve talked at length about this topic on the podcast, but I like to categorize people into three different groups:

• Group A: They have quite a bit of financial margin in their life. Though they see inflation is happening, it’s not making a significant impact on their day-to-day life.

• Group B: They had some margin in their financial life and are really feeling the impact of inflation. Not long ago they were making swift progress, but now most (or all) of their financial margin has been squeezed out. They are making ends meet, but many of their wants and savings have been paused.

• Group C: They had little to no financial margin in their life. They were struggling to keep the train on the track even before inflation struck. Now, they are experiencing profound pain and chaos.

Most of us live in little vacuums. We live our own unique lives and base our perceptions of the world on a sample size of one: ourselves. For the members of Group A, this causes many to lose sight of what’s really happening to people in Groups B and C. They aren’t trying to be insensitive or dismissive……they often don’t know what they don’t know.

Here’s where I’m trying to land the plane. Members of Group B also have a blind spot. While watching their margin melt away and lose momentum, they are looking in the mirror and wondering what they are doing wrong. What they don’t know is so many others are having the very same experience. The walls are slowly closing in, and they think their own failure is the cause of it. I’ve had multiple client conversations around this topic recently. My motto has become, “Sometimes surviving is thriving.” Everything is a season, and for some, this season is about getting out alive.

However, it all comes down to your definition of “surviving.” Based on the looks of this recent article, more and more, people are turning to their credit cards to keep the train on the track. Credit card debt just hit an all-time high, and we’ll soon hit an outstanding balance of 1 TRILLION! Yikes!

In my book, “surviving” looks a little different. It looks like navigating from month to month without incurring debt. It looks like overcoming medical, car, house, and other emergencies without wreaking havoc on your life and marriage. It looks like prioritizing your values and holding onto the things which add the most value to your life (and perhaps letting go of the others). It looks like keeping momentum toward your aspirations (even a forward crawl is better than standing still or heading backward). And it looks like waking up every day with meaning and purpose. It’s not perfect, and it’s often messy, and it’s far from easy, but it’s worth it. If that’s you, I celebrate you and what you’re trying to do. It doesn’t always feel great, but you’re doing far better than you know!

You got this, guys! Sometimes surviving is thriving!

Opportunity Cost: In the Wild

On the heels of yesterday’s post about opportunity cost, at least 10 people asked if I would provide a real-life example of how the exercise works in practice. At the same time, Cole (Meaning Over Money co-founder) has been encouraging me to be more transparent with my own numbers. I feel like I’m a very transparent person, but being open with my specific numbers does not come naturally. In fact, it’s quite uncomfortable. Therefore, let’s get me out of my comfort zone!

The following is what our prioritized opportunity cost list looks like. As a reminder, this is everything that’s not a basic need in our household (housing, food, transportation, insurance, phones, interest, etc.). The following list is for a specific month, but it also resembles what a “normal” month looks like in this season of life. Our basic needs are fairly modest and we never carry any debt. Excess income is approximately $3,800 this month. With that context in mind, here we go:

1. Giving: $1,000

2. Travel: $800

3. Kids: $600 (this is a mix of needs and wants, but heavy on wants)

4. Sarah's Personal Spending: $250

5. Travis's Personal Spending: $250

6. Dining Out: $150

7. Streaming Services: $150

8. Car Fund: $150

9. Events/Entertainment: $150

10. Home Furnishings: $300

11. Investing: None

12. House Cleaning: None

13. College Funds: None

14. Lake Condo: None

When I pull back the curtain and reveal our list, a few things come to mind.

• The fact giving and travel eats up 47% of our excess income is a true reflection of how important those are in our life. They are the foundation of our family.

• I believe personal spending for each spouse should be a non-negotiable in every marriage. It acts as a great release valve and allows each spouse to live out their unique values and interests with a portion of the finances. Our house rule has always been each of us shall get the same amount…..no matter what.

• For as important as food is to our family, dining out hasn’t received as much love in recent years (initiated by COVID). Something to think about in the months to come.

• I’ve been putting $150/month into the car fund for 19 years. It works wonders!

• Investing and college funds have taken a back seat in this season of life. This is, in part, a consequence of our heavy giving and travel budgets (mission and memories, as my friend Gary Hoag likes to say).

• We stopped getting periodic house cleaning in Fall 2022…..probably something we’ll move up the list in the near future.

• Sarah REALLY wants a small condo on a lake. I mean, she REALLY wants it. This is an ongoing discussion in our household and it wouldn’t surprise me if this one moves up the list in due time.

Wow, that was as uncomfortable as I feared. Oh well, I hope you found it insightful, beneficial, and perhaps a bit entertaining. What’s most important to remember is this is a reflection of OUR values. It’s unique to us because we are the ones who have to live our life. And you get to live yours! As you do, I hope you recklessly and relentlessly live your values!

What is Success?

Later today, I’ll be speaking at the DSM Small Business Success Summit. My talk is called What is Success?: Aligning Your Mission with Your Meaning. In it, I’m going to challenge people to throw out the traditional and cultural measuring sticks of success (sales, margins, profits, growth, etc.), and replace them with what really matters. Not what matters to me but rather what matters to them. What really matters.

This idea stems from two different places. The first is something I write and podcast about often. The behavioral science of money and happiness. If money can’t make us happy (after our needs are met), why are we using money to define success? I think it’s partly because most people sincerely (and mistakenly) believe “more’ is the answer, and partly because financial metrics are easy to track and easy to compare. It makes for a very useful and universal measuring stick.

Second, when I’m meeting with business owners and business leaders, I like to dive deep into what really matters to them. Once we get past the first few layers, we quickly discover it’s not really about money at all. Money may play a role, but what they are seeking is far deeper than money. So instead of chasing the money as a way to get to those things, why not just pursue those other things directly? It’s a powerful concept that has the power to change us and the way we live.

What about you? What do you really want? If you were to redefine what success means to you, what would it look like?