Merging Into Life: How to Manage Money Stress and Build a Healthier Mindset

[00:01:36] Julien: Now, most of us already know the basics like spend less than you earn, save when you can, but that’s not always the hard part. The hard part is why we don’t do what we know we should. That’s where emotions come in.

[00:01:48] Kiersten: Exactly and for a lot of people learning how to feel differently about money is what made it possible to act differently with money.

[00:01:55] Julien: I think one of the most popular phrases with respect to money is, when you know better, you do better. Which brings me to our conversation today. I had a really great conversation with Eoin.

[00:02:06] Kiersten: Yeah, I’m so sad I missed that conversation, but I really enjoyed listening to the episode.

[00:02:10] Julien: Yeah. Eoin McGee is a financial expert, author of How to Be Good with Money, and the founder of Prosperous Financial, where he offers private financial planning with a focus on long-term holistic strategies.

[00:02:20] Kiersten: He’s known for breaking down the emotional and psychological side of money, from financial anxiety and subconscious spending to reshaping your mindset and building habits that last.

[00:02:33] Julien: Can you start by sharing just a little bit more about yourself and what got you interested in learning about finance?

[00:02:39] Eoin: Yeah, it’s actually quite a personal story. When I was two, my dad had a heart attack, and he had a quadruple bypass. And when I was six, he had another heart attack, and he had three stents put in. And then when I was eight, he had another heart attack, and he had a quintuple bypass, which is five of them. And he was only 48 at the time. And he turned to his doctor and his consultant, his cardiologist, and said 48 years of age, in the last six years, I’ve had three major heart incidents, what am I doing wrong? And his doctor sat back and said, the problem is stress. And the doctor asked him, what’s the biggest stress in your life? And dad sat back, and he wasn’t a financial planner, he had nothing to do with the profession I’m in today, but he was very successful in his career. And he kind of sat back. And he said, sure, I want to give up work, but you know what I’ll do, I’ll see if the finances can decide it for me. So I’ll often see if I can afford to give it up. And it turned out that along the way at some stage, I don’t know in the States what you call it, but in Ireland we would have called it in the 80s, an insurance salesman. That guy had reached my dad and had sold him an income protection policy. But basically what it meant for dad was, because on medical grounds he was being suggested that it gives up work. He was able to give up work, and he was on 75 percent of his wages until he was fit enough to go back to work or he hit normal retirement age, whichever came first. And it did take my dad a little bit of time to get his head around it but at 50 years of age dad stopped working. And he was able to look after his health and he was there for me. He was there and he made my breakfast before school in the morning. He started driving the school bus to the football matches. He sat on the board of the committee, the parents association. He was around, but the point was he was there. Something struck me. And when I finished up in college, I was offered a job in a big insurance company that happened to be the same insurance company that sold my dad the income protection. And I was very quickly drawn to the idea that I want to do for other families, what that insurance salesman did for my family, which gave us extra years with that. So in simple terms, what drew me to this, I just want to make sure people get the most out of their money. And it’s because someone else did that for me or did that for my family.

[00:04:57] Julien: It immediately made me think about my nephew, who is in his 40s right now, who has a long, long list of ailments in this having his own struggles all while trying to support four children. It brought me back to what first interested me in talking about finance and wanting to share our personal stories and everything that we’ve learned. My wife and I to help other people in couples, because more often than not, it is some type of struggle or conflict in their life, whether it’s in their relationships or some kind of familiar situation that forces people to come to grips with their spending and the way that they think about money and the way that manage money. Now you talk a lot about subconscious spending, which I’m really curious to hear more about. Can you just explain what that is, and how can we tell when we’re doing it?

[00:05:44] Eoin: So subconscious, there’s a difference between subconscious spending and conscious spending. And the main difference here is subconscious spending is walking into the shop to get a Diet Coke. And that’s conscious spending, you went in there to get the Diet Coke. Subconscious spending is walking out with a Diet Coke and a bar of chocolate, right? You went in to do something, but when you actually walked out, you go, oh, hold on a second, I’ve got two things here, because somewhere along the line, the marketing department got into your head to say, you like this bar of chocolate, get this bar of chocolate, you need to buy this now, right. And that’s a subconscious spend. And I try and bring it down to the lowest common denomination, because there’s lots of subconscious spends we do. Like, walking by your barista in the morning, that might be a conscious spend. I need my coffee to get my day going, right? But is the fourth time you walk by the barista that day, is that habit or is that a conscious spend? What was the difference? Like, we all have somebody in the office or a friend or a partner, preferably not your partner, right, but somebody who is a nightmare to deal with till they have coffee in the morning. Okay, and I think that’s something that they really need to have. But that person can often say, oh no, but it has to be that coffee from that barista, or I can’t get on with my day. And then all of a sudden, they’re making their coffees at home with pods and doing it all, and they survived it. So there is a thing there about where we just spend, because it’s hampers from where we spend, because it is conscious spending. There’s a really good way of recognizing the difference between the two of them. And the way you recognize it is, I would put a challenge out that don’t change your spending for the next week. Keep your spending as it is, okay? But every time you spend, take out your phone and go into the notes section and write down, Diet Coke, $2.50, whatever the dollars is, right? Bar of chocolate,$ 2.00. Pair of jeans, $100. Drinks with the girls after work, $60 or whatever it turns out to be. But every time you spend money, just spend like you always spend, but every time you spend, I want you to write it down. And this day next week, take out your phone, take out a pen and a piece of paper. This is really important to do with a pen a piece paper. Something happens in our brain when it comes to pen and paper. Just goes in a bit deeper. Okay. So write a line, put a line down the middle of the page on one side of the page, put conscious spending, on the other side of page, but subconscious spending. I want you to take everything from your notes section and put it on one side or the other and remember the barista coffee first thing in the morning might have been a conscious spend but was the fourth one. Some people struggle with this a little bit actually and if you change the headings a little to added value to my life or didn’t add value to my life. Okay and once you’ve got those lists put down and again there are certain things and certain circumstances will add value in your life. So for example I do a lot of travel. When I travel, if I’m traveling for work, like, if I’m speaking at an engagement in the US, for example, and I’m over at a conference and I speak at the conference, I really don’t care what the hotel is like. Provided it’s safe, and provided it’s clean, and provided that it’s quiet and I can sleep, I’m happy with the hotel, okay? When I travel for leisure, I want a nice pool or whatever the circumstance, I want it to be nice, right? So, in different circumstances, different things add different value to us, okay. And what I would say is it’s about trying to just take that week as an example and applying what added value to my life, what didn’t add value to it, what was a conscious or what was the subconscious spend. Because once you’ve done that, and you’ve taught up everything on the right hand column, if that’s the way you’re doing it, everything that’s other than the subconscious or didn’t have value to our life, you can calculate how much money did I spend last week on stuff that added no value to your life. Because guess what? If you strip that out of your life next week, your enjoyment of life is still exactly the same, but you’ve identified $50 or $60 out of $80 that you can now go and put to some use somewhere else, whether that’s saving or clearing down debt or building your buffer or whatever it is that you wanna do, you’ve got money there without devaluing what you enjoy out of life or without diminishing the value you put on life. I think that’s a really important exercise. Some people would do it, and they say, oh, do I have to do this from now on? Absolutely not. It’s when you feel that wallet leakage is kicking in again, that you need to jump back in again and do it. Maybe the first time you do it, you might do it five or six weeks later, but then you might do it for five or six months because you feel like you’re on top of it. And you do eventually get become a master of it

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[00:10:40] Julien: You know, we, I believe, call it value-based spending. It’s just this idea. It’s like a supplementary exercise, and I and I completely agree with you there’s something powerful about writing those things down, and then just try to identify some of those patterns and that tends to identify or at least categorize some areas where you think people really should keep it because these are things that obviously are rated very highly by you but it forces people to go through that kind of pruning exercise to say wow I didn’t realize I spent so much money on things that I am also admitting I’m not adding that much value to my life. What’s really interesting is over time, you start to realize that some of the things that you used to rate or rank really highly, you don’t rank them nearly as highly anymore.

[00:11:24] Eoin: Interesting, though, because I do think that’s actually there’s a piece of research out there that describes exactly what you’re talking about. So if you think about it now, and I’m going to put you on the spot, but is there a particular band or a singer or somebody who you think, I just love them right now? Is there anyone you can think of that you just like if they’re coming to town, you’re going.

[00:11:44] Julien: If I’m being honest, no, because that’s another one of those things that has completely fallen off my radar. But 10 years ago, I would have said there was a band called Lake Street Dive that I would have absolutely loved. And I have paid to go see them perform.

[00:11:58] Eoin: It’s actually proven my point even better now. So 10 years ago, if we had to be having a chat, and I said to you, Lake Street Band, is up to say Lake Street, what you call them?

[00:12:06] Julien: Lake Street Dive.

[00:12:07] Eoin: Lake Street Dive, right? I said you, Lake Street Dive are on tonight. I have the last ticket. And you would have said to me, I’ll buy the ticket off you. I’ll give you $100, $200, $300, $500. We roll forward 10 years. Lake Street Dive playing tonight. You want to go maybe nostalgia, but I’m not paying more than $50 for the ticket. And it’s because our values do change over time. And that’s really important to recognize that. But it’s important to be able to really dive into that to make sure that you keep on checking, not only on yourself, but if you’re in a relationship that you’re checking on the other persons as well, so that your values align with each other.

[00:12:40] Julien: If you’re talking about spending conscious and subconscious spending, I found that people tend to disregard the importance of the value or the power of the little things. What do you think people can learn from small or consistent habit building?

[00:12:55] Eoin: I was speaking at a conference, I do a lot of corporate speaking, right, and public engagements and that type of thing. And I was speak at a particular conference and the audience would have been very heavily reliant on what you guys have called social security or certainly on the lower income bracket, and that was the purpose of being there was to try and help these people change their financial future. And somebody came up to me at the end of the conference and kind of approached me as I was coming down off the stage and said, oh, can I just stop you there for a minute? Yeah, of course. And she said I heard you say something about 12 weeks ago on radio, and I started saving for the first time. And I’ve never had savings in my life. She had 60 euros in savings because she had saved 5 euros a week. And I’ll be honest, I don’t want to sound patronizing or anything like it. But I felt more pride in her than my clients who have millions and millions ready to invest because she was proud of herself. The switch that had changed for her was, I had said those couple of weeks before that you’re either a saver or you’re not. And this idea that people say, I’m crap at saving or I’m a terrible saver, I can’t save, that actually isn’t, isn’t true. You are either a saver or you’re not a saver, and whether you accept it or not, you have made a choice between the two. And what I will always say to people is, if you’ve made a choice and you want to switch that and you want to become a saver, you need to pick an amount of money that you say, the next time I get paid, I’m going to save that amount of the money, and I don’t care how small it is, right? I want you to start at that level, but I want it, in fact, to be so small that if you didn’t achieve it, you’d be embarrassed to tell your best mate or your partner you didn’t do it. Because what you do then over time is you turn up the volume on the savings. So you start at one dollar, you start at five dollars, you started ten dollars. The next week or the next month you get paid, you turn it up just a little bit. Turn it up. Now, the whole point of the story is if you’re saying every time I start saving, it fails. I have to dip into it by the end of the month. I never succeed with it. What you need to do is create the habit first. That’s the important thing. Get the habit going that you are now a saver. And then every week or every month or every time you get paid, you just turn up the volume a little more because the other thing you’re doing there is there’s a law called Parkinson’s Law. So Parkinson’s Law is it’s a rule reading. A rule that says a job will take as long as you give it. So if you’ve got to mow the lawn and you have an hour to do it on Saturday before you need to go out for the evening, you’ll get it done in the hour. But if you start at nine that morning and give yourself four hours, it’s gonna take four hours. Okay, just your job expands to the time that you give. And I believe the same happens with our income, OK? So you’re making $100,000 a year. You’re going to spend $100,000 a year. You’re making $200,000 dollars a year, you’re going to spend $200,000 dollars, because lifestyle creep kicks in. Your lifestyle expands to fill the income that you have. And the only way of reversing lifestyle creep or reversing Parkinson’s Law is to turn up the volume on the savings or the intentional stuff that you do on a monthly basis where it’s putting money into your 401(k) or put money savings or whatever else you’re doing.

[00:16:12] Julien: I completely agree with you. One of the questions that I get, and I would imagine you get it as well, is people place this label on themselves and they just say, I’m just, I am bad with money. That’s just who I am. It’s who I will always be. How do you help people kind of change that story that they’re telling themselves about themselves?

[00:16:30] Eoin: First of all, what I would say is, is your money personality, you’re either exactly the same or exactly opposite to the adults you grew up with, whether that’s your parents or somebody else, right? You’re going to be the same, but the opposite, because you’ll be either attracted to what they were like, or you want to be exactly different to them. And that’s embedded very early on. So the first thing to accept is that some of this is inbuilt from an early age, but just because it’s embedded from an earlier age doesn’t mean that you’re stuck with it for life. Whatever way you are right now, you can make that worse or you can make that better. You can make that choice. If you feel that you’re bad with money and you want to be different, you need to treat yourself like a child. And I’m going to get very deep here, but you almost need to speak to your inner child and relearn the stuff that’s ingrained in you so that you can get better at it, and you can be more conscious of us and more aware of us, and you get better outcomes ultimately is what it is. Money can control us or we can control it. And you can do something very simple today that just tips that balance ever so slightly back in your favor. And then it’s about getting little wins on a regular basis to create massive change over long periods of time.

[00:17:41] Julien: You actually don’t realize that you have really deeply ingrained values and beliefs about money and you’re absolutely correct. A lot of it starts with their experiences at home. I think that’s sets the tone for whether or not you believe in ideas like abundance, or if you believe that money is truly something that is scarce. I want to change gears just for a second here. You mentioned lifestyle creep, and I don’t know that everybody understands what that term means. I’m going to ask if you have any kind of tips on things that people can do to reverse or, you know, avoid lifestyle creep or some of this impulsive spending that we know people struggle with.

[00:18:21] Eoin: Yeah, so lifestyle creep in its simplest form is that when you get a pay rise, you feel, and you should feel like you need to reward yourself. So I’m going out for dinner instead of getting the takeaway as a simple example because I’ve just got a pay rise and I deserve it. And you do deserve it, and you do work hard. And if that’s something that you value and it’s really important to you, allow for that one, allow for it somewhere else as well. If you think about it, do you suffer with lifestyle creep is a question you might be asking yourself when you’re sitting at home listening to this and you’re, why suffer with lifestyle creep? Ask yourself, when is the last time you got a pay rise? And there’d be lots of people who would say, I got a pay rise 12 months ago. How does that feel now? And most people will answer, well, it’s made no difference to me whatsoever. And what’s happened there is, is their lifestyle has increased to fill the amount of money that they have, and they just do nicer things with that money. The way to reverse this, and it’s really clear how you reverse this, when you get to a certain salary level, most of the over-excess spending can be cut back without it impacting your lifestyle. And how you cut that back, you can go through it with a fine tooth comb and find out where is your money going. Do you realize you’re spending X amount of money on delivery food and you’re spending this on that and your holidays and your vacations, as you would call it, are being spent on this? If you just say, I get paid X amount per month, and before I do anything, I’m going take a chunk of that, and I’m going to put it into savings or I’m going to put it into my 401(k) or going to do something with it, I’m gonna take it out of my checking account because once I do that, and I have everything else covered, it’s only the stuff that’s left over in your checking account that you end up spending, and you will then end up being suffering with Parkinson’s Law or Lifestyle Creep. I think that’s really important that if you realize that if you do it immediately and you automate it and you take the money at the start, Lifestyle Creep doesn’t have anywhere to expand into.

[00:20:19] Julien: What kind of emotional roadblocks do you see most people have?

[00:20:23] Eoin: When it comes to money and what keeps people awake at night is uncertainty. It’s around what is next, what happens if inflation doesn’t get under control. It’s a huge problem throughout the world, but it’s the not knowing what’s next, and it’s not understanding how can I prepare today for the unknown future. And it can, it can really send you around in spins and circles. And like, even if you think about it in simple terms, if you’ve got cash and you’re sitting and you have it in your checking account or in your savings account, and I say to a client, everything called the five-year-rule. If you don’t need your money in the next five years, get it out of your checking account and get it into an investment account and whatever you’re doing, just get it somewhere where it’s working hard for you. And then people say, Oh, but what if I need it? What if I need? Well, have you needed it in the last 10 years? No, I haven’t. But what if I do in the next five? I can’t afford to put it away. I can afford to ride out the storms. And it’s the stuff they don’t know, they don’t know which is scaring them the most. There is people out there that are means that will say, I’m worrying doesn’t do anything. It doesn’t make the problems go away. But we do spend a huge amount of time worried about stuff that’s never going to happen. Now, this is a joke. And I just hope I translate probably said and 95 percent of the things I worry about never happen. You see, worrying works. The reality is, most of the stuff we worry about doesn’t happen. There’s so much stuff that consumes us and what I would say rents space in our head that we need to get out of there and it is a blockage when it comes to taking action, whether that action is financial or that action is some other part of your life.

[00:22:05] Julien: I want to close and maybe see if we can do a little bit of myth busting here. Is there a particular belief or a myth about money that you wish more people would just let go of?

[00:22:15] Eoin: Financial future is not predetermined. Now, more than ever, I strongly believe you can create your financial path, financial future, whatever way you want it to be. It’s interesting you talk about the difference between positive thinking and negative thinking, right? And if I say to you, if you think negative, negative things are going to happen. Most people will accept that outright. They would say, oh, yeah, no, I get that. But if I said to somebody, if you think positively, positive things are going to happen. Lots of people will challenge that, say no, they won’t, you can’t imagine a good future and you’re going to get it. But you’ll accept it on the opposite side, negative makes negative, but you won’t accept they’re equal and opposites. So therefore you believe in one, you have to believe in the other. What I love about money is it’s black and white. And what I mean by that is there’s a right answer and there’s wrong answer. But it’s also relative, it’s percentage based. Right, so we had somebody who won a lot of a lottery here last last week, won 250 million euros and a lot of a quarter of a billion, here it’s tax free by the way, right. They won a quarter of a billion, biggest win ever. And the investment advice that person should be getting with 250 million is the same investment advice you should be getting with your 250 dollars because math makes it equal. And that’s one of the myths we need to get over that, oh, it’s only good for the rich or it’s no good for me because I’m not at that level. It’s math and it’s agnostic to what the number actually is because it’s percentage based, and it is either black or white, it is right or it is wrong. That’s it.

[00:23:53] Julien: I really enjoyed this conversation with Eoin, and I especially loved that he shared some deeply personal aspects of his life.

[00:24:00] Kiersten: I really enjoyed that you shared some things as well. You talked about how you used to prioritize concert tickets and now those things aren’t as important to you. And it made me think, do I have anything in my life that way? And it’s actually the opposite. There are things that I didn’t use to prioritize that I do now, like sleep. Like I will spend more money to ensure that I get a good night’s sleep. I have a sturdy sleep routine at home. Any sort of product or pillowcase or sheet set, a cooling fan, all of that stuff is going to hit the cart versus in the past like when I was in my 20s I could sleep on a hay, like a pile of hay. It did not matter where I slept. I could sleep sitting up and now I actually, I need that comfort.

[00:24:45] Julien: Yeah, and it just goes to show, just as Eoin outlined in our conversation, as you change, your values change and those things affect the way that you spend your money. There’s nothing wrong with that, but it is important to pay attention to that and making sure that you are adjusting along the way. Thanks for listening to Merging Into Life, brought to you by AAA Northeast. If you found this helpful, share it with a friend and subscribe wherever you get your podcasts.

[00:25:13] Kiersten: The views and opinions expressed in this podcast do not constitute financial advice and are not necessarily the views of AAA Northeast, AAA, and or its affiliates.