The Mind Behind the Money
by SGL Financial
Our 2 Cents – Episode #216
The Mind Behind the Money
It’s everyone’s favorite financial podcast, Our 2 Cents, back with a brand-new episode that’ll get inside your head (in the best way)! We start by unpacking the rising cost of fast food, then dig into the surprising mental habits that influence how we view and manage our savings. Tune in now using the link below!
- Gabriel’s ‘Quick Hit’:
- Take a closer look at how fast food has gone from affordable to almost a luxury, with the numbers to back it up.
- The Psychology of Money:
- How do your early experiences with money still influence the way you handle finances today?
- Is your confidence with money based on knowledge—or just comfort with your habits?
- Are you Saving Too Much For Retirement?:
- Saving aggressively is good, but saving too much might limit your ability to enjoy life today.
- The Lewits share key warning signs and offer insights on how to navigate financial decisions with better balance.
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Podcast Transcript
Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the president of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest and financial news, trends, strategies, and more.
Gabriel Lewit: Welcome everybody to Our 2 Cents. You’ve got Gabriel, Steve, Producer Gabby, Producer Katie in the background, of course…
Steve Lewit: Yes.
Gabriel Lewit: … and I want to just wish you a happy day, right? Whatever day you’re listening to. For us it’s Thursday.
Steve Lewit: Yeah, it must be some national day today.
Gabriel Lewit: It’s happy day.
Steve Lewit: It’s happy day.
Gabriel Lewit: Well, recently, the other week, it was a Happy Donut Day, no, National Donut Day?
Steve Lewit: There was something. I can’t remember what it was.
Gabriel Lewit: It’s kind of funny because we were in the office in the morning and somebody just came and delivered a box of donuts to us last week, and we were like, “Who is this person, and why are we having donuts delivered to us?” It was some vendor, some guy trying to earn our business for something for our business, but…
Steve Lewit: Took a while to find out.
Gabriel Lewit: Yeah, finally, that person emailed us the next day and said, “Hey, did you get our donuts?”
Anyways, it was kind of interesting. But yeah, we’re hoping you have a wonderful day. Today, of course, is I think not a special day, although what I’ve learned is that they’ve made every day a special day if you look it up.
Steve Lewit: It seems that way.
Gabriel Lewit: Yes.
Steve Lewit: I actually thought you were going to start without debate about your, what is it?
Gabriel Lewit: Well, I’ve got a mini food theme for us just to start things off today.
Steve Lewit: But we got to put it right out on the table. You have this drink.
Gabriel Lewit: We got a Poppi.
Steve Lewit: Which you think is the best drink ever, and you are the only one that likes it.
Gabriel Lewit: I see everyone in the company drinking them. They naturally get-
Steve Lewit: Well, our company has no taste.
Gabriel Lewit: They regularly are getting lower in quantity in the fridge.
Steve Lewit: Well, I drank half of one and threw it out. Not even half.
Gabriel Lewit: Well, you tried the wrong one.
Steve Lewit: Okay, you’ll explain to folks because it has to do with money and our budget that we’re actually-
Gabriel Lewit: Well, actually I was-
Steve Lewit: … so this is an important discussion.
Gabriel Lewit: Yeah, so if you haven’t had the drink, Poppi, the news is it just sold for $1.95 billion, got bought out by Pepsi.
Steve Lewit: Not worth it.
Gabriel Lewit: Okay? So it’s clearly, I think, pretty popular.
Steve Lewit: It’s a loser.
Gabriel Lewit: And it’s got only five grams of sugar in it. I think I’ve mentioned it on the show before, but yeah, that’s the news. You start something new, all of the sudden it blows up, and then Pepsi’s buying you for $1.95 billion. That’s pretty cool.
Steve Lewit: It should only happen.
Gabriel Lewit: Yeah, what would you do with $1.95 billion, Mr. Lewit?
Steve Lewit: I have no idea. Really, I don’t have any idea.
Gabriel Lewit: Yes.
All right. Well, I wanted to just have a little tidbit here on food to start out. I thought there was an interesting article. We had talked about this. I can’t remember when how the cost of fast food was feeling like it’s getting more expensive. And then I came across this article that was giving us data on this and I just wanted to share. And then the rest of our show, we’re going to talk about the psychology of money in a little bit more depth from a different angle, because we’re regularly talking about the psychology of money on the show, but I think this has some really unique examples for us to pull and talk about here.
But this study is called here… Before we get into that, the study on fast food says, “Where does fast food hit your wallet hardest,” these cities are leading the pack. And apparently in, of course, San Francisco, probably leading the pack there, an average combo meal now costs about $13.88 cents in San Francisco.
Steve Lewit: That’s a combo meaning at McDonald’s or Wendy’s or…
Gabriel Lewit: Yeah, so the study here said it was looking at Burger King, Chick-fil-A, McDonald’s, Taco Bell, and Wendy’s, so not even what I would call the high-priced fast food restaurants.
Steve Lewit: I was at your place, and I decided when I went home to stop at the Wendy’s nearby you. And I just had this hankering for bad food. And I like their french fries. So I ordered, and it’s $15. How’s this $15 for a Wendy’s burger and fries?
Gabriel Lewit: Yeah, the average combo meal across the country is now more than $11.50.
Steve Lewit: It’s crazy.
Gabriel Lewit: And what the study is actually really interesting, it’s talking about how the workers that work in these areas get paid hourly wage, typically how it takes them almost a full hour of work to afford even a simple meal at these what were used to be considered very cheap fast food restaurants are not so cheap anymore. And it says now that I think 78% of Americans, based on recent polls, now view fast food as a luxury-
Steve Lewit: No…
Gabriel Lewit: … because of the pricing.
Steve Lewit: So where did they go to get a discount-
Gabriel Lewit: Well, now you go to the convenience store where you get that hot dog on the roller…
Steve Lewit: Oh, I was reading that.
Gabriel Lewit: … that’s rolling there for two, three hours.
Steve Lewit: I was just reading the research on that. The gas stations that have food places are making money hand over fist.
Gabriel Lewit: Well, yeah, because you can’t afford fast food, now you get really fast food.
Steve Lewit: That’s where they go. I never thought of that.
Gabriel Lewit: Yeah,
Steve Lewit: Yeah.
Gabriel Lewit: So, it’s kind of crazy, right?
Steve Lewit: Because I would never buy food at a gas station. I never thought of it. It’s like, that’s not part of my… I’m going to have to look around now. Yeah.
Gabriel Lewit: So, I didn’t want to spend too much time on that.
Steve Lewit: Do they have burgers in gas stations?
Gabriel Lewit: I don’t know. I never go in them for food. I swipe-and-go.
Steve Lewit: Yeah, I swipe-and-
Gabriel Lewit: Pump-and-go.
Steve Lewit: Yeah, I’m a pump-and-go-er too.
Gabriel Lewit: Yeah.
Steve Lewit: Yeah.
Gabriel Lewit: If I’m on the road, right, on a road trip, I will go into the gas station.
Steve Lewit: I think most people are pump-and-go-ers.
Gabriel Lewit: Well, it just said on the thing we pulled up here-
Steve Lewit: I guess not.
Gabriel Lewit: They make more money selling food and beverages and stuff than they do on the gas and car.
Steve Lewit: And car washes.
Gabriel Lewit: I don’t know about car washes, but yes, they do tend to have them, but most of them are usually pretty poor washes next to a lot of gas stations.
Steve Lewit: The one on Lake Cook is fantastic.
Gabriel Lewit: All right, well, let’s talk about the psychology of money, shall we?
Steve Lewit: Sure.
Gabriel Lewit: Moving on past the fast food and our food intro for the show…
Steve Lewit: Who are the most interesting things in the world?
Gabriel Lewit: Say what?
Steve Lewit: The most interesting thing in the world?
Gabriel Lewit: I think you confused me, because I think you just said, “Who are the most interesting thing in the world?”
Steve Lewit: Well, I didn’t want-
Gabriel Lewit: It just didn’t make any sense.
Steve Lewit: Mid-sentence I said-
Gabriel Lewit: It was should have been a plural.
Steve Lewit: I said I’m going to give this away and I’m asking a question, I’m giving the answer away. All right, I’ll just say. Humans are the most interesting thing in the world.
Gabriel Lewit: Okay. Right?
Steve Lewit: I’ll just say it.
Gabriel Lewit: Okay, that makes more sense.
Steve Lewit: So, the psychology of money is like anything that has to do with human being thinking and why we do what we do is really so interesting, isn’t it?
Gabriel Lewit: I was taking a sip of my Poppi.
Steve Lewit: Yeah, I saw that.
Gabriel Lewit: But yes, they are very interesting. If there’s one thing that I can say for certain in life is that people will never fail to surprise you in many various ways, right?
Steve Lewit: Leave your expectations at home.
Gabriel Lewit: Every single person is a unique… We all share similarities obviously, right? But everybody’s a unique story. And especially when it comes to your money, there’s a book here that’s really the prompt of this entire discussion point here. It’s from Morgan Housel? Housel? I don’t know. Anyways, he’s got a book called The Psychology of Money where he’s giving stories and money tips and just talking about different people and their past experiences, essentially how they view various money topics. And your decisions today are very much reflective of your past life experiences that have helped shaped your perceptions of the world, including on money.
Steve Lewit: Let’s be clear, past life experiences isn’t life before this life. Past life experiences, folks, is in this life.
Gabriel Lewit: You know what’s interesting is, who knows? Maybe even past life experiences shape your current life, your viewpoints, but I don’t know about that.
Steve Lewit: You’re not going to go there.
Gabriel Lewit: There’s no evidentiary proof of that one yet.
Steve Lewit: We’re not going there.
Gabriel Lewit: Okay? But that’s a deeper discussion.
Steve Lewit: I’d love to go there, but we’re not going there.
Gabriel Lewit: But yes, different financial backgrounds, different generations, different ways you were raised, income levels of what you grew up with, your values, all of those impact how you view money.
Steve Lewit: Well, if you think about it, our past impacts everything that we do. Not just money, but why we live where we live, why we hang out with people, the things we like and we don’t like, because we have our customs, our thoughts, our parents are still talking to us.
Gabriel Lewit: Yeah.
Steve Lewit: Well, I’m still here, so you hear me talking to you all the time. But sometimes, I do things that I can hear my mother yelling at me. It’s like, “Where is she?”
Gabriel Lewit: I do hear you yelling at me.
Steve Lewit: No, you never hear me yelling.
Gabriel Lewit: All right, well, the first concept here is no one is crazy is what it says, right? As we digest this is, no one’s crazy. Sometimes people look at people’s financial habits and they’re like, “That person’s crazy. What’s up with them?” And the concept here is that no one is crazy, right? We’re all a result of our past experiences that we’ve lived through, and those have, again, probably shaped you.
Let’s say you came out of the Great Depression, although you’d be pretty old now if you were living through the Great Depression. You might’ve pinched a whole lot of pennies. Although we talked last time, you can’t do that going forward, you’ll have to be pinching nickels, right? Because the penny’s going away. But yeah, you probably pinched a lot of pennies, and you do that for long enough, all of a sudden, that becomes a habit. And you may have plenty of money fast-forward to today, but you live through that timeframe, you pinched lot of pennies, it’s now hard for you to envision spending excessively when you went through such a long period of not spending and being very cautious and careful with your money.
Steve Lewit: Yeah, how often, Gabriel, do we have a client that has a fairly a good amount of wealth, let’s say $2 million or $3 million, and they spend $50 grand a year? And… excuse me. And we can’t motivate them to spend more. They can certainly afford to-
Gabriel Lewit: And I want to put on the side note; there’s nothing wrong with that.
Steve Lewit: No, they’re not crazy. Exactly.
Gabriel Lewit: Well, I just mean there’s nothing wrong with not spending money at the end of the day either.
Steve Lewit: No, I’m not saying that as a judgment. I’m saying that our expectation would think that, “Yeah, they should be spending more money.”
Gabriel Lewit: You have many millions of dollars, perhaps more than you need, right? You think you might want to spend that. But what’s also interesting is that same person will say leaving money to their kids is not a priority for them.
Steve Lewit: Not a priority.
Gabriel Lewit: But they also can’t motivate themselves to spend.
Steve Lewit: Exactly.
Gabriel Lewit: That’s kind of the interesting part, I think, throughout that.
And so if you recognize these things about yourself, you might be able to learn how you view money and the habits that you have, and then make different decisions along with us as your advisor to help you navigate through these things. So let’s talk about a couple other examples.
Last time, on the last podcast, we were talking about private equity and how it’s riskier, and how some people, well, they love chasing the thrill of higher returns, because we were asking, “Do you need these higher returns that come with so much extra risk, like with private equity deals or private offerings or things of that nature? And that’s another habit that’s often formed. Maybe as a kid you felt like you just never had enough and somebody else around you always had more than you, and it really impacted, I don’t know, your self-esteem, and then so now, you just chase after that return because it gives you a feeling of excitement or if you were to achieve it, right? But it also could be very risky for you at the same time.
Steve Lewit: Yeah. Plus, it’s the old FOMO syndrome, fear of missing out. I see that in myself, actually. I was talking to my daughter, your sister, about it is that, because I grew up with nothing in the South Bronx in New York, and we went outside and played with sticks and had a good time, just like you grew up.
Gabriel Lewit: I actually did grow up playing with sticks too.
Steve Lewit: Yeah, I grew up-
Gabriel Lewit: I grew up in a poor farmhouse in the middle of Vermont with my mom…
Steve Lewit: And nine cats.
Gabriel Lewit: We had nine cats, and we had a lot of trees and sticks, and we had a cow, and yeah…
Steve Lewit: You actually did.
So I went through a period where I just spent a lot of money when I was a young person trying to make it in the opera and tennis. Even though I was dead broke, I would spend every nickel that I had because there’s something in me that really just wanted to make up for all that lost time.
Gabriel Lewit: Yeah.
Steve Lewit: Even today, I’m not a big spender, but I’m more of a spender than a thriftier. Is that a real word, a thriftier?
Gabriel Lewit: Spendthrift, I think, is the word.
Steve Lewit: Yeah, I’m more of a spender than a saver, even today. Not like it was years ago, and I think it’s because I grew up with nothing. And I want to have something.
Gabriel Lewit: Yeah.
Steve Lewit: It’s very interesting.
Gabriel Lewit: Well, the concept here is, is there ever a point-
Steve Lewit: And you grew up with everything.
Gabriel Lewit: I did not, actually.
Steve Lewit: No you-
Gabriel Lewit: I don’t know why you keep saying that, because I didn’t.
Steve Lewit: That’s really true. I don’t know why. Maybe-
Gabriel Lewit: Have you forgotten my childhood?
Steve Lewit: Maybe because your sisters and brothers grew up with everything.
Gabriel Lewit: Yeah. All right.
Well, anywhos, we could dig into that a different day. But yeah, the hardest skill is getting the goalposts to stop moving and deciding when is enough when it comes to chasing returns. Ironically, that’s the same concept that stops people from spending more that could spend more because they’ve actually already mastered that goal. They’ve learned that their lifestyle that they’re living is enough, and they’re happy and content with it, and they don’t need to spend more, even though they financially have the ability to do so.
Steve Lewit: And they don’t need to make more.
Gabriel Lewit: Yeah.
Steve Lewit: Those folks are usually not in the market looking for 17% returns. They’re looking to get nice, 5, 6, 7%.
Gabriel Lewit: So, there’s two ends of this spectrum, right? You’ve got the people that have yet to figure out when enough is enough, and then you’ve got people that have mastered that, and I think this all goes back to one of my life beliefs, especially when it comes to financial planning. And this is going to dovetail into our second topic for today here in just a few minutes, but this goal of… This is what I call the battle for balance, okay? Balance, I think, is sort of this universal concept, and it really is applicable in a major way when it comes to your money, right? Can we have enough in some parts, but then can we also enjoy ourselves and others, right? What’s that balance that we can achieve there?
Steve Lewit: Yeah, and balance for money, for most people, there’s no… Like balance for your body is balance. Either you have it or you don’t or in between. But people have different definitions of balance when it comes to money. You could have, like I said, $3 million in the bank and spend little, and that’s balance for you financially. For another person, it might be like if I had #3 million in the bank, I’d be spending $200 grand a year.
Gabriel Lewit: Yeah.
Steve Lewit: And that would be balance for them
Gabriel Lewit: Exactly good point, right?
Steve Lewit: Yeah.
Gabriel Lewit: Okay-
Steve Lewit: And I just found out something about you.
Gabriel Lewit: What’s that?
Steve Lewit: You’re afraid of spiders.
Gabriel Lewit: I’m not afraid of spiders. There’s a spider crawling on the wall and I pointed to my producers here to go kill it because I’m on the show and I can’t do it while we’re talking here. You’re, of course, sitting here while the spider’s climbing up on the wall.
Steve Lewit: Well, you’re going… Why are you killing that poor spider? That’s so violent.
Gabriel Lewit: You can take it outside if you’d like, but I don’t want to crawling on me later.
Steve Lewit: You see? You have a fear-
Gabriel Lewit: You spot a problem; you take care of the problem.
Steve Lewit: I didn’t know, how did you grow up on a farm with a fear of spiders?
Gabriel Lewit: That’s probably why I have a fear of spiders.
Steve Lewit: Yeah.
Gabriel Lewit: That’s actually not a fear; it’s just a dislike. Okay.
Steve Lewit: It’s so cute.
Gabriel Lewit: All right, last topic here related to this…
Steve Lewit: Eight legs.
Gabriel Lewit: … okay, is basically room for error. Okay?
Well, actually there’s two more things here. We want to talk about reasonableness and room for error. It says basically when it comes to your financial planning, there’s a really big value to having a margin of error in your planning, right? There’s a safety zone there in having a room for error, right? If you have no room for error, you’re going to be disappointed a lot.
Steve Lewit: Yeah, because something is going to come up.
Gabriel Lewit: Right? I must get 10% return for my plan to work, and you get 9, and your plan doesn’t work, there’s no margin for error there, and it’s going to stress you out quite a bit more. So that’s something that we build into every one of our plans in quite a number of different ways. And as you look at your own financial plan, ask yourself that question, right? “Do I have margin for error built in?” Whether it’s higher than expected tax rates, unexpected withdrawal needs, lower than expected returns, bad bear markets, higher than expected inflation, higher than expected healthcare costs, right? All these different points, you want to have plans for a margin of error so that you can feel really comfortable with your long-term plan and not worry about the money side of things no matter what comes up along the way.
Steve Lewit: Something’s going to come up sooner or later.
Gabriel Lewit: Yeah.
So that’s really this concept here, right? Understanding how you view money, what’s important for you, what’s steering and driving your decisions, and then taking a whole another look at your financial plan based on that, and trying to, I’d say, look at it from a whole other angle to see if you are still comfortable with what you’re doing based on that or with that recognition in perspective, would you change anything you’re with your planning?
Steve Lewit: Yeah, and I think a lot of that has to do with this last one here, Gabriel, which is reasonable verse rational. And rational means very logic, like go by the numbers, and reasonable says, “You know, the numbers may say I go left here, but that doesn’t really feel good, so I’m going to go midway. I’m not going to go totally right, but I’m not going to just be rational. I’m also going to take care of my emotional life.”
Gabriel Lewit: Yeah, exactly.
Steve Lewit: Yeah, because-
Gabriel Lewit: Rational is all logic, reasonable is logic/emotion, and it’s really understanding your feelings and emotions and how that impacts your money.
Steve Lewit: That goes back to balance like you were talking about. It’s the balance of mind and heart, feelings and thoughts, and how do those balance each other? It’s really hard because emotions… If you have a fear of losing money, it’s hard to get past that and put your money at a little bit of risk in the stock market.
Gabriel Lewit: Yeah, that’s a great example, right? Rational says you’re maybe older at retirement, you shouldn’t lose any money, but you want to get a higher return, so reasonable says you take a little risk so you can get a higher return. But again, all of this is done in context of your planning and typically with the guidance of a financial advisor. Because it’s hard to… It’s really, honestly, guys, it is hard to work through all of that by yourself because you can’t have a conversation with yourself.
Steve Lewit: Well, you could.
Gabriel Lewit: Right, but a little more difficult and challenging-
Steve Lewit: I’m not sure I want to hear that conversation
Gabriel Lewit: … to pull off, right? You are limited in your own perspectives when you converse with just yourself.
Steve Lewit: Yes.
Gabriel Lewit: Okay, well if you have questions on that, hopefully you found that interesting. We’re big believers in the psychology of money and psychology of finance here in what’s called behavioral finance when it comes to building your financial plans because it has such a big impact on everything that you do. So if you have questions and we can help you through that, call us here, (847) 499-3330, to set up an appointment to talk with us. You can also email us to set up an appointment at info@sglfinancial.com and set up a time to talk with us here and we can chat through your money goals, your money concerns, your money history, and help you craft and navigate a better plan for the future.
Steve Lewit: And your money decisions.
Gabriel Lewit: Yes, indeed.
Steve Lewit: Yup, indeed.
Gabriel Lewit: All right, so to round out things for today, and as I mentioned earlier, this is very much in line in parts of what we were just talking about, is this question here, “Am I saving too much for retirement?”
So let me put a little bit of perspective on this when I position that question, right? A lot of people come to us at various stages of saving for retirement. And let’s say that you get your first job at 21 years old or your son or your grandson gets their first job at 21 years old, and they put some money into their 401(k). Are they saving for retirement?
Steve Lewit: Yes,
Gabriel Lewit: They are?
Steve Lewit: Yes.
Gabriel Lewit: Okay, so you can start saving for very young. You could be 21, you could be 31, you could be 41, you could be 51, you could be 61, you could even be 71 and still saving for retirement, depending on how long you’re planning on working. And so the concept here is this question, “How much am I saving? Am I saving enough or am I saving too much?” Right?
Steve Lewit: Well, I was going to ask you a question. In your experience, most people would say, “I’m not saving enough.”
Gabriel Lewit: Well, this is what’s interesting about it.
Steve Lewit: Yes.
Gabriel Lewit: So, the typical question is, “Am I saving enough?”
The opposite part of that question is, “Am I saving too much?”
Steve Lewit: Yes.
Gabriel Lewit: And sometimes, the answer to that is yes. So how do we figure that out? And let’s say this for just to suppose the question to really position this entire topic. If you knew right now, if you were 45 years old, maxing out maybe two 401(k)s for you and your wife, not going on as many vacations or spending or buying maybe a basketball hoop for your kid because you’re saving for retirement or you’re saving for college. If you knew right now at that timeframe you were saving too much, would you change your money habits? Right? Keeping in mind if you over-save, what happens? You get really used to this concept of not spending, as we were just talking about, your habits start to change.
Steve Lewit: Depriving yourself.
Gabriel Lewit: Well, maybe not depriving, but you’re just getting used to not spending as much, which is, again, fine, but let’s say you’re doing it because you’re thinking you’re not saving enough. You’ve got this scarcity mentality.
Steve Lewit: Yes.
Gabriel Lewit: So, you save, save, save, save, save. You get to retirement and you realize, so you 20 years of save, save, save, save, right? Because you listen to Susie Orman, and that’s all she says to do is save your money.
Steve Lewit: And Gabriel Lewit.
Gabriel Lewit: That’s not what I’m saying, actually. Well, we’ll get there in a second.
Steve Lewit: Okay.
Gabriel Lewit: And you get to retirement, and you realize you have, “Whoops, we run your plan, we see your numbers, you saved way too much money. Great job, but you… Yeah, you’re great,” right? You have way more than you need. What just happened for that person?
Steve Lewit: Nothing. No, really, nothing. They’re not going to change their ways.
Gabriel Lewit: No, you’re missing what I’m saying, right? That person just went 25 years thinking they weren’t saving enough.
Steve Lewit: Oh, I see. Yes.
Gabriel Lewit: Save, save, save, save, save, didn’t do maybe many things that they would’ve otherwise done just to find out at 65 when they retired, that they had way over-saved and had way more money. They possibly missed out on 25 years’ worth of more financial balance in their lives.
Steve Lewit: Yeah, maybe they could have paid for their kids’ college or bought them a house or…
Gabriel Lewit: Taking a trip for themselves, buying a convertible that they maybe would’ve wanted, right? So this concept of your decisions today should always be put into context of where you’re going to be in the future.
I’ll use an analogy that I use a lot, which is driving. And I know you talk about how I use analogies a lot, so I do.
Steve Lewit: I thought it was going to be a menu at a restaurant analysis.
Gabriel Lewit: No, not this one.
Steve Lewit: Okay.
Gabriel Lewit: So, you’re driving from here to California, right?
Steve Lewit: Yeah.
Gabriel Lewit: And the goal is I got to be there in three days.
Steve Lewit: Yes.
Gabriel Lewit: Okay, let’s say you’ve got to be there maybe even four days or whatever the number is. So let’s say it’s four days. And you’ve got all mapped out, and all of a sudden along the way you realize you’re looking at your GPS, “Okay, I’m way ahead of schedule here,” right? So the first half of the trip, you’re just going, because you got to get there. And then halfway through you realize, “Oh, I’m way ahead of schedule.”
Steve Lewit: Is that when you see the giant donut in the field?
Gabriel Lewit: Giant ball of yarn?
Steve Lewit: Ball of yarn in the field?
Gabriel Lewit: Yeah, so you’re driving down the highway and you realize you’re ahead of schedule, and you see the giant ball of yarn that’s two stories tall or whatever it is, and you realize, “I’ve got the time to go see this thing.”
Steve Lewit: Yeah, “Do I, or don’t I?”
Gabriel Lewit: “Do I, or don’t I?” Well, if you think you don’t have the time…
Steve Lewit: You’re definitely not.
Gabriel Lewit: … you’re definitely not going to.
Steve Lewit: Yeah, I’m driving faster.
Gabriel Lewit: Right? “I got to get there.”
But the moment you know have enough time, you’re well ahead of schedule, “Yeah, maybe I’d stop and see the giant ball of yarn,” or, “Maybe I’ll pull off on the scenic overlook to stare at the really pretty mountains for five to ten minutes,” knowing where you are in a progression in something like financial planning, where you’re headed, allows you to make better decisions today. And this is really the fundamental concept behind that question, “Am I saving too much for retirement,” because if you did zoom out and see that entire picture and realize that you are, you’re ahead of schedule, you might be able to stop and enjoy some of the scenery and the fruits of your labor along the way a little bit more.
Steve Lewit: Yeah, you look at what’s driving that. What’s driving that is maybe at 30 or 40 years old, and you have this fear, “I won’t have enough money to retire,” because you hear it all around you. It’s in the news, it’s on what you read. Every financial advisor saying, “You must save for retirement,” and you have this fear that develops that, “I’m not going to have enough,” and you crank out every nickel that you possibly can if you’re a saver, right?
And then 20 years later, like you said, it’s like you have far more than you need, and something’s got to go on inside and say, “Man, look at all the things I missed out on.”
Gabriel Lewit: Yeah, regret of lost time is a big thing in the future.
Now, I’ll give a real life example of this. I had a client once, came on board as a client I think five years ago now at this point, and she really wanted to stretch and buy her dream house. It was a very expensive house. But she and her husband had been maxing out their 401(k)s, and after they bought this new house, they were feeling really tight on their cash flow. Really tight, okay? And they were complaining to me.
And I said, “Well, how about you reduce the amount of savings in your 401(k)s? You’re both maxing them out.”
And they looked at me and they’re like, “We can’t do that.”
And I said, “Well-”
Steve Lewit: It’s against the law.
Gabriel Lewit: I was like, “Why not?”
Steve Lewit: They go, “I’m going to get arrested.”
Gabriel Lewit: I’m like, “If you both cut your contributions down by a $1,000 a month, right? So each of you is putting in,” I’ll just use round numbers, “20 grand instead of 30 grand every year, you’ve just freed up an extra $20,000 a year, almost $1,500, $1,600 a month of cash flow. Would that give you more breathing room?”
And they’re like, “Well, of course, but we can’t.”
Steve Lewit: Not allowed.
Gabriel Lewit: “We can’t cut back our 401(k)s.”
Steve Lewit: Not allowed.
Gabriel Lewit: “We need that for retirement,” and this is how these conversations play out.
Steve Lewit: Because we’re conditioned to think we can’t touch that.
Gabriel Lewit: Right.
Well, so I said, “Well, let’s look at your numbers,” right? And we reran their plan with… And I said, “It doesn’t even have to be permanent. It could be for five years. Wait until your income jumps back up with raises, and promotions, and things of that nature.”
So we reran the numbers with $20,000 each for a year instead of, it was like 28,000, or whatever it was. They’re over 50, so it was a catch-up thing. And guess what? Their plan looked great. Plenty of money left over in both scenarios, right?
Steve Lewit: But…
Gabriel Lewit: And they actually did it.
Steve Lewit: Oh, they did!
Gabriel Lewit: They did do.
Steve Lewit: Wow!
Gabriel Lewit: And so they temporarily-
Steve Lewit: Most people still won’t do it.
Gabriel Lewit: They said, “Well, I guess we could lower for a couple years.”
Steve Lewit: Yeah.
Gabriel Lewit: And they lowered it and-
Steve Lewit: And enjoyed their lives. Imagine that.
Gabriel Lewit: Then a couple of years ago, she got a big promotion, right? Cash flow jumped back up, was then able to, again, in their minds, they still wanted to max out these 401(k)s, so then they went back to maxing out the 401(k)s, but still solve their cash flow needs, right? So that helped them get through this time.
Steve Lewit: It’s like I’ve been watching the basketball finals, which have been fantastic, but I was listening to some of the analysts and what the analysts are saying. “If you want to be successful, you have to know where you are on the court at all times. You’ve got to know your position, and what is happening, and where things are going, but knowing where you are on the court is number one.” And it’s same thing. I don’t want say the court of life because that’s kind of like, I don’t know, it’s a little…
Gabriel Lewit: The basketball court of life.
Steve Lewit: The basketball of life. But you get it. It’s that if you don’t know where you-
Gabriel Lewit: Not the criminal courts of life.
Steve Lewit: No. But if you don’t know where you are, you don’t know what to do next. So you just listen to people, and they get in your head, and then you start doing what other people think you should do rather than what you should think you should do.
Gabriel Lewit: Well, this is why I think I’ve mentioned on previous shows, I’m not a big fan of, quote, “rules of thumb” when it comes to financial planning, because the rules of thumb don’t know you, right? And this entire episode, really, we’ve been talking about you, right? Your history, your experiences-
Steve Lewit: Your makeup…
Gabriel Lewit: … your past, your goals, your target savings amounts for retirement, are you saving too much, not saving enough? All of this is designed to help you maximize the quality of your life throughout retirement, and we have a motto here at SGL. It’s actually our tagline, building wealth for life. And I don’t reference it often, but I thought it was a really good tie-in to today’s show. What does that mean, right? Yes, we help you build wealth, right? If you were to just look at it from a pure money perspective, our tagline could have been, “Building wealth for you,” right?
Steve Lewit: Building wealth to spend more.
Gabriel Lewit: Which is very financial, right? Building wealth. Building wealth for life, though, the reason we added that is we are big believers in your money should support your life, right? It’s fuel for your life’s journey. We’ve got to figure out how you’re going to use it, and that’s shaped by all your experiences about your timelines, about your goals of being on track or not on track, and we can really empower you to enjoy your life’s journey, but also maximizing the money part along the way.
Steve Lewit: And I think the power of planning, Gabriel, we’ve never talked about this. It makes you take a look at your-
Gabriel Lewit: Pretty sure we’ve talked about the power of planning.
Steve Lewit: We have, but we haven’t done a-
Gabriel Lewit: Just so you’re aware of that.
Steve Lewit: No, I meant from this perspective. We are planners. We have talked about planning. Yeah, what I meant to say is, from this perspective is that it makes you look at how you perceive the world. And when you sit with a planner, that planner is asking you questions, and it may allow you to see that you’re kind of looking at the world through this filter, and there are other filters to look through that you might really like, and that’s what planning does.
Gabriel Lewit: It does. It gives you a very good perspective.
Steve Lewit: Have we talked about planning cable… to Katie? Yeah, we have? Yeah. I don’t remember.
Gabriel Lewit: Cable? Who’s Cable?
Steve Lewit: I’m having trouble with my tongue this morning.
Gabriel Lewit: Oh, my gosh. Yes, you-
Steve Lewit: It wants to do its own thing.
Gabriel Lewit: Well, folks, that’s our show for you here today. And one last thing before we go, wanted to wish you, Mr. Lewit, I guess and myself…
Steve Lewit: Yeah.
Gabriel Lewit: A very happy Father’s Day.
Steve Lewit: Reciprocated. Yeah.
Gabriel Lewit: And to all of you dads, and fathers, and stand-up guys out there, fathers to be, right? Happy Father’s Day to you. We are very much thinking of you and hoping you have a wonderful Sunday. Get out there, do something to enjoy yourself…
Steve Lewit: Definitely.
Gabriel Lewit: … in addition to hopefully listening to our show here, and yeah, just wanted to put that out there onto the airwaves.
Steve Lewit: Likewise. Same to you, my son.
Gabriel Lewit: Thank you, sir.
Steve Lewit: And let’s wish everybody well and have a wonderful week.
Gabriel Lewit: We shall wish you well. Have a wonderful week, and we’ll talk to you on the next show.
Steve Lewit: Be well, everybody. Bye now.
Gabriel Lewit: Bye.
Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL call at (847) 499-3330 or visit us on the web at sglfinancial.com. And be sure to subscribe to join us on next week’s episode.
Prerecorded Voice: Investment Advisory Services are offered through SGL Financial LLC, an SEC Registered Investment Adviser. Insurance and other financial products are offered separately through individually licensed and appointed agents.
