Chapter 1: What happens when financial anxiety persists despite wealth?
What happens when you should be at the stage of life where you relax and enjoy it, but you just can't shake the feeling that everything you've built is about to come crashing down? Because that's today's letter writer. They've worked hard, they've invested, and now have a net worth of over $5 million. But still, they can't stop to savor it.
They've had hard times with money in the past, particularly from childhood, and that's something that's hard to shake. There's a temptation to enjoy some of the finer things in life, but whenever they think that maybe it's time to splash out, they tell themselves that Kmart clothes and second-hand cars means they can keep investing and build even more. But
What's the point of building all this if you never stop to smell the roses? How do you go from building wealth to actually living with it? Well, welcome to Ask the Experts, where each week we take your questions, drag in an expert from inside the money world so they can give you the answers that you need.
Making Sense has partnered up with EnableMe to get you the strategies for reaching financial freedom faster. Head to their website to learn more. Visit enable.me today. All right, we've got the lovely Katie Wisney back in the hot seat for EnableMe. Are you ready? So ready. Okay, here we go.
Hi Francis, I've been a long time listener to your podcasts and this morning I listened to another thought I had to write in. I'm in my late 40s, moved to New Zealand about 35 years ago from what is often considered a third world country. I have an interesting dilemma that I think would make for a good episode. I worked very hard as a teen and young adult to get into a well-paying industry.
I also happened to start investing at the age of 23 when I first read the Rich Dad Poor Dad books. I have a theory that the reason I got into investment was because I did not want to be in the situation that we were in when we migrated to New Zealand. It was a tough five to ten years as we came with very little money and the money we did come with was nicely squandered by a close family friend.
Fast forward 20 years, a lot of corporate grinding, being a cash-strapped landlord, lots of renovations, sweat and tears.
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Chapter 2: How do childhood experiences shape our relationship with money?
We are in a very fortunate position of having a portfolio of over $5 million in investments and net worth well in excess of that. I have been able to coast fire since I was in my mid-30s because of this. However, cash flow is not quite where it should be as we are heavily invested in real estate, which is something I'm in the process of changing. Now the dilemma.
On paper, we look like we are in the higher end of the top 5% of net worth in New Zealand. So in theory, we should be living the high life, driving flash cars, wearing designer clothes and going overseas regularly. In reality, we don't have any extravagance in our lifestyle at all. My clothes are mainly from Kmart or on occasion from a sale at a better joint.
Cars are all secondhand around $20,000 max. We go out occasionally. We don't drink, don't smoke. I've not been overseas for around six years and we don't have any other expensive hobbies. Debt-wise, we have a small amount of our net worth in mortgages over rental property. No ridiculous consumer debt at all. In my mind, as cash flow is not great, I don't spend much.
Because of the PTSD of coming to New Zealand and not having much money, I always have that fear that we will run out of money and not be able to meet commitments. Some would say I'm a Scrooge McDuck, but I just can't get myself to spend a lot of money without feeling like that money could be better utilized or invested. Am I a case for psychiatric evaluation? I love that sign off.
I love everything about this letter. I actually think a lot more people struggle with this than you would think. Have you had people come into your office like this?
Oh yeah, absolutely. Because it's a different mentality. So someone comes in, where would you start with them? I think it's giving them a really good understanding of their numbers. What do you need to be spending to live a happy life? And then we're modeling out, well, based on your asset position, when will your money run out, if at all?
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Chapter 3: What strategies can help replace money anxiety with confidence?
And that is really comforting in terms of not modeling some hypothetical numbers. It's, well, what is your number and where are you going to land? And I think they've done it. exceptionally well in terms of where they're at. But again, just a different mindset going forward. And you've got to have a plan and you have to understand your numbers.
Yeah, I think that's really smart. Let's get this into reality, first of all, which is often something that I can sometimes, you know, life is so busy. You get caught up with just getting through the day to day to sit down and actually take a hard look at your numbers. What's coming in? What's going out? What are we good on? How long can things last?
is actually very comforting, whether or not it's what you expected. Just having it in front of you, I think, grounds you a little.
It really does. And that is a universal problem with all of my savers. You need to give them permission to spend money up to a point knowing they're going to be okay going forward. Really important.
One thing I found interesting though, right? When he was talking about we should have flash cars, we should have nice clothes, we should be going on holidays. I kind of read that and I'm like, heck, if you want to, let's make it happen. But like the idea of should, like, Do you even want that?
Right? So true.
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Chapter 4: How can a financial adviser help you enjoy your wealth?
Because, again, just in the framing of the letter, it feels like he's got a picture of wealth in his head. But actually, when I'm listening, I don't think any of those things potentially will make him happy. What he's after is permission.
Yeah.
to live the life that he wants. That is what he's after. And those, I'm pretty sure those flash cars is not the thing that is going to make him happy. And that's what he's going to figure out.
It's so true, right? I think taking the moment to be like, hang on, you know, if a status symbol makes you happy and you can afford it, I have no problem with it. But I think a lot of people actually maybe that isn't what would make them happy. I think about myself, right? And I say this as someone who loves Formula One, right? Love watching cars go vroom around the track.
The idea of making a car go vroom myself on my daily commute or whatever, It's not even that I think there are better things to put my money on. It's that it genuinely just leaves me cold. If my car is reliable and good and hits what I need it to hit, that's actually... I have no emotional connection to it.
Now, do I have an emotional connection to the perfect pair of jeans that makes my butt look amazing? Absolutely. Absolutely. Will I spend far more on those? Absolutely. But like... One is a status symbol, I guess, that I would genuinely enjoy. And one is another one that would be totally a waste of money to me.
I really challenge those status symbols. They are not a reflection of wealth. In my experience, the most flashy people... sometimes have the least amount of money when you scratch the surface. So I think it's challenging that. Absolutely. And really understanding, well, what does make you happy and giving yourself permission to spend money on those things.
And often it's having really rich conversations. And with my savers, we dig a little deeper. So I might ask, you know, what makes you happy? And they might say, well, I'd really love to travel. That's such a surface thing. So you would love to travel. I would love to travel. Who are we taking? When are we going? How much is it going to cost us? Let's overlay that in our plan and make it happen.
Otherwise, it just won't. There will always be an excuse to not do something unless you put it in the plan and make it super specific.
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