Chapter 1: What is the main topic discussed in this episode?
Just quickly before we get into the episode, at the minute we're really trying to understand how people in the UK are saving for their futures. We hope that we can turn it into something really useful, maybe a rapport or a video on my channel. We'd love your input, it would take about five minutes, it's completely anonymous and if you're up for it you can find a link in the description.
My dad's self-worth came from external sources. Then when things didn't go so well, he went bankrupt and lost everything. It completely destroyed him. I wouldn't allow myself to be a victim of life as I felt my dad had been.
Chris Budd is a former financial planner who believes we're building wealth in completely the wrong way. Because the pursuit of money has given me lots of happiness, to be honest. What I've become more aware of though as I get older is it doesn't give me relationships and it doesn't, the pursuit of money without spending it doesn't give me memories.
Understand your beliefs and whether they're leading to good decisions. And it could be things like, I don't deserve money. I don't deserve to be rich. I do deserve to be rich. It can be just as self-limiting. Lovely attire to maintain.
Why, thank you. This is from my Dubai collection. My tailor made me some outfits for the wedding I went to in Dubai.
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Chapter 2: What personal experience shaped Chris Budd's views on money?
I love the frills.
There are no frills. Don't listen to him. Lies and deceit. You tassels. The pink tassels, yeah. Yeah. Thanks for joining us. We are called the Making Money Podcast, but you say that we shouldn't really be focusing on money in life. So what's that about?
Wow, straight into it then. Yeah, we don't mess around here. Well, so if you look at what's important in life, money should be our servant, not our master. And I think we start in the wrong place. I think when we're looking to build financial plans and looking at our relationship with money, we start off looking at money and start trying to build wealth, build financial security.
And only when we get it do we then look around and realize what we're going to do with it. So we're starting in the wrong place. So the way I put this is we've got three steps to a financial plan of well-being. And what we should do is we start with step two. So step two is, what does the research tell us about what makes us happy? And there is lots of research. It's been 2,500 years.
All of humanity, people have been thinking about this. Buddhists sat down in a grove of trees 2,500 years ago and worked it all out. So this is nothing new here. This isn't my thinking. This is all the research that's out there. And the answer is self-worth. That's a really big source of well-being, right? Feeling content with yourself. And there's two types of that.
We can have internal or external self-worth. External self-worth is when you get your self-worth from other people. So if you buy a big expensive car because you want to be seen driving a big expensive car, then you've got to have somebody looking at you in that car to get your self-worth.
If there's nobody looking at you, you've got to keep driving around until you find somebody else to look at you, right? But if you drive that big expensive car because you love cars and you don't need to be seen, you just love sitting in it, that's fine. That's internal self-worth. Better examples might be creativity or purpose. So that's step two, understanding the sources of joy and wellbeing.
Step three is then how does that apply to me? What will I get from that? How will I find purpose and meaning in life? What are the things that will give me long-term joy and wellbeing? And then you start with step one. You go back to step one and say, how much money will I need to do those things?
But what we tend to do is we tend to start with step one, ask ourselves, how much money do I need, without thinking, what for? What is that money for? So I think we're starting in the wrong place when it comes to money. We're starting to think about money when we should be starting to think about happiness.
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Chapter 3: Why should we rethink our relationship with money?
And back in 98, when I started like that, I was quite literally laughed at by my peers. Literally, in one case, laughed in my face. And then they're all doing it now.
Yeah.
So what's the shift there in the terms of the fee structure? And how does that affect the incentives of the financial advisor, do you think?
So back in those days, in the 90s, you got paid a percentage for selling an investment product or a life insurance product. To be fair, that got abolished for investments and pensions, got abolished in the Retail Distribution Review whenever that was. 2016, was it? So all firms were forced to act the way that I had been for 18 years by that time.
What it does for the relationship with a client is it should focus on a longer term relationship rather than the sale of a product. And the profession has changed massively since those days. And I would say... There won't be too many that if you could deal with that would be very transactional orientated. I would say most financial advisors now would be more long-term relationship.
Whether they're doing planning or not is another matter, but they will be much longer term looking. I do a lot of work with business owners who are looking to succession on succession planning because of my employee ownership expertise. And one of the questions I always ask them is, so how much do you need to sell your business for? And they'll tell me, well, it's worth 3 million.
And I say, okay, two things. Firstly, that's a very round figure. I don't trust round figures. You haven't actually done any work on that at all. You've just made that up. Well, you've guessed. But secondly, I didn't ask what its value is. I said, how much do you need it to be worth? And then they say, oh, well, you know, three million would be enough.
And I say, well, do you have a financial advisor? Yeah, I do. Somebody looks after my pensions. And I say, well, do you have a cash flow forecast? And they say, no, we don't. What's that? And they get a new advisor as a result of that conversation because they need to know that how much do I need figure.
What do you find happens to people that just focus on money and they stay on step one, focus on making money for their whole lives?
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Chapter 4: What are the three steps to financial well-being?
What happens to them in the long run?
Um, well, crikey, that's a great question too. Lots of answers to that. Let me give you, uh, so there's a particular, so I do lots of coaching with wealthy people kind of after wealth, trying to work out what next, because they've only started on that step one. And I asked the question, what's your money for? And I kind of get a blank look.
Um, one of them said, well, I've got to buy an expensive car. And I said, Can you explain to me the thinking behind buying expensive cars? I said, well, I need to have something to show for my money. And I said, show who?
Chapter 5: What does research say about happiness and money?
And he went, oh, yeah, thought about that. The irony was three months later with our next session, he'd just bought a Bentley. And that's a really important point, actually. Did he show it to you? No, no. Come see my Bentley. It's for you. The meeting got interrupted by it being delivered. No, no.
So there are a lot of distractions trying to push you into advertising, you know, the whole social, who are we impressed by, who are heroes? There are so many things pushing us down, commercialism about spending, that wealth is good, et cetera. But the research is different. So what happens to them? They never realise they're not unhappy, maybe. Some of them are.
I definitely know plenty of unhappy, wealthy people. But they're not as happy as they would otherwise be. There is a... a thing called Schwartz's Circumplex, which is a psychological theory about values and how you map values against each other.
Chapter 6: How does self-worth impact financial decisions?
And some values compete with each other. And there's a guy called Professor Tim Kasser who used this model and applied it to money. And he looked at the different values around your life and found that if you have values that are associated with wealth, with seeing wealth as the objective of life, they are in conflict with values that will bring you joy and well-being.
So if you are a person who sees money as one of your objectives of life, you will be unhappier than you could otherwise be.
Damn.
You laugh it off.
I've kind of prioritised, we'll get into me later, but I've prioritised happiness over wealth, but Damien, obviously... Would you say you prioritize money over happiness?
So one thing that I would get into around this is I think where you start is important. I'm prioritizing never financially struggling and never being in the position I was when I was in my 20s and maybe when I was growing up. And I think I've been running away from that kind of not having money.
And I've been like, I had a happy childhood. So I'm like, I just want to, I just continued with my Peter Pandem. I'm like, whatever I do, I'm going to be happy. I could be broke. I could be rich. I'm going to be happy. So like, yeah, that's a good point.
So let's talk to that. I can give you some stuff on that. So have you heard of Maslow's hierarchy? Yes. So you've got to be very, very careful when I say more money doesn't make you more happy. Because some people say, well, look at that guy who's homeless. If he had some money, he'd be happier. Absolutely true. And Maslow's hierarchy of needs is a really good model for explaining that.
If you don't have security, if you don't have something to eat, then you are going to be unhappy and some money will make you more happy. Absolutely. But as you go up Maslow's hierarchy of needs, you don't need money to be creative. You don't need money for self-actualization. So there is a point at which more money will not make you any more happy. Now, this is great. I love this one.
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Chapter 7: How can we cultivate better financial habits?
As long as I can keep my records and I've got food on the table, et cetera, I'm happy. I don't need lots more because I'm not motivated by that. When you then factor in the internal and external self-worth bit, I would suggest that there is a limit to which more money will really give you long-term well-being.
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Your tax returns can be filed directly from within Xero as well, which is especially important with the changes to making tax digital. But what I like most is how easy it is to see what's going on across my businesses. Revenue, profit, cashflow, all the stuff that I need to be on top of. So if you're looking for accountancy software, you should 100% check out Xero.
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Chapter 8: What role do social relationships play in our well-being?
And if they said that, I would have said, well, actually my best O-level, that's how far back I go, the only A I got was English language. I like writing stories. So I could have been a journalist. I could have done all sorts of things.
And it was only when I realised all of this in my early 40s, when I was getting quite depressed and I didn't know why, that I realised it was because I wasn't writing. I've since written three novels and the depression went fairly soon after I started doing that. And it was all because the focus was, what are you good at?
And for my dad, bless him, it was, how can you make money and have a stable life? What kind of novels? Oh, it's a long story. No, I mean, that's one of my favourite jokes.
It took you longer than me. I was like, no, fuck's sake.
I'm just scratching my head like, long story, I get it.
So they're kind of psychological, kind of fun things, yeah. I'll tell you one of them, which actually the second one didn't do so well because I don't think I realised it, but I love the idea as a solicitor who's a bit grumpy and a guy in a flash car overtakes him and flips him the finger as he goes past.
And he comes across him a mile later than his country lane and the guy in the fancy car, expensive car has crashed. He gets out, the sister, he goes over, the guy's alive, so he helps him out of the car, brings him back to his car, opens the boot, puts him in the boot, takes him then back to his house where he takes him up into his attic, ties him up and tortures him to make him a nicer person.
That was from your book? Yeah.
I hope it's not based on a true story. We'll see.
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