Episode 49 - Financial Lifestyle

Everyone has a financial lifestyle. Whether they created it intentionally or it has been created by small day-to-day decisions that add up.  Some are good, and some are not. Let's talk about how to create a Financial Lifestyle that has Jesus as Lord.

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Paul, Welcome to Catholic money talk, where we talk about all things money and finance, and we try to do it through a lens of being Catholic, where our ultimate goal is to one day be in Heaven with the Lord. I am your host. Paul Scarfone, thank you for being here today. Today I want to talk about one of my favorite topics, lifestyle. But before we do that, let's say a prayer in the name of the Father and of the Son and of the Holy Spirit. Amen, Heavenly Father, we thank you for this day, we ask You for all the grace and wisdom that we need to face the challenges or the circumstances that we find ourselves in. We know that you love us and that you have a great plan for us, allow us to yield to your Holy Spirit. Come Holy Spirit, we ask all this in Jesus name, amen, in the name of the Father and of the Son of the Holy Spirit. Amen. So what do I mean by lifestyle? Well, I'm actually talking about financial lifestyle. And forbes.com defines a financial lifestyle as it is how you and your spouse, if you're married, will manage money, handle debt, buy things like cars and homes, set and execute goals like retirement and college planning and whether it's intentional or it's just day by day decisions that add up over time, we all have a financial lifestyle, so I agree with that, and that's on forbes.com so all of us have a lifestyle that we've created for ourselves. And yes, some people might feel that their financial lifestyle it's just a result of their circumstances, and others understand that the choices they've made have created their lifestyle. So that's the first designation I kind of want to make. The first point your current lifestyle, it's a result of decisions you have made, and you can't control the situations you're faced with, but you do control how you respond, how you behave within those situations, and the result of those behaviors that you've decided to do, they create your lifestyle. For example, when my wife Taryn and I, when we bought our first home, we allowed the mortgage rep to sell us the biggest mortgage we could get approved for, and we just decided to go with that the results. It was a huge mortgage payment in relation to our income, and we felt broke because everything was extremely tight. Our poor decision. It created a broke lifestyle, one where we just felt super tight and we were just crushed under our different financial liabilities. When we sold that home and bought our second home, the one we live in now, we learned how to be intentional with our finances, how to create and execute a plan that reflected our goals. I like to make analogies between financial health and physical health. If someone is in terrible shape, maybe they're 100 pounds overweight. They typically didn't make an intentional decision to do that. Instead, it's a result of several smaller decisions over a long period of time that resulted in being 100 pounds overweight. There might have been food choices, activity choices, and many other choices, but they all added up to create this situation of being 100 pounds overweight. The same is true with finances. Most people don't intentionally make the decision to be broke. They don't make the decision to be unable to save and invest money intentionally. Instead, they've made a series of smaller choices, usually smaller some can be big that, over time, have added up to put them in a place where they're financially tight and they're broke. They feel like they're unable to keep their head above water with finances and a key part to remember here, like most times, 90% of the time, it's not an income problem. Some people think, Oh, if I just made more money to be fine. My average client, they've got a household income of about $200,000 per year, and they come to me because they feel they should be doing better than they are. This isn't an income problem. This is a behavior problem, and it's usually a failure to make well discerned and intentional financial decisions, and this creates the financial lifestyle that they experience. If you go back in my podcast episodes number two and three, right at the beginning, I talk about lifestyle creep and addressing lifestyle creep, and this is when you've just made so many decisions, they just build upon each other so much, and you don't realize it's just kind of subtle. But today I want to talk more about just understanding your lifestyle and a few points that and questions that you can ask yourself. Self that will help you to make well, discerned and intentional financial decision. So here we go. The first point I want to make is, let's start with prayer. The first thing to do when making a financial decision is to pray, just like we do when we start each episode here on Catholic money talk, we say, Come Holy Spirit, right? We're saying that because we want the Lord, the Holy Spirit, to inspire us so we can do the Lord's will, we should come with the posture of Jesus. I surrender my finances to you. You are the Lord of our finances. Please make your Will the clear path before us. We can say a prayer to just get the evil one out of here, because he likes to get involved in this. And if we're married, there's going to be tensions on Unity when we're talking about finances. So we want to cast the evil one out of there. St Michael, prayer is a great prayer to say, but then we want to tell the Lord, He's the Lord of our finances. Jesus, you are Lord of my finances. And we want to say a prayer to enthrone him there for when we meet. But prayer is the best place to start. One key thing to look for when making a financial decision is, will we be peaceful with this decision? The Lord's will for us is good. He wants good things for us, and we find peace when we live in the will of the Father. So if there's a possible decision, if you're going back and forth between a couple things, and there's one or two in particular that you're just not feeling peaceful about, that might not be God's will for you. So here's an example, five and a half years ago, right? So we were leaving our first house, looking for our second home, and when we're looking to buy a home, I remember there was one home that we found, and we didn't love it, but it was close to some friends. It was across the street, and there were some challenges with the house. There was a weird layout. It was kind of small. Part of the property was in a flood zone, but it was across the street from a friend's home. It was a busy street, and my wife, Taryn, she was a little worried if we moved there, it'd be dangerous for our kids if they want to just run across the street to go visit their friend's house. We ended up making an offer because we had looked at a few things and we were feeling pinched, and we made the offer, and I felt extremely unpeaceful. I actually started to pray that they would not accept our offer. My realtor called me and said, All right, they've got a few offers. We need to submit our best and final and I told them like we're out. Once we heard they accepted a different offer, there was so much peace. We were relieved. So don't underestimate how the Lord can show up and help you through discernment process by just giving you a sense of peace about the options in front of you. The next point I want to make is, don't have blinders on. Many financial decisions we make, we might throw blinders on, or maybe we're just making them in a vacuum, and sometimes it can be like the one I just said, like, if we just feel pinched about a certain thing, we just want to make a decision to relieve the pain that we're feeling. But the problem is, if we don't look too far down the road, or we don't look to see what other things exist that we might want to make a prayer in the future, we could mess up. You know, as you try to solve the immediate problem. Take a look at the other things that are approaching. How can we assess our entire situation, current and possible future? I remember a couple years ago, maybe it was one and a half years ago, a friend had called me up and they were looking to buy a new family vehicle. And I mean, used prices are still high, but they were even higher back then, right? Just a couple years ago due to covid and some of the craziness that happened. But he called me up and he said, Hey, I feel like I've got two choices. I can either buy a used version of this vehicle for$30,000 or a new vehicle for 45,000 and I think those were about the numbers, but the numbers aren't important, right? I asked him how he was paying for it. He said, cash, using a savings account. They had no other debt other than their mortgage, and so that was great. I asked him, Look, if you spent $45,000 Do you still have an emergency fund to tackle the unexpected? He said, Yes. Then I asked him about the retirement accounts, they're well underway, and they could probably even stop contributing for a while if they needed to. Then my last question was, can you see a possible time in the next five to 10 years where having an extra 15,000 would be helpful? So he went home to pray and talk with his wife. He came back and said, Okay, yep, we're gonna buy the $30,000 car. And he couldn't clearly name the expense, but as he thought about past situations, car repairs, home repairs, orthodontics and more, they had a strong sense to hang on to that extra 15,000 for future needs, and they felt peaceful about that now. Either one of their decisions, it would have been good or acceptable. They're more financially responsible than most people, but thinking of the two possible financial lifestyles that they could have landed in, one had them with an extra 15,000 available to help with future needs, and that was a great place to land. A big part of your desired financial lifestyle is having a plan. So that's like my third point here. You need to pray and dream with your spouse about about what your goals are. Then create a plan to achieve them. Put priorities on different goals so that you actually have a focus. You can't focus on everything. So which ones are the most important? Then create a monthly budget that reflects these goals, and this is one of the biggest factors in creating a financial lifestyle that promotes peace. You pray, you prioritize and you budget, you execute it. And then when you're making smaller decisions, like how much to spend on a date night or whether you can hire a cleaning lady, or you know which dishwasher to buy, which vacuum to buy, you can look at the budget and see what you have with daily decisions you want to live on less than you make. And then when bigger decisions come up, we need to pull out our list of goals and priorities and then prayerfully discern them. And these bigger items, they're going to be things like a car purchase, a home purchase. It might be vacations. Maybe it's your 10th Anniversary, 15th anniversary, retirement contributions, potentially job offers and what a new job could mean and how that could impact the financial picture, kids, education, there's so many, so many others. You know, here's, here's a couple, here's a couple of great questions. When looking at some of these bigger decisions, how far down the road Am I trying to look with this decision? Right? Are there future items that are reasonably possible that I am not considering? Or maybe here's another question, are there any significant variables that we are ignoring? So some of the significant variables that I see people dealing with is, are one of us going to plan to stay home with a baby if we have a baby, are we going to be trying to take care of aging parents? How do we expect to tackle kids college? Right? These are things that are reasonably possible for many people in the future, and they are significant variables when you're trying to look at a bigger plan. A great way to do this is just have something that helps you think broadly. I have this little chart that I update annually, and I'll go to it more than that, but officially, I update it annually, and it lists a lot of our longer term goals. So those are goals that span more than a year, things like retirement savings, paying off a mortgage, kids, college, stuff like that. This past year, I was completing it in January, and I was looking down to where we're hoping to be when I'm 50. So that's seven years away for me. So in seven years, I'll be 50. And I ran my finger down the column, and then each column next to it, next to the goals I have Paul Taran and the kids listed each with individual columns and our ages. And so I went down the column, I see here's here's when I'm 50 in the year 2031, and I start looking over in that column to see my kids ages when I'm 50. And I was, like, shocked. Today, I don't have any adult children. Josh, he's my oldest. He's 17. He'll turn 18 a couple months when I'm 50. So in seven years from now, four of my six kids will be adults. That blew my mind. Seven years from now does not seem very far away when I'm thinking about me and my age, but to have four adult kids, it seems so far away. And I started thinking about the possibility of different things with kids that age, if there's a wedding or two in the next seven years, I looked at Tara and I said, we've never discussed this before. Do we want to plan to support our kids, like wedding costs? Because we're not currently working towards that. We still need to talk, you know, we still need to talk more. There's a few variables that could impact that. You know, we might not be paying as much in K through 12 tuition at that point, so there might be a few dollars. Our goal is to have our mortgage paid off by then, so we'd hopefully have that money. But we need to discuss this and pray about this a little bit more. And my point is looking down the road a little bit when making decisions is important, because these decisions will impact our future financial lifestyle. I remember hearing a quote, and it was something like, every decision we make is a vote for the future person we want to be, or something like that. And that is very easily translated to finances, right? Every financial decision we make is a vote for the future. Your financial lifestyle we want to have now, there are some things that we can push off, but what is our attitude towards them? We don't want to have the attitude of, well, we'll just deal with it when it gets here. Instead, I would approach this. Can we start talking and discussing these so that when it does come it's no surprise. So my example here is with our kids college. So we have six children, the oldest starts college this fall, eight years ago, when we were getting our finances together, we had started to look at longer term financial things. Our immediately back then, was paying off debt so we could free up some cash flow. But when we started looking at some of the longer term finances, we looked at it and said, We will not be able to pay for all of our six kids to go to school. We're just not going to be able to save up enough money to put that many kids through college. However, we did start saving a little bit because we wanted to have something set aside to be able to help them. But we also started talking to our kids, particularly to Josh, our oldest, and he was we started talking to him when he was in seventh grade, and we would talk to him every year, and it was really discussed in college, would you be pursuing a career where you need a college degree? And we told them you're going to need to work and save and work while you're in school to pay for it. And we started telling them that in seventh grade, eighth grade, ninth grade. So none of this is new, and we discussed the importance of not borrowing student loans, and this has been an ongoing conversation. And earlier this year, actually, you know, in the fall, earlier this school year, him and I sat down, we looked at his options. Now we've saved some money and he saved some and we were looking at how the numbers shake out. So we plan to cover about $7,000 each year. So that means the first two years he's actually going to county college. It's paid for, right? We've got that money. We're giving him 7000 a year. We can do those first two years. And then while he's in those first two years, he's going to be working and saving, and he's going to use that savings plus the money he makes in years three and four, combined with $7,000 we give him each of those years three and four, and he'll have enough to be able to finish his four year degree At an in state school and graduate college debt free. So having that ongoing conversation, even though we didn't have a like a clean, done resolution, but being able to keep it in front of us, even if we can't take care of it in that moment, it helps to keep it as a priority so that you're ready for it. When it does come and our financial lifestyle stays in a good place, the last thing I want to talk about as it relates to financial lifestyle is we have a limited perspective, right? Sometimes when circumstances and even a crisis. When it comes crashing in on us, we get desperate. We try to make quick decisions because we think the storm will pass more quickly if we just make a decision fast, but it doesn't. We just compound the situation. We can create a financial lifestyle that's intolerable, right? The storm just gets worse. We need help. I always tell people, have someone in your life that you can share your finances with. There's something about when we make Jesus the Lord of our finances. One of the ways to do that is we bring it to the light. We share it with someone. And yes, if you're married, you already do that, but you and your spouse, you need to work together, and it's even better if you have someone outside of the two of you that you both can go to and seek wisdom from. They don't need to be a financial Wiz, they don't need to have a designation. They don't need to be a financial advisor or a certified financial planner or a CPA, but they do need to be someone who loves you and understands your greatest desires. They'll be able to help you determine if your financial decisions, like your budget and things like that, if they actually reflect what God has in your heart, if we are created to know love and serve God in this life so that we can be happy with him forever in heaven. How do we know love and serve God with our finances, we seek His will for our lives. We surrender our life and our finances to him. We need a friend who wants heaven for us. Who can share, who we can share with about what the Lord is doing in our heart and our life, someone who loves us enough to tell us when we look like we're veering from our plan and from our heavenly goal. Having someone like this in your life will yield countless blessings, and I'll add, you're going to be able to serve someone else in this way as well, I can promise you, because this has happened to us as I help people with their financial situations and helping them prayerfully discern different decisions, it has been a huge blessing to me and Taryn in our life, speaking truth to others reminds us of what is important and what our eternal goal is as well. Knowing our eternal goal and working towards it is the best way to create a financial lifestyle. It'll bring us peace, and it will bring us closer to God. That's what I have for you today. I hope this has been helpful. Thank you for joining me. God bless Thank you for listening to Catholic money talk. I hope you join us again next time, please click Subscribe on your podcast app to get notified of new episodes. God bless you and have a great day. Foreign