WEBVTT
00:00:00.050 --> 00:00:01.370
Welcome back to Retire Early.
00:00:01.370 --> 00:00:04.429
Retire now the podcast where we help high income earners.
00:00:04.429 --> 00:00:11.480
Stop guessing, stop stressing, and start using money as a tool to live better now and in the future.
00:00:11.960 --> 00:00:17.839
If you're new here, I'm Hunter Kelly, certified financial planner and owner of Palm Valley Wealth Management.
00:00:18.140 --> 00:00:24.649
This show is all about bridging the gap between financial independence and actually enjoying your life along the way.
00:00:25.129 --> 00:00:32.359
Now, today's episode is for a very specific type of person, and if this is you, you're going to feel heard.
00:00:32.536 --> 00:00:36.197
You save aggressively, you do all the right financial things.
00:00:36.256 --> 00:00:38.402
You max out your retirement accounts, you avoid.
00:00:38.781 --> 00:00:43.521
Dumb financial decisions and yet you still feel hesitant to spend.
00:00:43.972 --> 00:00:46.731
You still feel like you should be doing more.
00:00:47.212 --> 00:00:54.021
And anytime you think about loosening up the reigns, there's a quiet voice saying, what if I'm making a mistake?
00:00:54.652 --> 00:00:59.572
Today's episode we're going to talk about when saving more actually stops helping.
00:01:00.231 --> 00:01:08.602
How over optimizing can quietly hurt your quality of life and how to tell the D difference between discipline and fear.
00:01:08.602 --> 00:01:17.287
Dressed up as discipline because at some point, many people don't realize this, but saving more doesn't always move the needle forward.
00:01:19.816 --> 00:01:21.947
Before we get into it, take 10 seconds.
00:01:22.156 --> 00:01:25.727
Go ahead and press that follow button on your favorite podcasting app.
00:01:26.716 --> 00:01:30.406
Leave a five star review and share this with a friend.
00:01:30.826 --> 00:01:31.667
But let's jump in.
00:01:33.227 --> 00:01:42.106
Here's something I see all the time as a financial planner, people think financial journey looks like this.
00:01:42.106 --> 00:01:44.266
You save, you invest.
00:01:44.731 --> 00:01:47.522
You retire and lastly you live.
00:01:48.121 --> 00:01:53.072
But in reality, there's a messy middle phase that doesn't get talked about enough.
00:01:54.061 --> 00:01:57.512
And this is oftentimes when prospective clients come.
00:01:58.201 --> 00:02:06.841
To work with Palm Valley Wealth Management, it's the phase where you're no longer struggling, you're not behind.
00:02:07.022 --> 00:02:17.681
You've built momentum, you're not fully done either, and this is where over optimizing sneaks in early on, saving more is incredibly powerful.
00:02:18.806 --> 00:02:25.826
You probably can remember when you saved that first 10,000, 20,000, 50,000, a hundred thousand dollars.
00:02:26.606 --> 00:02:28.137
Every extra dollar mattered.
00:02:28.977 --> 00:02:31.137
Every habit was compounding.
00:02:31.796 --> 00:02:37.197
It made you feel good, but there comes a point where your savings rate is already strong.
00:02:37.826 --> 00:02:44.157
Your future trajectory is largely set and additional saving creates less benefit than you think.
00:02:44.787 --> 00:02:49.616
The problem, most people never change their behavior after crossing this line.
00:02:51.146 --> 00:02:52.917
They keep running the same playbook.
00:02:53.546 --> 00:03:02.997
Finding ways to save more, adding more restriction to what they're already doing, delaying more trips, delaying more spending.
00:03:03.866 --> 00:03:11.787
Not because it's optimal, but because it feels safe and safety can quietly turn into stagnation.
00:03:13.137 --> 00:03:15.111
Again, this is something that is very common.
00:03:15.426 --> 00:03:26.347
When, people are coming to work with Palm Valley Wealth Management and so over optimizing doesn't look irresponsible, it actually looks responsible.
00:03:26.347 --> 00:03:31.026
You're probably the one that your neighbors are like, man, I wish I could be like them.
00:03:31.507 --> 00:03:33.782
It sounds like we'll take a triple later.
00:03:34.956 --> 00:03:36.426
Let's wait one more year.
00:03:37.026 --> 00:03:39.396
I just want to save extra.
00:03:39.699 --> 00:03:47.110
Once we hit this number, then we will loosen up and here are a few signs that I've noticed when people are over optimizing.
00:03:47.319 --> 00:03:50.409
You're solving for certainty instead of progress.
00:03:51.099 --> 00:03:55.485
There's no version of financial planning that will eliminate risk completely.
00:03:56.724 --> 00:04:02.854
I don't care how, sound your financial plan is, there's always a little bit of risk, right?
00:04:02.854 --> 00:04:04.324
At least a little bit of risk.
00:04:04.865 --> 00:04:09.905
So if you're waiting to feel a hundred percent confident before enjoying life, you'll be waiting forever.
00:04:11.555 --> 00:04:13.354
Your life hasn't changed.
00:04:13.969 --> 00:04:22.189
But your net worth has, your balance sheet has improved every year, but your day-to-day experience looks exactly the same.
00:04:22.879 --> 00:04:24.410
This could be a red flag.
00:04:24.714 --> 00:04:29.814
You feel guilty spending money and you clearly can afford X, Y, Z.
00:04:30.425 --> 00:04:37.384
This one shows up constantly with high income earners, especially if they grew up in a family where money was hard to come by.
00:04:37.985 --> 00:04:40.685
You can spend, but you don't feel like you're allowed to.
00:04:41.033 --> 00:04:45.418
You can keep op, you keep optimizing numbers instead of outcomes.
00:04:45.627 --> 00:04:48.177
The goal isn't always the highest savings rate.
00:04:48.588 --> 00:04:53.538
The lowest tax bill, the cleanest spreadsheet, the highest rate of return.
00:04:54.197 --> 00:04:57.978
The goal is a life that actually feels good to live.
00:04:58.548 --> 00:05:02.538
The goal is a life that actually feels good to live.
00:05:03.137 --> 00:05:05.507
And I talk about this a lot on the podcast.
00:05:05.507 --> 00:05:07.398
This is what my whole practice is about.
00:05:07.937 --> 00:05:11.867
If you're making all this money, if you're saving all this money, what's the point?
00:05:11.867 --> 00:05:13.487
If you're not actually enjoying the money?
00:05:14.148 --> 00:05:17.627
And enjoyment can mean a lot of different things to a lot of different people, right?
00:05:18.108 --> 00:05:19.637
Enjoyment may be taking trips.
00:05:19.637 --> 00:05:24.648
It may be, donating your time to your favorite charities or your money to favorite charities.
00:05:24.927 --> 00:05:28.958
helping out your family, doing any number of things.
00:05:29.528 --> 00:05:30.127
And if you.
00:05:30.502 --> 00:05:32.963
Are worried about just accumulating money.
00:05:33.202 --> 00:05:40.882
To me, that's not as a fulfilled life as using that money as a tool to do the things that are actually important to you.
00:05:42.773 --> 00:05:50.452
So let's talk about something planners don't say enough people in my industry, financial planners, financial advisors, they don't say this enough.
00:05:50.663 --> 00:05:55.312
There is actually a law diminishing returns to savings.
00:05:56.483 --> 00:05:59.122
Again, I kinda mentioned this earlier in the podcast episode.
00:05:59.887 --> 00:06:06.127
When you're saving, early on, those early dollars saved had a massive impact, right?
00:06:07.358 --> 00:06:20.767
you can probably remember when you had that first$10,000 saved or that first$50,000 saved, and how impactful that 10 to 20% or whatever you were saving of your income was going to that dollar amount.
00:06:23.423 --> 00:06:25.103
Honestly, that is the biggest impact.
00:06:25.103 --> 00:06:28.403
That's the fastest way that you can grow those accounts early on.
00:06:29.182 --> 00:06:34.043
But as those accounts start to grow, that compounding interest starts to take over.
00:06:34.822 --> 00:06:40.523
Those later dollars saved can only have a marginal improvement, right?
00:06:40.733 --> 00:06:46.882
Unless you have some sort of big windfall, or maybe hit big on a business, whatever that may be.
00:06:47.242 --> 00:06:49.192
But for the vast majority of those dollars.
00:06:50.228 --> 00:06:56.187
There is going to be marginal improvement in, your overall net worth and savings and things of that nature, right?
00:06:56.237 --> 00:07:11.608
Generally what I say, the turning point should be, at least to start thinking about a turning point is if your interest is starting to overtake the amount that you're contributing to these accounts, then we can start thinking about, Hey, what do I actually need to be saving?
00:07:12.208 --> 00:07:16.418
can I make some changes in my life, that I can start?
00:07:16.778 --> 00:07:18.427
Maybe relaxing a little bit, right?
00:07:19.237 --> 00:07:24.668
And so at some point your future is already funded, your flexibility is already built.
00:07:24.997 --> 00:07:28.658
Your downside risk is already in a spot where it's manageable.
00:07:29.437 --> 00:07:34.298
An additional savings doesn't meaningfully change retirement timing.
00:07:34.898 --> 00:07:37.418
It doesn't materially improve security.
00:07:37.867 --> 00:07:42.278
It doesn't materially reduce the present day enjoyment, right?
00:07:42.668 --> 00:07:44.317
So this is where.
00:07:45.517 --> 00:07:51.968
The question shifts from, can I save this to, what am I giving up if I do save this?
00:07:53.257 --> 00:07:57.898
and here's the hard truth, you don't get bonus points for dying with the most optimized plan.
00:07:57.927 --> 00:08:03.807
You do get regret if you delay living a life you could've afforded along the way.
00:08:04.918 --> 00:08:12.358
Again, being in this profession for just under a decade, I have seen many couples.
00:08:13.317 --> 00:08:23.838
Sadly get so close to retirement and they delayed things for so long that they get to the point where they cannot enjoy that money that they have worked so hard for.
00:08:24.468 --> 00:08:26.228
And to me it's what was the point?
00:08:26.557 --> 00:08:32.827
We worked so hard to save this millions of dollars or hundreds of thousands of dollars, whatever it may be in their situation.
00:08:33.518 --> 00:08:36.697
And now we're at a place where our health.
00:08:36.982 --> 00:08:43.403
Or our family, whatever that may be, doesn't allow us to do the things that we always wanted to do.
00:08:44.602 --> 00:08:50.332
Having that fine balance really, really can make a difference in your fulfillment in life.
00:08:50.873 --> 00:08:57.232
ask yourself, right, am I at a point where the dollars that I'm saving, are they actually that impactful?
00:08:57.263 --> 00:09:08.033
Maybe the first 10% of your income is maybe the first 20% of your income is, but if you're over optimizing, does that extra two or three or 4% really make that much of a difference?
00:09:08.107 --> 00:09:08.528
Right.
00:09:08.947 --> 00:09:11.707
And I am not suggesting to go spend frivolously.
00:09:11.707 --> 00:09:13.597
This is not that type of podcast.
00:09:13.898 --> 00:09:18.677
It is just understanding where you're at in life, and making sure that you're maximizing the most of it.
00:09:19.518 --> 00:09:22.368
So how do you actually know when saving more stops helping?
00:09:23.148 --> 00:09:29.868
Here's a simple framework I use with clients to make sure that there's enough being saved.
00:09:30.768 --> 00:09:32.207
So one capacity.
00:09:32.658 --> 00:09:37.847
Are you saving at a level that supports your long-term goals without heroics?
00:09:38.057 --> 00:09:54.748
So if you are already meeting the savings need for your retirement goals, for potentially paying for your kids' tuition, whatever long-term goals that you have, then you may be in a spot where you can start saving less or not worrying about saving more.
00:09:56.067 --> 00:10:02.908
Another question you could ask yourself is, if I lost motivation to save, would my plan still work?
00:10:03.491 --> 00:10:04.932
Number two, optionality.
00:10:05.111 --> 00:10:08.081
Do you have flexibility outside of retirement accounts?
00:10:08.711 --> 00:10:12.042
And can you make changes without blowing up your plan?
00:10:12.432 --> 00:10:18.432
Am I at a spot where I can pivot and my whole financial life doesn't go to shambles?
00:10:18.851 --> 00:10:20.111
Number three margin.
00:10:20.412 --> 00:10:22.422
Do you have any room for error?
00:10:22.841 --> 00:10:25.902
Market downturns, career changes, life surprises.
00:10:26.501 --> 00:10:33.731
If you have margin for some of those big life events that potentially could, maybe, won't, potentially could happen.
00:10:33.967 --> 00:10:35.437
Do you have room for error there?
00:10:35.827 --> 00:10:38.168
And if you do, you don't need perfection.
00:10:38.692 --> 00:10:40.613
Number four, trade off awareness.
00:10:40.763 --> 00:10:44.482
Do you know what you're trading by saving more?
00:10:44.812 --> 00:10:46.043
Are you trading time?
00:10:46.072 --> 00:10:47.812
Are you trading experience?
00:10:47.932 --> 00:10:49.342
Are you trading energy?
00:10:49.613 --> 00:10:50.783
Are you trading your health?
00:10:51.413 --> 00:10:51.743
Right?
00:10:51.743 --> 00:10:52.523
Because again.
00:10:53.427 --> 00:11:08.337
There becomes a point where you're saving and that saving becomes less impactful, and now you're realistically cut down your hours at work and get some of that time back and still be able to live out your long-term goals.
00:11:08.812 --> 00:11:10.072
If you can't articulate.
00:11:12.107 --> 00:11:16.337
If you can't articulate it, that's fear making this decision for you.
00:11:16.972 --> 00:11:18.023
So what does this mean?
00:11:18.173 --> 00:11:19.613
What should we do instead?
00:11:20.332 --> 00:11:21.863
This doesn't mean stop saving.
00:11:21.863 --> 00:11:23.633
It doesn't mean be reckless.
00:11:24.143 --> 00:11:26.753
It doesn't mean stop being disciplined.
00:11:26.962 --> 00:11:28.342
This is not that podcast.
00:11:29.363 --> 00:11:31.763
It means to reallocate with intention.
00:11:32.302 --> 00:11:41.812
Again, I want money to be a tool for my clients, for myself to do the things that you love to do with the people that you enjoy doing those things with.
00:11:43.192 --> 00:11:47.513
So how can I, instead of asking yourself, how can I save more?
00:11:47.513 --> 00:11:52.243
Start asking yourself, what would make my life more meaningful this year?
00:11:53.158 --> 00:11:55.557
Where would money buy back my time?
00:11:56.038 --> 00:11:57.177
What experiences?
00:11:57.177 --> 00:11:59.067
Don't get easier later?
00:11:59.355 --> 00:12:08.445
And if you can start answering these questions, maybe you can give those extra dollars a more meaningful task, a more meaningful job.
00:12:09.061 --> 00:12:11.100
This is where lifestyle design comes in.
00:12:11.221 --> 00:12:13.591
It's not indulgence, but it's a strategy.
00:12:14.250 --> 00:12:17.250
Money is meant to support your life and not replace it.
00:12:17.895 --> 00:12:29.115
Again, use that money as a tool, and if you're at a point in your life where saving a little bit more is just not impactful anymore, then let's start living your life.
00:12:29.265 --> 00:12:31.000
Let's start doing the things that you love to do.
00:12:31.363 --> 00:12:49.317
so if you feel like this episode has hit close to home, you're not broken, you're just transitioning I know people that get to a point, their net worth, their savings has gotten to a spot where I feel like I'm doing the right things, but I don't quite feel completely fulfilled.
00:12:49.317 --> 00:12:50.577
I don't wanna screw this up.
00:12:51.087 --> 00:12:53.697
I need some help, If you want help figuring out.
00:12:54.567 --> 00:13:01.738
Whether you're saving too aggressively or whether you're saving enough How to loosen the reins without wrecking your financial plan.
00:13:02.008 --> 00:13:05.817
How to align your plan with your life, that act that you actually want.
00:13:06.268 --> 00:13:08.878
That's exactly what I do at Palm Valley Wealth Management.
00:13:09.748 --> 00:13:12.807
Go to my website, Palm Valley wm.com.
00:13:13.738 --> 00:13:14.758
Look at my process.
00:13:14.758 --> 00:13:16.288
I call it the Palm Valley Pathway.
00:13:16.557 --> 00:13:29.847
This is the process that I have found that helps customize your financial plan to build the life that you want to live, to make sure you can use that money as the exact type of tool that you need for a fulfilled life.
00:13:30.148 --> 00:13:31.258
So you can go there.
00:13:31.317 --> 00:13:33.508
You can click on that Palm Valley Pathway button.
00:13:33.988 --> 00:13:35.158
You can look at the process.
00:13:35.158 --> 00:13:36.023
You can schedule a call.
00:13:36.702 --> 00:13:40.602
Uh, and we can get to know each other and see if it's the right path for you.
00:13:41.952 --> 00:13:51.432
And it would be super helpful if you know someone that this podcast episode resonate with, share it with a friend, or take 10 seconds to leave.
00:13:51.758 --> 00:13:54.067
A five star review on your favorite podcasting app.
00:13:54.398 --> 00:13:59.437
It helps us show find more people so that they can start living the life that they want to live as well.
00:13:59.977 --> 00:14:02.018
As always, this is educational.
00:14:02.018 --> 00:14:06.097
It's not financial advice, so don't make decisions based off this podcast.
00:14:06.097 --> 00:14:11.317
Go seek a professional, uh, before you make any sort of life changes.
00:14:11.528 --> 00:14:13.538
Thanks for listening, and I'll see you next week.
00:00:00.050 --> 00:00:01.370
Welcome back to Retire Early.
00:00:01.370 --> 00:00:04.429
Retire now the podcast where we help high income earners.
00:00:04.429 --> 00:00:11.480
Stop guessing, stop stressing, and start using money as a tool to live better now and in the future.
00:00:11.960 --> 00:00:17.839
If you're new here, I'm Hunter Kelly, certified financial planner and owner of Palm Valley Wealth Management.
00:00:18.140 --> 00:00:24.649
This show is all about bridging the gap between financial independence and actually enjoying your life along the way.
00:00:25.129 --> 00:00:32.359
Now, today's episode is for a very specific type of person, and if this is you, you're going to feel heard.
00:00:32.536 --> 00:00:36.197
You save aggressively, you do all the right financial things.
00:00:36.256 --> 00:00:38.402
You max out your retirement accounts, you avoid.
00:00:38.781 --> 00:00:43.521
Dumb financial decisions and yet you still feel hesitant to spend.
00:00:43.972 --> 00:00:46.731
You still feel like you should be doing more.
00:00:47.212 --> 00:00:54.021
And anytime you think about loosening up the reigns, there's a quiet voice saying, what if I'm making a mistake?
00:00:54.652 --> 00:00:59.572
Today's episode we're going to talk about when saving more actually stops helping.
00:01:00.231 --> 00:01:08.602
How over optimizing can quietly hurt your quality of life and how to tell the D difference between discipline and fear.
00:01:08.602 --> 00:01:17.287
Dressed up as discipline because at some point, many people don't realize this, but saving more doesn't always move the needle forward.
00:01:19.816 --> 00:01:21.947
Before we get into it, take 10 seconds.
00:01:22.156 --> 00:01:25.727
Go ahead and press that follow button on your favorite podcasting app.
00:01:26.716 --> 00:01:30.406
Leave a five star review and share this with a friend.
00:01:30.826 --> 00:01:31.667
But let's jump in.
00:01:33.227 --> 00:01:42.106
Here's something I see all the time as a financial planner, people think financial journey looks like this.
00:01:42.106 --> 00:01:44.266
You save, you invest.
00:01:44.731 --> 00:01:47.522
You retire and lastly you live.
00:01:48.121 --> 00:01:53.072
But in reality, there's a messy middle phase that doesn't get talked about enough.
00:01:54.061 --> 00:01:57.512
And this is oftentimes when prospective clients come.
00:01:58.201 --> 00:02:06.841
To work with Palm Valley Wealth Management, it's the phase where you're no longer struggling, you're not behind.
00:02:07.022 --> 00:02:17.681
You've built momentum, you're not fully done either, and this is where over optimizing sneaks in early on, saving more is incredibly powerful.
00:02:18.806 --> 00:02:25.826
You probably can remember when you saved that first 10,000, 20,000, 50,000, a hundred thousand dollars.
00:02:26.606 --> 00:02:28.137
Every extra dollar mattered.
00:02:28.977 --> 00:02:31.137
Every habit was compounding.
00:02:31.796 --> 00:02:37.197
It made you feel good, but there comes a point where your savings rate is already strong.
00:02:37.826 --> 00:02:44.157
Your future trajectory is largely set and additional saving creates less benefit than you think.
00:02:44.787 --> 00:02:49.616
The problem, most people never change their behavior after crossing this line.
00:02:51.146 --> 00:02:52.917
They keep running the same playbook.
00:02:53.546 --> 00:03:02.997
Finding ways to save more, adding more restriction to what they're already doing, delaying more trips, delaying more spending.
00:03:03.866 --> 00:03:11.787
Not because it's optimal, but because it feels safe and safety can quietly turn into stagnation.
00:03:13.137 --> 00:03:15.111
Again, this is something that is very common.
00:03:15.426 --> 00:03:26.347
When, people are coming to work with Palm Valley Wealth Management and so over optimizing doesn't look irresponsible, it actually looks responsible.
00:03:26.347 --> 00:03:31.026
You're probably the one that your neighbors are like, man, I wish I could be like them.
00:03:31.507 --> 00:03:33.782
It sounds like we'll take a triple later.
00:03:34.956 --> 00:03:36.426
Let's wait one more year.
00:03:37.026 --> 00:03:39.396
I just want to save extra.
00:03:39.699 --> 00:03:47.110
Once we hit this number, then we will loosen up and here are a few signs that I've noticed when people are over optimizing.
00:03:47.319 --> 00:03:50.409
You're solving for certainty instead of progress.
00:03:51.099 --> 00:03:55.485
There's no version of financial planning that will eliminate risk completely.
00:03:56.724 --> 00:04:02.854
I don't care how, sound your financial plan is, there's always a little bit of risk, right?
00:04:02.854 --> 00:04:04.324
At least a little bit of risk.
00:04:04.865 --> 00:04:09.905
So if you're waiting to feel a hundred percent confident before enjoying life, you'll be waiting forever.
00:04:11.555 --> 00:04:13.354
Your life hasn't changed.
00:04:13.969 --> 00:04:22.189
But your net worth has, your balance sheet has improved every year, but your day-to-day experience looks exactly the same.
00:04:22.879 --> 00:04:24.410
This could be a red flag.
00:04:24.714 --> 00:04:29.814
You feel guilty spending money and you clearly can afford X, Y, Z.
00:04:30.425 --> 00:04:37.384
This one shows up constantly with high income earners, especially if they grew up in a family where money was hard to come by.
00:04:37.985 --> 00:04:40.685
You can spend, but you don't feel like you're allowed to.
00:04:41.033 --> 00:04:45.418
You can keep op, you keep optimizing numbers instead of outcomes.
00:04:45.627 --> 00:04:48.177
The goal isn't always the highest savings rate.
00:04:48.588 --> 00:04:53.538
The lowest tax bill, the cleanest spreadsheet, the highest rate of return.
00:04:54.197 --> 00:04:57.978
The goal is a life that actually feels good to live.
00:04:58.548 --> 00:05:02.538
The goal is a life that actually feels good to live.
00:05:03.137 --> 00:05:05.507
And I talk about this a lot on the podcast.
00:05:05.507 --> 00:05:07.398
This is what my whole practice is about.
00:05:07.937 --> 00:05:11.867
If you're making all this money, if you're saving all this money, what's the point?
00:05:11.867 --> 00:05:13.487
If you're not actually enjoying the money?
00:05:14.148 --> 00:05:17.627
And enjoyment can mean a lot of different things to a lot of different people, right?
00:05:18.108 --> 00:05:19.637
Enjoyment may be taking trips.
00:05:19.637 --> 00:05:24.648
It may be, donating your time to your favorite charities or your money to favorite charities.
00:05:24.927 --> 00:05:28.958
helping out your family, doing any number of things.
00:05:29.528 --> 00:05:30.127
And if you.
00:05:30.502 --> 00:05:32.963
Are worried about just accumulating money.
00:05:33.202 --> 00:05:40.882
To me, that's not as a fulfilled life as using that money as a tool to do the things that are actually important to you.
00:05:42.773 --> 00:05:50.452
So let's talk about something planners don't say enough people in my industry, financial planners, financial advisors, they don't say this enough.
00:05:50.663 --> 00:05:55.312
There is actually a law diminishing returns to savings.
00:05:56.483 --> 00:05:59.122
Again, I kinda mentioned this earlier in the podcast episode.
00:05:59.887 --> 00:06:06.127
When you're saving, early on, those early dollars saved had a massive impact, right?
00:06:07.358 --> 00:06:20.767
you can probably remember when you had that first$10,000 saved or that first$50,000 saved, and how impactful that 10 to 20% or whatever you were saving of your income was going to that dollar amount.
00:06:23.423 --> 00:06:25.103
Honestly, that is the biggest impact.
00:06:25.103 --> 00:06:28.403
That's the fastest way that you can grow those accounts early on.
00:06:29.182 --> 00:06:34.043
But as those accounts start to grow, that compounding interest starts to take over.
00:06:34.822 --> 00:06:40.523
Those later dollars saved can only have a marginal improvement, right?
00:06:40.733 --> 00:06:46.882
Unless you have some sort of big windfall, or maybe hit big on a business, whatever that may be.
00:06:47.242 --> 00:06:49.192
But for the vast majority of those dollars.
00:06:50.228 --> 00:06:56.187
There is going to be marginal improvement in, your overall net worth and savings and things of that nature, right?
00:06:56.237 --> 00:07:11.608
Generally what I say, the turning point should be, at least to start thinking about a turning point is if your interest is starting to overtake the amount that you're contributing to these accounts, then we can start thinking about, Hey, what do I actually need to be saving?
00:07:12.208 --> 00:07:16.418
can I make some changes in my life, that I can start?
00:07:16.778 --> 00:07:18.427
Maybe relaxing a little bit, right?
00:07:19.237 --> 00:07:24.668
And so at some point your future is already funded, your flexibility is already built.
00:07:24.997 --> 00:07:28.658
Your downside risk is already in a spot where it's manageable.
00:07:29.437 --> 00:07:34.298
An additional savings doesn't meaningfully change retirement timing.
00:07:34.898 --> 00:07:37.418
It doesn't materially improve security.
00:07:37.867 --> 00:07:42.278
It doesn't materially reduce the present day enjoyment, right?
00:07:42.668 --> 00:07:44.317
So this is where.
00:07:45.517 --> 00:07:51.968
The question shifts from, can I save this to, what am I giving up if I do save this?
00:07:53.257 --> 00:07:57.898
and here's the hard truth, you don't get bonus points for dying with the most optimized plan.
00:07:57.927 --> 00:08:03.807
You do get regret if you delay living a life you could've afforded along the way.
00:08:04.918 --> 00:08:12.358
Again, being in this profession for just under a decade, I have seen many couples.
00:08:13.317 --> 00:08:23.838
Sadly get so close to retirement and they delayed things for so long that they get to the point where they cannot enjoy that money that they have worked so hard for.
00:08:24.468 --> 00:08:26.228
And to me it's what was the point?
00:08:26.557 --> 00:08:32.827
We worked so hard to save this millions of dollars or hundreds of thousands of dollars, whatever it may be in their situation.
00:08:33.518 --> 00:08:36.697
And now we're at a place where our health.
00:08:36.982 --> 00:08:43.403
Or our family, whatever that may be, doesn't allow us to do the things that we always wanted to do.
00:08:44.602 --> 00:08:50.332
Having that fine balance really, really can make a difference in your fulfillment in life.
00:08:50.873 --> 00:08:57.232
ask yourself, right, am I at a point where the dollars that I'm saving, are they actually that impactful?
00:08:57.263 --> 00:09:08.033
Maybe the first 10% of your income is maybe the first 20% of your income is, but if you're over optimizing, does that extra two or three or 4% really make that much of a difference?
00:09:08.107 --> 00:09:08.528
Right.
00:09:08.947 --> 00:09:11.707
And I am not suggesting to go spend frivolously.
00:09:11.707 --> 00:09:13.597
This is not that type of podcast.
00:09:13.898 --> 00:09:18.677
It is just understanding where you're at in life, and making sure that you're maximizing the most of it.
00:09:19.518 --> 00:09:22.368
So how do you actually know when saving more stops helping?
00:09:23.148 --> 00:09:29.868
Here's a simple framework I use with clients to make sure that there's enough being saved.
00:09:30.768 --> 00:09:32.207
So one capacity.
00:09:32.658 --> 00:09:37.847
Are you saving at a level that supports your long-term goals without heroics?
00:09:38.057 --> 00:09:54.748
So if you are already meeting the savings need for your retirement goals, for potentially paying for your kids' tuition, whatever long-term goals that you have, then you may be in a spot where you can start saving less or not worrying about saving more.
00:09:56.067 --> 00:10:02.908
Another question you could ask yourself is, if I lost motivation to save, would my plan still work?
00:10:03.491 --> 00:10:04.932
Number two, optionality.
00:10:05.111 --> 00:10:08.081
Do you have flexibility outside of retirement accounts?
00:10:08.711 --> 00:10:12.042
And can you make changes without blowing up your plan?
00:10:12.432 --> 00:10:18.432
Am I at a spot where I can pivot and my whole financial life doesn't go to shambles?
00:10:18.851 --> 00:10:20.111
Number three margin.
00:10:20.412 --> 00:10:22.422
Do you have any room for error?
00:10:22.841 --> 00:10:25.902
Market downturns, career changes, life surprises.
00:10:26.501 --> 00:10:33.731
If you have margin for some of those big life events that potentially could, maybe, won't, potentially could happen.
00:10:33.967 --> 00:10:35.437
Do you have room for error there?
00:10:35.827 --> 00:10:38.168
And if you do, you don't need perfection.
00:10:38.692 --> 00:10:40.613
Number four, trade off awareness.
00:10:40.763 --> 00:10:44.482
Do you know what you're trading by saving more?
00:10:44.812 --> 00:10:46.043
Are you trading time?
00:10:46.072 --> 00:10:47.812
Are you trading experience?
00:10:47.932 --> 00:10:49.342
Are you trading energy?
00:10:49.613 --> 00:10:50.783
Are you trading your health?
00:10:51.413 --> 00:10:51.743
Right?
00:10:51.743 --> 00:10:52.523
Because again.
00:10:53.427 --> 00:11:08.337
There becomes a point where you're saving and that saving becomes less impactful, and now you're realistically cut down your hours at work and get some of that time back and still be able to live out your long-term goals.
00:11:08.812 --> 00:11:10.072
If you can't articulate.
00:11:12.107 --> 00:11:16.337
If you can't articulate it, that's fear making this decision for you.
00:11:16.972 --> 00:11:18.023
So what does this mean?
00:11:18.173 --> 00:11:19.613
What should we do instead?
00:11:20.332 --> 00:11:21.863
This doesn't mean stop saving.
00:11:21.863 --> 00:11:23.633
It doesn't mean be reckless.
00:11:24.143 --> 00:11:26.753
It doesn't mean stop being disciplined.
00:11:26.962 --> 00:11:28.342
This is not that podcast.
00:11:29.363 --> 00:11:31.763
It means to reallocate with intention.
00:11:32.302 --> 00:11:41.812
Again, I want money to be a tool for my clients, for myself to do the things that you love to do with the people that you enjoy doing those things with.
00:11:43.192 --> 00:11:47.513
So how can I, instead of asking yourself, how can I save more?
00:11:47.513 --> 00:11:52.243
Start asking yourself, what would make my life more meaningful this year?
00:11:53.158 --> 00:11:55.557
Where would money buy back my time?
00:11:56.038 --> 00:11:57.177
What experiences?
00:11:57.177 --> 00:11:59.067
Don't get easier later?
00:11:59.355 --> 00:12:08.445
And if you can start answering these questions, maybe you can give those extra dollars a more meaningful task, a more meaningful job.
00:12:09.061 --> 00:12:11.100
This is where lifestyle design comes in.
00:12:11.221 --> 00:12:13.591
It's not indulgence, but it's a strategy.
00:12:14.250 --> 00:12:17.250
Money is meant to support your life and not replace it.
00:12:17.895 --> 00:12:29.115
Again, use that money as a tool, and if you're at a point in your life where saving a little bit more is just not impactful anymore, then let's start living your life.
00:12:29.265 --> 00:12:31.000
Let's start doing the things that you love to do.
00:12:31.363 --> 00:12:49.317
so if you feel like this episode has hit close to home, you're not broken, you're just transitioning I know people that get to a point, their net worth, their savings has gotten to a spot where I feel like I'm doing the right things, but I don't quite feel completely fulfilled.
00:12:49.317 --> 00:12:50.577
I don't wanna screw this up.
00:12:51.087 --> 00:12:53.697
I need some help, If you want help figuring out.
00:12:54.567 --> 00:13:01.738
Whether you're saving too aggressively or whether you're saving enough How to loosen the reins without wrecking your financial plan.
00:13:02.008 --> 00:13:05.817
How to align your plan with your life, that act that you actually want.
00:13:06.268 --> 00:13:08.878
That's exactly what I do at Palm Valley Wealth Management.
00:13:09.748 --> 00:13:12.807
Go to my website, Palm Valley wm.com.
00:13:13.738 --> 00:13:14.758
Look at my process.
00:13:14.758 --> 00:13:16.288
I call it the Palm Valley Pathway.
00:13:16.557 --> 00:13:29.847
This is the process that I have found that helps customize your financial plan to build the life that you want to live, to make sure you can use that money as the exact type of tool that you need for a fulfilled life.
00:13:30.148 --> 00:13:31.258
So you can go there.
00:13:31.317 --> 00:13:33.508
You can click on that Palm Valley Pathway button.
00:13:33.988 --> 00:13:35.158
You can look at the process.
00:13:35.158 --> 00:13:36.023
You can schedule a call.
00:13:36.702 --> 00:13:40.602
Uh, and we can get to know each other and see if it's the right path for you.
00:13:41.952 --> 00:13:51.432
And it would be super helpful if you know someone that this podcast episode resonate with, share it with a friend, or take 10 seconds to leave.
00:13:51.758 --> 00:13:54.067
A five star review on your favorite podcasting app.
00:13:54.398 --> 00:13:59.437
It helps us show find more people so that they can start living the life that they want to live as well.
00:13:59.977 --> 00:14:02.018
As always, this is educational.
00:14:02.018 --> 00:14:06.097
It's not financial advice, so don't make decisions based off this podcast.
00:14:06.097 --> 00:14:11.317
Go seek a professional, uh, before you make any sort of life changes.
00:14:11.528 --> 00:14:13.538
Thanks for listening, and I'll see you next week.
