227 | Be Honest With Yourself

Here’s one of the biggest reasons you may not be making progress on your financial goals:

You’re lying to yourself about how much room you actually have for your goals in your finances.

This comes up especially around lifestyle choices, where we sometimes mistakenly identify wants as needs.

In this episode, let’s talk about one of my clients’ experience with this and my advice to her and anyone else struggling to achieve their goals.

• • my client’s experience with her lifestyle choices competing with her goals

  • being honest with yourself about what’s really happening with your finances

  • questioning your lifestyle choices

  • a more effective way to fit your goals and your lifestyle into your finances

   

Episode 225: What You Want Now vs. What You Want Most

You’re listening to Wealthyesq. We are a community of lawyers who believe that true wealth is having control of our time. I’m Rho Thomas, and as a busy wife, mom and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today, we are talking about the importance of being honest with yourself about the choices that you’re making with your finances. So I was having this conversation recently with one of my clients. We’ll call her Betty. Betty, and I were talking about her finances and creating more space for the goals that she has, and she specifically wants to pay off more debt. So Betty and her husband have a number of big expenses that are pulling at their income. They make a good income, but they have a house with a pool, and they have nice cars, and their daughter is in private school, and they’re spending a lot on food, both grocery shopping and going out to eat. And then, on top of all of that, they have a bunch of debt that they want to get rid of, and that debt has a bunch of minimum payments that’s adding up to 1000s of dollars a month. So Betty. In this particular conversation, Betty was telling me that she was putting together her spending plan, and she felt like she was having to choose between needs and other needs, so like there was a specific thing where she wanted to have or needed to have a certain level of it, and she ended up doing something a little bit lower than what she needed, because she felt like the money just wasn’t there. And I’m looking at her like, now, Betty, you know. And I know, and you know, I know that’s not the issue, right? Like I told her, she has to be honest with herself. And you know, when we look at things like, the truth of the matter is she and her husband have more than enough to be able to pay for their needs, to achieve their goals, like that kind of stuff, but because of some of the choices that they’re Making with their discretionary expenses, the money isn’t there. I and she was telling me that she and her husband have been having some conversations about their finances and about places they can cut back. And, you know, that’s great, but the things that they were looking at were kind of like the small potatoes, if you will. And I told her that they need to have some tougher conversations and make some tougher decisions. Betty and her husband can’t afford to keep everything that they are currently paying for in their life and still achieve their goals. They are right at the limit of their income and unexpected expenses keep throwing them off track. So even though they technically have the money for it, they can’t afford the lifestyle that they’re living right now. They just don’t have anything left after paying for everything, and if they could get rid of even one of those big expenses that’s pulling at their income, like if they didn’t have the cars they have, or if they didn’t have their daughter in private school, if she were in a cheaper school, if they didn’t have the mortgage they have, or if they weren’t spending as much as they’re spending on food that would free up some money for them To be able to make progress on their debt. That would free up some money for them to have more available for these other things that they need, and that would free up more money for them to achieve their goals, so they can’t keep everything the same at the same level and expect for things to change. And I find that often we overlook our lifestyle choices that you know we’re making, especially things like our house or the car we drive, or the activities that our kids are in. We just look at those things like they can’t change. Those are a given, and we act like there’s nothing that we can do about them, and we just have to work with whatever’s left. But that’s not the case. When you’re trying to get your finances in order, and especially when you’ve got a lot of debt, you’ve got a bunch of payments coming out, you have to question all of it. Question everything. Do we still want to live here? Do we want these cars? Do we still want to pay this much for education? What’s truly important? One of the things that has been an undercurrent for Betty is wanting to create a better life for her daughter. So the question then becomes, is it more important to stay in this house or to create a better life for our daughter? Is it more important to keep these cars or to create a better life for our daughter. Is it more important to have this lifestyle or to create a better life for our daughter? What’s most important? It’s like we talked about in the episode about what you want most versus what you want now, if what you want most is to create a better life for your kids, that may mean giving up something that you want right now, temporarily right, to be able to have that money available, to build your savings, to pay off debt, to invest all those kinds of things that get you to a better Place financially, where you don’t have so much money coming out in minimum payments, and you have a savings cushion to fall back on, and then in the future, maybe you can pick those expenses back up, but at that point, you are not going to be in a place where money is so tight, and you won’t have that same stress and the anxiety and the fear that you may be feeling now, like you’ll have the money available to create that better life that you’re dreaming of right now. I think about it in terms of, how do we fit all these expenses in? Like, have you ever seen that exercise where you have to fit, like, the big rocks and the pebbles and the sand all in the jar, and the only way to get it all to fit is if you put the big rocks in first, and then the smaller items and the pebbles than the sand. I think the same thing is true here with your finances, where we want to look at what is the thing that is most important to you right? Fit those bigger things in first, those things that are most important, put those in and then see where there’s space for other stuff that you want but don’t necessarily need. Every dollar that you spend on one thing is $1 that you can’t use for something else. And to put it in this specific context, every dollar that you spend on your lifestyle is $1 that you can’t use for your goals. And I’m not saying that you have to cut everything and live in some rundown place and drive a beat up car and eat nothing but ramen noodles. But I am saying that often we spend too much on lifestyle and we wonder why we can’t get ahead. And again, it comes back to questioning those things. Just because you live in this house doesn’t mean you have to continue to live in this house. Just because you drive this car doesn’t mean you have to continue driving this car, right? We don’t have to spend as much on our lifestyles often as we do, and if we would be willing to spend a little bit less on the lifestyle, then we would have more money available for those things that are more important to us. So instead of putting your lifestyle in the jar first and trying to fit everything else around it and trying to, like, cram it in and wondering why it won’t fit, put those ultimate goals in first, right. Put the better life for your kids, the house that you want to buy, whatever it is like, put those things that move you closer to having more money, having more savings, having less debt, put that in first and then fit your lifestyle around it. And it might be that you don’t have enough to fit those things in first and still live the lifestyle that you’re living nine times out of 10, even 99 times out of 100 I feel like people don’t have enough money left over if they prioritized those ultimate goals to continue living the lifestyle that they are living. Because if you did, then you would be making the progress that you want to make now, right? So there are always changes that need to be made to do something new, and the most important thing in actually making those changes is being honest with yourself about the trade offs that you’re making with the way you’re currently spending being honest with yourself that you’re currently treating these things like your lifestyle, right? These the house, the car, the whatever else you’re treating those things as if they’re more important to you than your ultimate goal. And we may not like it when you put it that way, like that feels like, oh, you know, I don’t like that, but that’s what’s happening. So be honest with yourself about that. And I encourage you to think about the way that you’re spending and look at where you can make some changes to prioritize your ultimate goal. Because when you get honest with yourself in that way, and you see what you’re actually prioritizing. Chances are you’re not going to like it. It’s not what you want to be prioritizing. So make sure that you are looking at how you’re spending, choosing those things wisely, choosing those things more intentionally, to make sure that you still have money available for the ultimate goals that you have. And if you would like some help with that, if you want to cut through the noise, implement a proven system to get out of debt for good, I’m currently enrolling my last private one on one clients for the year, and I invite you to be one of them. So head to rho thomas.com/call and schedule your consultation. All right, that is it for this week’s episode. Please take a second share this episode with another lawyer who could use this information. That’s how we spread this information and make sure that as many lawyers as possible get the help they need. And I thank you in advance for your support. As we close out, friend, I pray that you take the information you learn here, apply it in your life and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to regain control of your time, build wealth and live the life of freedom and choice, you deserve. Talk to you later.