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TEBI podcast 48: Jonathan Clements on the appetite for “struggle and strife” that keeps us moving throughout life
549 Plays11 months ago
In the eighth of a series of 12 TEBI episodes looking at meaning and money during later careers or second lives, Jonathan Hollow interviews writer and publisher Jonathan Clements.
Jonathan Clements enjoyed a hugely successful career as a personal finance writer for The Wall Street Journal, but as he candidly confesses in this interview, for a long time he was addicted to frugality and the future at the expense of life in the here and now. He also worked for Citigroup and lectured college students on personal finance - both experiences he looks back on with less than pleasure, as he explains. In his frank and highly articulate voice, he explains why he’s still restless in his early sixties, and what new challenges he is exploring. He then discusses the lively life stories and examples that emerge from his most recent book: "My Money Journey: how 30 people found financial freedom, and you can too."
This podcast series has been developed with financial planning firm Mulberry Bow. Based in London, they offer a highly personalised service to around 150 individuals and families. Robin Powell and Jonathan Hollow are very grateful for their enthusiastic support for "Second Lives”.
Transcript: https://www.evidenceinvestor.com/jonathan-clements-what-ive-learned-about-life-and-money/ --
Links to key mentions in this podcast: Jonathan’s “Humble Dollar” website - https://humbledollar.com/ —
Jonathan’s latest book, “My Money Journey" - https://www.harriman-house.com/mymoneyjourney —
Mulberry Bow financial planners: https://mulberrybow.com/ —
Jonathan Hollow and Robin Powell's book "How To Fund The Life You Want": http://tinyurl.com/how2fund --
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Transcript
Introduction to Second Lives Podcast
00:00:07
Speaker
I'm Jonathan Hollow and welcome back to Second Lives, a series of 12 podcasts for the evidence-based investor, looking at the questions raised by fresh directions in later life. When I started planning this series with Robin Powell, we were reflecting on the themes of our book, how to fund the life you want, and how we could bring them out further in interviews.
00:00:28
Speaker
One of the key themes our book tackles is the challenge people experience in managing their feelings about money and, accordingly, keeping their behaviors on track.
Jonathan Clements and Humble Dollar
00:00:40
Speaker
So I'm really pleased that today's interview with the writer and publisher Jonathan Clements looks at that challenge from multiple dimensions.
00:00:48
Speaker
Jonathan Clements has been writing about money all his working life, including a long stint as the personal finance columnist for the Wall Street Journal, but he now runs a website with an intriguing name, Humble Dollar. It provides a platform for people to tell money stories that cover their whole lives and to explore the links between money and meaning. His most recent book, My Money Journey, invited 30 contributors to his website to tell their stories.
00:01:18
Speaker
Its chapters provide a blend of insight, facts and emotions that will stimulate anyone looking for new challenges and new solutions in their lives. And Jonathan has many interesting things to say himself, especially as you will hear about the shift from saving to spending.
00:01:37
Speaker
Cambridge educated, but with a long career in the United States, Jonathan is still seeking out new challenges in his early sixties. But just before we roll this interview with Jonathan, I'd like to say a word about Mulberry Bow. This podcast is brought to you in collaboration with them.
00:01:56
Speaker
They are a chartered financial planning boutique in the city of London that offers a highly personalized service to around 150 individuals and families. Robin Powell and I like the fact that the team at Mulberry Bow do not have sales targets nor their own financial products to sell. As they like to say, they sit on your side of the table. For more information, just Google Mulberry Bow Wealth Planning or follow the links in the notes for this podcast.
00:02:27
Speaker
So now we go Jonathan to Jonathan with Jonathan Clements. Jonathan, your website is called Humble Dollar. Why do you advocate a humble dollar? Show me the point of the dollar is to be mighty.
00:02:40
Speaker
So the dollar part is obvious, right? It's a site devoted to personal finance, but why humble? So there is so much about our financial lives that we can't control. We don't know what's going to happen to the stock and bond markets. We don't know what financial misfortunes are going to befall us. We don't know how long we're going to live. There's so much
00:03:04
Speaker
about our financial lives that is beyond our control, and that's why a certain level of humility is important. On the other hand, there's significant portions of our financial life that we can control. We can control how much risk we take. We can control our investment costs. We can control how much we save and spend. We can, one hopes, control our emotional reaction to the markets, ups and downs.
00:03:31
Speaker
And sure, we can lead thoughtful financial lives even when we're faced by all this uncertainty. So yes, we should be humbled in the face of all the uncertainty that confronts us, but it doesn't mean that we can't exert some measure of control over our financial lives. And what are the different functions and purposes that the website is for? Who's it trying to help with those themes?
00:03:58
Speaker
So if you go back to the launch of the site, the site launched at the end of 2016 and at the time I had very limited ambitions for the site. I at that point had been putting out an annual financial guide
00:04:15
Speaker
as a book and as an e-book edition, and it seemed to me that it was just the wrong format. In today's 24-7 world where information is constantly updated, having an annual financial guide seemed a little bit like a dinosaur. So I decided, what the heck, I would throw it up on the web.
00:04:34
Speaker
and update the guide continuously, make it freely available, run a few ads next to maybe make a few dollars. And I'd already been blogging occasionally on another site on JonathanClements.com. So I thought, all right, I'll keep blogging and maybe I'll invite people I know to
00:04:53
Speaker
Blog along with me from there the site Sort of evolved to what it is today where you know, I'm running, you know 10 a dozen articles every week, you know, I have this the financial guide is still there there is a calculator on the cycle the two-minute checkup and so on and what if the site has evolved to be a
00:05:19
Speaker
is a site that's geared towards people who are in or close to retirement, heavily focused on indexing, who are trying to pursue a thoughtful approach to
Clements' Career Journey
00:05:33
Speaker
managing money. They're trying to figure out
00:05:35
Speaker
how they can have happier financial lives. And so those are the issues that we touch on a lot on the website. Most of the writers for the site are amateur writers who just happen to have a very keen interest in personal finance. And so one of the things that I say to these folks is you may not be an expert on the financial world, but you are an expert on your own life. So if you write about what you've done,
00:06:05
Speaker
you can do so with great authority. And that has really led to what is probably our signature type of article where people talk about how they've tackled different issues in their financial lives. And I know we're going to talk about it in a little bit, but that is also the genesis of the book that the site recently put out, My Money Journey.
00:06:27
Speaker
So this current phase of your life where you you're a website publisher and a writer, you've described this as a third act of your life. Can you tell us what the first two acts were? So, Jonathan, I got out of Cambridge in 1985 and in college, you know, I used to say to people, I will never get married, you know, and I will never have children.
00:06:54
Speaker
So within a year of leaving Cambridge, I was engaged, within two years I was married, and within three years I was a father.
00:07:02
Speaker
I found myself at this point living in New York City with a wife who was a PhD student and very quickly I had not one but two small children to take care of and to do so all on a junior reporter's salary in one of the most expensive cities in the world. One of the consequences of this is that I had to grow up financially very, very fast.
00:07:29
Speaker
And so while a lot of my, you know, friends were enjoying their twenties, bar hopping, going to parties, you know, I was changing diapers and trying to figure out whether we could afford pizza on a Friday night.
00:07:44
Speaker
The frugality that that bread carried me through the first two decades of my life, and this was years of professional success, but a very routine life where
00:08:03
Speaker
I went to work, I was working for the Wall Street Journal, I was there as the personal finance columnist. I was soaking away great gulps of money and essentially building the financial foundation that my life rests upon today, but it was a very structured life. I'm not sure it was the happiest time of my life, but it was certainly a time when I was very financially careful.
00:08:27
Speaker
I lived in a home that was far smaller than I could really afford. And that's one of the reasons I was able to save great cops and money. And I reached a point in my early 40s, I guess it was a midlife crisis perhaps, when I realized that I had sort of achieved financial freedom and I could start taking more career risks. So I was a little burned out of the journal. I'd been writing this column for many years.
00:08:57
Speaker
was recruited by Citigroup to help with a financial startup at the bank and that later morphed into me being director of financial education for their wealth management. So I spent six years on Wall Street seeing the advisory business from the inside, not a particularly attractive view sometimes.
00:09:19
Speaker
And that was my second phase. And then around 2014, I realized that as much as I was making tons of money at Citigroup, I was really making no difference in the world. I spent my time dealing with lawyers and compliance officers trying to make sure in this very tightly regulated business that we were doing the wrong thing. And I was sort of sick of it.
00:09:47
Speaker
So I left Citi in 2014. I waited long enough to get my final bonus, and then I left. And for the past nine years, I've had this third phase, which I refer to as my second childhood. And it's a period where I've tried all kinds of different things. I was involved in another financial startup. I wrote a number of books. I freelanced a
00:10:17
Speaker
column for the Wall Street Journal, as well as some other publications, a little bit of consulting. I gave a bunch of speeches. I tried something that I thought I was going to love, which was teaching personal finance at the college level and discovered that I really actually didn't like teaching. And then somewhere along the way, I, um, I ended up launching this thing called humble dollar, which, you know, since it was launched at the end of 2016 has slowly devoured my life. And that is where I am today.
00:10:46
Speaker
And why didn't you like teaching? It's interesting. I taught at a small private college in New York State. It's reputed to be the least expensive private college in New York State and that is deliberately so. It's very much geared towards
00:11:07
Speaker
Kids who are from the poorer parts of New York City, but one of the consequences of that is that these kids Had to work many times full-time jobs in order to afford to go to this college So they were spending you know 40 hours a week working They were doing you know five
00:11:28
Speaker
crosses a semester and those classes were running for three hours. That was 15 hours of class work time. So you've got 40 hours of work, 15 hours in the classroom. That's 55 hours. And then, you know, this is jerk who keeps giving them homework at the end of every personal finance class. And surprise, surprise, they just didn't do it. I mean, I felt like I wasn't making any difference in their lives.
00:11:57
Speaker
No fool of the kids, I understand. They were in an economic dilemma, but it just wasn't for me. And to be honest, when you're used to writing and reaching hundreds of thousands of people, standing in front of a classroom of 20 or 30 kids and realizing you're having a much, much smaller impact, that doesn't fit quite so well. It certainly didn't for me.
Financial Habits and Retirement
00:12:24
Speaker
This is Jonathan Hollow and you're listening to Second Lives. I'm interviewing author Jonathan Clements about his own money story and the insightful stories he's brought to life from others. Let's go back to this frugal theme that developed from what you said in your mid-twenties. You have said that through that frugal approach you've amassed more than enough money for your retirement. Can you shape that, quantify that for us?
00:12:53
Speaker
Well, one way to quantify it is that here in the US, we have Social Security, our national government pension. And my intention is to delay Social Security until age 70, which gives me the maximum possible benefit. And if I delay till age 70, in today's dollars, I will receive $48,000 a year, according to the Social Security website.
00:13:20
Speaker
And $48,000 a year will pretty much pay all of my retirement expenses. So as a consequence, all of this money that I've saved for retirement, in a sense, is sort of useless. It won't be entirely useless. I hope to do some traveling and so on.
00:13:41
Speaker
You know, one thing I've discovered is that I've clearly saved way too much for retirement and probably the biggest beneficiaries are going to be the charities that I support and my two children. And has it been hard to give up on frugality in that circumstance?
00:14:01
Speaker
Slowly, you know, you know, with the moths, you know, appear when I open my wallets, but slowly, you know, the wallet has been opened. I spend money in ways that I didn't, you know, a dozen years ago, I go out to dinner at least once a week and I like to try new restaurants. And, you know, that's a, that's an expensive habit. I've been doing much more traveling.
00:14:29
Speaker
One of the things that I would say to anybody who has historically been a great saver, who's reached retirement, and suddenly you have to flip the switch. You have to go from being a saver to being a spender. It's a difficult transition for a lot of people.
00:14:44
Speaker
is to start small so this is not the time when you go out and you buy that luxury european sedan because if you do it it'll be a deeply uncomfortable experience and you probably won't enjoy the car and the money involved but if you start small
00:15:01
Speaker
If you do go out to dinner, if you buy yourself the latest electronic gizmo, if you take a weekend away, if you start small and those small expenses seem to enhance your life, then it gets a little easier to give up the frugality thing. But it's certainly for me,
00:15:21
Speaker
Been difficult, and I don't think that you know I will ever spend You know in proportion to the amount of money that I've managed to amass Hmm. I think you said somewhere that you felt that Traveling business class would make your travel a lot more pleasurable, but that's something that you would find quite difficult to do Yeah, the the business class thing is is is a sticking point right now. I take a few cues from my mother my mother I
00:15:51
Speaker
just turned to age 84, and she continues to travel, but now she travels first class. And that was not the way she's done it historically, but as she's got older, in order for her to enjoy travel and get on that airplane, she feels that she needs to travel business class or first class. And so I look at that and think, yeah, so that's probably coming down the road.
00:16:18
Speaker
and I'm trying to wrap my head around that. On internal US flights, I'm happy to sit in the cheap seats. It's okay to be at the back of the plane, but now when I think about traveling to Europe, climbing on a plane, waking up
00:16:34
Speaker
you know, in London or Paris having been sitting up all night and staggering into this, you know, city that I don't entirely know, that's not as quiet as an attractive proposition as it was 20 years ago. And so, yeah, the idea of being able to sleep on the plane and arrive feeling relatively fresh is seeming more and more appealing at some point, some point. I'm not there yet, Johnathan, but at some point.
00:17:01
Speaker
I will, I think I will bite the bullet and do so. We were awake with bated breath. What about the charitable giving? Do you find it easier to give to charities in a more generous way than spend on yourself perhaps?
00:17:16
Speaker
When you think about what you can do with money, you have money, a certain amount of discretionary money. You've got to cover your fixed expenses, your mortgage or rent if you have it, the groceries, the utilities, the insurance premiums. That money is basically already designated. You can't do anything about that.
00:17:39
Speaker
From there you have all this discretionary money, so you can save it, you can spend it on new possessions, you can spend it on experiences, you can give it to charity, or you can give it to loved ones. And I think that when we think about what are our values, we
00:17:58
Speaker
could learn a lot by looking at how we use our discretionary dollars. So historically, the thing that I valued most was clearly financial security because with my discretionary dollars, I saved like crazy. When I was younger, I think I was more apt to buy possessions. That was what I valued today. I buy very, very few possessions. In fact, I'm much happier throwing things out than bringing them into the house.
00:18:28
Speaker
But yeah, what I do get great pleasure from these days is spending on experiences, giving to my kids. And one of the things that I have been trying to get better at and I've been thinking about more is giving to charity. But for me, you know, I'm still struggling to sort of find which charity it is that I really feel, you know, I
00:18:54
Speaker
I want to support.
Personal and Financial Purpose in Later Life
00:18:56
Speaker
So I've been thinking about that and thinking about how I can do it in a more structured way. I think I could be much more generous with charity and I'm figuring out how I can do it in a way that would make me more comfortable and feel like I was being more effective in the way that I use my dollars.
00:19:17
Speaker
Now for a word from Mulberry Bowe, who have collaborated with us to develop this series. I spoke to Simon Bullock of Mulberry Bowe. Does he ever find that a client start talking about money, but he needs to work backwards to understand their life? Here's what Simon had to say. That's a very fair question. It's almost every time to be honest.
00:19:42
Speaker
It's natural, isn't it? You get referred to a planning firm, you go in, you start talking about your personal balance sheet, but to be fair, and of course all that stuff is important, but in the first instance, we need to get a handle on what kind of life they want, both now and in the future. We tend to look back to to understand what's worked or not worked for them in the past, both in terms of lifestyle and their experiences of getting professional advice. Money and life are,
00:20:10
Speaker
intertwined, aren't they? And many clients are looking to hand things off and focus on enjoying life while there's others that want to be a bit more involved. Thank you. That was Simon Bullock, the founder of Mulberry Bow. And now back to Jonathan Clements to discuss life lessons and money stories.
00:20:31
Speaker
This theme of a second childhood and still being quite restless, I suppose, in your sixties, it almost sounds like despite your very significant career success, at least with the Wall Street Journal, you're kind of still looking for new challenges now. Yeah, I think it's really, really difficult to say, you know, I have enough.
00:20:55
Speaker
And I've achieved enough, at least for me. Other people may be different. I am at the point where I pretty much would have said, you know, I have enough. I probably take more investment risk than I need to, in part because I know I'm not going to spend, you know, my savings during my lifetime are not a significant portion of it.
00:21:20
Speaker
But you know, I have pretty much reached the point where I can say I have enough and I feel that way but I'm not sure I'm quite at the point where I've said I've achieved enough and You know, we all I think like to think that we're gonna go out on a high note and actually that never happens and
00:21:42
Speaker
Because the destination is not what counts, it's the journey, it's the striving, it's spending our days engaged in things that we find fulfilling, that we think are meaningful, that we feel that we're good at, that we think are important, that we find challenging. These are the things that give our lives a sense of purpose.
00:22:01
Speaker
And I still want to spend my days doing those things that give it a sense of purpose. I think even in retirement, we need a reason to get out of bed in the morning. And for me at this point, the website, HumbleDollar, is my sense of purpose. What I would like to do is get to the point where it doesn't consume quite so much of my life.
00:22:27
Speaker
You know, maybe if I look two years down the road, instead of putting up a dozen new articles a week, maybe I only put up four new articles a week. I'd like to get to the point where I can
00:22:40
Speaker
spend maybe half my day working in half day for myself. But I have not quite got to the point where I can bring myself to be quite that selfish. But I'm trying to get there. I'm trying to go. That's the journey. But I don't want to ever not have that sense of purpose. It's about the struggle and the strife.
00:23:02
Speaker
Yeah, absolutely. I mean, it's the hedonic treadmill, right? Every time we look at it ahead and say, well, once I get this done, everything's going to be fine. And I'm going to be permanently happier. And of course, it never happens. Whatever it is that you're striving for, whether it's buying the home, buying the new car, just getting you to work out of the way so you can go on vacation for two weeks, once you get to that point, everything is going to be
00:23:30
Speaker
happier and your life's gonna be so much better and then you know, you know two days into your vacation you wake up in the Morning, you're like you're a little bit restless. It's like, oh, you know, what am I gonna do today? You know suddenly this sort of the worries come creeping in again No, we are as humans not built to relax. We are built to strive that those are the hunter-gatherer genes that we carry within us and
00:23:57
Speaker
I would say that we should not fight it. We should find some way to harness it. We will be happier if we always have things that we are striving toward. That's the nature of us as humans.
00:24:09
Speaker
Now let's talk about the book, My Money Journey. You've used the website as a platform to publish and then gather life stories about money and you've gathered some great stories in the book. At the end of the book, you say to the reader, you're urging the reader to write down their own money story. Why do you think that would help every reader or an ordinary reader?
00:24:33
Speaker
I think there are really two potential benefits to get from sitting down and spending a couple of thousand words writing about your financial journey. First, when you write about your financial journey, you're really writing about your life journey.
00:24:52
Speaker
pretty much every aspect of life has a money aspect. And so when you write about your money journey, you write about your life journey. And in doing so, from a financial point of view, it gives you a chance to look back and say, what did I do right? What did I do wrong? What has been important? What hasn't been important? And that can help you going forward.
00:25:16
Speaker
But the second reason to sit down and write about your money journey is with an eye to future generations. So I knew my grandparents very well. I never knew my great grandparents. Would I like to be able to read their account of their life journey and their financial journey? Of course I would. It would be fascinating to know what their life was like. One of the things that I say to people is,
00:25:47
Speaker
The only immortality we have in this world is the memory of others. If you want a little bit of immortality, sit down and write about your financial story and your life journey so that you're not just your children and your nieces and nephews, but future generations can know what your life was like.
00:26:09
Speaker
that accounted for something. So yeah, you should sit down and you should write that financial story and then you should put it with your most important papers. When they go to find your will, your life story, your money journey should be there as well. That's a really interesting concept. In our book that Robin, pal and I wrote, we were talking about having a death box of all these kind of significant financial facts about you.
00:26:34
Speaker
And the fact that a financial advisor is a very good person to be holding those facts for when you pass on, but we hadn't thought of actually putting a story in there as well. Maybe that will take- The only thing I would say, and this is coming from the point of view of somebody who has committed too many words to paper over the years,
00:26:54
Speaker
is you should also think carefully about what it is that you want to leave behind. Because if you leave three boxes of family letters, they will never be read. But if you pick out a dozen key pieces of paper and you leave them behind, there is a much better chance that your family will look at them after your death.
00:27:20
Speaker
You need to do the pruning before you go so that they do actually pay attention to the stuff that you want them to pay attention to. Yeah, good point.
00:27:32
Speaker
Well, let's turn to some of the individual stories.
Stories of Financial Resilience
00:27:35
Speaker
I mean, the subtitle to the book is How 30 People Found Financial Freedom. And you can too. But of course, the road to financial freedom can be bumpy. And it's often the mistakes that tell us more. Tell us about the journey of, is it Juan Furlough? A bad business, he called his story.
00:27:55
Speaker
One of the things about the book in general that I hope people will find inspiring is that these 30 stories of how people have almost reached financial freedom, every one of them had mistakes along the way. Even if you've made mistakes, don't assume that you're doomed.
00:28:19
Speaker
You know, plenty of people make financial mistakes and still manage to retire in comfort and amass significant wealth. So you should not be deterred by the fact that you made what seemed like horrendous mistakes. So in one's case, one lives in Iowa. He works in a chemical factory.
00:28:41
Speaker
He works the plot. He's also, interestingly enough, a professional wrestler. So this is his sort of his side hustle as he refers to it. So once a clearly an ambitious guy, so beyond working at the chemical factory, he has a whole real estate business. I think last I knew he had six or seven rental properties that he owned in the area.
00:29:09
Speaker
But his entrepreneurial streak also led him to launch a coffee shop, and the coffee shop did not live up to the ambitions of his wife and him, and it very quickly failed.
00:29:26
Speaker
Juan pushed on with the coffee business for too long, and one of the things he ended up having to do was to dip into his retirement savings during the 2008-2009 stock market collapse. So he ended up setting himself back financially.
00:29:50
Speaker
The good news is that he's still on track to retire early despite that mistake, but there are a lot of lessons to be learned from reading about people's mistake, and his story is a fascinating one. And I think what interested me about it was he had a very different reaction to
00:30:09
Speaker
almost a decade, I think he said, of financial setbacks as a result of this. His reaction was very different from that of his wife, who was really focused on the good things that had happened during the year or so that they'd been running the coffee shop. Yeah, I don't think she was talking about the customers that they met and the friends they make through the business. And he was more focused on the fact that the businesses had not succeeded and that there had been a large financial loss involved.
00:30:38
Speaker
I think that probably if it had happened to me, I would be in the wand camp. I think I would not. I would find it hard to see the silver lining in this. This is Jonathan Hollow, and you're listening to Second Lives. I'm interviewing Jonathan Clements, one-time personal finance columnist for The Wall Street Journal, and someone still exploring new challenges in his early sixties.
00:31:05
Speaker
Another really great story in the book was John Goodall and what was lovely about that was he talks about deliberate choices he made to spend money rather than save it or accumulate it that were really important for him and his family.
00:31:23
Speaker
Yeah, I think this is a very telling story and an important story. And certainly for me, a reminder that the relentless pursuit of more money is not necessarily the path to greater happiness. So John spent, I believe it was 14 years in the army, as a lawyer in the army, but it also meant that he had to do active duty.
00:31:50
Speaker
For instance, he served in Afghanistan, and in the book he talks about three times that he essentially set back his own march towards financial freedom, and those three times was one when he was
00:32:07
Speaker
on active duty in Afghanistan that he committed to buying a new car. I think it was a Mustang, some special Ford Mustang car, and how thinking about that car and picking out the specs for it and ordering it and knowing that it would be waiting for him when he got back to the US helps him to get through the experience of being on active duty in Afghanistan.
00:32:33
Speaker
Second, he talks about financial costs that his wife and he occurred when they adopted three children from South America.
00:32:45
Speaker
including the fact that there's an adoption credit here in the US that is available. But because the kids came up for adoption earlier than they expected, they weren't able to get that adoption credit for various technical reasons. And they still went ahead because having the three children was more important than getting a break on their taxes. And then subsequently, John actually left the army and left behind
00:33:15
Speaker
you know, a very lucrative pension. If you're in the military in the US and you do 20 years of active duty, you get a pension that's equal to half of your final three years salary. And he actually
00:33:30
Speaker
decided to leave The army and he'll still get a pension down the road, but not nearly as generous Because you know he did now have these three adopted children, you know part of army life is constantly moving and he thought it was unfair on the kids unfair on his wife and that it would be much better if they could be in one place and so to do that he left the army and again, you know, he set back and
00:33:55
Speaker
his progress towards financial freedom, but in return, he had a happier financial life. And I'm not sure I would be able to make that financial sacrifice, but I have to say, I admire that he did it. And I think that we should all be cognizant of those trade-offs and not necessarily put the almighty dollar at the top of our list.
00:34:22
Speaker
Yeah, I suppose my reflection on that story was it kind of gave a new meaning to the idea of financial freedom because for a lot of people, it's a kind of nirvana of amount of money, you know, beginning for you to stop working, etc, etc, etc. But for whom it was freedom from being too concerned about that goal. And in your own chapter, you said, I've come to see not thinking about money as perhaps the greatest luxury
Financial Freedom and Family Narratives
00:34:50
Speaker
that money can buy, which I thought was a really interesting thought. I mean, can we expand on that from your own perspective? Sure. So there's this, you know, we keep up, we offer this question all the time, you know, does money buy happiness?
00:35:05
Speaker
And I would contend that the real role of money is to help us avoid unhappiness. And one of the ways that money can help us to avoid unhappiness is that it can allow us not to think about money.
00:35:26
Speaker
One of the terrible situations to be in is to not have enough money, be constantly worried about how you're going to pay the bills. Once you reach financial freedom, I think there are two key elements to that. One is that your time becomes your own. You can decide how you're going to spend your days.
00:35:48
Speaker
One of the key things you should do at that time, I believe, is to engage in activities that you find meaningful, that give your life a sense of purpose. But the other aspect of financial freedom is this ability not to worry about money. And that's huge to me. I mean, that not having to think about money on a daily basis
00:36:08
Speaker
is a wonderful thing. And for a lot of people, unfortunately, that goal remains elusive. For a lot of people, money is a constant source of concern. The US government, one of its divisions, did a study of well-being in the US, financial well-being. And they looked at all kinds of different factors. But the
00:36:37
Speaker
biggest factor was essentially money in the bank. And people who had $5,000 or more in the bank were on their scale, roughly 50% happier than those who had $250 or less. Just having cash in the bank, some reasonable amount that could ensure that the bumps of daily life don't
00:37:03
Speaker
Do you rail your existence? That's enormous. And for people who are living on the edge, it's misery. So just having a little bit of cash in back so you don't have to worry about money, that is a big deal.
00:37:18
Speaker
There's another story in the book by Phil Kernan called Project Mookie. And I suppose this links because he and his wife and family decided to have a constant reminder of a money goal gradually growing up in front of them. Can you just tell that story? So Phil is a financial advisor in Kansas City.
00:37:42
Speaker
Before he became a financial advisor, he worked at the banking business, and he and his wife realized that they weren't going to be financially free in the near future, meaning they weren't going to be able to completely stop working, but they would have substantially more financial flexibility if they didn't have a mortgage.
00:38:06
Speaker
So they set a goal of getting their mortgage paid off as quickly as possible. And to get their kids on board with these frugality that would be involved in getting their mortgage paid off as quickly as possible.
00:38:22
Speaker
They promised this reward, which was that everybody would go to Disney World. And to bring this alive, Phil's wife went out and she bought a large puzzle of Mickey Mouse. And whenever they paid off, I believe it was $1,000 of the principal, they would add eight pieces to the puzzle to sort of show their progress. And when the puzzle was completed, it would be time to go to Disney World.
00:38:52
Speaker
And so sure enough, over the years that followed, every time they paid down the principal by $1,000 or more, they would add pieces to the puzzle and slowly Mickey appeared before them and off to Disney World they went. I thought it was a very clever way to bring a financial goal to life and to get everybody on board with the sacrifices that are necessarily involved.
00:39:16
Speaker
I thought it was a brilliant idea. I had a bittersweet reaction to it, though, because I can't stand Disney and the key back. That's where they are moving into the nightmares, at least they have been up over 10 or 15 years, but that's just personal taste.
00:39:32
Speaker
a principle could be replicated very successfully in a different way. In the foreword to the book, you expressed a regret, I suppose, about the lack of female voices who are among the authors, relatively speaking. And that was, well, you can explain how that came about. I mean, that's not really your choice as such.
00:39:52
Speaker
What's your take on the different relationships that women and men have with money in the United States? So of the books 30 authors, five of them are women. And I wish it was more. One of the reasons the number is relatively small is simply this.
00:40:16
Speaker
I run the website on a shoestring. I can't pay contributors very much. So I'm really, you know, at the mercy of whoever puts up their hand and says, yes, I'd like to write for your website. A lot of the people who read the website previously, you know, read me at the Wall Street Journal. And as I took to joking when I was the journal and continues to joke to this day, you know, the journals readership are basically dead white males.
00:40:42
Speaker
And so those are the people who read Humble Dollar.
00:40:48
Speaker
And so in the category of, you know, dead white males, you don't find many women. Nonetheless, I think there is an issue here that, you know, historically, you know, men have tended to manage the household finances, you know, and women take a back seat. And that, of course, is extremely unfortunate. You know, we'll we know from the studies that on the one hand, you know,
00:41:14
Speaker
women do tend to be somewhat more risk averse. On the other hand, they also tend to be much more careful as investors and tend to get better investment results. Men tend to trade too much.
00:41:29
Speaker
I think and hope that the story has changed and will change further as women have reached equal footing in the workplace and as everybody has to take greater charge of their own financial future. But for now, in this one book, it is disappointing that only five of the contributors are women.
00:41:54
Speaker
Do you think it's also that men are more willing to step forward and tell stories about themselves?
Conclusion and Future Episodes
00:42:01
Speaker
I do think that, you know, men definitely are more willing to step up and, you know, and to some degree, you know, assume that what went on in their life is going to be interesting to other people. Maybe women are a little bit more modest and a little bit more cautious about that and thinking, hey, you know, do I, do, does the story that I have to tell necessarily
00:42:29
Speaker
Is it exciting enough to grip the interest of other readers? Well, notwithstanding the male-to-male balance, it's a very interesting book. Just remind us again of the title and what you think it can do for listeners of this podcast.
00:42:49
Speaker
So the book is called My Money Journey, How 30 People Found Financial Freedom and You Can Too. I hope that it can do a number of things for readers. One, I think it can inspire them to keep going with their financial journey. Two, I think it will make them realize that managing your money is not that complicated. As has been said by many others, managing money is simple,
00:43:18
Speaker
But it's not easy. So yes, there is an emotional component that is difficult to handle. But in terms of the mechanics of investing, you don't need to own the latest Wall Street contraption. You can make great financial strides using simple, low-cost financial products.
00:43:38
Speaker
And I think the other thing that the book can do for people is it gives them a chance to have a real look at people's finances. We don't talk about money in an honest fashion nearly enough. I think so. And I think also that your own candor and honesty, because your own story is told in the book, is a kind of driving force behind
00:44:06
Speaker
what other people have been willing to put into the book. So thank you for sharing that, too, on this podcast. It's been my pleasure. Thank you for having me on, Jonathan. So that was Jonathan Clements. Very insightful, completely candid and relentlessly articulate. The perfect interviewee.
00:44:27
Speaker
If you've enjoyed this episode, please bookmark this podcast in your app so that you don't miss the next episode of Second Lives. In that next episode, you'll hear another interviewee who spoke to me with remarkable candour. It's the Paralympian Scott Morehouse. We'll talk about losing part of a limb, finding a Paralympian career, competing in the London 2012 Games, and making a new life beyond sport.
00:44:55
Speaker
And I'd like to thank again, Mulberry Bow, the chartered financial planning boutique in the city of London that has worked with us to develop this series. For more information, just Google Mulberry Bow wealth planning, or follow the links in the notes for this podcast.