On today’s episode, we’re going to look at building predictability into your personal finances, and dig down into some core financial concepts, as well as answer some of the TOP questions about what it takes to be financially sound even in the midst of a crisis – or God forbid – another pandemic.
Who out there has experienced something that you didn’t predict or anticipate financially in the last … oh … say 12-18 months? Ha! I think maybe we all did. 2020 gave the word unprecedented a run for its money!
You can literally take steps now, to remain unshaken then. Let me know what you think of today’s episode, just reply to this email with your thoughts and questions!
428 | Building Predictability Into Your Personal Finances
money, debt, people, decisions, emergency, budget, life, gratification, question, predictability, financial peace university, work, cash, priorities, bad, spend, finances, talk, buy, forecasting
Chris LoCurto 00:00
How to keep on sailing despite the storms that come to your financial situation, that is coming up next.
Chris LoCurto 00:16
Welcome to the Chris LoCurto show, where we discuss leadership and life, and discover that business is what you do, not who you are. Hey folks, hope you're having a great day out there. Question for you, who out there has experienced something you didn't predict or anticipate financially in the last oh, I don't know, 12 or 18 months? Listen, 2020 gave the word unprecedented a run for its money. I've never heard that word so used and so abused as it was, last year. And you probably have as well. But let's be serious for a second. It's actually a good thing, when new variables are introduced, that dramatically improve your bottom line. But what about when you get blindsided by something, let's say it's negative, or let's say it's something painful? Today, we're gonna discuss how you can recover quickly, in these unprecedented times. And again, are they unprecedented? You decide. But have they been difficult for a lot of people? Absolutely. Either way, stuff has changed, and more importantly, how you can prepare for the next round of, say, market fluctuations. So you absolutely don't have to be at the mercy of every economic influx. Instead, you can build some reasonable predictability into your finances, so that you stop getting tossed around by the market. Now we're going to talk about three easy steps to throw overboard, what's dragging your ship down when we come back right after this.
Chris LoCurto 01:58
Folks, if you've been listening to me for any length of time, then you know the number one issue when it comes to business, when it comes to family, when it comes to friendships, is having a lack of high quality communication. To make sure that you are absolutely winning in every aspect of your life, it all starts with having great communication. The best way to get that communication is to understand your personality style, and to understand the personality style of the folks that you're spending the most time with, whether it be at work, whether it be at home. The best way to do that, is to go to chrislocurto.com/store and get your personality profile and personality profiles for your team today, get it for your family members, today. As you go through that profile, you will begin to see the greatest ways to communicate. Go to chrislocurto.com/store today.
Chris LoCurto 02:56
So here's what I want you to do. Even if you are in a great financial situation, it doesn't matter what your financial situation is, the things that I'm going to be talking to you about today are things that I want you to think through so you can predict your own financial situations, even when bad times come. So one of the things I want you to do is I want you to lighten your cargo. So you can dramatically improve your ability to stay afloat and recover quickly if something bad comes. And by the way, we're almost guaranteed that more bad is coming. Right? Now for those of us that are believers, we are guaranteed that more bad is coming. It's just it has to go this route, right? Things are gonna get tough, they're gonna get worse. But here's some things that you can do to improve your predictability. Number one, get rid of the dead weight. Get rid of the dead weight. Okay? Get rid of debt, get rid of subscriptions you don't need, get rid of unprofitable hobbies, cut off the dead limbs. take a hard look at where you're spending money and asking, "Am I spending money on these things because I need these things, or am I spending money on these things because in some way, shape or form, I've convinced myself that they make me happy?" Whatever it is, number one is get rid of the dead weight. Number two, save up smart stores of cash. Now, one of the things I should throw in here and we've talked about it multiple times on the show, get your butt in Dave Ramsey's Financial Peace University, get in it, do it, go through the program, try to do it with a group, if at all possible the accountability process is the most powerful piece that will help you to make the best decisions and learn the most about money. So one of the great things that Dave talks about in there, get yourself an emergency fund so that you have money for-I know it's crazy-this is really weird: emergencies. So when something come along, when there's a problem with the car, I remember when I first got out of consumer debt, I had a problem with my, I can't remember if it was the transmission or something. I don't remember what it was. But I remember having a problem and just stroking a check for it and it was gone. It was like, oh, gosh, wow, that was actually easy. I didn't like losing the money. I don't like giving up the money. But my gosh, I didn't have to go into debt. I didn't have to stress, I didn't have to worry about it. So save up money so that when bad things do happen, you actually have cash. We talked a lot with our clients, when COVID hit. Now one of the greatest things that we experienced is one COVID hit, the first thing we did is I came in and talked with our team and said, well, we actually zoomed. And I'm like, "We are not going to fear. We are believers, we do not fear. God has got this, you know, this is the way it's going to be and we're definitely not going to carry fear to our clients. Instead, we're going to go help them not to fear." So then the next thing we did is we did a big zoom call with a bunch of our clients, anybody who wanted to join in, we were going to talk through stuff, and I pounded home, do not be fearful, do not operate out of fear, trust God, trust that we're going to do. And let's talk through some things that you can put in place. And as we walked through and gave them advice on things they could do, the most fabulous thing came out. Now some people were really affected, some people their industries shut down overnight. But for the bulk of people that were on that call, one of the greatest things I heard was "Chris, we've been following you and doing the things you teach for so long, we're good. We're fine. We're awesome." And it was so good to hear that, that for almost all of them; there's a couple, a few, a handful, that it hurt for a while, right? But it was so great to hear that people had been saving, they had been following you know, all of our things that we teach, so they were in a great place when the bad situation came. Number three, don't just buffer against the storm. Instead, make sure that you head and spread your investments out with wisdom. Now, I don't just have investments in one place, I'm pretty darn well diversified. I don't screw around with single stocks in the stock market. I did that when I was at Etrade and I lost plenty of money there. That was not smart. I invest wisely. I have a lot of mutual funds. I have a lot of real estate, residential, commercial, I have stuff that I have investments in that is spread out with wisdom. And as I gain more I'm always looking if I'm going to invest in something, I'm always looking at what's the smart decision for me to put this in? I personally, do not gamble with a lot-I don't gamble period-but a lot of these new potential investments that have been out for the last handful of years, I'm not gonna name them. But some of you are out there making some money, and some of you out there losing some money. Listen, gambling is putting hope in something that's going to work out for you that is out of your control. My hopes in God. So I don't gamble. I don't screw around with that stuff. I grew up in Tahoe. I grew up watching people going to Reno and losing their lives. I mean, just ridiculous. So for me, you know, I don't do that. It's safe to say that if you rack up a bunch of debt, then you're heading into a bad place financially, right? That's pretty predictable. If you want to increase your predictability, understand that the more debt you do, the worst your situation is going to be. You've heard me say this a bunch of times, debt removes your options. I'll say it again. Debt removes your options. "Oh, Chris, I hear you say that. You talk about that. Dave talks about that, you know, I'm smarter than that. I know how to use that wisely." Good for you. Okay, you keep doing that. I will tell you that I have not had consumer debt in 20 years, I've not had a mortgage debt in 16. I'm doing pretty good. I have money, I can do things. So I will tell you being on both sides of it. You will never again find me thinking that I'm so wise to use debt to my advantage. It's just not gonna happen. I I trust God instead. So here's the deal. Predictability is a learned skill. This is a skill you must learn to do and it comes through right habits, right? What are right habits, you know, practicing what we should be doing. That's wisdom right? When you know that you're continuing to practice the right habits, doing the smart things, getting out of debt, putting money aside, investing wisely, then you've got the right habits. That's something that as you continue to practice this, it becomes second nature. Another learned skill is the experience side of stuff. So think of budgeting, right? predictability is improvement from implementation, the more you do it, the more you do it, the more you do it, every Next Level Life person out there listening to me right now, you must practice the tools you learned in the event, right? It's not enough to just go through the event and gain all of this wisdom and tools and stuff, and then walk out and not do anything with it. You must practice it, the more experience you have, like budgeting, then the smarter decisions and the more right habit you can do. Another learned skill is hard work. So think diligence here, right? Predictability grows with diligent pursuit of right goals. Now, I am not saying that you can't have fun in life, I'm not saying that you can't have things in life. What I'm saying is, if you will prioritize the right things in life, and then you bust your butt to get to those right things, then that diligence is going to create a predictability. Alright. When we come back, we're going to be talking about building the predictability that will help you keep on sailing despite the storm.
Chris LoCurto 11:30
Hey, folks, if you're feeling stuck, anxious, not good enough, or held back in life, then you need to go through our Next Level Life. That's why we created this two day event process. The power of Next Level Life is that it helps you discover your specific root system, why you believe what you do, how you make decisions, and why you are where you are in life. You'll learn the things that are holding you back in life and how to overcome them. You'll come away having found healing, and ready to start living with purpose and authenticity. So if you're ready to stop struggling, if you're ready to find greater peace, then head over to chrislocurto com/nextlevellife, and next level life is waiting for you. That's chrislocurto com/nextlevellife, today.
Chris LoCurto 12:22
We are back and we are talking through building the predictability that will keep you sailing no matter what the storm is, right? So I have a list of questions I want you to ask yourself, I'm going to ask these questions, I'm going to answer them. But I want you to answer them as well. I want you to think through these specific questions, so that you can help yourself to understand where you are in any storm, or when the skies are clear. Right? So the first one is, "How does having an emergency savings help hedge against the unexpected?" Now, it sounds like a "Well no, duh, it's because you have some money." Well, here's the deal. When you understand how bad emergencies affect you, when you don't have cash, then it makes so much more sense when you have plenty of cash. Okay? So if you're operating on, like most people are, that they are actually overextended, which means that they owe more money than they make. They literally in the same year, spend more money than they actually make, then you understand that when an emergency comes along, you have to come up with new money. You have to come up with actual money to take care of the emergency. But where are we currently? If you're in the normal, the average American, living the average American lifestyle, then you now have to go further in debt to take care of that emergency. And what is Murphy's Law? If anything can go wrong, it will go wrong.
Chris LoCurto 13:59
Folks, you've if you're listening to this show, you've lived long enough to understand that crap is gonna happen. Bad stuff is gonna happen. And if it happens while you're in debt, you don't have enough money, then how do you handle it? How do you solve it? You go further in debt, so how does an emergency savings help hedge against the unexpected? It helps you that when the unexpected happens, it's not a tragedy. Instead, it's an inconvenience. It's something that you handle, you get rid of, you move on. You stockpile backup, you know, if you had to spend a good amount of your emergency then you feel that emergency back up. So when the next thing comes along, again, it's an inconvenience. It's not a tragedy. Next question, I want you to ask yourself, "What's the first thing folks need to do with regards to having a working budget?" I will tell you, the first thing you need to do is understand how you're currently spending money. If you do not talked about this in the last episode or the episode before that, I can't remember what you should do before you sit down and do a budget, is for 30 days, get a receipt, I don't care if you buy a stick of gum. Get a receipt, pull every penny that you have spent laying out on your table, categorize it, and see your priorities in front of you. When you see that, you will make changes pretty darn quickly. When you discover where you have well overspent money in areas that you did not realize you were, it'll change the way you spend money, and then it will help you to put together a much better budget. Next question I want you to ask yourself, "How does delayed gratification, think of steering clear of debt, right, help ward off emergencies?" Well, when you delay the gratification, there's multiple things that happen, right? What is our issue? Our issue is a lack of self- control, when we must go after the gratification, right? We're living in, if you go back and listen to the willpower episodes where we talked through the different areas of your prefrontal cortex where you're either focused on reward or you're focused on better decision making, right? Well, delayed gratification does not come when you're focused on the rewards in life, "I need a reward, I want a reward I desire reward, I deserve a reward." Right? It only comes in the delayed gratification area of the prefrontal cortex, which is you helping to make better decisions. You causing yourself to make better decisions. When you ward off that gratification, when you delay that gratification, then what happens is you make better decisions, so let's say you're going to buy a car. But instead of going out immediately and going into debt and buying a brand new car, let's say you delay that gratification, and you save up and you buy you something that you can afford. Guess what? Not only are you going to make a better decision on what you buy, you're most likely going to buy something that costs considerably less than you would have bought if you'd have gone after the gratification, right? So many times-and I did this in my mid 20s, when I was in youth ministry and I had a pickup truck that I loved dearly to this day, I regret this decision, but it was all primered and rust. And I was embarrassed because I was worried about man's opinion. And my carburetor was not working correctly, a $300 fix. Instead, I went and bought a $17,000 car in debt. Genius, right? That was an amazingly bad decision. But in my mind, it was an emergency. I had to do it. Immediately I regretted it, it was just a bad bad decision. And I gave it my truck. Still hate that to this day. So, delayed gratification can help you when "Emergencies come along." Next question I want you to ask is, "What's the next step my family needs to implement after we've addressed the debts?" Let's say you've paid off debt, or you're in the process of getting, you know, close to paying off debt, or at least consumer debt, get rid of your consumer debt as fast as you can. The next thing I want you to focus on is what are the family's priorities and goals? Right? You can start planning where you're going to utilize this money if you have right priorities, if you have right goals. So every family is going to be different. The goals in each family is going to be different, maybe for you it's putting your kids through college, which today I would question with what's going on in colleges. But that was a lot funnier in my head. Maybe it's putting them through college, maybe it's focusing on, I don't know educational trips, whatever it is, whatever your priorities are in your family, maybe it's a bigger house because the family has grown, maybe it's a vacation, whatever it is, plan it. Put goals in place. Put a strategy in place, get a vision of what you want the future to look like. Now, I will tell you, that you know we use Zig Zigler's Wheel of Life in so much of our teaching here, I will tell you that you need to have a plan or a strategy in every area of that. So one of those when it comes to your family is, what is the next five years, three years look like for your family? Let's start planning that out. Let's plan what that looks like. And I am not talking about going out and buying a bunch of stuff. I'm talking about what do you want your family to look like three years from now five years from now? Hopefully a large portion of that is leading them to a closer relationship with God and then helping them to make right decisions as they you know, leave the nest. Next question I want you to ask "Well, what do I do if I'm on a variable income or commission based pay structure? What do I do with those?" So again, I'm going to point you right back to Financial Peace University, because I've got such great budgeting forms, and including the variable income budgeting forms, there's probably something on-I don't know if there's anything on the site, but there's definitely in the back of Financial Peace University, it's don't want to make over those books and that stuff, free to actually walk out that budget, right? But again, get into Financial Peace University. What you need to do is you need to be taking care of the most important things, you know, having a roof over your head, putting food on the table, taking care of the electricity, putting gas in the car, cable is not a priority, right? Internet is not a priority, unless that's how you make money. But you know, take care of the things that you need to take care of, and then anything that's left over, start saving that to take care of other stuff, right? Start prioritizing the other things. So if your variable, take care of the things that you have to have to take care of you and your family, and then as more money comes in, don't go spend it. Commission based people, variable income people, make the dumbest decisions, not everybody, but a lot of them make the dumbest decision of "Oh, I just got a big paycheck." And then they go buy a new car, they go buy a new watch. No, save the money. Save the money, and then utilize it in the time that you don't have such a big commission check, right? So make sure that you have a strategy for how you handle your variable income. Next question I want you to ask is, "How can we continue to improve or tweak our budget's predictability over time?" Well, there's only one way you're going to do this. And that is you have to literally sit down every single month. If you're single, or if you're a couple, and one of us working on the budget, then you've got to sit down as a couple and go over what worked, what didn't work. Where did we screw up, where did we do it well, the more you do it-and talk through again, always budget next month before it gets here. Right? Talk through the things that are coming up in the future. I literally teach that here in the business to business owners and leaders on how to budget and forecast their business. Think about what's coming up. Think about what you know-if you plan on hiring three people next year, then not only do you need to be forecasting those salaries, but you need to be forecasting the taxes, you need to be forecasting the computers, the desks, the whatever you're doing that you're going to pay for those people to come on board, right? Because it's way above just a salary, there's so much more that comes into it. When you forecast that, then you can be looking at your net profit and ask yourself the question, "How many people can I hire?" If you still have numbers on the bottom line, then you have more money that you can do stuff with. It's the same thing at home. Right? If you will continue to discuss what's coming up, you know, birthdays, anniversaries, you know, gifts that you're going to spend on, I don't know, somebody's kid's birthday party that you're going to go to, whatever it is, right? Or, you know, being able to put money aside for a car that's going to be old, whatever it is, the more that you can tweak those and tighten those up, the more you can predict it over time. Next question is, "What's the best safeguards to have in place should we go through another 2020?" Well, I'm gonna tell you relationship with God is by far your best. Trust, faith, belief, knowing that he is your sufficiency, that's going to be your number one. But when it comes to your finances, if you do not have an emergency fund, and I mean, a decent sized one, right? Think about it. How long could you go-what if we get a worse year where, you know, a lot more people can't work and, you know, money gets super tight? Do you have the ability to stockpile money? Do you have the ability to make recurring income from something else? Do you have the ability to sell off things, set yourself up, put yourself in a place where you do not have recurring debt, that you do not have things that are sucking up your cash. You know, that you don't have habits that are sucking up your cash right now, so for another emergency happened, you have no cash on hand, right? Instead, make wise choices and stockpile as much cash as you possibly can. Again, we believe in Financial Peace university so much that every one of our team members gets to go through for free. Because we want them to be in a place where you know, everyday they get to come to work and they're happy and they're excited because they're not focused on a bunch of debt or a bunch of bad decisions that they've made. So, in conclusion, it's possible that you're not able to fully pandemic proof your budget. Right? I get that, I understand that. But you can do a whole lot of things that puts you back on track and get you in control of your finances, that actually do come through your hands, right? The money that you are making. So you're not responsible for the global pandemics or the the economic downturns, but you do have control of what you have coming into your household. Get rid of the dead weight, make smart choices with money, practice and improve your budgets. If you will do those things, you will be blown away at how well you're able to handle when the downturn comes. If you don't believe me, talk to the people that were already prepared when the pandemic did hit. Right? Talk to them. I happen to be one of those people. It did not affect me horribly, right? It affected my business. And we came back and we had plenty of reserves. So did I like it? No, of course I didn't like it. But it didn't put me in a situation where I was hitting life at all, not even remotely close. I was able to handle everything the way that I'm teaching you to do it right now. So hopefully this helps you today, hopefully this helps you to really get your finances in order. I will say one more time get your butt in Financial Peace University. If you can get yourself on a class, it's even better than doing it on your own. Because the accountability process is phenomenal. So hopefully this helps you to get you, your family, your finances, in order. As always take this information, change your leadership, change your business, change your life, and join us on the next episode.