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Financial Security

Financial Security

Episode 009: Financial Security – Direction and Process

Synopsis In Episode 009, Jared challenges the popular obsession with "The Number"—that specific amount of money people believe will finally make them feel safe. Through a series of thought experiments and real-world examples, Jared proves that financial security is not a destination or a dollar amount, but a direction and a process. You will learn why a person with $1 million in the bank can be infinitely more secure than someone with $25 million, why "Once I achieve [X]" is a dangerous trap, and how to apply the professional investor’s formula—Build the Skillset, Set the Plan, Repeat Forever—to achieve security in your money, your health, and your relationships.

Detailed Sequential Outline

I. The "Walking Away" Number

  • (0:15) What’s Your Number?: Most people have thought about how much money it would take to quit their job and retire.
  • (1:14) Defining Financial Security: The common, simple definition is the state where you no longer have to worry about money. But as Jared illustrates, this definition is often disconnected from reality.

II. The Security Thought Experiment

  • (1:36) Two Investors: * Investor A: Has $1 million in the bank and makes $100,000 a year.
    • Investor B: Has $25 million in the bank and makes $2.5 million a year.
  • (4:09) The Missing Information (Trajectory): On the surface, B is "better." But look at the trajectory:
    • Investor A doubled their net worth from $500k to $1M in five years. They spend only $50k (50% savings rate). Their trajectory is up.
    • Investor B saw their net worth cut in half from $50M to $25M in five years. They spend $5M a year (doubling their income). Their trajectory is down.
  • (6:54) The Verdict: Despite having 25 times more money, Investor B will feel chronically insecure and lose sleep at night. Investor A, though "poorer," is objectively secure because their process is working.

III. The Core Thesis: Direction and Process

  • (9:15) It’s Not a Number: Financial security is never just a number. It is a direction and a process.
  • (9:46) The Components: * Direction: The line on the chart is moving up.
    • Process: The strategy and tools you use to keep it moving up.
  • (13:55) The Badge is Unlocked: If your direction is up and your process is sustainable, you have already achieved financial security—regardless of the current balance in your account.

IV. Security Across the Life Portfolio

  • (16:09) Universal Application: The same truth applies to every area we care about.
  • (16:44) Career Security: It’s not about a 20-year tenure or a specific title. It’s the process of having a valuable skillset that solves problems. If your current job disappears, you still own the value.
  • (17:25) Relationship Security: It’s not a milestone (like an 8th anniversary). A 30-year marriage can become insecure overnight if the process of investment turns into neglect.
  • (18:38) Health Security: It’s not a number on a scale or a PR in the gym. It is the discipline and fueling process that continues daily.

V. The "Once" Fallacy and Mile Markers

  • (19:43) Destinations vs. Mile Markers: We tend to live for "Once": "Once I graduate," "Once I get married," "Once I hit my number."
  • (20:58) Life Keeps Moving: Life is not about staying at destinations. "Once" is just a mile marker you pass on your way to somewhere else.
  • (22:03) The Number is the Less Important Part: Big balances are nice, but they can be spent down or reversed in a hurry. The path you are on is the only thing that provides lasting peace.

VI. The Three-Step Formula for Security

  • (23:14) Step 1: Build the Skillset: * In money: Develop expertise, solve problems, and decouple your pay from your time. Insist on being paid for the value you produce.
  • (26:20) Step 2: Set the Plan:
    • In money: Spend less than you earn and invest the difference.
  • (26:51) Step 3: Repeat Forever:
    • Success is found in the "forever" part. Most people regress because they stop the process once they reach a mile marker.

VII. Slow and Boring vs. Fast and Exciting

  • (29:42) The Sustainable Edge: Slow and boring is the most sure way to achieve "fast and exciting" outcomes sustainably.
  • (30:06) The Unsustainable Trap: Big vacations funded by empty bank accounts or "soul-sucking" homes you can't afford provide glimpses of excitement followed by the pain of "habituating down."
  • (32:14) Habituating Down: You are better off never being rich than being rich for a season and then returning to not-rich. We are good at adjusting up, but terrible at adjusting down.

VIII. Contentment: The Superpower Skill

  • (34:30) Enough is a Choice: If your lifestyle costs $80k and you make $100k, you feel rich. If your lifestyle costs $1.2M and you make $1M, you feel poor.
  • (36:11) The Moving Goalposts: Jared admits to his own struggle: even with the things he wanted in his 20s, he moves the goalposts. Contentment is the necessary partner to financial security.

IX. Rethinking the Purpose of Work

  • (37:10) The Porsche Exit: Some people dream of quitting work to do nothing. Jared suggests working toward a job you don't want to quit.
  • (38:58) Integration Over Distinction: There is no "work vs. life"—it is all life. If you believe in your calling, you invest in it regardless of the day or hour.
  • (40:43) Retirement Redefined: We aren't called to do the same thing forever, but we are called to do something. Don't use financial security as an excuse to contribute less; use it to contribute differently.

X. Story: The Frightened Millionaire

  • (42:13) The Shocking Realization: Jared recounts a friend in his late 30s who realized he didn't need to work anymore. Instead of feeling safe, the friend felt frightened because the "need" to push was gone.
  • (45:07) The Takeaway: The friend realized he had been secure the entire time because of his process, not because he finally hit a specific number.

XI. Closing: The Heart Rate Monitor of Life

  • (46:46) Volatility is Vital: Ups and downs are the waves on the heart rate monitor of life. You do not want a flat line.
  • (47:50) Confidence in the Process: If your direction is up and your process is in place, you are secure. You can sleep well at night even if your current balance is small or taking a temporary dip.

Quotes to Remember

"Financial security is not a number. It is a direction and a process."
"The valuable part of your career was never the paycheck. The part that brings expertise and solves problems—that’s you. And you'll be paid for it somewhere."
"You would be better off never having been rich than being rich for a period of time and then going back to not-rich. We are really good at habituating up, but we are really bad at habituating down."
"Slow and boring is the most sure and sustainable way to achieve fast and exciting."
"Contentment is a choice. If you make $800,000 but your 'enough' costs $1 million, you will feel poor."
"Volatility means you are alive. Those ups and downs are the waves on the heart rate monitor of life—and believe me, you do not want a flat line."

Next Episode: Diving into the core concept of Benchmarking, starting with the first two key steps: tracking and measuring.

Full Transcript:

The "Walking Away" Number

(0:15 - 0:35)

Good day, investors. I'm Jared Bowers. And I have a question for you.

(0:36 - 0:45)

What's your number? No, not your phone number. Your walking away number. You may have been asked that question before.

(0:47 - 0:57)

And if you haven't, there's a good chance that you've at least thought about it. How much money would it take for you to just be done? Walk away. Quit your job.

(0:58 - 1:13)

Retire to whatever location and live whatever lifestyle you've dreamed of. That's what I mean by, what's your number? And today we're not talking about retirement per se. We're talking about financial security.

Defining Financial Security beyond Arithmetic

(1:14 - 1:26)

Financial security is the financial state that someone is trying to achieve. The point at which they no longer have to worry about money. That is the simple definition that we're going to use for now.

(1:26 - 2:20)

And let me ask you another question. From your standpoint, my friends, I'd like to ask you, which one of the following people do you believe is going to feel financially secure? Someone with a million dollars in the bank or someone with $25 million in the bank? Second question related to that, who do you believe is going to feel more financially secure? Someone who makes $100,000 a year or someone who makes $2.5 million a year? There would seem to be an obvious answer, right? And you know that I don't like trick questions, but when I ask a question that seems to have an obvious answer, there's an immediate hesitation to answer quickly. What's the catch? What's he going to say? And I'm glad you have that response.

(2:21 - 2:39)

Because with some things in money, the higher number is better and the lower number is worse. Or conversely with money, if we're talking about something like expenses, the lower number is better and the higher number is worse. There are many times, probably most times, when the obvious number is correct.

(2:41 - 2:50)

That's one of the things that I love about finance and investing. Simple math. The company that consistently grows their profitability will be more valuable over time.

(2:51 - 3:03)

The company that has less debt and higher cash flow will be more financially stable. The family that spends less than they earn will be on a better financial trajectory. That is the benefit of math.

(3:04 - 3:13)

That is money math, which is real math in my opinion. Simple math. Not the stuff that mixes in letters and symbols, weird symbols anyway.

(3:14 - 3:29)

I like numbers, plus signs, minus signs, multiplication, division, arithmetic. It also has the benefit of being the math that I'm good at. And it's the math that applies most directly to real life and money, to finances.

(3:29 - 3:43)

So yeah, in most cases, the obvious answer is the correct answer. But when we're discussing financial security, that goes beyond just the raw arithmetic. There's more to it than that.

(3:44 - 3:52)

Because I didn't ask you which number was bigger. That's pretty obvious. $25 million is bigger than a million.

(3:53 - 4:08)

A $2.5 million salary is bigger than $100,000 a year. I also didn't ask you which one was better. I would also argue that in this case, with just the information that was presented, we can all answer that question.

(4:09 - 4:18)

The bigger number is better. But the question was not who has more money. It was which of them is going to feel financially secure.

The Full Picture: Trajectory and Cash Flow

(4:19 - 4:26)

And that is not as cut and dry. That is nuanced. And we need more information.

(4:27 - 4:57)

What if I told you that the person with $1 million in their portfolio had half a million dollars five years ago? So their account has doubled in that five years. And then what if I told you that the person with $25 million in their portfolio had $50 million five years ago? Their account has been cut in half over the last five years. Knowing the trajectory introduces quite a different dynamic, doesn't it? And it's not just on the income side that we need to know.

(4:57 - 5:23)

We also need to know the spending side, right? Well, the new information that you need to know is that the person who makes $100,000 a year only spends $50,000 of it. Taxes, debt payments, living expenses, fund money, giving, all comes out of that 50%, which leaves 50% left over. You are eventually going to believe that I really do like easy math.

(5:25 - 5:38)

Versus the person with a $2.5 million salary. The new information here is that they spend $5 million per year. How is that possible? Believe me, it is.

(5:38 - 5:56)

I've seen it happen. First, there's this nifty tool, powerful tool, dangerous tool called credit that can be used well or can be used poorly. It can allow a low-income earner or a high-income earner to spend far beyond what they actually make in a year.

(5:56 - 6:16)

But in this case, the real spending ability above what they make is coming from their portfolio. Now, we are getting some of the answer as to why a $50 million portfolio turned into $25 million. Now, with these additional pieces of information, you are starting to see a fuller picture.

(6:17 - 6:46)

And you likely have the right answer. Who feels financially secure? On one side, we have the person who earns $100,000 a year, spends $50,000, and has grown their net worth from a half a million dollars to a million dollars over the past five years. Then we have the second person who earns $2.5 million a year, spends $5 million, and their net worth has fallen from $50 million to $25 million over the past five years.

(6:47 - 7:21)

We don't need more information at this point to answer the question accurately and confidently. Even though we have someone with a much higher salary and objectively more money, they will feel financially insecure when compared to the other person who is earning much less and has less in the bank. The person who is poorer, and I'll put poorer in quotation marks here, the poorer person is going to feel great about their financial situation, and the richer person is going to feel horrible.

Direction and Process over Raw Numbers

(7:22 - 7:40)

Because of their trajectory. If you interviewed the guy with a positive trajectory, he would likely report feeling more financially secure than the guy who is vastly wealthier and makes vastly more money than he does. This is a simplified example, but it illustrates a point.

(7:41 - 8:00)

The person with objectively less money will worry less, will feel better about the future, will feel financially secure compared to the person who is objectively wealthier. Much wealthier. By the way, these are not examples that are outside of the realm of reality.

(8:01 - 8:13)

I see these types of examples in my work. It is rare, to be fair, to find somebody with a $25 million net worth that is heading badly in the wrong direction. But they do exist.

(8:14 - 8:26)

With different numbers and different scales, I see these two types of examples all the time. And back to my opening question. What's your number? It can be kind of fun to think about.

(8:27 - 8:34)

I think you should think about it. It can give you a goal, something to shoot for. It can be motivating to save and invest toward.

(8:35 - 8:50)

But that question itself suggests a couple things that I disagree with. The first one is that financial security is a number. From what I see, most people believe that financial security is a number.

(8:51 - 9:02)

If I had X dollars in the bank, I would feel financially secure. Well, you may have a number in mind. But I am here to tell you that the number is the less important part.

(9:03 - 9:14)

Not the unimportant part, but the less important part. And this brings us to one of the most important points that can be learned about money. Especially as it relates to financial security.

(9:15 - 9:25)

And that is, financial security is not a number. It is never just a number. But I'm not going to just talk about what it's not.

(9:26 - 9:35)

I would like to talk about what it actually is. Financial security is a direction and a process. Simple as that.

(9:36 - 9:42)

Okay, that's it. End of the podcast. All right, maybe it needs a bit more explanation.

High Wealth vs. High Insecurity

(9:44 - 9:55)

Financial security is a direction and a process. The direction is up. And the process is the strategy that you have set and the tools that you use to keep it going up.

(9:56 - 10:09)

In our example of the person who is clearly very wealthy and clearly very high income. $25 million in their portfolio, $2.5 million earned per year. They are objectively rich.

(10:10 - 10:27)

But they are also objectively heading in the wrong direction. And in this case, as it relates to how that person feels, how secure they feel, it is the direction that matters more than the raw numbers. Which means that they will not feel financially secure.

(10:28 - 10:35)

They've likely worked themselves into that situation over time. Living beyond their means. Probably investing poorly.

(10:35 - 10:45)

Maybe making some bets with their money. Because it doesn't sound like it's just the spending that caused their portfolio to be cut in half. From $50 million to $25 million in five years.

(10:46 - 10:55)

Though their high spending has contributed toward it. Maybe partially covered by credit, which is easy to do. Especially when you have a net worth that high.

(10:56 - 11:13)

Outside of an obvious explanation like the market fell substantially over the last five years, someone's portfolio having been cut in half over a period of time like that typically implies a combination of high spending and bad investments. They were probably making bets. They were swinging for the fence.

(11:14 - 11:28)

Rich enough to try it, but bad outcomes were achieved. Probably multiple bad outcomes. Imagine being that wealthy, earning that much money, and losing sleep every night over money.

(11:29 - 11:40)

But that would be that person's reality. Because it is going in the wrong direction. And the process that they have set up is pushing it in that wrong direction.

(11:41 - 11:52)

Their financial direction is downward. And their process is keeping them on that downward trajectory. Huge numbers, hugely financially insecure.

The "Poorer" Person's Security Badge

(11:53 - 12:02)

Now let's go back to our less wealthy person. Not poor, but objectively poorer than the other guy. Living well within their means.

(12:02 - 12:14)

50% savings rate on their $100,000 a year salary. A million bucks in the bank. And not just in the bank, but a million dollar portfolio that has been invested well and is growing.

(12:14 - 12:27)

And that they have grown from a half a million dollars just five years ago. Which tells me that it's a combination of their savings rate and being invested well in a strong market. That doesn't sound poor to me.

(12:28 - 12:39)

And I get to sit down and help people like this sometimes. And they don't need much help. Mostly, they just need a confidence boost and encouragement to keep at it, which I'm happy to provide.

(12:40 - 12:48)

It would be rare that that person would go to sleep at night worried about their money. They probably think about their money. They plan it.

(12:49 - 12:53)

They budget it. They consider what they should do. What they could do better.

(12:54 - 13:20)

They probably do wonder sometimes if they're going to be able to achieve what they hope is financial security in the future. And these numbers can mean different things in different contexts, right? If you heard that this person was 60 years old versus 40 years old, that might change things. A 60 year old in that situation, even though they have a positive financial trajectory, they might not feel as financially secure as a 40 year old would in that situation.

(13:21 - 13:45)

So let's assume that this person who is living well within their means and is investing well is on the younger or middle aged side. But even then they may still wonder, am I going to achieve financial security? Am I going to be able to retire when I want to? The answer is very likely yes. And they probably know that, especially if they have a good financial planner or they have the know-how themselves.

(13:46 - 13:56)

And with a trajectory like this, they probably have a wealthy mindset. But here is what I would tell them about their financial security. You've already achieved it.

(13:57 - 14:13)

Now that doesn't mean that they should stop saving and start spending. And it doesn't mean that they should do dumb things with their portfolio, but they have, by my definition, already achieved financial security. Because again, what is financial security? Don't worry.

(14:14 - 14:22)

I'm going to say this many more times while we're here together today. Financial security is a direction and a process. It is not a number.

(14:23 - 14:52)

Their direction is up and they have a process in place to keep it going rightward and upward in that direction. If they just stick to what they've been doing, their financial future is secure. Even if there's a hiccup in the road, and there will be, even if there's a downturn in the market, and there will be, even if there's a job loss, unexpected expenses, they have a process in place that is going to get them back on track, even after periods of turbulence.

(14:53 - 15:03)

Smaller numbers, at least relative to the guy who has 25 times more, but small worry. Sleeping well at night. High confidence.

(15:05 - 15:21)

Financial security badge unlocked. And it was not because of a number. Now, we've been talking about money almost exclusively so far, but this approach and this truth applies to all other areas in life beyond money as well.

Job, Relationship, and Health Security

(15:22 - 15:37)

We look for and seek out security in the areas of our lives that we care about. We want job security. We want to know that our job is going to be there tomorrow, that we are going to be appreciated, that we are not just going to be handed a pink slip and replaced.

(15:38 - 15:54)

We also want, maybe even more than money security, we want relationship security. We want to know that the people that we care about are going to still be there, not just tomorrow, but ideally decades from now. We also want to feel secure in our health.

(15:55 - 16:17)

We want to be confident that we are going in a good direction, that we're going to remain healthy and strong. I could keep going through the examples, but this is enough to illustrate what I'm talking about and what I'm going to talk about more next. The same principle and truth applies when it comes to the security that we seek and crave in the other areas of our lives.

(16:18 - 16:27)

It is not a number. Think about it related to the job situation that we talked about. Job security is not just getting to a career milestone.

(16:28 - 16:32)

Okay, I've been here 20 years. Now I'm secure. I'm safe.

(16:32 - 16:38)

Oh, I got that promotion with a new title and a new salary. That's what I was looking for. Now I feel secure.

(16:39 - 16:44)

I've arrived. I don't have to worry anymore. No.

(16:44 - 17:15)

Security from a career standpoint is you know that you have a valuable skill set that you can apply and add value in an environment with people that appreciate your skill, that care about it, and that you're going to get better at over time in a company that is looking to invest in their people and see them grow and succeed. If you couple that valuable skill set that is applied to positive effect inside of a company that wants to see their people do well, you have job security. You have career security.

(17:15 - 17:19)

That is not a number. That is not a title. It's not a salary.

(17:20 - 17:26)

That is a direction and a process. Relationships. Let's talk about that.

(17:27 - 17:44)

If you look at the stats, I think that you're much less likely to divorce if you make it to the 8-year mark. Something like that. Sorry, but relationship security is not making it to your 8-year anniversary with your marriage still intact, at least legally, and then thinking, okay, now I'm secure.

(17:45 - 17:56)

It's also not having achieved a relationship milestone. Believing that you have achieved something, built something, and then thinking, okay, I have it now. I can coast.

(17:56 - 18:21)

We have a strong relationship, so we're good. No, someone who has been married for 30 years and invested their way into a strong relationship, who then starts neglecting it and making investment decisions in the wrong direction, is going to erode the relationship capital that is there. The people in that relationship are going to feel very insecure, regardless of what was built up to that point.

(18:22 - 18:29)

Because the direction and the process changed. It is the same in this case. Security is not a number.

Security as a State of Doing

(18:29 - 18:37)

It is not a state of being. It is a state of doing. Security is a direction and a process.

(18:38 - 18:57)

We can talk through this related to a health example, but I think you get the picture. Security in your health is not weight on a scale achieved, the six-pack abs visible, the squat, bench press, or deadlift number hit, the 5K PR. Those are all good things and good things to shoot for.

(18:58 - 19:18)

But it is the process and the discipline and the progress that got you there that then continues. Anyone who has invested in their health for a long time and built something meaningful from a health or strength or physique standpoint knows that it can go away. A bad injury coupled with a change in lifestyle coupled with putting their fitness on the back burner.

(19:19 - 19:42)

What has been achieved in the past, a number so to speak, the stats, is not what gets you security in your health or in your fitness. It is the direction and the process that got you there and then continues to get you somewhere else that you want to go. What this comes down to is a fundamental misunderstanding that we apply to many, maybe even most areas of life.

The Mile Marker Fallacy

(19:43 - 19:55)

We tend to think about goals as destinations. We think about achieving security in an area of life as a place we can arrive and then stay at. Something that can be achieved and then had.

(19:56 - 20:03)

Kept nice and tidy and safe once achieved. Most of us live their lives this way. I'm guilty of it myself.

(20:04 - 20:13)

Once I graduate, my worries will be behind me. Once I get into the college I want, I'll be good. Once I get my degree and that job, I'll be set.

(20:14 - 20:23)

Once I get married, I'll be happy. Once we own our own home, then we will be happy. When I get that promotion and that salary, smooth sailing.

(20:24 - 20:37)

Once we get that dream home, our dreams will come true. Once I achieve that number, I'll feel secure. But in every one of those phrases is an important word that is misunderstood.

(20:38 - 20:48)

Once. We tend to think of once as a place we arrive and then stay at. But very few things in life work that way.

(20:49 - 20:59)

Because very few things in life are a destination. Instead, we need to see each instance of once as what they are. A mile marker.

(21:00 - 21:23)

Just a point on the path that we're moving along that we then pretty quickly pass by. Almost every goal that is achieved, every mile marker reached, everything or every circumstance we said would make us happy or secure is just a point that we get to and then move past as we keep going somewhere else. Because life is not about destinations.

(21:24 - 21:32)

At least it's not about staying at destinations. Life keeps moving forward. And that is wonderful because it means that we are alive.

(21:34 - 21:50)

And this means that the destinations, or more accurately the mile markers, are not the most important part. They are not unimportant, but they are less important compared to the path that we are on and how we are moving along it. Our trajectory.

Trajectory over Balance

(21:51 - 21:59)

Our direction and our process of achieving it. Please don't hear me wrong. Building up a balance is a good thing to do.

(22:00 - 22:14)

Big balances are a really nice thing to have. None of the examples that we talked through of valuable capital is the important thing, the raw number. What was finally achieved? It doesn't matter how big an account balance is.

(22:14 - 22:21)

It can be spent down. It can be invested poorly and then go down. It can be reversed in a hurry.

(22:22 - 22:27)

The number is not the important part. The number is good. We like healthy numbers.

(22:28 - 22:34)

We like big investment accounts. We like a big salary. We like to feel that we have a big relationship capital account.

(22:34 - 22:39)

We like a lean, fit, healthy body. Healthy lungs. A healthy heart.

(22:39 - 22:58)

Those are all wonderful things. But when you talk about the most important thing, it is the direction and the process. The direction is up and the process is the set of tools and strategies that you implement to keep you going in that direction during good times or get back in that direction after bad times.

Practicing the Skill Set of Earning

(22:59 - 23:13)

And since we aren't supposed to focus on destinations, let's talk about how to get rich and stay rich. Just kidding. But we should talk more specifically about how to establish that direction and the process.

(23:14 - 23:25)

We've talked through some examples already, but I want to cover the financial side from a specific angle. The first thing we need to do is build the skill set. In the case of money, the skill set of earning.

(23:26 - 23:39)

Earning is a skill that can and should be practiced. And I believe that it can be distilled down to a few key steps. First, develop expertise in something and apply it to solving problems.

(23:40 - 23:53)

Next, decouple being paid for your time and instead align being paid for your value. And then finally, insist on being measured and paid based on what you produce. That is being a business owner.

(23:53 - 24:06)

And you don't have to own your own company to do this. We should all look at ourselves as business owners. The value we bring are the skills and expertise that we have and what we can produce.

(24:07 - 24:22)

Our customer is whoever is paying us to do it. This approach removes your financial security from being tied to the job that you have right now, and it ties it directly to you. Because with this approach, if that job disappears, you still have the valuable part.

(24:23 - 24:32)

The valuable part was never the paycheck. The part that brings expertise and solves problems and adds value is the valuable part. That's you.

(24:32 - 24:41)

And you'll be paid for it. If not where you're at right now, then somewhere. I want to tell you something that I teach my investment students.

How to Get Rich: Expertise and Value

(24:42 - 24:52)

In the podcasts that I put out for them, I usually avoid clickbait titles. But I do have one. In the middle of our year, I have them listen to a podcast called How to Get Rich.

(24:53 - 25:10)

It's a common question that my students are interested in, and some of them are brave enough to ask. I love that question because I have an answer. But that question usually leaves off an important modifier that is implied but rarely explicitly stated.

(25:10 - 25:21)

Quickly. How can I get rich quickly? And admittedly, I don't have a good answer for that one. Because I don't know a sure and sustainable way to do that.

(25:22 - 25:32)

I do joke with them that there are three primary ways to get rich quickly. Get an inheritance, win the lottery, or sue someone. But I wouldn't recommend any of those methods.

(25:33 - 25:48)

Each of those is much more likely to result in a negative outcome for the recipient than a positive outcome. But here is what I tell my students about getting rich. Which I think is a good answer, because it has the benefit of being a true answer, and it reliably works.

(25:50 - 26:04)

Focus on building expertise in something that is valuable, and then using that expertise to help as many people as you can. If you do this, you will be successful. And that is in whatever way you prefer success to be.

(26:05 - 26:13)

Money, satisfaction, connection, purpose, impact. Maybe all of those things. It works.

The Security Formula: Skill Set, Plan, Repeat

(26:14 - 26:23)

Okay. Back to the steps toward building a direction and a process to build financial security. Step one that we just talked about was build the skill set.

(26:23 - 26:38)

The second part is set the plan. In the case of financial security, this applies to everyone. Apply the skill set of earning that we just talked about, spend less than you earn, and invest the difference.

(26:39 - 26:50)

In terms of an effective plan, there's not much more to it than that. It is pretty much a one-size-fits-all universal. And then the third step is pretty straightforward as well.

(26:51 - 26:54)

Follow it. Repeat. Forever.

(26:55 - 27:04)

The forever part might sound daunting, but it's crucial. So many people make progress for a period of time, but then they stop. And then they regress.

(27:05 - 27:24)

It's great to put effort into improving your health, but that effort has to continue for the real benefits to be had. Otherwise, you were just healthier for a season. It's good to invest in your relationship with your spouse and really get on the right track, but that investment needs to be sustained for those benefits to last and compound.

(27:25 - 27:45)

So to make sure that we're on the same page, the three steps that we just talked through are build the skill set, set the plan, and then repeat. This same formula can and should be applied to the areas of life that we want to achieve security in. Because it's about setting our direction and having a process that keeps us on that trajectory.

Health and Relationship Formulas

(27:46 - 27:55)

Let's talk about an example with health, our physical health. Build the skill set. Effective movement and appropriate fueling.

(27:56 - 28:13)

The resources available for us in this are incredible nowadays. Even any of the AI models can do a pretty darn good job of nutrition coaching and workout programming. But better still, hire an expert human or reach out to your friend who knows what's up when it comes to this health stuff.

(28:14 - 28:22)

They'd probably be thrilled to help. Step number two, set the plan. I am going to move in this way and eat in this way.

(28:22 - 28:29)

The meals, the movement, the time, the location. And then third step, follow it. Execute consistently.

(28:30 - 28:39)

Consistently hit, rarely missed, back on track when you do. We can apply this to our relationships. First, build the skill set.

(28:40 - 28:51)

Trust and genuine connection built through time and effort invested. Learn what the person you love needs and responds to and then invest in that. Number two, set the plan.

(28:52 - 28:57)

Define this is how we connect. These are our values. This is what we do.

(28:58 - 29:04)

And then the third step is, follow it. Execute consistently. Regular connection.

(29:05 - 29:14)

Consistent investment. My friends, I am not saying anything that is earth shattering. This is the recipe for investing well in anything.

(29:14 - 29:22)

Everything. And you know what? It may sound slow and boring to a lot of people. Yeah, it is.

Slow & Boring vs. Fast & Exciting

(29:22 - 29:41)

Isn't that great? It's great because it works. And I want to emphasize this as we talk about financial security, health security, relationship security, because this is a topic that will come up in other ways as we go forward, I'm sure. Yes, slow and boring is great.

(29:42 - 30:01)

Because slow and boring is the most sure and sustainable way to be able to achieve fast and exciting. I think that most people want fast and exciting in a lot of areas of life, but they go about it in the wrong way. We can get glimpses of fast and exciting unsustainably.

(30:02 - 30:22)

We've seen or maybe experienced examples in our own lives. Blowing all of the money in the account on that big vacation or car or some other big expense, then having to tighten down and give things up or go without afterward. Maybe buying the house that was beyond their means, and nice while it lasted until they had to sell it while being underwater on their mortgage.

(30:22 - 30:34)

Or how about this one? The one night stand. Fast and exciting maybe, but here today and gone tomorrow with nothing good to show for it. Nothing that a real relationship would generate.

(30:35 - 30:53)

All examples of fast and exciting unsustainably. And unsustainable sucks, because it gives you a glimpse into what you could have had or what could have been, and then you have to give it up or it's taken away. We are drawn to fast and exciting.

(30:53 - 31:01)

It's part of why we want shortcuts and hacks. And in a way it makes sense. I think this was built into us.

(31:02 - 31:14)

Why spend more effort to get something when we could have gotten it for less? Energy preservation is often a good strategy. Same with time and money. We want things for less.

(31:16 - 31:54)

But the real question is, what does it mean to have something? Is having the excitement of the vacation the point when you have to come home to an empty bank account? Is having that nice house the point when you worry about how much it costs the whole time you live there and eventually have to sell it? Is having a physical experience with another person the point when there is nothing that preceded it and nothing that will develop from it? For some, the answer to those questions is probably yes. But I think that they're lying to themselves. There's really nothing worse than experiencing fast and exciting unsustainably.

Habituating Up and Down

(31:55 - 32:02)

When we get something good, the best way to have it is to have it. Hold on to it. Grow it.

(32:02 - 32:25)

And experience the joy of progress. Another thing I teach my investment students and really try to drive home, because I've seen terrible ramifications of it in the real world and in people's lives, you would be better off never having been rich than being rich for a period of time and then back to not rich. We are really good at habituating up.

(32:26 - 32:45)

We are really bad at habituating down. The example that I use here is with someone I know. I'll get more into their story another time, but the gist of it is that they went from nothing to a net worth of nearly $50 million and then back down to a net worth of $5 million by the time they retired.

(32:46 - 32:56)

And it was terrible for them. And the interesting thing is that they're still well off, undoubtedly. But they don't feel that way.

(32:56 - 33:02)

It eats at them. They feel poor, if you can believe it. Stay tuned for how they did it.

(33:03 - 33:10)

That's a story that's packed full of lessons. Not sure how I'm going to anonymize that one. They'll know I'm talking about them.

(33:11 - 33:22)

But you won't know who it is. And that's the important part. Compare that example to someone who slowly built their wealth from nothing to $5 million and then sustainably stayed there.

(33:22 - 33:30)

They are going to feel great. Especially compared to the other couple. Same exact level of wealth in the end.

(33:31 - 33:40)

Completely different experience. We want good and fast and fun things. And the best way to have those is to actually have them.

(33:40 - 33:48)

For the long term. Not just experience them for a time. Slow and boring is wonderful.

(33:48 - 33:58)

Because it is what enables fast and exciting. And the best way to experience fast and exciting is sustainably. And that takes time.

(33:58 - 34:10)

Just like everything in life that is worthwhile, it needs to be invested toward. Built deposit by deposit until we can truly afford it. Relationally, physically, financially, all true.

Contentment and Choosing "Enough"

(34:12 - 34:18)

And back to my students. I don't just teach them how to get rich. I tell them how to feel rich.

(34:19 - 34:29)

Because both of those couples with $5 million were still well off. But only one of them feels that way. This is another important tie-in to financial security.

(34:30 - 34:41)

Another key to achieving financial security is to figure out how to have enough. And that's less about achieving a number and more about choosing to be content. Contentment is a choice.

(34:41 - 34:49)

And that means that enough is a choice. But again, we are really good at habituating up. Getting used to the nicer things.

(34:49 - 34:59)

The better lifestyle. And that can put us on a path to thinking that the next level is going to make us happy. But we all have a tendency to move the goalposts.

(35:00 - 35:11)

Happiness and contentment is always that next step away. But consider this. If enough is a lifestyle that costs $80,000 per year and you make a hundred, you will feel rich.

(35:12 - 35:28)

But if enough is a lifestyle that costs $120,000 and you make a hundred, you will feel poor. And the same is true for multiples of that. If enough is a lifestyle that would require a million dollars and you make $800,000, you will feel poor.

(35:29 - 35:39)

It's hard to wrap your mind around somebody feeling poor making $800,000 a year. But they do exist. That is the case for many people making that much money.

(35:40 - 35:54)

With the exact same income, one person would feel poor and the other person would feel rich. And it comes down to our mindset around contentment and the goalposts that we have. So much of feeling rich and secure is deciding to be content.

(35:55 - 36:05)

It is fully within our grasp, but it is a hard thing to do. I struggle with it myself. I have everything that I said would make me happy when I was in my 20s.

(36:05 - 36:13)

I have it. And I am not as satisfied as I told myself I would be with it. Part of that is that I love the pursuit.

(36:14 - 36:31)

And the most satisfying and rewarding part for me is the pursuit. And part of it is that money and things are not inherently satisfying, even though we don't even believe it ourselves when we say it. I say that as though it's truth and then in many parts of my life, I act as though that's not true.

(36:32 - 36:48)

But a big part of it, probably the biggest part of it, is that I move the goalposts. I move them when I get close to them or I just set new ones once I've achieved the previous ones. Contentment, just like how to achieve financial security, is a superpower skill.

(36:49 - 37:09)

And combining those two together is a holy grail of sorts. Okay, something else I don't like about the question, what's your number, is another thing it implies in addition to its main implication that security can be achieved with a number. I mentioned earlier that I have a couple problems with this question.

The Point of Work: Impact over Resignation

(37:10 - 37:30)

It also implies that the point is to be done, be done working, do less or even do nothing. Some people dream about being able to walk into their boss's office, toss down their resignation letter, and then peel out of the parking lot in their new Porsche, never to work again. And if that's something you dream about, I have something for you to consider.

(37:32 - 37:50)

Maybe work toward a job that you don't want to do that with. When I hear from people who would love to just quit because they don't like their job or because it sucks their soul or because of the stress, my heart goes out to them. Because our work isn't just our work, it's a big part of our life.

(37:50 - 38:02)

And if you hate your work, you hate a big part of your life. Now, to be fair, the work that I do isn't perfect. No, not just the quality of my work, sure, that isn't perfect either.

(38:03 - 38:10)

I'm talking about my experience of it. I hate some of the things that I have to do. It sucks my soul at times.

(38:11 - 38:28)

The stress has been pretty bad during certain periods, but I find it meaningful and worthwhile. I get to apply my unique skill set to solving problems that really do impact other people. And the rewards of my work enable so many other cool and amazing things in my life.

(38:29 - 38:47)

Providing for my family, supporting the nonprofits and the ministries that I care about, doing some really fun things, giving me the opportunity to teach what I know to my investment students and now here. And I believe that my work is part of what I'm called to do. Not the thing that I'm called to do, but one of them.

No Work-Life Distinction: It's All Life

(38:48 - 39:05)

And I may be a bit strange in that I don't draw a work-life distinction between the things I believe that I'm called to do. There isn't work versus life, it's all life. If I believe it's part of what I should be doing, I work at it like it's my job, because it is.

(39:06 - 39:27)

I'll work at it as though it's a key part of my life, because it is. This approach allows me to invest and invest heavily and invest with confidence in a number of key areas. Those areas include my family, my church, the school that I teach at and I'm the board chairman of, my health and my fitness and my work.

(39:28 - 39:42)

And most recently, this podcast. The most important qualification for my investment of resources is whether I believe that it is part of my calling. And those areas get my investment and they get a lot of it.

(39:42 - 40:08)

And this is why I can teach my investment class on Tuesday and Thursday mornings at 9 a.m. This is why I'll work on a podcast outline on Friday at 5 a.m. and at 8 p.m. I'll meet with a major donor for the school on Monday at 3 o'clock. I'll do company research on a Saturday afternoon because the dang market is closed and I can actually focus. I'll write client emails on a Sunday night so that I can send them Monday morning.

(40:09 - 40:27)

And I'll work out most days, whatever time works best, made possible by my home gym. This is what I mean by not drawing work-life distinctions between what I'm called to do. And if I hated my work or I felt like it was just robbing hours from me, what an unfortunate way to exist.

(40:28 - 40:47)

A better way is available. I am not saying that we need to work for a paycheck forever. The thing I say most often to my clients and those I help transition into retirement, being done working for money, is this, we aren't called to do the same thing our whole lives, but we are called to do something.

(40:48 - 41:01)

The point is not to work less. The point is to identify your greatest areas of impact and contribution and then invest like heck. And if working for money no longer fits that, feel free to be done.

(41:02 - 41:15)

Just don't use it as an excuse to do less. Do something different, but still do. Volunteer, develop hobbies, be there for family, connect with people, pass on your hard-earned wisdom.

A Story of Uneasy Abundance

(41:16 - 41:34)

There's a lot more to dig into on this, on purpose, our calling, retirement, the point of work and the meaning that we can get and derive from it, but another time. I would say that for most of my adult life, I have felt financially secure. I'm very fortunate in that.

(41:35 - 41:48)

And it did not have to do with a number. When I was in my 20s, just starting out my professional career, I had very little money in the bank. We, my wife and I, had very little money and not a very big salary.

(41:48 - 41:59)

But we lived within our means and we made progress. My salary was on an upward trajectory. Our investment account was mostly growing and we spent less than we made.

(42:00 - 42:14)

The direction and the process were in place. And I was able to sleep well at night, even in the absence of a portfolio that I could just walk away with. I'd like to tell you a story about someone I'm close to.

(42:15 - 42:35)

It was quite recently when I was crunching the numbers on affordability for a big purchase he was considering. And what I found in looking through his numbers, lifestyle, budget, portfolio, the math didn't just tell me that he could easily afford the big purchase. It told me that he didn't need to work anymore if he didn't want to.

(42:36 - 42:45)

He wouldn't be able to live as high on the hog as he does. Him and his family live very well. But I know they could live on a lot less because they recently were living on less.

(42:46 - 43:03)

And when I told him this, it was a shocking realization to him. It's something that he probably should have known already leading up to that point considering the industry he works in and the wealth that he has accumulated. But he's of the variety who is not ever planning on retiring.

(43:03 - 43:17)

He likes what he does. But in the absence of that big expense, with the current lifestyle that they had, he really didn't need to continue earning in the same way that he did. With their portfolio and a bit of consulting work, he could mostly retire.

(43:18 - 43:30)

And what I just described was a number that was achieved. And a young guy, too, in his late 30s. You'd think that he would be feeling pretty great about that.

(43:31 - 43:41)

That is what we all think we want, right? But it did not make him feel good. It actually frightened him. It scared him a little bit.

(43:42 - 44:01)

That response was surprising to both of us. But digging in, it was because he realized that the need to keep pushing, to keep working, to figure things out, that need felt important. And some of that need was almost certainly driven by wanting to achieve a number.

(44:01 - 44:13)

Because he believed that financial security was a number. And when he realized that a number had been achieved along those lines, it didn't make him feel good. It made him feel uneasy.

(44:13 - 44:26)

Like that need had been, in a way, taken away. Well, rest assured, my friends, we do not need to worry about him, at least for now. Because he did, in fact, make that big purchase.

(44:27 - 44:41)

The need has been reinstated. Spoiler alert, financial independence successfully postponed, at least for a little while longer. This helped reinforce something that I believed before, but now am even more sure of.

Number as the Distraction

(44:42 - 44:52)

That number is not what is important. Yes, years before that, I had come to the realization about financial security. But this experience reinforced that.

(44:53 - 45:05)

My friend thought that the number would feel like safety. Instead, it felt unsettling. He got close to the thing that people think they want, but the thing was never the point.

(45:05 - 45:15)

It is not a number. It was a direction and it is a process that got them there. And it is a direction and a process that will continue.

(45:16 - 45:30)

And through this process, he realized that he has been financially secure that entire time. Not because of a number, but because of what really matters. And that direction and that process is going to continue.

(45:31 - 45:43)

And that is the important part. Any area that we want to achieve security in, that direction and that process needs to be invested toward. That's my plan and I hope that's yours as well.

(45:44 - 46:09)

Not just in my career pursuits, but in my marriage, in my other important relationships, in my health, and in the other important areas that I invest in. And I'll be happy to keep making those investments because they align with my purpose and my calling. Any number that I achieved in those other areas is only meaningful to the extent that it was the result of good investing and a good process to get there.

Volatility: The Pulse of Life

(46:10 - 46:31)

And it really only continues to have value and staying power if that process and growth continues, even in the face of volatility, which, again, is going to happen. And this ties into an important point, the last point, as it relates to achieving security in anything. It isn't always about having the number go up.

(46:32 - 46:40)

Always making incremental progress, however you measure it. Tough times will come. Withdrawals will need to happen.

(46:40 - 46:51)

Life has a way of injecting volatility. But volatility means that you are alive. Those ups and downs are the waves on the heart rate monitor of life.

(46:52 - 47:08)

And believe me, you do not want a flat line on the monitor. And if your direction is set and your process is in place to keep you moving generally in that direction, you are secure. You will sleep well at night, even if your account balance is small.

(47:09 - 47:21)

And even if your account balance takes a dip or a dive for a period of time. That is why security, financial or otherwise, is not a number. But the number is a fun thing to think about.

(47:22 - 47:53)

Just know that it will not get you that secure feeling if the direction is inconsistent and the process isn't in place. And if we understand security in any area as a direction and a process, we can get past the immature idea that a dollar amount or a location or a relationship status or a PR alone will achieve security. And the great news is that if we set that direction and process well, those numbers, those milestones, the mile markers will not just be achieved.

Conclusion: Security Achieved

(47:54 - 48:10)

They will keep coming because our direction is up and we have a process in place that is going to keep us going in that direction through the ups and downs. And we won't want to just walk away. We will want to keep investing because it's all part of our purpose.

(48:11 - 48:21)

It's part of our life. Who we are called to be. Because we have built the skill set to set the direction we want and then implement it and follow it consistently.

(48:22 - 48:38)

That is what is going to keep us pointed in the right direction and making progress in that direction. Financial security, relationship security, health security, all of it. And progress itself is motivating and satisfying.

(48:39 - 48:44)

Combine that with a healthy practice of contentment. Wow. You will be set.

(48:45 - 48:54)

Security achieved.

Okay. Thank you for investing in yourself and in those around you

I will talk to you next time.