Invest In Your Life

Loss aversion is a cognitive bias that is frustrating regarding money. James has talked about loss aversion and cognitive bias in previous shows. Today he is going to couple loss aversion with benefit discounting and how this can create a toxic financial mix. Humans will prioritize avoiding loss over achieving a gain. This can ultimately lead to bad decisions and losing even more in the long run by avoiding any risk that would lead to gain. He discusses how to think about the market in today's climate regarding feelings of loss aversion and benefit discounting. Ultimately, we can have the best intentions but still hold ourselves back from creating more considerable gains. Episode Highlights: [02:47] Humans will make decisions to avoid loss. We will even prioritize avoiding loss above opportunity for gain. It's counter intuitive, but it's something James sees all the time. [03:18] The attention we pay to loss is an incredible multiple compared to the attention we pay to gain. Risks we take to avoid loss are sometimes greater than the risks we take to achieve gain. [04:56] We are afraid of loss. All of the news about the market being down etc. is dialing our loss aversion up to 11. [06:53] Our ancestors had a powerful motivation to avoid loss aversion, because someone had to go out and hunt or everyone would die. They overcame loss by realizing the importance of the gain. [07:50] We don't have that pressure now, so loss aversion can run over us. The risk of not taking risks is too far into the future. We discount the benefit of taking the risk of investing in our future. This is benefit discounting. [09:55] The market is our friend. It will get us where we're going if we just get out of its way. We can't see it, because the benefits all happened in the past. [12:26] As all the news about the market being volatile comes out, loss aversion is going to be triggered. Our most powerful tool against loss aversion is to prevent the benefit discounting. [13:04] We've done this before and the market has been creating wealth all along. [13:49] Trying to avoid loss creates the ultimate risk. Not will create your future success. Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth

We are talking about something that has been going on quietly behind the scenes at many employers, and that's the idea of quiet quitting. Coming out of the great resignation, there is a trend where employees are intentionally shutting down and doing less because they're burnt out, struggling, and frustrated. We've talked a lot about the toll that burnout can take on us psychologically, but does quiet quitting accomplish what we think it does? We are also going to talk about how as leaders, we can protect and prevent employees from stepping into this stage. The goal is to stay connected, stay productive, and stay engaged. Episode Highlights: [03:04] Quiet quitting describes people intentionally doing the minimum amount of work and only staying within their job description. They stick to the lowest activity level, which allows them to maintain their job. [03:45] 7 out of 10 employees have experienced burnout in the last year. [05:29] Getting back on the treadmill has been jarring and we are dealing with the effects of it now. People still want the autonomy that they had during the pandemic. [06:10] Some people believe the level of output that they were doing in the past isn't worth it anymore. [08:24] We need to be aware that there's something bigger going on. We need to recognize that these individuals are just worn out from giving their all. [09:56] The result of quiet quitting may not end in actual autonomy. Quiet quitting is making us worth less, because we are giving less value. [13:17] If you really want to quit, you actually could. It's not fair to your team members or yourself to just show up and do the bare minimum. [15:33] It's more authentic to make an active choice than to passively slowly grind things into the ground. [16:31] It's incredibly valuable for your team if you can prevent quiet quitting. [17:35] Hear from your team members how they are really doing. Only talking about goals and data will lead to burn out. Ask great questions and check in to see how they are doing. [19:44] Have an agreed process to deal with conflicts. Create authentic safety for your employees. [21:56] Prioritize employees and let them know that they are valuable before they start to pull away. Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth

It's a new year, and we should be kind and compassionate toward ourselves. Sure, everything may not be perfect. Maybe we've already failed a new year's resolution or goal. Perhaps we feel regret over our Christmas spending or credit card debt. There are so many things that can allow our inner critic to take hold and wreak havoc on our minds. I'm going to talk about ten ways to manage that inner critic or the cognitive distortions which make us unusually hard on ourselves or feel bad about ourselves. It's time to look at those thoughts and find ways to manage that inner critic so we can find our inner ally to respond to those thoughts. Episode Highlights: [04:12] When our brain says something over and over again, we decide that it's true. This is called cognitive distortion. [05:33] All-or-Nothing thinking. You're either perfect or a failure. We need to actively look for the middle ground. [07:12] Overgeneralization is using the words always or never. Remove the words always or never. It's a singular moment. [08:33] Filtering. We filter and magnify the negative and discard the positive. Our brains are always looking for threats. Keep track of the positive aspects by writing them down. [09:49] Catastrophizing. Going to the worst case scenario. Ask ourselves what could go right? Look for the best case scenario. [11:58] Disqualifying the positive. It takes five positives to offset one negative. Keep track of your wins and write down a few positives. [13:30] Jumping to conclusions. Project onto people what you're most afraid that they will feel. Is it true? Are there other possibilities? [14:34] Emotional reasoning. Telling yourself it must be true because you feel it. Intense emotional feelings only last about 90 seconds. [16:02] Should statements. When you tell yourself what it should be like. Stop and ask where these expectations come from. [17:46] Personalization. When you take everything personally and accept responsibility. [18:56] Double standard. Where we hold ourselves to a higher standard than everyone else. How would we respond to a friend? Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth 10 Tested Strategies to Manage Your Inner Critic

This is our 200th Episode of The Rich Life Podcast. Thank you for listening and celebrating this milestone. We've been trying to change the conversation around money just being math. We talk about what makes money hard, and it's not math. James will talk about where we've been and where we're going with this podcast. It's taken four years to get through 200 episodes. We've talked about cognitive bias, the Enneagram, and managing emotions. We've discussed how emotions drive our decisions, and managing money goes much further than math. We've gone through the pandemic, quietly quitting, and much more. James wants to express his gratitude for joining him in these conversations. Episode Highlights: [02:39] It's taken four years of showing up to get to 200 episodes. [03:07] The whole wager was that there were people out there who wanted to have a different conversation around money. We wanted to talk about what's really going on with most of the problems with money going on in people's heads, not their wallets. [04:38] The feedback that James has gotten has been so deeply encouraging. [05:23] The show started out as a radio show, but we soon discovered that most people were listening to it as a podcast. [06:07] We've been talking about so many different things like cognitive bias, the Enneagram, and managing emotions. The more we have self-awareness and understand how our brain works, the easier it will be to step into decisions that benefit us. [08:00] We've covered a lot of ground and defined what a rich life is. We've talked about decision processes, having authority over our thoughts, and how our decisions are rooted in emotion. [09:28] James really enjoys being able to talk with everyone and share what he's learning. 200 episodes is a big milestone, and he just wants to express his gratitude. [10:58] We are hoping that advisers start to talk about things like this that are in our control. Money is deeply connected to our emotions and relationships. Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth

We're in a busy season with a lot to get done. You know that feeling where you have so many things swirling around inside your head that you can't relax, that's what I'm talking about today. I recently read a Psychology Today article called The Tyranny of Getting Stuff Done which sums up my point perfectly. We need to give ourselves permission to just be in the present moment. We don't have to prioritize things that don't have a deadline. We need to stop putting things we notice in the front of the line creating artificial deadlines. Let's prioritize family, play, and connection this season. Episode Highlights: [03:45] We're constantly inundated by our own brains telling us that we can't sit down. [04:03] The tyranny of clutter can overwhelm us and distract us, the same way the tyranny of having too much to do can overwhelm our brain. Our to-do list becomes our clutter, and we can't stay present or just sit. [05:59] We want time and space to engage and have connection. These are the things that should have priority. [07:41] We are the ones putting the pressure on ourselves and making things a priority that don't have to be. [08:47] Getting the to-dos done just gives me relief, whereas when I prioritize family time I feel nourished. [09:40] I want to focus on the things that are going to actually nourish me. [10:04] Think of the things that don't matter that you think you need to do as an itch that needs to be scratched. Take the time to ask what you're giving up by scratching that itch. [11:37] Schedule it and give yourself a deadline when you will do those tasks. Follow your calendar. [12:11] Writing it down and getting it out of your head gives you almost the same relief as doing it. [13:54] Decide when things will be taken care of and you won't have to think about it anymore. [15:42] Putting things aside can make us feel like we're putting things off and not keeping up. Choosing to put something aside and getting rid of the noise can be a powerful upgrade. Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth The Tyranny of Getting Stuff Done Episode 89: The Most Important Hour of Your Week

Sometimes, when talking with my clients, I have these exceptional and authentic moments. I'm going to share one of those today. This topic affects a lot of couples, and it affects my client. When he and his wife were first starting, they had nothing. They lived a simple life and were deeply engaged in each other because they had nothing else to define them. This is a familiar story where couples frequently start at a fragile place, yet when they look back, that is the time when they feel the most connected and the most engaged in their relationship. As time goes by, distractions take couples away from each other. There are kids, social obligations, and money to pursue other interests. Distractions cause drift. We'll talk about that drift, how it happens, and what to do about it. Episode Highlights: [03:34] I was talking with a client who told me that he and his wife had nothing when they first started out, but they connected as they focused together on getting by and making it. [04:01] As things progressed, and they had kids and advanced in their careers, they became distracted and didn't need each other as much. They were distracted by what money was buying them and what success had opened up for them. [04:36] They were involved in the country club and social groups, their kids were in sports, and there were so many things creating complexities in their life. [04:45] They found a level of identity that wasn't rooted in their relationship. The cost of success. [05:32] This couple accumulated a lot of wealth, and now he struggles with all of the complexities. [06:00] We come from simplicity into complexity. We think the more money we have the simpler life is going to be, because we don't have to worry about stuff anymore. Instead, we find that complexity creates a distance that forces us away from each other. [06:53] When the breadwinner is always gone earning a living, the rest of the family starts to organize their lives around things that don't include this breadwinner. [08:51] Empty nest syndrome with a filling of time and things that's been mostly fueled by success. [10:13] Reminiscing one of the most powerful ways to recover what was lost in the drift is to talk about what it was like previously. [12:01] Find activities that you can do together. This softens the resentment of money spent doing things away from us. Spend money on things you can do together. [14:53] Volunteer together and give your time to something that you both care about. Create time where you feel like you are contributing. [17:21] Entertain people at your home. This creates space to break bread without feeling rushed. [20:11] Take walks together. There's something about having conversation while you're walking, and it's also healthy. [21:39] Make time for intentional dates. You can have space for more intentional conversations as a couple. [22:57] All of these things are movements towards simplicity and what life used to be like when things were simple. Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth

We are heading into the holiday season and the buying, spending, and marketing is strong. The Black Friday data shows that in spite of high inflation, people are spending record amounts of money. In this episode, I'm going to talk about why it might be time to take a step back and have an open and honest conversation with your family about Christmas and spending. It's easy to fall for the pressure to spend and over spend. Many families have used stimulus money to pay down debt or pad their savings. Even with record inflation, many people are in a better position to face it. I'm going to argue that this isn't the time to repeat mistakes of the past and get sucked into a spending frenzy. Talking with your kids about what they want and value might just surprise you and create a better financial reality after the holiday season. Episode Highlights: [03:43] We've stepped into this inflationary time healthier than ever. People have paid down debt and put money into savings when they received stimulus money. [04:30] I'm afraid the margin that people have created is going to get sucked out the window with the holiday spending frenzy. We're spending way more than we planned on and using credit cards to do it. [05:17] Overspending will get people stuck in the cycle of feeling like they can't make their finances work. [05:49] We are already under pressure. We don't need more pressure from the holiday season. This is actually a great opportunity to have a conversation with your family and teach your kids about money. [06:13] Kids need to understand economics and what all these terms mean, so that they can be well versed In the environment that we're facing. [06:35] With inflation so strong we've been paying more for normal things we need, which means Christmas is going to look different this year. [07:33] We should focus on the feeling of peace and just being together instead of spending. [07:57] This would be a great season to have a conversation with your kids and find out what they really want. Usually, they just want to spend time together. [08:08] We should experience what we want from this holiday season, not buy for it. [09:39] Have an honest conversation about where you are and start managing expectations. Don't give up the gains you've made. [11:08] Having conversations with our kids and asking them to partner with us helps them grow up to be healthier adults. [12:27] Think about some of the most important gifts that you were given in your experience growing up. What probably stands out is that one thing you wanted, not the other gifts. [16:16] I'm concerned that there's families out there running the risk of falling for the same marketing prey that got them into trouble in the first place. Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth Episode 191: ECONOMIC LITERACY

It's common for people to treat being busy as a badge of honor. There's guilt associated with not being productive and getting things done. This episode is about the overlooked importance of play. One of the reasons that people are so burned out and miserable is the lack of play, especially quality play with the ones they love. Our book club just finished Brene Brown's The Gifts Of Imperfection, where she talks about how we struggle with ideas of play and rest. I'm going to talk about how play is a critical aspect of the human experience and so important that we need to put resources towards having fun, playful experiences with our families and spending time doing fun things that aren't aimed at being productive. Episode Highlights: [02:29] Our book club just finished up The Gifts Of Imperfection by Brene Brown. She's one of my favorite authors, and I highly recommend her work. [02:53] One of the things she talks about is how we struggle with the idea of play and rest, because it goes along with the stigma of laziness. [03:11] We identify our importance and value by our busyness and overworking. We are proud of how over-packed our calendars are. [04:12] Instead of accepting busyness, we need to find a cure for it. [04:50] Play shouldn't be structured on something that we design. Play is unstructured time spent without a purpose. [06:26] We need to change the paradigm of saying no to our kids when they ask us to play, because we need to be doing productive work all of the time. Without play, we end up with exhaustion and discontent. [08:08] Board games and family game nights create space to play. [09:32] The studies are clear that the joy of play makes us infinitely more productive. [10:09] We need to make space to play. It reduces anxiety, stress, and overwhelm. [10:49] Play is time spent without purpose, something you don't want to end, and it leads to a loss of self-consciousness. [12:44] Through trial and error, figure out what works for you and your family. Give yourself permission to prioritize spending around your play. [14:31] What needs to happen for you to give yourself permission to play? [16:06] Remind your brain that play will make you more productive. [17:37] Play needs to be fulfilling, not just staring at a device. [17:56] Challenge: Look at your calendar and notice how overbooked you and your family are. Cut out the things that aren't fun and spend some money on what you and your family really enjoy and find engaging. Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth The Gifts of Imperfection: 10th Anniversary Edition: Features a new foreword and brand-new tools The Ruthless Elimination of Hurry: How to Stay Emotionally Healthy and Spiritually Alive in the Chaos of the Modern World

Does money buy happiness? Absolutely yes, and definitely not! Depending on your money experiences growing up, your answer may fall on either side of this equation. Whatever your situation was, you may have evidence to back up either answer. Both sides are right. James dives into the aspects of happiness that money can buy and how having more and more money does not lead to experienced happiness. We know that to a degree, money can buy happiness. We also know that once a certain money threshold is passed, the increase in happiness stops. Episode Highlights: [02:41] There's a threshold where money stops producing happiness. These are findings from a 2010 study by Daniel Kahneman and Angus Deaton. [03:12] The numbers may be old but the truth is timeless. They looked at emotional well-being or real experience of happiness and joy. They also looked at life evaluation which is our judgment of it. [04:18] Higher-income improves someone's life evaluation over time. The more money they have, the happier they feel they are. [05:02] The effects of income on emotional well-being satiates fully around $75,000. At least that was the amount in 2010. [05:25] More money makes us think our lives are better, but doesn't actually make our lives better after a certain threshold. [06:10] More money decreases fear and anxiety. These increases in emotional well-being are experienced happiness. Once we get past a certain threshold, we only think more money is buying us the same benefits. [07:59] Why do people experience less happiness when they accumulate more and more? [08:32] Once we have all that money, we have to do something with it. [09:15] Constantly upgrading everything adds more and more stress to our lives. [10:50] The things that make us happy are being safe and comfortable and connected to each other. [12:17] If your financial needs are already met, then more money will not make you happier. [13:42] Define satisfaction and contentment ahead of time. What does it take for you to lead a life that is fulfilling? [16:56] Take a pause and evaluate the full experience of happiness. Stop chasing what you already have. Resources & Links Related to this Episode Wealthquest Get Started Living a Rich Life: The No-Regrets Guide to Building and Spending Wealth High Income Improves Evaluation Of Life But Not Emotional Well-Being Brooke Castillo

They unpack how small secret spending and hidden debt erode trust in relationships. They explore emotional baggage, shame, and why money becomes untouchable between partners. Real stories and striking stats highlight how secrecy escalates into resentment. The conversation ends with a push for regular, honest money conversations to prevent secrets from taking root.