Your Best Financial Life: How Gen Z & Millennials Can Save Smart | Anne Lester, Episode 065

#065.  In this episode, I sit down with Anne Lester, retirement expert and author of Your Best Financial Life: Save Smart Now for the Future That You Want. Anne shares powerful insights on overcoming behavioral biases that prevent us from saving and how to build financial habits that set us up for long-term success.

We dive into key money questions Millennials and Gen Z should ask themselves, the biggest financial mistakes young people make, and why many struggle to connect with their future selves when it comes to retirement. Anne also shares personal stories—including managing billions of dollars at work while struggling to save in her own life—and offers practical strategies to shift our mindset around saving and investing.

Show notes and more at:

https://moneydadpodcast.com/session065

Transcript

Justin: Well, I'm thrilled to introduce my guest today, Anne Lester, retirement expert, author, media commentator, top rated speaker, and former head of Retirement solutions for JP Morgan Asset Management, where she worked for almost 30 years. She's been featured on TS, including Bloomberg tv, CNBC, Forbes Business Insider and Wall Street Journal, to name a few.

Justin: Her upcoming book, your Best Financial Life. Save Smart Now for the Future That You Want. Helps younger savers find long-term saving success by overcoming their behavioral biases. She and her husband have two children, a genzer and a millennial who are working to become retirement ready and welcome to the Monday Day Podcast.

Anne: Well, thank you so much for having me. 

Justin: I am, I'm so thrilled to have you on and, and look forward to chatting with you about how we can help guide millennials, gen Zs to their best financial life. Now, I've got a couple of young kids, , which are in very different life stages than your Gen Z and millennial kids.

Justin: For a Gen Z or a millennial retirement can seem like an eternity away. So I think back to my twenties and while I was a pretty good saver, retirement was not necessarily a top of mind for me as I was focused on getting my own career. , on track. What are the five questions that Gen Zers, or millennials should be asking themselves in their twenties and thirties as they start to plan their retirement goals?

Anne: So, I think, you know, they're unanswerable questions, but one of the reasons that it's so important to to think about it is. Time is actually the most important ingredient in compound investing returns, right? So the longer you have, the more time works for you, the less money you'll actually have to save to hit the same goal in your sixties or seventies.

Anne: So, so it's really important to start thinking about it, but as you pointed out, right, you're, we're not. We're not wired to think of ourselves in the future as ourselves, right? Uh, the, the part of our brain that lights up is this stranger part. So, you know, I think it's really useful to give it a little thought, even if it seems like a weird thought experiment because you're thinking about your grandparents maybe, and they're just like old.

Anne: Um, and you're like, I'm not doing that. Um, you might be, you never know. Uh, but. One of the most important reasons why it's important to think about some of these things that I'll share in a second is it starts bridging the gap between your present self and your future self. So you start, I. Creating a little bit of empathy for that future self, and that actually makes it a little easier to save and, you know, do, when you save, you're basically sacrificing what you want today for the future.

Anne: So that makes it a little less painful to do that when you are a little more connected to that future self. Um, the second reason it's important to think about this stuff is it actually will help determine how much money you'll need to be happy with the life you're leading in retirement. Right? So understanding.

Anne: You know, what kind of lifestyle you're aspiring to. Is it better than what you're doing now? Maybe in your twenties you're going, oh yeah, maybe in your thirties. You're like, you know, no, I kinda like where I am right now. This is good. I don't need a lot more. Right. But thinking about that helps you figure out the goal, like how much you need.

Anne: Um, so, so the things you should be thinking about, right, are how am I gonna be spending my time? 

Justin (2): Mm-hmm. 

Anne: Right? That again, is, is a pretty important. Topic. And there's actually a lot of research and books coming out right now, mostly for boomers. Um, talking about how important it is to understand what you wanna be doing with your life once you leave formal working, even if it's hard to imagine because a lot of people, and actually have a, a good friend of mine who just, just retired and she said, I need to find some hobbies.

Anne: I literally don't know what I'm gonna do all day long. And I was like, whoa, really? Like, wow. That's, that's a little surprising. I thought you were a planner, but I guess not. Um, so. You don't wanna find leaving the workforce like destroying your life. Like you don't have any relationships outside of work.

Anne: All your friends are at work. Like that's a bad place to be, so mm-hmm. Think about how you wanna spend your time. That's also gonna determine how much money you need to support that. If you envision, you know, the thing you see on the retirement ads with the fancy boat, like that's a pretty expensive lifestyle if you imagine gardening at home, right?

Anne: That's a cheaper lifestyle. So that, that helps, but also just like understand what you wanna be doing. Or at least think about it. And, and here's the thing, you're never gonna have a right answer. There's no right answer to any of these questions, right? This is not an exam where you're gonna pass or fail.

Anne: It's just like a, a game you can play with yourself. Like, how do I, you know, you might, you might find yourself, you know, imagining or even fantasizing about the house you want someday or the, you know, the meals you like to cook or whatever. Like this can just go in the vacations you'd like. This can just go into that little bucket of, Hmm, what's my someday day thought, right?

Anne: Mm-hmm. So no pressure on this, right? How do you spend your time? Where do you see spending your time? Like, do you see staying in the same community? Do you see moving to somewhere warmer? So I frankly would like to move somewhere colder, where I could go skiing more often, right? Mm-hmm. Like, I really like to ski.

Anne: I wanna do as much of it as I can before my body tells me it's dangerous. So like, that's, that's a thing for me. Skiing is really expensive, right? So that, that needs to factor into how I think about the future. Staying in good shape, right? How you treat your body, how, what's your body gonna be able to do for you again?

Anne: It's really hard to understand this in your twenties and thirties, but the way you treat yourself now physically is gonna have massive implications for how you are able to live your life when you're older. Some of it's beyond your control. Some of it's genetics, some of it's luck, but a lot of it is what you choose to do now.

Anne: So those habits that you may or may not be building right are actually gonna have a huge influence on what you're able to do. So if you imagine leading an active life, you know, leading an active life now is a great way to build into that future. That's three. I'm, I'm like, what? What are the five there?

Anne: There are five in my book. Um, sort of where, how, what, you know, community, who you wanna be spending your time with, right? How do you think about being engaged and, and with people, um, is also incredibly important. So all of these serve as a bridge to that future self and make it easier to save. But they also help shape how much you'll need to save.

Anne: And so they're important for those two reasons. But, but keep in mind. Like I said, that it's gonna change as you, as you go through your life. Mm-hmm. And things that you thought you really wanted in your twenties and thirties may become more important or less important as, as you age. 

Justin: Yeah. I mean, yeah, as you kind of alluded to there, I mean, things are gonna change in how you think about things at 20, I'm, you know, at 20 you feel invincible, right?

Justin: Nothing can stop you. , body wise, physically wise, you're, you know, you can, you can do amazing things and not feel it the next day and, and, , it changes over time and your beliefs as well. And, but I think that's an important point where you mentioned, yeah, it's really connecting your present day self.

Justin: Imagine your future self and figuring out whether that's, , where, , in terms of the community, your activities, and how much money you're gonna need, , at that time to support whatever lifestyle that you, , desire or see yourself having in the future. You, you shared a story actually in the book. , that surprised me, but I was glad to hear it.

Justin: You mentioned that, you know, going back to your working days, you were managing billions of dollars of other people's money, but you yourself was living, were were living to paycheck. To paycheck. Can you share that story, maybe how you got to that point and then perhaps lessons that you took away from that?

Anne: Yeah, so, uh, it's a combination of things, right? One is I think, a reality when you're starting out and it's. There's a whole bunch of academic theories about lifecycle consumption. Smoothing, right? And when you're younger, right, you, I think it's a reasonable expectation for people to have that their salaries will go up over time as they learn more and they become more valuable to employers.

Anne: And that's pretty well documented that it happens for most people in most industries, in most circumstances. I think that's, uh. Steeper if you have a college degree or an advanced degree, but I think it's true kind of across the board for a while and it kind of plateaus out somewhere in your, typically in your forties, right?

Anne: You stopped, you stopped seeing those big pay increases, right? You stop getting promoted, right? You stop generating huge leaps in the ability to do stuff better, right? And, and maybe your pay will keep going up, but not at the same rate. So a little bit of that, like thirties, like stretch, I think was not silly.

Anne: Like you sort of. Need to be careful about how much house you buy, but like, it's okay to imagine like kind of making it work for a year or two and hoping that it all works out, which is kind of what we did. And it did fortunately, but there was luck involved in that too. Um, I think the root challenge for me, I mean two, two big things.

Anne: One is nurture, one is nature, right? And I think for a lot of the way we're wired financially, it is both nurture and nature. So the, the nature part of it, right? Our brain wiring, like we're not naturally wired, most of us to delay gratification. And some, you know, people are on a spectrum. Some people are naturally better at it than others, but most of us like don't like saying, no thank you to something we really want because we know it'll be better for us in the long run.

Anne: And so you have to build up habits. You have to practice doing those things right and build resiliency and some grit around saying, no, thank you. It's a skill you learn, but we're also just naturally wired that way. I am a spender and ever since I, I can remember. Getting some money as a little kid, my first thought is, oh goody, what can I do with this?

Anne: Right. It's never like, right now, and, and I, you know, the saying, money burns a hole in my pocket could literally have been invented for me. Like, it, it's an itch. I wanna spend it. 

Justin (2): Yeah. 

Anne: Um, so I understand that about myself. Now, I did not really understand that about myself in my twenties and thirties. I, I, I really have trouble saying no to stuff.

Anne: Food and money in particular, like, it's really hard for me to say, no, thank you. So I know that now and I'm able to manage that better. I've had a lot more practice. Right. So that's number one. So that's the, the, the, the nature side, the nurture side. It's interesting, right? My parents were born in the Depression.

Anne: They were classic silent generation, depression era kids, and they grew up in a world without credit. 

Anne: And, and so. There were never any real conversations in my house about money and budgeting and managing finances. There was always enough, and the way my parents made financial decisions that we heard about, I don't, I don't, I don't actually know what kind of conversations they had, not that wasn't in front of the kids, but the conversations that we had were, is this a, a purchase?

Anne: Is this something we value spending money on? Is this aligned with our goals and our values? If the answer is yes, there was money for it, and if the answer was no, there wasn't money for it, but it never was connected back to how much money do we have? Mm-hmm. How much money are we choosing to spend? Right.

Anne: It's like, so, and I never had an allowance. Right. My parents like kept thinking, oh, we'll have an allowance, but they were very bad at executing it. And, and back in the day, you needed to give people cash. Right? Right. There was no like transfer into your account, like 

Justin (3): Right. 

Anne: We gave our kids allowances, we automated it.

Anne: It was really easy. They had ATM cards, like, you know, when they were 10 or 11, like the whole thing was much easier to manage. So I. There was always a, can I have some money to do X or Y? And if they thought it was good, yes. And if they thought it was bad, no. And so any kind of budgeting I had, you know, there was always a sense of there would be enough money.

Anne: And again, my parents didn't grow up wealthy. I certainly, but we were comfortable. Right. And, uh, looking back, right, they were very, very, very frugal as well, but. Because of that frugality, which was invisible to me as a kid. Yeah. There was just always enough money, so I just kind of assumed that, of course there's always enough money, right?

Anne: Well, guess what? You know, there isn't always enough money. Right. And I didn't have any skill or practice or like teaching on how not to spend. And then, oh my gosh, in, in the early eighties when I was in college, there were credit cards suddenly in every college kid's mailbox saying, you can open up a credit card.

Anne: Right? So. Nobody taught me how to use credit. And so it was really easy to get into this like constant, like, you know, run up the debt, manage the debt, get it down a little bit, run it up again, get a raise. We could run up even more debt. Right? And so, and then we're, I. In a world of like stuff. Yeah. And you know, your friends are doing it and everybody's buying a house and you know, my husband and I are, we know this serial rehabbers and fixer uppers of houses, so, okay.

Anne: That's not a cheap hobby. No. So yeah, it was tough. 

Justin: , I think back to my, , childhood at times where. I mean, so you, you spoke about, , when you were looking for something, asking for money about, and if your parents thought that it aligned with, , the values that they wanted, they said, yeah, here, here it is.

Justin: And, and if not, then no. Then you don't. And, you know, at the time I remember, so my, my dad, , and parents, but my father really, , in general, like he valued education. Education and like, he was very supportive of activities as well, like to, , physical activities like , sports and things like that.

Justin: So. There was all the money kind of in the world for that. Those kind of things. You want to buy a book on to like read? Sure. Or actually no, he wanted to go to the library 'cause he didn't have to pay for it, but you know, those kind of values. Whereas, you know, we didn't have a lot of extra money for like vacations or cos or, or kind of things like that.

Justin: , but sounds 

Anne: very similar to my growing up actually. Yeah. 

Justin: , but so I want to, , touch on a couple things that you mentioned there. . . You talked about how, I think, you know,, you mentioned your, you realize your natural, , tendency, , was as, as a spender. Right? , and so, , I talked to friends of mine who have kids and like many of them mentioned, one of their kid is like, I.

Justin: A natural spender. Right? Like, as you know, you kind of talked about as soon as you got some money, like it was like it burned a hole in your pocket and out it goes. , whereas the other kid is naturally inclined to save. Mm-hmm. And it's actually pretty hard for them to spend anything because they don't wanna spend it and they, they choose to.

Justin: They wanna keep it. . Talk to us about what, , those money types are and strategies on how, you know, if you are a certain money type, and again, it's not necessarily set in stone, but how can you overcome whether it's poor spending habits or saving habits Once we become aware of, 

Justin: the money type that we are. 

Anne: It's funny, I have a kid who's a spender and a kid who's a saver too, and I, I, I don't know that it's spender or saver so much as. Again, this is something, I'm sorry I passed on to my older son, right? You can put me in a store with no price labels on anything and I will unerringly pick out some of the most expensive stuff in the store.

Anne: Like we were, we were remodeling our kitchen and, um, replacing a 1960s kitchen. So, you know, after we bought this house and we went to the stone yard, like looking a stone and there's no prices, they all have like weird codes. Like, you know, there's no way to know. And the only one I liked was like literally the most expensive piece.

Anne: Like how it's It's a gift. It's a gift. Yeah. So my son, my younger son, and my husband like, actually couldn't care less like, like they want it to work. They want it to be functional. They don't care. Like they, they just don't care. And so some of it is, uh. And I don't care about having a nice granite counter because it impresses people that walk into our kitchen.

Anne: I care. 'cause it's pretty, yeah, like I like it. It makes me happy. Right. So maybe I'm more of a materialist that way ,, than my younger son or my husband. , my older son maybe is a little more like that. Like he just likes nice stuff, right? Yeah. So I, I don't think we taught him that. He just kind of came outta the womb like that.

Anne: And I'll just share a trick given, given your podcast, , what we did with our kids, that was incredibly effective. , and again, this is back in the day when there was cash and there were also physical toy stores. Two things that you need for this to work is we gave them an allowance that was. Big enough to buy something that they wanted, but it wasn't going to be very nice.

Anne: Okay. And it was typically kind of like a, a cheap plastic toy that would break, and again, we're going back like they're now 24 and 26. So this is, this is a while ago. Um, you could buy those little smallest box of Legos for like $4. 

Justin (2): Mm-hmm. So 

Anne: we were giving them a dollar, $2 a week in allowance, and they had to save one that was just like, you have to save half of it.

Anne: That just was, it went in the savings account, like boom, just went there. Starting that habit early. Mm-hmm. And then if they didn't spend that dollar that week, we'd give them an extra dollar the next week. 

Justin: Mm. Yep. 

Anne: To incentivize 

Justin: them. And 

Anne: they pretty quickly figured out that if they just waited a week or two, they could actually buy something they wanted.

Anne: They really wanted, instead of this junkie thing just to buy. And it was interesting watching them navigate that and then learning how to let that build up. So I, I do think even my older son has got a much better sense for the value of waiting than I ever had, because that, again, my parents taught me plenty and, and do, do not feel sorry for me.

Anne: But like, that really was a lesson that I think you, you really do learn. You know, kind of, I, I talk about this in my book, that our understanding of money and how it works and starting to. Figure out the power of it happens way before most parents start teaching their kids formally about money. 

Justin (3): Mm-hmm. 

Anne: So they, they learn a lot, you know, without even seeing it.

Anne: I got that tip from a book, I don't know if it's still in print called Money Doesn't Grow On Trees, which I thought was phenomenal book for, for kids. So just pass that tip along and I've already, like, I've, I've wandered off your question here. , so, you know, some of those spending types and what to do about it.

Anne: Like, to me, the single most important thing to do. Especially if you have trouble with that kind of impulse control is make sure you don't allow impulses to occur. Right. So it's how, how do you set up the guardrails for yourself? Mm-hmm. That on the one hand, take the money out of your pocket. Like, don't, don't let the money get into your pocket.

Anne: You don't, you 

Justin: don't even wanna see it. 

Anne: You don't even wanna see it. Right. So, automating your savings. Putting it into what I'm gonna call slightly sticky places like in America, if you're saving for retirement, it goes into a 4 0 1 KIRA. There are massive tax penalties to pull that thing out, right? So, so like it's pretty sticky in there.

Anne: Like you really, you. Can get it out, but you really, really don't want to. It's gonna hurt a lot. So that's the ultimate sticky place. Yeah. , I often recommend that people think about setting up a high yield savings account, not just because you get more interest there, but also because it's not on the same homepage as your regular checking account.

Anne: Like, like it's not good just to see that money sitting there whenever you open up your app. Right. Like, don't, don't see it. Like you wanna get to it kind of easily, but you don't want it in your face all the time. 

Anne: Like, I just think it makes it hard to manage. So, so one is like. Don't put the money in your pocket and then you won't spend it.

Anne: , the second one, and I, it's different. You have to figure out your own version of this, but I'm a huge believer in lists and I'm a huge believer in only going into stores when I know I need a specific thing from that store. Mm-hmm. Because I like nice things and, you know, it's pretty rare for me not to find something that, gosh, I really could, I, I could use that thing.

Anne: Right. I, I could see how that thing could be a part of my life. 

Anne: . 

Anne: Okay, so just don't, don't go there. Like there's a clothing store in town that I love shopping at, and it's got great stuff for me, and it fits me, and they offer free alterations. This is not a cheap store, and I have now made a vow, especially that I'm not getting a regular paycheck anymore.

Anne: Like I just don't go in there. 

Anne: . 

Anne: If I go in there because I know I need a specific things for a specific, you know, event or, uh, I'm doing something that I need, like I need it. It's not a, oh, I could, you know, go shopping in your closet first. If there's nothing there, go there. I literally will not let them.

Anne: Help me try anything on that I know isn't exactly what I've already got on my list. Right? So I go back to that list and say, is it on my list? If it's not on my list, it's not. It's, it's not part of the conversation. And that takes practice. It takes discipline. Yeah. I'd like to report that I'm a hundred percent compliant with that.

Anne: I'm not, but, but it really helps. 

Anne: . 

Anne: I think if you're shopping for your family, whether it's food, whether it's kids' clothing, right? The the, oh, it's cute, and I know they'll wear it, is not the same thing as they need it. 

Justin: . It's almost like mentally preparing yourself. I.

Justin: Okay. Yeah. The list that you mentioned and saying, okay, this is what I'm gonna, and it takes discipline, like you mentioned where you're sticking to that list. I mean, same, you know, different example, but let's say if you're gonna the grocery store and you're looking for specific items, I, if you have it on the list, it's more likely that you're gonna just stick to the list as opposed to just, I'm, I'm kind of, it's funny when I go to grocery store, my wife and I are very different people and so I actually like going to grocery stores and yes, I kind of have an idea of what I kind of need, but I also like exploring and just getting, .

Justin: Trying different things. , whereas my wife is just like, this is on the list. This is the list. This is what we're getting. , but you mentioned that, which I think is a great tip. And then, yeah, making sure that you. Essentially, , don't see it, right? So you've already diverted it somewhere else. Whether, you know, in America it's that 401k in Canada, it's similar idea.

Justin: It's called an RSP, same stickiness, right? So if you put it in, you could take it out, but it's, it, obviously you gotta , pay taxes when you do ticket it out. So it's, those are some great tips there I want to touch on. , something that you mentioned. In, in terms of, , when you were, taught by your parents, but one of my favorite chapters in your book was really the section that you questioned, like why you weren't taught Money Habits when you were growing up and you were, you know, you had a comment in there about being angry at the societal norm that says that we're not supposed to talk about money.

Justin: With our kids. And you quoted a, study that said, mm-hmm 70% of Americans don't think adults should share financial details with their kids under 14, and then another 14% on top of that. I think parents should never share, , this information at all, which to me is, mind boggling, right? Like mm-hmm.

Justin: 'cause one of the reasons why I started this podcast is that like I have this burning desire to have parents talk to their kids about money. Because it's an opportunity, , to have those conversations, , when the kids are young, especially so that those good money habits and those skills are, , can be taught.

Justin: And I know that, you know, as part of your own research when putting together the book, you had talked about, , you know, conducting focus groups and that one of the main traits that, , you noticed was among the best savers was that there were money habits that were taught by Yeah. Perhaps a family member when the kids were young.

Justin: Uh, which is paramount, I think, you know, that's, and that's why I love, I love making sure that, you know, we, we have those conversations with our kids, and I know for my oldest, , , I started talking to him about money when he was like three years old. Right. And obviously it's different types of conversations, , , so for parents listening, , right now, perhaps with the younger kids like mine or a little bit older, , what advice would you have?

Justin: To them on having those conversations about money with their kids or maybe something that they can, you know, take away and use in those conversations? 

Anne: Absolutely. I think. A couple of things. One, you know, I've already touched on, like mind poor impulse control with food and money. You mentioned it in the grocery store.

Anne: The, food thing is actually a really helpful way to, to try to frame some of the stuff because I think it's a little more commonly accepted, certainly for women to think about their relationship with food and what they may be passing along to their children. Because a whole bunch of societal reasons, we have all these weird, like food issues.

Anne: Um. I think the same thing is true with money. So the first stop is maybe to to spend a little bit of time thinking about what's your relationship with money. And I think for many people, money is shameful, whether there's not enough of it or a perception that there's too much of it, or people won't like me if only they knew.

Anne: I have a lot. I don't have any like, whatever. Right. It's, it doesn't actually seem to be connected with reality at all. It just is like, it's a source of shame and discomfort. So I just like, why the heck are we all like this? At least in this country? Like, I don't know, but it's not very healthy.

Anne: , so as a parent, I would say think about your own relationship with money. , , what's your money story, right? , what stories do you tell yourself about how you are with money? What stories did you gather from your family, whether they were explicit or implicit about is it shameful?

Anne: Is it scary? Is it like, Hey, no big deal. It's always around like was it formally taught? , you've got a story of some sort, right? So maybe just spend a little time thinking about it , and then think about what is your parenting model, right? How open and transparent are you?

Anne: Right? I'm a big believer. My mother actually was an early childhood education specialist, so a lot of this I got from her, but the more neutral right? And. Sort of fact-based for at, at an age appropriate way You can be when any of your kids ask you the scary questions, whether it's about where did I come from, or, you know, I heard that kid say a bad word, or, you know, you name a thing, it'll come up, right?

Anne: Yeah. Money is often in that basket of like, uh, I don't wanna talk about it. So practice with your partner, practice with another parent practice in the mirror. Like what are you gonna say when your kid says, do we have enough money? Are we rich? Are we poor? Like, that question is just gonna trigger something.

Anne: And you probably, probably, right? Yeah, maybe not. Maybe, maybe you are clean and you've done the work and like you understand and you are good and it's all neutral, but most people are not neutral, right? So 

Justin (3): yeah. 

Anne: Just those questions are gonna make you feel just like the, where did I come from? Question or having that, that conversation with your tweens right?

Anne: About, about the things you have to talk about, whether it's sex or drugs or whatever. Like it's, you're gonna bring some baggage into that conversation and the more you understand about that baggage, a, the more successful you'll be at leaving at the door. Or B, I would maybe invite you to think about incorporating some of the baggage.

Anne: Like I was pretty explicit with our kids about that stuff. Right. And one thing I wish we had done a little differently, and this was my shame, right? Or weirdness, is I think probably when my kids were well into their teen years, right? I had some professional successes and we suddenly had some more money.

Anne: And I felt really weird about telling them. Right. So, and we, you know, I live in a very affluent community and their friends are all doing things. And like our kids were the only kids in the neighborhood that were mowing the lawn. And at one point they said, can't we afford to mow the lawn? And we said, no, we absolutely can afford to have somebody hire mow the lawn.

Anne: We just don't think we should. Like, we think you should earn your allowances. And that's a value we have. Right? Like we, and, and when my, my older son went to college, which we were fortunate enough to be able to pay for. When I was in college, my dad had just lost his job and there was no money. Like that was the first time in life I ever hit the budgeting reality, which is like, except, ah, my parents wouldn't gimme a budget.

Anne: They would just say, just, just buy what you need. I'm like, that, that doesn't help. I don't, I don't know what I need. Right. Ah, it was a terrible thing to do to an 18-year-old. 17-year-old. But we said to our son, like, we don't know how much money you need. You're living in an apartment. You're living, you went to school overseas.

Anne: Like we don't know. I'll tell you what we're trying to do though, is make sure you have enough money not to feel poor and that you can never do stuff. Mm-hmm. And we don't want you to have so much money that you can say yes to everything. We want you to have to make choices about how you're spending your money.

Anne: Yeah. And we actually had a real conversation about it with him for, I'd say the first six months he was living in an apartment by himself and we kind of figured out what it was. It worked really well. 

Justin: , you talked about , shame and, , parents perhaps their own money story.

Justin: , making sure that they're, you know, having, thinking about that because it, it is part of, , your background and, and being able to, , use those examples and, and. Part of it, I think is a judgment thing where you think people will, you know, judge you, , based on 

Anne: they, they may be too, like, it's, it's just 'cause you're paranoid doesn't mean they're not after you.

Anne: Right. Like, they may be judging you. It's not, it's, it's real. Right? 

Justin: Yeah. Yeah. And, , using that even when you're, let's say when you're talking about that with your own kids. , those are just opportunities for conversations, right? To have. Yep. And, and not be ashamed of those.

Justin: And so they're just part of, they're stories that you help and use and, can help you in their experience really. , so that can help move things forward. I wanted to get back to, , gen Zers and millennials and talk about, , in, especially in today's, , age. There's, you know, whether it's student loan debt, whether it's incredibly high housing costs.

Justin: Right. Whether you're, you know, you're looking to save to buy anywhere. Anywhere. Yeah. House or renting. , which I mean, for a lot of people, you know, buying a house at least, uh, you know, here, um, in can, in some major cities, it's, outta reach for a lot of Yeah. Young people. Yeah, it's true 

Anne: here in the states too.

Anne: Yeah. 

Justin: And, and, or it could be, you know, their wages are not growing. Or keeping up with inflation. So a lot of Gen Zers or millennials, you know, just simply not saving enough money. What are some of the ways that you suggest that they can, you know, or that we can hack our brains. They can hack their brains to make saving easier for them.

Anne: So, and I, I thought of mentioning this earlier. I'll, I'll just mention it quickly right now. One thing I think Gen Zers and millennials are doing very, very well is actually getting a lot more comfortable talking about money. I think it's a real, whether it's the transparency, salary, transparency, , talker that started a couple years ago or trends about actually being comfortable. Telling people, I can't afford this. Right. There's a, I can't remember the name of it now, but it's like hard budgeting or loud, loud budgeting or something where people are actually just saying, Hey, I can't afford this right now, so I'm not gonna do it.

Anne: There's just a vastly higher level of comfort. I think also people today, in their twenties and thirties are far more financially literate, even if it's not the level we all aspire to, like they, they just know more. They understand how credit works. I still think there are places that are easy to slip up, like the whole buy now, pay later thing.

Anne: I, I know, I hope this is starting to diminish, but certainly when it started people were like, oh, that's much better than credit cards. And I'm like, it's the same thing as credit cards, but with higher interest payments. Right. So Right. You're 

Justin: paying more. 

Anne: Yeah. But, but, uh, and also you don't know what you got.

Anne: Like it's really hard to keep track of so very bad. Um. So I think they're better. Also, despite all of the headline noise, at least in the States, gen Zers are actually saving more for retirement than the boomers or Gen Xers were at their age. So like it isn't all that, it's bad. I, I don't wanna say all of what you said isn't true, but actually it's easy to get caught up on how terrible it is and when you do some really careful peer-to-peer comparisons.

Anne: It's actually not that bad, so it doesn't make you feel better hearing that from me. Like, whatever, you don't understand my life. Fair enough. But I, I would just throw out there that people's financial lives in their twenties never feel very good, , unless their parents are bankrolling them. And that is part of being young is like you don't have very much money.

Anne: And as you grow older, you will in fact be able to start doing more. I think the housing thing is real in that there is. A shortage of housing, like builders aren't building enough. So, okay. That's starting to get fixed in the states. I hope it's gonna be fixed in other communities too, but it'll take a little while for that to come back into balance.

Anne: But I would, I would, I would bet money that in 10 years we won't be talking about this anymore. Okay. Like in 10 years, the interest rate environment's gonna be different, the supply demand thing will be different. And I think we'll be having different conversations and it still will never feel like we all have enough money because that's kind of the human condition.

Anne: But, having said all that, I think. Automating savings is the single most powerful way to make sure you do it. Not setting yourself up for failure by creating huge undefinable, unmanageable goals is another key one. Right. So take a small bite. I always think in terms of percentages of salary, 'cause that's the way I was trained when I was building retirement products.

Anne: 'cause you can kind of do the math on, if you save x percent of your salary, it'll grow into replacing y percent of your income at a certain age, right? So, but you can also think in dollars, right? If I save $10 a week, $20 a week, $30 a week. Not everybody, but many people can find those little bits of money in their budget.

Anne: Just pause and ask yourself, do I really need this for one thing in your day? I. I hate latte shaming, right? Because I actually just talked to someone whose cup, cup of morning coffee was like literally the best part of her day. She goes to the neighborhood coffee shop, she finds the barista, who knows what she wants.

Anne: They look at each other, they smile. They got her, they got it ready for you. By the time she gets up to like, like, like, no, don't, don't lop that thing outta your life, like that would be a terrible thing to do yourself. Maybe the one after lunch. Like, maybe that one you don't need so much. That's right.

Anne: Maybe it's brown bagging it twice a week. Maybe it's like, there, there are tiny little things you can do to say, can, can I, can I challenge myself to save 25 bucks a month, 25 bucks a week? You, you probably can do that without feeling much sacrificial pain. And then once you build that habit, right, it just, it just snowballs and you start looking at that balance, which is now growing and you go, wow, I can, I can do this.

Anne: Automate it outta your paycheck. Maybe think about one small thing to give up that is not gonna destroy, like something precious in your life. I noticed this trend again versus the way, the way we used to when we were their age. , we used to entertain a lot more at home, right?

Anne: Yeah. We used to have people over a lot more. It's a lot cheaper. It is so much cheaper, right. And. It can be even more fun, right? If you do a communal potluck thing, if, you know, we, we do this all the time with friends, like we all cook together. It's really, it's a blast. It's fun. You end up with a great meal, right?

Anne: Nobody kicks you out 'cause you're being loud and well, maybe your neighbors will, but, but like, you can, you know, it's, it's a fun, it's a fun thing to do. It's a way to save. You're going out twice a week to meet friends. Maybe just do it once a week and meet somewhere else. Meet, meet for a free thing, right?

Anne: So there are lots of little ways to, to boost your savings. So automate it, start small. And then here's the, the thing that is. The single most powerful thing to do, and now that inflation is actually coming down, it's more possible to do this now than it would've been a year ago. The next time you get a raise, save half of it.

Anne: Don't try to get to that mythical, I I tell people in my book, you should really be saving at least 15% of your income. That's if you're saving one or nothing Right now, you can't, you can't just say, today I will start saving fif. Like, that's impossible. 

Anne: Impossible. Like, don't even try. You're just gonna set yourself up for failure.

Anne: Promise yourself that the next time you get some money, especially that you weren't expecting, sock that away. 

Anne: It's painless because you don't have it. You gotta do it right. And some 401k, some employers can let you automate that. Like the next raise, I'm gonna bump it up and they'll do it for you automatically.

Anne: That's a fabulous tool. If it exists, not, I don't think it's all that common, but if it does exist, it's really powerful. You can do this by yourself. If you get a tax refund, save half of it. Yep. Use it to pay down debt. You know, get into the habit of Sure. Enjoying spending a little bit of money because like you do want your lifestyle to go up.

Anne: Let's be honest. That's 

Justin (3): Yeah. Motivating it's life. You're right. 

Anne: And don't let your lifestyle creep up together with every income rise you get, because that will set you up for a disaster. If and when you have kids, if and when you need to start writing tuition checks, if and when, um, you decide to retire because your lifestyle will require a lot bigger savings pool to, to replace it.

Anne: So you've kind of, you've done yourself two problems, right? One, you're creating a much higher need for a much bigger retirement savings pool, and you're not creating it because you're not saving. So it's, it's like a very toxic combination. If you get into this habit of saving half of every raise until you're at least 15 to 20% savings rate, then guess what?

Anne: You will have built up the, the savings pool that you need to sustain that lifestyle when you stop working in your sixties or seventies. 

Justin: Trying to, , prevent that consumption creep, is important in making sure that you sock away and save half , of your raises or windfalls or other source of money coming in.

Justin: Seeing and talking to Genzer and millennials, what are some of the biggest mistakes that you've seen, you know, the younger generations make and, what they should be doing to avoid them? 

Anne: I think one of the biggest sort of long-term mistakes is being afraid to invest money. . And being afraid that they'll get it wrong. So there are lots and lots and lots of what I'm gonna call suboptimal, like not perfect, not great ways to invest your money.

Anne: And you know, the internet is full of them and that should not be the only place you're getting your investment advice. Right. There's some great tips on TikTok, don't get me wrong. There's some terrible tips on TikTok. So like. Do cast a wide net when you're, when you're soliciting information, right?

Anne: Listen to podcasts like this. Um, but I think the fear of getting it wrong stops people from starting. And then the worry that , , you know, this is a really important decision and this, fear of getting it wrong, coupled with the genuine uncertainty. Nobody knows what the markets are gonna do, right?

Anne: So. Actually, there's no perfect answer. Like you'll never get it right, like just let go of getting it right. 'cause there's no right here, there, there are degrees of wrong. The biggest wrong is not to invest then your money is literally shrinking. Like you can watch your money shrink.

Anne: Especially now if you've got it in a low interest rate like bank savings account, it will shrink. So that's the worst thing you can do. Then it's all different degrees of better. I'm a big advocate for not trying to manage your money yourself, because it's super easy to fall into this fear, greed trap, and only wanting to invest when you're sure it's gonna go up.

Anne: It's gone up, and then it's okay. That means you're buying it expensively. And then when stuff is on sale is when things feel kind of scary and bad, and then you don't wanna do it. And typically individuals who try to invest their own money do a lot worse than the average market. Unless they just leave it alone and don't touch it.

Anne: And that's hard to do if you're like managing it. I'm a big advocate for the products that I used to manage, like target date funds, balanced accounts, right. Things that let you just invest it and sock it away and not think about it. , 'cause it stops you from second guessing all of your decisions.

Anne: And since we don't know what the markets are gonna do, you can't get it. Right. So just let go of that. Yeah. Get it right thing. Yeah. Um, so I think, I think that's, and then I think the second. Thing I see some people doing, although it's much less common, is trying to pick the perfect winner, right? Oh, I know this guy that got in and out of Nvidia at just the right time, or Tesla or Bitcoin or like whatever.

Anne: . You never hear about the 19 bad trades they made. . And people are notoriously bad at keeping honest track of how they're doing in their whole account after transaction costs versus like a passive index fund. 'cause that's the real benchmark you should be looking at. Yeah. So one great trade once does not make you a good day trader.

Anne: You should not be doing that. 

Justin: It's those stories of, oh yeah, that one time I did this, and yeah. Ignoring all the other bad trades, so, but yep. , but yeah, you're right. I think a lot of people get stuck on, , getting it wrong and not investing when they should, when they're not sure what to invest in or, , you know, you hear about the headlines, oh, the market is down, but Reno really, like if you look at the long term over time, the market even, yeah.

Justin: Stick it into an index fund and you're gonna be fine, you know, generating, let's say a seven to 10%. Return on your money. Yeah. Over time in the long run. , so the biggest mistake is not participating in that because you're right as, uh, you know, you're losing money because of inflation and the purchasing power of your dollars, , is going down, , every year.

Justin: . Wanted to move on to our, , rapid fire round. So I'm gonna fire off some quick questions for you to answer. Oh, okay. Number one, what's the most fun that you've had with your money? 

Anne: Oh my gosh. I love spending money. I don't even know how to answer that question.

Anne: Um, experiences, right? I love to ski. That's expensive. I did a, a pilgrimage walk, , from the Swiss border to Rome, , two years ago, two and a half years ago now. Wow. And it wasn't actually very expensive. It was, you know, you a pilgrim, you're not staying in very nice places and you're like eating. Stale sandwiches, but it, it was, it was some of the most fun I've ever had.

Anne: Taking some great trips with our kids when they were younger. , again, some kind of fancy, some very unfancy, but it was just figuring out a way to spend time together. , time skiing, actually. We still take family ski trips, but it's how do we spend time together doing things we enjoy, uh, where we're not like sitting all over each other all the time because those kind of.

Anne: Those, those get old fast. Right. 

Justin: , what is an important money belief that you personally held when you were young that's now changed over the years as you've grown older and wiser and more experienced? 

Anne: I guess two. Right? I'm cheating. One is I can't.

Anne: I can't save, I don't know how I'm a bad person because I can't, and it's all caught up in that negative, like, I can't do this, I can't do this, I can't do this. So I'm very glad to have figured out how to create my own guardrails, um, which I occasionally break. And, you know, that's, it's a journey. Um, I guess the second one, , is I, I can live with the discomfort of saying, no, I don't need this.

Anne: , I didn't know how to do that when I was younger. Like, I want it, I want it now. And it was really, it just, it just, it was too painful not to have it. Right. And, and years of coaching and therapy later, it's like, it's okay to live with that discomfort. Like, I'm strong enough to live with that discomfort and not having that thing I want.

Anne: It's fine. 

Justin: Awesome. Yeah. And it's a, it's a journey and it's part of that. , what's the best piece of advice you've ever been given? 

Anne: Best piece of advice, money advice or just advice in general? 

Justin: Advice in GE could be advice in general. Oh, 

Anne: best. Well, okay, and I'm gonna give you two 'cause I can't pick One was my grandmother when I was in my late, I must've been in my early twenties, my first job.

Anne: And I was stressing about something terrible that had happened at work. And she listened to me and she looked at me and she said, honey, will it matter a hill of beans in 30, years? What just happened? And I thought. I don't think anybody's gonna care about this in 30 days, not 30 years. Like, oh my God.

Anne: So just like really try to keep things in perspective would be one piece of advice. The second one I got from a mentor of mine at work, actually a fabulous, , equity portfolio manager, Tom Luddy, who took so much time to mentor the younger staff. , he was just, is a, a great man. , I was asking him for some career advice and he said, I was like, I need to make sure I keep my doors open and like do the things I need to do.

Anne: And he just looked at me and he said, Anne. Find what you love. If you love what you're doing, you'll do it well, and all the doors will be open. And I was just like, wow, that is just such great life advice. 

Justin: That is wonderful advice. If you could sit down and have dinner with anyone dead or alive, who would it be and why?

Anne: Oh, you know, literally nobody's ever asked me that question. I don't have, I don't have a canned answer for that. I don't know, maybe today in Austin. Like how did she, I, I like reading novels. I'm an Austin fan. How did she, how did she manage to observe so much while living such a retired li, like she did not live an extravagantly like public life?

Anne: I. How did she maintain such a good sense of humor in the face of like not a, a lovely, wonderful life? Hmm. . 

Justin: And then finally, what's the one conversation that you recommend parents have with their kids, whether they're young, they're young or old today about money?

Anne: I think it's a conversation about needs and wants and desires. Because I think the earlier you can start helping your children and maybe yourself distinguish between needs, wants and desires, the easier it gets to a, manage your money and stay inside of, your means. I don't much like the word budget 'cause it feels very finger wagging.

Anne: , and secondly, it helps you understand the sort of transient nature of the desire and. Maybe associated with that, a concept called the hedonic treadmill, which is is a very important one, which is that, you know, once you get above a certain kind of level of comfort, nicer things don't make you any happier, 

Justin (3): right?

Anne: So once you have a reliable car that stops breaking down, that has a heater that works, that. Maybe he has electric windows, I'll give you that. But like the difference between a solid, you know, name, a relatively inexpensive, you know, geo car and you know, the equivalent BMW or Audi, I mean. I don't know, like it's nicer the sound, like you can hear your radio better inside, but is it really worth the money?

Anne: I don't know. Like if you've got the money to spare and that's something that gives you a lot of pleasure. Sure. But like, how many of us who drive those cars have the money to spare? I don't know. 

Justin (3): Mm-hmm. 

Anne: So it's, it's that needs, wants and desires. And then really asking yourself, again, back to that values question, which I think my parents did a great job teaching me.

Anne: Right. I just wish they'd also wrapped it with some like, and this is how much we have to do it with, , math, which I, which I missed. . You know, I think that helps you really stick to your stick to stick within a framework that you, that will get you aligned with your long-term financial goals, 

Justin: As we wrap up here, where can my listeners stay in touch with what you're doing, , or pick up a copy of your fantastic book? 

Anne: Thank you so much. So you can find me on my website, which is ann lester.com, A-N-N-E-L-E-S-T-E r.com. There's a quiz you can take on my, on my site about your money type and a couple of hacks that you'll get about how to manage that.

Anne: Your spending type mostly, although saving is one type two or seven. So six spending and one saving. , then, , you can follow me on social media. I'm on all the usual things. My handle is save smart W and save smart with, and, but w instead of with. And then last but not least, you can find my book, your Best Financial Life on any platform.

Anne: Books are sold on Amazon, on bookshop.org and in many independent bookstores. 

Justin: Awesome. We'll have all the links, , that you just mentioned in the show notes as well, and definitely encourage, , everyone out there to check it out. , had a lot of great strategies in it and then you mixed in, you know, wonderful stories and, and humor as well into the book to make it, uh, fun and enjoyable to read.

Justin: So, , encourage everyone to check it out. Uh, so, and just. As we close off here. . I just appreciate you coming on the show and just sharing your experiences, being vulnerable, , and talking about some of the stories, you know, whether it's in your childhood or, , when you're older. And just giving us some great tips, whether for millennials and Genzer or for those, , parents out there with the younger kids as well.

Justin: Just, , thank you for sharing, , some great tidbits and advice. , thank you so much. 

Anne: Oh, you're so welcome.