Creating Financial Balance and Discovering Purpose Through The Currency Pyramid

The best piece of money advice I’ve ever heard was, “If you’re broke and, in a hole, don’t make it worst and dig deeper.” Money is a topic that everybody thinks about, but unfortunately doesn’t get talked about a lot. But income can have a huge impact on our mental health, physical fitness, and our overall well-being. In today’s episode, I discuss the concept of the currency pyramid and expand on the generic argument for needs over wants. Financial balance begins with our approach to fitness and health and drives our rigid needs, flexible needs, and our value driven wants. Practice the mindset and build the experience for financial resilience. Invest in a value driven life and inspire the world around you.

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Transcript

How’s it everyone, my name is Mike Cabuco, and welcome to another episode of the Love Notes for Life podcast, your creative space for amplifying greatness through gratitude.

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So over the weekend, I was thinking about this pretty fun idea for a mobile app.

 What if. Now what if there was an app, out there, that could design your meal plans per your macros and caloric requirements, and at the same time give you an estimate of your grocery bill? I mean that would be a fantastic product hashtag trending and come on now, that would be an epic deal!

Look. It may sound trivial, but if you’ve been tracking your average grocery bill over the past few weeks, it seems like it just keeps going up, up, and uppity up every weekend. And really, it doesn’t matter where you shop. You could try to save a few more bucks by shopping at those bulk savings store, but by the time you ring up your groceries at the self-checkout, you’re staring straight back at a $100 receipt easily for one person. Well thank you Mr. inflation. Thank you very much. I really was trying to make it a habit to spend more money this year anyways than to cut back. So kudos to you. You’re definitely the charmer and you know how to win a man’s heart. But come on now, I think this all getting quite out of hand.

 And I'm not going to sugar coat it. Yes, I make a decent salary and I have the privilege to more accessibility in life. But just because I have the resources to live it up, I've made it an intentional decision to hold back. To quote Chris Rock, "I may be rich, but I identify as poor."

 I don't like spending unintentionally. Really. It’s just not my thing. But rather, I like spending intentionally and I don't mind spending the extra dollars. I enjoy buying things that give me value at the right price dictated by what I consider reasonable. And I don’t mind supporting my favorite brands, investing in my family, friends, and the people I care about. However, I cringe when it comes to buyer’s remorse. To be honest, I’ve had my bad moments with wasting money in the past so nowadays I treat every financial transaction as an investment. And of course, I'm not perfect and I’m not saying that I’m shielded from deliberate mistakes. However, moving forward I'm learning to spend my dollars very intentionally.

And I think mindful spending is a very valuable skill to learn especially when it's so easy to spend money that can disappear quickly with only a few clicks of a button. I mean, we live in a Buy It Now culture with access to a ridiculous amount of credit. You want something now? Pull out that credit card and tap, swipe, or insert chip. You see? Even technology makes it even easier to spend that hard earned money.

And depending on what you do for a living and your environment, money can either be very accessible or downright tough to make. And sometimes, it gets to the point where making money and trying to save money may feel more like a marathon that’s literally going nowhere.

 And to be honest, even though things are going really really good for me financially right now, I admit that wasn't the case years ago. My first job as a young mechanical engineer didn’t pay too well. Sure, looking back on day one, my baby salary exceeded my initial expectations, but I was comparing it to the $9.50 per hour wage I was making while working in the fast-food industry.

However, my first engineering salary made me feel like a million bucks. Of course, I’m exaggerating, but nevertheless I remember after the first year of working, I was already browsing the internet for supercars such as Ferrari F430, Aston Martin DB9, and of course my dream car a Porsche 911 GT3 RS. Mind you, I was placing my faith in a down payment for a supercar rather than focusing that cash flow on a house. I mean, let’s face it. I was young, reckless, and seriously ridiculous. Clearly, my single life youth showcased my lack of responsibility and respect for money. But when you’re granted more money in life, sometimes lifestyle creep can overcome you.

 Thankfully, I never pulled the trigger on those supercars, but I did waste that money on my project cars. My 1996 Nissan 240sx was my first high school car. It had a remarkable legacy in Japan as the Nissan Silvia S14 equipped with a turbocharged inline-4 engine called an SR20DET. It boasts a whopping 220 horsepower, which was awesome for its time, but unfortunately when that chassis came to the states, it swapped identities and became known as the Nissan 240SX which was equipped with a leftover truck motor called the KA24DE rated at 150 horsepower. While it didn’t have the heart of the Japanese production mode, the Nissan 240SX was a solid tuner platform for drifting and road racing.

 I was so crazy about making my car the best that it could be. It truly became an addiction, and I finally had the cashflow to build up my dream car. It all started with better suspension, power mods, and wheels that really spoke to the hellaflush and stance culture. Every week, I had no control and I dumped thousands of dollars into my project car and to be honest, the only people that noticed I was flexing was myself and the other crazy car people that loved to spend money that they really didn’t have.

On top of that, I attempted to pursue many business ideas with the same money I was making, and I was trying to copy the big brands. I wanted to go big, and I wanted to emulate what the big brands were doing. However, I was David trying to act like Goliath rather than just focusing on becoming the best David that I could be. I placed myself in an uncomfortable financial position and really pushed past my pain point. I fell to the expense of what I wanted rather than what I needed.

And at the time, I considered my side business as a guaranteed investment. But I lacked experience and like a majority of startups, success doesn’t necessarily happen after day one. My first business took months leading into a year, before I even made my first dollar on it. It was tough and it made me realize that running a business requires time, money, awareness, and the trust of your customers. And if you're lacking in any of those categories, going from zero to hero with your business can evolve into a taxing period of your life and feel like fruitless labor going nowhere.

 It was a tough period of my life, and it taught me first-hand the downside to over-investing or putting more dollars into your business beyond your pain point. Sure, investing is important, but it should be done in a very strategic and mindful way. For example, if I gave you $100 and that's the only thing you had to spend in one day. You probably wouldn't blow it on a pair of $100 sneakers, right? I mean, unless you fancy fasting for 24 hours, but most likely you'll put that $100 to good use and probably use most of it for food and anything else that you need.

Eventually, there came a day when enough was enough. I grew up and confronted my financial mistakes. I started getting really good with saving and budgeting money. I became aware of my behavior, and I really learned to love to spend intentionally. I stopped throwing money on things that didn’t give me value and I was able to build up my financial tools for success. I finally had a solid rainy-day fund, a healthy investment portfolio, and most importantly, I learned to set aside money for the fun things I wanted in life and the experiences that I treasured. 

That financial transition period, showed me, firsthand, that even the most stubborn of individuals, including myself, can learn to adapt over time. I mean, it would've been nice if I was equipped with this knowledge years ago, this financial habit that I have now, but as my mom would say encouragingly, "Charge it to experience."
 
And that experience helps me define what mindful spending is all about. Over the years, I leaned on a model called the currency pyramid that has helped me bring in more financial balance within my life. It's a dynamic framework that can be adjusted accordingly based on our specific needs and wants. Traditionally, we tend to separate our needs and wants with a hard divisive line. However, nowadays, I don’t think it’s that black and white. Because I believe that our needs and wants are really influenced by our fitness and health impressed upon by our cultural upbringing and behavior. So, in essence, I find more balance when I let my health and fitness drive my spending habits.

 For example, I grew up in a culture where food was the focal point of family get-togethers. I really do believe that food is the language of love and while it's great to eat out and hang out with family, the price tag of dining out can add up and dig deep into one's budget. Eating out isn't cheap, we all know that, and if you’re a connoisseur of the best of the best, dining out can become a premium. While it does cost to dine, I do not believe we should neglect the moments we share with our friends and family. It’s important to stay social and interact with the world around us. So while dining out isn’t a rigid need, I still consider it a flexible need within our currency pyramid because it help us improve our mental health.

 So as an overview, here’s my framework, my gameplan for the currency pyramid. At the base of the pyramid we have health and fitness. Above that, we have our rigid needs followed by our flexible needs. And then at the top we have our value driven wants.

So our health and fitness drives our rigid needs, which are things that typically can’t shift on a whim. They're very ingrained in your code, your way of life, and if you tried to depart from it, you'd probably lose your sense of homeostasis. These are the life support expenses such as bills, utilities, housing, transportation, and health. All these items maintain your baseline performance and if you subtracted one of them, the pyramid would topple over like a bunch of Jenga blocks.

 Bills, utilities, housing, and transportation are pretty straightforward, but for me, health is a category in itself. Great nutrition creates a greater product of you. How you spend your dollars on your calories can really help you perform better for yourself and for others. It’s like driving a luxury car that requires premium gas. You wouldn’t risk running low octane fuel in your high-performance vehicle and risk your engine knocking and potentially failing and detonating. No! No you wouldn’t and I know you’re better than that! And it’s vital to fuel your body with quality.

In addition, be generous with your fitness. Look, I’ve heard all the excuses. Being healthy is expensive. Eating healthy cost too much and gym memberships are getting way too expensive. However, I think the cost is reasonable especially when it helps you perform better in life. I’m not saying go crazy and spend more money past your pain point.

Invest in what you can, little by little. If you can afford to incorporate more healthy choices into your diet, go small with the changes. You don’t have to overhaul your entire diet to achieve the benefits of healthy food choices. Also, keep in mind culture. There are certain things that I consume, that aren’t technically your typical health-conscious foods, but they serve a purpose in my life to feed my cultural needs and give myself some diversity. I enjoy “junk food”, but I consume junk food in moderation. And hey sometimes, it’s to save some money by doing so.

And as far as gym memberships go well shop around and find a gym that suits your needs. The fitness industry is competitive and that also helps out the consumers. You don’t have to be locked into one place and entertain the chase for better price points and higher quality equipment. And, if the gym fees are too hard on the budget, then no worries, the world outside is a free gym. Try your take on bodyweight training and see if you can find a calisthenics park. Also, don’t be afraid to try out a new sport. You never know, you might actually find it more appealing than just hitting the gym and hitting the weights. Bottomline, try to find ways to be creative with the tools you have.
 
After your rigid needs, we can then target our flexible needs, which can strategically be adjusted financially when necessary. These are kind of like the halfway point between our needs and our wants. However, I still refer to them as needs because they can feed positive vibes into our mental and physical health.

For example, I consider eating out and going on vacation with family and/or friends as a flexible need. It’s not like you can’t live without it, but these experiences bring so much value within our lives. They can give us so much meaning and value and really, for me, it’s a big part of living life in the moment. In a very productive society, we tend to overly focus on work rather taking the time to slow down and celebrate our wins. Once we satisfy our rigid needs, we are free to experience our flexible needs and bring that spice into our lives. Pull back when necessary, but never neglect the positive power of our flexible needs.

Lastly, the icing on the cake is our value driven wants. Our value driven wants are the personal things that we do for ourselves. These are the treats in life, the self-care experiences that we invest in. For me, I love style and buying clothes that fit my taste. I also like buying and collecting sneakers, in moderation, and of course I enjoy investing back into my Love Notes for Life brand. I like repping the movement and rocking the shirts that I designed. It’s my form of self-expression and I’m proud to share the vision with world around us. So really, at the end of the day, learn to be flexible with your value driven wants and feel free to splurge on it once in awhile. 

So, remember, draw inspiration from the currency pyramid and design a custom life that matters to you. Lean on your health and fitness to drive your rigid needs. Fulfill your rigid needs to inspire your flexible needs. And when your needs are met, experience the potential of life through your value driven wants.

Invest in a value driven life and inspire the world around you.

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Thanks, y’all for tuning in to another episode of the Love Notes for Life podcast. I look forward to continuing this conversation of awareness and amplifying greatness through gratitude. If you’re enjoying the Love Notes for Life podcast, please subscribe and leave a 5-star rating on Spotify, Apple, and other major podcast platforms. The Love Notes for Life lifestyle collection is now available at lovenotesforlife.com. Thanks for supporting the Love Notes movement and be sure to track the mindset by following me @mikecabuco on Instagram or Twitter.

Thanks, y’all for the support and always remember, “There is beauty in knowing that there is only one of you.” Take care.