Money Isn’t Math | Charles "Chuck" Failla | Growing Money with Sean Trace

I sat down with Chuck Failla, CFP and founder of Sovereign Financial Group, for one of the most honest conversations I've had on this show about what it really means to trust someone with your money.

Chuck has spent 30 years in financial services, from cold-calling stockbroker to fully independent RIA, and the insight he brings is the kind you can only earn through experience. 

We get into why financial advisors are the only professionals in the four major advice pillars who aren't required to act as fiduciaries, and why that single fact explains so much of the skepticism people feel when they walk into an advisor's office. 

Chuck breaks down the most common money mistakes he sees families make: almost always rooted in behavior, not math and shares why a solid cash flow analysis is the foundation of every sound financial decision. 

What's one area of your financial life you've been avoiding looking at honestly?

Transcript

SPEAKER_00 0:00

What when I see a real dumpster fire of a financial situation when they come into the office, um, it's almost always driven by bad behavioral choices, right? Bad behavioral choices. I would say that's probably true. Whether it's behavioral finance when it comes to their investment philosophy or behavioral finance when it comes to their uh saving or spending patterns, it's really all that. And all of that really can be fixed by quantifying it. That's why I say, you know, the the three most important things are quantify, quantify, quantify. If you're gonna make any kind of meaningful decision, you have to quantify what the inputs are. And for your finances, there's three things. What you think you're gonna bring into the household as far as income, what you think is gonna leave the household by way of expenses, and the rate of return that you think you're gonna get, right? And with those three assumptions, you could have a real clear idea of what your financial future is gonna look like. And that helps drive really good decisions on your savings patterns, on where what your retirement plans might be, what your estate planning uh needs may or may not be, what your insurance needs may or may not be. All of that is driven from that cash flow analysis. So to not have that is a real big mistake. And you know, that also helps drive better behavioral choices. So I would say, yeah, both are important, no doubt about it, but it's really the behavioral side that that makes or breaks any kind of financial outcome.

SPEAKER_01 1:32

Welcome everybody back to the Growing Money with Sean Trace Podcast. I've got an awesome guest with me today. Can you tell people who you are and a little bit about what you do?

SPEAKER_00 1:40

Sure. Well, I'm Chuck Fela, and uh I do a bunch of things as we all do, but my main gig is I founded uh Sovereign Financial Group, which is an RIA platform for advisors looking to go independent, but without all the back office. Think of us as sort of a mini version of Dynasty. And uh also do the podcast for investment news called Go RIA, talking about helping folks going RIA.

SPEAKER_01 2:04

Awesome. How did you get started down this path? What was it, you know, that that took you down this path toward what you're doing now?

SPEAKER_00 2:12

Yeah. So, you know, depending on how far back you want to go, but you know, I've been doing this for 30 years. So I can give you the real brief um real origin story, and uh it really was simply this. I was doing work as a fundraising consultant, nothing to do with uh with Wall Street, uh, and I was consulting for some pretty big organizations like the Metropolitan Opera, the Warren School of Business, the uh Chicago Botanic Garden, Purdue University, so on and so forth. And that was great. You know, I was uh in my mid-20s, mid to late 20s, uh flying four days uh out of the week, had a huge number of frequent flyer miles, and I thought everything was fantastic, right? How can this get any better? Um, then uh a buddy of mine who actually I trained, um, he was someone that reported to me in my fundraising life, ended up going into uh Wall Street. And he joined uh the infamous 55 uh Water Street over at Lehman Brothers, uh, under the category, if you know, you know, right? So if there's some other advisors out there with that with as much gray in their hair as I have, you'll know 55 Water Street. It was really an infamous uh location of Lehman Brothers and essentially the birthplace of uh cold calling, uh, for those of you that recall. And so he started doing that, you know, and we're in our you know mid-20s at this time. And he just started doing really, really well for himself, like really well. And I was like, wow, that's that's kind of cool. Uh I trained you. I wonder if I could do this. And there it was that I become, became a stock broker, like literally a stock broker, you know, smiling and dialing, 400 calls a day, that type of thing, selling individual stocks. And I loved it because I always did love the markets. Um, but it didn't take too long for me to realize like this is not a very efficient way to build portfolios for people, right? Because you're literally calling and selling one stock at a time. And, you know, it was behavioral finance. I didn't realize that at the time, but it was. And the way it would work is you would sell one stock, and if that first stock worked, then they would give you a chance for a second stock. And if that worked, then you start building something close to a portfolio. It was it was kind of a silly way to do it. Um, so then in 1999, I quit that cold turkey commission base and went right into a fee-based business, uh, opened up a branch of Raymond James, uh, the independent broker dealer side, uh, built a hundred million dollar book of business. Then in 2019, we're coming to a wrap here. 2019, I dropped my 70s, dropped by 24, and then fully went independent. Uh, formed Sovereign Financial, which up until that point was really a brand, a DBA of uh of Raymond James. Um, but I wanted my own firm, and that was in 2019, and that's when Sovereign Financial became uh an RIA. And in addition to running my book as a pure fiduciary RIA, I also saw a real need for advisors like me that were not huge, right? I mean, I had a hundred million dollar book, which, you know, 30 years ago was something, but today is sort of like table stakes. That's not, no one would say that's a huge monster book anymore. And so what I wanted to do is create a platform for the $100 million or even subhundred million dollar advisor to be able to break away the way I did, um, but leverage our infrastructure. And that's where Sovereign landed right now, as um, I would say one of the top choices for advisors, you know, the sub hundred million dollar in particular, that want to go independent but don't want to do all the back office work. Uh, I think we have a really neat solution for that. And that's been a lot of fun to grow. And that's what I uh spend most of my time doing now.

SPEAKER_01 5:46

It's really interesting to me because, first of all, I love hearing about the evolution of things, how someone starts here and then gets to here to me, because I don't know if you know it, but I I live in Vietnam and I split my time between California and Vietnam, right? It's it's different. And so my wife and is like a famous singer. She is like the first winner of Vietnam Idol, and I did all her media, and so yeah, right? It's wild. So I started to that. And I I went to all these different places, studied all these wild things, taught English to kids, but now I do podcasts and media. Yeah. And I love it because to me, it's it's organic, it's real, it's fun, and I think that it's something that I can I can stand behind, you know, but like it's not easy all the time. When you first started building your business, what was the hardest part about getting people to trust you with their money?

SPEAKER_00 6:45

So it's interesting. I I've had two rounds of that. So the first round was having individuals can, you know, comfortable that I could manage their money. And that was hard. But you know what's even harder, frankly, in my opinion, is convincing advisors that we could support their work, supporting their clients, right? Yeah. So if you think about that, when an advisor joins a platform, you know, like ours or like, you know, we're probably pretty similar to Mariner, RFG, or New Edge, those all the ones, those advisors are making the biggest decision of their business life, right? Without question, right? Their entire livelihood is tied up in that. And it's hard to reverse course, right? A client could choose an advisor, you know, and it's that's still a big decision, but it's pretty easy to course correct, right? If it did, if a client chooses an advisor and there's really not a fit, they could change. But if you look at a uh an advisor that's moving over one, two, three hundred households, and then they find out this platform's not the right platform, that's a problem. You know, that's a real hard thing to reverse. So I've really spent my time showing people that we've built something that could be trusted, both for clients. Why should they trust me to manage their money and their finances? And then even a bigger ask is asking an advisor to place their trust in our platform to support them. Because I think that's an even harder thing for someone to choose to do. Because as I say, it's so hard to reverse that decision, right? We're starting to see some of that. You know, I call that the breakaway breakaway. Uh, if you if you follow some of the stuff I do on LinkedIn. But I think we're seeing a lot of advisors leaving, you know, a broker dealer, independent broker dealer, wirehouse, regional, what have you, go into an RIA, they land there like, holy smoke, this is just like the last firm I just left, and now they're looking to breakaway again. And that's something that most advisors would rather rather not have to do. Uh, but it's hard. And the trick is to, I guess, best answer your question, is you have to be authentic and you cannot have any surprises, right? You got to make it real clear what your value proposition is, what you offer, and what you charge. That's the two parts of a value proposition, right? What you offer, what you charge. And as long as there's no surprise, as long as you deliver what you say you're gonna deliver and charge what you say you're gonna charge, everyone should be really happy. The problems I see, both with clients being unhappy with their advisors and advisors being unhappy with their platforms, is a disconnect between that value proposition, right? What they were told to expect ends up not being what they get. And that causes the friction. And if there's been one thing that I would attribute whatever success I've had over the these past 30 years to be, it is that is authenticity and no surprises, right? Tell the people the honest truth, the including the bad news up front. And that way they know what they're getting into. And I think that goes a long way.

SPEAKER_01 9:51

I think so. And it there was a great book that I've been working with content and video a long time, and there was a great book when YouTube and everything was getting going by these early content guru guys, and it's called Trust Agents. And the book goes on to say that your goal in anything is to cultivate trust. Now, trust is never given lightly. People only give out trust when it is earned. And you have to show people, like, you know, why is it that, you know, why would you want to trust me? And I 100% agree that authenticity is the core of it. You know, you have to be sitting there like, I, this podcast is built on the premise of like, I'm honest with people about how my finances were a train wreck, and I am heading in the right direction because for me, I'm not a financial advisor. I had my daughter one day ask me, Daddy, can you tell me about money? And I was like, that is something I don't know much about, but I do know how to find people who do know about it. And I went about with the goal of trying to get in touch with people. But I had something that I know a lot of other people had in the beginning. Like, at times people will feel intimidated by financial advisors. You know, why do you think people feel that intimidation? And what makes someone feel safe talking to an advisor?

SPEAKER_00 11:21

You know, I'm not sure if they feel intimidated, although possibly I I think they just feel incredibly um skeptical. And they should be, right? They should be. And and I talk about this a lot um at various conferences on that. And it's simply this if if you look at the what I would say are the core professions that service people's most important needs, well, what are those, right? Medical, doctors, legal, lawyers, accountants, taxes, and financial advisors. Here's the part that is just crazy, right? It's just insane. Of those four pillars, right? Those four advice pillars that most people will need at some point in their life, and and many people need all the times, right? Medical advice, legal advice, tax advice, financial advice, investment advice. Of those four, there's only one that doesn't have to be a fiduciary. That's crazy, right? Yeah. And of course, that's the financial advisor. Financial advisors do not have to work as fiduciaries. What? Wow. That that's insane, right? So a doctor better always work in their patient's best interest. A lawyer clearly has to always represent their client's interest first. Accountants clearly do. Advisors, optional, right? Optional to work as a fiduciary. How is that possible? And for that reason, that is why many uh consumers out there rightfully don't trust advisors out of the gate. You got to earn it. Now, what we need to do as an industry is help educate clients about the difference between salespeople and true advisors, right? There is no title protection, right? You could call yourself a financial advisor currently, uh, if you're a fiduciary or not. Well, that's not too cool, in my opinion. I think if you're going to be responsible for someone's financial health, which is second only to their medical health, and you could choose to buy a product that benefits you, the salesperson, more than the client, well, that's a problem. And that could stop with title protection. And I'm very plugged in with the folks at the CFP board and the FPA, and they're doing great work trying to get title protection. Good luck. I don't think we'll see it in my lifetime. Um, I hope we do. I don't think we will. And until we fix that, you know, advisors are still going to have to spend a lot of time differentiating themselves, the good ones, that is, from the salespeople. And with all the social media that you're we're seeing out there, that's getting really hard to do, right? Because you could have someone who's super polished and puts together this great pitch that's essentially leading everyone into, you know, high cost index universal life or annuities that had these monster commissions. But boy, they sound really good on TikTok, right? And a lot of clients just don't have the capacity. Not that they're stupid, they just don't have the understanding of the industry as we do, and they have the wrong impression because most honest people, the bias is they think other people are honest too. And that's not always the case, and that's a problem.

SPEAKER_01 14:36

Yeah. That is a core problem. I have run into issues with that time and time again. My wife is like, you got my wife said, You gotta be more critical, you gotta be more careful because you don't know. Give a perfect example of something that pops up when you talk about this. So, this piano radiator, my daughter's brand new piano, we got yesterday. I had to buy this yesterday because her old piano died. It died. And so it's a it was a little pan, but there you go. It was it was an electric piano, and so my wife had it for 25 years. And so, but what was wild on it was that first of all, the screen went out. We're like, oh, we can fix the screen. We got a new screen. Uh, then after the screen went out, the speaker started going, we fixed the speakers. And then the key action started to go on it. And unlike like a uh a wooden piano, um, it is kind of like one whole unit. So if you lose one, you just gotta put the whole new thing. And that's hard. It's like a piano, like it's the 26 years old digital piano. Like, can you find parts for 26-year-old computers? No, man. Like it is it's a good luck, it's the same thing. So we had some people come in and started like checking it, right? Now, both of the people that I had originally checked the piano were um like recommended to me, both repair people came in, checked up my piano, started repairing, you know, said, All right, it's gonna be this much. It's quite, quite expensive, but I recommend that you don't repair this piano. But something felt a little weird about that. And I was just like, well, what's what's going on there? And um, and they're like, Yeah, but you know what you should do? You should get a new one. And I know the guy. And I was like, all right, hold on. I know, I know, I know what's going on right here. And then the next guy, I was like, I second opinion, I know, but I know a guy. And finally the third guy was just a repair guy. And he came in, he's like, you can repair it, but he gave it to me straight. You know, the first two guys were like, it's gonna take, you know, $500 to repair, and this thing's only worth, you know, $400. But the last guy was like, actually, this is worth about $700, but it's gonna be $400 repair. He's like, at that point in time, it isn't in your best interest to repair this because I can't guarantee that it's not gonna have further problems in six months because you know, we're gonna have to get donor parts. And the last guy, I was like, Do you know where I can get a piano? He's like, Go on Facebook or, you know, someplace online and look. And I was just like, okay, I trust you a little bit more because you weren't trying to sell me anything. And it wasn't that the products that the guys had weren't good. Like they were selling good quality pianos. But the problem was is that their advice to me was always being filtered through that lens. And that left me, it wasn't my best interest, it was their best interest. And so, like it was really clear to be yesterday, and we ended up going to a whole different place and got something that's gonna last longer and worked out well, you know. But I wanted to ask you this because um it leads my question because people start getting into these situations and uh regular families can get into things and not be clear on stuff. And like, what are the biggest mistakes, money mistakes you see normal families making over and over again?

SPEAKER_00 17:57

So in the broadest sense, if we're talking from an investment perspective, and there's a lot of other financial mistakes you can make, but I would say, generally speaking, either being too conservatively allocated or too aggressively allocated. When we see a portfolio come to us, you know, client referral or someone finds us on the internet, what have you, or we're doing a review, you know, if they are not really on top of portfolio construction and in particular financial planning, we consider those two processes to be incredibly interrelated, right? I mean, financial planning by itself is useless, money management by itself is useless. Doing them together is the only way to really get a good outcome. Because what it does, it helps you make sure you have the right amount invested conservatively, moderately, and aggressively, and then update that. Because if you're too conservative, then you're not protecting purchasing power. If you're too aggressive, you're not protecting principal. And you got to protect both. You got to protect principal, you got to protect purchasing power. You got to protect principal for the uh expenditures that you have in the foreseeable future, you know, that college tuition that's due for me this fall, Mike is just starting college, your mortgage payment that's due next month, and so on and so forth. Those dollar amounts should not be in the stock market, right? Because you need them in the short term. You got to protect that principle. You have to accept the fact they're not gonna grow much because safe investments don't grow much, but they don't go down, and that's what you need. But conversely, in the monies that you need in 10, 15, 20 years from now for retirement, for potential long-term care issues or whatever those might be, you got to protect something completely different, which is purchasing power. And you can only really protect purchasing power by investing it more aggressively. Now, if you segregate those funds long term, you give it time for the ups and downs to work themselves out, right? If the market goes down 20% tomorrow, well, that's never fun to see. But as long as the money you have invested in the stock market you don't need for 5, 10, 15, 20 years, why would you worry? But if you have money in the stock market that you need for your tuition payment this fall, you've got a problem. So I would say most people, what I've seen in portfolio that is heading in the wrong direction, sometimes they have like really bad products or overly expensive products, and that's an easy fix. But really the larger problems, even above and beyond a more expensive mutual fund that you should have, is improper allocation. And usually it's one or the other. Either I see people that are way too conservative or way too aggressive and not properly balanced. And that's again, there's a fix for that, but it is something that really needs to be addressed.

SPEAKER_01 20:37

That's so interesting, too, because I think that this is one of the things that I in my uh in my absolute lack of financial awareness early on, I didn't know what questions to ask. You know, and I think that talking to people about this is like for me, one of the things that I'm huge on and I swear by is just trying to educate people, whether that be the person who's, you know, exceptionally knowledgeable about this stuff or the person who's not. But you know, I saw and I see a lot of young people, 25-year-olds showing up. I used to teach at university. There was one kid that was paying for Mike. I stopped because I couldn't handle teaching at a private university and knowing what those kids were paying, and then knowing that a lot of that information was available on YouTube. Like it just made me go, I don't feel so comfortable with this. But like I had one student come to me and he was complaining about money and he felt overwhelmed about money. What would you tell someone that's just feeling overwhelmed about their financial situation, whatever age they're at? You know, what would you tell them to focus on first?

SPEAKER_00 21:44

Well, I tell you what, is it's the same thing I would say if you're feeling overwhelmed about anything, right? And there's so much going on these days, it's it's probably not hard to get overwhelmed. Right. And the first thing I say, whether if you're overwhelmed about your finances or overwhelmed about some other issues that you're Having like really quantify, like, what are you worried about? Let's talk about finances because that's what we're talking about here. When it comes to finances, what are people ultimately worried about? Not being able to afford the lifestyle they want, right? And I say lifestyle because that incorporates all the stuff. The stuff that you need to do, like pay your mortgage, the stuff that you really want to do, which is help your kids with college, and the stuff that you would like to do, which is go on vacation once in a while. Right? That's all lifestyle. So when it comes to money, really the problem is can I afford the lifestyle I want? That's what people are worried about. So how do you get comfortable with that? Well, there's three things quantify, quantify, quantify. Right? And as simple as this. Well, what do they say? It's it's simple but not easy, or or easy but not simple. I forget which is which. I don't really quite get that expression too much, but I I get the context of what it's trying to say, which is, you know, it's not complex, but you have to do it. And here's how you do it you simply have to outline what exactly it is that you want, right? Meaning, what are your expenditures? And what I'm describing here is a cash flow plan, which is like financial planning 101. And you know, most people, and this is a biased statement because I happen to be a financial planner, tend to do a better job with that with some real guidance of a professional. But can they do it themselves? Sure. Get yourself a spreadsheet, and in each column, put a year. Column A would be 2026, column B would be 2027, column C would be 2028, and so on and so forth. Then in the rows, put all your income, what's coming in from this, that, and the other thing, and your expenses. What do you want to spend on this, that, and the other thing? And then do that for 2027, then do it for 2028, do it for 2029, all the way through. But I'm also describing as financial planning software. We happen to use e-money. But could you do that if you had a lot of time to kill with a spreadsheet? Sure. Um, but ultimately you need to know what your cash flow needs look like and what your abilities are to pay for that with actual income. Then, hopefully, for most people, as they're working, their income section will be greater than their expense section, and that's gonna solve for how much they could save. That's what you should save. Then when they're in drawdown, usually most people are earning less than they're spending. That's why they save for retirement. But you better be sure you know what to expect that you're gonna have to spend in retirement. And then can your saved or projected saved assets support that? So if they could do this, and again, what I'm describing here is nothing more, nothing less than a detailed cash flow analysis, which is a cornerstone of any financial plan. If you do that, then you'll be able to say, now, what you might be able, what you might see, right, is I want to do this, but I can't afford to do it. Okay, well, that's unpleasant, but at least you know now and then you could plan around for. And then if there's something that you want to do that you can't, then you could go back to your cash flow analysis and tweak it. Maybe if you want to do this, then don't do that. Or if you want to do this and that, maybe work a few more years. I mean, there's so many different levers you could pull and push. That's the beauty of a really good cash flow analysis. And then once you can see what's going to happen, you have to accept it, right? So, you know, what do they say? If you have um uh caviar wishes, but uh uh what is it? No, champagne wishes, but a beer budget, right? If that's the case, then that's the case. Then maybe you can't afford the champagne, or maybe start earning more like champagne than beer or whatever analogy you want to use. But it really doesn't matter other than quantifying it. Understand what your cash flow is going to look like, and that really alleviates a lot of anxiety. It may not look the way you would wish it to work or wish it to look, right? So maybe you're like, oh, I want to retire at 45 and you know, travel the world. Well, maybe you, maybe you can't afford to do that. And that at least takes the anxiety out, maybe not the disappointment. The disappointment stays, but the anxiety leaves. But it's better, in my opinion, to know what that future is going to look like based on your current trajectory than just always live with this anxious feeling. I I don't know if retirement's gonna work for me. So I like to know in advance will I be able to do what I want to do or not? And if not, what can I change to get there? And if I can't change it, accept it. And that's kind of a philosophy I would look for for anything, finances for sure, but a lot of stuff in life as well. I love that.

SPEAKER_01 26:31

That was like some deep wisdom right there on just every challenge. I have my daughter had a teacher. Um it was challenging that we had a teacher here who directly pushed back against uh my daughter. My daughter is a mixed-race kid, native English speaker, and it was her English teacher at public schools in Vietnam. And one day, I did the wrong thing. There was a grammar point that my daughter got right. And I messaged a teacher and I was like, hey, I'm 99% sure this is correct. I got my daughter singled out pretty badly because of that. And there wasn't much else I could do. And then for a long time, she just went after her constantly and kept messaging me, do you see these mistakes? Do you see these mistakes? And I had to sit there and talk to this little person about how to deal with adversity at a very young age at eight, you know, and I said, We can't change that. I said, Well, what can you do? I said, every single time you write your answer, you check every I, is it dotted? You check every T, is it crossed? Every I that stands by itself, is it capitalized? Do you have a full stop at each sent at the end of the sentence? And what she did is she just kept showing up and getting better and getting better. Yeah. And it made a difference because you can't change the person. You can't change how they're gonna be. There's so much, you know, it's like that stoic dichotomy of control, you know, focus on what you can control and let go of the rest. That's exactly right. You know, I want to ask you this too, because I feel like there's this idea that the middle class has about wealthy people. But are there anything, are there things that the wealthy people understand that middle class families often don't about money?

SPEAKER_00 28:26

I see it both ways, right? I I've seen some wealthy families not understand what a lot of middle class families understand, and and vice versa. And I don't think that there's a big difference uh uh as far as which one of those demographic groups or or socioeconomic groups has a better um handle or not, right? So I know a lot of wealthy people that spend way beyond their means, and they're living constantly with anxiety because they know somewhere down deep that they're spending beyond their means. Um, and I have know a lot and have a lot of uh, you know, middle class clients that live well within their means and they're they're happy as heck. You know, so you know, I I don't want to go down, you know, another philosophical um rabbit hole necessarily, but the one thing I have learned, having done this for 30 years, is as far as happiness from your finances comes from living within your means. That is so important. If if you're living within your means, you're sleeping at night, you're comfortable, you're enjoying your life, you have happiness. If you're not living within your means, you're happy for that one instance that you're doing something you shouldn't be doing, but then you're going back to being pretty, pretty unhappy. And going back to, I mean, cash flow analysis is so critical for what we do as financial planners. If you have an honest cash flow analysis, meaning really what is your income projections looking like? What are your expense expense expense projections really looking like? And then everything balances, that's peace of mind. For me, you know, that that's key, you know, and it comes from your perspective too. Like I grew up in, you know, probably what would be considered a lower middle class uh socioeconomic uh area. My my father was um working on oil tankers. My mom was a stay-at-home mom until my father passed away when I was 13. Then she were English for her as a second language. She is, you know, right off the boat from Italy. Got a job at Sears selling carpets, you know, and I tell you something, we I didn't want for anything, you know, uh, we weren't going on really fancy vacations, but you know, I went to school and everything was was fine. And but I still remember, you know, my mother washing, you know, those plastic sandwich bags, right? You know, when you make like a peanut butter and jelly sandwich and you have that little plastic bag. 100%.

SPEAKER_02 30:50

Yeah.

SPEAKER_00 30:51

She used to wash them, and I used to remember seeing them in the dish rack being dried, right? And that's something that sticks with you. Uh as far as what is important. But that said, she was washing um sandwich bags. And I'm thinking about this. My mom passed away not too long ago, and yes, it was Mother's Day, so it was kind of top of mind uh for me on this. But back in 1982, it's a long time ago, right? So that's 40 plus years ago, right? 1982, I was the only kid I knew that had a computer at home. I had an Apple II Plus, which I did the math on this because I was really curious on it. My best guess, like on an inflation-adjusted basis on what I think my mom was earning as a carpet salesperson at Sears back in 1982, and what an Apple II Plus cost back then. It worked out to be something like probably about 10% of her take-home pay for that year. 10%. Oh man. And the reason why that's impactful for me, like I was really into computers. Uh, and she was like, I will get this for you. But you got to take this class. And I took this class of, you know, you know, how to program basic and all this and Pascal with a bunch of adults. And I crushed it because I was really, really into that as a kid. I've always been into technology, I still am. And I passed that, and you know what? She bought that computer. Now, this is 1982. I got to stress this. This is not like everyone has two or three computers back in 1982. I I didn't know of one other kid in my high school that had a computer at home. To have a computer at school that we all shared was kind of a big deal in 1982. Um, but talk about I don't I don't know if she had a cash flow uh analysis, but she had a pretty good handle on what her budget was. So she chose to wash sandwich bags, but by and and and allocate about 10% of her after tax pay for one year. So I had a computer, and I tell you what, I really leveraged it and I did a lot of work with it, and I ended up getting a job as a teenager teaching computers to other kids. So the other part of this is when someone is sacrificing to give you something like that, you got to, in my opinion, do something with it. And and I I felt I did. But that always stuck with me, you know, and talk about living within your means, it gives you the ability to do things that are really important and you prioritize. So for her, prioritization has always been education, right? And you know, fancifications wasn't even on the radar. And that was her choice, but that gave her satisfaction to know that she was doing something to elevate, you know, um her kid. So I think that's pretty important.

SPEAKER_01 33:36

I love that. We all make choices. I uh I I don't spend much money on myself. Like I really don't. I'm very careful. But you know, for the past five years, we've had my daughter practic learning piano. And the other day, I said her piano died, but she's been on that piano, which was my wife's piano that was gifted to her from her parents 25 years ago.

SPEAKER_02 34:02

Yeah.

SPEAKER_01 34:03

And, you know, so when it died uh the other day, we we sat there and thought about it. And we went and bought a secondhand, nice Yamaha, which is a wooden piano. So she's her first upright wooden piano, and she's uh, you know, over the moon about it. But I I pointed out to her, it was like something that she earned, you know, and my wife and I understand that it's something that, you know, I'll it wasn't crazy expensive, but it wasn't cheap. And I looked at her and she's like, I wanted an iPhone Pro Max, and like, she's 10. And I was like, no, that's not happening, you know? And I looked at her and I said, This piano is not that much money. It's not as much expensive as an iPhone, which is nuts. But yeah, I said, it's it's a big buy like that, and now you have to step up and show because mommy and daddy, yeah, we this is this is our hard-earned money. We don't have it lying around. Like we're not like it's not money popping out everywhere. And it was interesting too, because it what we've been working on with her is a mindset shift, you know. And I wanted to ask you too, like, because it seems that you're alluding to this, why don't I ask about it directly? Like, how much of financial success is really math? And how much of it is behavior, emotions, and mindset?

SPEAKER_00 35:19

Yeah. Boy, that's a great question. And if I had to pick one or the other, they're both clearly important, but it really is the latter that drives the former, right? So it's the behavioral choices that drive the math behind it. If you don't have the right behavioral mindset, you know, as far as prioritizing, and look, maybe, you know, buying a computer for your kid or a piano for your kid is not your priority. That's cool. I'm not here to say what your priorities should be. I'm saying what you should do is define what your priorities are. You know, some people's priority might be like, you know, I'm not gonna do that. You know, then I personally would disagree. I mean, that's not how I run my household. But what I am saying you should do is understand what your priorities are. And Sean, to your point, it's the behavioral. What when I see a real dumpster fire of a financial situation when they come into the office, um, it's almost always driven by bad behavioral choices, right? Yeah. Bad behavioral choices. I would say that's probably true. Whether it's behavioral finance when it comes to their investment philosophy or behavioral finance when it comes to their uh saving or spending patterns, it's really all that. And all of that really can be fixed by quantifying it. That's why I say, you know, the the three most important things are quantify, quantify, quantify. If you're gonna make any kind of meaningful decision, you have to quantify what the inputs are. And for your finances, there's three things. What you think you're gonna bring into the household as far as income, what you think is gonna leave the household by way of expenses, and the rate of return that you think you're gonna get. Right. And with those three assumptions, you could have a real clear idea of what your financial future is gonna look like. And that helps drive really good decisions on your savings patterns, on where what your retirement plans might be, what your estate planning uh needs may or may not be, what your insurance needs may or may not be. All of that is driven from that cash flow analysis. So to not have that is a real big mistake. And, you know, that also helps drive better behavioral choices. So I would say, yeah, both are important, no doubt about it. But it's really the behavioral side that that makes or breaks any kind of financial outcome.

SPEAKER_01 37:37

I love that. Well, I want to ask you one last question. Where can people go to find out more about you and what you do?

SPEAKER_00 37:45

Sure. Um, well, I'm very active on LinkedIn. You know, that's a real good place to find me. Uh, I am without question the most famous Chuck Fala on LinkedIn. Um, I think there's three of us. And the other two seem like they're not active at all. So uh it's a good thing about having a less than really common last name. So if they go, you just put in Chuck Baila onto LinkedIn or even on Google, I come up pretty quick. And uh I'm always very eager to to connect with other advisors or other folks. Uh, and I'm again very active there. So you can go to the website and all this other stuff. But a quick, easy way is find me on LinkedIn, hit me up with the DM, and and um, I'm always very responsive.