Escape Plan 2.0 | How to supercharge your saving (without being a tight ass)

Setting the Context
In the sixth installment of The Escape Plan Series, Terry and Ryan guide you through one of the most transformative skills in their money mapping method:  Income Mapping. Building on previous episodes, this episode delivers a 'life changing' new way to gamify your spending, fast track financial progress and feel good about money. 

What you'll learn:

• The three patterns of financial underperformance that hold most people back. 
• The one habit that transforms saving and spending into an empowering practice.
• Why delayed gratification is not always 'good' and what works better. 
• The secret to achieving financial confidence, even on a modest income.

By the end of this episode, you’ll have a clear, actionable system for giving every dollar a job, ⚖️ balancing your present and future financial needs without feeling like you’re constantly sacrificing. 

Find out your financial skill score
Do you have the money skills to fund your goals? Take the 4 minute quiz here
🔗 https://financialskill.scoreapp.com/

Join our podcast community
Get live updates, talk shop with us and meet like minded legends in our digital treehouse. Click here to get access now.
🔗 https://www.facebook.com/groups/4609737389252111

Other links 👇

Money mentorship:
Click here to start putting what you've been learning into practice.
🔗 https://www.cashflowco.com.au/mentorship

Transcript

Terry: 0:29

Welcome in to the Money Minded Podcast. This is your host, Terry Condon. Ryan, sometimes people don't realize who is who. I've realized. I jump on the calls of people and they go, G'day Ryan. And I go, what do you mean? And they go, Oh, shit, are you Terry? I'm Terry. My voice sounds a little bit, I don't know. It's a little bit more ice creamy than Ryan's.

Ryan: 0:46

creamy. I'm the guy that everyone thinks looks like Chris Hemsworth. That's you.

Terry: 0:49

poor man's Chris Hemsworth. Chris Hemsworth jump into this episode, mate. This is the fourth episode in the escape plan series. This is the one I've been waiting for, to be honest, because we've covered a lot, but we're going to share some stuff in this episode that I reckon it's the most counterintuitive wisdom that goes against all the conventions and a hundred percent works. so let's quickly signpost where we're at and then talk about what we're going to cover. So what we covered so far, we've gone through the origins of the money mapping method, and the key insight that underpins this being, you know, it's time spent engaging with money and it's skill that really matters. And then we've gone through the first three skills so far. So the first one we talked about was future authoring and that's how to rewire your relationship with money. And that's, how to see yourself at the top of that mountain. And then we looked at skill number two, which is how to stop stressing about

Ryan: 1:29

Yeah. Yeah.

Terry: 1:29

And then skill number three, which is the last episode was cash flow forecasting. And that's all about how to spend guilt free. and achieve your goals. And this is all about scanning up ahead, making sure you can see the terrain and being able to plot your path as you kind of go and adapt on the fly. talk about what we're going to cover in this episode, mate. How would you describe income mapping?

Ryan: 1:45

This is basically just about how you sustain yourself so you can go the distance. And it's how to supercharge your saving without being a tight ass. Would be the words I would use, and crucially, I think this is where most people build unshakable financial confidence as well. Once they can get this part right, they feel most in control and that materializes in all these other ways. So this one, I think is the thing, it's the habit, it's the routine, it's the practice, as we call it, that if you can get this right and stick to it, it unlocks everything else.

Terry: 2:14

And if you've ever struggled to make the transition from saving versus now I'm investing now I'm starting to make the bigger money moves I think what you're gonna learn in this episode is gonna explain why that's the case why you've Really struggle to trust yourself to be able to make those decisions I think a lot of people get stuck in those moments going like I don't trust myself I don't really know if I'm making the right decision what I think

Ryan: 2:33

Okay. Okay. Okay. Okay. Okay. Okay. Okay. Okay.

Terry: 2:58

guys are saying to me, I still feel stressed about money. I still feel like I don't know what I'm doing. I'm just hoping this works out.'cause I don't know actually what's going on a day-to-day basis with the cashflow where, where the money's actually going, what is happening with it? I, it's all blind to me. I'm making these like big decisions, but then these little stuff in front of me, I just dunno what the fuck's going on. You know? And it's like we don't have a huge margin for, we're not on a huge income and I just feel like I'm taking a huge risk because of that. But the numbers in the bank account keep looking good. They all look great, but my experience isn't. One of prosperity. My experience is one of scarcity, one, one of anxiety, one of fear. And I think, it can feel like in that scenario, like you're just, you're doing all the right things, but it doesn't feel like it's going the right way. You still feel like you're working really hard and you're like, I'm just filling up a bank account, but I don't feel like I'm really enjoying the journey here. And you know, it all kind of fall over. So, I wanted to explain what's going on here. I think. We're taught to be mindless with our money, basically. To mindlessly spend, so just ignore it and forget about it, and maybe just focus on making money. You never have to worry about any of this sort of stuff again. Or just YOLO. So you have no system and structure when that's the case. You're just trying to sock money into a savings account and then use willpower to keep it there and make sure that you're doing the right thing. So you're either winning if you're saving, and if you're not saving, you're losing, and it's as simple as that versus the other way to be mindless is mindlessly save. You're trying to automate everything away. You're trying to save compulsively and you're spending reactively. you actually don't have any system and structure for the way that you are spending. And, that is just as bad, I think. They're both mindless. And they both lead to that kind of same level of anxiety. Neither of them build self efficacy. And so the guy I was talking about, like, I do save but I don't know how consistently I'm saving. I don't really know how it's happening. I'm just kind of trying to put money over there. And I was like, how much are you saving? He's like, I don't know. And I'm like, that's the problem. You don't know how much you're saving. You don't know. How fast you're progressing. You don't know any of those answers to those questions. You are winging it in that sense. And it's not your fault. It's just that most of us have been taught to be mindless with our money. We're taught to follow these prescriptions, which don't really show us exactly what's happening with our money. Or we're taught to be like, just focus on just making money and everything else will solve for itself. But it doesn't solve for the financial confidence problem.

Ryan: 4:53

Mm.

Terry: 4:53

so it's, yeah, it's interesting, isn't it?

Ryan: 4:54

And so most people become quite detached from their finances in some way, like the actual everyday management of it. Most people do set up as automation and we're taught to push it right off to the side. But we know. That is a surefire way not to be savoring the wins that you're having on the fly. And one of the most powerful things we've realized is the more that you interact with it, build that confidence you talked about in making small decisions, lean into making great big decisions, but also it just helps you. Actually validate your ideas, whether or not you think you're doing well, it validates that if you're doing not so well, it does validate that and you more quickly course correct and you make decisions based on actually problem solving as opposed to just being like, well, I feel like where we're stagnating or even where, you know, we're going backwards. Versus actually knowing and knowing why, this is where this comes into play. And as the name suggests, it's very much looking at the income that you're getting and then being very diligent about giving them jobs. And crucially, when you first give your money a job, the first job you give new money plays a very big role in the ultimate outcome of that money. Usually sets pretty. It ends up doing that thing. If it's for spending, it'll get If it's for saving, it'll probably get saved. If it's for investing, it'll get invested. but it's not an easy thing to always find the balance between those things, knowing that with new money, it's going towards, me now on this thing versus me saving and setting up my future. Finding balance between those two things is not easy to find necessarily, especially If you're not engaging with it and you're kind of just coasting along.

Terry: 6:21

You don't have self efficacy if you're not engaging with it. And that's the huge problem with mindlessly spending or mindlessly saving. It is your belief, your inherent belief that you can achieve the thing that you want to achieve. That is actually the biggest determinant in whether you do achieve something. Do you believe that you can achieve it? Because if you don't, and you're not sure, you're guessing and hoping, you'll be really second guessing yourself at all times. You'll be dealing with doubt. Instead of like looking at information and sort of solving for the problem. So,

Ryan: 6:44

How's it different from self confidence? Self efficacy versus self confidence.

Terry: 6:47

Self confidence is probably like an outcome of the body of work that you've created. and self efficacy is the inherent sort of belief that you're the kind of person that can do that thing. I reckon they're pretty closely related We might even be clutching at straws here. You could actually say they're the same thing.

Ryan: 7:01

Yeah.

Terry: 7:01

think confidence is like me and the kind of person I am. And maybe self efficacy is like the belief that I can achieve whatever I'm trying to,

Ryan: 7:07

Yeah. More how you see yourself versus whether or not you think we're capable.

Terry: 7:11

And so if you've been mindlessly saving or mindlessly spending, cause you've been either following a prescription or following no prescription and just focusing on financial offense and ignoring this part of your life, have that financial efficacy. And you know, there's a couple of ways this plays out, right? about this time last year, I got a phone call from a lady that joined our program and she rang me so stressed. She's like, I can't sleep. I'm worried about the future. I'm going to stuff this up. I'm going to be a burden on my kids. I was like, what's wrong? She's like, well, the money dropped in my account today. And I was like, okay. And, see, that was her reaction to a 2. 5 million

Ryan: 7:38

Okay. Okay. Okay. Hmm.

Terry: 8:05

then you really stress out about the big ones like the analogy I always give is like imagine somebody sat you in the cockpit of a 747 And turned you around and said hey these thousand people you've got to get these thousand people from australia across this continent Get them over to spain safely The first thing you do is stand up and get the fuck out of that cockpit and you'd be saying i'm not qualified to do And it's a huge internal block with people that we haven't actually built the skills and the confidence and that self efficacy that comes with making decisions with money because we've been taught to be mindless with it. So, you know, the ultimate negative outcome for this is you may have a high number in your bank account, but you lack the skill and confidence. It's like sitting in that 747 without the qualification. So you don't give yourself permission to make big decisions. Your efforts don't compound fast enough to be motivating. And you start wondering, like, I'm working really hard here. But what's the point? Like I don't feel better about money and there's three patterns really. The first one is like you give up and you say, I'm not going to do this. I don't want to do this. I'm just going to remove myself from this sort of a part of my life and detach completely. Second one is you self sabotage and bring yourself back to a financial position that you feel comfortable and capable of managing. don't get me out of the 747, get me back into a little Cessna. And that's where you're going to stay, Flying Cessnas. and then the last one I think is the most common, which is you start to just scale back your dreams and ambitions because it feels safer because everything else feels like chaos. You're like, Oh, I don't want to deal with that much chaos, that much pain, that much uncertainty. just going to temper my ambitions because I don't know that I could deal with the challenges that come with the experience that I want to create and the position that I want to get to financially. so I think it's one of the biggest inherent blockers with people. I think offense and making more money is fantastic, we've got folks in the program who make a lot of money and have fallen into these patterns. Like a story I just told you right, about the lady that had the 2. 5 million dollars drop into her account. someone in our program who's earning great money reached out to me and said that's exactly what I've done. I've brought this back to a point that I can manage it because I just didn't have any skills. I was completely invisible here. I'm so grateful to be learning this stuff now because I feel like the obstacle to growth is being addressed. So you could be really strong on financial offense. but your spending patterns and the way you use your money is going to be inherently unconsciously self sabotaging yourself to keep yourself in a financial position that you feel equipped to manage. I know that's a lot of layers there,

Ryan: 10:06

Yeah.

Terry: 10:06

a really, it's one of the most important discoveries I'd say of our work over the last five years. Would you agree? Yeah.

Ryan: 10:15

to how much responsibility you want to take on and money and resources is one of those. It's a big responsibility that we carry in our lives. And I know at times I'm like, you know what? Especially when you have business and you know, life and, all these other things that happen, you have all these responsibilities build up and you're like, fuck, I wish I could just get rid of them. And money is one of those for a lot of people. It feels like a burden, a responsibility to have to take care of. And they say, well, what if I just didn't have to take care of it? What if this system or this, you know, you're outsourced to somebody else and you just didn't have to carry that. But like we've been doing a little bit of, philosophic work. I guess this is actually come off the back of some of that work by Viktor Frankl slash Jordan Peterson around, you know, the search for happiness versus finding meaning and fulfillment and how happy It's quite transient. Whereas meaning comes from building something worthwhile, being able to look back and say, this is what I've done. This is what I've accomplished. And what that does for self efficacy and confidence. and there's only one way to do that, which is to take on responsibilities.

Terry: 11:09

Yeah.

Ryan: 11:13

leading or you're creating or you're building, usually, well, it's very hard to do that without layering up. And so you actually need to become resilient in handling responsibilities, pushing through some of the struggle, the pain, the suffering to actually get to the other side. To then be able to cope and manage with all those things in a way in which you look like you're taking in your stride. cause that allows you to actually do big things, look back and go, fuck, I lived a good life. but also to be in a position where you can handle a lot and not be knocked off the horse. and so yeah, it's an interesting one where like those three patterns you said, so you give up, just kind of throw your hands up in the air and you say, I'm a bit helpless and you're like, well, I just don't want any responsibility. I can't handle it, you self sabotage because you're like, I actually just want less responsibility. So I want to go backwards. you scale back because you're like, I don't think I can handle responsibility. So you don't push forward. so I look at what we're talking about here is going, well, how do you actually just get better at handling the responsibilities you have now building that resilience so that you can layer up and actually do meaningful things with your life.

Terry: 12:09

Yeah. I mean, if success is dying with zero regrets, yeah, This is the thing. what are the, you know, the theory of constraints, you look at the weakest link, you address that weakest link, and I'd suggest that when it comes to money, this is a completely blind part of most people's lives and it's not anyone's fault. It's the way we've been taught to think about money. Just from it. Leave it over there.

Ryan: 12:26

there's a second reason to one's the automation idea. The second one is, That a lot of people think that's too good for it

Terry: 12:32

yeah. Tell me more about that.

Ryan: 12:33

Well what we're getting into is like handling and managing your cash flow part of it is budgeting the resources you have And most people are like no i'm not so I don't need to count my i'm not going to count my pennies and it has A bit of a, there's a bit of a stigma around it, I would say. So I definitely noticed this more so with men and probably less with younger generations, I would say. but there is definitely a, yeah, I don't need to do that. I'm too good for it. even if it's not stated, there's some kind of stigma around the person that needs to do that. So something we're going to have to break down.

Terry: 13:05

I've got a theory around that.

Ryan: 13:06

Okay.

Terry: 13:07

we might be going off a little tangent here. But, I still feel like there's, like very gendered stereotypes when it comes to money and traditionally it's been the man that's made the money and it's been the woman that's managed the money. and so I guess the big thing that we've learned over time is those aren't gendered roles. and actually the more siloed you are from either and the more blind you are with one or the other, the harder it is for you to make better decisions because you actually don't have a full picture of reality. You're dealing with, you know, half the windscreen. And so, it's kind of an interesting one to me. I think that's maybe where that resistance comes from. No, no. I'm just the guy that goes out, catches, kills, hunts, the prey, brings it home. And you're the one that kind of carves it up and makes it work for the household, right? Really kind of prehistoric thinking. And Yeah. just because. You don't have the best information. And then also, like we said before, you're actually not building the self efficacy you need. And again, this is not our Yep. Yep Yep it's going to go out and work hard to make more money. And it's like that bodybuilder that just keeps doing upper body and never does legs. You're just like, it doesn't work, you know, it's like, you need to balance the whole situation.

Ryan: 14:29

And the final thing I'd say to that is also if you think you're going to invest confidently without having a good handle on this, then

Terry: 14:36

True.

Ryan: 14:36

you're going to battle like not all purchases are going to go exactly as planned, especially right now, a cashflow positive. So you do have to take on some negatively geared, purchases and you need to know how you can manage it and you need to be able to forecast out and go, well, this is what we're thinking about doing. Let's play that out. See what life looks like on the other side of this action or this purchase. And then, make an informed judgment call on that. But the only way for you to have confidence in forecasting is to know that, yeah, what I'm forecasting out is actually real. I am spending 1500 bucks a month on groceries. I am spending this on that. We have earned this much from there and we notice this all the time, you know, I forecast out with people when they're first doing this for the first time, you forecast out, see what's possible over the next 6, 12, 24 months, but they're kind yeah, but I don't really believe it. There must be something wrong.

Terry: 15:23

Seeing is believing and actually you getting your hands dirty, getting in amongst that is actually what you got. No, that's actually pretty correct. Those assumptions are fair. Whereas if you've been detached, you kind of know that all feels like pie in the sky. It's like, yeah, it's only pie in the sky because you haven't seen it.

Ryan: 15:37

That's right. And like, even though we get guys to track back the last 3 months at a minimum first go, how much did you earn and spend for the last 3 months before forecasting forward? So it's based off actuals. Even still, it feels invalidated. And so it's actually, as you go, well, month one in that 12 month or 24 month forecast, it actually happened like this. This is what you said. This is what happened. Okay. It's partly validated next month, validated a little bit more next month, validated further. And as you actually validate in real time, as things are happening, that you build confidence in the projections you have for the future, that they're actually real, that they actually can happen. Yeah.

Terry: 16:25

It's just like look at your bank statements once make a few assumptions about the future set up set and forget system Don't worry about it ever again. can we expect that's ever going to work? help us actually understand what's going on with that money. It doesn't. You know, the big thing is, I really want to sort of stress this point. have been taught to think about money. We need to find something easy, when what we should be seeking is enjoyment. Because believe it or not, you do this really well, and you engage with this process. You do enjoy it because this is how you gamify your spending. this is what we're going to cover in this episode. We're going to show you the one bank account that's going to change your life, able to set this up and do this really well. And I know that's a huge call, but the reason I make that call is because we haven't said this before, we've got a lot of financial professionals in the program. I've got accountants, mortgage brokers, CEOs, CFOs, account managers, guys that run 30 million dollar companies. the finances of those companies have come in and we've taught them this. We've taught them what you're about to learn in this episode. And they've been like, that actually is unbelievably simple, but it's profound. That's the direct quote, Nicola, one of our mortgage brokers. She said, I know how to manage money. I just came through this thinking that I was going to understand what was happening with my clients. When I was referring people through, I wanted to do a good job of understanding and we love her for that. And she's kind of going like, what's this account you want me to do? You set up this income pool thing. What is this? And she's like, that's actually changed everything. She's like, I can't believe the impact that's had on the way we manage money in our personal life and what that's done for us.

Ryan: 17:39

Sense of control.

Terry: 17:40

Through that. Yeah. So then we'll talk about why you stress about spending and how to eliminate that stress. We're going to explain why that happens. we're going to talk about how to gamify goal achievement by looking at the way you spend. And if you're a couple, what you're about to learn, if you work your way through this process, this has just, I guess, been a byproduct of our learning. When you collapse those information silos and you work through this system together and you're managing your money in this way, you make much better decisions and you can make good use of each other's strengths. You turn your differences into strengths because it's a diversity of opinion, the diversity of the way you process the world that improves the decisions that you make. And this is why I think a lot of couples love this process because they go, this has been amazing for us. It's broken down all these information silos and it's gotten us in parentheses on the same page. So If you want to learn how to build that confidence that comes from competence, this is how you do it. And if you want to give yourself permission to make the big money moves, this is how you do it. let's get into it, mate.

Ryan: 18:29

a big intro.

Terry: 18:30

Yeah. I think heaven.

Ryan: 18:30

well, let's start with what it's not. so where I'd probably start with this is it is not a rigid set of rules. You need to follow that someone else who's never met you has set for you. You call it a prescription, which is basically just saying, you know, it's a plan on a page. It's baby steps. It's, you know, follow these 7 steps And you'll reach some level of financial, health that will give you some comfort, I guess. but that's not really what we're searching for. Like you said, we want to get to a point where you're building an extreme amount of confidence and capability that allows you to know you can handle anything. And make big money moves that really do buy back time so that you don't have to go to work through obligation. and so what it is in contrast to that is for us, it's a monthly ritual for actively managing your money to get what you want. this is very much what's the research you're referencing there? Like you called back to just before, that research was that self made millionaires spend twice as much time managing their money and making decisions about their future financially than those who did not. And this doesn't need to be an extreme amount of time. Like our members practice, maybe about 15, sometimes 30. Some guys love it, spend a little bit more, but 15 minutes a month is actually heaps here. it, like I've mentioned before, sitting down with the new money you've got and deciding exactly what you want it to do for you. And it doesn't necessarily mean, writing down that I can have four lunches throughout the month. It's a little bit more high level than that. You can go into the detail, which is great if you're willing to do that. But we don't want to be dogmatic. We actually just want to be very conscious about what's the split of our resources, and are we balancing that split well? a good example of this is, if prescriptions are a bit like recipes you must follow to the letter to get a specific result, like cooking from the can. Did you ever cook from a can mate? Ramen,

Terry: 20:08

In uni, I could cook from the can all the time. I used to from the can, life was easy. those stir fry dinners where you just, like, you take the top off and you pour it in over some ramen noodles and you're like, yeah, look at me, I'm cooking, mum. That's like that. a prescription. Yeah.

Ryan: 20:21

you can do it fast, do it dirty, and it's probably not going to be that nutritious. It probably won't be that healthy at the end of the day. Whereas income mapping is like knowing how to actually cook with various ingredients to create a bit more of a culinary experience that you want. So it's being able to open up the pantry, say this is what's left in here, maybe open up the fridge, maybe there's a lot of leftovers from other meals, but turn it into something great. That's how I would compare the two. Hahahahahahahahahahahahahahahahahahahahaha

Terry: 20:46

I love that. That's my favorite analogy to explain those three things. you're not really skilled when you're cooking from a can to get a certain outcome. but you relate very differently to the experience. And remember, I called back to a future author, we talked about temple building versus bricklaying, right? You want to be a temple builder, the kind of person that's taking pride in the skill of doing the thing. And you have an element of creativity. There's an element of you doing it the way you want to do it, playing the way you want to play, right? There's a freedom, there's an agency, there's an autonomy in doing it when you're skilled and people who are a lot more skilled have a lot more fun. Like, you know, I was learning how to surf. I was like, is this kind of ironic? I'm out here on Bell's beach. I'm like 30 years old learning how to surf. And I feel like an absolute amateur. I'm working so hard and I'm looking around. I mean, there's like 55 year old guys who have been surfing for their whole lives, just. picking off every single wave. They know the timing. They know to get the right wave. good guys are going to give me one every now and then, but they're the guys that having the most fun because they have the skill. in to build the skill. And you know, here I am trying to learn the surf and I'm thinking it's all about the surfboard and where I've got the carbon fiber thing. And it's not, it's about time spent in the ocean, learning how to surf. so like there's a huge difference between those two things. If you want to have more fun.

Ryan: 21:50

Yeah, that's that Cal Newport idea as well, isn't it? Which is, as soon as you become good at something, you start to become passionate. Most people seek out professions based off what they're passionate about. but usually you become passionate about something. Once you get good at it and you're like, Oh yeah, this is something I can actually really give to the world, something I enjoy doing because of the fact that I know I'm good at it.

Terry: 22:09

and I think that's where these prescriptions fall down, right? Because you actually don't get the skill, so you actually don't have any confidence or self efficacy that's coming from the thing. You just have like a certain set of results and you've met a

Ryan: 22:19

Yeah. Oh, yeah. All right.

Terry: 22:46

sense for you. That's improving your life. I've just spoke to, Trudy, shout out to Trudy. She just started with us this month. She's a bloody legend. And, You know, she had been printing out bank statements and every spend for seven years. She said for seven years and I said, Oh man, this is and it's not in line with any goal. It's just the idea that like you should keep as much as you possibly can. It's not inherently motivating. that's sucks. And so I was like, this is going to change everything for you. I spoke to her two nights ago. She's like, Oh my God, this is just dawned on me. She's like this. I've been doing for the last seven years versus what you guys have been talking about. it is chalk and cheese. I can understand completely why I haven't been hitting my goals and why I've been hiding this process. Yeah, it was just bloody cool to hear, but I, I, I hear it all the time. People go, who the fuck am I I hated this part of my life. I'm like, you didn't hate this part of life. You hated the way you were doing it. That's what you hated. Yeah.

Ryan: 23:32

I think it's like a really specific example because we've used that term prescription a couple of times versus this income mapping. The difference really is like a prescription would be when your income lands, you split 50 percent towards spending 30 percent towards saving and 20 percent towards investing. obviously the tricky thing with that is life is very dynamic. We've got seasons of spending. We've got bill cycles. We've got, competing priorities at times. We want to take time off. We have maternity leave. We go on holidays. We have all these dynamic things in life that make it very hard to stick to that kind of split where we're talking about income mapping is. One, we want to always detach ourself from, when we get paid is a really important factor here, which is usually when we're, if we're allocating money, as soon as we get paid, a sense of dependency on that is massively elevated. And that is purely through, the fact that we kind of look and go, if we don't get paid on that day, the whole thing falls apart and we're fucked. so one, we want to detach ourself from when we get paid and actually let. But it's with that new money, the income we've earned that we're actually sitting down and going, well, how much would we like to spend? What bills do we have? And that can be done in, you know, less than a few minutes. Honestly, it takes me less than five minutes to do that whole thing with the right tools. But then looking at the goals you have and saying, well, this month, we've got this trip that's now six months out and we're 6, 000 to go. We need to put at least a thousand towards that. But then we've got the dream home that we're funding as well as our investment portfolio. They're really important to us. So how much of what we have do we want to put towards each of those? And essentially what we're saying is with our income, every dollar allocated is us voting to create that next. And there's this real tight connection between every single month actually making and creating. The next thing in life, the layers that we're introducing, that is a part of that future authoring that we talked about in that first step. It's like, what does life, a great life look like? And now how do we take a step towards that as often as possible and really tightly coupling shit, this new money, when we get to savor it, fuck, this is how much we've got. This is how our hard work has translated into resources and means for us now. And now with that, we get to spend it on these things. We get to live a good life. We also get to make serious progress towards each of these goals that we have to, and I can see every time I contribute and vote for one of these goals, it just becomes a little bit less fuzzy in my mind because I can see it now it's getting closer, it's becoming a little bit more real and that actual action of allocating to a goal, transferring money. Firstly, deciding to allocate two grand towards the dream home, for example, and then transferring that money, actively transferring that money, flicking the, you know, opening up the app, flicking the thumb across the screen and sending across and then seeing that balance grow. And get close to the target. That's how you create a win state that just makes it, you know, it's a huge dopamine spike that makes you go, that felt good. I can't wait to do that again next month. And as soon as you get to that point, and we hear this from guys all the time, they're like, I'm addicted to this. I actually can't wait. What's wrong with me?

Terry: 26:19

Yeah.

Ryan: 26:19

who am I? that is because like, you're now tightly linking. Yeah. So my money that I'm working for, I get to actively decide what it does for me. And then I'm seeing that come to life in front of me and I feel in control of what I'm creating. And that's the purpose of all of this.

Terry: 26:34

There's a neuroscientist, his name is Alex Korb, and he wrote an awesome book called The Upward Spiral. And he talks about how the act of setting intentions and planning calms the monkey mind. He said there's like a part of the brain that's like ruminating all the time. As soon as you set down an intention, put something in place, it actually does take you from that. limbic system a little bit brings you back to your executive function and helps you kind of relax in that way. it gives you a bit of an illusion of certainty that it's going to play out exactly the way you want. And we know that's not true, but it's always better to have a plan that you're acting and reacting to the not plan. And drift and be nowhere. So you just know, Hey, I'm actually taking control. I'm stepping into the driver's seat of my life and I'm making decisions. We've talked about the power of decisions before and how important they are. it's the most powerful gift you have to create your life. You do not want to outsource the power of your decision to somebody else's prescription. You want to take those moments. And I think, you know, if I can play devil's advocate here, I know there's a portion of our audience that might be listening to this and rolling their eyes, going, Oh my God, I don't want to be ruled by money. I don't spend all this time thinking about money. I want to explain why you're thinking that and why that's going through your head right now. Because what you haven't experienced is having the life that you dictating to and directing the way you use your money. You have just been thinking the thing I should do is be responsible with money being responsible with money. looks like I'm not just having less fun in life.

Ryan: 27:45

Okay.

Terry: 27:57

shouldn't pretend that every month looks like the last bank statement that you printed out and you set a bit of a prescription based off. It's just never going to be that way. There is no such thing as a normal month. it gives you that sense of being able to spend in line with what you value, and move with your life. And being controlling the process. And so you feel like, oh, Matt, that sounds like such a burden, that sort of thing. And it has been a burden because primarily, probably what you've experienced is a form of control motivation where it's like, it's not what I want. It's what money wants, what money lets me do versus what we're talking about is no, actually giving money a very specific job for us where we're in charge every single month. And so you don't have a reference point for that right now. And that's why you might be thinking like that. And that's not your fault. It's because of the way we've been taught to manage money. And it's our absolute fucking crusade to change that. Because I think it's such a limiting thought. It's such a limiting belief and you can absolutely change it. I'm 100 percent convicted on that now because I've just seen it so many times. if I could do one thing, I want to just change that reaction. what I mean?

Ryan: 28:49

That sounds hectic. Crusade. I like that.

Terry: 28:51

yeah, exactly. So, you gave a bit of an overview there. I do want to delve into it More deeply, there's a few prerequisites. I'm going to just quickly go through these, and then we're gonna delve into the actual mechanics of this process. I think we've given you a bit of a preview. We've talked about some outcomes and a little bit of how this works, but I really want to make this as tactical as possible. if you are the DIY type person, you can skip the two or three years we took to be able to figure out what does this need to look like to make it work? so some prerequisites, let me skip through these. So done your 12 month forecast. listen back to the last episode. You should know what that is. you know what your seasons of spending and saving are, you clocked your irregular expenses. You know, when they show up. You've done that. The second thing is you need to set up a banking structure that's geared towards your goals. So there's a few things we need to get through here. banking structures and buckets, those sort of things, they're inherently good ideas, but they're practiced in a bit of a limited way because it's very generic. It should be very specific to your goals. So let's quickly go through these three, mate, just to explain this. The first one is we need to separate income from spending. Now, just to signpost you, I said there's going to be one account that's going to change your life. It's this account. It's called the income pool. Let's explain it.

Ryan: 29:51

Yes. So income pool is just the account. I think I referenced it before. It just purely collects new money as it comes in, wherever it comes from work, from business, from investments, from gifts, whatever that might be. Just whenever there's new money that comes into your system, it collects it there. And it keeps it there until you've had a chance to sit down with it and decide exactly what you want it to do for you. And sometimes, this can help for parents that have little ones. Think of it like the playground at water parks. It has a bucket above the playground that fills up with water and then eventually it tips. But you've got a very juicy bucket to tip.

Terry: 30:23

Mm.

Ryan: 30:23

the income pool. Purely collecting new money, letting it sit there and letting, sometimes it's occurring more than one paycheck. Bye bye. so we've met a monthly rhythm. We're really optimal way to manage this just because it's like you're managing your cadence a little bit better. Too many data points throughout the year, too many actions can be fatiguing. So it's harder to go, you know, I'm going to distribute my income every week or every fortnight. We found monthly just means breaking the year down into 12 discrete monthly money missions. And, that can be a fantastic cadence cause it's only 10 to 15 minutes a month that you have to do it. But it also means that you can adopt a lot of the different, frequencies of, Paychecks as well. so if you get paid weekly or fortnightly or monthly, it all still work. So then if your paycheck does change, if your pay cycle does change, then you can absorb it. If you go from monthly to weekly or weekly to monthly, or fortnightly to monthly, it doesn't affect your system at home. You still collect money and distribute on the same cadence, which is once a month.

Terry: 31:19

I love this account because it does a couple of things, really important things. The first thing it does is decouple incoming from outgoing and that like slows down that financial pulse and it allows you to front load your decisions and do them once a month. Why that matters is because you can do those separated from the actual doing and the further the decision from the doing, the less the stress that comes with spending. the thing that stresses us out. And the thing that makes us feel like we're not in control is that we're having to react to things that we could have anticipated and we could have thought our way through. And we're doing that often with no willpower. It's oh shit. I just got home. I got the mail and the rego is due today. That's 800 bucks that I didn't really consider. And like the 50, 30, 20 rules thrown out. I just suck at money. I'm no good at this.

Ryan: 32:00

Hmm.

Terry: 32:00

You actually did know that was coming. If you did a forecast, you'll know exactly when that's coming. And if you thought into the month, you'll know it's coming as well. And the problem isn't the rego bill. It's the fact that you didn't anticipate it. And it's also the fact that you're having to decide what to do about it when it actually shows up. If you knew at the start of the month, hey, it's March. March is when the rego hits. So when we're distributing our money for the month, That's when we need to kind of consider like this is going to be

Ryan: 32:21

It's a part of it.

Terry: 32:22

You're going to spend the money anyway. You're just going to be doing it with or without stress. And that's what I find so kind of tragic really. Cause like the money's getting spent. it's going to be that you're actually either being proactive with it or you're being reactive and reactivity is what creates the stress. It's a violated expectation, but it's actually just your willful ignorance. You're pretending that every month is going to be the same and you know it's not, you know, there's things that pop up every single month be in control of that. So

Ryan: 32:43

Yep. All right.

Terry: 32:58

it helps a lot. And this is why, you know, Nicola, mortgage broker said like, this actually was profound, the difference this had. She's like, I know how to manage money in a spreadsheet, but managing money in real life and doing it with moving parts and doing it with a partner is a completely different thing. Having an income pool that actually makes us stop, step back, zoom out every single month. decisions with what to do with the money, where to send it. That's been a game changer.

Ryan: 33:18

Silence.

Terry: 33:19

Most people say this completely stopped all of our fights. We don't fight about money because we're just thinking really rationally about it and it's all separated from the doing. It's pretty cool.

Ryan: 33:26

I think that's massive. Like there's a big difference between going shopping and just buying something because you're like, fuck, I need, I feel like something fresh. And a bit of mood repair versus being like, Oh, this month we allocated 400 bucks for clothes. I'm going to go shopping and buy a couple of things. And just that sense of like that feeling at the exchange when you actually make the purchase, tap the card, do that thing. It's very different to be like, fuck, how good that I've got a budget for this much that I can do this. Versus being like, shit, should I have done this? but I'm sure whether or not where that's going to cost me. and that's where this being able to kind of sit with your money first and go, this is how much is okay in terms of spending, but also then still maintaining meaningful progress towards our goals just allows you to go. Do you know what? Yeah, spending that much is okay. Because I've got context. I know what it means.

Terry: 34:10

I know what's happening for the month, but I've also zoomed out in on the year. And I've actually incorporated this into the year. And that even with this spending, I'm still funding that goal, I'm still funding that lifestyle goal. I've still got that investment goal funded. So what am I stressed about?

Ryan: 34:21

I think of like thinking about what you just said there. Like, it actually trains a fair bit of metacognition in the sense that you start to observe your own thoughts patterns. And and you go, well, how do I usually react in this situation? where am I tripping myself up you're paying attention and observing your own thoughts and patterns throughout the month, but then kind of going into this boss mode, removing yourself from it for a little bit of time at the start of the month and taking a level of control that you probably haven't had before. And that's just being proactive. That's what being proactive looks like and preparing yourself.

Terry: 34:52

That's the difference between knowing how to cook versus cooking out of a can. I know how to cook, so I know how to get this result. We were on this holiday in the middle of the year up in the East coast and, you know, we'd actually done really well, stuck to our kind of plan for the month for our spending for that. And then on the last day this trip, Someone came up with the idea of going to wet wild. I was like, oh man, we've been wet the whole time, might as well get wild. It's been bloody raining the whole time. Sorry. Okay, we'll go. Anyway, so we were like, let's go. and I was thinking, oh, we've got some space in our plan. Like, we've been pretty good with this. Let's see how we go. And so I ring up, it's 12 o'clock in the day. And it's going to take us an hour to get there and it closes at 3. 30 and I said, yeah, so much a ticket is go, yeah, it's like 450 bucks. I was like, But I can only be there for two hours. And this is my only opportunity to do it. Like, yeah, it's just 450 bucks.

Ryan: 35:33

Yeah. I

Terry: 35:45

is actually really interesting because like I've, I'm actually making the decision to be miserable about this because of this one thing. But really. I am able to kind of look at it in perspective, I zoom out on the month. I go, okay, so it's actually probably takes us 250 bucks above what the actual plan was. What would I shift and change different in the next, in the last week or two of this month, to adjust or, or accommodate for that? And what, what might I change next month? And if I do zoom out across the full year, what does it actually mean? And I'm just laughing at myself. I'm just like, this doesn't make any sense. Like I've just made the, I've made the choice to be miserable and have the experience being miserable and make it miserable for everybody else. Just because that kind of violated expectation of like how much it is versus what we actually get out of it. fuck it. I'm just going to make the choice to have fun. So I enjoyed every single ride. Like it was the last time I was ever going to ride

Ryan: 36:27

went mild steak, very much.

Terry: 36:33

example of what you're talking about there. The difference between sort being sucked into the moment versus being able to know how to cook, being able to know how to adjust and change things and you either know how to get your results with money or you're just going like, Oh, we didn't keep the money. Must be bad. You know what I mean? too simplistic.

Ryan: 36:49

yeah, this is a bit of an aside, but it's kind of related. I always say this to Brit, around like getting fines or big unexpected expenses. which is, I'm like, why are you trying to make it cost more? It's a bit of a naughty comment. But it's like, it already costs 500 bucks. You being upset about it just makes it cost more. And like, if you don't let yourself get upset by it, you just go, Oh, it is what it is. We have some means, you know, pay it, move on. you don't pay anywhere near the price. it's like, oh, the money's gone. Like, unless you're going to change it.

Terry: 37:15

that's a good statement, but in defense of Brit, I'd be like, yes, Ryan, but don't repeat that mistake. You keep getting your fucking, your tickets. So you might, you need to make it hurt just a little bit more, I reckon, just so you don't repeat the mistake.

Ryan: 37:24

yes.

Terry: 37:25

We've talked a bit about banking structures here. We talked about separating income from spending. thing is separate needs and wants for spending and creating buckets for goals. So let's quickly go through these, needs and wants for spending. So we just talk about essentials and we talk about lifestyle accounts.

Ryan: 37:39

Don't do

Terry: 37:40

there's two types of lifestyle accounts. There's a shared lifestyle account and then there's an individual lifestyle account. So yes, you always have your own money. So this is a game changer for couples because it actually makes you think about how you invest in the relationship. so Alyse and I allocate for this every month. Every second Thursday, we go and do hot and colds and like sauna and then ice bath, that sort of thing. and if we didn't have that account, we wouldn't give ourselves permission to do that. And so it's a kind of a nice trigger forcing function for you to keep investing time and money in the relationship. Or else, I mean, for us, you got the two kids now, it's just so easy to get lost in the vortex of life and the kids and what's going on with them. And you can turn around in six to eight years and hate each other. And so she said to me, she's like, it's cheaper than a divorce. I was like, yes, it is much cheaper than a divorce.

Ryan: 38:18

It also quarantines that money for that purpose because like other things pop up and it's making sure you quarantine it, keep it there for those purposes. Otherwise, if it's all together in the wash, then other things can steal it pretty quickly. So that's where division of money segmentation in different accounts plays an important role.

Terry: 38:33

yeah, so individual lifestyle, shared lifestyle, and then we have essentials, which is obviously just paying all the bills and things that you have to do to keep the house running and keep things going. So needs versus want for that. And then we have buckets for goals with targets. So goals, it might be like you said Dreamhouse, but it's got to be Dreamhouse 150k deposit or whatever the number is, by a certain date. Make it concrete, make it measurable as possible. We generally sort of advocate for somewhere between three to five goals that you're funding, one or two lifestyle goals, a couple of financial goals that make sense for you to keep pushing you forward, and breaking those down into little milestones as well.

Ryan: 39:04

Yep.

Terry: 39:04

one that we didn't talk about here is just the cash cushion. So do you want to just explain the difference between the income pool versus cash cushion rate?

Ryan: 39:10

Yeah, so the cash question is essentially just, it's an emergency fund, it's there to cushion the blow whenever life throws a curveball, and it can serve a couple of different purposes, like for big expenses that hit you by surprise. where you do need a cushion or if your expenses are higher than your income for some months that it can just absorb those months as well. And you ride through them. And then also, if there's ever times where, you know, there's loss of income or, you know, you want to quit your job and Give yourself a runway to do something different. It kind of keeps those choices open to you so you can be bold in getting after the things you actually want. so yeah, it kind of sits off the side, but it's there to support when things happen. So a bill hits you by surprise. You didn't plan for it for the month. It can, it can tackle that before you, and then you might just prioritize refilling it in the next cycle.

Terry: 39:56

Yeah, so we've got Income Pool, we've got Cash Cushion, we've got Lifestyle and Essentials accounts, and then we have Goals accounts. The reason this is so important is because when you do quarantine spending, if you like, into those accounts, you are regulating supply, which means you moderate demand. So Parkinson's law is a really big thing. Parkinson's law is the idea that more supply, the more demand. so for example, if the fridge is full, you eat more.

Ryan: 40:18

Oh yeah.

Terry: 40:18

two weeks. when you actually regulate the supply of the thing, you moderate the demand and you quarantine it for that purpose. And, this is super, super powerful for a couple of reasons. Like I said, it kind of helps you moderate demand, but it also shows you the opportunity costs of taking money from one of your accounts. So it's really easy to take money from savings, really easy to take money from something called savings with no purpose. It's really hard to take money from kids school fees. 10, 000 by July, 2020. You're like, Oh, that's gonna hurt. I'm taking money from this kid's cool space. That's something called mental accounting. You want to make mental accounting work for you. Because when you put it in those accounts, it kind of gives it that job. In your mind, you're like, you're labeling it saying, that's what it's for. so,

Ryan: 40:57

Yeah, I love the

Terry: 41:06

it. And then the cushion, as you said, it's there to cushion life's blows. people have savings accounts and they never use them. They go, no, I can't use them. I'm like, that's the purpose of savings It's to cushion life's blows. It's emergency fund. It's there for that purpose. So it's, you know, this takes some setting up. But it's a one time thing and once you've got it set up, it makes your money life work unbelievably easy for the rest of your life. You just need to set it up once, just change the labels of these accounts as you change your goals. And, so I think some people go, Oh, I don't want to do that. And I'm like, well, you're just making the decision to struggle the rest of your life completely blind where your money's going and what's going. You're spending more time and energy on that.

Ryan: 41:38

Yeah. And the other side of it is you have all your money in one bank account and you never know what it's really for. You're trying to kind of segment that 80 grand that's in that offset account because it's got to do these different things in the future. But you're not really sure what that split is because it's always kind of changing in balance and it's basically like having a lasagna in the fridge. An endless lasagna. That's scary for me. eating that shit three, four times a day.

Terry: 41:59

well. That is not going well.

Ryan: 42:00

Carb intake through the roof.

Terry: 42:02

of each month, whenever you get paid, you feel like you're absolutely creaming it. So you're just like, you're out shopping and

Ryan: 42:07

not even when you get paid. If it's one, my bank account, it doesn't matter even if you're getting paid. It's just the fridge is always full, just endless, endlessly full. so that that can come as challenges. and especially when you then start attaching all meaning to a single balance. Whether or not we're doing well or not is purely based off this single balance versus we're actually getting closer to these life goals. That is a very different, frame to look at your finances through. so it's an important one, Seth. Yep.

Terry: 42:33

so these are our prerequisites, right? You've got to set up those bank accounts. You need to have done the forecast. The last thing is you need to be one month ahead. if it costs you 8k a month to live,

Ryan: 42:40

Yep.

Terry: 42:41

essentials, you need to have at least 8k in savings so that you can pull money through the month to allocate it to the subsequent month. that becomes your kind of float, if that makes sense. So you do that the first time and then you move through that process of like pulling the money through the month and allocating it. So right now it's the end of November and it's popped up in Moola right now. December money map is available. And so what you're doing is you're looking at your income pool and you're saying, look, this is how much we have for the month. Now what's coming up through December? What is actually coming up in December? And you need to be able to kind have that ready to be able to give every single dollar a job, and make that work. So these are our prerequisites. 12 month forecast, banking structure, one month ahead. The mechanics we've sort of discussed here, but just to make it even more concrete, how do you actually map your money? There's a few steps here, mate. So go nice and slowly and just talk about what's happening, when it's happening.

Ryan: 43:24

Okay. Yep. So the first step would be redirected income into this income pool account that's a single account sits by itself and income is collected in there and you let that collects for a full month. Like you mentioned, you need to be able to allocate and be a month ahead on all your spending. Otherwise, money's coming in, money's going out, and you're living on the financial edge. So getting away from that financial edge first, getting a month ahead, and then being able to collect for a month, and then be able to allocate for the full month. And of course, then at the start of the month, as you're doing that, you're also funding your goals. You're looking at the goals you have and really asking two questions. What's most important and what's most urgent. Urgent is set based on a timeframe. Like I said, with that travel example, holiday, maybe it's in six months and you need 6, 000 to go. So you're like, well, it's urgent. So I have to put a thousand dollars a month towards it. Cause it's got a timeframe. Often you don't have timeframes, or you've got looser timeframes and it's like, well, now it's just whatever's most important. I want to get to that one soonest. And that's wayfinding. but the key thing is at the start of each month, you find your goals. And you choose the things that are most important. and then lastly, you fill your spending accounts. you fill your spending accounts, your essentials and your lifestyle and you decide how much you want to spend in specific categories. If you've already done your forecast, obviously our guys have done their forecasting with Moola. So it's already there. Good to go. And you know, they've planned out with between essentials and lifestyle essentials, being things like groceries, transport, health and fitness, housing and utilities, education, childcare, insurances, et cetera. Lifestyle being, you know, eating out, dining in bars, takeaway and coffee, shopping, personal care, entertainment, home improvement, pets, gifting, et cetera, travel. but it's essentially looking at those categories and going, how much will I need or how much do I want for this next month? a doozy, obviously. We're about to start December and it's one of those ones where you go, well, this month, gifting's probably going to be a little bit higher. There's going to be a few more Christmas presents that are required, if you're last minute like me. so essentially, you're deciding on each of those

Terry: 45:16

Silence.

Ryan: 45:25

three grand of worth of spending that I'd like to do on the lifestyle front. And so I've got 11, 000 to allocate. And from the 15K that I earned, I'm going to put four towards this goal and one grand towards that goal, for example. And then once you've done that, you're then validating it. Like I mentioned earlier, you kind of going, well, that eight grand and that three grand, was that close? Kind of true. and that's what we call monetary vitals throughout the month. So first check how much is left in your spending accounts. That's kind of the first pass. Have I spent well and am I pacing myself well throughout this month? Or have I been a bit like, Usain Bolt out of the blocks and I'm now running out of steam at the 800 meter mark? But then to checking in each of those categories, how much did I spend or have I spent on gifts so far this month versus what I plan to spend? I was planning to spend 1500 on gifts. I've already spent two grand, so I probably need to manage my expectation going into next year. So I might actually update my forecast for next December and beyond so that when I get to next year, it already tells me no. You need two grand, not 1500. and that's it. Rinse and repeat, doing that every single month. And as you're doing that, you're updating your forecast. Like I mentioned, you're updating your assumptions about what it looks like going forward, which helps you better plan when you're doing the next layer, which is planning out investments and your strategy and taking on debt and all those things that are required to build purchasing power over time.

Terry: 46:42

Yeah, I love it. So find your goals. redirect income into one account, let it collect a month's worth of income, fill your spending accounts to fuel yourself and go the distance, and then monitor your vitals through the month to actually see how you're going against those intentions. That last point's actually pretty key. It's real time data you're actually looking at. So you're always going to the fridge and saying, how much left in the fridge, and when can I fill it up again? So I've got weeks left and I've got this much in the fridge. So I am now figuring out that I can't eat all that lasagna today. That's got to last a couple of days.

Ryan: 47:07

Yeah.

Terry: 47:08

through that, looking at how much supply you actually have. That's how you get your Parkinson's law working for you instead of against you. Now it's kind of interesting. It's kind of become a bit of a game. There's a few game mechanics happening here, right? There's a goal, you set an intention, you've got a scoreboard, you're looking at it throughout the month. And then there's a set of rules as well. and there's more particulars in terms of like, what happens if you know, run out of essentials? Where do you take that money from? What happens if you run out of your, you know, lifestyle spending? Where do you take that money from? We've got some sort of conventions around that help you really think about the best ways to do it. So, it sets up a game mechanic with your money. And it makes it bloody interesting. The best way to make something interesting is to make a prediction. It sets up like a dopamine loop in your brain. We like, how's it going to show up? How's it going to turn out? What's going to happen? And when you do that, you're training and honing your attention on how you're spending. And if you train and hone your attention to how you're spending, then you will be saving. You'll be sustainably saving guys.

Ryan: 47:55

It's worth adding also rewards and punishments. There's a lot of rewards in this and give you a big dopamine spike. And then there's some punishments you mentioned there about what happens when money runs out in the account. So something we do personally is we've got a couple of key lifestyle goals that we want to do that are exciting. But if we ever overspend with our lifestyle, then we have to pull from one of those two. And so the trade off becomes very visible. It's like, fuck, do we want to go out? For more beers, or do we want to go to, Europe in March? And sometimes you go, yeah, let's have more beers. We'll figure it out. but it's just always good to see what you're choosing between, because the reality of finite resources, which if you're listening to this, and 99. 9999 percent even the wealthiest do, but for most people, we've got finite resources. So we're always choosing between this and between that.

Terry: 48:39

Yeah.

Ryan: 48:40

Usually we can't see it. And if you can't see it, you don't optimize it and you end up spending very inefficiently on the things you don't value versus when the really important things, it becomes really visible. You can see what you're choosing between, then you choose the things that are most important and the things that are less important fall into that shadow. You don't even notice it. And this is why people always say to me, We don't feel like we're spending less, but we seem to have more for the things we care about. And that is purely through visibility of trade offs. Seeing that this thing that we're excited about, it's important to us. We're getting more of that, but we seem to be saving more at the same time. And that's because the less important things have just been shadowed.

Terry: 49:14

If I could just zoom in on the point you just made there for a second and even decode it further. When you make the decision we're going to have more beers or not have more beers because we want to, you know, take that trip. You're values based decision. It's a what do we value more? Do we value this immediate experience in front of us? It takes it from a decision to a very intentional decision. You're having to decide what do we value more and why. And It never feels bad to spend in line with your values. It always feels good. And, you know, call back to our friend BJ Fogg from Stanford, the behavior scientist. We don't change by feeling bad, we change by feeling good. And so if you are more consciously making values based decisions with your money all the time, you're not sacrificing. You're making very deliberate decisions that you are consciously aware of. If you're asking yourself the question, should I, or shouldn't I go out with beers for the boys, it's a really good indication that you can't see the trade off you're probably not going to feel great about it because of that. Even if you went and did it at the time, if you're money conscious and your future focus and your goal orientated, you'll be sitting there at the beers drinking, going like, Oh, should I have done this? And again, you've made the decision to feel bad about a thing. Then maybe you should feel good. You could feel really good about it. You should say, yeah, maybe I haven't been out with the boys for ages. This is a really important thing for me to do now. I can figure out how to accommodate and adjust my spending for the month. Let's enjoy ourselves. So up such a toxic relationship when you cannot see these trade offs and you don't know what's happening with your money because you are. it,

Ryan: 50:28

and also the values that kind of override it too. Like we had a perfect example last weekend where sitting around with a bunch of mates, probably 10, 12 of us, awesome afternoon, 33 degrees, balmy, sun was out we're at the bowls club and Brit and I were kind of looking at each other going, Oh, I think we said to each other, actually, we're definitely blowing our budget this month on, dining out and drinks. And we kind of know what that's offsetting, like I said, a Europe trip. but you also look at it and go, well, what's the point of the Europe trip to have more days like this. Yes, we'd love to go on that trip and make lots of memories, but we actually love these memories just as much, if not more. And so valuing those things for the right reasons is important as well.

Terry: 51:04

You're making a choice there. You're not saying it's this or that. You're saying Okay, we're having this now and that's going to have an implication on that. So does that mean we push our time frame out a little bit further or do we change the shape of what that trip looks like? how do we accommodate? How do we adjust and how do we make a more deliberate decision? And I think that's the difference, right? Because I think people might hear that and say, oh, you made a decision to do that. And you just, you know, you didn't delay the gratification, did the wrong thing. And automatically that's the bad thing. You should always delay gratification. And you kind of go, I call a lot of bullshit on that now. It really have the skills. You don't have the visibility to manage things, to be able to get, a life of and not either or basically.

Ryan: 51:37

Yeah, that's how quickly you can compute. Can I do this and that and go? Yes, I can. And we can still do those other things. Cool. So there's a trade off, but is it a considerable trade off or not? and there we go. But thanks for validating my decision there to have more beers. Thanks.

Terry: 51:51

yourself feel good there, mate. Love you. but I think it is important, right? Like, it really shouldn't be you're always a slave to money in the future. Because some things you don't get back. Like, we've talked about this, there's different windows of life. Those opportunities, like, I don't do that. that's not my life anymore. you're not going to find me at a bowls club all afternoon doing that sort of stuff. That's not really a choice that's as easy as it used to be. and when you think about those moments, You sort of go, well, are these friends important to me? What is it about these friends? How often do we catch up? I heard a really good mental model this morning and it said, always think about long term decision making. He says, I don't allow my current self to make decisions anymore. I always ask my a hundred year old self what they would do. And, he's like, I always make better decisions when that's the case. Because otherwise you're just relying on these like dogmatic algorithms. Whereas the 100 year old self would be like, dude, gonna have 40 years of work. You're going to be doing this. You'll probably figure a few things out. I think you're going to be okay. You know what I mean? Like, spend the time with your mates. You've got some time here in 2, 3, 4 years time when you're knee deep in kids and that sort of thing, you'd be like, Oh, well, this is completely different. and that's not about, it's not about your responsible or irresponsible because you can responsibly make that decision and decide what you can do about it to accommodate afterwards. And that's, I think that's a completely different kettle of fish. It's just that we've lacked any system or framework to make those decisions. So we've just relied on these rules. why I think people hate money. Because money has ruled the life. They're like, nah, I shouldn't do it. Should do it.

Ryan: 53:03

Yeah, I think that's what calling out there is like zooming in zooming out like part of what we're talking about here is zoom in and control the resources you have as diligently as possible. But then zoom out get context. I have the exact same conversations that client last week, which they're moved. Moved cities, quit jobs, looking at doing something new, looking to buy a new home, and stressing about the fact that I don't have incomes right now, and needing to make it happen, you know, in the next six weeks. It's like, hang on a second, take a moment. What would the 70 year old version of you say to you right now? The 70 year old version would probably say, Look, like you said, you're going to work a long time. You know, there's all these things you're going to, you're going to earn money. take six months and do it. Well, you're relocating, set yourself up nicely. take your time. You don't need to rush because the problem is our default state is urgent. And that's one of the biggest problems with, the rat race really is constant urgency. That we set upon ourselves and that is a great way to slow down your pulse is to go. Well, hang on a second. If 70 or a hundred year old version of me, they would probably tell me to do this. It's like with maternity leave as well. how quickly people stress about not making financial progress during that time. It's like, well, hang on a sec, like 70 year old version of you would say to you, no, the whole point of it is to be able to have the freedom and choice to take time like this. why are you trying to push forward? And not actually enjoy the experience. You've got it all backwards. So yeah, I think being able to zoom out, but then zoom in and go, but as long as you feel like you're controlling what you can control at the ground level, which is this income mapping we're talking about, then, you can feel in control throughout those times when things are less certain.

Terry: 54:34

What we're talking about here is just like being creative with your money, like actually playing with using your money to improve the quality of your life, you know, I had this conversation yesterday with one of our guys, he's a physicist, the first physicist that's come through our program and, you know, he mapped out his life by design, right? And this guy's like, I'm talking one of those like Uber nerds, like the kind of people that you look at in Spider Man movies. he's got the whole lab and he's doing all those experiments and that sort of stuff. but he has the kind of skills that can create. and unlock value in completely new industries. And we spoke about, him feeling a bit trapped and feeling like he was like, I want to do more with my skills. I want to challenge myself more. I want to see if I can do something really important and see what I'm capable of and I'm interested in business and that sort of thing. And I was like, dude, awesome. So let's map it out. what does it look like? how would you be pursuing that? who would you be talking to and that sort of thing? And he rang me yesterday and we had this conversation. He said, Hey, so I applied for Y Combinator. You don't know Y Combinator. It's like Hogwarts Academy for startups. and I got through a certain level of process, got rejected at the end. And then they got into another one. and he's like, I've got a real opportunity now and it's a really good chance I'm going to be able to get to pitch to some of these VCs and I'm starting to freak out and he's like, because I've got to take 12 weeks off. Yeah. If I get this, he's like, I'm going to take 12 weeks off, go through this incubator and I don't know what's going to

Ryan: 55:43

Yeah. Yeah. Yeah. Yeah. Yeah.

Terry: 55:55

Mark Zuckerberg and is going to make a billion dollars with no skills. You're a fucking physicist who knows how to create completely. You just explained the problem that you've solved for me. That is a billion dollar problem in the industry that you talked about. You've sold a billion dollar problem that you have the skills to solve.

Ryan: 56:07

Yeah.

Terry: 56:24

you know, I said to him, I was like, The money that you've got sitting there, you're gonna have sort of for investing. I'm like, what if you just relabeled that money? You put it in a new account and you said business education and that there got you through the 12 weeks to give you all the learning that you needed to get to that point. Who do you become on the other side of that process? And what does that mean? Where does that lead you? I can't tell you, but I can tell you what moving towards your dreams looks like. And I can tell you what leaning away looks like. Real question is, who do you want to be? And the whole thing is like you're so zoomed up and you're thinking about the money, but you're not thinking about how to reconfigure it, how to make it work for you. And I think kind of the difference. As you start to do this more and more often, you start to go, hang on. There's different configurations and that unlocks or locks down choices in my life. And if I can change that configuration, I can think about it differently. Now I'm cooking, right? I'm cooking cause I've got the skills. I know how to cook. I'm not cooking from a can.

Ryan: 57:08

Completely changes what you perceive as possible and that idea in itself, buying yourself time. for most people is very hard to do. And how you can figure how your bank accounts look and the role money's like the way you're moving money through it, completely unlocks that's something we've done quite a few times. mate, we've covered a lot here and conscious of time. what else we got to cover?

Terry: 57:29

I think we've actually, you know, I've got a section here about why it works. And I feel like we've covered off a lot of this like during the conversation. It works because it's goal focused, not savings focused. You're focusing on lead actions, not lag outcomes. You surface that sense of progress. It works because it's proactive. It's flexible. It's not reactive and rigid. You feel better about it because what you're doing is decoupled from the deciding. You change by feeling good. It works because it leverages Parkinson's law and makes it work for you instead of against you. And it works because, as you said before, it surfaces those trade offs. It makes the month winnable. it turns an infinite game, which is like my life, into a series of finite games that you can win, lose and learn from. And so even if your month doesn't turn out the way you wanted to, you can look back on the month, reflect, learn, move ahead, go again. And so you don't have to adopt the identity of like, I'm a loser when it comes to money. You can say, Oh, we lost that month. It didn't kind of work the way we wanted to. What can we learn from it? What can we do going forward? So they're the reasons that this works and they're the reasons that it helps you build that skill, that self efficacy, that confidence. so, I guess the key point that I want to make and just to kind of summarize this is wanting to be mindless with your money, it doesn't build skill. Wanting to be mindless with your money doesn't build skill. So stop looking for easy solutions and start trying to enjoy the process of managing your money. And to build skill, you need to make mindful decisions with your money and income mapping is just a practice of making mindful decisions with your money on a monthly basis. And to do that income mapping, as we said, redirect income into one account. Let it build up actively allocated to goals, spending and saving. Then watch the money through the month to match your intentions to the outcomes. And that's pretty much it. You want to do that and set up that game mechanic when it comes to money, anything you'd add to that.

Ryan: 58:54

No, I think that's solid and obviously rules make a difference. So that is something we're developing. So keep an eye on what we're doing and we'll have some tools that will make that even easier to be more publicly available. soon, yeah, that process in and of itself, you can do with a spreadsheet. We did it for years. So, have a crack.

Terry: 59:11

And if you want to know how you're doing with this skill. you can find out your financial skill score just by clicking the link in the description. Take that little quiz. It'll take you about three or four minutes. I think it's like three minutes, 42 seconds. The average person takes, and it'll give you a bit of a spit out. It'll tell you, Hey, this is how you're going against this skill set, and this is how you can improve, and this is what you can do, to get better at that, along with this episode as well. So, mate, this is the fourth skill. We've only got one more to go in this series. I'm getting a little bit been a but, what is it? What's the next skill?

Ryan: 59:36

So, the last skill in the money mapping method is about how you buy time. And obviously, we're leaning into investing and something we do with our members is master planning. It's like devising the strategy and implementation steps over time. But at the end of the day, what you're really learning to do is to buy back your time, through building up your asset base. and this is really just. Building out a playbook for buying back your time through investing. And this is the final piece of the puzzle and makes everything you do go further. These are all prerequisites, what we've talked about so far, to doing that really well and doing that confidently. but importantly, we want to get you to the point where you stop trading your time for money and you're working through the obligation because you need the money, but getting to a point where you don't. Doing so because you're choosing to, you're taking on the challenges for the challenge sake. as opposed to doing it to get paid. So we're excited to get into that one because obviously it's the sexy part.

Terry: 1:00:24

It is. Everyone wants to get to that part. I always feel like Mr Miyagi going through this whole thing. People like, no, it gives the investing part. but if you take this sequence, by the time you get to the investing part, how you invest and what you choose, it's very different. you don't play not to lose. You play to win once you get to this stage. So, That's why it matters to build the skills first and these four skills, the ones we've talked about so far, are so important. Looking forward to this one, mate, to wrap this one up. So, sure if you want this when it comes out to drop, to come straight to you, make sure you subscribe to this podcast and as I said before, find out your financial skills score. Hit that link in the description.

Ryan: 1:00:53

Very good. See you guys in the next one.