63 – Leading Your Financial Life

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Episode Overview:

Springboarding from last week’s episode, Ken explores the concept of leadership, taking action, and driving change. Ken defines key traits of leadership. They must have vision, be aware of the plan and its details. A leader must ask questions and must remain within the plan’s scope. They must initiate re-calibration if needed. They don’t delegate leadership, and must own the results of the tasks that are delegated. All these traits must be applied in order to take control of your financial life.

Transcriptions are auto-generated, please excuse grammar/spelling!

Happy day to you. This is Ken Kaufman and I’m thrilled that you’re here for Episode 63: Leading Your Financial Life. Now, coming off of last week’s episode, I’ve been thinking about the discussion we had about tasks, strategy, and leadership. And then, I was influenced to find a quote because of the most recent and tragic death of George Floyd that occurred in Minnesota. And then, there’s been quite a bit of civil unrest as a result of that. And I just feel poorly and have sympathy and empathy for his family and for those who are impacted directly, and then so many lives that are impacted directly or they’re repressed in any way.

And this episode, I want to dedicate to this concept that Martin Luther King shared as a way for us to step forward, as a way for us to take leadership. I’m gonna be talking in our financial lives but in every other way to continue in this country, to try to drive change, to try to create the right environment here and a fair environment, and one that doesn’t look down upon or give extra privilege to anyone because of the way they look or because of any other factor about themselves, other than if they qualify for it, if they’ve earned it. So in the context of that, the quote that I found was from Martin Luther King. I was motivated to look up some of his writings and some of the things that he said. And he’d certainly been a great movement for destroying injustice and his words, obviously, continue to resonate today. This is the quote. And I want you to think about it in the context of not just what’s happening in the world today, but how you, in your life, can learn how to be a better leader of your finances. Martin Luther King says, “I came to the conclusion that there is an existential moment in your life when you must decide to speak for yourself; nobody else can speak for you.”

Now, when we think about that quote and in the context of last week, I have this concept of tasks, and strategy, and leadership. To me, the moment that you decide that nobody else can speak for you is the moment that you step forward and you decide to start leading. Now, there’s tasks like paying your bills, like organizing your budget, reconciling your bank account. Those are good and those are fine, but not your greatest contribution to your financial outcome. Also, you can spend some time looking at reports and reviewing those things and that’s very, very helpful because it will help you to see and understand things. But, again, still not your greatest contribution. You also are gonna need to regularly check in to see how is your net worth progressing and to check up on progress for priorities. Those are important. But some of those tasks can even be outsourced and you can be given information as well as these other tasks like paying the bills and reconciling your bank account, and credit cards, and those things. The point here is, is that even if you choose to outsource certain tasks or if you choose to do them yourselves, it’s not where your greatest contribution is.

And I just want to give a couple of examples of the strategy components. For example, if you choose to hire somebody to do your financial plan, they still need your leadership. And I’ll talk about that in just a second. If you choose to outsource having your tax return done, which I do, I highly recommend that others do. I know the tax code actually pretty well. And I have a spreadsheet and a Google sheet that helps me calculate and estimate where my taxes are gonna be. I still have an outside CPA, that’s a tax expert, look at my things and make sure I’m on track and then, have them assist in the preparing of my tax returns each year. And I do that because I gain confidence from it, but I do not abdicate leadership to them, to that person I outsource to. I do not abdicate leadership or I wouldn’t if I was having somebody build a financial plan and an investment strategy for me. I’m a do-it-yourselfer. I know that many that listen to this show are also do-it-yourselfers and so, you may not outsource much or you may not outsource at all. If you do remember, you cannot abdicate leadership. You are in charge of deciding these following things as a leader of your finances.

Number one, a leader has to show up and bring the vision and has to care about it passionately, has to live it. A leader needs to create the plan and sign off on the plan, has to agree to it, and not just blindly. A leader needs to understand the details, ask questions where maybe they don’t understand something or it’s outside of their area of expertise to understand. A leader has to stop the planning or the execution of the plan if it’s getting out of scope from the vision. How often does this happen where we’ve got a great plan and then we start executing on it. This could be in business, in life, in family, or in our finances. And over time, we just kind of drift out of scope with what we’re really trying to accomplish and where we’re really trying to go. A leader is one who acknowledges that, steps forward and says, “Hey, let’s stop. Let’s recalibrate.”

And that leads to the next point which is the leader is the one who initiates that it’s time to iterate the plan, not just is it, “Are we drifting from scope?” But sometimes, they say, “Hey, this plan isn’t working anymore because the environment’s changed.” Maybe external factors, maybe internal factors, whatever it is.

Next, a leader does not delegate the owning that they need to lead. “Cannot abdicate leadership,” I think I’ve said that enough here. When others need to be involved, the leader diligently interviews and picks, not just the most skilled, but they find those professionals and those people who they’re gonna outsource things to, that are the most aligned with their core values. Let me give you an example. Let’s say that you decide that you want to, by the time you retire, you want to have a $1 million in the bank. Well, it takes a lot of work. There’s planning, there’s thought process, there’s projecting, there’s understanding how much money you need to save and how you need to execute on that. The leader shows up. They create that vision and they care about it. And they’re gonna live it. Then, they help to create the plan or maybe you create it completely yourself. And sign off and say, “Okay, here’s the plan, and here’s what my investment return is gonna be. Here’s how much money I’m gonna put away.” All within, you know, making the best assumptions you can about the future. Nobody knows the future, but we can certainly make some assumptions based on the past and adjust for tax, for risk, for market volatility, and so on and so forth.

Next, if all of a sudden you find that you’re getting out of scope with the plan, where you’re not saving enough money or maybe your investment returns are far underperforming what your projections were, stop the plan and acknowledge that it’s out of scope. And then be willing to iterate that plan based on feedback that you have around you. You also don’t delegate leadership. You never would say, “Hey here, why don’t you do my investments for me?” And then not have a stake or an interest in what they’re doing and what strategy they’re following.

And then also, a leader will spend a lot of time interviewing and finding the right person that they will outsource components to, for example, if you decide to outsource the investment strategy. Ultimately, you still have to own the results. The leader has to always own the results. And so, there’s never a complete handoff because, even if somebody fails, they can walk away. It’s you who has to own whatever the outcome is.

So, again, just to sum up leading your financial life, the role of leading is the most important. Everything else is ancillary. Still, those are important things but it’s where you’re going to add the most value. And I want to just wrap up today’s episode, again, in the spirit of the teachings, and sayings, and the leadership of Martin Luther King, Jr. He said this, “Our lives begin to end the day we become silent about the things that matter.” I hope if there’s any one lesson you take from this, it’s that you cannot be silent about your financial life. You need to step forward, lead through whatever challenges or problems you’re having, lead through this pandemic, lead through this civil unrest that’s out there in the world. Take control and decide you’re not going to become silent about what you care about, what your vision is, and about what you want to accomplish in your financial life.

Many, many thanks to you for joining today. This is a wrap for Episode 63. Happy day!

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About the Podcast

Join Chief Financial Officer Ken Kaufman as he helps you track and hack your net worth. For those seeking financial independence, your net worth is one of the most significant measurements of success. Using his two decades of financial experience, Ken Kaufman helps you overcome your financial obstacles and look onward towards a better, brighter financial future.

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