35 – Net Worth and Thanksgiving

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Episode Overview:

With Thanksgiving happening this week, Ken reflects on how an attitude of gratitude is actually a crucial part of building your net worth. Ken recounts a time early on in his career where he made some poor decisions as a result of a lack of gratitude...including missing out on a $100K deal! Building net worth over the course of your lifetime is a long term discipline. It requires that you resist the temptation of instant gratification. Science proves that gratitude actually helps combat instant gratification; Ken shares a few tips on how to be grateful, including patience, contentment, and perspective.

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

Happy day to you. This is Ken Kaufman and I am thrilled you’re here for episode number 35, “Net Worth and Thanksgiving.” Now, the U.S. holiday of Thanksgiving is happening this week. And it motivated me to start thinking about how this one time of year we’re supposed to make this extra effort and put in this mental energy to thinking about what we’re grateful for and thanking those around us who have contributed and helped us. A lot of times when we’re around family, we express these things, and that’s all wonderful and important. As I thought about it, the effort that we go through to build net worth is actually dependent on us having an attitude of gratitude or an attitude of thanksgiving, not just one day a year, but it requires work and effort all year round. Let me give you a quick example that is a very bad example from my own life of how a lack of gratitude and thanksgiving kept me or I should say did not…the lack of that left me exposed to make some decisions that I shouldn’t have made.

For example, through the years, early on in my career I had several different jobs between what I was doing while I was in school then my first job out of college, and then I mentioned in the last episode, it was five years after I graduated from college with an undergrad that I went back to MBA school. And each of those instances I had built up some retirement savings in the company-sponsored 401(k) plan. And rather than keeping those just put away and invested, I cashed them out and it was always in the spirit of we’re buying a house or we’re trying to graduate from graduate school without debt. And they weren’t large amounts. I think it was $1000, $2000, none of them was any more than, you know, $5,000 of accumulated asset. But wow, if I hadn’t of cashed those out, I would be in a much better position today as that money would have grown over the last 25 years. It’s actually pretty scary to think about where that would be and how much further along I would be with my goals.

The other one is, so besides having cashed that out and not having had the patience and the willpower to just let those be, I cashed them out. I paid the early taxes on it and…I’m sorry, I paid the taxes in the early withdrawal penalty. I made one other big mistake and it was getting involved in a deal where I was feeling rushed and in a hurry and I got involved and I lost $100,000 in this deal. Again, I’d be in a different place if I hadn’t of lost that money, but I realized now that it was really stemming from a lack of gratitude that caused me to make these poor financial decisions and to make decisions that were going to hurt, not help my net worth in both the short and the long term.
Now, with that story, let me back up. I want to lay a little bit of groundwork for what Thanksgiving and an attitude of gratitude has to do with money and building net worth and then we’ll wrap up by me talking about how it influenced my decisions and had I thought differently I would just be in a different place. So, I need to, first of all, remind everybody the reason we care about net worth is because this is how we make sure that we’re going to have the income that we need and want in the future to whatever degree your financial plan calls for it. It is the source of income for life along with maybe a social security or, you know, other things that might provide that as well. But this net worth is something we’re building so that it can create that security of income.

The problem with building net worth, the biggest one of all is it is a very, very, very long play. If you’re 20 years old today and you’re building net worth so that you can retire at age 65, that is a long ways away. Instant gratification today, doing something fun today versus saving for 45 years from now is a very long way away. And even if our net worth is building and growing just a little bit, because let’s say, you know this last year you paid down some debt and even had the ability to set some money aside into your 401(k) plan at your employer. Even if you did that, it would still look like such a drop in the bucket compared to where you need to be way down the road and it’s just so far away that it’s so tempting to think about using that money for anything else. It’s just hard to set that goal, hard to ride with that goal, and it’s just like I said, difficult and it’s long. It takes a ton of discipline. It takes patience to stick with your plan and it takes decades, literally. So, it can feel overwhelming, sometimes depressing when you look at how slow you’re making progress relative to this long timeframe and it can be pretty demotivating.

So, many things can come up and try to take its place. And I can honestly say, as I mentioned, I liquidated three different 401(k) accounts. I also invested money in a way that I should not have. I’m headed more towards an instant gratification, which I’ll touch on here in a bit. I certainly wish I had all those decisions back. But this temptation is real, to focus on anything other than what’s gonna be best for our net worth in the long term. It’s the temptation. It’s the sheer overwhelm of the time that it’s going to take that keeps us from feeling like, you know, am I ever going to benefit from all this effort and all this work? This is a emotional reaction and there is a way to overcome it. And I think the underpinning way to overcome it is through thanksgiving, through having that attitude of gratitude. And why do I think that’s going to help us financially being grateful is going to help us succeed with our finances, it has to do with perspective, it has to do with patience, and it has to do with contentment.

So, did you know that the feelings of gratitude can actually combat the tendency to seek out instant gratification or that temptation to give up a future opportunity for getting something today? Believe it or not, according to the journal Psychology [inaudible 00:06:41], gratitude increases a person’s ability to patiently wait for a better outcome. And I’ll put a link in this to the show notes if you want to take a look at it. But the science is there. The ability to defer for the long term is easier and comes more quickly when you are living with that attitude of gratitude. Giving thanks and having gratitude can also foster contentment. If you go back to episode three on iterating mindset, you’ll hear some of my philosophy on contentment and how it is this balance between, first of all, being satisfied with where you’re at in what you’ve accomplished and then secondly, being hungry and motivated, still improve to grow, to learn and develop or in this case to build your net worth. So, it’s being satisfied with what you’ve accomplished so far and building it, but still also feeling motivated. So, it’s this balance between the two. Go back to episode three and have a listen if you have an interest in hearing a little bit more and some more philosophy behind why this works the way that it does.

So, the benefits of gratitude are extremely clear. It helps us gain this greater and more accurate perspective of our lives and our money. It gives us a more likely chance that we will defer immediate gratification with patience for a better potential outcome. And it gives us this contentment or the ability to not just focus on getting more, but valuing and appreciating what we have done and the progress we’ve made. The $100,000 I lost was because I did not exercise patience. I acted quickly, I did not slow things down and it’s because I was not expressing and was not experiencing enough gratitude in my life at that time. I can directly point and show that to you. The same with liquidating those early 401(k) accounts when I saw these other things that I needed to spend it on right then at the moment, this, you know, pending debt, going back to college, this downpayment on a home. But when I look back, I would be financially so much further ahead than I am today because…or as a result of those…or if I had not made those decisions in the past. So, I just want to give you a few suggestions, some things to think about during Thanksgiving or hopefully throughout the year that can help us to improve in terms of having gratitude in our lives and having it be so ingrained in us that we reap these benefits of patient, perspective, contentment and actually better emotional skills to build net worth because those things are so critical to making the right decisions to building net worth.

So, the number one on my list is to do a look backward perspective. And I know that this can be a little bit hard because you might not want to look backward. Maybe there’s things back there in the past that you’re ashamed of or you’re angry at, or you wish that those things hadn’t happened to you. I’m asking you to look back in the past to see where you were and then to swing that all the way to today to where you’re at and all of a sudden there’ll be things that jump off the page that are going to show you progress. Now, your net worth hopefully has gone up. If you say, look back 10 years or 20 years and where you’re at today, hopefully it’s gone up. And that will feel really good when you put it in that perspective. All of a sudden we start to feel grateful for what we’ve accomplished. Now, if your net worth has gone down, here is my piece of advice for you. I think you still go through this exercise, but instead you should be writing down and notating all the valuable lessons that you’ve learned along the way and how those are going to empower you to not make similar mistakes again in the future. So again, number one is look backward and put in context where you’re at today with where you’ve been financially and with all the things that you’ve learned and the person that you’ve become in the process.

Another way to bring gratitude, a second way here is take a moment every day and just write down one or two or three good things that happened that day. It just changes that point of reference and as soon as you start talking about something good that happened, it helps you feel so much better. In my workplace, every meeting that we start, we start with something called positive focus and it is so powerful because a lot of times people at work will come into a meeting and then in the middle of a project or they’re working on something that’s really difficult and hard and they are in what we call the gap, which means they are feeling overwhelmed because they see this goal out there in the future they’re trying to get to but they aren’t there and they’re feeling overwhelmed that they’re not there and with all the things they have to do to get there and it keeps them from feeling happy or content today. Positive focus we start every meeting with because it pulls everybody out of the gap. It forces them to find something good or positive professionally or personally that they can talk about, that they can think about and all of a sudden these emotions start to flow through the body and our meetings tend to run so much better because everybody gets into this nice positive place and it’s a place of truth. It’s not that we’re lying to ourselves, it’s that we’re just recognizing and acknowledging all the progress that we’ve made in the past.

Another quick suggestion here. Number three would be if you’re a religious or God-fearing person, I would recommend you take a few minutes every day to evaluate where God’s hand may have appeared in your life. Whatever version of God you believe in and worship, this is so helpful with centering you in faith and centering you and having this attitude of gratitude.

The fourth option here to think about is find a reason to express gratitude to your spouse, your children, your closest coworkers, and anyone else that you’re enact with a lot. We take those people for granted, unfortunately, the most. So, take a day and just be very conscious and present with you finding a way to express gratitude for them in your lives. That by itself you’ll find great juice if you will, that comes if you make that investment.

And then the last one that I’ve found has helped me is doing something nice for someone or serving someone, that tends to elevate my gratitude a great deal. I also…there’s an article that I found, I didn’t read much of it, but I figured I’d put it in the show notes in case any of you like long lists and like to sort through and come up with a bunch of ideas around all of this. It’s a life hacks article that gives the 40 simple ways to practice gratitude. So, I’ll put that in the show notes just so it’s there and you can take a look at it.

So, in conclusion, who knew that Thanksgiving had so much to do with building net worth and with making your relationship with money even more healthy and more productive? For those celebrating this U.S. Thanksgiving holiday, I hope you enjoy it. But for everyone here that’s listening, let’s make a commitment. Let’s make Thanksgiving a daily holiday in terms of implementing this attitude of gratitude. So, it’s not a once in a year flash-in-a-pan event. Rather, it’s something that helps ground us so that we can be more successful building net worth and believe it or not, more successful at building our lives and being successful in whatever it is that we are interested in and whatever it is that we’re pursuing. Many, many thanks to you for joining today. This is a wrap for episode 35. Happy day.

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40 Simple Ways to Practice Gratitude

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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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