Jasper Smith, also known as Mr. #Build Wealth, rejoins Paula and Jon today. Together, they delve into the realm of intelligent money management and share valuable insights on effective budgeting, financial communication, and alternatives to traditional budgets.
Jasper highlights the key hurdle: finding a budgeting strategy that truly resonates with one's unique lifestyle and preferences. He emphasizes the need to choose a method that aligns with individual needs rather than blindly adopting popular approaches.
Jasper explains the "highlighter challenge," a practical exercise designed to illuminate spending habits. This activity involves reviewing the past three months of financial statements and highlighting non-essential expenses. By doing so, individuals gain a clearer understanding of their spending patterns and can differentiate between necessary expenditures and discretionary wants.
The conversation then shifts to the 50/20 rule, a strategy that Jasper endorses. He explains that this approach involves allocating 50% of one's income to essentials, 20% to financial goals, and 30% to lifestyle expenses. Jasper emphasizes that adopting a simplified and personalized budgeting approach can lead to greater financial freedom and enjoyment.
We discuss the importance of open and transparent financial communication within couples. Jasper suggests having honest conversations about financial strategies and goals in a relaxed setting, which fosters understanding and cooperation. The episode also touches on the significance of both partners being informed about their financial situation to avoid potential complications in the future.
Paula and Jasper conclude the episode by emphasizing the critical role of addressing financial challenges head-on and seeking expert guidance when needed.
More from Jasper Smith, "Mr. #Build Wealth" and the Build Wealth Movement, here: https://www.thebuildwealthmovement.com/
Find Paula Christine at PaulaChristine.com or via email at paula@paulachristine.com.
Paula: Hi, and welcome to Beyond The Paycheck. I'm Paula Christine. Now, everybody wants to have a lot of money one day. I think a good way to start is by learning how to manage your money wisely, like planning what we spend and saving, better known as budgeting. Today we're going to talk to Jasper Smith, also known as Mr. Build Wealth. He's going to teach us how to be smart with our money. Welcome, Jasper.
Jasper: Hey Paula. Happy to be here.
Paula: Thanks for coming back. I enjoyed our last conversation.
Jasper: Yes, me too. Glad I was able to come back for a second round.
Paula: Me too. I'm excited to see what we've got. Okay, I get it, budgeting. Everybody hates that word. I know it makes you want to vomit, but you have to do it because you can't get ahead if you don't. How do we do it?
Jasper: First, you've got to figure out what strategy are you going to use. I guess the biggest challenge for most people is there's somebody's strategy that they just blast out. Try my strategy, try this strategy, download this app, do that. The problem is we don't pick one that works for us. I've seen it a million times. It's just, do your budget for a whole month and for some people, they live their lives in these two-week windows of when they get their paycheck. I'm like, can you do like a two-week budget?
Just figuring out what's it going to take to get you to make the commitment, for a lot of people, they struggle primarily because they've never seen budgeting in a positive light.
Paula: Oh, no because when you say the word, it's just like I started it off with budgeting. We both did the same thing. Actually, it's the most amazing thing you can do to get ahold of your finances. Once you get it to where it works for you and you just continue, it just becomes second nature. I like it, it's fun. It's like, "Ooh, look how much is going in my savings account. Look at how big it's grown."
Jasper: It's a tool. The analogy I can give when I'm doing workshops around budgeting, I'm always like, "Look, a hammer's a great tool if you pick it up and swing it. If the hammer's just laying on the table, you can't build anything. Think about the budget, it's great if you use it." Just to your point, you will understand how you're spending your money and then where your money's going for bills or savings or investments, retirement, insurance, whatever it is, we are just lost.
I think when people hear the word budgeting, they feel like, I've got to cut something out of my life, I've got to stop doing something that's fun. I'm like, I agree. That's the initial feeling.
Paula: You could or you can figure out how to do more fun things because you figure out where you were wasting it, and now you can put that towards something else that might be a lot more fun.
Jasper: Hey, Paula, now you're talking my language. That's exactly how I handle my clients who are like, "I just can't figure out this budgeting." Honestly, I tell them, "Let's not worry about budgeting yet. Let's try this activity. This is a real activity I'll share with you because I've seen it work in real-time." The idea is you take a look at your previous three months of statements. I call it the highlighter challenge, some people call it the once challenge. It's just to get you to see how you're spending your money.
I prefer you to print out your, again, previous three months of statements, whether that's credit cards or your checking account. I want you to see what you've been doing the previous three months. You get a highlighter and you highlight everything that was not a necessity to live.
Paula: Oh-oh, I'm in trouble.
Jasper: Most people are. What's funny is if you look back at the previous month, everybody does this. They smirk, and then they kind of giggle. That's only the first month, then they look too months back and then you get hysterical almost. You're like, "I spent," and the answer is, yes. That was you that spent that money on something that was not a necessity. Now we can begin to have that conversation around needs versus wants. That's how you start this process.
I've got stuff I need, like I need to eat, I need shelter, I need certain things to live, but the majority of people spending goes to stuff they just want to do. You didn't need it, but I want to do that today. I wanted to eat out or I wanted to go on this trip, I wanted to go to this show. I wanted to buy some little-- again, the wants begin to overwhelm us, but we don't see it. Getting somebody to highlight it, all it does it gets you to say, ah, that was me that spent that extra $100 last month on something that I did not need.
What I found is if I can get people to go do that activity, we have to do the normal budget. We kind of don't have to do it because now, I've got a good idea of how you spend and then the very next step is we're going to automate everything else. The trick is when I know the money that's coming in and going out, now I can begin to really do some planning, some budgeting work on, okay, I need to hide some money for myself, so I can save for an emergency. I need to be saving for that emergency, for maybe a house, maybe for a trip. Maybe I need to put a little bit more away in my retirement account. If I can get people to see what they're doing from a spending perspective, we never really do a formal budget.
Paula: That's interesting. I always have people do a formal budget only because we're all trying to accomplish the same things.
Jasper: Exactly.
Paula: What I'm, again, looking for same thing, where their money is going because I remember this one time, this couple I was meeting with. They made really good money. They were probably bringing home about $16,000 a month. They're like, "Oh, but we only spend $8,000 a month." I'm like, "Wow, how much have you got in savings?" They're like, "Nothing." I'm like, "You're bringing in $16,000 and you're spending $8,000-
Jasper: Where is it?
Paula: - "Where's the other $8,000?" They're like, "I don't know." I'm thinking, oh my God, how do you spend $8,000 a month and not know where it went? When they did that exercise--
Jon: It's the little things.
Paula: No, it was big things. They were just not--
Jon: I can't say I've ever made 16 grand a month, but I think I've told this story on the podcast before Paula. When my wife and I were dating long distance, she was here in Detroit, I was down in New Orleans, and I said, "Oh man, I don't have any money this month." I said, "I'm spending all this money on plane tickets to come see you." She said, "No, you're not." We looked at my credit card and my debit card account, I was spending more money going to Starbucks every morning than I was on plane tickets.
Paula: Oh, my God.
Jon: That's what was adding up. Jasper's laughing because I'm sure you've seen this movie before, right, Jasper?
Jasper: Yes. The truth hurt. The truth is an eye-opener.
Paula: Some people are so embarrassed that they never come back and talk to you, but they never do anything about it either. They just get frozen.
Jon: First step is admitting you have a problem.
Jasper: Yes, and Paula, I do like the old-school budget templates and all that good stuff, but I have very little success with people actually doing it thoroughly. I think everybody tries it. Unless you're the let's say the engineering analytical type of brain, it's a joy.
Paula: They do it very thoroughly.
Jasper: Thoroughly. It's color-coordinated. They could tell you the whole story, like they like it. I don't even like budgeting. I'm a financial planner, I don't like budgeting.
[laughs]
I think part of it was I kept trying to tell people to do these templates that I myself wasn't doing. I started looking up like, what are some different budgeting strategies? There are a ton. I think that's why I'm very adamant about finding the strategy that works for you because if you don't, you won't have success. I personally went through those struggles in my early 20s of trying to do it the way my industry tells us. I was like, "That doesn't work for me. The way my brain works, I need something simple and if I can just focus on the important stuff, I should be able to have a little fun." That's what I found.
I'm a big proponent of the, I call it the 50/30/20. Some people call it the 50/30/20, but that in my mind, so I do 50/20 because I think about essentials and my financial obligations, which is 70%, so the 30%, lifestyle. In my brain, I could go out here and party and do my thing because I took care of the 70%. That's the really important adult stuff to do. That's what freed me up.
When I adopted it, it was like, "|Oh, my God, why don't more people do this?" Then some people would say, "That's too simple for me." I was like, "Great. I don't need complicated in my life of anything, especially when it comes to my money." I think there was this whole tug and pull of people trying to fit into these buckets that financial organizations have been telling us, but then realizing they weren't getting the results.
Despite them going to multiple budgeting workshops and seminars, it was never clicking. I was in the industry and I said, "This ain't working for me. Let me find an alternative." Now I'm very mindful of people's personality styles. I started to ask, "Hey, are you one of those people who likes to really like do these type of projects?" They say no, here's another strategy that might work for you. It works because my goal as a financial advisor or planner, I've got to get you to get the results.
If I've got to do some things to get you to act, I'll do it because whatever works, it's a good system.
Paula: Okay. I'm going to switch subjects on you for a second. Same subject, but different question. How do you advise a couple who might have two different strategies for handling this conversation?
Jasper: Ooh. Couples? We've got to have the talk.
Paula: [chuckles] The talk.
Jasper: Got to have the talk. Preferably should be over dinner, maybe a glass of wine or your favorite adult beverage.
Jon: Or several.
Jasper: Oh, absolutely. You've got to have the talk on-
Paula: And before you get married.
Jon: [laughs] I was going to say that. I did that. Before I got married, I had that talk with my now wife and I said, "Here's how I operate." She listened and then I allowed her to speak. I like taking notes because I like to document like, "Hey, we are on the same page here. Right? Here's how I roll, here's how you roll.
Paula: Wait a minute, you document your wife?
Jasper: Stop. She hates it that I do this.
Paula: I'm telling you, I already hate it.
Jasper: But you know what it does? It helps us to not get into arguments.
Paula: I guess.
Jasper: To this day she hates it. What I did was I said, "Here's how I like to do things. Here's how you like to do things. Is there some commonalities in terms of how we want to run this household?" What we found is we were able to kind of share those inner thoughts and say, how can we get to an agreement that everybody can be happy?
For the longest time, we didn't have like a joint bank account. I said, "I'm fine with having my own and you have your own, but for household stuff that we both have to use, I think is worth having a joint account," so we did. If it was mortgages or rents, if it was food or gas, just certain things that we all have to have, I think we should share that.
Some couples, everything is separate. I think for the individual, you have to have that talk with your spouse or significant other to devise the plan that's going to work for your house. I'll give you one of these, Paula. This is a weird one, but it works. I have a good friend, they're both in banking, make great money. The wife makes more than the husband. Let me say that.
Paula: Good for her.
Jasper: The wife, despite making more money is the spender. There's always the spender in the saver in every household, everyone. She said for them to have a very good system, she gives herself an allowance.
Paula: Oh, I give myself an allowance. I think it's important to give yourself an allowance, so you don't overspend.
Jasper: Thank you, Paula. Paula, when I say allowance and then husband and wife people to say, "Oh, my God, she's too--" No, no, no, their household works. The wife has an allowance, so she doesn't overspend. Husband loves doing the numbers for the house, and they communicate on what's going on at all times. She knows every week she has X amount to spend on her, whatever she wants to do.
I think for those couples, if you don't have the talk and maybe in a relaxed setting, you're going to have issues later. I'll just say that you're going to have issues. If you don't talk, it's going to become an issue.
Paula: I think that's one of the biggest ends to a marriage is finances.
Jasper: Yes, it's one of them.
Paula: Let me ask you this question. Let's say that, and I don't see it as much anymore, but it's still out there where you'll talk to a couple and like, "Oh, he handles all the money," or, "She handles all the money. I don't have a clue." I'm like, "Oh, well, what if they die? You have to have a clue. " How do you talk with your clients about that?
Jasper: That's exactly what I say, Paula, "So they're dead, now what?" That's literally what I say. As soon as they say that, I'm like-
Jon: That's blunt and to the point.
Jasper: I look at Paula and I pause and I'm extra. I'm like, "Whoa, stop, you dead. Now what you doing with your life? That's exactly how I do it because if you don't shock them, you know that real shock is going to happen in real life, and so I'd rather it be in this meeting setting where it's like, "Okay, you're not really dead, but you can't talk no more."
What it does is the other spouse, person will sit there and they're like, "I don't know where to start." Then I'll allow the person who died to talk. I say, all right, so now how can we get to a point where at least they are informed on where to go, and who to talk to about the finances? You don't have to relinquish the control or the responsibility, but in that scenario where you just died, they had no clue what to do. That doesn't sit well with me, but I don't live in your house. If y'all are okay going to sleep knowing that one of y'all just doesn't know what's going on, have at it, not in my house.
Paula: You trust that person, but what if they're not trustworthy and you don't have a clue? Then you wake up one day and you go, oh, I thought we had this, but we really didn't. It can be a nightmare.
Jasper: It can be, but these kind of nightmares can be avoided.
Paula: I've got one more question for you, then I know then my producer, Jon:'s going to start yelling at us.
Jon: Tick-tock.
Paula: When we go back to that separate, like when you talked about the couples that keep everything separate. I ran into this early on in my career where at that point the man made all the money. The wife made maybe 20% of what he did, he saved for his retirement. She really didn't because she didn't make much money. Yet you cover this, you cover that, but then when they get into retirement I always struggle, how does that work? Because you've got to be a team. It just never seemed to make sense to me.
Jasper: I don't know, Paula, it don't make sense to me either.
Paula: Good. It's not just me?
Jasper: It's weird to this day when I hear stuff like that, I'm just like, how does this work? Y'all have been together. It's weird. It's never not going to be weird to me that you don't have some level of communication around what goes on in your house. I know back in the day and all that, that's great. We're past those days because I live in the now. I'm not as critical as I used to be on people who have strong opinions about how they run their household, I'm learning to just offer suggestions. Hey, would you consider? Either you ask those questions that get them to think, so if something happens, how's this dealt with? You just pause.
Jon: I think your whole business model, Jasper, is you're meeting people where they are, which is brilliant.
Jasper: It's hard to not want to like just, oh, y'all need to stop doing that. It's just like, hey, what y'all want to do. If you think that's going to work long-term, great, but I'm not going to try to convince you.
Paula: If somebody wants to hear your suggestions, Jasper, how should they get ahold of you?
Jasper: thebuildwealthmovement.com. You can scroll down to the bottom, there's a Contact Us section and I would love to have a conversation, see if I can be of service. If so, we'll find out after we chat. I'm all about having the conversation first and seeing where we can go. If I can't help, I'm going to tell you, I'm not your guy. You need somebody else, it's not going to be me. I think for most people I can help a little bit if not a lot of bit. thebuildwealthmovement.com is a great place to find me. Reach out via the Contact Us section and I'll be more than happy to set up that time and have a chat with you.
Paula: I appreciate you. I just love talking to you. I will be reaching out to have you back and we will talk about something else. You're just so much fun. If anybody wants to get ahold of me, they can reach me at paulachristine.com or you can check out my website at paulachristine.com. Thanks again, Jasper. So much fun.
Jasper: Thanks a lot, Paula.
[00:17:06] [END OF AUDIO]