The author and financial planner discusses the connection between wealth and well-being, the quest for financial harmony, and his new book, Wealth in the Key of Life.
Our guest on the podcast today is Dr. Preston Cherry. Dr. Cherry is the author of a new book called Wealth in the Key of Life: Finding Your Financial Harmony. He’s also founder and president of Concurrent Wealth Management. In addition, he serves as Assistant Professor of Finance and Head of the Personal Financial Planning Program at the University of Wisconsin-Green Bay, where he also serves as the Director of the Charles Schwab Foundation Center for Financial Wellness. Prior to assuming his current roles, he served in lead and internal financial planning roles in institutional retirement sales. He has also served as co-investment manager at a Registered Investment Advisor and as a mutual fund wholesaler.
Background
Life Money Balance podcast
Wealth in the Key of Life: Finding Your Financial Harmony
Schwab Center for Financial Wellness
Themes in Book
“What Is Financial Freedom?” by Preston Cherry, concurrentfp.com, July 9, 2024.
“Building Wealth With Gratitude: Essential Tips for Gen X,” Life Money Balance podcast, youtube.com, Nov. 26, 2024.
“How to Retire Comfortably: Essential Financial and Emotional Tips for a Joyful Retirement,” by Preston Cherry, concurrentfp.com, Nov. 13, 2024.
Other
“Dr. Preston Cherry: ‘Money and Life Intertwined,’” The Long View podcast, Morningstar.com, Nov. 22, 2024.
Songs in the Key of Life, Stevie Wonder album
“Does Money Buy Happiness? Here’s What the Research Says,” by Michele Berger, knowledge.wharton.upenn.edu, March 28, 2023.
The Millionaire Next Door, by Thomas Stanley and William Danko
Christine Benz: Hi and welcome to The Long View. I’m Christine Benz, director of personal finance for Morningstar.
Amy Arnott: And I’m Amy Arnott, portfolio strategist for Morningstar.
Benz: Our guest on the podcast today is Dr. Preston Cherry. Dr. Cherry is the author of a new book called Wealth in the Key of Life: Finding Your Financial Harmony. He’s also founder and president of Concurrent Wealth Management. In addition, he serves as Assistant Professor of Finance and Head of the Personal Financial Planning Program at the University of Wisconsin-Green Bay, where he also serves as the Director of the Charles Schwab Foundation Center for Financial Wellness. Prior to assuming his current roles, he served in lead and internal financial planning roles in institutional retirement sales. He has also served as co-investment manager at a Registered Investment Advisor and as a mutual fund wholesaler.
Dr. Preston Cherry, welcome back to The Long View.
Dr. Preston Cherry: Thank you, Christine.
Benz: Thank you so much for being here. So your new book is called Wealth in the Key of Life, and we want to talk about what you were trying to achieve with this book that you hadn’t seen in other books about how to align our money with our values and our life goals.
Cherry: I wanted to give people permission to prosper in a way that they can have a more intimate relationship with money according to how they live their life. The subtitle to the book is Finding Your Financial Harmony. Not going into a lot of musical references and what that is, but financial harmony in a nutshell is about alignment. It is aligning your life and your money and having experienced, Christine, disconnect between life and money before in my own life—and with the people I’ve served, either in the classroom or my firm for all these years—that simply does not feel good. And so putting a name to it, usually when you hear financial harmony, it has to do with couples, but this is another definition. Financial harmony is about aligning your life and money according to yourself, your values, your preferences, your attitudes, and your aspirations about your life and money. And I just wanted to give people a different perspective on how to go about that they may not have heard before in some other book or an advisor or something.
Arnott: So you mentioned financial harmony and your book’s title is kind of a nod to the Stevie Wonder album, Songs in the Key of Life. In the book, you talk about how money and music are related. Can you discuss that thesis?
Cherry: If anybody’s ever heard the Songs in the Key of Life album, one of the, if not the best album of all the time, top five or 10 in any musical genre. These are just facts. When you hear about that album and you hear reviews about it, whether they’re personal or there’s some sort of musical critique of Songs in the Key of Life, and even coming from Stevie Wonder himself, it’s an ode, ode to and through life. It’s a journey just like life. Every song on that album speaks to some sort of humanity, whether it be social, internal, external, emotion, elation, joy, sadness, resilience. And it was a process to record the album as well. Stevie had a run of albums through that time, about four in a row, that probably could be some of the best of all time. And so this was almost a conclusion of a mastery of that during a part of his life as well. So what does that mean to this book?
It is an ode to life. And when I said life and money, I say very powerfully that wealth and well-being are two distinct domains. And you use your wealth through life—and I know we’ll get to this later—but you use your wealth in order to fund your well-being domains. And because life and money are concurrent, which is the name of my firm. But that’s the reason why—they work in parallel fashion. It’s partnership, and money is very important in our lives, and we shouldn’t discount its essentialness to help us through the journey of life. And so this is why I picked the title, I picked the subtitle, I picked the musical essence of it, having a soul, because music touches us all—it’s universal, and so too is money. These are, when I say the humanity of money, this is what I mean. Everyone is living their life on their own journey, and they have money at all levels in order to help them fulfill that. And people have life and money aspirations on both sides, life aspirations and money aspirations. So how do you go about unifying this in a way in order to get where you want to go?
Benz: Preston, you write that your book aims to push back on some oft-repeated personal finance platitudes that get people stuck in social shame, stigma, or potential biases. That’s a quote from the book. What’s an example, do you think, of one or maybe two of those platitudes that you hear repeated again and again in personal finance circles that you think maybe isn’t serving people especially well?
Cherry: The first one is about happiness. It’s like money can’t buy happiness, and I have a fundamental issue with that. And not only just a fundamental, but even academic and even scientific pushback on that, which is money can in fact—I wouldn’t say in fact—it can indeed buy happiness. I know some of its perception, but there’s theory behind it. There’s economic math behind it. And here’s why. Obviously, we know the research that said at one time happiness is diminishing after I believe it was $75,000. That money can’t buy any happiness after this particular amount or this diminishing amount. And I always said—and this is before my PhD studies, Christine, this was like years ago—I was like, well, why don’t you let me be a participant in that study?
Give me a couple of hundred thousand dollars and let me see if I can be happier, right? So that was my first thought, even from my PhD studies. The second study, obviously, there was a conflict study that came together. One person said, yes, you can buy happiness, but beyond $75,000; the other person that you couldn’t. And he came with the study. It was the Penn Wharton Happiness Study. But anyway, it came to the conclusion that, well, after, 74, you can for sure find some happiness and all the way up and to and through $500,000 is the number. And so where did the original outcome come from?
Well, here’s the conclusion. And this is what it has to do with the book and happiness. If you haven’t done any internal work on yourself, if you haven’t investigated what brings you joy, happiness, well-being improvement. If you haven’t done a study of self, what are your aspirations? What do you want to do? What do you don’t want to do anymore? What are some things you want to do differently? All of that internal work. If you haven’t done any of that, then no amount of money is going to help a person. Matter of fact, if you get a whole bunch of money, then all it’s going to do is expose all of that. But if you have done—and this is something in the book, too—if you’ve done some internal work, and it’s part of this alignment system, the Six-A Alignment System.
If you’ve done an honest self-audit, is what I call it, you have admitted where you are in your life and money journey. You’ve acknowledged how you feel about that, and that’s a process in and of itself. Then you can start taking action in what you want to do with your life. But you first have to cleanse the palate. You have to go through grace and compassion and a courageous process. And it could take time. It could be three days, three months, three weeks, three years. But once you’ve done that work, then you can buy units of happiness. And where that comes from is consumer utility theory, to put a fancy name on it. But you have preferences inside utility. Utility is synonym for well-being. You have time preference. You have budget constraints. And if you know what your preferences of well-being are in time and resources of money, your budget and all that, the more dollars that you have, it affords you the resources to invest in well-being units that you can purchase. And in that order or in that vein, then yes, you can buy more units of happiness. And I’ll conclude with this. Happiness is just not euphoric.
It’s not like, oh, pink cloud in the sky type of happiness. We’re talking about well-being. Can you increase your well-being? Which is another close synonym, talking about utility, well-being, and happiness. And I’ll give you an example quickly, which is, when I was struggling with alcohol years ago. I had enough money in my bank account to where I could invest in stopping doing what I did not want to do anymore. I simply didn’t want to live that way anymore. That was a process. That process that I was talking about, it took a long time. And I figured out what I did want to do in my life. I actually had that vision way before that actually just came to fruition. And I said, this is what I want to be doing, and I’m not doing it.
And that was hurting me as well. And I said, how can I use my dollars? This is after I figured out what I wanted to do and I did the work to increase my well-being. And that was healing, Christine. It was seeking professional help. It was buying myself the time to work through the process. Time costs money. And it actually helped me buy more well-being units. And that in and of itself is an example of happiness. I was unwell and unhappy in the life that I was living. But because I did the work and investigated of what more units that I could purchase, yes, I was more happy than what I was. I was suffering. So was it pink-cloud-in-the-sky happiness? No. Was it increased well-being that afforded me to feel better in the light of the word happiness? Absolutely. And this is what I’m talking about using your wealth dollars to fund your well-being domains and purchasing happiness.
Arnott: I think that’s a great point that money doesn’t just afford you the ability to buy stuff. But, if you’re dealing with a problem like what you went through that was really getting in your way and impeding your well-being, money can be a tool for dealing with that and coming out on the other side.
Cherry: Absolutely. And there’s a lot of examples of that. And we’ll get to material purchases here in a minute. But yes, you summarize that quite well.
Arnott: And in the book, you also talk about the importance of uncovering what you value the most. Can you talk about some specific steps that you think people can go through to figure that out? And I think sometimes it’s hard for us to separate what do you actually want versus what people around you want, whether it’s your parents or your spouse or significant other, your friends, whatever.
Cherry: So this is where we’re getting into the Six-A Alignment System that I talk about. And one half of the Six-As are the honest self-audit. The other three is called living aspirationally. And it is a step process. I didn’t know this when I started writing this book years ago. I started writing it about seven years ago when the firm opened, but really before that—I’ll tell you what, it was starting to be written when I had that pivot point in life that I was talking to you about. When I wanted to stop living in a way that was hurting me and start living in a way that was amplifying, it was aspirational. This is when I started writing all the concepts that you’re hearing about whether it be in the firm with life/money balance, financial harmony—this is where it all started. And it started with, and I wanted other folks to feel the same transformation and transition that I did. We’ll get to the Four Ts in a moment.
And this is where it started. Getting in the mirror, either taking in a physical mirror or just a mirror in your mind and admitting where you are. Where was I? And where are you, the people in your own journey of life, assessing that, being bold and courageous with where you are. It can be messy at times. It can also be a milestone moment in life too. You may have inherited some money or sudden wealth and all this other stuff. Where are you? What is that? It doesn’t always have to be trial. And then once that is admitted, this is the honest self-audit. That’s why it’s called honest. Then you get to acknowledge how you feel about that. This is where the shame and the guilt. I’m going to tell you this. During my time at trial, the guilt and the shame of letting opportunity pass me by in lost time, that was killing me more than the actual alcohol, to be honest with you. So I had to figure out what I felt about that. I had a lot of guilt. I had a lot of shame. I had a lot of judgment internally and even externally.
People were like, wow, you were afforded a pretty good life coming up. Why are you doing this to yourself? Why is this? Why is that? So there’s a lot of that. So acknowledging how I felt about it and allowing a process to heal, understand and heal. Very important. It could be money trauma. I want folks to know that it’s whatever that you’re going through in life. I want you to apply this framework to so you can get your life and your money right. And I’m just telling my story so folks can adapt it to theirs. Then after you cleanse the pallet of admitting where you are and acknowledging how you’re feeling, you go through the process of that—first of all, it’s not easy and you don’t know how long it’s going to be. And then lastly, you’re like, you know what? I feel now I could take some action for what I want to do with my life and money. That’s the honest, self-audit part.
The next part is the fun part. It’s align, aspire, and achieve. And what are those alignments? How are you going to align what you do value most? Well, at the particular part of life that you’re in, so the life stage is important. We’ll get to that later, too, because I want to talk about the life/money balance wheel and why the domains are important. But aligning that life and money, I always say that if you can give your life and money alignment, then you can give your money assignments. This is why the fun part is; this is where purchasing those units are about. So writing that down, going through that exercise of alignment, those are aspirations. They’re not necessarily goals. Aspirations have more meat in the bone. Goals help you reach your aspirations rather than the other way around.
Aspirations like, what is it that I want to do? What is it that I want to journey on? And what are those aspirations? And then going about achieving them. That’s where we’re talking about having goals within aspirations. But also living in the journey to where every day is a reward day, even if it’s a survival day, so you can work up to your award days. Reward and award are two different things. And if you have that aspirational pursuit and the values tied to it and that alignment, now you have connective glue to an actual financial plan because all that information is going to inform where your dollars go, how they’re invested short term, medium term, long term. And that exercise within itself can make a great financial plan.
Benz: So you referenced pivot points, Preston, in that response. And one pivot point I think for you personally is that you and your wife recently welcomed a newborn son. Can you talk about how being a parent has changed your perspective on life and money if it has?
Cherry: Well, I think it’s enhanced it, Christine, because I talk about my parents a lot. And I give them their flowers now because right now, because a lot of people, poo poo on their parents, they are like, well, I don’t want to be like my parents. I don’t want to work a nine to five. I don’t want to work 40 years for a company. I don’t want to make the same mistakes they did. But there’s a reason why you’re sitting here, right? And enjoying the life that you enjoy is because they sacrifice. So I don’t like hearing people say those type of things to their parents. My dad has, and I’ll get to the point here in a minute, because it has to do with my son—our son, my wife and I.
My dad and my mom both worked, they have been married 46 years. My dad has not the best-looking feet. And he still gets a pedicure every now and again, but he doesn’t have the best-looking feet. But I do. My feet are beautiful. They’re oiled and all this other stuff. They got good cuticles and all those other stuff. But why is that? Well, my dad worked 40 years, blue collar. And he wore boots all the time, steel-toed boots. He worked for the power plant, and he worked for the airlines too. That hard work and commitment to him and my mother, because my mother worked also, she went back and forth with work out into the workforce and being at home raising us. But that hard work that shows up on his feet and it allows me to have good-looking feet.
And so I appreciate that very much so. So I say when it has to deal with our son, my wife, Eiman and I, is I’ve been someone’s son. I haven’t been somebody’s dad. And I know what it feels like to be a son and what I appreciate in life and what my folks gave me. They gave my sister and I self-worth, self-value, and love. Those are compoundable assets no one can take away from me. And actually, those assets right there can feed into something called household production. You could be more productive in life. If you have these resources and you’re more well, then you can use your well-being units and also your human-capital units in order to be more productive in life—produce that income you need in order to buy assets and so forth. But that came from my parents. And so how does that carry over? That’s another form of generational wealth. How does that carry over to the next generation?
Well, my wife and I are dead-set on making the decisions, even hopefully make an improvement because we’ve been afforded resources in life. Much like our parents did for us. So I’m using that construct to pay it forward and align our dollars in a way that not only helps us live right now—a nice lifestyle because we’re in our vitality years, and also fund our retirement for later. It’s and not or. Also now, how are we going to assign these dollars to him to afford him that self-worth, that self-value even more resources because my parents moved us to the good school districts in order to advance ourselves. We were middle class; we weren’t poor, we weren’t rich, but that the education system allowed us to be where, the Dr. Cherry, but there was a reason for all of that. And so we want to assign our dollars in a way that helps him experience what we experienced and even ten- or twentyfold.
Arnott: Another story about your parents that I really liked in the book is you talk about how when you were growing up they gave you an allowance, but you had to keep a ledger book. And I thought that was a really great idea to kind of instill a sense of accountability with kids. Do you think that that ledger helped instill a sense of financial responsibility with you early on?
Cherry: Absolutely. I mean we have, what is it, financial socialization is the fancy term for it, but these are money talks in the home. When were you introduced to money and how does it align with life? I think that’s most important to everybody—I wouldn’t say everybody because money talks are, they’re getting more and more common. These young folks are in tune with their finances more than Generation X and the previous generation, but that doesn’t mean it’s still the norm. We have money talks in the home. Yes, you could talk about say, hey and open up a Roth and contribute to it. Or set 10% aside for saving so you can pay yourself. How does that apply to life too? And I think that’s where not only the money talks, but the life talks that we had in our household was very beneficial and influences the way that I’ve practiced money before and now.
It’s carried over. I’m 46 years old and many of the lessons that I learned either were improved upon or saying, hey, I want to do that differently—as far as the money talks and the practices that we had in the home. And as far as the ledger was concerned—and there’s another one, another story. First the ledger: It did provide a sense of priority about money, and pay yourself meant two things in our household. It meant pay your current self and your future self, which is a misconcept or underappreciated concept nowadays, which is a lot of folks—and this is what we’re talking about, pushing back on some of the stigmas and things to say all the time, often-repeated things in personal finance. Which is you have to somehow sacrifice everything in the present in order to fund your future, and have this extra sense of delayed gratification. And that can be harmful as well, because if you give so much of the present up now, you’re unlikely to commit to a financial plan long term, and then you’re going to have regrets in the future more than likely.
And pay yourself first meant two things in our home, which is yes, set some money aside immediately for your future self. This is where the ledger came from, as far as order of priority. Then also put some money in your pocket. Put some money in your pocket. I still carry cash to this day, folks. So you still carry cash? Yes, I still carry cash money. You never know when you’ll need some cash money. Deals on the table or something like that. Then whoever has got the cash in their hands is going to get the deal. Or in an emergency, if you lose electricity or something, ATMs are out, or I got cash in my hand.
And it was about, my dad and my mom said take some money for yourself. Invest in your well-being. You can buy something material if you like. Do something, read a book, whatever that well-being domain is in life, but make sure it’s for the right now to take care of yourself. Self-care, so that’s your current self and your future self. So that’s what that ledger taught. And then another story real quick was taking care of needs. As far as what you need to do as far as your responsibilities with your money. I remember the first time I got a check. I think it was for a pharmacy company or something like that. I think it was Eckerd’s or something like that. But anyway, I worked in a pharmacy. And I brought my first check home.
I think it was like 16 or 17. And I said, I said, “Yo, pops, what’s this FICA? Why they got all these hands in my pockets?” He was like, “Ah, all right, so let’s have a little conversation about the taxman.” And so that was an introduction to that. And then my parents also said, “While we’re on the subject,” they said, “since this is a lesson on you can’t do everything willy-nilly with your money. So while we’re talking about the tax person and paying yourself first—current self and future self.” They said, “You know what, we’re not buying any of your toiletries anymore. for your bathroom.” Because me and my sister shared a bathroom. They said, “We’re not buying any of that for you anymore. Toilet paper, toothpaste, lotion, and all that.”
Now, could they have? Absolutely, I mean, obviously they had money to buy me the stuff. But the point was, is that you need to be doing these things, taking care of your priorities first before you go to the mall and do this or that. And so, from the age of, I think 16 or 17—from my first job, let’s just put it that way—I was responsible for toothpaste and all that type of stuff. And we lived in the old-school house, so one of the choices were, you weren’t walking around with bad breath. So that means you just wasn’t going nowhere because you would have feeling embarrassed the household like that. So you didn’t have any choice but to go get your toiletries. But, those money talks, money experiences have helped me and my sister and all that carry that forward in life. And this one last thing I’ll share about life and money—life and money has ebb and flow.
It’s not a straight line. And life doesn’t work that way. And I think there’s too many rosy pictures out in social media and stuff and all that. I say there’s real life, and then there’s reel life. Reel is R-E-E-L, and then there’s real life, R-E-A-L. And you have to be able to roll and adapt. And there were times in life, where my dad lost his job, or my mom decided to stay home for work. We had to make some adjustments, and the money was tight. And so we had talks about that. How do you feel about that? What are going to be the expectations for the next six or seven months? How do you inspire hope that things are going to get better? So what that also showed about life and money is life and money is ebb and flow. And you have to be able to roll and adapt and make some adjustments as well. So all of those were money talks in the home for us.
Benz: Preston, I wanted to ask now that you are the expert on money matters, I would assume in the household, how involved have you been in helping your mom and dad manage their retirements and think about their own money situation? Have you had a bit of a role reversal?
Cherry: Yes, well, yes, being able to manage some of the money for my folk—they were my first clients. So when I had the opportunity to, transition, particularly my dad, because my mom was already retired; she stayed at home throughout that time. But to help retire my dad, that was a joy in order to work through some of the nuances of retirement, which one is preparing emotionally for retirement. What’s next, what are we going to do? Choosing the date? Why? How? What’s life look like on the opposite end? Just take the emotional part of retirement. And then the finances part of retirement: the pension, medical care, 401(k)s, all that. Are we—here goes the, yes, it’s a common question: do we have enough? Is it enough for us and not compared to enough for others? Because my dad says all the time, my mom and dad say, people would jump off a bridge if they had what we had for retirement funds; they couldn’t live that type of lifestyle. And obviously I don’t want anybody, I’m not joking about suicide or anything, but people wouldn’t be satisfied with their level of finances.
But Christine, that goes to a good point. It’s wealth in your eyes, dollar amount. Because I always say wealth and well-being are different. And if you have a wealth of dollars according to what’s going to fund your well-being amount, then you have the necessary wealth of dollars. Now for somebody wealth of dollars, they may need $3, $5, $10, $20 million. But for my folks, they were like, “We know our fulfillment amount, so far as dollars and fulfillment well-being levels. We know that. How does it look before we retire, when we retire, and after we retire? Let’s look at these three domains and can you help us with that, Preston?” That’s the same thing I do with my clients. But to be able to go through that exercise with my parents, there’s just really no words for that. There’s really no words for that.
There was a sitcom long ago. It was a family show. I’ll leave the name out for some reasons, but I’ll just say it was a family show. And the father and the mother were talking and the daughter walks in and says, “I’m getting bullied at school because we’re rich.” And the parents said, “Oh, I can help you out with that. Your mother and I are rich. You have nothing. And matter of fact, you owe me and your mother $1,700,000,” and they had it to the cents, “$0.18.” And the point about that is that we can never repay our parents, but it felt good to help them with that as some sort of offering when you talk about role reversal. So it felt good.
Arnott: So speaking of retirement, you have a section about retirement in the book and you point out that financially retired doesn’t mean finally retired. What do you think the distinction is there?
Cherry: Yes, well first of all, I like that you use the word retirement. I wish more people would use the word retirement. And this is one of those oft-repeated aspects that I push back on. Everybody’s trying to find out a new word for retirement. And I know folks have this theme in their head, it’s like, OK, retirement is different nowadays. We don’t have to work till 62. We want to fire ourselves from society and all this other stuff. First of all, you know what early retirement is? It’s retirement on time. You just retired when you wanted to. That’s it. You had the resources to do that, whether it be 40, 45, 50. And retirement is simply stopping your must do and moving on to what you want to do. And that doesn’t mean that you stopped being productive in life. There’s ways to be productive in life to where you’re not assigned to a must-do earning job or business that you own. That means you’re transitioning. And something in the book is the four T’s: trial, triumph, transformation, and transition.
You don’t have to start at trial. I want to make that clear too. Because a lot of folks when we’re talking either advisors or gurus or whatever it may be is that everybody’s suffering from money. You don’t have to start from trial in life or money. You can start from triumph, but that still has stuff that’s unknown and you have a lot of questions. But that transformation and transition part, that’s where the gold is. It’s what do I want to transform to? And am I going to give myself the permission to transition into it? And this is what retirement is. And financially retired, meaning you don’t have to work as much or must work for money. Doesn’t mean you’re finally retired. You’re retired from your must do to go to your, you want to do. And it’s trying to take the stigma off of the word retirement as though when you stop working, and all the relationships are reporting that goes into a lot of research about having good relationships around you and all that, and people struggle with separating their work identity from their life identity. But stopping work, retiring from that doesn’t mean that you don’t have anywhere to go.
And it goes back to doing the work and understanding that I think providing more understanding and shedding more light on what retirement is, then there’s really no need to come up with these different words all the dang-on time. Like for example, loud budgeting or quiet luxury—why the hell you got to be quiet about it? You could afford nice things, just because you don’t have a label on it. It’s as though luxury is a bad thing. I’ll come back to the retirement point in a minute. I said on stage one time, I walked on stage, and I said, this was the first sentence. I said, “I’m wearing $3,000 right now.” People were like, you can imagine the gasps. They’re like, “Oh, this guy has, he’s arrogant; oh, he believes his self-worth is defined by his net worth. I got these bad scripts and everything.” No, it’s giving permission for you to do what you want in life to make yourself feel more well. Not necessarily you’d have to have money to have self-worth, but to live more well. I could tell you for a fact that a shirt from the five and dime feels differently from a custom shirt. I could tell you that, right?
And to think that somebody in the audience wasn’t wearing $3,000 either, and then go tell somebody else that you don’t have any values because you have a certain amount of money on, although you didn’t yell it from the rooftops. Well, that’s some bull. And it’s as though those with money are not increasing their well-being in all these domain areas. That’s some bull as well. So it was one of those things to where I was giving permission for folks to prosper in a way that they want and taking a quiet luxury off of it. Yes, your eye frames. The eye frames that I wear on stage and all that, those are $1,000. The belt I was wearing, maybe $300. Jeans, hell, jeans nowadays, a good pair is $400. So it adds up quick. Now, do I have to tell you that? No. Do I have to hide the fact that I can look decently on stage? I don’t have to do that either.
So my point about the financially retired, finally retired, not having to come up with different words for retirement is the same thing, a premise that I say with loud budgeting or quiet luxury. No, you just got luxury. Don’t be ashamed of it. And hopefully you’re giving back. You’re doing well for yourself and you’re giving back. Loud budgeting, why you have to tell somebody about your budget? It’s cool to be talking to your friends on helping each other out and everything. But it’s like, “I didn’t go to the dinner or my friend’s wedding because I’m loud budgeting. I want to be proud about my budget. I just saved this amount of money because I didn’t go to that wedding.” Well, we don’t need these extra words. Retirement is retirement. Yeah, “work optional” is nice, decent, but it’s in the word retirement already. Retirement early—all these FIREs. You got fat FIRE, barista FIRE, how to do a FIRE, all this other FIRE, Boy Scout FIRE, all these fires. Retiring early is just retiring on time. You’re retired. So I know that was long, but you got me worked up a little bit about some of the things that just keep repeating themselves about words, coming up with this new stuff all the time.
Benz: Well, I did want to ask about the financial independence retire early piece Preston, because you do cover it in the book. You talk about it. Do you feel like some people in the FIRE community go overboard with the excessive frugality? I’m guessing you think yes. In fact, that was kind of a theme running through the book, is that you think we’ve perhaps carried frugality a little bit too far in our personal finance circles, but I’m wondering if you can talk about that.
Cherry: Absolutely. Thank you for asking about this, because there’s a miseducation on frugality. I call it false frugality syndrome a little bit. And first of all, let’s talk about frugality. And you don’t have to live below your means. That is a phrase that is often repeated in personal finance. Below your means is a choice. Because a lot of people say, if you live below your means, because finances and life are very simple, and particularly those that have survivors’ bias. All I did was live below my means and make good choices in life and work hard. And I have a retirement fund. OK, you don’t have to live below your means, but you have to live within your means. It’s different. I know people like wordplay, but this one makes a difference. Because means means different to different households. So if you have the resources to have a higher spending plan, a higher savings rate, first of all, express some gratitude for that. Because there’s a lot of factors in life through where we get to where we get to. And that’s why I say nobody’s self-made, because that’s some bull as well. Or I’m self-made millionaire.
No, somebody believed in you at some point, so on and so forth. I’ll get back to that later. But the point is, if you have means and you have an abundance of means, then you have resources to have more of now and also invest in later—that’s OK. Permission to prosper. This is what the theme of the book: permissions. And you don’t have to live below to starve, when I say, starve the now to feed your later. This excess delayed gratification, this excess frugality. And what chaps my hide a little bit is—somebody was telling me, I was telling my age when I use phrases like that, “chap my hide,” I haven’t heard that in a while. But chap my hide was, listen, I like The Millionaire Next Door. It’s a decent book. I know some of the authors of it and all other stuff. But there’s a lot of bias in the book too, to where there’s only one way to do things. And below your means comes up; frugality.
There’re some cultural norms, Midwest, it’s sometimes white, survivors’ bias. “I drive a pickup truck and live next to your neighbor, real quiet and go to the five and dime, get you a pearl snap shirt and do that. And then work real hard and survive and make a good income and own your business, you’ll be a millionaire.” And I’m like, I’m really tired of hearing of that. But I don’t want to judge folks that live like that because that’s their choice, that’s the way they want to live. It brings them well-being. If you want to have below your means and really satisfy that savings rate and that’s the way that you choose to do, that’s OK for you too, there’s no judgment of that. But also don’t share with folks that, because folks don’t live like that and drive a bucket all the time. I’ve come out with a, I have a theme right now that I’m championing, which is “F It Bucket.” You don’t have to drive a bucket in order to achieve finances. But if you choose to live like that, that’s a preference.
And that’s OK, nobody should shame or judge you for that. But if you do have a preference and a desire to have and invest in well-being domains in life that may include a ca and may include this or that, and it’s within your purview, your finances, your plan, then you can do that all day long. So this is another permission or addressing a common theme that I just want to give a different perspective on is don’t shame or judge if somebody wants to live well below their means, but also don’t shame or judge if people want to live within their means by satisfying their plan. So this is why frugality, I push back on it big time and give a five-point plan about it, which is your person, which is your identity, your preferences. And the person that has your values in it as well. Your purpose, your points in life. So your life stage is very important, that’s where the points in life come from. And then your plan, those are five P’s, your financial plan, you add all those up and you have prosperity. So when you talk about frugality, then it’s in that preference domain. It’s in that points of life that you’re in. And it’s in your financial planning. And you can prosper how you like. And this is the thing about permission that I talk about in frugality.
Arnott: Another thing that we often hear repeated in personal finance circles is this adage that you should spend on experiences rather than things. What do you think about that or what is that missing?
Cherry: You got the Ric Flair out of me today. Whoo! I’m telling you, that’s another thing that chaps my hide as well. It’s one of my get off my lawn moments, which, life-stage vitality means something. Life-stage vitality means something, and what is that? That means… I was watching Benjamin Button is a favorite movie of mine. And there’s a point in that movie where they meet in the middle, if you remember. They’re in the mirror. They said, “You’re 38, I’m about 35 down there. We’re meeting in the middle.” And she’s dancing, and he’s enjoying life. Brad Pitt looks good. And who’s the lady in there? I forgot, but she was looking beautiful. She was dancing and all that type of stuff. That was prime life right there. And I always say that whoever we are in life, if we get opportunity, all else equal, about from 40 to 55 is really where it’s at.
You have about everybody living for that 15 years to where everything, all else equal, is going right. You know something about yourself. You got some physical abilities. You got some money in your pocket. You’re spiritually inclined and all that. Everything’s going right. Before and after, we can give or take that. And why life stage matters, at that particular point, when we talk about materials and experiences, well, at that point, you may want to look good, Christine. Shoot. When I was younger, I was kind of chubby. And I’m still a little chubby now. But I was real big in there, and I’m not making fun of anybody.
I’m talking about my own life experiences. I couldn’t wear certain things. And but looking good was important in our family. We dressed well just because it was a part of our self-confidence. It’s like Deion Sanders says, “Look good, play good, play good, pay good.” And when you’re older, I’ll get to my mom and dad here in a minute about the older part. But right now, I invested in looking kind of good. That feels good to me now at this stage of life. Along with experiences, maybe hiking or something to this effect. But later on in life, having a decent outfit—I’m not going to just look like a hobo or anything like that. But it may not mean as much to me in that particular later life stage—looking pretty good, because I have the body for it or I have the vitality for it, all this, right?
So life stages are very important to how we approach. And let’s talk about these materials and experiences to be specific. Just because you invest in materials doesn’t mean that you don’t value experiences. Me having a nice outfit or not driving a bucket, that has nothing to do with my value system. That doesn’t mean I’m not spending time with my son. That doesn’t mean I’m not spending time with my wife and child, or I’m not present in life. Because experiences are expense items as well. And folks feel like that if you’re spending money on materials or your overall lifestyle well-being, then you have a value problem because you don’t value all this other stuff. Again, this is where judgment is. It’s like, keep your eye on your own luggage. What they tell you in the airport, keep your eye on your own luggage. And they say, well, if you invest in this then, that means you don’t value this. And then there’s something maladaptive or wrong with you. You have a jaded value system.
Well, all of that is false. And then when you do invest in experience—this is another thing that I push back on. They all cost money. So you need wealth in order to fund those well-being domains. I was on the highway the other day, and I was looking at this camping contraption, this big GMC truck I think it was. First of all, GMC trucks, them fancy ones? Those are luxury items. I just want to let everybody know. Those are $80,000 $90,000 trucks. Because somebody will tell you, speaking like The Millionaire Next Door, they’ll tell you the top 10 cars and one of them was a Chevy. OK, well, what model?
Please tell me, because GMC and Chevy got the Denalis and all that other stuff. Now, the people that I serve, that’s what they got in there. And if somebody will tell you, “Oh, I don’t drive a Mercedes, I drive a GMC.” OK, but you didn’t tell them it was a Denali, did you? But they’re going camping on this experience, because they want to tell you how much they value experiences. And then, you know what they got on the back of that thing? They got that camper. The camper that costs $100,000, pulling it across there. But they’re spending time with their family, right? They’re being present, they’re going to the park, and everything like that. And by the way, how much money did that time cost? If you’re a business owner, you were able to step away. Who’s running your firm? Of course, you got a team to do that. That costs money.
If you’re a business executive and everything, there’s a reason why it’s called PTO, paid time off. That costs money. So somebody would describe that as an experience and not valuing materials. But when I went camping, we had that tent from Walmart that if you sneeze wrong, it was blowing over, and you had to put the stakes in the ground that you had to bury real deep, with some rocks on top of that because the kit that came with it didn’t hold it down. So you had rock to hold it down and we were at a free public park. And a bear or some wolf may have jumped out of there or something like that. We weren’t at Redwood Park. So my point about that is experience material judgment and value system type of judgment, and also shame—money shame, where we allocate our dollars.
And the three domains in the book—and this is in the life/money balance—they are life-centered utility, so fulfillment and meaning; money psychology utility, which is wholeness and self-actualization; and lifestyle utility, which is your wants, goods, and services that you internally value. And so you’re going to allocate your dollars across those three, how you see fit. And really, nobody should be in your business and for sure, shouldn’t be judging value systems, when most of the flexes out there—I guess these young folks, “there’s a flex,” about experiences and having a higher value system than others. It’s really a flex because once you start digging down to it, it’s about where you are in life, what your resources are, and how you feel and allocate your dollars. And look, keep your eye on your own luggage. Keep looking straight. Don’t be worried about what everybody else is doing.
Benz: Well, Preston, this has been such a fun and illuminating conversation. Thank you so much for being here, and congratulations again on the book.
Cherry: I appreciate it. Thank you so much.
Arnott: Thanks again, Preston.
Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts. You can follow me on social media @Christine_Benz on X or at Christine Benz on LinkedIn.
Arnott: And at Amy Arnott on LinkedIn.
Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week. Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at thelongview@morningstar.com. Until next time, thanks for joining us.
(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording and are subject to change without notice. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates, which together we refer to as Morningstar. Morningstar is not affiliated with guests or their business affiliates, unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. This recording is for informational purposes only and the information, data, analysis, or opinions it includes, or their use should not be considered investment or tax advice and therefore is not an offer to buy or sell a security. Morningstar shall not be responsible for any trading decisions, damages, or other losses resulting from or related to the information, data, analysis, or opinions or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision. Please consult a tax and/or financial professional for advice specific to your individual circumstances.)