Why high earners still feel behind—and how a clear plan and purposeful savings buckets can turn financial anxiety into confidence.
Episode Summary
A high income, growing investments, and a rising net worth should lead to financial confidence. So why do so many successful professionals still feel like they’re falling behind? Why doesn’t financial progress always feel like financial security?
In this episode of Scripted Wealth: Money & Meaning for Pharmacists, Tim & Tim explore the scarcity mindset that can persist even when the numbers suggest you’re doing well. They discuss how perfectionism, comparison, childhood money scripts, and the disconnect between long-term wealth and day-to-day cash flow can create financial anxiety. They also explain why defining “enough,” building a clear financial plan, and giving your money a specific purpose through savings buckets can help you spend and save with greater confidence, while enjoying a rich life today and preparing for the future.
What you’ll learn in this episode:
- Why a high income and growing net worth don’t always create financial confidence
- How perfectionism, comparison, and childhood money scripts can fuel a scarcity mindset
- Why being “asset rich” can still leave you feeling constrained by today’s cash flow
- How defining what “enough” means can provide a more meaningful measure of progress
- How purpose-driven savings buckets can make it easier to spend on what matters without derailing your long-term goals
Mentioned in Today’s Episode
Episode Transcript
[00:00:00] I think sometimes with like over, people who are overachievers, there’s this, this sense of things like it’s never good enough, or am I crossing all the T’s, dotting all the I’s? Meaning like, am I fully optimized? And if I’m not, like that bothers me. And one of the things I’ve noticed is that some of the most financially anxious people that I’ve met, and I, I put myself in there at, at, at times as, as well.
Um, in, in fact, many of them are high income professionals, so earn a good income, may- maybe even have a good savings rate, investment accounts, balances are, are growing, and overall there’s a pretty good plan in, in place. Why do so many pharmacists who are in this category, earn a good income, have a solid plan, are seeing savings balances grow over time, why, why are those individuals who are objectively doing well financially still feeling like on some level [00:01:00] they’re, they’re behind?
Yeah, I actually think a lot of it is- Like a pharmacist personality. Um- Mm … it definitely, like, and I know we’re, we’re making, like, broad and sweeping statements, but I think when most people, you know, people recently that I’ve talked to, they’re like, “You said, you said something about, like, the pharmacist brain and, like, that you’re, like, describing me.”
Um, you know, I think sometimes with, like, over- people who are overachievers, there’s this, this sense of things like it’s never good enough or am I crossing all the Ts, dotting all the Is, meaning, like, am I fully optimized? And if I’m not, like, that bothers me. Um, so you know, I think, I think that’s a, that plays a big part of it.
And, and one of, you know, one of the common themes that I hear in, in the discussions that I have is, like, “Hey, I think I’m doing okay, um, and but I don’t have a plan, so I don’t know. So I don’t, I don’t really know where I’m at in the universe. Um, I don’t know if I’m doing well for [00:02:00] myself. I don’t know– Like, I think I, I think I am.
Um, I don’t know where I stand kind of relative to peers.” Um, or if I have a plan and I’m working with a planner, you know, the, the, the message that I’m getting is, “You’re fine. You’re fine.” And that makes, that might be a, a quick dopamine hit, but then I’m like, “Well, what does that actually even mean?” Um, so yeah, I think that some of that can be obviously manufactured by the pharmacist brain, but then I think there’s an objective, like there’s no plan in place or the plan is, you know, kind of a loose construct of what fine is.
So I- that’s how I would attribute it to. Yeah, and that’s really what we’re gonna talk about today, Tim, is this disconnect between, you know, objectively what, what the numbers say or the progress that has been made and the emotional feelings behind that and what might be some of the, the causes that are attributing to that.
And you, you mentioned, you know, [00:03:00] a couple already. You mentioned comparison. We’ll, we’ll come back and talk to that, talk about that in terms of, you know, I, I might be looking at my progress and You know, depending on what my point of comparison is, I, I might, I might feel like I’m on track, behind. Uh, and I think more often than not, when we’re talking about comparison, we probably are feeling behind.
So the question is, to what are we comparing and, and why? Where, where is that benchmark, you know, exist? Another one you really mentioned that we’ve talked about before on the show is, you know, even if all the numbers are checking in the right direction, if we don’t have a sense of a coordinated plan, you know, it can feel different e- even if things are tracking in, in the right direction.
Because often we have these unanswered questions that are, you know, circulating in our head or, you know, even just running the numbers, right? We, we can have a million and a half dollars saved in a retirement account, but we might feel like we’re behind saving for retirement because we’ve never run the projections.
We’ve never looked at the retirement income scenario. So sometimes just that work [00:04:00] can give us some emotional confidence. Uh, another thing I was thinking of, Tim, here as, as we’re starting the conversation, is just the emotional relationship we have to money based on the upbringing, um, that we had around money in this topic.
And I, I think we underestimate this. You know, this is often referred to as money scripts. And, you know, this is something I’ve noticed in my own financial plan. Jess and I have talked a lot about this, but I see it in others as well, where, you know, we can check all the boxes, uh, and a third party really, really can help us in this specific area.
Um, but if we, if we were raised in a home where the tenor around money was constantly either anxious or fear- fear-oriented or stressful or we associate some type of emotion like that That can sometimes trump the progress that we are making on paper, and I’d be curious to hear [00:05:00] your, your thoughts on that because if we can bring an awareness to that, um, it really can help us work through that just to, just to name it and see it, and then, you know, the way I visualize it is it’s almost this other, other person in the room that, you know, when we’re looking at the numbers it’s like, gosh, why, why do I feel fearful and anxious when everything on the spreadsheet is suggesting otherwise, right?
Yeah, and I, I think, you know, those, those money scripts, like that baggage that you have, whether it’s good or bad, like those are probably hardest to break ’cause they’re, they’re in your genes, they’re in your DNA. You see those play out. I think, um, I think again, having an objective third party that can show a pharmacist the math is probably gonna be the, the biggest breaker of said, of said behavior.
But it could also be the other way. You know, if you grew up in a house where it’s like, you know, if we, if we have the save, save, save on one side and fear [00:06:00] and, you know, kind of uncertainty and then you have the spend, spend, spend on the other side where it’s like, you know, tomorrow’s not promised and YOLO and, uh, maybe not overconfidence, but things will work out.
Like, you know, both of those can kinda be hard to come back from and again, that’s where I think, uh, you know, an objective third party has your best in– You know, I think fr- the way that I look at like a financial planner is, you know, they know you, they know your balance sheet, they know your goals and they can, we can adapt to what’s going on but the, the, the money scripts are really important to kind of note because, you know, it’s, it’s just for a lot of people, again a lot of pharmacists, they wanna see the evidence.
Like they wanna see the evidence of like, okay, if I do this we’re gonna be okay on the back end. So, you know, I, I… it is, it… you see it on both sides of the, of the fence so to speak, um, and I think that’s why a pen– a, a plan can be so powerful. But yeah, I mean, you know, I, you know, I kinda saw, and I kinda have [00:07:00] gone through my journey and, you know, I’ve, I’ve seen, you know, my parents in retirement and they’re gonna be okay, right?
And I probably had kinda similar where it’s like save, you know, don’t spend, you know, why would you ever spend that amount on baseball tickets? Like those would be the, those, those would be some of the questions, right? But I’m also seeing, and maybe that’s a symptom or maybe that’s because they did those things, right?
You know, you know, it’s kind of a little bit of the chicken and the egg. Yeah. But I do think that there is, and this is why we always talk about like the way that we approach financial planning is really threading the needle between living a wealthy life today and a l- wealthy life in the future, right?
And I think if you lean more towards one side it’s hard to kind of- You know, open your hand or close your hand to do what’s against the grain for you naturally. But I, it’s- it’s- it’s why I think having someone outside of your- your head or even- … the conversations what you have with your spouse are important.
Mm-hmm. So- The- the other thing I think about, Tim, here with this disconnect of, you know, hey, I’m a [00:08:00] pharmacist, I’ve got a really good household income, I’m- I’m saving, I’m investing, I’m doing all the things. You know, it- it- it looks like objectively we’re on the right path, but I don’t feel that way. The- the other thing that comes up here that I struggle with my own plan is the disconnect between the future dollars and the cash flow realities of today.
Yeah. Right? So you probably have heard of this before as, like, you’re asset rich, cash flow poor, and pharmacists, you know, certainly aren’t- aren’t cash flow poor, but the point that we’re making here is that y- you might have a lot of assets that are building, that are tied up, that aren’t impacting your cash flow reality today, right?
So you’ve got a, you’ve got a strong balance in your 401or your IRA or on that track or on that path. Those assets, you know, typically are gonna be tied up until we use those for retirement. Or, you know, maybe you have a home that you’ve been building equity in for years or for decades. So you look at your- your assets, you look at your net worth calculation, you’re like, doing great, right?
Net worth is $1, 2, 3, $4 million. [00:09:00] But there’s the reality of the cash flow today, right? And, you know, un- unless we’re sitting on a large amount of reserves, often we can run into situations with pharmacists where, hey, our assets that are building for the future, everything is trending in the right direction, but I don’t feel that today.
I don’t feel like we’re financially doing really well because it doesn’t necessarily feel like we have a lot of breathing room from a cash flow standpoint. Yeah, and- and, you know, I- I have said this ad nauseam is that I- I- I don’t think people really… You know, we- we believe that quantitatively the most important number to track over time is your net worth, and people don’t feel their net worth.
So you can go from, you know, 100,000 to a million dollars in net worth and- and really not, not that you don’t know, but you might be looking at account balances or understanding, like, what your house is worth and, like, what’s left on the mortgage. But to your point, like, you don’t feel that. What you feel is money in [00:10:00] the bank, right?
It’s the most immediate, like, hey, I’m paying a mortgage. We have these costs, this. Like, you feel that and you kind of always have an idea of what those dollars are. And, you know, that can, and especially today with where just the cost of living and everything is- has gone recently, it can cause stress and it can cause that scarcity mindset.
Now- Me, my personality, uh, you know, if I am sitting on a large amount of cash, I’m gonna wanna spend it. Like, that’s kind of where I’m at. Um, and so for, for us, and a lot of people resonate with this, is like you almost have to create, you almost have to manufacture a feeling of scarcity. It’s like I, I don’t, uh, I don’t, I don’t wanna say that scarcity is a bad thing.
It can be used for good. And what I mean by that is if we create a feeling of scarcity, which means that we’re pushing dollars to the things that matter most, retirement, our kids’ education, the travel fund because we’re, we’re doing this trip, this [00:11:00] trip, you know, the experiences that we have with our kids.
And, and those dollars are kind of coming out of our everyday check-in, but into buckets that we’re gonna deploy this year, next year, more the short and medium term. Like, I think that’s good because otherwise, if I’m just sitting on 100 grand, let’s say, I’m like, “Okay, I’m gonna do something frivolous.” So, scarcity is not always a bad thing.
I think, I think if you can manufacture that, I think it can really keep you on the, on the level in terms of like what’s important to you and what you wanna do. But if it becomes kind of like, like an all-consuming thing, that’s not a good thing either, where you’re like, you’re making decisions because you feel like you’re under the gun for whatever reason, despite what’s going on.
It’s almost like, it’s almost like a left and right brain thing, right? You have your everyday check-in, and then you have kind of those long… Like they’re, they, they almost feel like monopoly money the way that we’ve talked about, like student loans for- Yeah, yeah … pharmacists that are going through school.
Like, it almost doesn’t seem real [00:12:00] until you get right to the point of where, where it is real. So, what has always been w- like the, the, the common thread to the financial plan, what you always feel and never not feel is you open up your checking account, savings account, and you can kind of see those numbers.
And that often influences our, our mindset, um, and how we approach kind of the, the plan and, and the, the resources that we have I mean, it’s interesting. I wanna beat this one up for a minute ’cause I’m, I’m kinda curious even in my own plan. Um, you know, you mentioned, like, if you’re sitting on 100 grand in cash, you feel like that’s an open invitation to spend or maybe frivolous without intention.
Um, I find myself in the opposite- Yeah … behavior where if I have 100, and actually I’m struggling with this question right now, like, where if I have a large position in cash, like, I almost want to see that balance grow, where it gets to a point where there’s an opportunity cost that’s far beyond what I need to have in a rainy day fund or an emergency [00:13:00] fund that could be used elsewhere.
So that tells me there’s some type of, like, security mindset in that, um, even if it’s not objectively warranted, um, that maybe even gets to what we were talking about before of some of, like, the money, money scripts of, uh, it’s just interesting. Like, why, why the difference, right? You and I could have the same amount of cash sitting in a similar account, a high yield savings account, but emotionally it feels very different.
Yeah. Well, and, and I think what you’re, you’re describing is, like, the, the endowment effect, which is, I think we’ve talked about this before. It’s cognitive bias where people value things they already own significantly more than, like I– You know, we kinda talked about, you know, if you were to get that 100 grand as a gift and it flows in, and then it kinda flows out, or if you are building, like, you know, it’s like your babies, right?
Your, your, your $100,000, um, dollar babies in your account. Like, you just, you value that a lot more. Um, you know, from a s- a spending perspective, it causes consumers to overvalue. It could [00:14:00] also cause them to overvalue their, their, their current possessions, um, you know, leading to overspending during purchases and missed financial opportunities.
So yeah, I mean, and I, I look at it as almost like, as if you see a copious resource, like humans see that, they’ll, they’ll spend it. It’s like, you know, water for us. Like water for us today is very, you know, you turn on the tap and it’s there. Like, there’s a lot of countries that would see, well, how we consume water and be like, “Oh my goodness,” like-
“it’s so wasteful.” Mm-hmm. You know, for me, and I always j- make, make the joke is like, if I see a bowl of peanut M&M’s on the table, like I’m gonna eat that whole bowl, right? It’s just there. It’s, it’s there to be consumed, right? And there’s a lot of people, you know, that, that, that resonates with them from a spending perspective.
Again, if they have cash. And, and, you know, I… You know, it’s, it’s the things of like, okay, I need this bottle of whiskey. I don’t really need it ’cause it’s not in my plan, but there’s, there’s dollars there to be spent. Whereas, you know, you might, you might look at that and be like, “Man, what could this [00:15:00] $100,000 look like if it was $200,000?”
You know what I mean? And there’s really no rational, you know, uh, reasoning behind either one of those. I think what the common, you know, thread should be is like what does the plan say? So when we weren’t staring at that $100,000 and we were asked the questions like, “What’s important to you? What does success look like in a year, in five years, in 10 years?”
What were those answers? And let’s come back to that because a lot of, you know, a lot of what, um, kinda drives misbehavior is just not asking yourself those questions or kind of referring back to the plan. So to me, that’s, I think that’s, you know, come, come back to the plan, trust the plan and, you know, again, if it’s rooted in math, which I think a lot of pharmacists appreciate that, um, it’ll, it’ll allow you to, I think, spend or not spend, spend, save, like with, with more confidence, right?
And, and nothing, you know, even, even when we project things out, [00:16:00] you know, we’re, we’re simulating lots of different scenarios that have happened in history, but there’s also things that could happen that, you know, throw us a curve ball. But I think it allows us to al- to allow– it allows us to pivot at least more confident than, you know, if we didn’t have a plan at all And dri- drift is a word that’s coming to mind.
Like without- Yeah … without a plan, without a, a third party, without accountability, I think it’s easy to drift where the emotional… I, I think it often it starts emotional, where the emotional drift leads to then, you know, the actual financial drift of the numbers. And we’re, we’re talking about good problems to have, right?
You know, the example- Right … we’re using is a cash position. Um, but, you know, even thinking about my own situation, this is where I think an objective, you know, third party and a plan would be a good reminder, to your point, back to the goals, back to the situation of, hey, okay, well may- maybe single income in the household, you know, uh, o- owning your own, but maybe this is a situation makes sense where we’re looking at reserves beyond a six-month, maybe it’s a nine-month or a 12-month.
But [00:17:00] once we clearly define that target, then let’s go back to the goals, right? We’ve talked about, hey, we’re in a phase of life where we want to enjoy life’s experiences. Yeah. So if having, if having this extra, you know, dollars that are set aside in a, in an emergency fund that’s above and beyond what’s objectively needed, well, there’s an opportunity cost to that.
Sure. And, you know, I think that just kind of bringing that drift back, back to center, uh, i- is important. What, what about comparison? Like, this one’s hard. I even hesitate to bring this up, so it’s sort- it’s kind of like, well, what’s, what’s the solution, right? But it does feel like comparison, um, is just a natural human behavior that, that leads us to, I guess it could be either side, kind of a scarcity, you know, mindset, could be the opposite as well, that may not be grounded in, in objective reality.
Yeah, I, I think it, it can be, um, you know, it’s, it is a natural thing, right? The famous quote, I think it’s Teddy Roosevelt, uh, “Comparison is the [00:18:00] thief of joy.” Um, you know, but it is, I think it’s a natural thing to kind of look left and right to your, to your neighbors, to your colleagues, and, you know, kind of size up, like, where your are, where you are, you know, related to them.
And I think this can be a big driver, I think especially early in your career. Um, and, a- and maybe it fades, uh, you know, as you kind of get where, you know, we are. We’re slightly mid-career. But then I think k- kinda, kinda come back into the picture when you get closer to retirement age, ’cause, you know, you might say, like, “Oh,” like, “So and so retired.”
Like, “I feel like I’m not even close to that yet.” So, um- Without knowing the full picture of what’s going on. Correct. Yeah. And, and that’s, that’s the big, that’s the big thing here, is that, you know, I think more now than, than any time, like, it’s in your face, um, because I think of things like social media, Facebook, Instagram, um, LinkedIn career-wise, “Hey, so and so just got their board certification,” or this person, you know, got promoted- Sure, [00:19:00] yeah
or took this job or is retiring. And y- I think the, a natural thing is to feel happy for your colleagues, but also be like, “Man, am I, like, am I behind?” Or, you know, whatever. So I think that’s a natural thing. I think there’s, there, you know, we’re not s- sitting here saying, like, “Don’t do that,” but, like, give it context, right?
We know that- You know, things that are put out on social media, those, that’s the best foot forward, right? You know, there’s a lot more behind the scenes. So, you know, every situation is different. Um, so we’re not saying, you know, don’t be human, ’cause it’s a human, I, I think a human thing to do. But, you know, at the end of the day, you know, if I’m, if, if you’re the client and I’m the, you know, I’m the planner, I’m saying like, “What does your plan say, and how are we tracking to that plan?”
And sometimes it say like, it might say like, “Hey Tim, like you said this was important to go see orca whales. Where are we at with doing that? Or to go see these baseball games, like where are we at with doing that?” Or it might be like, “Hey, we’re behind. Like we gotta, you [00:20:00] know, we gotta, we gotta catch up and really, you know, do a better job of, um, you know, funding these in- investment accounts and all these things.”
And, um, you know, again, I think having those conversations are, is powerful, right? And a lot of people are afraid to have them because of where they might be. But, you know, I, I, I think comparison’s a natural thing, but I’d also think that, um, you know, you have to give it context, because without that you can drive yourself crazy.
And, and, you know, especially if you’re, again, kind of pharmacist brain, overachiever, type A, want to be at the front of the line type of thing. And, um, you know, there’s always gonna be people that are out there that are gonna be more successful, more whatever than you are. Just the reality of things. And I think, you know, you have to live your own life, run your own race, and, and feel good about that.
And, and, and to me, that’s, that’s what a financial plan I think really helps you to do is kind of keep you on course. It’s your, it’s your roadmap, so to speak. And I think defining that roadmap, we’ve talked about the importance of defining enough, right? [00:21:00] Defining your own plan, your own goals. Like, that needs to be your measuring stick, right?
‘Cause otherwise the goalposts are, are always moving. Yeah. Um, you know, and, and we tend, it’s just human behavior that we tend to project our own experiences onto somebody else’s situation that may not be even com- remotely comparable, right? Right. So like the, the example that’s coming to mind as you were talking is, you know, I might be a, a 45-year-old industry pharmacist, and I hear one of my colleagues who works in industry that’s retiring at the age of 52, and I’m all of a sudden thinking like Well, how are they able to retire early?
And what, why am I behind? And why didn’t I do all these things? And well, maybe they got an inheritance. I don’t know. Like who- Yeah … who knows what, who’s, who knows what the reason is, or ma- many other variables, so. Or, or maybe the family history is that, you know, a lot of them only live into their 60s or s- Right
you know, they, like, and that’s, that’s a big driver, so it’s like- Yes … “Hey, I wanna unplug myself and, and really take the time that I may or may not have.” So there’s [00:22:00] so much that goes into that- Mm-hmm … that is below the surface that, you know, I, again, I think it can be dangerous for that 45-year-old industry pharmacist to kind of go down that rabbit hole- Yeah
like, “Am I good enough? Am I, am I doing the right things?” W- one of the perils, Tim, that I think, um, strikes pharmacists is the inherent, um, pursuit for optimization, and I think this comes from a good place, you know, wanting to improve, wanting to optimize. Uh, we’ve talked about the high achiever personality.
Again, we’re, we’re certainly generalizing, probably overgeneralizing to some degree. Um, but I see this when we often present in person or in a webinar, uh, especially where we do, like, one-on-one questions afterwards, where we might talk about a certain, you know, investment account or strategy or approach, or we talk about retirement goals.
And you can just see, like, the do- the dopamine rush of like, “Well, what do I need to do,” right? “What do I need to do to check the boxes to save more? And once I do that, once I max out this account, like, what am I [00:23:00] doing after that? What am I doing after that? What am I doing after that?” And all of them might Ultimately check the textbook answer of, like, how we optimize accounts or the priority we invest, but is it potentially drift from the goals of what we’re trying to achieve?
And again, that balance of quantitative and, and qualitative. Um, so I, I, I think this isn’t unique to pharmacists, but I think pharmacists struggle with this more than maybe what we see in just the general population of, like, with learning more, there’s, like, this, “Oh, okay, what do I do next? What do I do next?
What do I do next?” Yeah. And, and, you know, I sometimes will get some youn- like, younger pharmacists that are f- like, fresh out of school, and they’ll, you know, wanna talk to me about planning, and they’re– you know, they basically will tick off all the different parts of the financial plan. “I need this, I need to do this, I need to do this.”
And, you know, I think it, it’s definitely perspective I think is good here, right? So even, even, even no matter where you’re in your career, if you’ve never done a plan, it’s like, let’s focus [00:24:00] on, like, let’s take this into bite-sized pieces. So we’re gonna deliver a full financial plan, but we might only prioritize one or two major areas to kinda get us rolling and, and get going.
So, you know, I think what often happens is, yeah, you’re right, sometimes you really need to, to drill down into, like, one or two issues versus have a sh- shallow understanding or a shallow, um, you know, attempt to address 5,000 things related to the financial plan. So, you know, I, I, I think that, you know, it’s important for us to, to have perspective and, and to think about– we talk about this in our client engagement standards is, like, Rome wasn’t built in a day.
It takes time to do these things. And we believe that, you know, people that are engaged with their financial plan over the long-term basis, so not just a year, but years and decades, will have the best success. Um, and doing that [00:25:00] allows you to kind of start where you need to start, and I kinda think of this as like the bleeding head wound.
Um, let’s address that, triage that, and then start moving on to things that are maybe less, um, you know, terminal, so to speak. So, you know, and I, you know, I, I’ll, I’ll be in meetings with people and they’ll be… They’ll, they’ll kind of have this full shotgun blast of things that they need to do, and I’m thinking like, “Man, well, we need to get started on this particular issue.”
That, to me, is, is the thing that we really need to address, and typically because there is some time bound or, or something that’s just, you know, in my mind, you know, th- and they don’t ma- might not necessarily see. So, I, I do think that this is a real thing is, you know, optimization is probably the word that I hear the most these days when I talk to pharmacists.
Um, but you know, to me, it, it takes time, right? And I think it’s, it’s really… Part of the, part of the problem with the financial plan is that it, it just covers, like, [00:26:00] a full, like the full breadth of things that you don’t even think about. A lot there, yeah. And that’s often, like, when we go through it, people are like, “Oh, I didn’t even know that that was something that you would work on.”
There is no f- perfect financial plan. That’s why we talk about it’s Planning versus having a plan, because it’s not a static thing that you just- Mm-hmm … throw on the shelf after you’re done. It’s something that is a living, breathing document, so to speak, that’s gonna ebb and flow with the market, what’s going on in the world, but to, you know, then what’s going on in your life, um, and you know, how you’re approaching things and, and that type of thing.
So, um, but that’s can be hard for a pharmacist that wants perfection. Um- Yeah … it can be really hard. Yeah. Well, especially I’m, I’m thinking about the, those that are listening that are just grinding, you know. Um, when I think about the first 10 years, Tim, like graduating 2008, 2008 to 2018, I mean, you know, we’re, we were working through a couple hundred thousand dollars of student loan debt.
Uh, we were building an emergency fund, saving for a down [00:27:00] payment on a home, starting our family, right? Trying to establish a lot of those rhythms, making sure we have the right insurance protection in place, estate pla- like, none of that are things that you wake up super excited, you know, about. Some more than others, right?
Maybe the home purchase or, you know, trying to get to the end of a debt repayment goal. Um, but I think in the optimization culture we’re talking about, paired with some of the peer comparison, social comparison, some of those foundational things, like they’re just not a whole lot of fun, you know, necessarily.
But it gives the, the foundation for those things that are gonna come later. And as we often say, like there’s, you know, this is a lifelong journey. Um, but you can spend years or decades, and we’re not, we’re not suggesting you don’t have any fun along the way. Like absolutely we gotta find a balance. Um, but I just wanna pause and just acknowledge those people that are, that are in the grind, and especially as they see what is not reality out there of, you know, [00:28:00] someone who, who has worked 35 years to get to a point of maybe an early retirement or, you know, someone who’s worked incredibly hard to get, get to a point of, uh, pur- purchasing a dream home or taking a, you know, lavish vacation, whatever it might be.
Like you’re seeing snippets of the whole story without understanding everything that went behind it. And here you are in the grinding phase being like, “Oh my gosh, am I ever gonna get out of this?” Right? Yeah. And, and, you know, in a recent conversation I had with, um, you know, a graduating student, you know, who are typically not good fits for our planning services ’cause we’re working typically with people that are more mid-career, one of the things that I said, because she was kind of ticking off like, “I need to do a Roth or a Roth con- like I need to do, you know, I need to make sure this and that,” and I basically said to her, you know, ’cause I think she was going into like residency, I was like, “You know what?
Like-” I- if you, if you can get through the next couple years and, and pay down the consumer debt that you have and stash [00:29:00] some cash away, like, that’s a win. Like, I don’t– I, it, uh, if you can get your employer match, that’s great, ’cause that’s kind of the free money. But I think even in that case, like if wouldn’t invest, I’m like, “Don’t do it.”
Um, not advice, but I’m like, generally don’t, don’t do it. So, like, that’s not sexy advice. Like, you wanna start buying stock or mutual funds, or find that tax thing that’s gonna save you some money. But I’m just saying, like, put money into a high yield savings account, because if you’re, if you wanna buy a house or get your emergency fund up to where it needs to be, or not incur all those expenses that you, you typically see in residency that p- people don’t expect, um, or go through the boards and all that kind of stuff.
Like, so I was– uh, basically the message was like, cash is king, and that’s okay. But that’s not, like to your point, like it’s, it’s kind of not the– like you feel like, “Well, maybe I’m not doing enough.” Like, there’s no sizzle- No, totally … there’s no sizzle to this. Like- Yeah … um, it’s boring. [00:30:00] So, and, and I think often the best financial plans are boring outside of the things that are, like that drive you in ter- in terms of like we talk about those invest in.
You know, if, if investing is, is sexy, it’s typically expensive and you’re– it’s typically you’re chasing returns that aren’t consistent. Um, so I get it. Like, I, I get it. I, I get the whole like, okay, here’s the, the, you know, 101 point checklist of what I, you know, of what I should be doing from a financial plan, and I’m telling you to really focus on the first two that are there, which is like build your cash reserves for emergency fund, cash purchase.
I mean, that could tr- like it could be the same thing. Like, I had a recent conversation with someone that sold their house, they’re entering retirement, and they have this large sum of money, and it’s like, “What do we do with this money?” I’m like, “Take a trip. Pay down some debt.” Mm-hmm. Um, again, you know, like that’s what I’m saying in my brain, ’cause like at the time they weren’t q- they weren’t quite clients.
But it’s also like sitting down and being like, “Well, what’s [00:31:00] important to you?” You know? And, and, you know, if we apply this to your retirement funds versus like we spend some of it, like how does that affect your long term trajectory in terms of like money running out in the future? So, you know, I think that, um, again, it all goes back to the plan, you know, what a surprise.
But to me, that is the backbone and the constant, and it’s not that the plan won’t change, but the constant, like there, there’s a thread of you and what you value and, you know, that balance sheet’s gonna ebb and flow and grow and, you know, it’s gonna retract, it’s gonna grow, but then you know, that, that’s the constant thing that, you know, even if it shifts by 20%, that 80% is still there and grounded and, and we’re gonna adapt to, you know, the, the variance.
So, um, yeah. I think, I think it g- it always goes back to the plan. We talked about this. You, you, you mentioned it, we’ve talked about it on other shows, but I want to explicitly define it, ’cause I think it’s an important [00:32:00] antidote to a potential problem that we often see on the scarcity side, which is the abi- inability to spend money that somebody has worked hard to save and that we do have a good plan in place.
And so it’s, “Hey, I’m making this progress. I do have some money. I’ve defined these things that are most important to me, but I’m just having a hard time letting go. I’m having a hard time flexing that spending muscle, even if it’s appropriate.” And, and I think the antidote to this is the buckets Right?
It’s, it’s, it’s the clearly defined purpose. I know for me personally, you know, th- this is something I’ve struggled with for a while, and I have found that when I can define how the dollars are being used, I can get much more comfortable with spending the dollars if they’re earmarked for that specific purpose.
So I just wanna make sure we don’t go past this concept too quickly for those that are hearing this maybe for the first or second time. D- define the bucket concept, the idea, and even practically how we might implement this. So the [00:33:00] retirement buckets are easy because the IRS basically says, “Hey, for you to get these triple tax benefit for an HSA or a double tax benefit for, um, an IRA, a Roth IRA, a 401, like, these buckets have to be, you know, clearly marked and, you know, the purpose is for retirement,” right?
We’ll let it grow tax-free, and then in retirement or at 59 and a half, you can distribute it without the penalty. So, like, check, right? We, we all get those. Um, if you take those money out, those monies out before, like, you’re gonna, you’re gonna get slapped on the hand. But outside of that, and maybe the HSA is the exce- ex- exception or, like, an FSA, outside of that, like, we don’t really label…
Or, you know, I would say, I would say from a cash perspective, most people w- know they need a rainy day or, like, an emergency fund. But it’s basically that’s the two ends of the spectrum. You have the, you have the, the long-term accumulation accounts of retirement, and then on the other, it’s the, “Hey, if it hits the fan, I [00:34:00] can get this money and use it for XYZ.”
But there’s so much in between that we often don’t define well. So what I mean by this is, you know, we are big believers in having a savings plan that’s gonna be anchored by an emergency fund, and we also believe that the retirement buckets are important to the seed and grow over time. So the in-between accounts, the sink in funds, are, I think, just as important because I think that these funds, and we talked about, you know, the qualitative and the quantitative aspects of a financial plan.
So quantitative, we believe income and net- net worth are the, the biggest ones. Net worth probably the most important, that we wanna grow wealth. The things, the assets, the things that you own minus the liabilities, things that you owe, that’s what sticks in the financial plan. We wanna get to, you know, multi-millionaire status.
For most pharmacists, that’s where they should be, um, you know, in their, in their careers. So- But the [00:35:00] qualitative ones, the qualitative aspect of this, I think is even more important than the quantitative. Um, because, you know, I, I, I make the joke as like, “Tim, when you’re on, you’re on your deathbed, you’re not gonna be like, ‘Ah, I wish Tim would’ve said to put more money into my Roth IRA.'”
You’re gonna say like, “I wish I would’ve done this with my sons. I wish I would’ve, you know, taken some more time off, had some more, you know, whatever, you know, more, uh, moments with Jess or with my parents,” um, those types of things. Th- that’s gonna be what sticks with you. So what often funds those qualitative things that we can’t really wrap our arms around in terms of like ROI are the sinking funds.
So, and what I mean by this is, um, so y- I, I kinda think of there’s, there, there are m- maybe even two types of sinking funds. So for example, um, we have a kids fund that has a sub bucket that is Olivia, Liam, Zoe, and Benji, our [00:36:00] dog, right? So that bucket… So it’s, what Shay and I do is we say, okay, for swim, for hockey, for soccer, um, for Benji’s vet appointments, for grooming, this is the amount of money that we spend per year.
Um, so let’s just say for, for easy math, it’s $1,200, which is not that, but it’s $1,200. Divide that by 12, $100 a month goes into that account. So that money comes in, and then it goes out. Um, you can do the same thing for a v- a travel fund. So like, hey, you know, we’re gonna spend $12,000 a year, $1,000 a month goes in and goes out.
Yeah. We have this with a m- a maintenance account. So we have a, like, a, a maintenance account that typically covers like home maintenance and car maintenance. Like we know that cars are gonna break down. We’re gonna need new windows, a new roof. That’s not an emergency, Tim. Yeah. That’s something that we’re planning for because of wear and tear.
That’s a maintenance account. So we, we project out what we spend, divide it by 12, and at the very least, we might, we might say like, [00:37:00] “Ooh, like that roof cost us n- now, and we weren’t expective.” So maybe we’re 75% of the way there. We kinda look at that as a coupon, and then we have to find 25%. Yes. You know?
And maybe that is the emergency fund or, or whatever. But then like the, the fun things are like- travel or- Mm-hmm … things like that where you, you know, what are the things that you’re most passionate about, and then, like, what is the dollar amount that we need to allocate for that? And to me, I think that’s the qualitative thing of what I’m talking about.
So that could be, like, a really expensive hobby. It could be restarting your music career. Whatever that is, like, to me, having dollars set aside in a very purposeful way makes it easier for someone like you, someone like me as well, to be like, “Ah, okay,” like, that money’s there, it’s accounted for, that’s what it’s for.
You know, we, I- A- and to know it’s not derailing other goals, right? Correct. ‘Cause we thought about, yeah. Yeah, everything else is, is part of this. Yes. So, but, but that gray area, that, that [00:38:00] gray matter, so to speak, w- I think is, is some of the most impactful f- like, things- Agreed … that we should be doing with our money that we don’t, it’s kind of just lost in the soup of other things.
Yes. Like, it’s not, like, hey, this, this money is my emergency fund, but it’s also for this, it’s also for that. And I’m like, if you’re doing the mental accounting, kinda, do the actual accounting. And at the very least, you can see, like, ooh, like, maybe we need to wait a year to, like, do X, Y, Z. I, I kinda talked about- I don’t know if I ever talked about this.
Well, maybe I did. Like, we, we bought our house, um, in Columbus when we moved out here in 2020, and then we were like, “Well, maybe we’ll move again, you know, when our family expands.” And then, like, the world changed, prices went up, interest rates went up, and we’re like, “Okay, this is a f- this is our forever house, so we’re gonna put the money in this house.”
So we spent a good amount of money on our house, Tim, right? You’ve seen it. And, like, if I just had to draw that money from a big account, I would’ve lost my mind. Consultations. [00:39:00] But we, yeah, we knew that. Yeah. You know, we knew that, and this was something that, you know, when we, you know, got our profit distribution from YFP, like, it went there, and then that’s kind of what paid for it, right?
So to me, the, the, the behavior and mental accounting of this, it, it’s so important because if not, well, I think what often happens is people, they’re like, they’re, they get paralyzed by the amount or, like, where it’s gonna come from because it’s not directly linked- Yes … to a certain bucket, and then nothing happens, right?
And then we wake up, and they’re like, “Well, why,” you know, “We didn’t spend this money. Like, why didn’t we?” Um, and, and that, maybe that window of time has passed, like we talked about with our young families. Like, we, we want to be able to do this. So, um, I think it’s something that’s so underrated, and you can, you, you can see this in retirees, too, in just in terms of, like, you know, how they’re, especially in, in early retirement, how, you know, they’re allocating, they’re earmarking dollars for X, Y, and Z.
They’re like, “Oh, I don’t know,” like, you [00:40:00] know, “Are we gonna… Is money gonna run out?” And, and it’s, it, that problem never goes away. So I just think it’s, it’s probably more of the, one of the underrated things I, I think you can do. Agreed. Um, and you know, to me, like, one of the things is, like, when we’re asking them, like, “What are, what’s important?
What does success look like?” We’re pulling out those things and creating buckets that are not an emergency fund, they’re not retirement, they’re the in between that th- there are things that we have to do to run a household- Yes … which I would think is like a mo- a, a maintenance fund, that are not emergencies.
But then there are things like, you know, I keep coming back to travel, because that’s probably the, one of the main them- themes I hear, is, or experiences that, like, we need to fund this bucket. Yeah. And we need to do it yesterday because if you’re telling me this is the most important thing, that, that’s, like, my job is to manage your money and make sure that we’re technically sound on the tax side, but if I’m not holding that mirror up to you, Tim, and saying, like, “Hey, remember when this was important, and we haven’t done jack for that?”
Like, that’s a [00:41:00] problem, and I think that’s a failure of us to hold you accountable to your plan. Yeah, what we’re talking about here is, is to your point, being able to draw a line From our goals to the dollars, right? Yeah. We, we can actually see the goals. So to your point, if we say travel’s important, if we say giving’s important, if we say, you know, what- whatever is the important goals, uh, we, we wanna be able to actually see do, do we have dollars represented to it?
And then, you know, I would add to that, for those that are doing this with a partner, significant other, spouse, where things are merged or a portion of them are merged, once those goals are agreed upon and defined, these become, right, the, the shared buckets of what we’re talking about, and we’re, we’re not in this wondering space.
Um, yeah, and I think that’s where the mental exhaustion comes from. Hey, I’ve got, I’ve got an account that’s got X thousand, 50,000, 100,000, whatever the number is, and to your point, I know some of this is for an emergency, some is for travel, some for that. Um, but life changes, and we kind of forget what, what those items are, and, uh, it’s [00:42:00] such a important, pretty simple step that I think has an outsized return.
You know, while it’s not… You may not change $100,000 in your account. The total sum is no different, but the clearly def- definitions of how those dollars are gonna be used, we just see this provide such a ton of momentum In confidence in someone’s financial plan. And just to take this a, a step deeper, you know, you and I both use an online bank where, you know, essentially there’s these virtual buckets.
Um, it’s all just in one high-yield savings account. I mean, you can open up multiple accounts, but you can have one high-yield savings account, and then have these virtual buckets where it’s really a name only. So, you know, as I’m going down my buckets, just to give some specific examples as you were talking, I was just pulling up my, my app.
You know, we’ve got a bucket called rich life experiences. So these, these are spontaneous things that we don’t necessarily have a specific concrete goal, but when they came, they, they come up, like, we just wanna be able to pull the trigger, you know, and move forward. [00:43:00] Next car purchase, so more, more functional.
Upcoming vacation. Boys activities, you mentioned that with the kids’ activities. Um, annual home maintenance. So these are the things that we know are, like, the recurring expenses on the home. They aren’t the big, like, roof projects. That’s a separate one we have in, like, a h- a home CapEx account. But, you know, we know we power wash every year.
We know we’re gonna mulch the yard every year, right? These big one-time expenses. Property taxes, so it doesn’t come out of escrow. We pay twice a year, so it’s kind of, you know, recurring throughout the year. Uh, homeschool expenses. Um, we’re working on saving up for that, uh, workout area in our basement. Car repairs.
Giving fund, and then of course the emergency fund that’s there as well. But I mean, if, if your bank doesn’t do this, you, you could simply just create a spreadsheet, right? You know, create a spreadsheet and you, you might look up at your bank account and it says you’ve got 50, 75, 100, whatever the number is, but then you’ve got this, uh, system on the side where you’re just tracking, you know, where those dollars are gonna go.
Yeah. And, you know, my, uh, Shane and I recently had the conversation about, you know, I’m looking [00:44:00] at my nieces and, uh, who are a little bit older, and then I’m looking at my kids and, and, and their teeth, and I’m like, “We probably have to start upping up, upping our kids’ fund for, for braces.” Um- Braces, that’s real.
Yeah … you know, so again, like, it’s not an emergency. We know it’s coming, and, and, you know, rather than stressing of like, okay, where is this thousands of dollars gonna come, you know, let’s, let’s get in front of it now, and we’re probably a little bit behind the eight ball, um, but for whatever reason, our kids’ teeth don’t fall out of their head and they have to get them pulled.
I don’t know. I don’t get it. Um, so we have some time, but I’m like, I’d rather, the, you know, just like in any plan, the more time that you have to plan, the less stressful it is in terms of, uh, you know, saving because it allows it to grow and, you know, earn interest and all that kind of stuff. So, you know, and, and I think just to put a, a cherry on this- I think the science of, you know, we were talking about the different cognitive bias, and I always make the joke of, you know, I think when we started this, um, you know, we would name [00:45:00] our travel fund, you know, Disney, ’cause that was the next big trip that we were going on.
Yeah. And, you know, you’re, you’re more likely to save for the mouse and less likely to steal from the mouse when it’s, when it’s labeled and it says that versus, like, savings account. So, drawing a c- a clear line between, like, what are the things that are important to you and in this sense, you know, the, the, the trip to Disney, that was a big thing that we wanted to do before, you know, Olivia reached a certain age.
Um, it’s just easier to get there and to, like, not steal that money for something else. Um, and I think it’s just easier to take that money out, you know, case in point, Disney is really expensive, but if that money is there, it’s just a lot easier to spend it because we’ve gone through that process. And even if it- Yeah
it doesn’t have to necessarily be 100% solution, right? You’re not, you’re not gonna hit it on the dime, you know, hit it on the nose all the time. Sometimes you’ll, you’ll over save, and then that’s the seed money for the next trip. So- Yeah … um, I just think it just [00:46:00] makes it a lot easier when you’re actually going to make that purchase or make that- Yes
you know, that transaction. Yeah, especially when you get to the park and, right, there’s the $18 pretzel and you’re like, “I don’t, I don’t love spending $18 on a pretzel,” but, like- Yeah … I’m not gonna be stressed about it all day. Right. We’ve, we’ve, we’ve thought about it and planned for it. Um, no, that’s good stuff.
And, and I think the topic of buckets pro- probably warrants, you know, a whole separate approach. It’s o- it’s one of those, um, Jess and I have been talking a lot about lately, like, the rare things in life that have, like, an outsized ROI, right? Where you’re like, “Wow,” like, that just is incredible of whether it’s an investment of time or money and you’re like, that really has a cascading effect.
I mean, this is one of those where you spend a little bit of time to implement this, um, and I think it just provides a ton of momentum, uh, in your, in your financial plan. So, I think where the magic happens is, like- The– it’s not just the bucket of money. I think that’s, that, [00:47:00] that has to happen. But sometimes what, what happens is like we have the money, but we’re not allocating the time.
So, you know, like let’s say that volunteering is really important to you and like you wanna spend, you know, X amount of hours for your favorite charity, but you’re not doing it. The question I would ask is like, “Well, what’s, what’s going on?” Um, you know, you’re donating like to your favorite charity, that’s great.
We have a bucket for that. But to me, like the, the analogy for time, um, here is like blocking your calendar. It’s bucketing your time as well. Um, so that could be like taking time off to take a trip or, you know, taking, you know, four hours in a day. And, you know, I, I know, you know, we’ve talked about burnout.
Sometimes like pharmacists are burnt out, and there’s no room for that, right? They’re, um, “Hey, I’m at capacity from a time perspective.” But, you know, this is, this is again multi-variable. Like we can, we can work on the, on the dollar perspective, but also, you know, if, [00:48:00] if I’m seeing like, hey, this is not happening for some reason, it’s because we’re not val– you know, we’re not, we’re not allocating the time resource enough, and that has to be accounted for as well.
So it’s not just dollars and cents, it could also be looking at the calendar and bucketing your time appropriately to make sure that that also aligns to the things that you’re, you’re passionate about. So, um, just a call-out to that ’cause I think, you know, when you brought up it’s, it’s a time and it’s a dollar perspective as well.
Great stuff. Uh, Tim, as we, we wrap up, you know, if there’s one, one theme that runs through the conversation, I think that it’s financial confidence isn’t something we arrive at because of a certain income or net worth or savings amount. I mean, certainly those all, all are gonna help, but it’s about the clarity.
Clarity of the values, the goals, what enough looks like for us in our own unique financial plan. Um, and hopefully we’ve made a strong point that having a plan and having an objective third party can really be a powerful instrument in working towards that goal. So Tim, as [00:49:00] always, great stuff. Uh, we’ll, we’ll be back at it here in a couple weeks.
Thank you so much for listening to this episode of Scripted Wealth: Money and Meaning for Pharmacists. If you enjoyed the conversation, be sure to subscribe, leave us a rating and review, and share the show with a friend or colleague. It really helps more pharmacists discover the show and join us on the journey toward living a rich life today and tomorrow.
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