A Little Bit Richer

James: This series is bought to you by L&G, helping you build a future that's a little bit richer.

Iona: Hello and happy New Year. Now today we're going to do something a wee bit different because we're actually going to do a book club and that's because personal finance starts with strengthening our mindset, our habits and our relationship with money. And we found some books that will help us to do just that. So we can set ourselves up with good financial foundations that our future selves will thank us for. And today, we're going to be exploring four books, The Psychology of Money by Morgan Housel, Money Together by Heather and Doug Boneparth, Atomic Habits by James Clear, and The Anxiety Solution by Chloe Brotheridge. We're going to unpack some big ideas, some uncomfortable truths, those aha moments, and the things that we're actually going to do differently because of what we've read. So whether you've devoured all four books, skimmed a summary, or haven't picked them up yet, consider this your guided tour through the insights that really matter to get your new year off to a great start.

And to chat through these books, I'm joined by L&G's Sean Philip. Now, Sean heads up a team who support workplace pension customers, providing digital tools and info to encourage people to plan for their longer-term finances. And he's also a bit of a bookworm. So we thought it'd be great to have a bit of a geek out about some great books on money and self- improvement. Welcome, Sean. Are you ready?

Sean Philip: I think so, yeah.

Iona: Brilliant. Well, let's get stuck in then. Your first book is The Psychology of Money by Morgan Housel. And if you could sum up this book in one sentence, what would it be?

Sean Philip: It's about how our mindset, our behaviours, and our psychology play a much bigger role in how we think about money and how we deal with money than financial markets or the economy or any kind of science or maths or markets.

Iona: And this book is an absolute phenomenon. It's been a global bestseller, hasn't it? And I think lots of people have been very drawn to this book because it offers something a little bit different from your average finance book. What makes this book such a compelling read?

Sean Philip: I think a lot of people, when they start thinking about finances and markets and the economy, they're often drawn into this kind of world of complicated terminology and it feels very much like a science, like a math subject, like, something really, really hard that I think most people... Well, not speaking for everyone, but not everyone really kind of enjoys those sorts of subjects. It's things that they probably kind of veered away from like after they left school.

Iona: Like me.

Sean Philip: Yeah. Yeah, definitely. But what Morgan Housel really does with the book is he really kind of illuminates the fact that it's about people's feelings and their psychology more than it is about these kind of hard sciences or numbers. And we're all good at that, right? So we're all human. We all innately kind of understand emotions and feelings. The book for your collection of 19 different short stories, it takes us on this journey about how your behaviours drive where you interact with money much more than numbers or hard facts.

Iona: And he uses lots of fascinating examples throughout as well. And one that jumped out at me was the janitor who had been investing all throughout his life very quietly and just became a low- key millionaire.

Sean Philip: Yeah, yeah.

Iona: And I didn't know that story before I read the book. So have you made any changes since you read the book? Anything in there that really made an impression on you and you thought, yeah, I'm going to use that in my own life?

Sean Philip: Yeah. I think the way that he uses the stories is a really great way of bringing a lot of this to life. And I think the thing that I took from it was that there's kind of two ways that people get wealthy and get successful financially. One is pure luck really. And with six billion people on the planet, some people are going to be very, very lucky, but you can't really emulate that. And thinking that you are just going to be one of those lucky people that suddenly gets wealthy isn't really a plan. The other examples that he brings through is the value of being consistent and actually that's how you become successful. That's how you drive and build wealth, it's this kind of consistent habits. And we'll talk about habits later in one of the other books that we're going to read, but it's about showing up and making small savings, choices over a very long time period. Might not be the sexiest, most exciting message, but it's the true message about how you build wealth.

Iona: And he's very, very pro saving as a way to give yourself choices and options further down the line. And that really spoke to me.

Sean Philip: So one of the big things that stayed with me was the concept that you don't have to be saving for something specific. And actually, the act of saving is an important outcome in and of itself. Obviously, there's times in your life when you do want to be saving for something, whether it's a wedding or a holiday or a deposit for a house. And I think I've been guilty of this as well, is that you get to that goal and then you kind of stop and actually you lose all the brilliant kind of power of the compounding that you would otherwise get. So I think one of the things that the book really encourages you to do, and something I've taken away is, well, actually if you can, you really should continue to save, not necessarily for something specific, but just because it is in and of itself a really valuable thing to do.

Iona: It is also about establishing low expectations in terms of your own lifestyle and not trying to keep up too much with the Joneses. I mean, it's so simple when we say it like that, but actually it's something that is very easy to forget and lands lots of us in trouble.

Sean Philip: Oh no, absolutely. He talks a lot about this concept of knowing when enough is enough and being really clear on how you understand, well, what is it that I actually really need to feel successful and to feel sated from a financial perspective? And that's really individual for everyone. Everyone's going to feel slightly differently about that. And I think that's what the book really encourages you to do is to see that there's lots of different voices in finance. And you turn the TV on, you go through social media and people have got lots of different opinions on things that they're getting out to you.

Iona: And they can be very certain in those opinions.

Sean Philip: And they can. Yes, exactly. But I think what he's quite clear to say is that you need to try and find a way to really forge your own path through that and understand, well, what is it that you on a personal level want to achieve with your finances and when is enough for you? And be happy with that.

Iona: Yeah. Run your own race, play your own game.

Sean Philip: Yeah, absolutely.

Iona: That's the thing I really took away from it most, I would say.

Sean Philip: Yeah. And Iona, you've been reading Money Together. If you could sum that up in one sentence, how would you describe it?

Iona: So it's a book by a couple for couples on how couples can manage their finances. So it sounds very simple, but it throws up lots of fascinating and complex questions.

Sean Philip: Great. And what drew you to the book?

Iona: Well, I think it's really unusual to come across a money book that's been written by a couple and a couple as honest as Heather and Doug. So Doug is a financial planner and he is an expert on money. So he does come at this whole subject from an authoritative position. But what I find really refreshing about the book is that this is a couple being really honest about their history, their challenges, and what they have had to learn, both the easy way and the hard way along the path of becoming a couple. And I feel the book really explores all the complexities and nuances and frustrations and difficulties, but joys as well of forging a path together with someone in life, but also confronting what that means for your joint finances. And the whole subject of money and relationships, it can be very taboo. Couples find it so hard to have these conversations with one another.

So I do think that anything that busts that taboo open and just gets us talking more about how we can manage money successfully in relationships, I feel like that is just such a positive step forward and will hopefully reduce the amount of conflict that people have in their relationships when it comes to money, because it can be a big cause of separation and divorce.

Sean Philip: Brilliant. I mean, I really liked how there's quite a lot of humour in the book as well, and it's quite a nice read, isn't it? And one of the things that stuck out for me when we're thinking about how you approach these different things as a couple was the story of the Diablo, the idea that actually one couple had really positioned their kind of financial challenge, which was to clear their collective student debt as this villain that they both wanted to go. And slay and in a really nice playful way, they've been able to kind of tackle quite a serious topic, but in a way that's also brought them together. And I think they were probably both fantasy fans.

Iona: True. Yeah.

Sean Philip: And it's not going to necessarily work for everyone, but it was just a really nice way of kind of sharing these stories and showing how there isn't one way of doing this. But if you are collectively tackling these things together, then you're much more likely to vanquish that villain.

Iona: Yeah. Yeah. I really like the use of those examples as well to bring this whole thorny subject to life and to do it in a way that will resonate with people who aren't necessarily finance narratives, let's face it. And I think that's what this book has in common with Psychology of Money. It is very much aimed at people who maybe haven't given their finances a lot of thought and certainly haven't talked that much with their partner about their finances. And I feel that this can be such a daunting subject that if you talk about it in those terms, then you just help to open up those conversations with your other half. And I feel that their examples that they used throughout the book just illustrate that all couples struggle with this issue. And even those couples that present a really beautiful image of their relationship on Instagram and the fact that you can end up looking at other couples and thinking, they've got it all sorted.

Actually, nobody's got it sorted. We're all fighting our own battles, but what's most important and what really came through for me is the fact that you are a team. You have to work together and try to find that balance between managing your own independence and working with that other person on your shared goals because we're not in a world anymore where you just kind of decide to let your other half make all the decisions for you when it comes to your finances. We're in a world now where actually having your own independence is a good thing. It's a good safety measure, but how can you do that without shutting out your partner and how can you do that without making them feel like you're not including them in your future? And I feel like they just tackle that whole subject in a very down to earth way.

It is American, so if you're a British reader, you might have to kind of get on board with, like, the American language and the American financial system, which is different from ours. But if you can see past that, there are universal truths in there that I think will resonate with everyone.

Sean Philip: Yeah, no, absolutely. And obviously, it is a book written by a couple, the examples in there are all couples. If you're single, is it still a worthwhile read?

Iona: I think so. Yeah. I think it's good to be aware of a lot of these issues before you get into a relationship with someone because I think it can be really, really hard to address this stuff once you're further down the line. And goodness knows a number of people that I speak to who get together with someone and they're really squeamish about asking those questions on the early dates because they don't think it's very romantic. And you can just picture the scene in a restaurant where like you're having a very lovely candle at meal and then you bring up the subject of how much have you got in your ISA? It's a bit of a passion killer. But I think if you do have this kind of stuff in mind when you're going into relationships, then you can have those conversations early on because communication is key.

So long as you keep talking and you're doing it in an empathetic and compassionate way with one another, and the book's got lots of exercises that will show you how to do that, then I think you're on the right path, even if you're quite different people and you've come from maybe quite different backgrounds, that's not an insurmountable challenge. You can still work it out to quote the Beatles/ Stevie Wonder. You can still overcome those obstacles if you're committed to working together as a team.

Sean Philip: Do you find that you've managed your money any differently after you've read the book?

Iona: Yeah. So in terms of my own relationship, I'm definitely going to give this to my other half because I think there is a lot of food for thought in there and it will also help me and him maybe address some of these difficult issues that can come up in a relationship in a way that will take the heat out of it. And I think that that will definitely be helpful. So, yeah. So coming onto more personal development books, Sean, your next book that you want to chat about is Atomic Habits. Can you tell me in one sentence what this is about?

Sean Philip: Atomic Habits by James Clear. It's a big global success story. Over 50 million copies have been sold and really it's all about how you can use the different techniques within the book to create new good habits.

Iona: So what drew you to this book?

Sean Philip: On one level, this is a really practical book that provides lots of different examples and exercises that you can go through and frameworks to create habits. On the other hand, and what drew me in was the bigger picture piece around it, which is the early kind of chapters. And for me, the real kind of thrust of the book was that it's actually more about identity and about who you are and who you want to become as a person as opposed to the different things that maybe you want to do. To kind of use an example, James Clear talks a bit about if you're going to the gym, often people say, and it'll be a classic New Year's resolution, " I want to go to the gym three days a week," let's say. But you're unlikely to keep that up if it hasn't fundamentally become part of your identity and who you are.

I think what he's really doing is trying to encourage you first to think about, " Well, who is it that I want to become?" And if you frame it like that and you say, " Well, I want to become somebody who's healthy and fit and strong," then you're much more likely to find the habits and the behaviours that you want to do to get there, sustain and the things that you're actually going to carry on doing.

Iona: Yeah. He definitely unpacks what has to go into making those habits stick and it's all very well having a system in place if you want to have your trainers beside the bed so that when you get up in the morning, you just see the trainers there and you've got one less excuse not to go to the gym. But ultimately, if you don't believe that actually you're someone who can become fitter and healthier and that you don't see that as part of your identity, then yeah, I can see why you're going to fail at the first hurdle. And I feel like that's got so much relevance for finance because so many people I meet will say to me, " Oh, I'm terrible with money. I'm never going to get better with this." And I feel like once you start identifying in that way, that's half the battle there that you're not winning because ultimately you're putting that label on yourself.

 And it's something that I think in Britain, especially actually, we feel very comfortable saying, but in other cultures and other countries, not so much. And that's what I find quite interesting about the book. It's challenging us all to think about the identities that we create for ourselves. Yeah.

Sean Philip: I think you're absolutely right. And that's one of the things that I've taken from it, which is if I want to think of myself as somebody who is confident with their finances, then what are the different habits that come off the back of that? And this is where we start thinking a bit more about some of the tactical things that you can actually do, but he talks about habit stacking. So where you've probably already got quite a lot of different habits that are not bad or good, they might be neutral in and of themselves, but how do you use them and leverage them to start bringing through the habits that are going to help you achieve your identity? So for me, that might be, and I'm sure I'm not alone in this, the first thing I do when I wake up in the morning, reach for the phone, start flicking through the socials, maybe like read a bit of the news.

But if I'm thinking about, well, how do I start to achieve that identity of being somebody who is more financially aware and confident, then actually before I kind of give myself the endorphin rush of checking the socials, let's have a look, what's my bank balance and how much have I got in my savings? Let's build that up as the habit so that actually when you do reach for your phone, because you are inevitably going to do that, it's also linked to feeling more confident about your finances.

Iona: That's interesting. Although I have to say, Sean, you're a brave man if the first thing you do in the morning is check your bank balance. But maybe that's the point. Actually, it's about just having these habits in place so that you are not being daunted by these things because often people get so intimidated by the idea of doing something like checking their bank balance. They've built it up in their head and because they don't have a system for actually making that a daily habit, then it just never happens. Whereas, yeah, why not do it first thing in the morning? At least you get it over and done with. And have you made any changes in your own life since reading this book?

Sean Philip: I'm a chronic nail biter and I have been for a very, very long time. And it's maybe not encouraged me to stop quite yet, but I'm definitely much more aware now of when I'm doing it, which is a good thing. So I'm on a bit of a journey with stopping that habit, but I'm getting there.

Iona: Brilliant. That's good to hear.

Sean Philip: Yeah. What about you, Iona? Have you picked up any new habits?

Iona: Yeah, I have. So actually, like you, the temptation to just pick up my phone in the morning is really strong. And instead, what I say to myself is that I'm going to read a non- fiction book in the morning and a fiction book at night. Now, I don't always succeed, but if I have that habit in place and it's just something that I do that's tied in with waking up and going to bed, then these are the windows that I know I should be reading in. And the great thing about that is that actually the nonfiction book could be a finance book. In the past few weeks from we've been reading these books for the book club, it's been a really good time. And actually, it helps you start the day then with a very enlightened mindset as opposed to getting quite stressed out about the latest news.

So yeah, I feel that this book's definitely made me think differently about my own habits. And ultimately, life is made up of what we do habitually. It's who we are, it's how we behave. And I think sometimes there is that disconnect between who we think we are or who we want to be and what we actually do in our day- to- day life. And we're never going to get it perfectly right.

Sean Philip: Great. I think this is the last book. It's The Anxiety Solution, isn't it, by Chloe Brotheridge? Could you tell us what it's all about?

Iona: So the Anxiety Solution is a book that is really designed, as the name suggests, to help you address your anxiety, whether that is at a kind of low level or whether it's something that is more chronic and diagnosable. Chloe is a qualified hypnotherapist, but she is also popular on social media because she is very good at sharing practical strategies for helping you manage your anxiety.

Sean Philip: Why should people read it?

Iona: I think we all feel anxious and that might be just from time to time at quite a low level or it could be something that happens on a regular basis. And I know at various points, I've had anxiety and that has been on a big spectrum ranging from mild to quite severe. And when your anxiety becomes more severe, it not only gets in the way of you being able to enjoy life, it actually gets in the way of you being able to make good decisions as well. And that's why being anxious shouldn't just become something that you tolerate and that you think is part of your identity, coming back to what we were saying, or something that you think is just, you just have to live with it and feel like it's just part of 21st century living. Of course, being anxious is fine on occasion.

 It's normal, it's healthy, it shows that we care and it shows that we want things to be good in our life, but if it tips over into a place where it stops us making decisions, it stops us being able to move forward, that's when we need to tackle it. And this is what I found really helpful about the book. I first read it back in 2017, so it's not a new book. It's been around for a while, but it was the first book that I'd read out of many, many psychology books that actually then gave me tools that I could apply in my own life. So I think the two that really stuck out for me were, firstly, it's such a simple idea, but the idea of making your decisions good. So I can sometimes get quite indecisive because I'm really worried about the outcome of the decisions that I make and that then leads to paralysis.

 And I feel like this applies to so many different things, but when it happens with your finances, it can be really problematic because then you're not going to push ahead with things like saving, investing, putting money into your pension when actually all of these things are really important. So for me, having the mentality of, if I make a decision, I'm going to make that decision good. That's what Chloe talked about. Make your decisions good as in once you've decided on something, make it work and see the best of it and see it through. And even if it's not perfect and there are flaws in it, you can always come back and address it and tweak it and change it. But ultimately, if you can just make that decision good, then you can move forward and make that first step.

And the other thing that really worked for me was worry time. So her suggestion is just set aside some time to worry about stuff and outside of that, say, " No, I am not going to worry about this right now." And that includes at 3: 00 AM when you have to go to the toilet and you get back into bed and suddenly your brain switches on with all the existential worries. I now say to myself, " I'm going to put that aside because that's not worry time. Right now, this is sleep time." And when I get round to worry time, I often find the things that I was worried about have gone away. I've kind of got them into perspective. My subconscious brain has turned it over and decided it's not that much of an issue. And if it is still something I'm worried about by the time I get to worry time, then her advice is to definitely just break it down into practical steps as to how you can address it.

So if I'm worried about my earnings as a freelancer, break it down and ask yourself why you're worried about it, and then you can come up with a solution. And just writing things down in general does wanders for your anxiety. So I mean, those are just two examples, but honestly, the book is absolutely stacked full of that kind of practical advice that I found really useful.

Sean Philip: Yeah. There's a brilliant chapter in the book around control and the way that actually anxiety can come about through the feeling that you've lost control or you don't have control over something. And I really liked some of the analogies that Chloe used around that and how that links in with finances because I think personally, if I think back to when I was at university and like never wanting to check my bank balance because it was almost like, well, if I don't check it, then it's fine.

Iona: I won't get bad news.

Sean Philip: And the kind of feeling like, well, if I did check it, I've kind of lost control over it. But I mean, the reality is I never had control in the first place, clearly. But I think the thing that I like in the book is the kind of concept that sometimes you just have to lean into that and let the anxiety float over you, I think is the terminology that she uses. And she uses this great example of skiing.

Iona: Yeah.

Sean Philip: If you've ever been skiing, when you're learning to ski, you have this kind of innate worry and fear of losing control and falling over. And what that encourages you to do is because it's an instinct, is you lean back and you try and stop yourself from the problem and that just has the opposite effect and you're much more likely to fall and not succeed. Whereas actually in skiing and I think in life and definitely with finances, actually you need to lean into it and you need to lean forward. And yes, you are going to have this feeling of losing control maybe, but leaning into it allows that anxiety to kind of float over you and actually gives you more of that control in the long run.

Iona: Yeah. It's a brilliant analogy and yeah, it's so applicable to finance because there is so much about money that is uncertain that we can't predict. I mean, if you put your money into the stock market, you just have no idea what's going to happen there. You've got a fairly good idea and you can make decisions that will manage your risk, but ultimately, you do have to take a leap of faith. And it's the same if you're buying a house, it's the same if you're putting money into your pension. You do have to just overcome that initial anxiety that you're not totally in control. And therefore, I think if you have ever had any anxiety around your finances, and let's face it, it would be weird if you didn't, then this book will definitely help you with that, but it will also help you if you have any kind of generalized anxiety.

Well, we really hope that that's inspired you to start reading and get your new year off to a great start. If this episode has motivated you this January, why not share the podcast and help others get a little bit richer, too? Next time, we're joined by friend of the show and L&G's Jenny Hazan to talk about divorce and your longer-term finances with some practical things that you need to think about. This podcast is brought to you by L&G. You can keep up with the show on YouTube, TikTok and Instagram @legalandgeneral. If you've got a question or topic you'd like answered on the show, please do get in touch on our socials. Until next time, thanks for listening and see you soon.