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Life by Design is a podcast that shares the experiences and tools to help couples align their wealth goals and reclaim their time, enabling them to experience freedom, abundance, and a life by design.
Jessilyn Persson: [00:00:10] Welcome to Life by Design Podcast with your hosts Jessilyn and Brian Persson. We support couples in achieving their wealth goals by sharing our journey of overcoming barriers to build our financial empire.
Brian Persson: [00:00:20] Recognizing the growing need for couples to find alignment and invest confidently in real estate, we created the Riches, Relationships and Real Estate program. Our goal is to support you in achieving your financial and relationship goals together. Want to know more about what's stopping you from building your wealth? Make sure to go to discoverlifebydesign.ca/wealth, and download 'The 3 Mistakes that Keep High Achieving Couples from Building their Wealth, Freedom & Living a Life they Love'.
Jessilyn Persson: [00:00:51] Today's topic is on how small, consistent habits can shape your wealth. Small, consistent habits shape your wealth by leveraging the power of incremental growth, discipline and compounding over time. Our first takeaway is, keep it small and simple. That is the key.
Brian Persson: [00:01:13] Keep it small and simple. Absolutely. I cannot count the number of times I have overwhelmed myself with trying to change too many things at once.
Jessilyn Persson: [00:01:22] Yes. Or taking a big lofty thing and trying to make it happen tomorrow.
Brian Persson: [00:01:28] Habits don't change overnight. They're exactly like going to the gym, you got to go and do the reps. You got to build that muscle day after day.
Jessilyn Persson: [00:01:37] Great example for me, this isn't necessarily with wealth, but I work out every day. I have for as long as I can remember. And it's natural, it's a habit, it's normal to me. But then when I decided to start journaling and figuring out how to meditate, I struggled with that for years. I'm like, how do people do this daily? And it's no different than working out. Once you make it a habit and you put that space in your calendar and you get up and you do it. Even if you're like, ah, I don't have time, or I want to sleep in, or whatever it is. But you just do it, and then over time, it's natural. Now you're like, okay, I get up, I journal, I work out. And now it's like, oh, and here before I didn't think I had the "time", but it was a priority. I just didn't prioritize it.
Brian Persson: [00:02:20] Yeah, priority is big. Your habit of journaling, there, actually caused me to create a habit. Because we have a common gym in our house and you were using the gym, and so I was not able to use the gym at that time. And so I had to actually change my sleep schedule, and I ended up joining the 5 a.m. club and getting up at, it was actually the 4:30 club. But it took me probably six months, I think, to actually build up the routine of getting up at 4:30. It wasn't like, September I just woke up, started waking up at 4:30. It was like, September I 'tried' to wake up at 4:30.
Jessilyn Persson: [00:03:02] I remember watching you on that journey because your journey impacted my journey because I shifted it. So you got up early, you went and did your workout. In that time, I would get up an hour later and that's when I would journal and meditate, and then I'd go work out. But if you didn't get up, I'm laying there going, you're in my space.
Brian Persson: [00:03:19] There was all kinds of little habits that got jostled around there. But now, it's very hard for me not to wake up at that time. And it feels kind of bizarre to not wake up at that time because the habit is so ingrained.
Jessilyn Persson: [00:03:34] Yeah, absolutely. So simple habits like saving a fixed percentage of your income, or automating investments or regularly contributing to a retirement fund can steadily build your financial foundation. And I know a lot of companies do this where they will take, if you approve it of course, take a percentage of your paycheck before you even get it and put it into some kind of a fund for you. Now that's a great way, hands off. All you got to do is sign up for it, and it's done.
Brian Persson: [00:04:03] You don't need your company to do that for you. It's called 'pay yourself first'. So pay yourself first by investing your money first and then making sure that you have enough for expenses and whatever else. One of our mentors, Grant Cardone, he's famous for what's called 'going broke'. So his habit is to literally invest every penny he had, earlier on in his career, to the point where he wasn't even able to pay rent sometimes. He figured it out, but he invested and invested first before he thought about anything else. Now he has a $4 billion real estate portfolio and a $300 million a year company. So he's not complaining, but it's kind of crazy what he forced into his life as a habit before he ever really made it, per se.
Jessilyn Persson: [00:04:59] And I know a lot, for years, they say save 10% of your income. And if you can do that, that's fantastic to start. But as we mentioned in this takeaway, small and simple is the key. If 10% seems like too much based on what you got going on right now, start with 1%, reassess it after a month or two, go up to 2%. The slow increments will add up and it won't feel like such a burden to you at first, and before you know it, you're going to be at 10% and it's like nothing. You won't even notice it.
Brian Persson: [00:05:30] And if you have not enough money to save, go the other way. See what expenses you can cut down. I know almost every one of our clients that we run through our program, we get them to do a budget somewhere near the beginning of the program. And every single client has the same response. It's like, oh my God, I did not know how much money I spent on x, y, z. Usually, coffee and food. Sometimes just the grocery bill. We love our food. We don't really hold back too much, but we don't go and buy the $50 tiny little slice of salmon compared to the Costco salmon, where you can get a fair bit more. We still get good quality salmon from Costco, but it's not killing our food budget. A lot of our clients, it's usually coffee and food. They are always shocked about how much they're spending on that.
Jessilyn Persson: [00:06:27] Yeah, absolutely. And remember, with small and simple, patience. People don't give their habits enough patience and time to develop.
Brian Persson: [00:06:37] No one gives their habits enough patience. Not me, not you. An exercise I put my clients through is monitoring their time. I have a habit of tracking almost every 15 minutes of my business day. I put my clients through that exercise, and no one has lasted more than two days.
Jessilyn Persson: [00:07:02] Yeah, that's true. Not even me.
Brian Persson: [00:07:05] Yeah, you tried that. But what did you find out in those two days about your habits? I remember, do you remember? How much time you were spending on email. It blew you away how much time you were spending on email.
Jessilyn Persson: [00:07:19] Email by creating that response, not going through them. It was like, oh, this will only take me two minutes, I just got to type this email up. 12 minutes later, I'm like, oh my god, really?
Brian Persson: [00:07:29] And that's a habit you can build in too. In fact, that's one that I'm just picking back up because I kind of fell out of a pattern with it, checking my emails later in the day instead of checking my emails all the time. So the habit I need to get back into the trend of is, 1:00 PM is when I check my emails and not before. I don't even look at them before 1:00 pm. What's been happening over the last couple of months is, my mornings have been getting eaten away by checking my email too soon. Little habit fell out of place and it's starting to affect things in the business.
Jessilyn Persson: [00:08:08] All right, I'm going to roll into takeaway two, which is that habits build financial discipline. So if you develop consistent habits, they'll foster financial discipline making it easier to stick to your wealth building plan and avoid impulsive decisions that can derail progress. I know when you got a bunch of money in the bank, and you haven't invested or put it aside somewhere else, it's very easy to think you can just spend it. It's there, it's accessible. Whereas if it's invested somewhere, it's out of sight, out of mind. And then you won't, firstly, have any kind of regrets because you spent it on who knows what, and it's going to build your wealth. So later when you look at it and it doubled in value, you're like, oh, I'm so glad I put that away.
Brian Persson: [00:08:54] Yeah, if you can get into the habit of invest and forget. I mean, obviously know where your investments are, but don't really think about them on a daily basis. You will not only have a lot more mental power behind you because you're not eating up all that mental power worrying about your investments. And you will allow the investments to do exactly what investments should do. And that's grow.
Jessilyn Persson: [00:09:18] Consistent habits help you develop better money management skills. Like budgeting, tracking expenses, minimizing unnecessary spending. And I know for us for example we, at least once a year, I actually think maybe twice a year, we'll go through and look at, what subscriptions do we have? Whether it's Netflix, Disney, Apple Podcasts, Prime Video, whatever. And we'll go, okay, which ones are we not using? Gone, cut. And then some we only use for a small amount of time. We don't do this now but, I remember a few years back we would get Apple Music for the holidays because I love Christmas music. But then come January, I'm done with holiday music so we turn it off. And then I think we pick it up for the summer because we like it for road trips and walking and stuff. But then we didn't use it again September, October and November. So we'd spend maybe three, four months of the subscription, or utilize it I should say, and only spend for those four months as opposed to paying a year when we weren't using it.
Brian Persson: [00:10:19] Same thing with Netflix and all the other subscription services. We just rotate through them instead of having all of them at our fingertips at the same time.
Jessilyn Persson: [00:10:27] Yeah, like there was one, I can't remember which service, it had this specific series we wanted to watch, Harry Potter. So what we did is we got just that subscription, and the kids and I binge watched every movie, over a few weeks of course, maybe a month I think it was. And then after that, there was no other movies to watch at that time. We made it very clear that it's the series we're watching, and then we cut that subscription, and just went back to our normal subscription.
Brian Persson: [00:10:52] Really easy thing you can do, for sure. On the topic of expenses, the thing that you can do with your budget is, just observe it. That's an amazing habit you can get into is just paying attention to your bank account and doing a measure of it. Don't just scan through it, put it into Excel, categorize it, make sure you understand what's going on with your budget. Because the act of observing your budget is half the battle. And when you actually know what's in it, then you almost automatically just start removing things that you understand are unnecessary.
Jessilyn Persson: [00:11:33] I think that's a big one for me. I do a lot of the grocery shopping for our household, and every time I'd go, wherever it would be, to one of the grocery stores, if something was on sale, I'd stock up. And our freezers would be full, and we have two freezers, plus our fridge freezer. And then I was like, well, we don't necessarily need all this. Are we even going to get through all this? And now you guys complain, the kiddos complain, they're like, there's no food in the house! There's lots of food in the house, it's just how we organize it and how we spend it. But now the freezer looks half empty instead of so full you can barely close the door.
Brian Persson: [00:12:10] To be fair, that habit fell off the rails for the last couple of weeks. And the way that the fridge and the freezer were actually getting filled were just out of sync. So habits do fall off. And that's the key is, if a habit does get out of sync, get back on track. If you for some reason can't save your 10% in a particular month, don't beat yourself up. Just let that month go and make a commitment to, not save 20% next month, don't double down because that's going to kill you. But just get back on the track of saving 10% consistently month over month because it's got to be consistent.
Jessilyn Persson: [00:12:52] I think that's a great point you raise is the double down because I know that was kind of my personality.
Brian Persson: [00:12:57] You were very much a double down person.
Jessilyn Persson: [00:12:59] And it didn't matter. It's like, oh, if I didn't work out last week, I got to go extra hard this week. And then you just kill the body and you're just so sore and you're exhausted, you barely can work out the next week. So don't double down, just pick up where you left off, keep making slow, steady progress.
Brian Persson: [00:13:16] In the past, you were really bad for that. And you would seesaw between saving every penny and then investing every penny. There was money all over the place sometimes, and none of it was getting invested because you were in a massive spending freeze. And then at other times we were investing so much where we were nearly going broke, kind of like Grant Cardone that I mentioned earlier, and we were having panic attacks.
Jessilyn Persson: [00:13:46] I don't know if I was having a panic attack. I was like, ooh look what we got invested, look at us!
Brian Persson: [00:13:51] Now we figured it out. We're off the roller coaster and the investments are much more consistent and they happen at the right times and we're a lot more educated than we were lots of years ago. They have tax advantages behind the investments now, there's buffer behind the investments, there's all kinds of things that add up over time that we've built into our investment habit that make the investments not only safe but appropriate for us, so that they're not reactionary. They're actually pro-actionary.
Jessilyn Persson: [00:14:30] Is pro-actionary a word?
Brian Persson: [00:14:31] It is now, yeah.
Jessilyn Persson: [00:14:33] Okay. On that note, I'm gonna roll into habit number three. Habits compound and stack. Minor investments, or savings, grow exponentially through the power of compounding. Turning small, consistent efforts into substantial wealth over the long term. And I think I knew this. I mean, I can't say I fully understand the whole concept of it, but I knew it. And I think where it really showed me the big, I'm going to call it, bang for my buck was our RESPs. We contribute steady for both our boys, and then of course the government contribution, and then the interest that you grow on it. When I look at for how long we've been investing, because our oldest is now 11 and our babe is 8, and I go, wow, we've invested, I don't want to say 'only' this much, but it's in the hundreds per month. But with everything else that compounded on top of it, it has grown exponentially and we still have quite a few years left for their education savings because they're only, like I said, 11 and 8. So that was a good eye opener for me.
Brian Persson: [00:15:38] All financial investments work that way. Where if you can consistently save over time, if the market is at an all time high right now, for example. There's lots of talk about how there's going to be a crash and a lot of people will start to get panicky and they'll get reactionary, and they'll pull their money out or they'll switch investments in weird ways or do bizarre things. The whole buy high and sell low paradigm, which is the exact wrong way to do it. The thing is, is that if you can keep investing consistently, even throughout the recessions and even throughout all the downtimes, you will win because it's a consistent habit that never exits the system, and it's always going to build into whatever environment that your financial world is in at that point.
Jessilyn Persson: [00:16:35] Yeah, exactly. And I guess the really surprising thing for me, that I watched, is that a small amount, I think it was $200 a month per kid, reaches up the maximum to what the government will match for funding. So that's $200 a month. So $400 a month, I guess, per kid. But over 10 years, and now we're looking at close to six digits and you're like, wait, $200, six digits. That's a huge spread. But it was the small, consistent month over month, year over year, that helped us get to that goal.
Brian Persson: [00:17:14] And the stacking component of it, is that once you build a habit like that, you save a little bit of money per month, it gives you some confidence. And then you both do two things. You have the confidence to try other habits that you can stack on top of it. And especially when it comes to the financial game, you also have the financial benefit that is behind you, where you can potentially use the habits that you've built into the past that have created a better financial future for you. And then you can leverage that financial future. And we've done that with our real estate. Throughout 2020 and 2021, we were building a business with partners here in Canada, and if it wasn't for the habit of our real estate and what we did over the previous four years in our real estate, getting it stable, having consistent rents, consistent repairs, consistent everything so that we knew exactly where our rental portfolio was, we probably would not have been able to float ourselves through 2020 and 2021 because we leaned heavy on our real estate portfolio at that time. And without that, without the habits that we had built previously, it would have been very sketchy to know how much was in that real estate portfolio and to know how much we could count on it. Because if we didn't have that habit, maybe one day a huge repair happens and then all of a sudden we're underwater. We spent four years basically stabilizing and consistently putting that real estate portfolio together so that it pays us.
Jessilyn Persson: [00:18:54] Absolutely. I know we use this analogy in a lot of our speaking, the small, consistent habits. With finance, it's the same with working out. If you want to lose X amount of pounds or you want to gain X amount of muscle, you're not going to just go to the gym one day and be lifting a 50 or 100 pound weight. It's not going to happen. You got to start with the 5 and the 10 and the 15 and move up. And it's going to take months, if not years, to build it just like your financial goals.
Brian Persson: [00:19:27] Exactly. And the sooner you start, the bigger your muscles get if you're in the gym and the bigger your bank account is going to get if you're doing finances. We have a lot of clients come to us and they have three year goals to $1 million or something like that, or even five year goals to $1 million. And then you ask them, okay, well how much do you have saved? It's like, well, I don't have anything saved. They're reactionary to their situation where they all of a sudden want to retire. They're five years from retirement or they're five years from, I just want to get out of my job, whatever it looks like. And all of a sudden they need $1 million, but it doesn't work that way. I mean, don't get me wrong, you can do it, it is possible. But the average person probably does not have the time, the education or the know-how to get it done. And so that's why you got to start early. You start with those small consistent habits early and then you got no worries financially into the future.
Jessilyn Persson: [00:20:32] And that's the same with, like I was mentioning with the RESP, the real estate savings plan. As soon as we could, we started for the kids. I don't remember how old they were, but some people will wait until they're five or wait until they're ten. And it's like, if you wait, now you got to be putting like $500 or $1000 a month away to be able to save up, to be able to make it, because education is really expensive if they go to university or college, and that is not feasible. Even if you're making more, say, ten years from when you had your kids because your career has really taken off and you've moved up the ladder, you're not making that much more that you can now put double, triple down what you needed to catch up to their RESP. Plus, the catch up, you missed all the interest.
Brian Persson: [00:21:20] If you really want to know what we're talking about, go online and search on Google 'the effect of compounding interest'. Probably you will find a chart somewhere in there, in the search results, and it will show you what happens if you invest later versus investing earlier, and the difference is substantial. It's unreal, actually, how much of a difference that investing earlier compared to later and getting that habit when you're young built into your financial discipline. It'll make all the difference in your world.
Jessilyn Persson: [00:21:54] I think we shared this story on one of our other podcast episodes, where we met a couple this past summer who said, oh, it's going to be really tough for our kids to be able to afford buying real estate when they're older. And their kids are about our kids' age, I think about 9, 10, 11. And we're like, yeah, but if you buy it now as an investment property, firstly, imagine what that's worth for you when they're old enough. Secondly, never mind the mortgage paydown tax advantage cash flow you can get as well. Don't wait for the future, there's compounding effects even in real estate by buying now versus 10 years from now.
Brian Persson: [00:22:38] It was almost like they were going to wait until the kid grew up and was going to move out of the house, and then they were going to start the action plan towards trying to find real estate. I can't remember how old their kids were, I think they were about 10 years old, so that means that they have, let's just say eight years, maybe ten years for the kid to move out. So you have 8 to 10 years of small little habits and small little actions that you can take over that period of time that you can help out your kid in some way. You can do a crazy amount in 8 to 10 years with very, very little effort. And I don't think people recognize that. I think they think, if I'm to get to whatever X large amount that I don't have right now, it's going to take a huge amount of effort. And so they just kind of give up. But the reality is, just a little bit of effort every day or every week over those 8 to 10 years will change the whole story of your life and your kid's life ultimately.
Jessilyn Persson: [00:23:39] Yeah, absolutely. All right, to recap our takeaways. Number one, small and simple is the key. Number two, habits build financial discipline. And takeaway number three, habits compound and stack. Our next topic is going to be the three key strategies we use to educate ourselves on real estate. Don't forget to go to discoverlifebydesign.ca/wealth and download 'The 3 Mistakes that Keep High Achieving Couples from Building their Wealth, Freedom & Living a Life they Love'.
Brian Persson: [00:24:11] We release podcasts every two weeks, so be sure to hit the subscribe button on your favorite podcast app to journey with us and create your life by design.
Jessilyn Persson: [00:24:20] Thanks for listening to Life by Design podcast with your hosts Jessilyn and Brian.