TRANSCRIPT

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#61 - The Science of Happier Spending: Behavioral Finance Insights with Brendan Frazier

Eric Blake: They say money can't buy happiness, but is that really true? What if the way you spend your money in retirement could actually increase your joy, satisfaction, and sense of purpose?

Eric Blake: Welcome to the episode of the Simply Retirement Podcast, where we want to empower and educate women to live your retirement on your terms. I'm your host, Eric Blake. For many women, especially those that are navigating retirement, after the major life changes like divorce, maybe loss of a spouse spending can feel somewhat surprisingly stressful.

Even after years of discipline, savings and planning. It is not uncommon to ask yourself. Am I spending the right way? This episode was actually inspired by two of our newer clients who were in very similar financial situations. Somewhere, you know, about a million dollars in retirement and investment assets, but they are on completely different ends of the spending comfort spectrum.

In both cases, their husbands are actually handling most of the financial decisions, if not all. During the marriage, one of the clients is actually coming out of a very difficult divorce. She feels anxious about spending anything. She tracks every single dollar with extreme caution. In fact, she was actually surprised to learn just how much income she had available after we went through her retirement income plan.

The other client was widowed just about a year ago now, and she recently has taken a couple of great trips, very meaningful to her. And while she thoroughly enjoyed herself, she admitted feeling guilty afterward about how much she had been spending on those vacations despite actually staying well within her means.

And these conversations highlighted a common challenge. How do we shift from a mindset of scarcity and guilt? I. To one of confident, purposeful spending in retirement, and that's exactly why I'm excited to welcome our guest today, Brendan Frazier. Brendan is a nationally respected expert in behavioral finance and the host of the Human Side of Money podcast.

He'll be walking us through the science of happier spending. This is research backed strategies to help you feel more joyful, intentional, and in control of your retirement dollars. For all the links and resources that are gonna be shared in today's episodes, you can visit the Simply Retirement podcast.com.

And with that, Brendan Frazier, welcome to the Simply Retirement Podcast.

Brendan Frazier: Eric, thank you so much for having me. Happy to be here. Looking forward to it.

Eric Blake: Absolutely. I'd love for you just to, as a starting point, just share a little bit about your background, how you got into this behavioral thing and when it comes to, uh, to money and finances.

I.

Brendan Frazier: Yeah, this is one of those, uh, questions that every time you hear it, you wish that there was like a better response or better answer. I wish I had this just like, you know, mind blowing story. It's kinda like whenever somebody asks, when you get on a, you meet a group of people and it's like, all right, share a fun fact about yourself or two truths and a lie.

And, and, and I'm always reminded, I'm like, I'm really not that interesting. This is the version of it that makes me go, like, I, I really need a better story. But ultimately it just kind of comes down to the fact that I've always been. Endlessly fascinated by people and human beings and why we do the things that we do.

And, uh, I, when I was, uh, an advisor, financial advisor myself, I would work with clients and you would see these things pop up from time to time that had nothing to do with what you could put or project on a spreadsheet. It had nothing to do with. Logic. It was all like emotion based, which is, which I think is a good thing.

It, we don't have to just be logically based when it comes to numbers. Uh, and there would be these instances that would pop up where I'd sit there and go, Hey, all my training, it never really prepared me for this. Right? Like, I could, I can show somebody what to do, but they may not necessarily, I. Do it. And so that just sort of opened the floodgates into this whole top, this whole arena that we call behavioral finance.

That was kind of the gateway. The idea that your behavior is actually one of the more, one of the things that's most responsible for your financial success behavior. Meaning can you do the things that you're supposed to do when you want to do them the least? And can you avoid doing the things that you want to do the most when you need to avoid doing them?

Right? And so one of the classic examples is like. Can I, can I avoid in the market downturn? Can I stay invested? But even, it even came down to, like, we would be asking people, we'd be asking our clients to go get their estate planning done, right? Go get your estate planning, your, all the, all your documents in order, and you would tell, you would say, Hey, here are all the reasons you need to do it, and why you should do it.

But then it would be like a year later and it still wasn't done right. That's an another example of a, that's, that's not a money problem, that's a psychological barrier. Right. And by the way, it's, most people fall prey to it. It's not, it's not a, um, it's not something that if that's, if you're listening to going, that's me, you're not alone.

You're, you're probably in the majority. So that just sparked this whole interest in, wait a minute. If I'm gonna do this job well, I need to know how to deal with people as much as I do the numbers like I need to, I need to get just as good with emotions and psychology as I do these spreadsheets. So that launched this whole.

Journey down, figuring out that aspect, uh, of these relationships. My wife's also a, she's a, a therapist, and so like that sort of opened my eyes to the whole, like, Hey, there's a human being over here. Like, it, it helps to know like thoughts, feelings, and emotions. So that launches that whole journey. And then, uh, as far as that goes, I'm learning all that, applying it, the work that I'm doing with clients and then eventually realize like, Hey, I'm way more interested in this than I am.

Running time, value of money calculations or retirement projections, and there's, those things are also great, but I just wanted to see where that could take me. And so here we are now, uh, getting the opportunity to, to talk about these things and, and work on 'em all the time with clients around the, around the country.

Eric Blake: Well, I think that's one of the things. So I, you know, I talk to our clients a lot about, I want, I want to help take care of those financial details for you. I'll do all the number crunching, do all those things, but I want you to spend your time doing the things that are most important to you. And that's one of the things that I've seen as being often such a challenge, especially emotionally.

I. Is when you're in that spending phase. So you spend 40 years of your life accumulating dollars. Mm-hmm. And that part is just, Hey, I'm putting money into my 401k every two weeks. But when you get to that phase of, Hey, I'm now actually able to. Or I, I can spend, that even becomes a bigger mental hurdle for many people.

And how do we go about getting over that hurdle? What are the, what are the challenges? What are the strategies? And that's why I really, and again, I'm looking forward to this. I'm a big fan of your podcast. I listen to it every, every episode and just picking up things I can transition or learn, I can transition to our client, my client conversations.

And you've identified some of these strategies, and that's why when I reached out to you about being on the podcast, about talking specifically about these five strategies. That can help people, especially of our audience, you know, particularly women who are planning for retirement and they, and just feeling more fulfilled, confident in how they spend.

So I just wanna list these first, and I'm gonna give you, gonna let you, you know, dive in deeper to these, provide your thoughts and insights, but the five experience or the five strategies that you have shared. Is number one, buy experience is not things, and I'll be honest, these, these are not in any particular order, but this is my favorite, not, it's not number one because of any other reason, but this is my favorite one.

Number two is make it a treat. Then you have number three is buy time. Number four, pay now and enjoy later. I'm looking forward to your, uh, thoughts on that one. And then really important, especially for our audience, for, you know, for women, this is a always, almost a high on the priority list, and that is number five is spend on others.

So if you wouldn't mind, just take, I just wanna go one by one again. Get your thoughts, your insight. Why, where can clients start incorporating this into their thought process? Where is me as an advisor, how can I do a better job of communicating these strategies? But when you think about buy experiences, not things, tell me why do experiences tend to deliver more happiness, more lasting happiness?

Rather than material purchases. And how can women who are going into retirement lean into that more?

Brendan Frazier: Yeah. So before I do that, I'm gonna gonna take one small step back and set the stage or this way, and you, you, uh, you alluded to this off the top and sort of set the stage in a similar way. I'm just gonna add to it a little bit, but I do think there's this like question that circles in our minds.

I. Often, and the reason I know that is because there's studies that have been done that show that want to know like, Hey, can money buy happiness? And like maybe it, maybe the question shows up different ways to different people, but at some fundamental level, we all kind of wonder like, Hey, what is this connection between.

Money and happiness. Happiness. Is there a connection between money and happiness? Because it feels like there should be, we just sort of like, not necessarily it's not right, but we sort of just intuitively, naturally think like, Hey, if I had more money. I'd probably be happier. Right. So you'd be hard pressed to find someone that just is, unequivocally denies that, and they're like, no, I think more money would make me miserable.

And maybe it would, but it's pretty, it's pretty easy to make the connection between why more money would create more happiness. So there's these people go out, they do the research, they study, they go, Hey, I. It. What's the connection? Can money buy happiness? And so one of the most famous studies was back in 2010 by Daniel Kaman, was one of the lead researchers.

And the one that gets, it's gets spread around, you'll, you've probably seen an article about it. You could look it up pretty easily if you act. In fact, if you look up like money and happiness, it's probably on the first page of, of Google. And what they found is that happiness tends to plateau at about $75,000 a year in income.

And now the people that are like. There's already people that are sitting there going, yeah, but cost of living. Where do you live? What about inflation? Right? Do they have fi, do they have, uh, three kids that they're providing for no way you can survive? Like, all these things happen, right? So yes, there's different factors that go into that.

That's the first one that came out. There's another one that came out about 10, 12 years later that said the number was drastically higher. And I mean, it was in like the hundreds of thousands that it doesn't even actually plateau till you get up there. And I think more people sat there and went. That feels more, right?

Yeah. I would be happier with several hundred thousand than I would, 75,000. Right. But there's a, I think a fundamental flaw in these studies. They all look and ask, Hey, is there an amount that you can earn or an amount that you can accumulate that's directly linked to happiness? What they don't, uh, what these studies don't do is they don't say, is there a way you can use your money?

To increase your happiness, meaning, and fulfillment in life. And I, if we're, if we're honest about it, if we look at it realistically, like we're not here, nobody wants to just save as much money as possible and never spend it, I mean. To some degree, it does feel good to do that, right? But ultimately your money's either gonna be used to live or you're gonna use it to give it to somebody else.

And so I think they missed the point with this where they said, Hey, if you make this much or have this much, would you be happy? Yes or no? What I think we should be way more interested in is, once I have my money, how can I use it? To boost my happiness, my meaning, my fulfillment in life, which is what, um, uh, Elizabeth Norton and Michael Dunn sought to find out in their book The Science of Happier Spending.

They wanted to know, Hey, if we give people money and have them use it in certain ways, are there certain ways you can use your money to. Boost happiness, meaning, and fulfillment. And it turns out that money can buy happiness if you know how to spend it. There are ways that are proven research back to boost your happiness.

So like you said, one of 'em, the very first one, uh, that you mentioned, the one that always comes up first, it's the one that I think is most intuitive to us, 'cause we probably heard it before, is that is buying experiences, not material goods. It doesn't mean that you don't buy. Material goods, right? There's some, there's fleeting happiness that comes from buying material goods.

So the house that you buy, the car that you buy, it produces this like in the moment for a week or two feeling of like happiness. But even that's not deep happiness. That's just like on the surface, momentary happiness and there's different versions of happiness that's probably for a different, a different podcast.

Um, and so the idea is that that type of purchase, something like I will say a. A car, a house, a purse. In my, in my life, it would probably be like a new tv. Those things are different than using your money or spending your money to buy an experience that creates what? A guy named Bill Perkins, he wrote a book called Die With Zero.

He calls memory dividends. Right? So if these experiences that you create. They don't, you enjoy them in the moment. Usually you're with other people, not always, but oftentimes you're with other people. So there's a social connection component too, and it creates memories that you relive and retell over the course of your life.

Right. And we, and we know from the research that these experiences produce more long, uh, more fulfilling happiness over the long term, rather than the momentary, fleeting version of happiness. One thing, I think one of my examples as far as like, okay, because I, I think one of us, on one hand, we go, yes, I see.

I get that and I know that, and I've heard that before. And on the other hand we go, but what do I do about it? Or how can I do more of that? So I have this exercise that I'd love to take people through when they say, okay, yes, I believe this. I want to do more experiences. And then the next thing you know, you're, you hang up the phone or you end that conversation with the person you're talking, or you stop listening to this podcast and then you're on your way to the next thing.

You're going to lunch, you're doing the task around the house and you don't really, you don't think enough about what is that gonna look like? How do I do it? So here's a fun way to think about how you can do buy more experiences. So you, you pull out your phone, whatever phone you have. It could be an Apple, it could be Android.

We all have a photos app. Right where we take pictures, it's because our phone is basically a camera as well. Well, it's a lot of things, but it's also a camera. And so you're in there and I would say just go back, go, go back and scroll through pictures from the last six months. It's actually more fun to do it over the last year.

Eric Blake: Mm-hmm.

Brendan Frazier: But go back through the last six months or the last year and look and ask yourself, what is something that I did in the last year? That I'm, that I wish that I would've done again, or that I would like to do again in the future. Something that I really, really enjoyed, an experience that I really enjoyed, that I want to do again.

And it's even more fun to go, Hey, what's something that I did that I would pay twice as much for next time and not even da? And not even question doing it again. So for my wife and I, the, what our example is, we went back and we were looking at things that we enjoyed and, uh, we felt, we saw that we, we went to a couple concerts.

We were like, man, we really enjoy going to, going to concerts. We love going to concerts. That's like a fun experience. We enjoy it. Sometimes we're with friends, sometimes it's just the two of us, but we get lots of joy from that. Those are things that we do that we love doing, and so it was kind of like this.

If we hadn't sat down and thought about it, if somebody came up and asked, Hey, do you like concerts? We would say, yes, but we didn't like get intentional and say, Hey, if we go to more concerts, like that's a good use of our money if we're intentional about it. And so we decided that we're gonna make an an intentional decision to buy more experiences by going to more concerts.

Because it's something that we've enjoyed doing and wanna do more of. So we've been doing that, doing that over the course of the last year or so, and at no point have we ever thought to ourselves, should we have gone to that concert? I don't know if that was a good idea, but I can promise you that I've looked on the TV at my, on the tv, on my wall a few times and gone.

I. What if that was a concert, would that have been better? I don't. I don't know. So, and anyways, we're not gonna shame people into h Like I'm also not into spin shaming by any means.

Eric Blake: There's a member of my family that if it was based on TVs, at some point the TV's just gonna take up the entire house. I'm just gonna say,

Brendan Frazier: yeah, right.

That's me. I mean, that's, yeah. I'd be like, Hey. I'm always like, Hey babe, we can probably get a bigger, bigger, and bigger. Yeah, yeah, yeah. I, I, I'm on record as saying there's no such thing as a TV that's too big. It doesn't go over very well in our household, but that's my, that's my stance. I'm sticking to it,

Eric Blake: and I, I feel fortunate that, you know, me and my wife, you we're never, I'm sure you have the same thoughts, but you and your wife are never gonna completely agree on everything financially.

But that is one of the things that my wife and I have very much been in agreement on from pretty much day one, is we much prefer experiences over stuff. Because stuff, stuff, at some point within the next handful of years is gonna be in a garage sale. It's gonna be, you know, going to Goodwill or it's gonna be going wherever.

Yeah. But those pictures even, you know, we just took our, we have our, a new grand baby. She's 17 months old. We took her to the Dallas Aquarium. Mm. And that's something that she's not, she's probably not gonna remember very long and or if ever, but those pictures are amazing. We're gonna look back on those pictures for years and years and years.

At least be able to show her those that we did that. And it, that's something you just can't, it's, it's forever.

Brendan Frazier: Yeah, this whole, like nobody, you don't, might meet many people that try to argue this whole experience is over material goods thing. It's kind of like an Oh yeah, that's a good point. I believe in that.

The, the key to it though, and I used this word a minute ago, so I'll use it again, but is the intentionality because it's so easy if you're not intentional to just mindlessly spend money on material goods and, and again, there's nothing wrong with. Material. 'cause it's just important to be aware that their contribution to your happiness, meaning, and fulfillment in life is less than the experiences that you're, that you're able to use money for.

So it's, it's just this con you need to, it's a constant reminder. You have to figure out ways to constantly remind yourself that experiences are. Experiences over goods. Right. Especially in this day and age where with Amazon, where you can get anything on your doorstep in like two days or less, right?

Right. It's like those are all material goods. There's nothing wrong with it. But if we're not careful, if we're not intentional, that's typically where our money will tend to go because we think, subconsciously think that it creates happiness or we need these things. So it's just a matter of being intentional about using it, not just on material goods, but carving out some money to use for experiences as well.

Eric Blake: Awesome. So let's talk about the next one then. So the next one is make it a treat. Uh, and this one might be a little counterintuitive, but can you talk about what that means and how it works from a behavioral standpoint?

Brendan Frazier: Yeah, this one's the one that's, um, really, really fascinating and I think maybe for me anyways, hardest to actually do and apply.

But the example that I like to use to kind of. Paint the picture for what this is like, or what we say make, when we say make a treat is a lot of us know, well maybe you do, maybe you don't. But Starbucks every fall they have the drink. They have this drink called the pumpkin spice Latte. And there's some people that are listening right now, by the way, that are like, yes, they do.

I they sure do. When is fall gonna be here? Only a few more months. Uh, but they don't have it year round. They only come out with it in the fall, and when it comes out in the fall, people lose their minds. They line out the door the day they know the, there's people that know the day that it comes back and they'll go get their pumpkin spice latte.

I think about growing up, my dad, for whatever reason, I don't know why he would, he loved eating the McRib from McDonald's and he, every year, and it's a, it's a seasonal limited time thing, and every year when it'd come out, he'd be like, I'm going to get it. I'm gonna get my McDonald's McRib. And if it was there year round, there's no way he would think it was that good.

It's a, it's a McRib sandwich from McDonald's. So it's this idea that the, the scarcity actually makes us appreciate things more. Right. Or the other way I heard to put is that abundance of something is the enemy of appreciation. So the researchers did this study where they had two groups of people. They gave one group.

They gave 'em some, uh, a bunch of chocolate that they could eat and they said, Hey, here's your chocolate. You can eat it whenever you want. Like, there are no restrictions. This is your chocolate. Eat it whenever you want, wherever you want, anytime you want. They had another group. They said, here's the chocolate.

You can have it once a week. And so I don't know all the details behind how often they did this or like how what, how they tracked it. But what they found from doing this study is that those who had to wait a week for the chocolate actually said that they enjoyed the chocolate. More. Right. And it's, it's this whole idea that the more often you have something, the more used to it.

We become the psychological term for, it's called hedonic adaptation. So we adapt to the things that we're exposed to. Most frequently. It's why, uh, when I first bought my, the TV that I got for the, for the room that we're in, I thought it was amazing and awesome and the best TV ever. And then fast forward like three weeks later, and it's still nice, but I don't have the same feelings towards it.

Or we just did a kitchen renovation and as soon as it was done, it was like, wow, look at our new kitchen now we're about four months out, and it just kind of feels normal again. That's hedonic adaptation. So the idea there is. If you can figure out ways to make these, your purchases not as frequent, but make them more scarce, it actually improves, or it, it increases the level of enjoyment that you get from the purchase itself.

If you can find, if you, and so one example, I'll give you this example and then I'll, yeah, I'll, I'll hand it, but you can let me know if you have any questions or things you think what you're thinking, but. I have a friend who would take these almost, it felt like weekly vacations. It probably wasn't weekly right?

But he was on these regular small vacations that he would go on, take off, uh, and over time they sort of started becoming just sort of routine. The idea of being on a vacation was routine. And so he decided to start dial it back and instead of doing these regular, frequent vacations, would take like one or two a year.

And then when you only go every so often, it. Makes, makes it that much more meaningful and rewarding when you do actually, when you do actually go. So I say it's the hardest to apply because you, you think about it and you're like, I'm trying to figure out how I do that with my money and in my life. But the, the core idea behind it is find something that you enjoy that maybe you have on a regular basis.

See if there's a way that you can dial it back or cut it back. And when you do buy it or purchase it or spend your money on it, your level of enjoyment will increase.

Eric Blake: Awesome. The only thing I'll add to that is the, uh, the peppermint shake at Chick-fil-A. That's my, uh,

Brendan Frazier: yeah, yeah, yeah, yeah. Right.

Eric Blake: I got, I gotta include that one.

If we're talking about, uh, infrequent purchases and, uh, things you had to wait for.

Brendan Frazier: I mean, we, we all have our thing, right? We all have the like, ah, yes. It's back. We, I finally, whereas has this been all my life, which again, if, if the, if the peppermint Shake was. They're year round. I guarantee you wouldn't be as avid of a fan of the peppermint shake as you are knowing that it's like, hey, I get it at this time of year.

I'm looking forward to it.

Eric Blake: Well that's even, that's even worse than a tv 'cause it's gone within, you know, 10 minutes. So

Brendan Frazier: That's true. Although, okay, but it's gone. Where's the TV's? This constant reminder of Should I have gone on the trip instead? No, I'm just kidding.

Eric Blake: So this is one that, that, that I, I personally, I know I struggle with, and when I say me struggling with my wife is the one that struggles with this, and that's buying time.

So when you think about, you know, buying time, um, talk about why spending to save time is so powerful.

Brendan Frazier: Yeah, this one, I think this is my favorite because it was the most transformative for me in my life. Now, it doesn't mean it's gonna be that way for everybody. I'm sure you could go through all five of these and one of them resonates more with somebody than others.

But it, when I finally wrapped my mind around and accepted the idea that I could spend money to buy time, I think that it, it was a transformed my relationship with time and money, but also I was. I would say happier as a result. I didn't know it at the time. Right. I, but like now that I'm doing this research and thinking through how to use money, I look at it now and go, oh yeah, it really did do that.

It worked out well. But what, hang on. Before I go there though, uh, I'll ask you this. What is it when you say that it's a, it is a struggle or it's your wife, what do you, what is, what would you say is your wife's holdup?

Eric Blake: So, one of my, my wor one of the things I hate in the most in the whole world is cleaning house.

And I would more than anything, love to pay somebody to clean our house and give us back more time, but my wife will not let it happen.

Brendan Frazier: And so are, and so then you're like, okay, as long as you're cleaning it, right? Yeah. But then

Eric Blake: that, somehow that doesn't work. That doesn't work like that. So I, I, I find myself, uh, right in there, in the middle of it.

And, uh, yeah, every time.

Brendan Frazier: Are there things that you, as a, as a couple, that you guys do spend money on that gives you time?

Eric Blake: A lot of it's work related. So actually, you know, when we're in this business where as a financial advisor, a lot of it's con, she tells me that I work constantly, which, you know, to some extent is probably true.

But, uh, you know, thinking about just the, you know, the team that produces our podcast, you know, I could probably spend time doing that, but I, am I as good as they are at it? Probably not. But doing the editing, doing the social media posts, all those different things. So that's probably the, just because, you know, we're recording a podcast at the moment, but where.

Uh, some of that effort would be taking away from other things that we would like to do. And so in terms of, again, it's, is it inexpensive? No, but I think it is worth it by any, by all means. And in terms of just, again, being able to focus, whether it's more time with her, more time with family now that we're, or for the most part, empty nesters, or it's just being able to spend more time focusing on the needs of clients.

Brendan Frazier: Yeah, the, so for anybody that's like the research mind, they're like, Hey, is this actually legitimate? They're, they did conduct research where they gave people, uh, back to the, the Elizabeth Dunn and Michael Norton that we mentioned earlier. One of the experiences they did was they gave people money and had them either buy a material good with it or use it to buy back time.

And those people that used their, it was about $40. The people that used the money to buy back their time said that they were happier. Using their money that way than they were buying some sort of nice material. Good. Which, uh, now that we're talking about on the surface maybe seems like it makes sense, but if you actually pause for a minute and think about that.

If you said, Hey, would I get more enjoyment out of, uh, paying for somebody to clean my house or paying for. I'm trying to think of a $40 material, let's say. Just paying for some sort of material good item. I think we would probably naturally think like, oh, I'd rather buy the good, right? Like, I'll clean my house on my own and then I'll go buy the good and then everything, like the house will be clean and I'll have this new item, but that's not what they found.

They found that the buying back time was actually more predictive of happiness and. So that's the research side, the, the research part of it. But I think if you think about it like this, we like frame it a little bit differently and I said, okay, I'll, I'll use an example from my own life when it hit me for the first time I was sitting.

So lemme put, I'll give this backdrop. A lot of times the hesitancy or the resistance to buying back time comes from a. Money, belief, or a way that you view money that oftentimes comes from your childhood. And so what it sounds like for most people is, uh, some version of why would I pay somebody else to do what I can do?

Why would I, I'm just as capable. I. Why would I, that would be a waste to spend money if I could do it myself. And so I struggled with that for a long time. And one of the examples was I always thought like, Hey, if I can mow the lawn, I should get out there and mow the lawn. It's not that hard. I can get out there, I can do it.

I, and so for the longest time, I, I would mow the lawn because I thought, Hey, you know what? That's not that big of a deal. If I can do it, there's no reason for me to pay somebody else to do it. Right? But then we had kids and I think it's when we had kids that my whole. Uh, philosophy and belief and the way I viewed time changed like pretty much forever, I think.

But it certainly changed in the moment because you sit there and you're like, time is fleeting. It goes by faster than we think, and I want to try to maximize the time that I have with them while they still like me, want to hang out with me and so I'm gonna have somebody come do it one time. Just see what it's like.

It was painful setting it up. It was painful pain then. But I remember sitting there in the window of our house. I was on the floor, our kids were little, we were playing some game, having fun, being together. And I look out the window and there's this guy mowing our lawn. And I was like, yeah, you know what?

It was painful. I, I should probably be doing that, right? But. The pain of that was easily by far away, offset by sitting there going, yeah, but it's these moments that I'm experiencing with my kids. Like this is a how I would rather spend my time. I would rather be with my kids than I would be mowing the lawn.

So using that money, bought myself back the time to spend it with them. So two important points here. Number one I is, if we look at it through that example, through that lens, like the, the key concept behind buying back time is time is a scarce resource. It's the one thing that you can't get more of, but you can create more of it.

And so it's as simple as saying, if you got to choose how you wanted to spend your time, if you had an hour, would you choose it to spend it mowing the lawn or with your family? And not everybody, but a lot of people are gonna say with my family, but replace spending time with my family with whatever you want.

You could say mowing the lawn or working on your. Golf game, mowing the lawn or playing bridge with your friends. And it's like a classic re two classic retirement examples, right? Uh, and most people are gonna say, I would probably rather not mow the lawn or cl or clean the house. And so it's just this idea of you only get so much time, it's a finite resource and so you wanna spend as much of it as you can on the things that you enjoy.

And so, and if you do that naturally. It's gonna lead to more happiness, more meaning and fulfillment. Because I'm not mowing a lawn. I'm hanging out and creating memories with my kids.

Eric Blake: So another one is very interesting, and that is the pay now enjoy later. And that's one you said you've talked about, uh, and is, can actually increase the enjoyment of the experience itself.

So how does that work and how does the, how might that actually reduce spending guilt?

Brendan Frazier: Yeah. The, the idea behind this is it's, it's one of the other ones that's kind of hard to embrace and think through applying it. But the idea behind it is that generally delayed gratification, if you can delay gratification.

When you get the gratification, the rewards are typically higher. So in other words, like if you decide you're gonna go to a. Concert, we'll use the concert example again, and you're like, Hey, I'm gonna go to this concert, or I bought tickets. It's three months from now. It's six months from now. What we know from psychology research is that almost as much as the experience itself is, the amount of joy that you get from the experience itself is almost equal to the amount that you get from the anticipation of that.

Event. So it's not just about experiencing it, it's about the anticipation and the excitement you get leading up to it. Same thing for vacations. When you plan a vacation, we don't think about this a lot, but the, the more time you plan, the more anticipation you have leading up to it. And that anticipation is actually a source of like happiness and joy because you think about, you get excited about the experience that you're gonna, that you're gonna create.

Right. So on one hand, the the idea is, hey, the more distance you can create, the more anticipation you can create, the more enjoyment you're gonna get from that. Once, once it finally comes, you're gonna get more enjoyment and fulfillment from it. The financial piece behind it, or the financial aspect to it is the idea of paying now rather than later.

Meaning the cla Here's a classic example, because I, I'll use this because I think it's the one that maybe will make the most sense, but it, it'd be like. Purchasing a vacation at an all inclusive resort. Going on that vacation, knowing everything is already paid for and has been paid for, you actually end up enjoying the, the, the trip more than if you were to pay for it once you leave.

Right. And especially if you were to pay for it by, if you were to fund it. Through credit card or some sort of debt, that's now a, an anchor in the future, right? And so the more you can save up for, so the more you can pay. If it's an all-inclusive resort, you pay for it upfront. You enjoy it while you're there.

That's one example. If you think about like bigger purchases, the more you save up for it over time. It may, you may have to delay gratification. It may be that you don't get to buy it for two years, but by delaying the gratification, pushing it out into the future and working towards it in anticipation of getting it, you're actually going to enjoy the purchase more than you would if you were to just say, Hey, I'll take out a loan and finance it today.

Right? And get the enjoyment of it sooner than later. And it, it's kind of a core human thing, right? Delayed gratification. It's hard. But we know the benefits of it. Same thing with money, if you can. The more you can delay your gratification, the more enjoyment you get when you actually make the purchase later on down the line.

Eric Blake: So I'll share a personal example of that. So this year was, uh, so about 10 days ago, my wife and I celebrated our 29th wedding anniversary. Congrats, by the way. Thank you. And we did so by just spending a couple of nights in a hotel because we recently put the down payment on our 30th anniversary, the big one 30th anniversary, grand European Riverboat Cruise next year.

Yes. So it's a, it is not inexpensive, but we said, okay, let's, we gotta be willing to say, let's, we're just gonna kind of lay low, still be together. 'cause anniversaries have always been really important to us. Even our kids know, even our kids know that, you know, my daughter said no, we're not gonna ask them to take care of our daughter on their wi on their anniversary day because we know that they're gonna be doing something, whatever that is.

Yeah, yeah. So this time we just stood, stayed in a hotel for a couple nights. In preparation for next year being that big, uh, that big vacation, the big one, uh, taking a 15 day riverboat cruise in Europe. So it's, uh, it's, we're both so excited about it. It's, it's still, we're actually looking at the, uh, the countdown, uh, a couple days ago, and we're just under a year now, so less than it was down to like 363 days or whatever it was that, uh, that we're, uh, away from, uh, actually taking the, uh.

I can't imagine what it's gonna be like, but, uh, definitely delayed gratification.

Brendan Frazier: What a great example. Next time. Next time. Uh, whenever it's like, all right, Brenda, tell us about, uh, this concept. I'm just gonna throw it back to you and say, no, no, no, you tell us. 'cause you've got the perfect example. That just drives the point home.

And oh, by the way, you're buying an experience, right? You're kind of making it a treat 'cause it's not something that you did very often. So according to what we're talking about here. When you're on this, when you're on this vacation, you should just be filled with happiness and fulfillment and chill. I hope so.

Eric Blake: I hope so.

Brendan Frazier: You're checking a lot of boxes here except for the last one, but that's okay. You'll, you'll find other ways to check

Eric Blake: it. Honestly, it's one of the, for a lot of our clients, it is one of the highest priorities as well, both the, the two client examples that I gave right off the bat. Both of them.

That is something they've brought up in our conversations and that is spending on others. Uh, and so if you would just explain why is generosity so effective when we're talking about increasing happiness with spending, uh, and what are some of the examples or some different ways that you have experienced or seen either yourself or others that have been able to utilize this strategy?

Brendan Frazier: Yeah, it, it's on the surface. It's really counterintuitive to think that, Hey, you have money, you could spend it on yourself, or you could spend it on somebody else, and spending it on that other person is actually gonna make you happier. Right? When you, when you frame it that way, you kind of go. That doesn't make a whole lot of sense.

Right? You would think that it should be feel better and and create more happiness if I use that money for myself. But again, in the research that they did, they gave a group of people money to spend on themselves. They gave a separate group of people the same amount of money, and by the way, it wasn't even a lot.

So it's not, the amount doesn't even factor in. They gave 'em the same amount of money to spend on somebody else. And for those that have been listening this whole time, you know what I'm gonna say and where this is going. Yes. What they found as they did the research and they talked to the participants is that those who gave money on, uh, to others or spent it on somebody else in some way, shape, or form, reported being happier and, and more fulfilled.

The other thing I like about this, it kind of hits on home on this from a neuro, uh, we'll say like neuroscience perspective is they've also looked and said, Hey, if we put these, if we put people in these brain scanners and we have them give money to somebody else versus spending it on themselves, what does it do and spending money on somebody else's, it actually lights up the pleasure, reward center part.

Of the brain, so it actually feels good to give money to someone else. It's also why around Christmas time you hear people say like, oh, I enjoy giving more than I do, getting the gifts. I think we've all experienced that or know people that say that. So it's actually wired into us to enjoy giving spending on somebody else more than, more than on ourselves.

And so it is a little bit counterintuitive. It may be hard to do, but if you can do it. At, it's one of those things that's proven to create more happiness, more meaning, more fulfillment. And so one way, like some small, so there's small ways to do it. It doesn't have to be big. I'm gonna get to the big one in a minute.

But small ways to do it. It can be buying somebody's. Coffee. It could be giving somebody a little bit of money when they need it. It, I gave this example on a video that I recorded because it had happened right beforehand, coincidentally, but I heard a story of somebody who they, like, I forget if it was once a week or once a month.

Every so often they'll drive through the Chick-fil-A line, probably get a peppermint shake for themselves, and then they. They pay for the order for the person behind them like a stranger, somebody that they've never met. They take care of their order, and it's just this a way for them. They're trying to demonstrate the values for their kids, so they'll always have their kids with 'em, number one.

But number two, it's just this constant reminder to be spinning on others and giving to others in some way, shape or form. So there's, there's way small ways to do it where I know it often comes up and where it came up with your clients. Where it comes up in the context of financial planning is when we start thinking about.

Legacy and yeah, we want to use our money to live. We saved up, we're here. Or, or maybe you're saving up for retirement, maybe you are retired. But there's also this like. I, I still wanna make a difference. I wanna make an impact. Maybe I have a, a charity or cause that I'm passionate about. I've got kids or grandkids that I want to take care of and, and that's good.

That's great. That is money that is going to be given to someone else. So it checks that box where I wanna throw in a little bit of a challenge. Is to say, and this requires some, uh, you have to be delicate. You have to be precise. You need to talk about it and discuss it. But my challenge would be that it's gonna be really, my challenge is this.

My challenge is to think about whether you can spend it on somebody else now rather than when you're gone. So make it a, a, an active legacy. Make it a something you do while you're still here, because it's gonna be really, really hard not just to see the benefits of it, but it's gonna be really hard to feel and experience happiness if you're in the grave.

So if you want these benefits of doing it, not only do you get to see it put to use, but you get the like happiness benefits of it if you're still around to see it put to use. So that's a way that it, it comes up in the legacy leaving money context. It's just a challenge to say, Hey, don't just do it when you're gone.

There's ways to do it while you're still around that can make a meaningful impact.

Eric Blake: Well, Brenda, this has been an amazing conversation. Uh, before we let you go, I wanna just see are there any specific resources you would recommend books? I know you've talked about a couple of different studies, but any resources that you might share or have suggestions where people might say, I really like all these concepts.

I like these strategies. How can I get started? Uh, and also make sure, share anything that you would like to share as far as any resources, how people can follow you as well.

Brendan Frazier: Yeah. So I'm gonna throw this one last. I know we did the five, but there's one thing that I don't think it's covered enough in there that I think is important and we'll just, I'll make it quick because it really can be pretty simple.

But, uh, one of the other things to one way to spend money that you'll never regret that we know leads to happiness that's not covered in here is it to invest in social connection. So there's a lot of research out there as well around what leads to a happy, meaningful life. And I'm not, I won't go into the research study for now, but social connections and the quality of our relationships are generally the number one predictor of happiness at every stage of life.

And so think about ways that if you, you can also spend money and invest your money or use your money to. Facilitate, nurture, create, and develop more social relationships. So for some people that's a country club membership. For some people that's being a part of a car club for some people, uh, it's, uh, the example of, of real life example, I have a friend who they pay a personal trainer to come work, train a friend and two of his friends, right?

So it's not just, they're not just working out, but they're creating these social connections and it's a lot of money, but. It's about social connection, relationship, because that's the core predictor of happiness at all stages of life. So think about if you're thinking about, I'm spending money, if it involves social relationships, think of it as an investment rather than spending money.

So that's, that's that. As far as resources go, uh, the book that I mentioned earlier, the Science of Happy Spending, that talks a lot about this stuff. If you like this concept, you wanna know more, I would dive into that. And then, um, the Psychology of Money by Morgan Housel. It's a really popular book, but it'll reshape the way you think about money.

I always consider that to be like a good starting point for a lot of people that are interested in this stuff. And then lastly, if it, if you're thinking like, Hey, I kind of like this, or I'm interested in this whole I. Uh, we'll call it the non-financial side of money. The part that has to do more with like happiness and psychology and emotions, the part that nobody tells us about, but actually impacts our finances and our decision making.

Um, I do a biweekly video. I. That's on YouTube where, uh, we talk about one of these topics. It's a pretty short try not to make it too dense or whatever. Sometimes I'll get carried away and get passionate, but biweekly, you put out these videos that goes into a topic on something that's not the spreadsheet, financial aspect of money.

Eric Blake: Perfect.

Brendan Frazier: Oh, it's called, it's called Wisdom and Wealth. We can link to it, by the way. But if you're wanting, absolutely. If you're thinking, Hey, I want, I'm, I'm hungry for more of this type of stuff, that's where you can get it.

Eric Blake: Yeah, we'll definitely share the links in the, uh, in the show summary for this episode.

And I think that hopefully for our audience, the thing to take away is these strategies aren't about spending more, they're just about spending better. They're about aligning your money with your values, your goals, your version of a meaningful retirement. I. That is it for today's episode. As a reminder for, again, for all the links and resources mentioned today, we will share that you can visit thesimplyretirementpodcast.com.

Thank you again, Brendan Frazier for joining me. Thank you to our audience for tuning in. Don't forget to like, follow and share the show. And until next time, please remember, retirement is not the end of the road. It's the start of a new journey.

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