Episode 3: Your Wealth Building Blueprint – Part 1

Kyle Pearce: Welcome to the Canadian Wealth Secrets Podcast with Kyle Pearce, Matt Biggley and Jon Orr.

Matt Biggley: Get ready to be taught as we share our successes and failures encountered during our real life lessons, learning how to build generational wealth from the ground up.

Jon Orr: Welcome invested students to another episode of the Canadian Wealth Secrets Podcast.

Matt Biggley: We're here today to help you follow your wealth building blueprint. We've really tried to scaffold this and break this down in a way that's going to be digestible, something that will be easy to follow and it will be actionable for you. And the first step is, admittedly, probably the one that is least exciting, but is so key, so fundamental to getting you started on the right track and to really mastering before you go anywhere else and this is the one that I think is most intimidating, but actually ends up being the most liberating as well. And this is about understanding your current budget.

Kyle Pearce: Yes, that's right Matt. And just for folks to know, this is going to be a multi episode ordeal where we're going to go through this wealth building blueprint and as Matt said, we are going to dig into this first one here about understanding your current budget. And you'll notice some people might be expecting, when we talk about budgets, it's this idea that you have to make one or create one. That's sort of the idea that always came to mind. We had to sit down and spend a bunch of time creating this thing. But the reality is that each of us has a budget and we're living by it. You are living by a budget every single month. Is it an effective budget or is it ineffective? I don't know. That's for you to decide. But each and every month you've got money coming in and you have money going out.
Hopefully, you have money coming in without money coming in. We've got problems. But at the end of the month, where really budget's just sort of telling us how much is left and then understanding your budget helps you to better understand where are those dollars going. So we are really here to get you thinking about that because if you want to follow a blueprint, the first thing you must do on any blueprint is you have to understand the journey. You have to understand what it is that you're trying to create and just like when you're building a house, you're going to be looking at all the tools you need, all the materials you need, you're going to start placing them in places and you're going to try to organize them in such a way that you're going to be able to create this wonderful home. We're going to be doing the same thing here when it comes to wealth building.

Jon Orr: Yeah. And I'm glad you brought that up, Kyle, because I think we're going to talk about in these next few episodes different ways to build your wealth and get started in building your wealth and I think that's the key thing here is by the end of listening to not only this episode, but the next episode and possibly the episode after that, you'll have a better understanding of where to grab or find this pocket of money or these ideas on how to get started in building your wealth from nothing. I think that's the key idea here. It's like I want to get started and change the trajectory of my financial future and I'm not sure exactly where to get started there and that's what this episode series is all about, how to get started there.
And these guys had just kind of outlined at the beginning here, the first step we know is all about designing this budget or figuring out where your money is going in and out so that you can pick where you want to spend your money. You have to think about what do you want your life to look like? And if you've got this idea we've had about your financial future in changing that financial future, we've got to think about what are the priorities of where I want my money to go, and how do I want to assign those? And that's why that budget is so important right now as step number one.

Matt Biggley: I love that, Jon. I love that. And I think this topic is so loaded with emotion. I think for some people it's got some shame. I mean, let's be honest here, when you make a budget, it's almost like a financial confessional. It's all laid bare. It's all laid there. But rather than going through the nuts and bolts of how to make a budget, there's so many great resources out there and we're going to share some good ones we've got some experience with. I want to first just talk about what are the benefits of doing this, and how does it relate to your future investing, and I think some of the biggest benefits are just awareness and it doesn't really matter where your money's going, as long as you're aware of that and you've made a conscious decision to make that a spending priority. I think that's a big thing.
It comes down to two fundamentals. You either spend less or you make more. And if you've decided to spend money in a certain area that someone else hasn't, there's no judgment, it's just a matter of being aware of that. With awareness comes better control and of course, fundamental to investing is having some extra money to be able to use to invest. And so being in control of your finances and feeling in control, I don't know about you guys, I'm a big control freak in so many areas of life and so whether it's ugly or whether you feel some shame over where some of that excess spending is going or whether you're totally okay with it, I think the idea of being in control and then being able to decide where those priorities are is so, so important.
And ultimately, I think if you can get really honest with yourself and you can really go through this self-assessment that so many of these resources and programs will take you through, you can master these fundamentals and this is something that it doesn't actually matter what your financial history is, it matters what your financial trajectory is. And so if you can get on the right trajectory, it doesn't matter what happened before. You go through this honest self-assessment and this self-appraisal, you get yourself on track with some fundamentals and that trajectory can totally and completely change for you.

Kyle Pearce: I love it. I love it. One of the books we were chatting about before we hit record, Jon brought this up, is one that all three of us have read. It's called I Will Teach You To Be Rich by Ramit Sethi and this book is a really great one. We'll put it in the show notes so that you've got a link there that you can jump over to Amazon and have a peek. But something we really like about this book is his approach to budgeting really aligns with our thinking around it too. And he sort of discusses this idea of getting a vision of what life you want to live and then basically budgeting the things that you've got to budget for and then all the rest is gravy.
But there is something that he does talk about, and it's something that is a really important part of our blueprint, which we will also be putting in our show notes, a blueprint that you can actually download and read and take with you so that you can dig into this work a little bit further that we're going to be discussing over the next couple of episodes. But this idea of if we get everything in order so you get your groceries, you know you need to do that, you know you need maybe rent or mortgage payment or the things that have to happen in your life, there's one that we're going to slip in there and we're going to start talking about it now. Something in your budget that you need to have is paying yourself first.
So even ahead of groceries, even ahead of your rent, even ahead of any of the other car payments or whatever you have lined up, if you can bump that one up to the top of your budget, and again, you still need to take care of the others. We're not going to ignore any of these other expenses that have to be taken care of, but if we include that as a primary or a priority, then whatever is left over, and this is from this, I Will Teach You to Be Rich book, this idea is whatever is left over, you could do whatever you want with.
And I think that messaging aligns so well with what we're trying to discuss because hey, listen, I'm not the type of person that goes out and shops and buys a bunch of things. I don't buy new clothes unless my wife says, "Hey, it's time for you to wear new clothes. It's becoming embarrassing, Kyle, to go into public with you." That's when I spend money on things like that. But maybe there's somebody else listening who's like, "I love shopping. I love new clothes." If that's what makes you happy, guess what? You get to spend the remainder of that money on clothes, but you have already paid yourself first and what we mean by paying yourself first is this idea of putting money aside in some way, shape, or form. We'll talk a little bit more about that shortly. But you're going to put this money aside and that money is intentionally going to be put into your investment strategy, be it your first investment strategy.
Maybe it's a variety of strategies depending on how far along in this journey you are, but ultimately that money is being put aside because you know that that money is going to have a significant impact on your financial freedom into the future. It's going to actually change or potentially change the way you live your life well into the future. Whereas the clothes you buy, or maybe it's the Starbucks you like to buy every day or whatever, any of those other things, they might be things that make you happy now, today, in this moment, they're probably not going to make you happy 10 years from now, 20 years from now, or well into retirement.
So that's a big idea here that I think is really important for us to think about is that, again, we're not... Some people may have already turned it off there, guys. They're like, "I don't want to do a budget." And we're saying, listen, it doesn't have to be everything line by line that you know exactly where every dollar is going, but you just have to make sure that that priority list starts to shuffle and that paying yourself first, if you put that first, that will naturally leave you less to spend in some other areas and then you're going to figure it out from there, right?

Jon Orr: I'm glad you brought that up, Kyle, at this point because our first tip to creating your blueprint and following your blueprint is to make the budget. I think we still got some more things to talk about there, but the second one is to pay yourself first. And I'm so glad you brought it up now, because if you don't pay yourself first, so think about the opposite. If we don't pay ourselves first, what happens is we say we don't have enough. We don't have enough money to start that investment, or where do I get that money? It's like, I need this extra pot, or I have to wait for a windfall of money to come into my life before I can start investing. Some people think that, right? It's like, "Well, if I all of a sudden got this chunk of change, I'll take that and I'll put it down into this first investment or one of my investments, or maybe it's my retirement investment accounts."
But if you don't pay yourself first, there's no money there, where if you switch it around, if you say, "Look, I'm going to dedicate this money here, and then that will fill up," and then all of a sudden you'll have less money to spend on other things. So it's really important in designing that budget, like Kyle said, and to figure out what are the main priorities of where you want the big chunks of change or the big ideas of your money to go. Yeah, you've got to pay your mortgage or your rent, you've got to pay for groceries, you've got to pay for your health insurance or your life insurance and all those kind of insurancey type things for your home and all those home expenses. There are fixed expenses you can't maneuver.
But there are other things where it's like, I know that from when I started to make my budget, because I just did this recently and I think this is why I wanted to make sure we talked about the budgeting in this episode, was that you start to see if you do, Kyle, track line by line of where your money goes, it's eye opening to see where this cash all of a sudden starts flowing.
And because it's like, "Oh wait man, I was really scared to make this budget, but now you can see I'm spending a ton of money over here that I don't think that that area is a priority for me and my family. I think this is where the priority should be." We got to steer this money over here so that we can set that aside. But if I set it aside now, if I put it here now, I won't have the money to burn over here just willy-nilly when the time comes because I know that's already gone." And I think that's so important about paying yourself first is because all of a sudden it will be taken care of and you know you're on the right track to that financial future. So paying yourself first is intermingled with making the budget. And I think you've got to make that budget so that you know that you can pay yourself first. We all can, we just have to make that choice.

Matt Biggley: I love that, Jon. I love that. I think what's so interesting about people who have maybe already got a good job, a teacher, a nurse, an engineer, any of these people in the demographics that you're comfortable, you're making enough, but it's really about this decision to become wealthy or to grow your generational wealth and so that's where it can be a little bit of a mind trip because you're getting by, you're okay, you're at that income level where you've got maybe a pension at the end of your career, you're going to get by, but are you going to really change your wealth trajectory here? And I think the big things for me to take away with this budgeting conversation, paying yourself first, again, it comes back to that awareness and that control and I think what your priorities are can evolve over time. I can remember early on in my wealth building with my wife, we used to skip taking vacations so we could renovate part of the house, we'd buy new air conditioner instead of going away in the summer because the money was finite.
We weren't necessarily bringing in, we didn't have a side hustle at the time, we didn't have second jobs, we weren't doing other things to help build our wealth so recognizing that money was finite, we had to make some tough decisions about what our priorities were and that certainly has evolved and shifted over time. Although we were always going to be people who see the opportunity to spend money on something where we'll get a return on maybe ahead of something that we'll enjoy, so that's been a big shift for us. But I think my takeaway here is that your priorities can evolve and change and in the early wealth building days, you're perhaps making more sacrifices but as you reprioritize and as you evolve, that's certainly going to change alongside your spending habits.

Kyle Pearce: I love it. I love it. And going back to Jon, you had mentioned it's really important, Jon is saying it's really important to understand that budget and I agree, but I will say that it still gives me a bit of the heebie-jeebies when I think about budgeting. It's not something... Like I'm actually scared.

Jon Orr: Wait, you know what that means? Is you actually need to do it.

Kyle Pearce: I know.

Jon Orr: Well, right now you're scared to see where your money is going to go, and you're like, "Wait, I don't even want to know. I don't even want to know because I'm fine." You're like, what Matt's saying. You're like, "I'm making ends meet, I'm doing what I want to do." But it's like Kyle, there's probably a big chunk of money sitting over there that you have access to, but you just need to redistribute.

Kyle Pearce: No totally.

Jon Orr: It's not ready because you didn't track. Yeah.

Kyle Pearce: Absolutely.

Jon Orr: And he doesn't want to admit it.

Kyle Pearce: I mean, I don't want to get myself in trouble here, but there's a second partner.

Jon Orr: You just looked upstairs, he just looked upstairs. He's like, "Oh, that means I have to have a conversation. I have to have a conversation with somebody else."

Kyle Pearce: And you know what? The thing is, and I guess here's what I want to share about that is yes, you have to understand your budget. I definitely don't have a full understanding of it. I do, but I don't because there's things that I think in our household we spend on that I don't like that we spend on, but other parts of our household are okay with spending on. So there is that balance too, that people have to think about.

Jon Orr: You definitely have to have that down.

Kyle Pearce: You notice I'm treading lightly here, right? Because I don't anticipate that my partner's going to be listening to this show anytime soon, but guess what?

Jon Orr: We'll send it to her.

Kyle Pearce: You guys sometimes come over and sometimes have conversations with her. So anyway, here's a strategy though that I want to share because there's other people who are listening who feel like me and they're going, "Okay," and I want to say that I take paying myself first very seriously, and that's something I always have done. So I've put that to the top of the list and then the rest of that money goes to wherever it goes, and we live comfortably in doing that. So I want to let people out there know who are like, "I don't know if I'm going to go the line by line anytime soon. Is this not for me?" And I want to let them know, no, it can be for you.
Here's some easy strategies that can help you get there. Even though I would argue that that is a weakness for me is I should go line by line, but I'm not there yet. I'm not at the line by line yet, but I am working towards it and maybe you're at home listening and you're thinking or feeling the same way. So what I want to encourage you to do, if you're going, "Okay, how am I going to pay myself first?"
Some easy strategies that you can do. Well, first of all, you can just start doing it and Parkinson's law would say that expenses always rise to meet income. Now the opposite's true as well. If your income goes down, your expenses will go down as well. As long as you're responsible and you're not just going to unleash it on credit card debt or anything like that, we don't want to advocate that at all. But if that's the case, you can just go with it and see how it goes over the next month or two and see is everything working out okay given the amount of money that you're paying yourself? Okay, that's one way to go. I would say a better way to go is to actually think of the things that you're spending money on pretty consistently each month that aren't actually bringing you the joy that you might expect that amount of money to bring you.
So an example, I'm going to give you one because I'm not this person. I personally do not enjoy new cars. It's not something that I need or want, but there are people out there and I know there's people listening who are like, "I love a new car." Every couple of years they bring the car back, they trade it in, they do whatever, or maybe it's a lease, whatever it might be. If you look at that and you go, okay, and you think about it, let's say it's a $500 a month payment, now I think that's low. Nowadays for a new car it's like $700 for a new car or something, or more depending.

Jon Orr: More.

Kyle Pearce: So if you're spending, let's say, $700 a month on a new car, my wonder is how much joy is it actually bringing you? I know it brought you joy when you were at the dealer and you bought it. I know it brought you joy for maybe the week or two or maybe month after you had it, but I wonder right now, is it bringing you the same amount of joy and when you see that money going out the window, is that money leaving? Is that going to give you joy a year from now, five years from now, 20 years from now? Now I know you're going to need a car so you're thinking, "Well, what do I do?"
My thought is, hey, if I can get a good used car in order to cut that payment down, and you're probably still going to have a payment, I'm guessing, of some type, but let's say you cut that $750 payment down to even half. If it was $400 a month, you've now just freed up a few hundred dollars to put towards that paying yourself first fund and that's just one thing. I know a car's a big one, but that's just one thing. There's other things in your life that you're probably doing out of habit, not out of the need for it to bring you joy. And it's almost like sometimes we get so entrenched in what we do that we assume that we can't live without them when in reality, if you were to simply remove it or replace it with something else, then actually your life would probably be exactly the same now, but maybe dramatically different later.

Jon Orr: That's a great example of where someone could make a change, you could change that payment right now if you had a new car and he goes like, "You know what? I can make that change and I can switch that out now." I think a lot of people who buy new cars, Kyle, I'm going to argue on the other side of the new car argument here, are not buying it maybe for joy, but maybe for peace of mind that might be like, "Hey, I've got a warranty here. If it breaks down, it's probably not going to break down." I know that that's part of our family's decision in buying a new car. I know that you bought used cars, we've bought new cars for the last little bit and it's because of that other partner in your life who's saying like, "Look, I don't want to have this car breakdown while I'm driving."

Kyle Pearce: I'm worried this podcast is going to cause rifts in our relationships, my friends.

Jon Orr: No, no, no. But is it a lot smaller chunk of change that can add up? I know that I was commuting to work, my teaching job to high school with, I was carpooling for a number of years and this person I was commuting with always stopped at Tim Horton's. Every day was a Tim Horton's stop on the way to school. We used to drive 30 minutes to school, I would get in with him, he would drive, I would drive, but we would always stop on the way to school to get a Tim Horton's every single day. Whereas he was making that choice, I wasn't. I always made coffee at home, but I know there's so many people, this is why Tim Horton's is so big here, is that so many people make it part of their routine to buy a Tim Horton's coffee, or maybe it's a Starbucks coffee or maybe whatever it happens to be.
Maybe you've decided in your budget that that's your treat. "This is how I'm going to live rich is to have these things." But it could be cutting that portion of your budget out. It's like, "Hey, do I really need to have this coffee or this milkshake every single day? Maybe I can save some by making my coffee at home and bringing it with me," and then that $2 to $5 every single day over the course of a month, over the course of a year adds up to going, "Look, I can take now that few hundred dollars that I've just saved and now that's boom, that's part of my investment fund." Sometimes it's not a big thing. Like Kyle's saying, I can make this big change about my purchases, but it could be small changes. What small changes could we make in our day-to-day life that add up over the course of the year?

Matt Biggley: I appreciate what you're saying there, and I think as to both what you and Kyle shared, it's like we can make... It's easy to make judgments about other people's budget items. Again, the big takeaway for me is that so many connotations and emotions around budgeting are negative and it doesn't have to be. It can be both hilarious as some of the comments that we've talked about here, but it's really clarifying and empowering and I actually love this idea that with our partners, with our spouses, we can actually get to a better place. There was a show that my wife and I used to watch called Til Debt Do Us Part. It was a Canadian show.

Jon Orr: Good show. Good show.

Matt Biggley: Absolute battle-axe. Gail Vaz-Oxlade was her name. We bought many of her books, watched every episode and there was so much emotion in that show between the couples and the families as they oftentimes fought through this budget creating process. But by the end in so many episodes, of course, wrapped it all up nicely in half an hour, the big takeaways for these people were that they had clarity, they were empowered now, they were actually in control and I think for so many of us with budgeting, it's just a head-in-the-sand type of thing. It just keeps going and keeps going. As long as we're not getting the debt collection notices, it just perpetuates and so I come back to these themes of just control and awareness and that we talked about money mindsets in earlier episodes and your mindset around this doesn't have to be negative.
This doesn't have to be work. This can be really something that you can approach with positivity and excitement and empowerment and just like in the episodes of Til Debt Do Us Part, at the end when you're feeling great and you're feeling empowered, this can truly be life-changing because all of that clarity and all that awareness can lead you to having that extra money to be able to make these investments and truly change your wealth trajectory.

Kyle Pearce: I love it. I love it. And what I'm hearing from you there, Matt, is a really great way to let everyone who's listening, everyone listening is different, and their situation is different, their income is different, their spending is different, their wants and needs are different. And we're hearing that in the three of us and you hear this variety, and I guess one of my big pieces here is that this journey, even though we're calling this a blueprint, it's like there's various paths in this blueprint that each and every listener is going to take. And you have to really get an understanding, not just of your budget, but of who you are as an investor, as a person, and maybe you're not the investor yet. We are trying to help you find who you are as an investor and that does start with finding out who you are as a spender.
And for me, I think the big idea that we want everybody to take away from this particular episode as we lead into the next, because in the next episode we're going to go and talk about identifying and planning your first investment. So we're talking about how are we going to find the money, the seed money that's going to get you investing, get you feeling like you're on the path to financial freedom, and then we're going to figure out like, "Hey, what are we going to do with this money?" So that's going to be in next episode, but the big piece here I think is for everybody to think about, it doesn't matter how you go about doing this work, you just have to get it done. So if you want to go and line by line, Jon, you're like, "Whoa, that is..." Maybe you're listening to this... It's being released in January.
Maybe you're like, "That's going to be a change I make this year is, I want to do a line by line budget." Jon, I'm just telling you, I'm being honest. I'm not ready to do that yet. I'm not going to do it. And maybe you're not either, the person listening. They're thinking, "Wait a second, if I just bump up paying myself first and I put that as top priority, then Parkinson's law will take over and everything else will work." Maybe that's your first step. So there's no judgment here. I think again, the big idea or my big takeaway is it doesn't matter how you do it, just do it. Think about what you spend and think about, are there any easy cuts? Easy cuts. I don't want it to be hurtful. For some people like Jon, that Tim Horton's thing, it cut deep for some people right here.
So making sure that you are comfortable with what you're doing because you have to make it a habit. It has to be something that is almost so easy to do that you're not even thinking about it anymore, right? You're being intentional now, but let's form a habit so that this is just going to happen and it's not going to feel like it's bogging down your thinking or bogging down like your emotions as you're doing this work.

Jon Orr: Yeah, good ideas to leave off our listener here with Kyle as we prepare to think about how we're going to make those investments and what we can do to change the trajectory of our future wealth. So just as a quick recap here, we are talking about in this episode, your wealth building blueprint, and we've got a number of steps here for you to go through and think about your wealth trajectory. We talked about two here in this episode. The first one is making a budget and thinking about your budget and we've given you some tips and some ideas on how you can go get started with that and how to think about that budget. But the second one here that's kind of intermingled and we've blended the two together is paying yourself first, which is the key strategy on how you can set that budget so that you do have this money ready to go so that when you do find the right investment, you have it.
You're not in a position to say, "I don't know where I'm going to get this from." That's what we want to start building for ourselves as is setting ourselves up so that when the time is right, we can take this money that we've planned for already and we put it to use so that we are planning for that future self. So you can also go and grab this blueprint. You can download it or you can find all of the tips right now by heading on over to our website and going to investedteacher.com/blueprint. That's investedteacher.com/blueprint. You can grab that document and you can start looking at it, you can read it, you can write in it. You can start to plan that invested future for yourself. That is going to be your action item here in this episode so you can start your invested future.

Matt Biggley: Thanks so much, Jon. Thanks for listening today. For all of you out there, we'd love you to leave us a five-star rating and review. We'd especially love you to share this podcast with your friends and family. We talked about spouses today. This is really a family affair and we'd love you to share this with anyone you think might be in benefit of it. Make sure you hit the subscribe button on all of our social media platforms. We're @investedteacher. We're on YouTube, on Twitter, Instagram and Facebook.

Kyle Pearce: All right, my friends and all links, resources and transcripts from this episode can be found over on the website investedteacher.com/episodethree. We are at the third one, my friend, and three is a charm. That is at investedteacher.com/episodethree. All right invested students, class dismissed.