Episode 5 – How to Apply Knowledge and Wisdom in Your Financial life.

financial wisdom

Do you know the difference between applying knowledge versus wisdom to your financial life?

Danielle uses her insight and experience as a financial advisor to clarify the difference. In this episode, Danielle defines wisdom and knowledge, explains how to implement them in this fall season of life, discusses how a fear of missing out can influence us, and recommends conversations to have with the key people in our lives.

Tune in and learn how you can apply knowledge and wisdom to your retirement season.

[00:00:03] Welcome to the Wealth Done Differently Retirement Podcast Danielle Howard a certified financial planner shares insight into the financial tools, techniques, and temperaments needed to make the most of your retirement dollars and relationships. Danielle bridges the gap between Wall Street Main Street bringing complex financial topics down to earth. Danielle will educate and inspire you as you define and refine your version of prosperity. Hello and welcome to another podcast with Danielle Howard. Today we’re going to get philosophical and if you listen to the podcast already it probably isn’t going to surprise you that we’re going to go down this route. But today we’re going to talk about the difference between knowledge and wisdom. Now this is a pretty deep philosophical thing Danielle. What made you bring this up in your book and how are we going to couch today’s conversation. Matt I think that for people to truly understand how money works in their lives and to get the most out of it that we have to peel apart go a little bit below the surface just you know what’s in our what’s in our pocketbooks and maybe the difference between stock and bond strategies etc.. I think unless we understand how many works in our lives we can’t get the full value out of it. That’s where we want to discern what’s the difference between knowledge and wisdom. And how does that apply to our retirement season and life and what can we do to make the most of it. OK we’ll unpack that a little bit more let’s start let’s start peeling that onion and tell us what what have you found that’s underneath it.

[00:01:43] Actually I’m sorry I need to rewind here so that we’re on the same page can you define them the difference between knowledge and wisdom and then let’s start peeling back that onion. All right. When we look at pre retirees and retirees you now what we’ve been we’ve been around the block and sometimes I think you know we know about money we’ve been doing this for awhile but I ask people who pause and maybe think about that a little bit. We may be knowledgeable we may know how to balance a checkbook. We may know what the difference between a traditional IRA or a Roth IRA is knowledge is that information gathered. We can go out on the Internet and we can do a Google search on a variety of topics and we can learn we can gain knowledge and understand you know basic concepts financial literacy investment you know asset allocation diversification all of those things. I kind of put in the bucket of of knowledge that we have to look at what is the difference between knowledge and wisdom wisdom. To me is about understanding how to optimize what you have in my book. It’s the unknown unknown author but knowledge is recognizing that the street is one way and wisdom is looking both directions anyway. So it’s how do we apply that knowledge. How do we look at that knowledge and apply it to our own personal lives when it comes to retirement. Two that fall season of life.

[00:03:23] I think it is even more important that we take the wisdom that we have gleaned over the years and I truly believe that as we get older many of us myself particularly if we learned the hard way we learned about what works in our financial lives and maybe some things that don’t work how do we take that wisdom and apply it to our lives. How do we take knowledge. The use of stocks and bonds or rates of return and how do we then apply knowledge. What does it take to get a return on life to steal that from mature Anthony. I think it was my grandfather who said Your wisdom always comes with a little blood and leaves a scar. So when you start peeling back the when you peel it back that you’re peeling away just the surface level of education that people have to uncover their wisdom. Or are you having that conversation to help impart wisdom. Longer term I think it’s a little bit of both. OK I think I think people when they either come into my office read my book listen to our podcasts read read my Blogs. My goal is to help them dig a little bit deeper than just the financial modalities. Just the tools that are out there. Yes those are very very important. We need to understand that Social Security is available to us and that if we continue to contribute to it that at age 62 we can take it early retirement or we may want to push it off till full retirement or what does it mean to leave it in. Delayed Retirement. That’s that knowledge. Then when I start asking clients deeper questions about what’s important in their life and they areas of lifestyle of how long they feel they’re they are going to live.

[00:05:19] That’s the big unknown out there none of us really none of us have the magic crystal ball as to how long we’re going to be around. What are you wanting to accomplish for your legacy your legacy goals and how do we look at where Social Security fits into all of that. So again that’s a difference to me between that knowledge and then how do we apply wisdom to get the optimum amount out of Social Security. Based on a variety of different moving parts as to what is important to each one of us. And it may be different because each one of us has a different story each one of us has different goals each one of us has a different life that we are anticipating that we’re going to be living down the road. These aren’t as you just said are very difficult questions. Do you mind sharing with the audience how you have scholastically and mentally prepared yourself to have conversations like this? Because you as you had said, once you kind of get underneath the surface I mean that isn’t always pretty and easy. Help us understand why you are not only qualified but so experienced in having these conversations. I’m living it myself. I think that the conversations that mark my husband and I have had and the training I’ve had whether it’s through a question through a George Kender through Mitch Anthony’s or the variety of life planners that are out there and helping the financial services world change the conversation with people as well as providing us with the skill sets and the tools. It’s primarily listening. It’s asking basic questions about what’s important in people’s lives.

[00:07:09] And my hope is that through this podcast that we can start those conversations in our own families. Sometimes it’s between a couple that they’ve never talked about what’s important about money. Now all we hear is the media coming at us and what our neighbors are doing and we we put that into our own heads and say OK we’re supposed to draw this line at age sixty five and step over it into a life of ease and sell off into the sunset in white linen with a cocktail in our hand. But we don’t want to buy into what the financial services world is telling us. We don’t want to buy into what our neighbors are doing. We want to really search our own hearts our own lives to come up with what is truly important about this fall’s season of life. And each one of us are on a little bit different journey. We can’t create that continuum for everybody that everybody is going to be in the same boat. And so that’s what I love about this process is it’s incredibly creative it’s incredibly individualized and unique and if we can start these conversations and if as financial advisers we can sit back and hear people’s hearts and hear their stories. Then I’m able to better put your financial tools. All those complex buckets of different types of income that are out there whether it’s Social Security whether it’s your 401k whether it’s your home equity or investment income from real estate we could start putting those together to create that foundation of providing you the wind beneath your sails took countless what’s important to you. Can you give us a couple more examples.

[00:09:04] I think the examples of financial logic that that was very very clear. I mean Google which is now I think that’s actually a verb that you can jump on. I mean you can watch YouTube videos on financial planning you can do all of that stuff and that’s going to take you to one level. Look let’s break down a little bit more of this financial wisdom. Can you give us an example of I mean obviously not a client example or just something that you’ve experienced either personally or you can you know meld a couple of client experiences together and not be specific but of the epiphany after somebody does gain this financial wisdom when a person is looking at how to bring income into their their lives you have a lot of different options. And I will I hear things from people that maybe they come to me with questions. And what do you think about this investment or what do you think about this idea for making you know an yes. And it may not fit what they’ve told me about their their risk tolerance. I have somebody has come to me and said you know I’m a very conservative investor what do I need to do to minimize my risk and yet still bring some income into my life. And then they start popping up with ideas over a variety of options that don’t fit who they are.

[00:10:29] I need to be able to wrap it a wrap back around to let’s remove your goals what you’re trying to accomplish and let’s peel apart your idea about this particular investment because it may be a lot more risk than you were willing to put on the table and I tried to be an advocate for people to help them understand the different elements of whatever type of investments I’m either bringing to the table or they’re wanting to get involved with. But we need to circle back around too. Why are they doing these investments why is it important for them to one continue to grow in their retirement rewire midseason and what are the best tools to use for that. Because if there is a disconnect between what is important to them and the tool that they’re trying to use they’re going to have dis ease. If we get into a market environment that is a little volatile they’re not going to want to stick with their plan. So we need to set things up to where they’re going to be successful no matter what happens in their economic season life season or financial season that they are that they are experiencing. A perfect example. I love that is very clear. That makes an enormous amount of sense. If they don’t have that that real connection with the plan or with the strategy and technique that you guys have come up with together then they are going to come in you know with their sleeves rolled up and you know have shaved their head and start yelling at you about buying this sort of stock in the sort of bond. Right. So that to me is is a really really great idea. How do you help sharpen people’s tools. How do you help gain that or help them uncover that wisdom. What would be some good things that our listeners could do today.

[00:12:37] And after they do these things then they’ll be even more prepared to give you a call as they’re moving towards retirement and looking at what is important to them. Again we want to define what does that mean to you. So start having those conversations with the people who are going to be impacted by your financial decisions. In this season of life usually it has a significant other it’s the person you’re sitting across the table looking at them in the morning and going wow what is that what’s going to unfold during our day and what financial decisions do we need to make to have to facilitate everything that we want to accomplish in life. And when you start having these conversations so many times again we fall into this idea of it’s all about what our retired neighbors are doing it’s what we’re seeing everybody doing on Facebook. It’s what the financial services industry has said it’s supposed to look like it’s the conversations that people have had at cocktail parties and I’ve heard over and over again I’m going to take Social Security as soon as I can because I know it may not be there. And I know that there has been some recent press on. You know what Social Security is going to be looking like down the road. I think we need to harness that emotion that comes in in any of those different areas whether it’s the fear of missing out what we call call Flomo now and do we want to use that to drive our decisions or do we want it. Yeah is it going to be in a positive direction or is it going to you know have us take more risk. You know we want to be really careful.

[00:14:22] So for example with the fear of missing out we can either use that to move us in a positive direction. We can say these are the things that are important to me in my life. And how do I use my financial resources. It doesn’t matter what Joe Schmoe is doing and what I see them doing on Facebook. I’m not going to feel bad about myself if I’m not traveling the world or if I’m not experiencing this because I’m accomplishing what’s important to me. That’s what it boils down to is really taking that introspective look over what is important to you and the people who are affected by your financial decisions and them putting the tools and techniques and temperaments into place to support you with that. Is that Zach getting us where we need to go. Absolutely you know that’s that’s fantastic. It all began that conversation right. Yeah and I hate to make it sound so simple but really it is. I think so many times we want this complex formula. We want this you know we want to feel really really smart. And a lot of times wisdom is very very simple and we need you know it’s OK to be simple. It’s way to take a look at what’s what’s important and how it plays out in our daily life. And then we’ll grow the complexity on top of that. So for example you’ve got that little itty bitty seed that grows into great big Sequoia. The tree is incredibly complex it’s huge it’s beautiful but it starts out with that little bit.

[00:16:04] See if you can look at what is truly important in your life and boil it down to some very simple values your core what. What do you want to drive your day. Then we can look at all the financial complex components taxes and investment strategies and income strategies and we can start building it from there to create this beautiful tree. Great analogy. And I think that’s a great way to end the podcast today. A simple question can lead. Just like that simple ACORN or that simple C can lead to an amazing tree. A simple question and truly having somebody in your corner who listens. Who is there for you to bounce ideas off of. To redirect rephrase reframe help you focus and gain greater focus on what this fall season of your life looks like. I think is something that more financial services professionals need to do and there aren’t very many people out there like Danielle who feel comfortable in this realm. So Danielle I just want to thank you for you being prepared and trained to have these conversations. You’re welcome. People want to take it from there you can download a copy of my monetary manifesto from my Web site Danielle Howard. Number four letter U dot com get learn about my upcoming 8 week retirement course that we’ve got coming up this summer of 2000 18 and you can check out how to work with us individually by going to wealth by design number four letter U dot com. Thank you very much in Vietnam subscribe to the podcast. Make sure you click subscribe now button below and or if you have somebody in your life that you know needs to have this conversation.

[00:17:51] Just share this podcast with them. It’s very very simple to do just click to share now button below you can share all on social media or via email. Start the conversation see what happens and soon you will be able to have that retirement that you’ve always wanted. And with that. Thank you very much and we’ll see you on the other side of the mic for our next episode very soon. Thank you for listening to the Wealth Done Differently Retirement podcast click the subscribe button below to be notified when new episodes become available. The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of Wealth Design LLC. The content has been made available for informational and educational purposes only. The content is not intended to be a substitute for professional investing advice always seek the advice of your financial adviser or other qualified service provider with any questions you may have regarding your investment planning. Danielle Howard certified financial planner is an investment adviser representative of Cambridge Investment Research Advisors a registered investment adviser. Securities offered through Cambridge Investment Research Inc. A broker dealer member FINRA SIPC Cambridge and Wealth By Design LLC are not affiliated.

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