Financial Fitness and How to Stop Stressing About Money

Interview with Shannon McLay

Shannon McLay of The Financial Gym explains how to keep your finances in trim. Find out what it means to be financially fit and how the cash diet can help you towards better financial health.

Douglas Goldstein: I’m very excited to have Shannon McLay of The Financial Gym on The Goldstein on Gelt Show.

Shannon McLay: Thank you, Doug, for having me.

Douglas Goldstein: Is that weights I hear going on in the background?

Shannon McLay: Yes. We are not working our bodies; we’re working out our balance sheets.

Douglas Goldstein: What does that really mean? Are there running machines and stuff in the gym?

Shannon McLay: No, but we have exercise ball seats that you can sit in while you’re working on your budget. The working out here that we do around money typically involves some drinking. We have a complementary beverage bar for our members, with anything from pressed juice to beer and wine. Working with people in a financial planning capacity sometimes gets a little emotional, a little depressing, especially when the numbers aren’t working out. Therefore, every now and then you need to just have a glass of wine and put your big girl panties on, big boy panties on, and deal with your money situation.

Douglas Goldstein: That’s a good model. When you’re dealing with money, you should be in a relaxed atmosphere. I find that so many people are tense when I’m talking to them. I get a couple that comes into my office and we’ll talk about planning, and you can just see their blood pressure rising.

Shannon McLay: People ask me what a financial gym is like. I reply that a physical fitness gym is designed to make you uncomfortable. You’re meant to put your body in uncomfortable positions and get sweaty and gross. At a financial gym, we want you to feel comfortable, relaxed, and at ease. Our training rooms, our conference rooms, are meant to feel like your dining room or your kitchen table. The best way to deal with your money problems is when you feel comfortable and relaxed.

When clients come here, we want to help them work on what it is that’s keeping them from where they want to go financially.

What Does It Mean To Be Financially Fit?

Douglas Goldstein: Step number one is being comfortable. Does being financially fit mean being frugal, cutting more coupons, and spending less?

Shannon McLay: Being financially fit looks different for everybody. When you compare yourself with the Joneses, you lose sight of your own journey. Financial fitness is the ability to live the life you want to live and achieve the goals you want to live without stress.

Your financial picture is not going to look the same as somebody else’s, but the whole point of financial fitness is making sure it’s right for you. You should be achieving the goals you want to achieve, when you want to achieve them, and in the manner you want to achieve them.

Douglas Goldstein: I think that it’s important for people to focus more on what they need rather than trying to fit some model. People usually ask me what asset allocation I recommend they should have. But I really need to understand how much money they have, their risk tolerance, and if they are getting inheritances. Are they marrying? There are so many factors to consider; it is not just one size fits all. For example, when I buy index funds for one individual, it doesn’t mean that it’s meant for everyone.

Shannon McLay: We’re platform agnostic at The Financial Gym. If you want to open an account at Vanguard or Fidelity, great. You want to bank at Chase Bank or Citibank, that’s great too. Do whatever you want to do, but do it for the reasons you want to do it. Sometimes I have clients who already have their 401K at Fidelity, and we’re talking about opening a brokerage account. I urge them to open it at Fidelity instead of having accounts all over.

Douglas Goldstein: Someone said to me that they wanted to open an account at a particular company so as to get a free debit card. According to the client, all he had to do was deposit $100,000 there and he could get the card for free.

Shannon McLay: What a deal! At only $100,000 for a debit card. That’s a bargain.

Douglas Goldstein: And it’s free. No charge. Let’s talk about the millennials. Financially, do they have a clue about what they are doing, and are they responsible?

Are Millenials Irresponsible?

Shannon McLay: I started my career as a financial advisor at Merrill Lynch. My advisor Rick Crier and I worked predominantly with the late Gen-Xers and baby boomers because that’s where more of the wealth was. It was frustrating for me to tell a baby boomer what they needed to do about their retirement, only for them to 100% of the time, ignore me.

The fascinating thing for me about millennials is that 98% of them sign up for their own accounts and pay for themselves. When I tell them what to do, they actually do it. They don’t listen to their parents, but they listen to me.

One time, I told one of my clients that she needed to go on an envelope system. She said that her mom had told her the same thing, only that she hadn’t listened to her mom, but she listened to me. Millennials actually listen to me better than my baby boomer clients do. I feel like they get better results.

Douglas Goldstein: A lot of people have really crummy habits though. How do you train someone to have good financial habits?

Training Someone To Have Good Financial Habits

Shannon McLay: It takes time and work. Going back to the whole age difference, the hard part with working with baby boomer clients is they have decades of bad habits that are so ingrained and hard to break. What’s great about working with somebody in their 20s and 30s is that the bad money habits haven’t really been around that long. They start to develop once you have your first job, and they go on from there. The great thing about the clients we’re working with is that we’re breaking the habits before they form. We’re giving them different tools and exercises and financial goals that will help them break their habits.

Douglas Goldstein: What’s the number one worst habit that you see people have?

Shannon McLay: Not being mindful with their money and not even knowing.

Douglas Goldstein: What does that mean?

The Credit Card Menace

Shannon McLay: A lot of studies show that when you swipe your card, you literally shut your brain off. Every time you swipe your card, you’re just not even thinking about what you’re doing and it plays out in your money. Every time my clients go out for the weekend, and they are using their credit or debit cards, they’ll spend as much as $200, $300, and not even think about it.

One of the exercises they’ll get is to switch to a cash diet. Cash is the ultimate teacher of financial health. If you want to learn how to be better with money, switch to the cash diet. Once cash is gone, it’s gone. When it gets lower, you will start making different, better decisions. I had one client recently who had a big problem with using the debit card. She had the challenge to go out, and she gave herself $100 and that was part of her budget. She had saved all week for it and that was the cash she had left over. So she had $100 to go out for a night in New York City, and I get a text from her at 11 o’clock saying that she’s waiting for the bus in heels.

The next day I get this long email from her telling me about her whole night, stating that she went out with $100 in cash and came home with $62. She gave me all the details about who paid for the cab, how she didn’t drink as much, and how she danced. Truth is, you can have just as much fun on $40 as you can on $200. Life is about choices, and we’re trying to help our clients understand and make healthier choices. It’s about thinking differently.

Douglas Goldstein: Whenever you say yes to something, you’re saying no to something else. Your saying yes to buying something today means no to having money to invest or to having it tomorrow.

Shannon McLay: That’s the problem with millennials; they don’t want to be told no. A lot of people don’t want to be told no.

Shannon McLay: Just because you’re saying no to one part doesn’t mean you’re saying no completely. You’re saying yes to what you really want to achieve. You’re saying no to that seamless order, or to that Uber ride, but you’re saying yes to that trip to Europe you want to go on.

Douglas Goldstein: Great thoughts. How can people follow you and follow your work?

Shannon McLay: They can me find online at www.financialgym.net or on social media @financialgym. My podcast is called Martinis and Your Money, and that’s on iTunes and Stitcher. We are physically located with our first gym in New York City at 226 5th Avenue, 5th floor. Come visit us and get your assets in the gym.

Douglas Goldstein: Thanks so much for your time.

Shannon McLay: Thanks for having me.