"The less time we spend planning how to get the most from our money, the more time we spend worrying about it." - Vince Scully
I first heard Vince Scully speak on a My Millenial Money podcast and was nodding all the way through. I had to know more about him and so hopped onto Google and went down the rabbit hole for a few hours.
His current creation, LifeSherpa, is an online financial literacy & adviser site, which is excellent and for all ages. So much information to assist at every stage of life and learning. On the Life Sherpa website you can request a 'discovery session' and I was lucky to get Vince for the meeting.
In those early stages of covid in April 2020 I was looking for strategies on how to hold on through a very rough patch. He was very generous with his time and so informative on what financial plans we could work on whilst in this holding pattern (put a hold on mortgage repayments, move out any equity in our offset account, stop paying principle from our investment properties, call companies to put our accounts on hold).
A final question I had for him was what was his typical client's ages and stage of life? He was so honest in sharing that his clients were typically in their mid-20s to mid-40s and people closer to retirement were not necessarily his core clients. The transparency was awesome and even though I wouldn't be using his team, I felt more at ease with our current situation and immediately went and purchased his book The Latte Fallacy (and other money myths) by Vince Scully.
I would like to give you my thoughts on this book and the key takeaways I believe make this a great 'wealth creation handbook'. Hint … I loved the book! Think of it as the next level up from The Barefoot Investor, which really helped me earlier on.
The Latte Fallacy is split into two sections. Your emotional attachments to money, generating money, having money and making money. The second section is all about the steps to take to create financial freedom.
In the FIRST Section, Vince goes through some common myths around money, from buying your lattes and smashed avocados, to renting is dead money and investing in the stock market is just like gambling. He breaks these down into some simple arguments that you can't help but agree with. Too much of our financial knowledge stems from what we hear in the media, from our parents, or people at the same stage and financial intelligence as ourselves. We really do need to rewire our brains.
Einstein is said to have described compound interest as the eighth wonder of the world and that, 'He who understands it, earns it.... he who doesn't.... pays it' - The Latte Fallacy
Some of the myths that captured my thoughts were:
Rent money is dead money was drummed into my head from a European culture that you "must buy land". I can agree that we should buy property however it doesn't need to be the one you live in. Provided that you invest money whilst renting, you can still build wealth.
Buy the biggest home you can afford OMG, this was definitely in the '90s and '00s. We thought that we'd grow into it. Consumerism was rampant with TVs in every room. What matters are not the "things" we have but the peace we get when we are free of debt. Took many years to learn/unlearn this!
Only rich people need financial advice. “Many people confuse financial planning with investment planning. Financial advice is for everyone who wants to better organise their finances, set money goals and make a plan to reach those goals.”
Investing in the stock market is just like gambling. I believed this for so long. Overnight your money could go puffff! It's not until after I educated myself and asked more questions that I understood the ups and downs and different types of shares.
You need a lot of money to start investing. This couldn't be further from the truth. In Australia, with the compulsory super, you are an investor from your first day at work! Outside of retirement/super funds, you can start with as little as a few hundred dollars.
Vince discusses how housing costs have changed and the curse of too much choice; with a greater variety of lifestyles that can bring about lifestyle inflation.
Lifestyle Inflation: "As our income increases, we develop spending habits that match. We buy a bigger house, we drive a more expensive car, we take more expensive holidays, drink better wine - it is so much more difficult to change a spending habit than to have never had it in the first place".
Vince's rules on life are about the big things we make decisions on, instead of the small ones. I definitely see this with expenses too, for example, concentrating on the high expenses (like mortgage interest rate, electricity rates, health care and other loan interest rates) and looking at making more money there, can make so much more impact than trying to skimp on lattes. His rules make so much sense and are powerful! Trust me, with 3 decades of being an adult, my own life experience and others around me, I can definitely vouch for these rules and how important they are. You have been told 😆
These are some of the big things to make sensible decisions about instead of sweating the small stuff.
Where you live
What car you drive
How you prepare for the unexpected
What school you should send your child to
How you prepare for retirement
How you make a living
And who you marry
He raises some great points and elaborates on this more here.
The book emphasises the importance of how you conduct yourself through the decades with some real truths to consider in your 20's and 30's. So much happens in these two decades and it’s stuff that matters and sets you up. Solid friends are formed so your circle of influence can help or hinder your progress AND the big one ... lifestyle inflation!
The SECOND section of the book dives into the action steps. I can say that Vince doesn’t sway off course with these steps. I have heard him mention these on podcast interviews and it's laid out all over the LifeSherpa website.
Vince lays the foundations and the building blocks, with simple steps to improve your confidence and your finances.
"Start by doing what's necessary; then do what's possible; and suddnely you are doing the impossible" - St Francis of Assisi
It wasn't in the book, but I do love this roadmap from the website, so I've included a copy below. It's a snapshot of all the steps at a glance. It shows how simple it can be. The book goes through these steps in much more detail so best to get the book 😉.
Notice in the roadmap that some steps can be done simultaneously AND it shows some percentages that you should get to before moving on to the next section. Really helpful.
Two-thirds of the money you will receive from your super in retirement will come from the earnings on your savings
His final page is gold … The 10 commandments. You will be nodding your head as you realise they are so right (and so simple really), for example:
Spend less than you earn
You can't outearn bad spending habits - yeppo
It's not about the numbers, it's about how you feel
Information without motivation is useless - this is priceless
"Knowing is not enough, we must apply. Willing is not enough, we must do" - Bruce Lee
Side note ... I think I have an FI crush on Vince 😆 I can listen to him for hours. So much knowledge and resonates with where we have been. LOVE what he has to say. He is a straight shooter, has been around for ages with so many tidbits on why certain things are the way they are ... fascinating & riveting stuff if you’re a money nerd like me ... Lol.
I strongly recommend anyone who is interested in taking their finances and their knowledge to the next level to grab this book. Let me know what you think!