(upbeat music) - You spent a lot of time in the book talking about financial planning and after you do the hard work about how to do it. And I like this kind of idea of, you know, bringing something fun to the conversation. So it's a dining room table. You said it's not a flamingo.

I can't remember all the other, it's not a three-legged stool. Talk a little bit about what that is. What is the financial plan to you? Because I think as someone who started a financial planning company, it can be a big thing that's daunting, that is complicated and takes hours and hours to go through.

Or you can kind of think about it in a more simple framework like I think you present. - So the idea is, you know, the American table, the dining room table is an institution in our country, right? This idea that the family sits around it. And I like it as a model for how our financial plans should be because it's stable, right?

It's hard to knock over a dining room table. It's solid, well-built, and it supports us. And I think we should look at our financial plan the same way. So a lot of people build a financial plan that looks a lot like a flamingo, right? Think about a flamingo. They've got their one leg.

They're incredibly unstable. Anything could knock them over. This is the person who really puts all their eggs in one basket, right? They have their W-2 job. They work for some company. And maybe if they do invest at all in stock, maybe it's through their 401k. Maybe it's actually in that company itself.

And so everything depends on this one company. And God forbid, you know, a la Enron, this company goes down, something happens to it. The flamingo is incredibly easy to knock over, right? So then you can think about a two-legged table or stool, still not that stable, but a little bit better, right?

That might be someone who has a W-2 job. And maybe they now have a 401k with some broad-based index funds, right? Or maybe some bonds. So again, a little bit more stability, but still not perfect. And then we start thinking, how can we even make it more stable? Like a three-legged stool.

Now maybe we add in a side hustle or some real estate, right? And so then again, we're now creating more space. And then the four-legged dining room table, something that even if you knock a leg off is still gonna be incredibly stable, you know, is your W-2 job plus the broad-based index funds, plus some real estate, plus a side hustle.

Maybe if you're excited about some alternatives, you have a little crypto here or there. Again, the idea is you're creating these different legs. It's this idea of a diversification, but it makes it a little bit more obvious. And again, the whole point of this is, really what we do wanna do is we wanna build a financial plan that supports our sense of purpose, identity, and connections.

We wanna build meaning into our life. To do that, we build a stable financial plan, and then we practice risk medication, right? What we're really doing is trying to protect ourselves against the unknown risks, like you'll suddenly lose your job, like an economic downturn, like a healthcare crisis or problem.

Like all of these things, we wanna create that dining room table that's gonna support us so that we can withstand whatever trauma, whatever black swan, or I call them white swan events that happen, right? These events that, a black swan event is a totally unexpected event that can really ruin our financial lives.

White swan events are events that can ruin our financial lives, but they're not totally unexpected, like a healthcare problem, right? People get sick and end up spending a lot of money on healthcare, it's common. A divorce, right? The whole point of all this is to build a solid financial foundation so you can mitigate your risk and withstand the winds of change that are gonna affect you and your financial plan so that you can continue using that money to do what it's supposed to do, which is give you the space and time to do meaningful things.

- To its core, would it be fair to say, a lot of times people think of the financial plan as what do I do with my savings? And your point is, it's not, you have your income, you have your savings, but then you might also have some other assets you own, whether it's a business, whether it's real estate, and you might also have not just your job, but your other income.

And the more you can start to build different buckets of money that aren't just your savings, the more stable you can be. But at some point, you mentioned the dining room table with four, at some point, maybe you don't need your eighth, ninth, 10th, 11th, 12th. If you can get four, which if one falls off three is still a little stable, four kind of solid pieces of financial wealth, if you will, whether it's a job or, that's kind of a place to strive for.

- Yeah, perfect is the enemy of good. I love these posts on social media where you have someone in the personal finance world that says, "I've got nine forms of income." And they love to say the different side hustles and the difference. That's great. But for the majority of us, four or five revenue streams that are stable, that are diversified, that are uncorrelated, like I don't wanna go too far, but how can we start building these streams and be thoughtful about it, right?

So, okay, I'm gonna retire. Do I have a pension? Do I have a 401k that I can start taking distributions from? Do I wanna set up an insurance policy that'll pay me like a spia? Like there are different ways of doing this so that when one revenue stream drops off, you can create another revenue stream.

And therefore, again, you can protect yourself from change because that's ultimately, we have no control over change. We have only control over the best planning we can do and then what we do with our lives. - So that's the planning piece. But you do talk a little bit about how one of the ways to tackle your finances is.