How are you and your partner doing when it comes to money issues? Are you on the same page or do you have different views on how you spend your money? If you fall into the latter category, my guest this week is here to help. Dan Hinz is the financial coach behind, Adulting With Money. For eight years, Dan has taught couples how to unite, not fight over money, whether they want to crush debt faster, buy a house sooner or just want to get on the same page. He joined me this week to talk about his four rules to Adulting With Money.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Did you know 57 percent of Canadian adults don’t have a will? Willful has made it more affordable, convenient and easy for Canadians to create a legal will and power of attorney documents online from the comfort of home. In less than 20 minutes, and for a fraction of the price of visiting a lawyer, you can gain peace of mind knowing you have a plan in place to protect your children, pets and loved ones in the event of an emergency. Get started for free at maplemoney.com/willful and use promo code Maple Money to save 15 percent. Now, let’s chat with Dan…

Tom: Hi, Dan, welcome to the Maple Money Show.

Dan: Thanks for having me, Tom. Great to be here.

Tom: There’s some concepts you’ve been working on, and I wanted to have you on the show just to break these down because I found this very interesting. And I don’t know fully what the background is behind them but it’s going to be interesting. What I want to do is literally just go through this list of these four rules to Adult With Money and see your thoughts on them.

Dan: As I work with people, grow older and learn things myself, these are just rules that I try to keep reminding myself. And then I try to teach my clients as well. If they’re coming to me for financial coaching and they want help, these are the guiding rules I try to teach them. Eventually, whatever we talk about, these are just general ideas that, if you keep them in mind, you’re going to be okay. That’s really what I’m going for.

Tom: I like the simplicity of it in that we can all writes 5,000 word blog posts and record hour long podcasts so there could be a lot of information out there. Multiply that by all the different blogs, podcasts and YouTube channels, just to dilute it down to some core tenets is very interesting and very helpful.

Dan: Yeah, and that’s what I’m going for. Tenets is also a good rule or a good word. I’ve seen one too many episodes of NCIS but I think it’s one of these things where when you’re talking about rules, there are things that you want to try to stick to. But as some people would say, rules are meant to be broken. So they’re guiding principles—or tenets which is a great word as well.

Tom: And speaking of rules being meant to be broken, the first one almost is a rule about breaking rules. I’ve got the list here and the first one is, there is no right way to handle money. Can you break that one down?

Dan: That’s the first rule—there is no right way to handle money. I can talk for days about this rule. But let me tell a personal story. Over the last year and a half, I have become more successful with business and life in general. The reason that is, for me, is because I was stuck in a lot of rules—a lot of “shoulds.” I’m not going to curse but the phrase is, “I was [shoulding] all over myself.” I should be this… I should do that… I should… I’m expected to do these things. Growing up in a public school system, you graduate high school, go to college and you get a job. You get married and you should have kids. This, that and the other thing. That really applied to my business life and my entrepreneur life as well. I should be successful by now; or I should be doing a podcast. Or I should be doing a YouTube channel. Finally I broke that to say, “What do I want? What do I want to do?” And that really does apply also to personal finance and trying to grow your net worth. There are two things. First of all, we want the short shortcut. We want there to be a golden rule or a golden formula or a silver bullet that just helps with everything. And the more you learn about personal finance, the more you realize there really is no right way. There are good strategies. There are good ideas and maybe some bad ideas but there’s no right way that if you discover it, you’ll be done. That you’ll be fine. It just doesn’t exist. The best analogy I have to explain that is like playing chess. My 8-year-old nieces and nephews know how to play chess. They can’t beat me but they know how to play. We can play chess match where we both follow the rules and it’s fine. In personal finance, the rules are fairly simple. You spend less more than you make. Grow your net worth and give money. That’s about it. When you really boil it down, those are basically the rules. But much like chess, there’s no right way to win. There’s learning the rules and then there’s winning the game. And winning the game, depending on who you’re playing, gets massively complicated. It gets really complicated, really fast because it’s not math, it’s strategy. And that’s what I realized. Personal finances is strategy. There’s no right way to win a chess match. There’s no one right way to win a football game. But you can be taught. You can learn and you can get good at it. So when clients ask me, “How much should I have in my emergency fund?” or, “How should I save for retirement? How much should I be putting in my 401k?” I try to point them to this rule—there is no right way. So asking me how much should go in there, there is no answer. I can’t answer that for you. No one can. Then we come back to, what you want. What is it you want right now, how much does that cost and what’s a good step in that direction? What’s a good strategy for that thing you want? Like I said, rule number one, we could talk for days on something like that. It goes pretty deep.

Tom: Well, you brought up the emergency fund, and that’s one I’ve struggled with too. I don’t do actual coaching, but people will email with questions and such. It’s tough, especially this year. Two years ago, the idea of a year in expenses for an emergency fund seemed a little overboard. But nowadays, maybe one year is a thing. But my default answer is, you don’t have an emergency fund, then, one month. Get that first month.

Dan: Yeah, let’s start with one.

Tom: Yes, there’s no sense putting too much thought into this. Do I need three months or six months this year? Just get that one month. It’s step one.

Dan: Yeah. And you could dive even deeper into that. You want an emergency fund? Why? Because if this happens, I want it covered. Sometimes when they say they want this covered, the answer becomes insurance. Not an emergency fund. If they’re worried about passing away, it’s life insurance. If you’re worried about losing your job, at least in the States there’s unemployment insurance. It’s not to say you can pay into that and just get it. But you have to ask yourself why you want that emergency fund and how much will it cost? You could come up with a number that’s a good guess. You could go on for a long time just with that conversation.

Tom: We do have unemployment insurance here but we call it employment insurance because it sounds nicer.

Dan: You’re right, it does sound nicer.

Tom: And it’s life insurance is the death insurance.

Dan: True. True. Yeah… maybe if we branded it differently. Marketing works. Marketing works, people.

Tom: The other thing that came to mind when I look at the right way to handle money is this idea of debt snowball or debt avalanche. Those are two very opposite things and it could confuse someone. To me, I’m a I’m a math guy so a debt avalanche, which is the idea of paying off the highest interest first (because that’s what’s costing you the most money) makes sense to me. But for a lot of people, there’s a mental thing—the momentum of paying off a debt and being done with it. So this is one of those cases where there’s two rules out there and they’re quite opposite.

Dan: Yeah. And the good news is that they’re helping you with the same goal, getting out of debt faster. It’s not actually costing more each month because you roll over one minimum payment to the next and it gets bigger. If you research it really quickly, that avalanche, as far as I know is mathematically the best answer because it pays off your debts the fastest. But if you go online to a “debt snowball” versus “avalanche” calculator… I’ve done this for my clients. I’ll do both. I’m going to try to tell my clients which one’s going to pay off their debt faster. And it’s usually only a difference of about a month. The avalanche is basically faster by one month. So I usually tell them to go with the snowball because we are emotional creatures. I would rather them win faster so if it costs them 30 days, I can live with that.

Tom: Yes, yes. And it needs to be something they can stick with. It is more motivating to go with the debt snowball. But for me, it was not paying much interest. I could have my own set of rules which is pretty much what this rule is. The things that work for me may not work for other people.

Dan: That’s why I’ve tried to come up with these rules. And it’s why I’m still workshopping with them. If people are listening to this and they want to email me and saying, “I really like number one but number three kind of seems kind of stupid,” go for it. Tell me, because these are rules that have helped me but I’m trying to tell as many people as possible so that I get an idea of whether I may need a fifth rule or sixth one. Or maybe I only need three. I don’t know. These are I’m still testing this stuff out.

Tom: The second one is interesting, speaking of getting into the mental side of things. Money fights are not about money. Can you tell us about that?

Dan: I focused my coaching on couples. This rule is mostly for them. It’s to say if you’re fighting over money, the truth is it’s really not about money. I’ve worked with a couple where the wife was in the fashion industry. She was spending a lot of money trying to kind of keep up with her coworkers and friends and they really couldn’t afford it. The husband, as kind of a reaction to that, went way overboard with budgeting. He said, “Every week we’re looking at this. We’re going to talk about it,” and he just hounded her on this stuff. But it’s really not about money. With her, it was about status. And with him, it was about trust. She’s trying to keep up with the Joneses, so to speak and he thinks she’s overspending. She’s making this promise with the budget but then overspending so can I really trust her? If you go just one level deeper with your money fight, you’ll realize it’s not about money. Now you might say, “But Dan, money touches everything.” Yes, it does. But so does air and water. Money is a resource just like water is. And if someone were to say, “Hey, we got divorced because we couldn’t agree on water,” we’d all go, “Huh?” Why would you fight over water? Were you drinking too much water? Was someone wetting the bed too much? Did you have a hole in the roof? What’s the real reason you were fighting over water? And that’s kind of how I view money. I say, “What’s the real reason that you were fighting over money? There’s something deeper here.” But if you’re single, if you don’t have a partner and you’re not in a couple, you could look at it the same way; I’m worried about money. If you go a little bit deeper like not making enough money. If you were making more, what would you do with it? Maybe it is status. Maybe it’s security. Maybe it’s something else. You want to take care of a brother, a sister, a mother or father. There’s something deeper there, and that’s okay. It’s normal. That’s where rule number two comes in, “Money is a tool. It’s a resource to get you to something else.” That’s what we really want to focus on.

Tom: Yeah, that’s a great point. You mentioned this idea of going one level lower, one level deeper. It seems like that really comes down to communication between a couple because you may not really talk about money or what the underlying issue is. If you don’t talk about it, you just resent each other. It seems like it’s a communication issue.

Dan: Yeah, and I’m a big fan of Tony Robbins as well. He has his six human needs. I like it, but he argues that we all want certainty. We also all want uncertainty or variety. We want love and connection. And then we… Oh, gosh, the fourth one sticking on me. Then there’s also contribution and growth. So that’s five out of six. You can Google the last one. In the end, it all kind of boils down to those six human needs as well. So you could go even deeper to say that whole idea of security or breaking promises, trust, leads to the certainty. The status kind of boils down to the love and connection, like, do I belong in this group? And then you could get into Maslow’s hierarchy of needs. It’s turtles all the way down. If you go deeper, you’ll find the real truth and that’s the whole point. It’s how you communicate that with yourself and with your partner.

Tom: This is the main thing you cover in coaching. Do you start to feel more like a psychologist or a counselor instead of a money coach?

Dan: You know, kind of, yeah. When I call myself a financial coach, I really think of myself as three people. One, is like a finance professor. If you want to learn how debt works and how to calculate it, I can find you the calculators. I can show you the math. I can do that. Second, is like a life coach. What is it that you want and why do you want it? And then the financial professor comes in and says, “Okay, let’s do the math on that.” But then the third, because I work with couples, is kind of a couples coach. A relationship coach. This is where I say there are some things, if you’re not communicating—if you’re doing these things then it can lead to divorce. It can lead to a breakup. There’s a Dr. Gottman who has the four horsemen of the apocalypse. And if you are exhibiting one of these four horsemen or all four of them, then your relationship is pretty much doomed unless you stop doing them. You have to recognize that you’re doing them. The worst one is stonewalling. If you’ve ever been dating someone and you’ve had a fight and the other person stops talking, just shuts down and you don’t even talk about it, that’s a very bad sign. He’s done studies where he sees these communication problems in couples and doesn’t intervene. He says, “Okay, we saw these and waited 15 years to see if they got divorced or not.” And it was 80 or 90 percent accuracy. If he saw them, they were not together 10, 15 years later unless something came in to help fix that. So, yeah, I’m not a marriage counselor (because I need a special certificate for that) but as a relationship coach, it’s about trying to help them communicate and talk about money to help solve some of these things.

Tom: Your third step is another one I feel works for me and not for other people. The rule is budgets control nothing and no one. I’ve said on the podcast before, I don’t do a real budget, but I do recommend them. Depending on where you’re at in life, some people need to make sure they know how much they’re spending, track that and improve that. I got to the point though where it was just kind of simpler to just focus on the totals. Make sure that you are making more than you spend. That was my view of that. Is that what you’re thinking here, especially the control part?

Dan: Well, the control is the key word in this rule. Depending on how you grew up or what you think of that ‘B’ word, budget, it might be a very dirty word in your mind or in your household. Especially if people have been in the corporate world or the government world where everything’s “not in the budget.” It can really grind on you. But in the end, a budget is just a plan. It’s a piece of paper or a spreadsheet or an idea just in your brain of how you want to win. How am I going to go from A to B when it comes to money? We could talk about the word diet like diet. Some people see the word diet as a very negative word. Personally, I have changed my definition of diet to just how I eat to reach my goals. I’ve lost weight. I’ve gained muscle. And I’ve maintained so my diet is what am I eating and how am I exercising to lose fat? How am I eating and exercising to gain muscle? Or how am I eating and exercising to just maintain? And so when I hear the word diet, it’s literally just a plan for my food. That’s it. I’m not trying to lose weight. Diet can mean different things. And that’s how I want people to view budgeting. It’s just a plan for your money. To your point, you got the most bang for your buck by just looking at the totals, which is great. As a financial coach, I would have no problem with that. I just want you to have some plan to go from A to B. It could be on paper, a spreadsheet, an app in your brain, whatever the case may be. But when it comes to couples, that’s kind of where the second half of that rule comes in—it doesn’t control anyone. If one side of a couple thinks, “If we do a budget, then my husband (or wife) will stop spending money.” No, the plan does nothing. It doesn’t control anyone and it definitely doesn’t give you the permission to try to control your partner. But on the flip side, if one side of the couple is worried or afraid that putting together a budget is going to be a means to control them, this rule is also there to kind of try to calm them down, to say, “No, no, it’s not. You’re still an adult. You’re an individual. You can make all the choices in the world that you want.” It’s trying to calm people down when it comes to budgeting. It’s to say, “I’d like to you for you to have some sort of plan. I’m not going to try to make you become a professional accountant and like figure every tiny little detail.” My wife and I used Mint as an app for eight, nine years. What I love about Mint is that it rounds to the nearest dollar on everything. You can’t watch down to the penny with Mint. I kind of like that. I switched to YNAB, which has great features. But now I have to do it to the penny and I don’t care to be that detailed. For me, there’s a middle ground. For everyone else there’s some happy “middle ground” where putting a plan together for your money should take a certain amount of time but not so much that you don’t look forward to it. Or so much time that it’s not paying off. So again, this rule budgets control nothing and no one. I can talk all day on it because it goes deeper and deeper and deeper.

Tom: I really like the idea of Mint and YNAB. There is another one here I’ve been looking at called, Lunch Money. It’s out of Canada, but it also works south of the border as well. I guess these all count as tracking money more than truly budgeting money in a way. But again, just my own personal, almost anti-budget view, tracking it is more important that the actual budget because you just need to see where you’re at. To use the somewhat “overused” latte factor, just to be able to see that add up and see what it’s costing me a month, a year… my lifetime. I do prefer tracking over budgeting and those tools you mentioned are great for that.

Dan: Actually, I would agree with you on that. Here are my four rules that I try to teach people to calm them down or tell them that you’re not really actually doing anything wrong. The three habits; number one is making goals, defining what it is that you want as individuals but also as a couple, as a family habit. Number two is tracking. It’s to have some way to watch your money come in and out. That’s it. Just watch. Habit number three is making decisions. It’s to say, “Okay, we know what we want. We know where we are, what’s next?” and trying to make that decision. Budgeting is kind of in that habit two, habit three. It has a foot in both ponds because budgets are helping you track, but also helps you make a decision… “Okay, we know what happened and we know what we want. How do we bridge that gap?” So, yeah, I agree with you. Yeah, tracking is far more important. And in fact, if tracking money helps you be better with money and you never actually put together a budget, I’m also okay with that. Rule number one—there is no “right way” to handle money, so now we’re coming full circle.

Tom: When you mentioned this part about tracking… Maybe I have been doing a mental budget because when I look at the tracking, I still know it’s off. Using that latte factor example, it’s like, “I’m spending too much on coffee so I’m going to create a coffee budget and reduce it by half.” I don’t actually take that step, but in my head I can look at a line and know that’s too much. There might be a bit of a budget in my head that no one can see but—

Dan: But hey, if it’s working, it’s working. It probably took you a couple months of understanding what your average was for buying coffee to know when it’s out of whack—when you’ve spent too much. You had sort of an internal thermometer to say, “I’ve looked at this and I’ve been spending too much,” but what is too much?

Tom: Well, that’s where I saw the benefits. In the good old days when people used to go to an office, I would buy coffee there. And to see it on a monthly basis showed me it was too much. I would start bringing a thermos of coffee in. And then I simplified it even more by actually just bringing in tea because they had boiling water on tap. So I wasn’t having to bring anything into the office. I just had my box of tea bags and I was good to go.

Dan: Yeah, little by little, you just get a little bit more efficient. Now you can get the same amount of caffeine for a lot less money.

Tom: The big switch to tea for me—just to go out on a tangent here was because I had read the health benefits about tea one day. The very next day the coffee I make in the morning for my thermos, it’s filter flipped over and there was coffee all over the kitchen. So between reading the health benefits and the convenience of having tea bags and boiling water in the office, I was done. I was just going to drink tea.

Dan: There you go… I’ve simplified my life and I’m happier for it.

Tom: Yes, saving money is simple. It’s all improvements to your life, whether it’s money or not. Your fourth rule is all decisions cost time, money and energy. This is an interesting one. I’m not sure what you’re thinking, but it seems like a good thing to consider, what is this going to cost me?

Dan: We could tie this directly back to the whole debt snowball and avalanche conversation. If you look at just time and money, the obvious answer is the debt avalanche because it’s going to save you time and money. It is mathematically the best way to go about it. But with a debt snowball, you have psychological, quicker win. When I say energy, I’m talking about emotional energy, stress, happiness, or just physically doing it. We’ve all been at work and eventually your brain just kind of shuts off. You get to a point in the day where your brain says, “I’m done. I can’t think anymore,” but that’s not time and that’s not money. It is energy. We all have to sleep. We all have to rest. So when I’m working with a couple or talking to someone and they ask me, “Should I do this or should I do that?” I tell them there is no right way to handle money but then we start to talk about which one makes you feel better? Which direction do you like better? While one direction might save you time and money, if it’s more stressful and going to hurt your health in that regard, maybe you should go a different route. Somewhere it’s a little bit easier. It’s going to take more time. It might take a little bit more money, but you’re happier. And if you’re happier, then it’s easier to make good decisions down the road when you need to make another decision. And so that’s where Adulting With Money and this fourth rule is, don’t discount your energy. Don’t discount your emotions. It’s going to play on you. This idea kind of comes from the field of behavioral economics, behavioral psychology—people like Daniel Kahneman, Amos Tversky, Nobel Prize winners. Even as economists, we think if we have A or B, all humans are going to pick A because it’s the most efficient route. But it turns out that’s not true. We do irrational non-economic decisions all the time, constantly. And if you read their work with the idea of mental accounting, our emotions will play on us, period. It’s going to happen. And I recognize that as a financial coach. I’m not trying to fit any individual or any couple as square pegs into some sort of round hole. Again, it goes back to rule number one, there is no right way. When we’re talking about trying to make those decisions, I’m also asking them, “How do you feel about that? How do you think that’s going to affect you next week or next month? How easy is that? How hard is that? Are you willing to spend the time, money and energy to go after that goal, or is there something better that we can go after?” Going back to your whole coffee thing. You could have spent the time and the money and the energy to make another pot of coffee. Just put in a new filter, put in the coffee—because you really want coffee. Personally, I would have made the coffee. Tea is good. I like tea. I love coffee way more. It would have made me very happy to hear that drip and to smell that fresh brewed coffee. It would have been great. That’s what I would have gone after. That’s the decision I would have made. But you got to a point where you’re like, “Nah, I’m just going to switch to tea,” because it was just the easier route and it just happened to save you time and money as well. So that’s where when we start to talk about decisions, I want people to think about how it’s going to make them feel. What’s the stress factor going to be and take that into consideration.

Tom: One of the thoughts that came to my mind when I read this one was I’ve been better at focusing more on the time and energy, even if it means giving up some money. I was very frugal for a long time. And now I start to look at things like, “Oh, I want a backsplash made of tile in the kitchen. Could I do it?” Yeah, I could take a whole weekend. I could do it. I might not be totally happy with the result. Or I could just pay someone $200 to do it in two hours. And more importantly than the time there is that the finished product would be better than I could ever do.

Dan: Yeah, you can walk into the kitchen and look at it every day and say, “That looks nice. I’m glad I paid someone professionally to do that.”

Tom: Just last episode Gwen Merz was on, and I admitted, I am not a home maintenance guy. I still don’t want to just spend money unnecessarily but if someone can do it five times faster than me and have a better result, I think that’s worth the money. In my case, I just don’t have that skill set.

Dan: By paying them you’re wanting it done right, and want it done right the first time. It’s kind of the same reason why I still pay people to change my oil. There’s a place a block away. I drive up, drive in. It takes them 10 minutes and you’re out. It would take me a long time to get that fast at changing my oil. In fact, I probably couldn’t by myself because they’re down in a pit and there’s three people doing things at the same time. By myself, I could not get it done that quickly, I’m pretty sure. This fourth rule, all decisions cost time, money and energy is, I will admit, kind of my anti-frugality rule. At a certain point in time, it’s good to save money. Because spending money on buying a rental property is maybe a bit better than buying coffee. So you’re going to try to save as much money as you can, switching to tea and then buying that real estate. But you’re going to get to a point after you’ve grown your wealth where you really just don’t need to be pinching pennies anymore. Pinching pennies doesn’t add happiness to your life. And it’s not going to add anything to your wealth because your assets are growing way faster than you can spend money on coffee. That’s a great place to be. So it’s safe to say at a certain point you can calm down. You can relax a bit. It’s okay to pay other people because then they have a business that they’re trying to grow. You’re pumping money back into an economy and other entrepreneurs. That’s a good thing. That’s the cycle of economics. That’s the cycle of life.

Tom: These rules have been great. I think everybody’s going to take something different away. They’ll find a motivational spark here. Can you let people know where they can find you online and tell you which steps they don’t agree with?

Dan: Ah, yeah. Absolutely. I’m not on Twitter, so you can’t find me on Twitter. But everywhere else it’s, Adulting With Money. So, adultingwithmoney.com. You can go to YouTube, Adulting With Money. Go to Facebook, Adulting With Money, and you’ll find me.

Tom: Great. Thanks for being on the show.

Dan: Thanks, Tom.

Thank you, Dan, for showing us why there isn’t simply one right way to manage money. Personal finance is just that, personal. You can find the show for this episode at maplemoney.com/146. I want to take a moment to thank you for listening to The Maple Money Show. I appreciate your support in helping us continue to grow. If you have the Apple podcast app on your phone, can you pull up Maple Money Show and give it a quick rating? Even better, leave a review to let everyone know what you think of the show. Thanks again. I’ll see you back here next week.