TED - How to Stop Being Weird About Money (w/ Paco De Leon) | How to Be a Better Human, a TED Podcast
Paco Deon, a musician and finance expert, offers practical financial advice tailored for artists and creatives who often struggle with money management. He emphasizes the importance of understanding the financial system to gain freedom and power to create art. Deon argues that money is a form of power necessary for artists to have the space and time to create. He shares his journey from a financial planner to helping artists manage their finances, highlighting the need to understand the market and value one's skills appropriately. Deon also discusses the emotional aspects of money, such as shame and societal expectations, and provides strategies to manage spending, like creating scarcity and separating accounts for different expenses. He encourages creatives to understand their worth and not undervalue their work, using personal anecdotes to illustrate how pricing can affect perception and respect. Deon also advises on practical steps for freelancers and those with stable jobs to manage their finances effectively.
Key Points:
- Understand the financial system to gain freedom and power for creativity.
- Value your skills appropriately to avoid undervaluing your work.
- Create scarcity in spending by separating accounts and setting rules.
- Address emotional aspects of money, like shame, to improve financial health.
- Take practical steps like consulting a small business accountant for financial planning.
Details:
1. 🎤 Meet Paco DeLeon: Bridging Art and Finance
- Paco DeLeon expertly bridges the gap between creativity and finance, specifically helping musicians and artists manage their finances effectively without compromising their art.
- He provides innovative financial strategies tailored to creative professionals, demonstrating that financial management and artistic endeavors can coexist harmoniously.
- Paco's success stories include helping artists establish sustainable financial practices, thereby empowering them to focus more on their creative pursuits.
- By offering workshops and personalized financial coaching, Paco equips artists with the tools to understand and navigate their financial landscapes effectively.
2. 💡 Practical Money Advice for Creatives
- Focus on doing something you love while ensuring you can pay your bills and keep the lights on.
- Emphasize the practicality of balancing creative pursuits with financial stability.
- Consider budgeting strategies and financial planning to support both creative freedom and economic security.
- Explore additional income streams that align with creative interests to enhance financial resilience.
- Prioritize financial literacy to better understand and manage resources effectively.
3. 🎸 Embracing Financial Freedom Through Art
- Many artists believe focusing on money will corrupt their creativity, yet financial acumen is crucial for artistic freedom. Artists often have the misconception that they are not good at making money; however, financial skills are essential to maintain their creative independence. Understanding financial management can empower artists to create, influence, and leverage money to drive change.
- Artists can benefit from financial education by learning about budgeting, investment, and diverse income streams. For instance, creating online courses or offering workshops can provide additional revenue.
- Case studies of successful artists reveal that those who manage their finances effectively can reinvest in their art, increase their audience reach, and sustain long-term careers.
4. 📚 Finance for the People: Paco's Journey
- Paco delion is the author and illustrator of 'Finance for the People'.
- During the day, Paco helps individuals manage their finances without stress, while in the evening, he engages in music, highlighting a dual career path.
- Paco acknowledges a challenge in balancing creative pursuits with professional responsibilities in finance, suggesting the necessity to arrange one's life to satisfy both creative and professional demands.
- Despite having significant expertise in finance, Paco struggles to maintain his musical endeavors due to the increasing opportunities and responsibilities in his finance role.
- To manage both roles effectively, Paco schedules dedicated time for his creative work, ensuring it aligns with his professional commitments.
5. 🔑 Money as Power: A Creative's Perspective
- For freelancers and creatives, mastering business basics such as reading a P&L and bookkeeping is crucial to avoid financial stress and ensure sustainability.
- The book 'Finance for the People' highlights that money serves as a proxy for power, a vital concept for those who may not naturally feel powerful, like many artists.
- While power can have negative connotations, it is essential for creatives to gain the time, space, and respect necessary to produce their work, with money being a key enabler of these resources.
- Creatives can leverage financial literacy to negotiate better deals, invest in their growth, and maintain artistic freedom without financial constraints.
6. 🧠 Reflecting on Money and Self-Discovery
- Effective financial management is crucial for having the energy, time, and drive to communicate your message to the world.
- Finances act as a mirror, reflecting personal behaviors and thought patterns, thus aiding in self-discovery.
- Analyzing financial behaviors can uncover similar patterns in other life areas, such as family relations or self-worth, providing insights into personal growth and development.
- For example, consistent overspending might reflect underlying issues of self-worth, which could be mirrored in relationships with family and friends.
- By identifying and addressing these patterns, you can foster better personal relationships and enhance self-awareness.
7. 🚀 Growth and Change: A Financial Perspective
- Implementing financial strategies can make individuals feel less fragile by teaching them to cope and let go of aspects outside their control, offering parallels to therapy and self-discovery.
- Adopting healthy financial habits is akin to a fitness journey, where learning patterns in one area (like fitness) can be used as a blueprint for financial growth.
- Analyzing spending habits and focusing on saving are common pathways for individuals to achieve financial growth and personal development.
- Creating a budget and tracking expenses regularly can significantly improve financial stability, mirroring the discipline seen in personal fitness.
- Building an emergency fund is a specific strategy that provides security and reduces anxiety about unforeseen financial challenges.
8. 🎯 Finding Purpose in Finance and Art
- Focusing on control and agency can lead to feeling empowered even when overwhelmed by external circumstances.
- Engaging in small, manageable actions regularly can lead to realizing one's capacity to make a difference.
- Choosing a practical career path, such as finance and economics, can provide stability and peace of mind to oneself and family during uncertain times.
- The narrative suggests that being proactive and making informed career choices can significantly impact personal fulfillment and financial security.
- Incorporating artistic pursuits alongside a stable career can enhance personal satisfaction and balance.
9. 🔍 A Career Path Blending Creativity and Finance
- The speaker noticed the financial success in the finance industry and shifted focus to finance to support artistic endeavors, initially working at a boutique consulting firm assisting creative businesses with financial management.
- A career transition led to a wealth management firm managing over $1 billion, where the speaker learned personal finance and advised high-profile clients, revealing a gap in financial support for artists.
- This gap inspired a mission to serve the creative community, resulting in the creation of a specialized bookkeeping agency, public speaking engagements, writing a book, and launching a podcast aimed at empowering artists financially.
- The speaker offers tailored financial services to artists, providing strategic advice and tools to help manage and grow their finances, addressing a critical need in the creative sector.
10. 💭 Understanding Money's Role and Value
- Financial literacy is essential for young professionals as they often face low income and debt management challenges.
- Changing the perception of money from a burden to a tool reduces stress and improves financial decisions.
- Continuous financial education is necessary to maintain a positive understanding of money.
- Practical financial advice empowers individuals to feel more in control, even with limited resources.
- Implementing budgeting strategies can help in managing finances effectively.
- Utilizing financial tools like apps can simplify tracking spending and saving goals.
- Seeking mentorship or guidance from financial advisors can provide personalized strategies for financial empowerment.
11. 🔄 Balancing Financial Logic and Personal Desires
- Feelings of financial constraint and desire for more are normal; managing these emotions is part of being human.
- The speaker shares a personal journey of financial struggle, including being a financial planner with limited income, highlighting the reality of living with financial constraints.
- Practical advice for young people includes focusing on controllable factors, such as understanding the market where skills are exchanged, rather than dwelling on uncontrollable elements like inequality.
- Illustrative personal example: riding a bike to work and growing lettuce to save money, underscoring small, actionable steps to manage finances.
- Emphasizes the importance of setting realistic financial goals and being creative with solutions, like leveraging community resources or skill-sharing platforms, to improve financial situations.
- Encourages young individuals to seek mentorship and continuously learn from those who have navigated similar financial challenges successfully.
12. 💸 Pricing Your Worth as a Creative
- Understanding the value you create is crucial; consider how you move, inspire, or entertain people and assign a dollar value to that.
- Transitioning from a job with set pricing to pricing creative work can be challenging, requiring a shift in mindset.
- Pricing creative work involves asking for compensation directly, such as fees for writing, video creation, or live performances.
- A personal insight revealed that charging more for performances, e.g., $500 instead of $50, did not result in negative reactions as feared.
- For creatives, setting a higher price point can often command more respect and perceived value without deterring potential clients.
- Developing a pricing strategy not only involves assessing personal value but also researching industry standards and competitor pricing to stay competitive.
- Consider offering tiered pricing packages that provide different levels of service to cater to varying client budgets.
- Regularly re-evaluate your pricing strategy to ensure it aligns with the value you deliver and market changes.
13. 🦪 The $1 Oyster: Perception and Value
- Charging $500 increased respect and better treatment from potential clients, highlighting the importance of pricing in perceived professionalism.
- Clients treated the individual more like a professional rather than just someone with a microphone, emphasizing the significance of pricing in professional perception.
- It is crucial to meet a certain skill threshold before charging higher prices, as simply increasing prices without the requisite skill can be misleading.
- Charging too little can lead to being perceived as a cheap option, which may negatively impact the perception of quality.
- The concept of the $1 oyster illustrates that extremely low prices can lead to skepticism about quality, similar to concerns about food safety with a $1 oyster.
14. 🚦 Setting Yourself Apart in a Competitive Market
- Operating a small business at a loss is not advisable, unlike larger companies that can leverage economies of scale and proprietary technology to sustain temporary losses.
- Competing on price alone, especially against larger companies, may not be sustainable and can lead to significant challenges, as experienced when trying to match the prices of companies like Bench.
- Raising prices can position a business as more premium, which can actually lead to increased customer acceptance and business growth, as evidenced by the positive response after price adjustments.
- The analogy of the '$1 oyster' highlights the hidden costs and perceived value associated with low pricing strategies, suggesting that consumers may associate higher prices with better quality.
15. 🔍 Personal Finance: It's All About Perspective
- If you can't clearly articulate why a client should choose your services over others, price becomes the sole differentiator, leading to a race to the bottom.
- Being the cheapest attracts clients who prioritize cost over value, which can negatively impact client interactions and service quality.
- Identify and emphasize your unique attributes to provide clients with reasons to choose your services for more than just price, such as specialized expertise or personalized service.
- Develop specific strategies for differentiation, like offering unique financial planning tools or tailored advice that competitors don't provide.
- Use testimonials and case studies to showcase successful outcomes and highlight the distinct benefits of your services.
16. 🤔 Rethinking Financial Beliefs and Behaviors
- The financial planning industry often focuses on having experts ('we got a guy') for complex needs like estate planning, emphasizing the importance of having trusted advisors in financial matters.
- People's approach to money isn't just about financial decisions but also involves their mindset and beliefs about money, highlighting the psychological aspect of financial management.
- A common theme is that people have complex emotions like shame and embarrassment when dealing with financial issues, such as debt collection, which can impact their financial behavior.
- The societal taboo around discussing money contributes to negative emotions and misunderstandings about personal finance, suggesting the need for more open conversations about financial matters.
17. 💡 Understanding the Financial System's Rules
- Before taking financial action, it's crucial to change beliefs about what is financially possible.
- Navigating the financial system effectively requires understanding both spoken and unspoken rules.
- Informed decision-making necessitates knowledge of financial tools' history and mechanics, such as credit scores, credit cards, and the stock market.
- For example, understanding the credit score system can lead to better credit management, impacting loan approvals and interest rates.
- Knowledge of credit card terms and benefits can optimize usage and prevent debt accumulation.
- Familiarity with stock market basics enables strategic investing, potentially increasing financial returns.
18. 📈 Bridging the Gap: From Outsider to Insider
- The US enforces strict laws against insider trading to prevent unfair investment advantages based on non-public information.
- These regulations ensure executives cannot exploit undisclosed data like poor sales forecasts, thereby protecting regular investors.
- The financial system at large lacks a unified approach to equal information access, which is crucial for fair investment opportunities.
- Efforts are underway to bridge the gap between financial insiders and outsiders, making the system more inclusive and equitable.
- Many individuals feel alienated from financial systems, often viewing them as inaccessible or not designed for them, a viewpoint echoed by the speaker.
- Case in point: the push for transparent financial disclosures aims to democratize information access, allowing all market participants to make informed decisions.
19. ⚖️ The Virtue of Thrift in Finance
- Thrift is defined as the quality of using money and other resources carefully and not wastefully. It is essential for financial stability and growth.
- Thrift connects to power, as money often serves as a proxy for power, emphasizing the importance of mindful resource management to gain or maintain influence.
- The podcast is grounded in virtues and moral values, with a focus on thrift as a means to reduce suffering through enhanced financial agency and empowerment.
- Historically, thrift has been a cornerstone of economic resilience, allowing individuals and communities to build wealth sustainably.
- Modern applications of thrift include budgeting strategies, investment in education, and creating emergency funds, which collectively improve financial security.
- Thrift reduces suffering by providing a buffer against economic shocks, ensuring individuals have the means to cope with unforeseen expenses without resorting to debt.
20. 💪 Embracing Thrift and Resourcefulness
- Understanding opportunity cost and trade-offs is crucial for informed decision-making.
- Personal anecdotes like riding a bike and growing lettuce save $42 weekly in gas and lettuce costs, but these savings primarily benefit employers, highlighting a need for balance.
- Open communication with employers about financial struggles can prevent maladaptive thrift practices.
- Aligning thrift with personal well-being is essential, ensuring personal savings and benefits are prioritized over those of employers.
21. 📊 Paco's Law: Managing Spending Habits
21.1. Understanding Paco's Law
21.2. Practical Advice for Managing Spending
22. 🛒 The Buy List: Curbing Impulsive Purchases
- Consumers are heavily influenced by social media and advertisements, which are designed by experts to encourage impulse buying.
- Traditional impulse purchases were low-risk, but now, pervasive advertising through smartphones increases the stakes.
- Relying solely on willpower to resist impulse buying is insufficient; consumers need strategies to protect themselves from constant marketing exploitation.
- Implementing rules, such as not purchasing directly from ads, can help curb impulse buying.
- Creating a 'buy list' where potential purchases are listed and considered over a set period (e.g., 5 days) allows for thoughtful decision-making.
- Engaging in the process of listing and imagining the purchase satisfies the brain's shopping urge, reducing impulsive spending.
23. 💰 Allocating Funds for Financial Clarity
- Establish a dedicated account for discretionary spending by transferring a fixed amount each month to manage non-essential expenses efficiently.
- Utilize multiple no-fee checking accounts to segment finances, such as one specifically for tax savings, to streamline financial management.
- Set aside 33% of each incoming check into a tax savings account to cover tax liabilities and prevent financial strain during tax season.
- At the end of the financial year, evaluate surplus in the tax savings account and reallocate excess funds to enhance discretionary spending flexibility.
- Implementing separate accounts minimizes mental calculations, clearly defines financial boundaries, and helps prevent overspending.
24. 🙈 Confronting Financial Shame
- Financial shame often stems from societal pressures and deviating from expectations, such as incurring student debt for less lucrative degrees or accumulating credit card debt.
- To address financial shame, it's crucial to recognize these pressures and understand personal financial choices.
- Strategies to overcome financial shame include setting realistic financial goals, seeking financial education, and focusing on personal growth rather than societal norms.
- Examples of overcoming financial shame include individuals who have successfully paid off debts by changing spending habits and prioritizing financial literacy.
25. 🎨 Art and Financial Value: A Personal Reflection
- Understanding societal expectations helps in recognizing personal deviations, crucial for personal growth and mental health.
- Experiences of not belonging, like being queer, offer a framework for overcoming financial and personal shame.
- Journaling and publicly sharing personal struggles, such as in newsletters, can lead to community support and validation, despite initial discomfort.
- Feedback from others who relate to shared vulnerabilities reinforces the value of openness and sharing in personal and artistic expression.
26. 🛠️ Essential Steps for New Freelancers
- In the first week or month, actively reach out to your network to validate your business idea and identify potential clients. Specifically, ask them to purchase your product/service or to refer you to someone who will.
- Set up a dedicated tax savings account early on to manage and save for taxes efficiently, ensuring you are prepared for tax obligations.
- Engage with a small business accountant by the end of the first year. Get recommendations from friends or online communities to find a reputable accountant who can assist in managing your finances effectively.
- Utilize platforms such as LinkedIn, Facebook groups, or professional networks to expand your reach and connect with potential clients or collaborators.
- Regularly review and adjust your business strategy based on feedback and market trends to ensure continued growth and relevance.
27. 👨👩👧 Financial Guidance for Different Life Stages
27.1. Year-End Tax Planning and Compensation Benefits
27.2. Teaching Children About Money and Value
28. 🙏 Thank You and Closing Remarks
- The segment expressed gratitude to Pac de Leon, highlighting the value of her wisdom and presence on the show.