Financial expert and raconteur Vitaliy Katsenelson gives his approach to the scarcity mindset, personal finance advice that changed his life, key strategies for making a budget, why people argue about money, geofencing as a diet tool, and a Stoic take on social media.
Guest Bio: Vitaliy Katsenelson was born in Murmansk, USSR, and immigrated to the United States with his family in 1991. After joining Denver-based value investment firm IMA in 1997, Vitaliy became Chief Investment Officer in 2007, and CEO in 2012. Vitaliy has written two books on investing and is an award-winning writer. Known for his uncommon common sense, Forbes Magazine called him “The New Benjamin Graham.”
He’s written for publications including Financial Times, Barron’s, Institutional Investor and Foreign Policy. His articles are also published on his website, ContrarianEdge, and in audio format on his Intellectual Investor Podcast. Vitaliy lives in Denver with his wife and three kids, where he loves to read, listen to classical music, play chess, and write about life, investing, and music. Soul in the Game is his third book, and first noninvesting book.
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We Discuss
The value of a scarcity mindset;
- Abundance and continual consumption can lead to desensitization and underappreciation.
- Vitaliy artificially infuses some scarcity into daily life as a method in increase appreciation
Personal finance advice that changed a financial expert’s life;
Create a budget that includes:
- Regular expenses like mortgage, cable, utilities, insurance, etc
- A sinking fund: expenses you don’t see regularly but will happen in the future – buying a car, going on vacation, retirement
Be mindful about spending and consider what to prioritize.
- Money buys the most when it buys things you value.
- What is it you value? Is daily Starbucks important? It might be 15 minutes of pure delight during your day. Or it might be a habit that doesn’t really add much. The $1500 spent on Starbucks each year is $1500 less to spend elsewhere.
“You may have arguments, but you won’t have to argue about finances.“
Loose vs strict budgeting;
A loose budget is in effect unlimited spending.
- For Vitaliy this is education, music, teachers, health, high quality food, time (paying a guy to mow the lawn). A loose budget also sends the message (to your kids) that these are things we highly value
A strict budget is where frugality comes in.
- Examples given: living in the same house or driving the same car for many years
Finishing books vs stopping early;
If the main point has been made and the rest is just filler, you have permission to stop!
Why people argue about money;
- Often it’s related to our backgrounds. One person may come from an abundance of money and want to spend freely, while the other’s background may be a scarcity of money (or perception of scarcity) and they may be more anxious about/attentive to the future
- There are different levels of anxiety surrounding money. This is where a budget becomes powerful. There will almost always be compromises.
Geofencing as a diet strategy;
- The premise here is using location as a guide for activity. Vitaliy does not eat carbs or dessert while at home. When traveling, his diet is unrestricted.
Habit vs. identity vs. willpower;
How an ancient Stoic might view social media;
- 2,000 years ago, the Stoic philosopher Seneca wrote about people wasting their time, fragmenting it on frivolous activities.
- Stoic negative visualization encourages contemplation on potential adverse outcomes (to us or others). When considering the worst possible outcome, our current situation doesn’t seem so bad. In fact, it can seem pretty good.
- One of the traps of social media is ‘positive visualization’. Posts often highlight the best possible presentation of people, places, events, and things. This continual positive face can trigger a comparison reflex where the viewer feels that they are not measuring up.
- Social media isn’t inherently negative. It depends on the approach and mindset. If it brings joy, allows you to stay in touch with friends, educate yourself… great! If it keeps you in the mind of ‘I am not enough’ and is a net negative, then it’s not so great.
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