132 | Values-Centric Financial Planning | Self-Awareness For Financial Independence | Katherine Lioala

Today we’ll be talking with a guest who’s an incredible career as well as a financial manager, career coach and a financial manager. Her name is Katherine Loila. Welcome Katherine. Hello, thank you for having me. Yeah, so let me introduce you. Katherine is the founder and CEO of concentric Private Wealth. He believes that financial choices must be made to personal values. He has been quoted several times and recognised national publications, The Wall Street Journal and investment news. And she recently collaborated with CNBC in their new project, invest in you, ready, set grow. She’s a certified financial planner. She’ll be here with us to show us a little bit more about her career and project and share her knowledge about financial planning with us.


All right, Katherine. So can you take us down the memory lane and tell us a little bit about yourself? How did you get started in financial planning and what was that part for you? What was that journey for you like?


Well, I technically started in financial planning right out of college, there was an alum of the university that I attended, who thought that I would be a really great fit for the industry because I had financed and paid my way worked my way through college. So there was a lot of skills That I had learned by be very in the know with what was going on with tuition and day to day expenses, and had become very strategic. So he thought that I would be a very good fit and make some introductions. And I began the interview process for that. But truly my real beginning really goes back to when I was a child. And the experiences that I had, I was the oldest of five kids and a single income household. And we didn’t have a lot of money. So my parents were very, very frugal at times, but they also wanted us to experience the world. And so I grew up in this family. Well, yes, we definitely had challenges from a financial perspective as well as family challenges that happened with every family. But I had this opportunity to really become aware of money at a young age, as well as become aware of opportunities in the world. And that’s truly I think, where my start began in terms of entering the financial world.


That’s awesome. You know, there are a lot of entrepreneurs and a lot of tech startup founders, and many of them are bad. And so I’m, I’m curious to know, what kind of learnings did you get in your childhood so that, you know, we can learn from that and maybe incorporate that into our kids lives as well. So if you can share some, that’ll be great.


Sure, well, if you had asked me that same question, about six and a half years ago, I think I probably would have had a little bit of a different response simply because almost seven years ago, I wasn’t a parent yet. Now today, I’m a parent of three little kids. And something that has become much more clear to me now as a parent, is how much you got to go a little bit with the flow and that each child is different and that there isn’t one thing that fits every situation. So a message to everyone listening who is a parent is really wanting to instil lessons Every child is to know that there isn’t a one solution that’s going to fit all kids. I’m actually in the process right now co authoring a book with a few other advisors. And that’s one thing that we are really hitting on because we’re talking about how to encourage parents to raise money, smart kids, who also are going to be leaving or excuse me, leading a mindful and fulfilling life. And that takes into account a lot of different dynamics. One thing that really resonated to me as a child, is that it’s really important to give your child the opportunity to experience adversity. Now, I’m not saying the message to experienced trauma. So sometimes when I’ve said adversity to people, people immediately respond with I don’t want my kids to experience some of the really hard challenges that I’ve experienced, and they’re referencing things that had created trauma in their life. What I’m talking about is putting your tenants in a position where they actually Actually can want something where they can feel who they are, where they can go out and get everything I find so often that with adults during senior level positions, and especially entrepreneurs, that they don’t want their kids to struggle. And yet, so much of what has put them in a position that they are today is because of what they learned during those moments and periods, sometimes their extended periods of struggle. So, for me, one of the things that was really helpful as a challenge, you know, this is actually in my high school years. I remember coming home from school, one year when I was a freshman and telling my parents how there’s a school trip to New Zealand and Australia. Now, I had never even been on a plane, much less to California. So the idea of me going from the Washington DC area, all the way to Australia was pretty big, but the idea of health That was going to actually be paid for when my parents didn’t have extra financial resources was also another component. And what my parents said to me was really key. They said, yes, you can go. And we will support you doing everything that you need to do to be able to earn the money for you to be able to go, but we’re not going to be able to financially support you in. And that was about a 1415 month timeframe. And what I did over that 1415 month timeframe was work a tonne of hours. Now some people from the outside looked at that and said, How can you allow your daughter to work as many hours as she’s doing? I was hustling, babysitting and lifeguarding and coaching as a soccer referee. There was on top of the activities that already has a school, but I wanted to get on that plane and go outside of the world that I had been exposed to which was green so many ways, but I knew that there was something bigger as well and I I’m very happy to say that I was able to earn all the money to get on that trip. And that trip in itself was really a pivotal point of my own life journey and recognising how much I wanted to be part of this bigger world and what I could do if I set my mind something, there’s of course, also lessons that I learned as a child as well, you know, some of those were not being able to, for example, go to a movie if I hadn’t earned the money to go to the movie. Now, my parents would pay at times for those things, but it’s not where I just got to do every single thing that I wanted to do. I understood that money was something that was literally not just sitting in a big bucket, you can pull out of it without putting back into it.


Yeah, that’s, that’s excellent advice. And yeah, I mean, I’ve worry about that about my kids all the time that I don’t want to give them everything and make it so easy that they don’t have a drive because as you rightly put it, you know, all those struggles that you go through in life, they actually shape your character and and if you learn Money skills early on, it’ll serve you well, in the latter part of your life.


So, and also, you know  it’s also just to add a little bit, it’s also not just the money skills and money skills are really important. But the bigger opportunities that I think that sometimes we are not giving to our children when we are not exposing them to the reality of numbers, is the ability to create an especially for entrepreneurs, that’s such a special gift to had and to be able to nurture over time. That ability to create is often given that extra candling when there are opportunities that are out there. And if we’re not giving a child the ability to see opportunities, then they don’t have as much opportunity to really be able to create, and truly one of the biggest ways that parents can help their child is through putting them in positions of observation. And demonstration, especially in this world that we live in where technology has given us so many efficiencies and ability to do things without having to carry around for example, cash or a chequebook. But at the same time, that’s also taken away the relationship experience or its own, which is also often why people are overspending. But also for kids,  you know, a kid doesn’t necessarily see that exchange of money for another type of good or service. So we have to make sure that we’re creating opportunities for a child to understand how the world works. Otherwise, all of a sudden, they’re an adult, and they start having money problems, even if they’re incredibly intelligent, partly because they just haven’t actually been able to build that relationship with how money works, the dynamics of it in their day to day life.

Yeah, completely agree. And one more thing I also want to point out and completely agree with you that crowd Different countries and experiencing different cultures, I think that also is a very fundamental thing that that shapes your character as, especially as a kid, you know, you get to see how other people live. And it expands your sort of frame of reference and and your and your thinking, but would you agree with that?


100% agreed. And this is something that for parents who may not necessarily be comfortable with travelling, which I’m a big, big believer in travelling outside of the country that we all have resigned in. But it’s also something that we can do in a local basis. So for example, if you have listeners who typically are going to one type of spot for a vacation, consider maybe going into a different type of spot, a different type of vacation experience. Maybe it’s one that is more service oriented, and there’s components of helping out a community that may not necessarily be as well served. Maybe It is taking a day or two out of the vacation and going into other parts of the neighbourhoods that you’re travelling to, to see what really the majority of the community is living like and talking to people and seeing what their lives are like, as opposed to just the resort vacation. I definitely again believe in travelling outside of the country that we reside in just to see how other people do things, as well as different mindsets and philosophies. But it’s one that we can do really in a local way, even if we’re not on vacation, so that our kids and ourselves can have I hate to say reality check, but in a way a reality check that there’s a lot of ways of living, and there’s a lot of ways of thinking and there’s a lot of ways of creating. And truly there’s such a power that can come when we can integrate all those different things together.


Yeah, completely agree. Awesome. So now let’s move on from gates to grown ups. Because, you know, that’s our audience. So let’s talk about financial planning for for grownups and I know that you focus on value based choices. And you think that those are the best strategies for financial planning. And, again, you know, we are, we are trying to serve entrepreneurs and startup founders. So, can you tell us what are some of the strategies that entrepreneurs or startup founders they can implement in their personal finances or the or the company finances to make sure that they manage their money? Well?


Absolutely. So when we’re talking about adults and financial planning, what recommendations make sense for each individual person and for the company that someone is running is going to be unique and specific to that individual situation. But for every person as well company, it is so key to understand what is at the core of the Who I am or what we are, we’re talking about a company. So often we see complexities and planning because someone is planning in a direction that is not aligned with what is important to them. And so it’s really key to take moments, every single year and throughout the year, it’s really focusing on what’s actually important to me what is important to our company? And are we aligned with our strategy with our marketing with everything else that we’re doing. Because if we look at, for example, on an individual basis, and we look at someone who has, let’s just say exited a company 1238 times whatever it may be, there might be a tonne of financial success in terms of the amount of money in the bank, that is great in so many ways. That does not mean however, that that person is financially independent, or that that person is fulfilled. That person might be chasing something that has nothing to do with what actually is bringing them joy. And so when we talked about financial independence, what we’re talking about is the ability to not be dependent on a certain lifestyle or type of work or exit from the company that you founded to simply be able to pay your bill. financial independence is being able to Yes, pay your bills, and to be able to live the way you want to live today and tomorrow, but it’s also about how you feel inside. And that’s a big part that’s missing for more people than not. But the good news is that that is something that absolutely can be addressed. You see that happening with companies to you know, so often companies are having a lot of success on paper. But often, what they haven’t really focused in on Is Who are they as a company, you know, what ultimately is their product or their service. And that’s easy to kind of go in a different direction because they might be chasing after the shiny thing or social media says one thing or their competitors are doing one thing. But at the end of the day, the company was may may have been founded to serve a particular group and just kind of got all over the place. So again, it’s really key to focus on values. It’s also really key to focus on strength as an individual for just focusing on our values. And we’re not taking into account what our strengths are, we might be creating more stress for ourselves and anxiety, because it’s taking more time to do things. And we’re not necessarily as engaged in the experience, because we’re doing things that aren’t really aligned with what our gifts are. So that’s really key. So it’s it’s about blending the value us, and distraint Kherson, as well as understanding what the financial dynamics are of them are today, that there is a strategy that can be done implemented, that will serve them today, but also allow them to be in a position so that they can continue to evolve as a person and to live that life of financial independence.

Yeah, no, that’s, that’s so true. And incidentally, you know, I also focus a lot on, I mean, through your life experiences, you learn these things that money and wealth accumulation is not the end goal. There is something deeper there. So unless you address that sort of deep sense of why you’re doing what you’re doing, it may not really lead to what you’re truly seeking. So I’m completely aligned there. So now diving a little bit deeper on an individual basis. You I know that everybody’s situation is different. But do you think there are certain frameworks, certain formulas people can implement in their lives in terms of, you know, where should they how much should they save? How much should they invest? You know, like something that, that they can practically implement, you know, there could be parameters, they can tweak, maybe, you know, somebody can save 10% of their income or whatever. So, can you give us something concrete in those terms?


I would say, kind of, because how much someone needs to save or invest has so much to do with the place of life that they’re in right now. For example, if I were to just say percentage, that percentage might be way lower than what someone should be adopting. And I find that this is often the case, because they haven’t been doing anything for so long or they’ve invested in companies. And those companies have not necessarily come to fruition or they’ve so much locked up in their own company. And they don’t have liquidity. So I will give you a few parameters. And one of those is beginning with liquidity. And that it’s really important that from a cash perspective, that there is liquidity that is going to allow that person in cash to be able to support themselves. This also applies to companies in the event of a rainy day situation where there’s a need or an opportunity. So typically, when we’re working with entrepreneurs, we actually usually see a higher level of cash need, often closer to a year’s worth of total expenses. But sometimes that can be as low as three to six months. It really depends on again, the person, but often with entrepreneurs, we see that closer to a year on top of cash, we often we also believe that it’s really important that people are not just saving and things that are retirement oriented, meaning that they can’t take money out until a specific date that is associated with a penalty. Now, we do Believe in investments that are earmarked for retirement. But at the same time, we also believe that life is very, very long and things happen before people stop the formal working years. And for many entrepreneurs, including myself, many entrepreneurs don’t necessarily have a specific end date where they’re no longer going to be working, because work for them is part of what fills them. That creation, that ability to beat impact, create new things, is something that gives them that fire. So we believe that it’s also important in addition to cash to make sure that there are liquid short term investments that are easily accessible, and are there for that person. So again, that they can navigate as they choose to evolve over time, the amount that needs to be not as completely dependent on the person. Another piece that we also recommend, and this is something that I would say is a pretty strong guidelines.

We recommend that all people every year of their life, invest five to 10% of their gross income. And then I don’t mean in the stock market, I don’t mean in cash. I don’t mean in their house and I don’t actually even mean in personal care, such as getting your hair hair done and or clothes that you’re purchasing. I mean money that’s being spent, so that you can, as a person continue to develop, whether it’s working with a coach, whether it is trying new activities and interests, picking up a hobby, being part of a sports team or an art group, whatever it may be, that is super key, so that that person can continue to explore who they are, be able to evolve as a person to be able to be fulfilled and to be able to navigate life. So those are, I’d say the base on guidelines. Another piece of housing and debt overall is, in most situations, we are not wanting to see the total debt situation of anyone be more than 30% of their gross income. But for some people, that’s going to be still too high the number but that would be the that would be the highest in terms of total debt.


Well, that does include your mortgage as well.


Yes. Now, okay.

There is exceptions. I will say there are exceptions. And with entrepreneurs, that is something that in terms of debt when it comes to whether it be working with investors or different plays that people are making with a company, that’s where I will say there are exceptions. But in general, we often see that people are doing really well financially in terms of how much money that they are making or how much money their companies have sold for. But often we see that they’re personally strapped to a lifestyle because of the things that they are buying that are outside of their financial means, and often are not actually even bringing them joy. So the 30% is a guideline. It’s technically a little bit higher than that if we take into account things like cars and looking at some smaller transactions, but it’s something that the 30 to 40% is kind of like the next guideline. But I really like to focus in on the 30. Because often we see that people have not accounted for all the maintenance related items that come with the debt that they’re carrying, whether it’s the interest on the cars, and homes or whether it’s the maintenance of the properties or emergencies. I just have And along the way.


I see. I see. All right, and I was going through your content. And one of the things that struck me was that you don’t believe in budget. So can you that’s kind of unusual. And I’m really interested in understanding the rationale behind it. So can you unpack that for us?


Sure. Well, I do, I want to clarify that I believe in budgets for projects. So if, as a business owner, you are, for example, going to be launching an initiative or you are going to be let’s just say renovating a building that your team is working out and things like that. That’s where budgets definitely makes sense. And you have to manage those managers very closely. And I’m okay with having a working budget overall, but the reason I don’t believe in budgets is because I look at them often like diet. dizer things that people are often engaged in, but they’re not actually embracing the lifestyle. We believe it’s extremely important that people are aligning their spending with what is important to them. As opposed to studying the restrictions per category based on some person who said, this is how much you should spend. In one particular category. We have clients to spend a tonne of money on for example, areas like food that would be way outside of what anyone would recommend for a budget around food. But those clients, for example, might really value entertaining or they might really value in everything that is organic or plant based, those budgets are going to be higher. Now, that same person might not necessarily value travel or buying a certain type of clothes or whatever it is. We believe that we’re spending it should be focused On you spending highly if you have the resources in the areas that bring you true deep joy and fulfilment, and other areas that don’t, that you don’t spend, and if anything cut significantly in those areas so that you have more flexibility in the other areas. That doesn’t happen. I just creating a budget, we need to start with understanding where is our spending. So we actually believe that people should, and this is I mean, all of your listeners can do is to track spending per category per month. Now that can be a lot for any one person to just jump into doing. And there are software systems that can help with that, but they all require some work. So what we would suggest that people initially first look at is take two to three categories and track those every single month and see how much is actually the instant it’s almost unanimous across the board. When we were with people that they’ll tell us that they’re spending is X amount of dollars. And then we look at their expenses, and it’s several thousand dollars more per month. That’s one of the beautiful things about math is it does have to add up. So money coming in, and money going out, there’s a place for all of it. But for most people, a lot of money is going through the cracks in terms of their studies, whether it be through random purchases that they’re making through things that are connected to some type of subscription or payment process that they have. But the key is that we really want to know where is people money going, is that spending rain and joy? If it’s not, then taking some steps back and shifting it so that it can be aligned, it’s never going to be completely perfect. But there’s certainly efforts that can be made so that the spending is aligned with who that person is and bringing them clarity and competence. Now, a budget can be created after the fact Similar to someone who is looking at living a healthy lifestyle and say, Okay, I’m going to let’s just say, Be plant based. But I’m only going to eat an animal protein, let’s just say, five days a week, one time, or three days a week, or whatever it is, and so that there can be some checks and balances for that. But we don’t believe in starting with a budget, because starting with a budget is often about setting restrictions to get to a place where they think that they need to be, it’s not starting with who the person is and what the actual reality is.


That’s, that’s a very good point. Now, one of the things I will bring up here is, you know, I completely agree with you that you should really focus on things which bring you to joy and happiness. But there’s a component of self-awareness here, right? Like a lot of people don’t even know what exactly are the priorities for them in life. So, I mean, they usually go with the normal flow of flow of, you know, buying, buying some clothing, some recognisable brand names, eating out going on vacation, but they never sort of step back and think whether this is something that they’re just doing because that’s the norm or is it truly, that this is what they want to do? What is your experience in that regard? Are people aware of their preferences, their wants and their desires or you’re completely on point. So we agree with you.


Self Awareness is really key for any individual can really do this work on their own, but we have found as part of why clients actually work with us directly because they need to be loved. And so it’s something that we encourage everyone and this applies to all of your listeners. Especially as burner because as entrepreneurs, we are often leading teams, we’re leading the initiatives, we are leading with the ideas of what’s coming next. But we don’t necessarily always have that person who’s leading us. Now we’re big believers and people working with someone who’s going to lead in financial strategy, which we believe should also have a component of the self awareness. But if someone isn’t ready to get to that place yet, and there are certainly many advisors who don’t have that self awareness component built into it. So that’s a key thing to look for someone trying to engage in that. But at a minimum, we would recommend that every individual every entrepreneur, figures out a medium that will help them begin to explore these things. So it could be something as simple but as important as journaling five minutes a day and beginning to do Write down their true thoughts, whether it be in a free list or not, whether it be in a paragraph format, but not really the rehash of the day, but more what are they actually feeling and beginning to get some of those thoughts from your head on paper. Sometimes that can be done by using an app and just talking while you’re in the car, about what your thoughts are, that might be a more efficient way for some people to get that out. For others, it could be that they’re working one on one with a therapist or a coach, and making sure that they’re beginning to explore these things that are important to them. The key is that we cannot expect that ourselves are going to be able to always effectively lead ourselves. There’s just too many things going on especially as entrepreneurs and we are having so many ideas and people around us that we are supporting


Yeah, that’s so true. Well, this is a this is such an interesting topic. And very important one at that because at the end of the day money is what moves this world. So he’s listened to this advice. It has, you know, you’ve shared so many good points, tips and strategies, please do incorporate these into your lives and, and prosper. So thank you so much for being with us today and sharing your wisdom with us. Now, before I let you go, can you tell us how people can reach out to you?


Absolutely. So you can find us on our company website can send your private wealth which is www dot concentric, p as in private w as in wealth.com. You can also follow me on LinkedIn where every Friday I have a video up that is really helping people live financially independent life thinking about mindset and health as well. And that is hashtag financial fitness Friday. And then we also have the social media platforms on Facebook and Twitter as well at Katherine Liola.


Awesome. That’s great. Thank you so much for being with us. Thanks for having me. It was great. Thank you. All right. Great. Thank you so much. That was awesome.

Links And Mentions From This Episode:

· Katherine’s Website: https://concentricpw.com/

· FREE MindSparkers’ Inner Game Mastery Accelerator Series: http://mind.innerget.com

· FREE Startup Founders’ Technology Accelerator Series: http://tech.innerget.com

· TetraNoodle professional training: https://courses.tetranoodle.com

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