Get Past the Fear and Loathing

Let’s face it, talking about personal finance can be a challenge in our world.  As children many of us were not exposed to how money really works and how to manage it because our parents either didn’t teach us or they didn’t know themselves.  This cycle continues to repeat itself as it has for many years now and it’s something that needs to be addressed.

Why is this topic so uncomfortable?  Why is it so difficult to have a real conversation about money?  The short answer is fear.  Fear of looking stupid, fear of feeling socially awkward, fear of alienating friends or family, and so on.  It’s a big hurdle to get over this level of socially engineered fear of the “money talk”.  But we need to get over it.  This is not an easy feat, but the mild discomfort early on will open up new possibilities in the money management part of your life.

In addition to this general fear, there is a very deep-rooted feeling that somehow money is bad.  Yes, this is crazy talk, but let’s get it out in the open.  I’m not going to pretend to know what’s buried deep in your psyche, but take a minute to think about what money means to you.  Think about how you see wealthy people being depicted in TV and movies.  How many of them look like the hard working, tax paying, charity supporting people we know in our real lives?  Few, if any.  The typical stereotype is one of a greedy Wall Street tycoon, and this has had an impact on the way many of us think about money.

The simple, but not easy, solution is that we need to change the way we think about money and what it represents.  It’s not overly complex or scary and, despite what some recent political followers would have you believe, money is not “the root of all evil”.  In fact, money is just a certificate of the value you have delivered to another human being.  If you did not steal the dollar in your hand, you earned it in some way.  If you happen to have more than me, then you have likely served more people and/or delivered a greater value.  Conquering our fear and re-thinking what wealth represents will lead to more open discussion and a more direct path to the wealth we desire.

The point is not to get everyone to wear a big necklace with their net worth for all to see, it’s to ensure we are all comfortable talking about money when the time is right.  With our loved ones and our advisors, in particular.

For additional thoughts on the virtue of wealth and prosperity, check out Rabbi Daniel Lapin’s book Thou Shall Prosper.  Or just contact me to receive the Tom’s Notes version.

Grammie’s Gift

“Some people buy teddy bears, but this is something that will make a difference in his life as he grows”.

This was the message from my great-grandmother roughly 42 years ago when she delivered my first birthday present.  The gift was a whole life insurance policy.  Grammie Gladys was a wise lady.

While we weren’t talking about the Perpetual Wealth Code™ (by name) back then, the principle still existed.  Save 10% of what you earn and don’t spend more than the rest of your check.  Pretty simple.  The connection to Grammie Gladys is that her gift – a whole life insurance policy – is the gold standard for where to place that 10%.  As the master of the back office of Granddad Jim’s growing business, she had a good idea how to save and use a dollar more than once.

The legacy that Grammie Gladys has built now extends to another generation.  Her great-great-grandson turns 11 years old today (happy birthday, Nolan!) and he has been the proud owner of his own life insurance policy for several years.

Money management and wealth creation is what we teach our clients and this 42-year-old story is a nice anecdote of how to both pass on what you have learned and what you have earned.  There will certainly be a post or two in the future about exactly what we have done with these gifts, but there is a second part to this story.

Shortly after the policies were delivered, on both Nolan and myself, medical conditions were discovered that would change how the insurance companies thought of us.  I was diagnosed as a Type I diabetic, and Nolan was found to have a heart condition with the shorthand name of SVT.  Had these conditions appeared prior to being insured, we likely would not have been insured at all.  This has been a tremendous blessing to both Nolan and me, and Grammie Gladys was spot on when she said, “this will make a difference in his life as he grows.”

The choices of gifts for children (great-great grand, or otherwise) are nearly limitless, but I would love to talk with you about how to make a difference in your loved-one’s life as they grow.  Please reach out with questions or comment below.

Love you, Grammie.

If you earn it, you can manage it

A while back I attended a conference called the Wealth Summit and it changed the way I think about “wealth” and money management.

The presenters were great, the wealth information spanned a wide range (not just money), and the energy in the room was very positive.  As positive as this experience was, the most profound memory I have from that Summit is a quote from the 16-year-old daughter of one of my friends.

She said, “I’ve realized that if I’m good enough to earn the money, I’m good enough to manage it myself.”

Kudos (and thanks) to my buddy for including his daughter on this journey.  This simple and very insightful statement gets to the core of what limits people in all areas of life, including finance.  The thinking that saving for the future and growing our own wealth is something that needs to be left to the “experts”.  The thinking that advanced degrees and letters after a name provide the insight absolutely needed to manage money.  Simply, the thinking that without these things, we aren’t good enough.

If you are reading this post, you are capable enough to handle your own funds.  Just start with that.  You don’t need a professional money manager earning 2% on your cash.  In fact, you can become your own money manager and earn that profit yourself.

Here are a few simple guidelines to get started…

Don’t spend more than you earn.  Yes, this seems like a no-brainer so forgive me.  There are plenty of people out there who need to be reminded occasionally that if they earn $100, they should not spend $101.  No judgment, just a friendly reminder.

Follow the Perpetual Wealth Code™.  The 10-20-70 principle guides us to pay ourselves first (save 10%), limit our debt payments to 20% of our income, and allocate the remaining 70% to our lifestyle.  The first step is the 10% savings, so start there.  If you don’t have any debt (car/student/credit card) payments to make, save 30%.

Let your values set your budget.  Once you have calculated your 70%, decide what you truly value.  You should actually decide the values piece of the puzzle first, but you get the idea.  I have friends who love Game of Thrones on HBO so it would be sacrilegious to even suggest that they cut back on their cable bill, while I have others who don’t even own a TV.

However you decide to allocate that 70% of your income, just make sure it lines up with your values and not someone else’s.  And when it comes to the 10-30% number, remember our 16-year-old sage.  You earned it, you can manage it.  Reach out to me to talk further about the Perpetual Wealth Code™ and how to make it work for you.   Also, if you are interested in seeing the Wealth Summit first hand, click here for details on the next event.