A Major Financial Error is to Mistake Money for Wealth

In the mid-20th century, the great Vanderbilt houses were torn down, and while their name lives on at Vanderbilt University, the influence and prominence of the family itself has fallen out of sight almost entirely.

Although my only experience with the Vanderbilts was as school mates, I have seen destructive effects of wealth on families. Seeing these outcomes was a primary reason I decided to focus my career on discovering what works in keeping families together when money matters, and helping families find common purpose with sustained meaning when money is a cornerstone to their dynamics.

In my years of observation, study and working with families, I have made two key observations that come to play when those who amass great fortunes determine how to pass their wealth from one generation to the next.

Families that focus on the assets as the key cornerstone to their family, do what they can to protect the assets. They construct brilliant plans to offset estate taxes, to take advantage of tax laws, to distribute assets “at the right time.” The assets will be protected. However, overtime, the soul of the family erodes, and with it, the family fortune because there has been no attention to its purpose. Individuals further their own agendas which may be in conflict with the long term growth of the money. Squabbling, squandering and over spending become the ingredients to financial wealth erosion. The sole or focus was on the fortune rather than on also preparing the heirs to receive and steward the assets.

Successful families understand that merely providing a healthy checking account to next generations is not enough. They realize that there must be a bigger purpose that all family members buy into and champion. They realize that the family structure can continue strong, lasting generations. They change the focus of their perspective on their money from being owners to being stewards. They build a family culture that is passed on from one generation to the next. The family fortune becomes merely one of the tools entrusted to the family to steward.

As you think about which of these two scenarios you advocate, ask yourself this question: “Are you preparing your heirs to become stewards of wealth or merely preparing the assets to be transferred?” Why is this question relevant? It is so, because it can prevent you from mistaking money as the only component to wealth. Do not mistake money as the only component of wealth.

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The Family Story is Powerful to Children

Several years ago, Emory University commissioned a study. The study was hosted by two prominent Emory psychologists, Robyn Fivush and Marshall Duke, and a former graduate student, Jennifer Bohanek. They wanted to understand the impact of family stories to a family’s dynamics with their adolescent members.

“Family stories” the researchers wrote, “…help children understand who they are in the world.” These unique and important stories help children understand who they are and where they come from, in a different way, but akin to the DNA tests available for us to take today. Neither of these will tell us who we are going to become, but they do shed light into that which brought us here.

The power of the important story is its experiential transmission of connectivity. Before this study, researchers had an inkling that family stories contributed to a child’s well-being and identity but had not measured their ideas. Now there was evidence. The study found that the teenagers in the study expressed “…higher levels of emotional well-being, and also higher levels of identity achievement, even when controlling for general level of family functioning.” Wow!

Although this is the first study of its kind to use a Do You Know Scale of measurement, it certainly is, for some, an eye opener, while for others, confirmation, on the power of important family stories.

What is your family’s story; not the where when or how, but the story of who and the why of the family? Your family story is a thread, a  link to identity and connection. Tell it to your family.

Take Action to Avoid the #1 Regret People Have

Recently, I read an article about regret. Of course, it included the biggest regret people have, which I will disclose a little later. But first, what, exactly, is regret?

According to the Miriam Webster Dictionary, the definition of the noun regret is: “1-sorrow aroused by circumstances beyond one’s control or power to repair and 2-an expression of distressing emotion (such as sorrow).” I find those to be interesting definitions and I feel I need to add one more which is remorse or shame  not following up or completing that which I had the power to complete or repair but lacked the motivation, strength, or courage to affect. Let’s look at the etymology of “regret” to discover more about its meaning. Regret appears in old Norse as grata, meaning to weep, or groan, in the Proto-Germanic as gretan, meaning weep and in the French as regreter meaning “ pain or distress in the mind at something done or left undone.” These give me a clearer framework to work with when I hear the word regret.

In the article I was reading about regret, authored by Diana Bruk and published online by MSN, six studies were conducted with hundreds of participants. Each participant was asked what they regretted most in life. While people tended to regret their actions (current behaviors or activities) more in the short term, their inactions (things they did not do or behaviors they did not model) were regretted more in the long term.  We tend to put off, in the short term, actions, which in the long term, we regret having neglected. But all this was merely a backdrop to what people regret most.

The number one regret people have, according to these six studies is: not fulfilling their ideal self. WOW!!!!

You can avoid this regret. By knowing your values, your mission, setting your goals, both long and short term, then having a method of achieving your goals while expressing your mission and values, you will sidestep this huge regret.

And a shout out to those of you who have taken up the Life Focus System, you model the axiom of living your ideal self. You have constructed ways to return to the path, when you stray from it. You live a life of focused purpose. You reap its benefits, both short and long term.

No, Wait, Don’t Quit, You’ve Just Started

I recently read an article where the University of Scranton revealed the sobering news we really didn’t want to hear.

Many people, about 40% of American adults, make resolutions at the beginning of the year. They make them for all kinds of commitments, but the top ones, according to IQuanti and compiled from Google search data, involve getting healthy with weight loss and exercise programs, getting organized, and living life to the fullest.

Lofty objectives are set, to find that, by mid-February, people have parted company with 80% of their  resolutions, according to U. S. News. Apparently, January 12, is the most common day for resolutions to begin to waiver.

Overtime, according to the University of Scranton study, only eight percent of those who make New Year resolutions, fulfill them in a timely manner. Wow, what is going on?!

Perhaps it’s not in the making of the resolutions but in the motivation, payoff and real commitment to these resolutions.

With resolutions you have made, how specific were they? The more specific they are, the easier they are to stick to. Then building action steps to hold yourself accountable to are your best tools. But only make one action item at a time. Do not overwhelm yourself with “THE List” of action steps. Instead create the first step with a timeline, do it, report back, and add the next step. Your action steps will get you to your goal over time.

How is your commitment to your resolutions? Don’t quit yet, you’ve just started!

This Year Money and I will Be Friends

Millennials, 81 million strong, are being scrutinized by researchers to learn about their financial habits and behaviors. One study, from a USA Today/Bank of America Money Habits Poll, found that one in five millennials are not saving money.

Another survey, hosted by Fidelity, found that over half the millennials had not started saving for retirement. Instead this generational cohort are wrestling with a different top financial issue: paying off credit card debt. As Fidelity also discovered, 4 in 10 millennials they survey worry about their financial future at least once a week.

Is this a case of one generation passing on habits and behaviors to another generation? Is this because money has become harder to understand? Is it because it is too easy to spend money?

I know that when I work with people on transforming their money behaviors and habits, there seem to be three main areas around money that cause major problems. They are:

  • the inability to communicate about money without a shroud of anxiety layered over the conversation
  • the feeling of being out of control when there is a constant barrage of decisions to make with your money
  • No reliable system in place to track, tweak and oversee money habits.

My initial recommendation, if money is a source of anxiety for you, is to step back and answer these four piercing questions:

  • What does money mean to you?
  • What do you want it to provide for you?
  • How far away are you from realizing question two?
  • Are you willing to do what you have to do to make question two happen?

These are not easy questions to answer, so give yourself the space to answer these fully for yourself. The responses you come up will not necessarily change your habits with money right away. What they will do is help you to become clear as to the purpose of your money so that you can then direct your attention to the areas of communication, control and systems around your behaviors with money.

As you pursue your mastery of money, make this your mantra for the year: “This year, money and I will be friends, and not part company as easy and as often as we did last year.”

Where Do You Stand on these Two Competing Views on the Future of Money

I recently read two books with similar names: The Evolution of Money, by Percy Kinnaid, published in 1909. and Evolution of Money, by Rupert Ederer, published in 1964. They both contained nuggets very appropriate to today as the authors wrote about money morphing from a value-based currency tied to gold, to one based on credit and good faith.

 

Here is a takeaway from Kinnaid’s book: “Money has evolved from concrete objects of intrinsic worth, used as standards of value, to paper representatives of ‘words’, originated to express the unit of value and its multiples and subdivisions.”  This is a profound change where promise and/or good faith  has replaced intrinsic value.

 

Ederer, in his book, wrote that extending credit would result in more good outflow in an economy which in turn would reduce gold’s supply and reserves. He added that taking us off the gold standard facilitated exchange and progressed the evolution of money to making money more functional and emancipating it from an imposed limit.

 

Ederer also wrote about and distinguished two theorists: the commodity theorists and the nominalist theorists. Broadly speaking, Ederer surmised that the commodity theorists advocate that the nature of money itself gives it value. They appreciate the present through the past, and value the origin of money, tying it to gold. The nominalists advocate that anything can be used for money. They appreciate the present by ignoring the past, and are divorced from money’s association to gold, believing money still has value. They point to the cultures where gold was never part of their money system and yet these cultures flourished.

 

Today, with traditional money, cryptocurrency, bitcoins and other types of currency in development, along with easing of credit, it is fascinating to listen to those on either side of money and its future value. Where do you stand? Should the future of money be based on solid ground like gold or shifting sand like new currencies, when it comes to “money” and its value?

A Look Back and a Peek Forward

As 2018 closes its remaining open doors , I reflect back on those who have made my year the satisfying one it has been. I appreciate your journey to elevating that which matters and to strengthening the world of legacy, life and money matters.

 

Thank you for your support of the work Focus and Sustain promotes.

Thank you for your commitment to significance and purpose.

Thank you for sharing your stories of success and the weighty challenges you faced and dealt with.

 You have given me great insight with the conversations we have had.

 

You have given me an opportunity to think more clearly with the questions you have asked and the stories you have shared of your own journey on creating, building and sustaining  strong legacy families, lives with purpose, and powerful money behaviors.

 

You have been an essential ingredient to making the circle of Strength and Significance mightier than it was when this year began.

 

As I peek into the year ahead,

 

I wish you a Meaningfully Focused 2019

Give Your Family Its Wings

Are you building your wealth only to see it gone by the time your great, great grandchildren are growing up and asking about their roots? Most families do not keep ancestral footprints. You can change that by creating a living and engaging family history, footprint, and legacy.

According to research done by The Williams Group, who researched families of great wealth,  70% of families with  assets and stories, values and meaning, will find their money gone by the end of the 2nd generation. Shocking? For those 70%, probably yes.

The research continued to find that 90% of families are unable to have their wealth pass on beyond the third generation, in other words, beyond their grandchildren.  Why is this?

Families survive and thrive not by money transfers alone, the above statistic evidences that.  Families stay together because of a “why.” This “why” is the glue that voluntarily keeps them unified. This “why” includes the history of who you are, where you came from, what shaped you. It is your family’s living legacy.

Consider this: the etymology of Legacy according to the Online Etymology Dictionary stems from the 14th Century French: “legate-body of persons sent on a mission”, and from the middle Latin “ambassador or envoy.” Give your family its wings by creating its legacy. This will keep them connected for generations well beyond your initial contributions.

You Need the Right Focus to Live a Life that Matters

As you may know, the concept of purpose and its practice is key to happiness. Purpose is difficult for many people to grasp because we are encouraged to be constantly on the go, and to fit in, neither of which speak to purpose. It is easy to wander through life and look back at an advanced age and wonder: “What happened? Why am I unsatisfied? What was my purpose?”

What is purpose? The Etymology Dictionary says that “purpose” stems from the 14th century Anglo-French purposer, meaning “to design.” However, purpose did not just appear then, it had already played an essential role in Asia, the Middle East and civilizations going back millenniums. Purpose is a cornerstone to living a life that matters.

Author and co-founding partner of the Australian company, Sonder, Jonathan Hopkins, wrote in a blog wrote: “Successful organizations (like Nike, IKEA, Ben & Jerrys, Lorna Jane, Apple) all have an idealistic purpose which is followed, worshipped and preached by its employees and customers alike. Without a powerful purpose, leaders will struggle to motivate their employees and customers will struggle to find a reason to connect with the organization.”

What is your purpose and how are you expressing that in your community?

A Profound Quote from 1688 to Mull Over

Back in the day, this day being 1688, the poet, philosopher, and author, Jose DeLa Vega, wrote a book called Confusion de Confusiones: Portions Descriptive of the Amsterdam Stock Exchange. It is considered a masterpiece and the oldest book written about the stock exchange, then, the “leading center of the world.” The book is rare with only a half-dozen copies known to be still in existence.

Confusion de Confusiones is centered around the following characters: the philosopher, the merchant, and the shareholder as they bring their questions and share their knowledge, and perspective of the market. There is a passage early in the book which I want to bring to your attention: “Truth is not hurt by being hidden. It is hurt by being altered. “…Truth is not violated by those who hide it, but by those who alter it…” This resonates strongly with me as I try to decipher what is fact, as I try to understand various views and perspectives of the same experienced or witnessed event, as I try to separate what is real from what is illusory.

In the spirit of honoring your journey into meaning and significance, relevance and understanding, I give you DeLa Vega’s words to mull overs as you build your life of significance, searching for that which resonates true for you.