3 Key Questions to Ask Yourself about Money

Money has been around a long, long, long time which leads me to ask these 3 questions:

#1: Why are we as clueless about keeping money today as we were yesterday and hundreds of years before then?

In my work with families, I find that one of their biggest stresses is around money. Often, parents and grandparents see poor money behaviors in their children and grandchildren, habits they wish they hadn’t inadvertently passed on. To attempt to ameliorate the problem, they pass on financial information or directives without a basis in understanding and experience for the young ones to mimic.  Modeling what they see rather than what they hear, is the child’s norm.

#2: Why is money so hard to keep?

We need this, we want that, we want an upgrade. No, really, I need it…really! Because it is so easy to part with, the government makes sure taxes are deducted before paying ourselves. Keeping money takes commitment to a different paradigm.  The benefits to committing to this paradigm include a sense of freedom, and calmness about money.

#3: Are you passing on to your children and grandchildren the financial literacy you wish you had been given?

Passing on financial literacy is not something to be afraid of, timid about, or embarrassed about. The stakes are too high to risk repeating cycles of financial confusion. Financial literacy is about learning how to use the 5 S.I.D.E.S. of Money © with purpose and habit.

Please comment on your thoughts to these questions. I would love to hear from you.

man holding u s dollar banknotes and black leather bi fold wallet

Photo by Artem Bali on Pexels.com

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Smart Money Tips for Kids from 3 to 22

Without a foundation of financial competence, people run the eventual risk of squandering, spending, or squabbling over money. Because of this it is essential to impart financial competence directly and early.

Having an early and repeated exposure to real money, gives children a direct experience with money. Collect coins and sort them into various sizes so your children are introduced to money.  Have them count the total of different coins and bills as an arithmetic and financial exercise. The writer downer here is to introduce them to money itself. Kids relate to the direct experience with it.

Observe your children with money and let them experience it. Be informal yet frequent about your dialogue with them about it. Kids from 5-7 age love games. Games that involve bartering are great activities for them. In this age group introduce them to different ways money is used.  Remember the piggy bank? This is a great time to introduce the piggy bank to your children.

8-11-year old children are at a great age to experience setting limits and making choices. Delayed gratification is an important trait to develop. You may have heard of the Stanford experiments to determine the effect of immediate versus delayed gratification. Delayed gratification correlated with higher SAT scores. It also correlated with self- control.  In this age group, delayed gratification can be expressed in self-determined goals/objectives and even incentives from you.

Preteens love to make buying decisions. They can handle the concept of limits. Have them set limits for themselves. They can understand ramification and consequences to exceeding budgets. Have them make budgets, not as tedious chores, but as a fun activity with gratifying outcomes.

Teens feel the pressure of their peers. This need of belonging can tug at their financial behaviors. “But, you don’t understand, I need this…now!” is a common plea. Reinforce their sense of responsibility by having your teens communicate the “why” of their, a “why” with consequences. This is also a wonderful time to Introduce them to the concept of earning, trading talents and skills for money that does not come from a family member.

Spreading their wings and testing their independent lives, young adults are often thrown into a world of a financial tightrope on which they may feel unprepared to take on. They have so many needs and wants tugging at them. How do they decide when to spend, when to save, how to invest and donate?  This is a time for young adults, if they haven’t already, to identify what money means to them and set up a system they can follow to save, invest, donate, earn, and spend.

We Need More Money Nights at Home

At a recent Ivy League School alumnae dinner, the host asked the attendees, to indicate, by a show of hands, if they engaged in financial discussions with their children and/or grandchildren on a monthly or more frequent basis? Of the 100 attendees, how many hands do you think went up?  3 raised their hands.

What did I glean from this? That few families have “money nights” at home. Although 17 states require a “course”, only 5 states require a stand-alone semester in personal finance before graduation from high school. We are not one of them.

It is up to us, the family, to teach kids about money. As Jack Weatherford, former Professor of anthropology at Macalester college in Minnesota, and award the Order of the Polar Star, Mongolia’s highest national honor for foreigners, pointed out: “…money is uniquely human. No version or analog of it exists among any members of the animal kingdom. We have to pass on its meaning to our future money stewards.”

Then how do we talk to our kids about money? Well it depends on their age, inclinations, and maturity. As you introduce money conversations/money nights and money stewardship at home, remember to guide and advise rather than dictate, encourage rather than criticize, be consistent, be flexible, be objective and purposeful about money, keep extended family members in the loop about your financial “rules”, be open to questions, mistakes, and ideas your children might have. Encourage accountability and praise their successes. Money just needs to become another conversation.

When children experience money early they will discover, tweak, and learn from their decisions, mistakes, and challenges. They will become familiar with money and its various facets. They will experience how to use it productively, so they can become stewards of money. This is what we all want.

How is money communicated in your home? Let me know I’d like to know.

Oops, I Made a Mistake

Whether you are 15, 115, or somewhere in between, the life you are building is the life you will leave for others to remember you by.

I thought about this yesterday after I was adamant on making a point instead of understanding another’s point of view. When my perspective was called out, I paused to reflect on my conduct. In this particular situation, I realized that I was focusing on the wrong thing.  I was so focused on the point I wanted to make that I was not listening to the other person’s point.

I was embarrassed because it is important for me to live by the values I hold so dear and understanding is one of my top values.

But the reminder that I was insisting on my point, rather than considering the other’s point, was important to hear. After all, if I do not have the aptitude to give space for someone else’s point of view, I am living in a world of potential isolation, unnecessary conflict and separation.

Allowing someone else’s point of view does not mean I have to give mine up or that I have to agree with theirs. It merely means I am letting them be in their thoughts and feelings as I am in mine.

Listen for It, Listen to It, It’s There to Help

Have you ever found yourself in a situation where you have witnessed your own behaviors in action?

Here is an example: You are in your car, driving down the highway, it’s twilight, with the sun just about out of sight. But it’s not quite night. Others in their cars, like you, are heading home, perhaps distracted, already thinking about dinner, to dos, tv shows, and home conversations.

You turn your signal in to indicate your intention to move from the left the middle lane. You look to see if anyone from the far-right lane is indicating they are going to turn to the middle lane. All clear.

Then that voice, one you have heard inside your head before, reaches out and tells you not to go into the middle lane, that far-right lane car is going to move into the middle lane.  You stay where you are and sure enough, THAT car moves into the middle lane about which you had signaled your intention. And they moved over without any signal, nothing. But you knew. Good thing you listened to THAT voice. It may have saved you a trip to the hospital.

How do you recognize THAT voice? It’s a protective, sagacious, and valuable voice. Researchers at the University of Toronto, Scarborough, conducted a study where participants repeated a word over and over as they performed a test: push the button when a certain symbol flashes on the screen. As this symbol flashed on the screen frequently, it could set off and did set off impulsive responses. The researchers found that when participants could not listen to their own inner “talk”, they were more likely to act more impulsively.  The researchers said this about the study: “Without being able to verbalize messages to themselves, they were not able to exercise the same amount of self-control as when they could themselves through the process.”

Listen for it, listen to it…your inner voice. It’s there to help.

Stress Can Wreak Havoc in Your Life

When you face danger, your body’s alarm system stimulates the production of adrenaline and cortisol. This is “stress.” This feeling of stress can be valuable as the adrenaline gets your heart beating faster and the cortisol produces glucose to help you react both mentally and physically. Once the danger is over, the adrenaline and cortisol rushes stop.

Unfortunately, that is not the only time when stress manifests itself. You can also experience stress whenever something bothers you or throws your world out of balance. Whether it’s from money or work issues, relationship or communication tensions, or something else that’s bothering you, when stress lingers, adrenaline and cortisol continue to pump through the body.  This isn’t productive.

If you cannot turn off your body’s alarm system you can find yourself eating more, exercising less, sleeping less, becoming forgetful about where you put things, more argumentative and impatient, more irrational, with increased abdominal fat, blood sugar imbalances and more.  You react to these hormonal releases with a faster beating heart which can result in higher blood pressure and increased cholesterol.

Stress itself is a constant in life and it is necessary: it helps you overcome dangerous/annoying situations. But, prolonged stress is toxic to your body and this is what you should avoid/manage. With the proper tools and systems in place you can protect yourself from its deleterious effects. Exercise, healthy food habits, laughing, and focusing on your strengths and values are key components to maintaining wellbeing.

Live with your core strengths and values at the forefront of your life.  They matter.

Pass the Chocolate, I’m out of Cash: How the Brain Deals with Fairness

I find money and food to be similar in many ways.  It seems to be difficult for many people to gain control over either and it seems that both topics can become emotionally charged, quickly.

Researchers have studied both, finding that the brain can respond similarly to both money and food behaviors. Surprised? Me neither. But I do find it interesting what the neurosciences have discovered. Let me share a little of that with you.

The brain, you should know, responds to fairness. One study asked their participants if they would agree to someone else’s division of money. If they declined, neither party would receive anything. Offers were made, each amounting to receiving $5 but from different totals. Some were offered $5 out of $10 while others were offered $5 from $20+. And here comes the interesting part: the brain’s reward circuitry was activated only for “fair offers.” In this case receiving $5 out f $10 was registered in the brain as being fairer than receiving $5 out of $23.

This part of the brain, one that reacts to “being fairly treated” is the same part of the brain responding to certain cravings, like for chocolate. Why? It seems to that the brain area that is activated in receiving a fair offer is the same area that is activated when we eat craved foods, like chocolate.

For those who are interested, the regions in the brain that respond to fairness are  the ventral striatum and ventromedial prefrontal cortex.

Two Insightful Money Observations

Money is merely a tool, which means that money itself is not THE culprit. If stays where we leave it, it goes where we move it to. With that as a backdrop, let’s look at two scenarios:

  • More earnings mean more wealth       Y             N

Not necessarily as money is easily spent. Data from the U.S. Bureau of Economic Analysis reports that the personal savings rate is at about 3.20% of income with lesser income earners saving more than higher income earners. The data continued to show that we exhibit one of the lowest savings rates of developed countries; only Spain, China, and Australia save less than we do, currently.

  • Money Can Buy Happiness                     Y             N            

Yes, up to a point. Think of what that Powerball lottery could do for you! Science has researched this question and found that how we spend money has an influence on our happiness. Research shows that happiness is increased when we spend money on others more than on ourselves. Does this have to do with experiencing satisfaction? I don’t know, I am merely asking. One study, I remember reading from the Weatherhead School of Management at Case Western University, indicated that once people earn more than $200,000, their level of happiness did not increase significantly.

 Money is very personal. Being personal, it is important that you understand what money means to you, so it can be the sharpest tool in your tool chest, doing what you want it to do for you!

 

There is Power in that Talking Stick

 

I was watching a movie the other day, Tanna, set in a remote Pacific Island, and acted by the Yakel Tribe members. In an intense scene between warring parties, I was struck by their communication. Even in the heat of opinions and attacks, they had a natural and respectful ability to let each person speak, fully, before another person got up to speak. They did not interrupt. They did not use escalating threats. They listened to the speaker before making their remarks. It was inspiring to watch.

This view into this tribe’s ability to communicate with an opposing tribe, when stakes and tension were high reminded me of an incident that occurred earlier this year. In a U.S. Senator’s office, during the stopgap spending bill talks were held. Senator Susan Collins used her “talking stick” as a tool to let others in the meeting know that the person holding the stick had the authority to speak. Everyone else had to wait until that person was done speaking and the talking stick was released before one of them could have their turn.

In this scenario, the “Talking Stick” has several key purposes. The first is to allow the speaker the platform to speak sans interruption. Second, the stick reminds others that they are to listen as their time to talk has not yet come. Third, the sticks passed from one speaker to the next. But at this meeting, an interruption did occur. Instead of holding on to the stick, the speaker hurled it towards the interrupter and missed, chipping a glass sculpture instead.

Much can be learned from the power in the “Talking Stick”. It has been used for centuries as a tool in negotiations, mediations, family meetings and sensitive facilitated discussions.  It is a powerful reminder to where the room’s attendees’ attention should be centered as well as a reminder that the person with the stick has control of the message until the stick is relinquished.

If you have not used a talking stick in a meeting, give it a shot. It is amazing how it can keep meetings on track, viewpoints respected, and keep tempers from flaring and accusations from hurling.

The Hero’s Story is Significant

 

Over the holidays, I attended the annual Seattle Business Magazine’s Family Business Awards Dinner. It was a fantastic event, honoring family businesses who deserve recognition in categories such as: Best Practices, Community Involvement and Family Business of the Year.

During the dinner, Chris Schiller, Managing Director of Cascadia Capital, gave a compelling introduction to the Family Business of the Year award.

I would like to quote Chris, as I thought his words were applicable to those of us who ork in guiding and consulting with family businesses and/or their families.

Chris began his talk by saying: “In thinking about tonight’s wonderful celebration of family business, it struck me that the eminent mythologist, writer and lecturer, Joseph Campbell’s Hero’s Journey, is much like the story of family business. All of the family businesses in this room have followed a similar path to Joseph Campbell’s hero, with you or one of your family taking the risk to start a company, then embarking on the journey of building your business, meeting tremendous challenges and personal struggles on the journey, finding various mentors (maybe including the family business advisors in this room) to help you overcome those challenges, and then crossing over into a period of transformation that leads to your ultimate success as a business and a family.

For all of you family businesses in this room, you likely have not arrived yet… rather your story continues to grow with your current generation and the next generation coming up. Often the journey is more important than the destination, as they say.

As investment bankers, my Cascadia colleagues and I live in a world of left brain… financial statements, revenue and EBITDA, numbers. Often the value of a business is ascribed largely to these numbers. However, what I have learned and what drives us, rather, is the stories of our family business clients. We are able to exercise our right brain to tell our client’s story to the market in a way that we find the optimal partner that embraces that story, and thereby sees value that others do not see in just the numbers. These stories are really what drives our passion for working with family business. “

These words were inspiring for me. Thank you, Chris, for speaking them and then letting me share them here. The story of the business is so important for families who continue their businesses across generations.