When Money Falls from Trees, Don’t Let the Runoff Stream into the Gutter

Money doesn’t only fall from trees; sometimes it pours from the leaves themselves.  There are so many stories of sports figures, politicians, and IPO victors who went from barely getting by to amassing fortunes. I think of Roger Federer, the winner of 17 Grand Slams in tennis, who renewed his contract with Nike for life and former President Clinton, who purportedly made $35,000 a year while governor of Arkansas and has made over $100,000,000 since he left the White House and Steve Jobs who amassed his fortune with Apple. None of these people came from homes that were accustomed to having a lot of money. Suddenly they had money…a lot of it.

But just because money falls from the trees and sometimes even more so from its leaves and falls at your feet, does not mean that you know how to tend to it.

What happens to money? For the most part it is spent Mint. Com reports that 25% of MLB, 60% of NBA and 78% of NFL players file bankruptcy within five years of retiring.  These are people with professional advisors and handlers who still go through their money like it will never stop pouring on them.  Research tells us that 70% of families lose their wealth by the end of the second (your children) and 90% lose their wealth by the end of the third generation (your grandchildren). There are those who inherited fortunes and lost them; people like Barbara Hutton, heir to not one but two fortunes, her father’s investment house and her mother’s claim to the Pillsbury estate or Anthony Marshall who went to jail at age 89 for stealing millions from him other, Brooke Astor.

Is this to be expected: money falling from trees and then money falling out of your hands?  Yes, when money is an entitlement. No when money is a responsibility.  How can you support responsibility and restrict entitlement? I have found three elements to consider. The first is: Begin early. Learn the 5 S.I.D.E.S. © of money (spend, invest, donate, earn and save) and self-direct that money to those 5 S.I.D.E.S. © while young so you can forge strong and personally supported habits early. The second is: Conscientiously rewire your brain so that it incorporates these five “sides” into your daily life. This will take time. It may even include some missteps. That’s okay. Just doing it will reap great rewards.   Third: you have to prioritize these 5 “sides” for the purpose of limiting yourself in “sides” you know you may want to over indulge.

If money can pour from the trees, you don’t want to see it streaming into the gutter, that gutter where your uncontrolled habits with money run away from you.

Tell me how money works for you in your life. Do you use the 5 S.I.D.E.S. © of money blueprint to guide you? If so, how? If not, why not. Leave me a comment. I’d love to hear from you.

Advertisements

I Grew Up when I Integrated the 5 S.I.D.E.S. © of Money into my Life

The 5 S.I.D.E.S© of Money Theory has served me well. But it didn’t happen overnight.  When I was a kid I was given an allowance. With it I felt a sense of responsibility. I was now like my older brothers who of course, knew what to do with their money. I would follow their lead (not really knowing what their behaviors were). They were older. They must know the right thing to do with money.  With an allowance I felt a sense of ownership. I had crossed over from the world of playing with stuffed animals and crayons to being trusted with something grown-ups and even more importantly, my parents used and seemed serious about. Surely I would also follow their lead. And finally I felt a sense of freedom. I could do what I wanted with this money. And what exactly did I want to do with this money? I wasn’t sure but I knew I had to be wise so my parents and brothers would be proud of me. I couldn’t spend it ALL on candy and comic books.

 

With my first allowance, my Mother gave me a savings book. She told me that I would have to save some of my allowance. Although initially disheartening, as soon as we went to the bank, and the teller treated me like a member of special “club”, I was hooked. As soon as I learned that with every dollar I saved it would gain interest, I was a believer. Even more, I wanted to add to the savings to have it grow faster. I wanted money!

 

But at the same time there was a pull tugging me to another direction. I wanted to know what my brothers spent their allowance on. I quickly found out. My brothers loved comics. With their big box, big enough to pack a refrigerator when empty, I found a massive collection of comic books. It was fantastic. I had early reading material at my disposal. I found my favorites and with my allowance wanted to continue the habit which I was picking up and my older brothers were getting out of.  So I bought comics and with comics had to come candy. So I bought candy. Overtime and without a lot of introspection, more of my allowance went to comics and candy and less to savings. I rationalized it by asking for money for Christmas and birthday, money I would put into savings to make up for my own lack of allocating my allowance.

 

This behavior became a habit and one I continued until I was the one dependent on my own earnings. Then I saw the consequence of spending so freely. I didn’t have enough money for what I wanted. I began to save ferociously and spent only on necessities like rent, food, and personal items I felt would last a long time. If I wanted an expensive or special item I would ask for it for my birthday or I would save for it. I used cash and did not go into debt. Before long I had the savings element down…as a belief.

 

One Christmas, as a young adult, I came home with a brilliant idea: instead of giving each other gifts for Christmas I wanted to give our gift money to a family chosen charity. Well, that idea landed with a quick dismissal and a big thud. That wasn’t going to happen, not at the expense of gifts my brothers had planned or strategized and petitioned for. However, what this experience made me feel was ostracized about giving. That part of my 5 S.I.D.E.S. © of money went underground for years.  When I gave, and it was often, I gave anonymously. And I saw how it greatly benefited the people I wanted to impact. I became a believer in giving as well.

 

I did not learn about investing until I decided to go into the financial world where I earned four robust financial certifications from two colleges: Certified Financial Planner©, Certified Life Underwriter, Chartered Financial Consultant, and Certified Advisor to Senior Living. For twenty years I learned about money as an investment tool and how to position it for my goals. I loved my work and contributions to the industry. But I left for reasons best left for another blog or conversation. I learned the great benefit to investing one I am ever grateful for. I am a believer here as well.

 

Why am I telling you this? Because I want you to know I understand that money is not an easy tool to deal with. When clients come to me in a state of anxiety about being out of control with their money, I see how our early habits still impact us today and how little we are taught about productive behaviors with money. I know that belief and experience have a huge role on money habits.

 

I believe we need to cultivate the systems and activities that as individuals and as a society make it easier to integrate the 5 S.I.D.E.S. © of money into our lives. This money pentagon is a crucial element to a significant live as individuals and together as a community of constant companions.

 

How do you allocate your money in the 5 S.I.D.E.S© of money pentagon? What needs strengthening? Talk to me. I would love to hear your comments on this because money is personal and money can be difficult to properly allocate.

 

Financial Literacy Is Illusive Until…

Success with money is highly correlated to what you want your money to do for you.

 

Think about it, until you know what you want your money to do for you, you are most likely to treat it casually: part with it impulsively, hoard it because you don’t know what else to do with it, overspend.

 

According to a survey conducted in 2013, Bankrate found, that across all income ranges:

76% of Americans are living paycheck to paycheck.

50% have less than a three month emergency fund

27% have no savings at all.

 

For many of us, it’s not because we can’t, it’s because we don’t. We have already prioritized other places for our money to go.  We spend our money before it even comes in.

 

And it’s easy to justify our behaviors, especially today in the subscription business model we bind ourselves to.  Smart phones, internet, Cloud, utilities, leases…we live on the monthly plan and we keep adding just one more subscription, one at a time, until it crushes us.

 

And we can’t seem to find a way to extricate ourselves from these. We’re too busy to clean so we hire house cleaners. We are too busy to cook so we order out or buy pre made offerings. We are too busy to ____________________so we______________________ (fill in your own blank) all in the name of making life easier while keeping ourselves tied to a lifestyle that owns us. We can’t let go.

 

What happened?

The further we are from what we really want our money to do for us the more we spend or hoard.

 

It’s time to specifically define what that seeming illusive financial standard means to our lives us, build a fence around that definition and follow it.

 

Let’s step aside and ask these two question: “Wait, what is it that I really want money to do for me?” Answer that clearly before moving on to the next question: “What am I willing to shift and sustain to get what I want and make that happen?”

 

Keep in mind that a business needs to make money. A big job of theirs is to convince you, somehow, to exchange your cash for their product. It’s easier to be seduced by this when you don’t know what you want your money to do for you.

 

Take hold of your life with your money by defining and following what want your money to do for you. That illusive sense of financial literacy will be yours.

 

Where is money a problem in your life? What first step can you take to getting control over this? Let me know your thoughts. I’d love to hear them.

Financial Setbacks Won’t Hurl you Down an Abyss When You…

“When the ability to earn was taken away it rocked our world. We didn’t have inheritances or trust funds to rely on. We create our own net and the holes were made by the others (thieves.)”

This was a comment someone made to me last week as they were talking about how the 2008 financial crash devastated their lives. Both husband and wife worked at the husband’s company. It went from 5 employees in an upscale office downtown to the two of them operating out of their basement. Their lives went into a tail spin as they tried to regroup in 2009 and 2010

Back then they had a child entering high school, a mortgage, with a lifestyle they had become comfortable with.

As you might imagine, the next four years was difficult for them as they struggled to keep the house, keep the business, and come up with the money to finance their child’s college expenses.

As a result of the change that was forced on them by the repercussions of the financial meltdown, they retreated into their own worlds of fear. Stunned at the abrupt and devastating change in their financial picture, they unleashed their anxieties about money on each other.

As the family business struggled, the husband spent more time secluding himself from his family. At the same time the wife started doubting his ability to generate business. She left the business and took a job with a company who would pay her for her talents and skills.

Their conversations about money became less and less frequent. The wife brought in steady income and suddenly their team work turned into feelings of resentment. She was bringing money in and keeping things afloat while he was trying to secure new clients.

Their money conversations slid into blame and finger pointing. “You got us into this.” “You never save.” “No, you’re the one who overspends. We don’t need to take vacations like the ones you want” became familiar phrases. These stories went on for five years as they were selling assets and trying to rebuild.

They are the fortunate ones because they saw that they were in danger of losing their marriage if they didn’t get on the same page with their money. They saw how disconnected they were about their money. They saw how they were spending less and less time together and more time focused on their own survival.

As we started working together, they recognized that they had developed some nasty behaviors with each other about money, ones that withdrew respect and trust for each other and their combined ability to manage their finances effectively.

They are now rebuilding that trust with each other in small steps and measurable ways that is benefitting their relationship and benefitting their financial situation.

I wonder how many couples are divorcing because they won’t or can’t talk about their money issues.

Why do I bring this up? Because when we don’t understand what money means to us, be it good or bad times, our money habits, behaviors and stories can dramatically and deleteriously affect our most precious relationships.

If you don’t already, think about how you can have a conversation at home about what money means to you.

  • What does having money give you?
  • What would happen if your money started dwindling and kept dwindling?
  • What was money like growing up for you?
  • What don’t you ever want to have happen with you and money?
  • How would you stop that from happening?
  • What do you have in place to help with that?

These are questions you can ask your spouse/partner to learn the meaning of money in their lives.

Others have and have lost it all-their money and their key relationships by not getting a handle on their relationship with money. You can stay in control of your life with money by staying involved with your relationship to your money and building a system of communication and intention with your spouse/partner.

I would love to hear from you. Give me your comments on this post, especially as it relates to the bullet points above. Have you used them? What did you learn?

Feed Your Brain what It Wants. It will Return the Favor by Helping You with Your Money

The brain is a beautiful thing. It is a structure that weighs about three pounds, is protected by the skull and skin and runs our life. The brain is soft and you can slice it with a butter knife. It generates about 25 watts of power while we are awake, enough to light a dim bulb (now you know where the phrase “a light just went off in my head” refers to.) The brain with its many folds in the cerebral cortex alone, if spread out, would cover about two and a half feet of space. The brain is constantly firing up its 100 billion or so neurons (about the same amount of stars in our galaxy.) The brain is accustomed to chaos as random information and stimuli are fed to the neurons by neurotransmitters and synapses.

Although it is responsible for directing so much of our lives, we are usually unaware of it. But as much as the brain feeds off of chaos it loves systems and it is to this point that I want to bring our attention. You see the neural networks in the brain gather and transform the stimuli it receives and organizes it.

Why do systems work so well for the brain? As I read about the brain and hear what psychologists and scientists say about this organ, it appears the brain creates systems for recognition, adaptability, and accessibility. If every time we looked at our shoes and wondered what they were and what to do with them, well, that wouldn’t be fun…not every time.  The brain provides recognition patterns for us to use to make our lives a lot easier. Finally, the brain provides easy accessibility. You want to remember something? Ask your brain. It will tell you where you last left your smart phone. Granted, it might wait two hours before it re-“minds” you where you left it, but it will remind you.

Okay, now how does this tie in to your relationship with money?  If the brain likes recognition, accessibility and adaptability well just give it what it wants to help with money habits and behaviors.

Build your system to effectively deal with the 5 S.I.D.E.S. of Money© (save, invest, donate, earn and spend.) Give your brain the productive and repetitive stimuli that help it access the support you need to be consistent with productive behaviors. If you are constantly in stress with your money, your brain will shift into overdrive firing up neurons to protect you from your stress. It can’t help build your muscles of consistency and repetition while it is trying to protect you from your bad behaviors and habits.  

When you build a system to support productive behaviors and habits with your money, its’ amazing how the brain supports you and even strengthens your behaviors.

Some people have jars to develop their 5 S.I.D.E.S. of Money© behaviors. Some use bank accounts to manage these segments of money stewardship. Still others manage their money segments with software or online systems.

Once you set these jars or accounts up and use them, you will be amazed at how the brain will support your behaviors and habits, giving you creative ideas on how to improve upon your uses of money. Try it. Let me know what you learn as a result. I’d love to hear from you.

Until next time, I leave you with this final question: What will you feed your brain so it helps you with your money?