Learn Where Life and Money Intersect for Money Mastery

I received a call from a gentleman who was referred to me. He was concerned about what his kids would do with his money, once they inherited it.

He told me he spent fifteen years building a company that he sold to another company for a generous profit. He said this new cash and stock infusion was significant to him. It represented an achievement he had worked hard to gain. He knew that the money was enough for he and his wife to live on and enough for his kids to benefit from but that’s not what he wanted the money to do. “I don’t want the money to provide so much security that life becomes a series of reality tv like experiences for my two teen age kids, caught up in the moment without any particular drive or interest. They’re already putting pressure on us about increasing their allowances and buying them new cars. It’s gotten tough on my wife and I to deal with this without feeling resentful.”

As our conversation continued, he revealed that money was never given to him as a child. He had to work for it. His wife also never had a lot growing up although she was given her parents’ car when she was 16 with the knowledge that she would have to turn it over to her brother when she was nineteen and he was sixteen. They couldn’t understand or appreciate their children’s covert and overt demands for money.

After a couple of meetings to understand their concerns and objectives, we decided to put together a 3-part financial program for the family. The first section was the “Financial Conversation.” This gave the kids an opportunity to express what money meant to them, their experience with money and what challenges they had with money. Their parents could only ask questions if they needed clarification on what was being discussed, not questions to judge or criticize. Then the parents had a chance to talk about what money meant to them, their experience with money and challenges they have faced with money.

Doing this in an environment where each participant felt like they could say what they wanted without fear of reprisal or judgment was crucial.  Each member came away from that meeting with a greater understanding of what money meant to themselves and to each other. This created a bond between them which we are now using in an exercise which involves an experience around money that the kids are doing as a team. They will report on their outcomes at the next meeting.

It is important for life and money to intersect so they can support each other rather than conflict with each other. It is critically important to do so in families where money matters so money and life can each be talked about with understanding and purpose rather than with judgment and directives.

3 Tips to Sustain Family Wealth for 7 Generations

Passing wealth is usually done with the help of well-crafted documents by estate planning attorneys. But is this enough? It is if all you want to do is pass assets. It’s not if you want to keep the family intact for generations because wealth is more than the assets.

Wealth encompasses, in addition to your financial assets, your values, your philosophy and beliefs, your family culture, as well as the story of your significant experiences and how they shaped you. All these are just as important when passing wealth to future generations, as passing assets. Without these additional components, your family runs the risk of losing its wealth and all it stands for, within 3 generations. Studies by the Williams Group have corroborated this unfortunate outcome. Phrases like shirtsleeves to shirtsleeves within three generations have pointed to it.

Families have concerns about how money will affect future generations. Will wealth make their children/grandchildren/greatgrandchildren lazy, spoiled, unmotivated, rudderless?  Many families do not talk to their children or grandchildren about their wealth, their (the children’s and grandchildren’s) roles with the wealth or what the purpose of the wealth is for the family as the family grows from the first to the second, and third generations.

It is difficult to have these conversations without a road map and without the appropriate tools to use when talking about sensitive and difficult topics. How can you start?

First, begin by identifying what is important about the wealth to your family. Develop and communicate the “why” of the wealth. This will include talking about your family values, the purpose for the wealth, how your values impact the use and growth of the financial wealth

Second, engage in experiential teams to develop and nurture leadership strategies for the use of the family money such as philanthropy, higher education, or funding homes.  Educate the family about financial literacy and productive financial behaviors.  If family members are young, start them on a course of financial stewardship. If they are young adults, have them team up and develop a philanthropic family initiative and lead this initiative through its formation.

Third, hold meetings where you use active listening to understand. Let each person speak on the topic at hand without interruption. Make sure intentions are communicated and understood by all family members. Seek to connect rather than to win an argument.

Sustaining family wealth so future generations can thrive is about supporting collaboration, respect, trust, and retaining an environment built on communication that develops the family’s agreed upon common purpose.

When 2 Should Become 1 with Money Allocations

When we partner up with another person, we tend to retain our separate phone numbers, two earning sources, our own credit cards and our unique views on money.  Often, it’s our unique views on money that can create tensions and undermine relationships. After all, money is one of the top reasons for divorce. And as a mediator, I am often called upon to facilitate new money frameworks for families, ones they can agree to and build upon for financial peace.

In dual income families, I find that one person’s salary is often used for basic living expenses while the other person’s earnings are used for discretionary expenses such as vacations, restaurants, entertainment and home furnishing upgrades.

This may work well initially but as earnings, lifestyles, and interests change, conversations about money end up lost, avoided or become weapons of assumptions. Because earnings can change for one person more dramatically, or more often, than for their partner, allocating percentages to the family budget can avoid or reduce the tension that personal finances has on the family’s tranquility.

What is easy in other parts of a partnering life, such as separate cell phone numbers, separate hobbies, and different cars, money needs to become an area in which there is harmony for peace to reign at home.

I recommend that you set up a time to talk about how to use percentages of your separate earnings for more harmony with your blended financial life.

2 Critical Issues Facing Family Businesses

For families with businesses, there are two big problems that surface as the family grows and ensuing generations get involved or migrate away from the family business.

Conversations about the business that may have started in the living room at home, moved to the kitchen, then a conference room then to a board room, often become a struggle as families grow and as individual agendas develop. Working well together, across generations, can become tense when visions are not aligned, and responsible stewardship is not defined. Competing and contrasting priorities due to generational differences, ownership positions, and desires for the business as contrasted with desires for the family harmony, surface.

It is not natural to manage such complexity. Like a garden who needs proper care and maintenance to stay healthy, relevant, and vibrant, a family is best served by developing a disciplined and purposed component to their family and family business dealings and becoming responsible stewards of what they are growing and eventually, passing down.

Determining an initial purpose to both the family and family business initially separate the two entities so they can clearly define themselves independently. Agreeing on and articulating the value, vision and mission of each entity across generations is key to being responsible stewards. Adapting and becoming comfortable with change is the responsibility of each generation.

Questions to consider asking at home:

  • Who do we want our family to be, as a family?
  • What do we want our family to represent in the community?
  • What is important to us as a family: what do we believe in? What do we stand for?

Creating purpose, mission, vision and family teams to develop the family’s success goes a long way to sustaining intergenerational trust and sustainability.

Questions to consider asking about the business:

  • What is the purpose and mission of the business?
  • Is the business meant to develop as a business or build family wealth?
  • What do we need to do to support our working together?
  • How do we communicate business information so it does not take over or interfere with the family environment?

Knowing the purpose of the business, communicating that to the family, developing trust in leadership development are all critical to successfully passing a business legacy and leadership from one generation to the next.

It’s Important for Women to be Confident with their Money

I have always enjoyed being a steward of money. Even as a kid, I would count my money; I was excited to open a bank account; I would plan on money expenditures, I thought about money and how to best use it.  As a young adult, I thought about how to ensure I had extra saved money; I enjoyed the world of investing, although, as a woman, back then, there was not a lot of support for women in money matters.

So, I was stunned to recently read an article about women and money that included sobering findings from a Fidelity Investments Money FIT Women Study. Surveying 1,500 women, this survey found that 8 out of 10 women don’t talk to family or friends about money. That is chilling to me. The study also revealed that 50% of those interviewed, mostly Gen X and Yers, said they are nervous talking about making financial decisions! What the what the?!

Even today, where so much is available and expected of us, it seems we don’t include financial literacy as an area to master. As a result, and according to the Fidelity study, women have a confidence gap when it comes to financial literacy.

Is this true for you? Do you feel yourself avoiding money conversations? If so, what can you do to change this behavior and mindset. Here are three tips to begin your positively affect your relationship with your money.

  • Take a moment to answer this question: How do you want money to play an active an enabling role in your life? Answering this question allows you to finally understand what money means to you. Knowing this gives you clarity about how you really view money. It may be that you don’t get money, or, you don’t respect it or, conversely, that you want to get a handle on it but don’t know how.
  • If it is easy for you to accumulate debt and spend more than you have, ask yourself: What is in it for you to continue this habit? Really stop and respond to this with clarity. We tend to do things either because there is a benefit to doing so, because we want to sabotage ourselves, or because we are avoiding dealing with the topic of money.
  • What first step can you commit to make a, one, not all, just one, present unproductive habit move into the shadows of your life rather than being in the driver’s seat to your life? Taking a small step can begin a journey of steps that eventually become a pathway to sustainable and successful habits and behaviors around money.

Need more help? Contact me. Having women be successful in life with their money is important to me! I hope it is to you, too.

I would like to speak to Millennials for a Moment

Today, every generation, thanks to the mining of so much data, can be and is dissected for quick sound bites and headlines. I, too, stop and read some of the headlines. A couple of these have caught my eye and wanted to focus on them today.

Recently, I saw two headlines addressed to millennials. The first was about money habits: In a poll from USA Today/Bank of America Better Money Habits, 33% do not have a savings account, 40% have less than $5,000 saved,  more than 50% have not funded their retirement savings. Instead millennials are focused on paying off credit card debt. 40% say they worry about their financial future at least once a week.

I have two reactions: the first is Y-A-W-N. The baby boomers were late to the money responsibility, as a generation, as well. So, not too much of a surprise here. What is taught and acted on in one generation often passes on, in some recognizable manner, to the next generation.

My second reaction is in the form of a question: as a species, are we savers? Or is this a luxury for those in a certain income range? In my 20 years as a financial planner (with three prestigious certifications) I rarely found the dedicated saver. And if stock options were available, it was no better. They seemed to equate more money to higher ticket items. It’s difficult to save when businesses spend a fortune on marketing to us to get us to part with our money.  I am not excusing non-savers, I am just painting a landscape that I see. I built my Money Focus program to address this big problem guide those who want to transform their money anxieties to money stewardship.

The second article I read was about millennials wanting to retire early. The take away in this article is not that millennials, as a group, want to chill somewhere, instead it is more fundamental to who they are: they feel insecure about the future, in general. A documentary: Playing with Fire, explores a millennial’s journey to their financial freedom, where health care, social security and social safety nets seem to be eroding and where individual financial future is now one’s own responsibility. Financial literacy is rarely taught in schools or at home. In 2017, only five states were given an A for their financial education efforts from the Champlain College’s Center for Financial Literacy’s Financial Report Card. These states: Alabama, Missouri, Tennessee, Utah and Virginia require that their students take at last a half-year personal finance course or its equivalent. At least it’s something.

Millennials, this has been happening for generations. And will continue for generations. But you can stop it. You can take control of your own financial life.  It only takes a willingness to change.

Let me know if you want to explore how.

Thank you for caring for your financial well-being!

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.

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?