Wisdom from the Ages Can Be Accessed from this One Tip

I recently read a recommended book. The author, Benjamin Franklin (1706-1790) wrote an autobiography, which was published posthumously in 1868. I would like to share a point that resonates with me and is as relevant today as it was for him, two hundred plus years ago.

To give you a little background, Franklin believed strongly in the attributes virtues had He went so far as to define the thirteen core virtues which were cornerstones to his life.  He defined what each meant to him, and this is insightful,  because he understood that each person defined virtues, individually. His definition was not necessarily theirs and vice versa.

Rather than focus on all thirteen virtues, he isolated one at a time. He started with temperance which he described as: “eat not to dullness, drink not to elevation” and focused on it for a week. He then moved on to the next, which for him, was silence, defined for him as: “speak not but what may benefit others or yourself; avoid trifling conversation”, the next week he focused on order “let all things have their places; resolution “resolve to perform what you ought, perform without fail what you resolve” and so on.

As he focused on only one virtue per week, he could gain greater understanding of it for himself and its valuable application in his life. As the years went by he became dedicated and pronounced with his virtues, refining them in his daily life.   This contributed to the respect he garnished. He took the time to live from his “virtues”, intimately.

Each day he would begin by asking himself: “What good shall I do this day.” In the evening, he would reflect on his morning question by asking: “What good have I done to-day?” using one of the thirteen virtues he was focusing on.

Now, that is Wisdom from the ages.

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Don’t Let Money Confuse You

Money habits and behaviors have great impact: if you spend and don’t save; if you save but don’t invest, if you invest and can’t share; if you have money but can’t generate money all have their consequences. It may take some time to see the consequences, but they are there. Money issues eventually surface, most frequently when we are in a relationship with someone else and their habits and behaviors differ from yours.

  • If you spend and don’t save, you may find that you don’t have the resources you need for retirement, for medical tests or costs that insurance will not pay for. Strive to save 5% of your net income for that emergency saving. Determine your “zero,” a number you never fall below. Use 5% of your gross income as an initial “zero” if saving is difficult for you.
  • If you save but do not invest, you will find that inflation and taxes will eat away at your savings. Partner with a financial advisor who can help you learn about investing. Make 15-20% of your gross income, your investing objective. Define a purpose for your investment and develop an active relationship with your advisor.
  • If you invest but have not yet helped others with your financial generosity, you might be surprised at how good it feels to assist someone in need. Organizations and causes you believe in can use your generosity in ways that do make the world better. Individuals, down on their luck appreciate your helping hand at an extremely difficult time in their lives. Make 5-10% of your net income a goal for giving.  Find an organization that aligns with your passions and beliefs and enter a giving program with them.
  • If you give money, and do not yet understand the value of generating your own finances, start a project that you personally fund. Become an entrepreneur. You will learn a lot about business and yourself! Alternatively, develop skills that are marketable and search for an opportunity in a field of interest to you. Be creative and bold in your search for work.

Money rocks! Don’t let it confuse you.

 

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.

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.

Quotes about Money to Start the Year

• The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind. -T.T. Munger
Saving is a beneficial life-long exercise.

• You can’t manage what you don’t measure. -Bhaj Townsend
It is important to know what your money is for, so you can determine how to manage it.

• Wealth consists not in having great possessions, but in having few wants. -Epictetus.
This still rings true centuries after this Turkish slave, who grew up to be a formidable Greek philosopher, said it.

• Money without meaning is like candy without a wrapper. It’s too easy to devour without restraint-Bhaj Townsend
Now that rings true!

• If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed. –Edmund Burke.
How true this can be.

• This year, money and I will be friends, and not part company as easily and as often as last year. -Bhaj Townsend
An excellent decision to follow through on.

• It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for. Robert Kiyosaki.
Yes, indeed.

• Money is gone, for most families, by the end of the third generation because the system for understanding its purpose wasn’t built, or communicated or sustained. -Bhaj Townsend
This is so sad because it is avoidable.

Holiday Family Giving Conversations Can Reap Great Benefits

At a recent University alumnae dinner, the host asked the attendees, to indicate, by a show of hands,
who engaged in family philanthropy. Nearly the entire room or about 150 guests raised their hands. But when the host followed up by asking who engaged the family in a conversation about the meaning of philanthropy and the impact they want their donations to have both for the organization (s) and the family, only 2 raised their hand.

With the holidays providing a favored setting for family conversations, perhaps this can be an appropriate setting to start a conversation about the impact of giving for the family.

Remember these 3 tips to make your conversation more engaging, should you choose to initiate a family conversation on charitable giving. Know and communicate the intention of the conversation and its intended outcome. Keep the conversation friendly and inviting rather than judgmental and limiting. Have an inclusive conversation by ensuring that everyone has an opportunity to say what is on their minds and in their hearts, without interruption.

When each member feels heard, understood and included, they feel connected. This connection can reap great benefits for families as they initiate or develop their family giving.

Holidays and giving, bring it home for deeper cheer.