The investing world is a better place, thanks to the advent of well-funded online investment advisory services.
Collectively dubbed “robo-advisors,” companies such as Betterment, Personal Capital and Wealthfront have managed in just a few years to do what the financial industry has failed to accomplish during a couple of centuries: provide quality investment guidance at a cost accessible to most demographics. It is a long time coming.
Adam Nash, Wealthfront’s chief executive, however, isn’t fond of the robo-advisor label.
“We’re just overwhelmed with life.” That was my response to an attorney looking for insight into the obstacles facing Generation X.
I’d referred a number of 30- and 40-something financial-planning clients to this attorney. All were in need of estate-planning documents.
But he came to me concerned about the difficulty he was having in reconnecting with clients who’d begun the process but were struggling to find the time to complete it. The time to complete anything, really.
While folks of all generations struggle with being overwhelmed by the various responsibilities and obligations of life, I see the problem as endemic within the ranks of Gen X, my peers.
You’ve got a machine just sitting around your house. It’s a money-printing machine, and it’s perfectly legal. This machine is expected to print $75,000 this year before taxes. You’ll use that cash to pay your household expenses.
Each year, the machine will print 3 percent more than it did in the previous year, and it will continue doing so for the next 40. That means, over its lifetime the machine will print $5,655,094.48, easily making it your most valuable asset today.
Yet there it sits, maybe in your garage, between an inherited set of golf clubs and a wheelbarrow with a flat tire, unprotected. Uninsured.
The machine, of course, is you, or more specifically, your ability to generate an income. It didn’t come cheap. You and your parents invested years of training and likely tens of thousands of dollars in hopes that your machine would not only support you financially for a lifetime but launch another generation as well.
We don’t question the need to buy insurance for the things our money machine purchases. But few of us know if—or at least how and to what degree—their income-generation engine is protected.
Giving Tuesday might officially be behind us, but let’s face it—we’re just getting started. The giving season is underway, with the holidays and year-end bearing down on us. So how can we transform one of the more stressful, and sometimes guilt-ridden, elements of the season into something more life-giving?
Whether you’re giving to a family member, a friend or a cause, please consider the following four directives as a guide to happy giving:
1) Give out of impulsion, not compulsion. Compulsion to give can arise from the mountain of expectations, perceived or otherwise, heaped upon us at this time of year. (Those expectations are more often self-imposed, by the way.) Impulsion, on the other hand, comes from within. Give because you want to, not because you have to. And don’t give if you don’t want to.
I travel a decent amount. I don’t mind flying, but I’ve always struggled with the loss of productivity. Hours waiting at the airport. Even more hours in flight. But with the advent of in-flight Wi-Fi, I thought my productivity problems were solved. I was wrong.
I’ve instead concluded that by nixing slow and unpredictable in-flight Wi-Fi altogether, we can save money and use flight time to more productive ends (like reading, writing and resting) better suited for that environment.
My initial plan was to use in-flight Wi-Fi to slay the email dragon. That way, I could land knowing that nothing had slipped through the cracks and that there were no surprises waiting. I might even allow non-urgent emails to pile up for a couple days if I knew I had an upcoming flight. Unfortunately, the strategy was a miserable failure.
Once you’ve abandoned the pursuit of balancing money and life in favor of integrating the two, the question still remains: Now what? How the heck do I better integrate money and life? Like most personal finance dilemmas, the answer is simple, but not easy.
It’s simple because it doesn’t require many steps. What’s more, it’s advice you’ve likely heard before, perhaps multiple times. But it’s challenging because you have to do some work—interior work. And then you have to make some difficult decisions.
Before I share the process, it’s imperative that we recognize a fundamental financial truth, often shrouded in a sea of marketing, misinformation and self-help rubbish that’s more sales than psychology.
RULE: Money is a means, not an end. Money is a tool—a neutral tool that is neither good nor evil. It may, however, be used in pursuit of either good or evil, and everything in between. Money can be well-utilized in the pursuit of goals, but it makes a very poor, lonely goal in and of itself.
Understanding—and believing and applying—this rule is the aim of the following systematic four-step approach to better integrating life and money:
We got the subtitle of my last book wrong. It reads, “Balancing Money and Life.” And while the book is still substantively solid and its aging content remains mostly relevant, the subtitle, I now believe, is a misnomer. It may actually contradict the book’s fundamental message.
Whether we’re talking about money and life, work and life—whatever and life—the temptation is to see the “whatever” as a force standing in opposition to life. An alternative to life.
And, unfortunately, this isn’t merely a rhetorical conundrum. As it often does, life follows language. Indeed, the phrase “work-life balance” has become so common that most of us now consider it an either-or proposition. We picture a scale, balancing work on one side and life on the other, as though it’s a zero-sum game. Work or life.
And so it has become with money. We can choose to expend life in pursuit of money or deplete our financial resources in pursuit of life.
Perhaps there’s a third option—the integration of money and life. Consider these seven ways we might view life and money differently if our approach to them was less mutually exclusive:
I was truly honored–and just a little bit terrified–to be the subject of one of the BAM Alliance‘s short films (extraordinarily produced by Once Films) depicting the heart of the work we’ve dedicated our lives to.
My son gave me a present. To be fair, I don’t think it was until after he realized the gift was monetarily worthless, but I appreciated it nonetheless. It’s a big hunk of the mineral pyrite, also known as fool’s gold. My son’s gift has value to me far beyond its function as an excellent paperweight. And, ironically, its worth to me is continually rising. It’s become a constant reminder to orient my life away from that which only appears valuable and towards that which truly is.
We all have our own versions of fool’s gold. It’s generally the stuff that, while largely worthless, receives an undue amount of our time, attention and investment. What’s yours?
Here are three ways to spot it:
1) Fool’s gold consumes time you’ve dedicated to other things. Not more than one paragraph into writing this post (on this topic, no less!) I found myself entering this Google search—“what is the best banjo ukulele”—and then navigating to this page, then this one.
As if PIMCO needed any more bad press, The Wall Street Journal reported this week that the Securities and Exchange Commission is investigating whether the bond giant “artificially boosted the returns of a popular fund aimed at small investors.” While we should all be attentive to the results of this probe—because I’d bet my lunch money that its implications will be felt beyond just PIMCO—there is an even deeper issue to consider. And this issue has a more direct impact on our individual portfolios and money management choices. The real danger in overstating returns, and indeed the root of most financial missteps, is self-deception.
“How’s your portfolio?”
Who among us wants to feel like a failure? We’ll generally avoid experiencing this sensation at all costs. So, absent conspicuous success, we permit ourselves to believe that we’ve at least not failed, frequently through self-deception.