A Misleading Moniker: Financial Literacy Month

Originally in ForbesApril is National Financial Literacy Month, and while I would never argue against financial literacy, I have a fundamental problem with the moniker. Who, after all, would willingly step forward and proudly announce themselves illiterate—at anything?

illiteracy

Unfortunately, I believe that’s what fully embracing the financial literacy movement requires. It positions financial educators as the Dickenses of currency and those who struggle with money as the collective Oliver Twist. Yes, it’s unfortunately true that too many Americans lack optimal—and perhaps even sufficient—personal financial education. But a sweeping declaration that labels the majority of the country financially illiterate does little to advance the cause. And it may even slow the progress we seek.

‘The One-Page Financial Plan’—Simple, But Not Simplistic

Originally in ForbesSimple is hot, even fashionable. But in many cases, it’s for all the wrong reasons. Simple is easier to pitch, explain and sell, and therefore also easier to receive, understand and buy. But when simple devolves into simplistic, becoming a one-dimensional end instead of a user-friendly means, it’s no longer an advantage and may actually be doing damage. Not everything can be turned into a tagline, a rule of thumb or a short cut.

Therefore, when my colleague and New York Times contributor Carl Richards first asked me a couple years ago to think about what a financial plan might look like if it was constrained to a single page, I was skeptical. After all, I’d dedicated my life and work to helping people, primarily in their dealings with money, wholly through the written and spoken word. The fullness of that education seemed impossible to responsibly confine to a single page. Then I read Carl’s new book, The One-Page Financial Plan

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At 208 pages, it may be a tad shorter than most personal finance books, but it’s obviously longer than one page. There is, however, a single page in it that I believe will help you understand why the book was written and how it could benefit you. On page 11, toward the end of the book’s introduction, Richards shares with us his family’s first attempt at an actual one-page financial plan.

3 Ways To Write Your Own Story, Like Baseball’s Daniel Norris

Originally in ForbesYesterday, a bearded 21-year-old surfer who lives in a 1978 VW bus, and on a self-imposed annual allowance of $10,000, mowed down my beloved Orioles with a 96-mile-per-hour fastball.

Blue Jays pitcher Daniel Norris isn’t striving to make a statement with his apparently Spartan existence. He’s simply choosing to live life according to his priorities. He’s writing his own story.

According to ESPN, Norris’ values system is strengthened by generational ties and rooted in the topography of Johnson City in northeast Tennessee: “Play outdoors. Love the earth. Live simply. Use only what you need.”

The point of this article is not to compel you to adopt Daniel Norris’ values, but to convince you to live by your own. Here are three ways to do so:

1) Know your values.

The challenge to knowing your values is learning how to discern and articulate what’s most important to you without simply parroting a corporate slogan or a Successories poster. (Hint: “Integrity” is already taken.) Most of us, in response to the direct question, “What are your values?” will inadvertently list someone else’s. Consider a less direct, but perhaps more difficult, path to discernment.

Especially if you are a visual processor, glance at this exercise—the Wheel of Life—courtesy of Money Quotient founder Carol Anderson:

Wheel of Life

On each spoke, rate your satisfaction in the corresponding area of life between zero and 10—10 being the best. After connecting the dots, note the roundness or wobbliness of your wheel as a whole. Consider why your satisfaction in some areas is high while in others it might be low.

Now, while ruminating on your reaction to the exercise, write a few words—or perhaps a few sentences—addressing what is most important in life to you. Start with two to five of the areas of life represented on the wheel. The result may be a nicely packaged articulation of what you value most.

If you want to go deeper—or you’re more verbal than visual, or if your Wheel of Life exercise was fruitless for any reason—consider George Kinder’s “3 Questions” exercise. It may be another eye opener.

2) Have the courage to live according to your values.

Truly living life according to your values is not for the faint of heart. It takes courage because social convention prefers efficiency. There are few venues where non-conformity is prized less than it is in sports, and “perhaps nowhere is consistency more valued than in baseball,” says Eli Saslow of ESPN.

Being true to yourself could cost you. It cost Carmen Segarra her job—and likely forevermore limited her prospects in her chosen profession—when she challenged Fed regulators to actually, well, regulate.

Of course, the objective is not non-conformity for its own sake, and definitely not visible self-righteousness. Daniel Norris won’t compromise his conviction not to consume alcohol, for example. But he also doesn’t opt-out of the rookie hazing ritual that involves carting around the veterans’ booze. Originality doesn’t necessarily have to mean unmitigated individuality.

Originality is attractive when it is genuine, but repellant when it is contrived or copied.

3) Outperform.

If Daniel Norris was just another dude living out of a VW bus down by the river, his non-conformist path would be unknown. Having inspired values alone doesn’t make Norris an inspiration. Applying himself to them in an exemplary fashion does.

Via Twitter, Norris tells us exactly how he’s decided to apply his values:

“I live to find 3 things. 1. Eternal life. 2. The strike zone. 3. Good waves.”

My Orioles are certainly aware that he’s mastered at least one of the three. So are his teammates, who have learned that Norris’ unique way of approaching life—and the game—has netted positive results. They may not understand his method, but they appreciate it. Similarly, you will be given more leeway to be yourself in whatever you choose to pursue if you do so with excellence.

Life isn’t a bullet list of values or a spreadsheet for calculating progress toward your goals—it’s a story, a narrative. I hope my suggestions aid you in writing your story, but please don’t confine yourself to my prescriptions. Regardless of whether or not we follow any particular method to discerning our values and pursuing our goals, we’re still creating a body of work. Everybody’s life tells a story. The only question is, Who’s writing yours?

I’m a speaker, author, wealth advisor and director of personal finance for Buckingham and the BAM Alliance. Connect with me on Twitter, Google+, and click HERE to receive my weekly post via email.

Putting Money In Its Place

Originally in ForbesWhat we believe about money will impact how we use it. Unfortunately, a central belief most of us hold about money is fundamentally flawed. We believe that money is either good or bad when, in reality, it is neither.

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A belief that money is bad certainly is the minority mindset. But it may be a more dangerous conviction than its inverse, if only because it appears virtuous. After all, how could using less water, less square footage, less medication, less natural resources — less money — be a bad thing? Perhaps because there’s a deceptively short distance between being pro less-[fill-in-the-blank] and becoming anti-[fill-in-the-blank]. And if we’re anti-money, we may also become anti-people-who-have-money, including ourselves if such a circumstance arose.

A friend of mine has a huge heart for people with less — I mean, really less. So much so that he dedicated his life and work to serving them. He regularly goes to the world’s most deprived places, using his powerful combo of empathy, education and experience to rally the necessary aid. Once, when he received a sudden sum of money, I asked him if he was capable of committing financial suicide — by which I meant divesting himself of all the extra decimal places in his bank account — simply because it wouldn’t feel right for him to have such a possession as one so wholly dedicated to the world’s underserved communities. He acknowledged it was possible.

The far more common belief is that money is inherently good. Although this belief appears innocuous at first blush, it’s important to consider its logical conclusion. If money is good, then more money is better. If so, we might be inclined to accept a common lament as true: “If I only had more money, I’d have a better life.” Inevitably, money becomes personified, and thus becomes an unconquerable competitor pitted against the actual people in our lives. In this reality, our friends and family simply can’t compete with money. People let us down, while money only promises to make our hopes and dreams come true.

We need to put money in its place. Specifically:

Money is a neutral tool that can be used for good or ill.

That’s it.

When we believe that money is bad, we typically handle it poorly and strain our relationships. When we believe that it’s good, we tend to put money in competition with people and strain our relationships.

3 Questions That Will Get Your Finances — and Life — on Track

Originally in MoneyFew things seem more diametrically opposed than managing money and spiritual enlightenment. But not everyone sees it that way. Some very influential people in the financial advisory community have dedicated their lives to helping advisers assist clients deal with the more personal elements in personal finance.

Consider George Kinder, the Harvard-trained economist-turned-philosopher-turned-CPA. He managed to evolve his tax practice into a comprehensive financial advisory offering, with supporting methodology, while on the successful path to becoming a Buddhist teacher based in Cambridge, Mass. and Hana, Hawaii.

railroad tracks

Within the advisory community, Kinder is almost universally known as the “father of life planning.” To many advisers, his work is the seminal, much-needed missing link between life and money. He originally articulated his views in his book, The Seven Stages of Money Maturity. Many more advisers, however, envision Kinder playing the ukulele on a magic carpet — just a little too “out there” for mainstream consumption and practical application. Having moved from the camp of skeptics to the camp of adherents myself, I invite you to consider what could become one of the most valued tools in a financial planning practice: George Kinder’s Three Questions.

The Dumbest (Most Important) Thing I’ve Ever Done

Originally in MoneyThe most important event in my life is one of which I was long ashamed.

I was an 18-year-old punk with a monumental chip on my shoulder. You know, the kind of kid certain of his indestructability, sure of his immunity from the dangers of self-destructive behavior.

At 2:00 a.m. on a random Wednesday morning in June 1994, after a long day and night of double-ended candle-burning, I set out for home in my Plymouth Horizon. At the time, my car was bedecked with stickers loudly displaying the names of late-60s rock bands. No shoes, no seatbelt, no problem.

Shame

Not even halfway home, I was awakened by the sound of rumble strips, just in time to fully experience my car leaving the road and careening over an embankment. After rolling down the hill, the vehicle settled on its wheels and I, surprisingly, landed in the driver’s seat. But all was not well.

Broken glass. My right leg was visibly fractured. I had hit the passenger seat so hard that it was dislodged from its mooring. Blood dripped on my white T-shirt.

You Can’t ‘Robo’ True Financial Advice

Originally published CNBCThe 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.

robo advisor

Stressed-Out Gen X and the Search for a More ‘Livable’ Life

Originally published CNBC“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.

gen x stress

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.

How to Protect Your Biggest Asset–Your Income

Originally published CNBCYou’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.

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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.

Do you?

The Guide to Happy Giving

Originally in ForbesGiving 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?

Gift

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.