Tag Archives: retirement

Make Your Financial Advisor Sweat

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I was meeting with a new friend recently when she told me of an interaction with her financial advisor that completely changed her view of their professional relationship. She had received a lump sum of meaningful size, and following the advisor’s presentation of his recommendations for the new money, she did the unthinkable—she asked him how he would be compensated and how much he would receive if she followed through with his recommendations.

I know, crazy!  Who in their right mind would ask a service provider how they’re getting paid and exactly how much he or she would receive for services rendered?  The nerve of some people!

Yes, this is how the financial industry has treated the check-writers lining its mahogany-trimmed custom leather coffers for…ever.

Back to the story.  The advisor took off his jacket, began pacing and started sweating as though Ray Lewis (of the world champion Baltimore Ravens—woo hoo!) was staring him down.  The gig was up.  His list of recommendations was catered to his personal financial best interest and not his client’s; he was completely busted.  All it took was a simple question anyone would expect as common practice in any other business, and the advisor imploded.

But not everyone in the financial industry is so bashful.  I know one financial sales person, in particular, who told me of an instance in which a prospect popped the question.  He responded with indignant self-righteousness, “You have no right to know how much money I make!”  I guess he forgot that he was talking to the person making his mortgage payment that month, possibly throwing in a vacation on top of it.

Now, I’m not suggesting you become a crass inquisitor with your broker, banker, insurance agent or financial planner—they are due appropriate compensation for a job well done—but you absolutely have a right to fully understand how your advisor is compensated and to what degree, for the following three reasons:

  1. Without understanding your advisor’s compensation regime, you’re unable to balance his or her economic bias in your decision making process.  For example, if the advisor is going to make more money if you pursue one recommended path over another, you should be able to weigh that conflict of interest.  It doesn’t mean you shouldn’t pursue the option that pays the advisor more, but he or she darn well better offer compelling justification.
  2. You have other options.  Fee-only financial advisors are required to provide full disclosure of all fees received, and if they are truly fee-only (note: “fee-based” is not fee-only), they are unable to receive any other compensation from referral sources or otherwise.  It doesn’t mean fee-only advisors don’t have an economic bias, but at least the transparency offers you an opportunity to see exactly what you’re paying.
  3. You ought to be getting a service that is proportionate to what you are paying.  But if you don’t know what you’re paying, how can you know if you’re getting your money’s worth?

And here’s the best reason to ask your financial advisor how and why he is compensated based on the recommendations you decide to implement: if he starts sweating like he’s in your hot yoga class, you should probably work up a sweat yourself…running for the door.

The Most Stressful Event Of Your Financial Life: RETIREMENT

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I don’t mean to strip you (or anyone else) of your idealized view of retirement that may have helped you overcome Lord knows how many miserable days—or years—of perpetual, slave-to-the-grind ladder climbing throughout your career.  But, the first stretch of your much anticipated retirement is likely to be one of the most stressful events of your life.

I admit that this phenomenon was a surprise to me, initially.  I began my career with a partial mission to help clients reach and enjoy financial independence, so it wasn’t until I began walking some of them into and through the transition that I realized how nearly-traumatic it can be for so many.  But if you doubt my hypothesis on its face, please consider this reasoning:

Most of us Americans, fortunate enough to enjoy a middle-class or higher upbringing, are born into environments—households, churches, schools, sports teams and other associations—that breed into us a sense of independence and empowerment.  We are set on a trajectory of productivity and accomplishment, aiming less toward our vocation or calling—more toward our occupation.  We may hear or read, “You can do anything you want to do!” and “You’re special.” and “Dream big!” but by the time we enter the work force, many of us realize we have been set on a course designed to capitalize financially on our most marketable skills.

We are trained to be do-ers, but not, so much, be-ers.

And for many (although not most), it works.  We become “productive members of society,” producing enough income to reach the penultimate goal of financial independence, a visual snapshot nicely captured for us in the high-def, beach-front commercial renderings lathered on by banks, brokerage firms and insurance companies.

It’s our lives’ work to be voracious do-ers until we can afford to be aristocratic be-ers.

So even if we are financially prepared for retirement by every tangible measure—certified by the most certified of financial planners—the transition from do-er to be-er is an exceedingly difficult one, and most of us don’t entirely understand why because the rhythms of our lives have become part of us.  The real difficulty is not in dealing with the visible, but the invisible.

What, then, would life, work and retirement look like if we:

  • Placed a greater emphasis on be-ing, prior to retirement?
  • Were more deliberate about do-ing, in retirement?

We might cultivate ourselves more as individuals who are part of a community and less as employees who are part of a company.  We may allow the question “Who am I?” to precede “What am I going to do?” and certainly “How much am I going to make?”  This self-analysis might lead to a path more akin to finding a calling than a job and would be more relational than transactional.  It would be more others-oriented than individualistic, ensuring that those we labor with and for would remain a priority over the work itself.  Instead of establishing, arriving, cashing-in and checking-out, we might see our progression as perpetually evolving, even into and through retirement.

“That sounds great,” you say, “but it wasn’t my path…so what should I do now?”

Don’t retire from something; retire to something.  Even if you conceded the last 20 to 40 years of your life to the big hamster wheel, it doesn’t mean you’re relegated to settling into a meaningless, unproductive retirement.  Ask the questions you wish you’d have asked yourself at the onset of your education or career and answer them.  Envision your transition into retirement less as an encore and more as act two of a three act play.

Wisdom Equals Wealth

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by Jim Stovall

If you were to ask any segment of our population what they believed it would take for them to be wealthy, the vast majority would give the simple answer, “Money.”

Making, earning, or being given more money does not make you wealthy.  Wealth is the accumulation of money.  I have encountered many people through my work in the area of financial education who make over $1 million in income and have little or no net worth. Some of these million dollar earners actually have a negative net worth.

Building wealth, at some point, becomes a matter of spending less than you earn.  Recent financial studies in the professional sports industry reveal that by the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress, and 60% of former NBA players have gone broke within five years of retirement.

Most sports fans and observers of professional athletes mistakenly assume that professional football players or basketball players have it made financially.  They assume these ball players are instantly made wealthy for the rest of their lives.  Once again, we have to remember that wealth is a process of spending less than you bring in, and accumulating money so that your money can earn more money.  This compounding is what creates permanent wealth and passive income.

If you make $1 million a year and spend $2 million a year, or like some of the athletes cited above who make $10 million a year and spend $15 million a year, you are not as wealthy as someone who earns a modest income but habitually saves and invests 15% or 20% of their monthly cash flow.

Wealth is not a function of what you earn.  It’s a function of what you do with what you earn.

If you don’t understand these principles, like many pro athletes, a high income will only serve as a counterproductive financial tool to leverage you into more debt and obligations.  If we took all the money in the world and divided it up equally among the population, within a few short years, those who are wealthy today would be wealthy again, and those who are in debt today would find themselves in financial distress once again.

Income is not the key to wealth.  Knowledge is the key to wealth.  But that knowledge will only generate permanent net worth for you when it is applied in the form of wisdom.  Most people realize that they’ve got to save and invest to accumulate wealth; however, for a myriad of reasons, they don’t do it.

We don’t fail because we don’t know what to do.  We fail because we don’t do what we know.

Someone who knows and understands a financial principle but fails to apply it is no better off than someone who remains ignorant of the financial formula or concept in the first place.

As you go through your day today, commit to learning, understanding, and applying the financial concepts that will turn your income into wealth.

Today’s the day!

Retirement STRESS Test, in 90 Seconds

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If you think that a comprehensive analysis of your retirement plan readiness is complex enough to require more than 90 seconds—you’re right.  Considerations of spending patterns, flexible withdrawal rates, increased healthcare costs, tax preference and investing style require a bit more time.  But a Retirement Stress Test, to give you an indication of whether or not you’re in the ballpark?  That we can handle in under 90 seconds.  Take a look!

Zero Impact: Presidential Politics And Your Finances

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What near-term impact will the presidential election results have on our personal finances? None—or almost none.

The impact of one president chosen over another is romanticized by both parties to convince us of the urgency inherent in our choice.  This is especially true in an election cycle that features the economy as its foremost issue at hand.  And while I seek not to minimize the importance of our individual votes for president, a recent and historical view provides us with the evidence necessary to conclude that the impact of our commander in chief on our personal bottom line is nominal, at best.

So if you were personally rooting for Governor Romney and fear that President Obama’s reelection spells doom for your finances in 2012, I’d like to allay those fears.  Furthermore, if you were a supporter of Obama’s and feel a certain level of financial peace post-election, I might suggest it is unfounded.

The reason presidential elections have little impact on our bottom line is two-fold: First, whatever pet projects the top dog manages to push through are typically phased-in over many years.  “Obamacare” is an excellent example of that.  Although President Obama’s legacy project has long been passed, it really won’t begin to impact our wallets (or those of our employers) in a meaningful way until 2014.  Second, it is really Congress—the House and Senate—that makes change happen that impacts our lives (for better and for worse).

Camel-Back-Breaking Straws

So the presidential election results themselves have very little impact on our personal financial plan, but the fact that the election is simply over means a great deal, especially over the next few months.  There are a few camel-back-breaking straws lingering that are expected to develop further now that the world is no longer hypnotized by our presidential election.

Europe can go back to slipping into a continental depression, a slow-bleed that alone could send the remainder of the planet back into a recession.  Many military and geo-political strategists predict a spike in the middle-east conflict du jour (most notably, the Israeli/Iranian struggle, but also further destabilization in Syria).  But the big issue that sits right on our doorstep is the ominous “fiscal cliff.”  This is not an imagined crisis.  NOT arriving at a compromise before we celebrate the end of 2012 will result in a host of personal, corporate and governmental financial time bombs going off while we’re watching football and over-eating on New Year’s Day.  (Yes, it also deserves mention that there are some bright signs peaking through the economic clouds that portend a rosier near future of growth in employment and housing, but the grimmer probability also appears to be the greater.)

What, then, can you do now that your civic duty is done?  More than you would think, especially as the haze of political punditry and spin still clouds our vision, attempting to convince us that our futures are determined by those running, winning and losing.  Yes, political self-interest and acrimony seems to have crippled the leaders we pay to govern, but WE are still—and will always be—the primary determinant of our personal financial success.  And whether you are unemployed or a multi-millionaire, effective cash flow management is still—and will always be—the leading indicator of your future prosperity.  Whether your country, state or municipality is blue or red, your income less your expenses is still your profit, and your assets minus your liabilities is still your net worth.

Now that the election is behind us, let’s control what we can, and disregard what we can’t.

Excessive Trading Leads To Death

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Actually, the headlines on Friday, November 29th, 1940 read, “Livermore, Wall St. Wonder, Dead.”[i]  I was recently re-acquainted with Jesse Livermore’s story—that of a self-made trading savant whose early-life exploits were regaled in a series of articles turned classic work of historical fiction, Reminiscences of a Stock Operator, by Edwin Lefevre[ii]. The volume is still handed out as a guide book to new traders every year, an ironic tradition considering the book was written as a cautionary tale.

It was first published in 1923, after Livermore had won and lost a couple fortunes already, but prior to his biggest take when he shorted the market in the Great Depression, increasing his net worth to a stunning $100 million.  Livermore subsequently went bankrupt—not for the first time—and was suspended as a member of the Chicago Board of Trade in 1934.  So why do we continue to romanticize the story of an investor who lost as much money as he ever made?  Why do we glorify the existence of a man who, thrice married, deemed his life’s work an abject failure?

The story’s remarkable appeal should not surprise us—regardless of the futility of sustainable success in the business of gambling, the allure of the quick or easy fortune seems a siren’s song that will forever be sung, heard and followed.  Maybe the appeal of Livermore’s sad story is that he did not follow his own rules, by his own admission, and that if we can manage to do so, we might be able to make the equivalent fortune without losing it.

Don’t bet on it.  When attending to the business of fooling the market, we almost invariably end up fooling ourselves.  And while one of the first stages of grief for the newly penniless may be blaming our failure on the market, like many others, Livermore eventually placed the blame where it rightly lay—on himself—and sadly took his own life at the age of 63.

Unfortunately, it’s not a stretch to suggest that dedicating ourselves wholly to the pursuit of money and riches often leads to death—literally for some but figuratively for many, many more.  Relinquish the claim to overnight riches in favor of lifetime investing.  You have a favorable probability of generating comfortable wealth through a lifetime of dedicated investing, but even the most disciplined gamblers eventually learn this sad truth—the house always wins.

[i] “The Daily News Record,” Harrisonburg, Virginia, November 29th, 1940

[ii] I highly recommend the edition published by John Wiley & Sons in 2010, newly and informatively annotated by Jon D. Markman.

Financial Planning…Bobby Knight Style

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Bobby Knight is a pretty controversial figure in the world of collegiate sports.  He was known for being as fiery as they come, a coach not below vulgar tirades and endless condescension, even toward his own players, if that got the job done.  And while the debate about the effectiveness and appropriateness of his methodology will continue into perpetuity, I’d like to highlight some of the financial acumen he’s demonstrated recently.

Knight recently chose to auction a lifetime’s worth of sports memorabilia that had collected throughout his illustrious career—including his championship basketball rings and Olympic gold medal—not because he’s been added to the list of sports figures to have gone bankrupt, but because he values the education of his grandchildren above his stuff.

His rationale was simple—he doesn’t use the stuff.  He doesn’t wear the championship rings, the Olympic warm-up jacket or medal.  But he figured his grandkids, nieces and nephews could benefit from the education supplement supported by the memorabilia liquidation.

Now, if I used Knight’s example as an opportunity to probe the depths of the warm and fuzzy or make an attempt at profundity, I’d surely only incite his wrath, so I’ll err on the side of brevity and directness and communicate just as the sports world’s most legendary curmudgeon might:

“You only have so many @#$%ing dollars and can only accumulate so much @#$%ing stuff, so stop acting like a dip-@#$% and put your money and stuff where your heart is.”

You know what?  Knight’s unintended financial planning lesson might just be the core lesson we all need to learn about money, albeit with a few less expletives.

So where’s your heart?  And where’s your money?

Mo’ Money, Mo’ Problems: ESPN Goes “Broke”

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This week, in their “30 For 30” special, “Broke,” ESPN expounded on the Sports Illustrated article alerting the nation to the systemic financial problems within the community of elite professional athletes.  Among other frightening observations, Sports Illustrated found (and ESPN corroborated) that “By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress” and “60% of former NBA players have gone broke within five years of retirement.”

The hypothesized causes of these frightening statistics are compelling:

  • Stratospheric salaries create the mistaken impression that the money could never be outlived.  When most pro sports originated, the players didn’t even make enough money to quit their day jobs.  And while pro football, basketball, baseball and hockey players have been making a fine living for a few decades now, the economic boom of the 90s and the corresponding leap in team valuations for owners has led to unimaginable salaries for the top players.
  • But keeping up with the Joneses is an even more gripping problem in the uber-competitive world of pro sports than it is at the country club.  Not everybody is making A-rod’s $32 mil in 2011, but everyone wants to look, eat and drive like they are.  As Jamal Mashburn observed, “The show wasn’t as much on the court as it was in the parking lot.”  Yes, the disease of more is alive and well in pro sports.
  • And unfortunately, even though many of these guys are becoming instant millionaires upon getting signed, they don’t know any more about the complexities of personal finance than any other kid in their late teens or upper 20s.  They may even carry less financial wisdom into their careers, as many young pro athletes hail from broken homes in disadvantaged communities.
  • Because so many athletes have risen out of poverty to their new fame and fortune, this also makes them a target within their communities.  Bart Scott of the New York Jets (but who spent his better years in black and purple) calls it winning the “Ghetto Lottery.”  At its peak, Andre Rison had an entourage of over 40 and Bernie Kosar had over 50 families relying on him financially.  50!
  • But it’s not just known friends and family that hound these instant millionaires—it’s also young ladies with an eye for upward mobility.  One restaurant owner in the nation’s capital confessed that she had 7,000 women who would receive an automatic text message every time Michael Jordan walked into the joint during his stretch as a Wizard.  Typically, over 2,000 women would heed the call.  Of course, these rich, young “ballers” aren’t exactly turning the ladies away either.  Travis Henry boasts nine kids, with nine different moms and $17,000 per month in child support.
  • And for those players who do settle into marriage, striking numbers of them have their assets cut in half shortly after retirement; fully 60% of NFL players find themselves divorced within three years after leaving the game.  This often doubles their expenses and halves their assets without diminishing their lifestyle.
  • Those athletes who do seek financial advice often find it through unscrupulous and opportunistic advisors, accountants, lawyers and agents who insist on taking a cut of everything.  They are often over-exposed in private equity, real estate and alternative investments—including hair-brained business “opportunities” with a 90% failure rate.  These competitive ball field warriors are especially prone to sales pitches with more allure than a bank CD or balanced portfolio.
  • All this happens typically before these men reach the age of 30.  Five years of income needs to last 50 years.

The temptation is to watch “Broke” or read about this and come to one of two conclusions:

  1. These poor athletes!  They’re used and abused to line the pockets of wealthy owners, only to be left with broken bodies and bank accounts.
  2. These stupid athletes!  They’re handed the world on a silver platter and all they do is wreak a path of destruction with their lives and let down the fans and families who support them.

Yes, it was stupid of Evander Holyfield to build a 52,000 square foot house with not one, but two, bowling alleys, not knowing whether he’d ever win another fight.  It is nearly unfathomable how John Daly gambled away $50 million and how Mike Tyson blew through $400 million.  And yes, it is heartbreaking to hear of Keith McCants’s story of being arrested penniless with two prostitutes, high on drugs that were first recommended by doctors to keep him in the game.  Leagues and owners are complicit, but so are universities cashing in on prime-time athletes and sending them away without any personal financial education whatsoever.

The temptation is to think that we’re bystanders or third-party participants, that we’re inherently different.  But we’re not.  What we see in the financial mismanagement of athletes is merely a magnification of the worst that lies in all of us regarding money.  I, for one, can certify that if I had that kind of money in my late-teens and early-twenties, I’d likely have done the same damn thing.  And I didn’t grow up without the benefit of loving parents and wise instruction.  Go ahead, think about the dumbest thing you’ve ever done; and then think about having a seemingly unlimited amount of money with which to do it AND the paparazzi drooling, waiting for you to screw up.

Money is a tool that can be used to great effect to magnify the impact of our foolishness, and also our wisdom and discernment.  But when money becomes an adornment, when richness becomes a personality trait, and when wealth becomes an advertisement or proposition, we very well may end up agreeing with McCants’s final conclusion: “’The love of money is the root of all evil.’ It destroyed everything around me.”

The Three Most Overrated (And Underrated) Financial Planning Recommendations

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The economic and dogmatic biases of financial planners are so powerful that the tendency to overemphasize certain recommendations and underemphasize others is quite often the norm, not the exception.  Here are three of the most overrated recommendations and their corresponding biases followed by the least appreciated, most underrated recommendations.

MOST OVERRATED

  1. Tax privilege – Whether deferring, deducting, avoiding or evading, financial planners go to great lengths to minimize taxes today and in the future (and sometimes in the past).  This is not only a good idea, but a duty on the part of a qualified financial or tax advisor.  But any time tax privilege is billed as the tip of the spear, it’s probably a sales pitch.  Unscrupulous advisors prey on the elderly who, living off of a fixed income, are very sensitive to taxes as a meaningful factor over which they have no control.  But many are also in a very low tax bracket, nullifying the supposed benefit of the tax-free status of muni bonds or the tax-deferral of fixed annuities.  Many advisors also encourage their clients to maintain a mortgage into retirement “for the tax deduction,” but last time I checked, you need to pay the bank a dollar to save a quarter; and since you can only deduct mortgage interest, mortgages nearing the end of their amortization schedule offer very little deduction.  These advisors may just want to see the money you’d use to pay off your mortgage invested in the accounts they manage—and charge fees and commissions on.  The avoidance of taxes is a worthy endeavor, but “don’t let the tax tail wag the dog.”
  2. Rates of return – No, I’m not denying the power of compound interest, for goodness sake—my calculator and a bazillion sales slicks from mutual fund companies prove it works, and that even a slight difference in annualized rates of return over a lifetime have a powerful impact.  But the amount of attention this gets in the financial planning process is nearly absurd.  This is because in order to retain your investment management business (the primary cash cow for most advisors), they need to convince you of the positive difference that their skill or style will add to your bottom line.  But guess what factor has an even bigger role to play than your rate of return toward the goal of financial independence?  The amount of money you save and invest.
  3. Retirement goals – Beginning with the financial industry’s epiphany some years ago that the biggest, wealthiest generation the world has ever seen would be colliding with the largest transfer of wealth (to that biggest, wealthiest generation from their parents) in history, the practice of financial planning has become increasingly retirement-centric.  It’s almost as if every recommendation in a financial plan is serving the sacred cow of an extended, blissful, effortless retirement.  I’m all for reaching financial independence, but making financial planning solely about deferred gratification means that the practice adds very little value to our todays.  Additionally, as it turns out, both doctors and number crunchers confirm that most people would be better off to maintain some degree of productive work as long as possible.

MOST UNDERRATED

  1. Career – Most of us will spend the majority of our waking adult hours engaged in the act of work.  It is often the way we support our families, contribute to society and make our mark on this world, and it is also the means toward the end of saving and investing for the future.  But how many advisors engage in (or are skilled at) career counseling?  As the primary source of funding for our financial future—and the way we expend much of the energy we have to give in our lifetimes—this is the most underrated (and under-resourced) financial planning recommendation.
  2. Liquidity –401(k)s, IRAs, Roth IRAs, 529s, annuities, cash value life insurance policies and irrevocable trusts have tangible benefits, but they all lack the intangible and underrated benefit of liquidity.  All these accounts that have been given special federal dispensation to allow for various (typically tax oriented) benefits have handcuffs, making it difficult to access your cash for any other reasons.  And life is filled with “any other reasons”!  Surprises and change are two of the only guarantees a financial planner can make, and that means we must plan for them by infusing financial plans with the capacity for flexibility through margin.  This means you should have cash in the bank and boring, conservative investments in an individual or joint brokerage account to fund the short-and mid-term, in addition to the long-term.  Liquidity isn’t sexy enough to sell and your advisor doesn’t get paid on your cash in the bank—that’s why you don’t hear about it as much.
  3. Simplicity – As a young stock broker and insurance agent, I was taught to make things complex to convince prospects that they were in desperate need of my proprietary knowledge (and products) to secure their financial futures.  But in addition to the economics of manipulation, ego also comes into play here.  Advisors love to talk about the most complex things they know because it makes them feel smart, but a truly gifted advisor will take complex matters and simplify them for you.  And, in my opinion, unless there is compelling evidence that your life or balance sheet is going to be materially impacted to the positive, advisors should err on the side of simplicity, not complexity.

Economic and egotistic bias drives the financial industry, but it need not drive your financial planning.

Money Vs. People

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Some time back, I tweeted, “Money serves us best when it is a facilitator of relationships, not an end in and of itself.”  A follower replied, “What are your thoughts/suggestions on how to live this out?”  Quite sure that, “I’m not sure, but I thought it sounded good,” was not the response he was looking for, and knowing 140 characters wouldn’t do it justice, I promised to get back to him with the benefit of more page space.

While money has no power in-and-of itself, we do a remarkable job of giving it power and allowing it to come between us in relationships.  If we elevate money to a position worthy of relationship, our relationships with people don’t stand a chance.  This is because the people in our lives are just like we are—flawed and imperfect.  No matter how much they love us, people inevitably let us down, argue with us and hurt us.  Money can’t.  It promises to give us everything we want if we dedicate ourselves to it, and there’s an entire industry out there working very hard to convince us of that (albeit shrouded in snapshots of gorgeous golf courses, picturesque beach homes, keeling sailboats, leaping whales and charging bulls).

How, then, can we practically differentiate between the life-giving, relationship-infusing, beneficial uses of money and the relationship-destroying, life-draining worship of money?  Well, it’s into the gray we roam, but here are three ways we can test our heart on this matter:

1)     Name your loves – What are the first three, five or seven things that come to mind that really set you on fire.  If a noticeable percentage of your loves are NOT persons, causes, movements, vocations or God, but material objects (animate or inanimate), consider red flag #1 raised.

2)     Ask those you love – Hopefully some of the aforementioned loves are people; if so, consider asking them what THEY think critically of your interaction with the almighty dollar.  This takes guts—to ask the question and to give the answer!  Be prepared for a humbling, and don’t bite back.  If, of course, you don’t have any people on the list of your loves or you’re unwilling to ask them this question, consider red flag #2 raised.

3)     Budget for experiences – Even those who claim not to budget must engage in a modicum of budgeting, at least for the mandatory expenses of life, right?—your mortgage, utilities, auto insurance, 401k…(greens fees and salon appointments).   Well, if the loves of your life are genuine priorities—presumably over your mandatory fixed expenses—shouldn’t budgeting for experiences with them be a non-negotiable?  And I’m not just talking about requisite vacations, but also date nights for spouses or sweethearts (not both), “date nights” with your kids individually, taking your parents on vacation, and going on physical trips to support your causes.

One of my foremost mentors in money and life shared a story with me, a confession of sorts that illustrated he valued money above the foremost relationship in his world.  As one of the most knowledgeable financial planners in the country, he dutifully managed the household budget with a keen eye for discrepancies.  And at repeated intervals, his wife spent more than the mutually determined limit for their credit card that was paid off every month.  Every month, she broke the spending limit and he broke her will for doing so.

Until one day, he felt a deep sense of conviction that he should take 100% of the energy he was dedicating to correcting this egregious wrong and instead pour it into his wife in the form of tangible affirmations and expressions of love.  Several months later, his wife came to him in tears, acknowledging that she realized she had been subconsciously sabotaging their budget.  The reason?  She felt his actions and words proved that money was more important than she, but had seen in recent months that it must not be true.

I do believe with all of my heart that money serves us best when it is a facilitator of relationships, not an end in and of itself, but merely acknowledging, understanding and knowing that does us little good.  It’s in the practical application of this truth that our lives—and the lives of those we love—are changed for the better.