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.

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.

Is A Million Bucks Enough To Retire?

Originally in Forbes“Wow, those guys must be millionaires!” I can recall uttering those words as a child, driving by the nicest house in our neighborhood—you know, the one with four garage bays filled with cars from Europe.

The innocent presumption, of course, was that our neighbors’ visible affluence was an expression of apparent financial independence, and that $1 million would certainly be enough to qualify as Enough.

Now, as an adult—and especially as a financial planner—I’m more aware of a few million-dollar realities:

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1)   Visible affluence doesn’t necessarily equate to actual wealth.  Thomas Stanley and William Danko, in their fascinating behavioral finance book, The Millionaire Next Door, surprised many of us with their research suggesting that visible affluence may actually be a sign of lesser net worth, with the average American millionaire exhibiting surprisingly few outward displays of wealth. Big hat, no cattle.

2)   A million dollars ain’t what it used to be. In 1984, a million bucks would have felt like about $2.4 million in today’s dollars. But while it’s quite possible that our neighbors were genuinely wealthy—financially independent, even—I doubt they had just barely crossed the seven-digit threshold, comfortably maintaining their apparent standard of living. To do so comfortably would likely take more than a million, even in the ’80s.

3)   Wealth is one of the most relative, misused terms in the world.  Relatively speaking, if you’re reading this article, you’re already among the world’s most wealthy, simply because you have a device capable of reading it. Most of the world’s inhabitants don’t have a car, much less two. But even among those blessed to have enough money to require help managing it, I have clients who are comfortably retired on half a million and millionaires who need to quadruple their nest egg in order to retire with their current standard of living.

The teacher couple, trained by reality to live frugally most of their lives, don’t even dip into their $400,000 retirement nest egg or their $250,000 home equity because they have two pensions and Social Security that more than covers their income needs.  Their retirement savings is just a bonus.

But the lawyer couple, trained by reality to live a more visibly wealthy existence, aren’t even close to retiring with their million-dollar retirement savings. In order to be comfortable, they’ll need to have at least $4 million.

A million bucks, then, may be more than enough for some and woefully insufficient for others.

Selfish Generosity

The-art-of-non-conformity-set-your-own-rules-live-the-life-you-want-and-change-the-world Chris Guillebeau is an interesting dude.  I had the chance to hang out with him recently when he was stopping in Baltimore on his book tour in support of his new book, The Art of Non-Conformity, and I interviewed Chris on the radio show, Money, Riches & Wealth.  In case you’ve never heard of Chris and require a little more buy-in to believe he’s worthy of the “interesting” label, my summary following should do the trick:

Chris quit high-school after his freshman year, got his GED, snuck into community college, finished hisundergrad degree in 2 years (your math is correct—at that point, he wouldn’t have even finished high school ordinarily), served with an aid organization in Africa for several years, came back to the states to complete grad school, began to blog, became a professional writer and then wrote a book including a chapter in which he calculates to the penny how he could’ve gotten more education for far less outside of grad school rather than in.

You might expect this rebel with a cause to be a loud, type-A, bull-in-a-china-shop sort, but I was somewhat surprised to learn he’s actually a soft-spoken introvert.  That hasn’t stopped him from communicating a truck-load of wisdom, certainly through his book, The Art of Non-Conformity, but even more so through his online presence (which you can enjoy at www.chrisguillebeau.com).

And here’s the most interesting thing about Chris and his vision that separates him from the vast majority of vocational self-help voices:

He doesn’t think it’s all about YOU (or him or me).

Way too many books—most glaringly, The Secret—have attempted to make us followers by courting us with self-centric pronouncements that WE are each the center of a universe that is waiting to dutifully serve us all the success and money we could dream of if we simply dedicate our every thought and action to that “reality.”   Mr. Guillebeau, on the other hand, sends a strikingly non-hedonistic message.  Sure, he believes that we should be enjoying nearly every minute of our education and job, but instead of attracting us with visions of living endless hours with our toes in the sand and a fruity umbrella drink in hand, he encourages us to live a life filled with purpose and work that may be enriching, but definitely fulfilling.

He believes that in order for us to be entirely fulfilled with our life’s work, we need to be serving someone other than ourselves; that we—regardless of our age—must be building a legacy, not just an estate.  He calls it “selfish generosity.”  Doing something good for others that is also good for you.  If you struggle to believe that one can find financial stability, or even affluence, by pursuing a vocational course that doesn’t seek first and always to serve oneself, take a look at, well, Chris.  Or, have some fun learning about Blake Mycoskie, the young entrepreneur who started a phenomenally successful, for-profit shoe company—TOMS Shoes—on the premise that they would give away one pair of shoes for every pair sold. One-for-one.

Aw, I don’t know…the whole greed-centered focus worked out so well in the Great Recession, though! (Sorry, I’m obviously struggling with my 2010 New Year’s Resolution to avoid the use of sarcasm…)

Listen to just a few minutes of my interview with Chris Guillebeau on this topic by clicking here:

 

Chris Inteview