Learner or Luddite?

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By Sue Peterson, CFA

“If you don’t like the weather, wait five minutes.” Change is inevitable in our life, whether it is as insignificant as the weather or as meaningful as a personal relationship. Our relationship with money should also change over time or we risk being financial Luddites. The danger of this could be leaving a wake — an emotional legacy — for our heirs that becomes a caricature discussed over Thanksgiving dinner rather than a beautiful example to emulate.

Maxwell Maltz, the father of self-help books, states, “To change a habit, make a conscious decision, then act out the new behavior.”

In my work as a wealth manager for more than two decades, I’ve seen clients who embrace this statement and many others who do not. Each story provides a case study for how one’s viewpoint about money can serve as a bridge or an impediment to personal health and relationships. For example:

Dave’s parents wanted to leave their children an inheritance after they passed; in the short term, they gave generously of their time but very little in terms of monetary gifts to their children. Dave and his wife were bold enough to tell his folks: We would rather spend time with you now than get an inheritance. Let’s use the money to go on vacations together with you instead of waiting to use the money when you are gone. This affirmation of a mutual desire to spend time together and enjoy the fruits of the parents’ financial success in the present has led to an annual trip to Hawaii courtesy of Dave’s parents. Schedules magically align when parents are paying!

Some believe that a legacy only means a financial inheritance…

Leah’s grandfather was one of nine children, raised in rural Kentucky during the Depression era. He raised his own children frugally, with Leah’s father eating out for the first time when he turned 18. When Leah’s grandmother became ill, she received mediocre care and quickly passed away. When her grandfather became ill, he didn’t want to pay for care and also passed away. After his death, the family discovered millions of dollars in assets. One could argue that this is a nice surprise for the family; however, it leaves mostly “what-if” questions. What if Grandma and Grandpa had paid for and received good medical care? For the heir that has already spent his share on alcohol, what if his father had intervened and offered to pay for treatment?

Carrie’s father was also raised during the Depression and still has “depression mentality.” He is well off and enjoys Whole Foods but won’t shop there because he believes they charge too much for fruit. She did the math for him and pointed out that if he ate an organic apple every day, he would pay, at most, another $300/year, an amount that easily fits into his financial ability. He laughed and said, “Well if you look at it that way …”

…Some feel that spending “too much” means more than you used to pay.

Yee’s parents always talked about leaving an inheritance for their two boys. Yee helped his parents understand that they have the financial capacity to more than cover their living expenses and also leave a financial legacy. He encouraged them to travel to places they have always wanted to visit and spend time with loved ones while they were in good health. Yee’s parents now travel with joy rather than a feeling of guilt that they are spending their children’s inheritance.

Each of these examples includes an assumption. Some believe that a legacy only means a financial inheritance; others feel that spending “too much” means more than you used to pay. Where do these assumptions and opinions come from? What is the message playing in your head? Is it still useful in light of your changed circumstances?

Now ask yourself some new questions: How much quality time do my spouse and I have remaining? How much longer can we travel? How much time do we really have until our children’s and grandchildren’s lives are too full to make time to be with us?

Perhaps changing your relationship with money will help you best deploy your capital during your remaining quality time. Another self-help author and speaker, Wayne Dyer, says it well: “If you change the way you look at things, the things you look at change.”

About The Author

Susan Peterson, CFA, is managing director of Cornerstone Advisors in Bellevue, Washington, one of the top 20 wealth management firms in the country. Peterson brings more than 20 years of financial industry experience to her work with women who find themselves suddenly single as a result of divorce or death of their spouse, as well as retirees and technology wealth.