I’ve helped people save and spend millions of dollars.
Since beginning my career as a professional investment advisor in 1984, I’ve enjoyed thousands of conversations about money. I’ve listened carefully as clients and friends discussed new homes, autos, vacations, businesses and schools. I’ve reviewed countless financial statements, balance sheets and investment recommendations. I’ve studied columns of numbers until my eyes blurred, blinked a few times and then studied them some more.
Here’s my conclusion: It’s not really about the money.
Money isn’t the focus of great financial planning. It took me a while to learn this, but I’m grateful I finally did. The secret of most tradecraft is not the initial training or education, but in incremental tidbits that accumulate day-by-day. That’s why we often learn best at the feet of masters.
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One master of the personal finance is a crusty New Yorker named Nick Murray. I’ve met Nick several times and recommend his columns and books with fervor. He was in Kansas City recently and I still marvel at his energy and wisdom. One bit of wisdom offers particularly powerful insight.
Murray identifies “Five Great Goals of Life.” Not everyone aspires to all five, but almost all of us identify with something on the list. His Five Great Goals of Life?
▪ Comfort in retirement,
▪ Financial assistance for children,
▪ Educational assistance for grandchildren,
▪ Care for aging parents, and
▪ Gifts to charitable organizations
His words are far more eloquent than this paraphrase.
How many of these fit you? Like me, you probably recognize all of them, with varying degrees of concern. While most of us seek a quality retirement, somewhat fewer worry about our parent’s financial plight. Yet overall, this is a solid list. Murray is a smart man and he doesn’t miss often.
If you only read a portion of this piece, please note that none of the five are “money” goals. The focus isn’t on building wealth; it’s on taking care of people and institutions we love – our spouse, children, parents, and church. Incredibly, these are people goals! In today’s world, that’s remarkable insight.
Next, our ability to meet these goals is enhanced by accumulating value. (The terms money or investment are too restrictive; equity in our house has financial value, but it isn’t money or an investment). Most of us can, and do, positively influence our children’s lives every day. Yet think of the impact we might have with more accumulated value – top-notch education, travel, and cultural experiences, business opportunities -- plus the freedom to pursue special talents or abilities.
Actually, all five of the main goals aren’t about money – but people. In short, our success financially will determine, in part, our ability to accomplish life’s important objectives. The better we do financially, the more powerful our positive touch in the lives of people we love.
Last, our best hope for accumulating genuine financial value is to work backwards from each goal. None of these goals are impossible if you implement systems to save, invest and monitor financial value:
▪ Really simple systems.
▪ Rational investment choices.
▪ Spending plans.
▪ Automatic investment plans.
▪ Periodic financial statements.
▪ Routine financial check-ups.
These are the tools that make the things you’ve imagined for the people in your life a sweet reality.
Building financial value isn’t rocket science. It’s a deliberate process of analyzing options and making those choices with the best chance of accomplishing objectives.
Don’t think of these as drudgery or some form of medieval torture. Instead, reshape them in your mind as modest sacrifices for the people you love. After all, money is just a tool to help us meet the Five Great Goals of Life.
Dan Danford serves as Founder/CEO of Family Investment Center, a full-service, commission-free investment advisory firm founded in 1998. Based in St. Joseph, Mo., Family Investment Center also serves clients in the Kansas City area and across the country, managing money for families and nonprofit clients.
The information provided in this article is provided for general information and educational purposes only, and is not intended to be and should not be relied upon as legal, accounting, tax, investment, or other professional advice or services. Because every individual’s situation is unique, you should consult a professional who can thoroughly review and analyze all aspects of your particular situation before making any decision or taking action.
If you would like members of the Financial Planning Association of Greater Kansas City to address a general financial planning topic or answer your question on this blog, please contact at firstname.lastname@example.org. Provide your first name, your age and hometown.