money management

Two Secrets About Money and Time
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“Wealth consists in caring less about what others think about you and more about using your money to control how you spend your time.” — Morgan Housel

We’re fond of the work of Morgan Housel, who strives to help folks change their relationship to money. In his definition of wealth, we notice two key ideas—ideas that could bring some clarity to our financial decisions.

Wealth Isn’t About Anyone But You

It takes only a moment to recognize the potential problems of using wealth to influence how others perceive us. The trappings of wealth can be had with borrowed money: a $10,000 watch for $200 monthly payments, a luxury car for a monthly lease payment. But the watch and the car are not proof of anything.

Ultimately, we do not control what others think. No amount of money gives us that power.

When we focus on meeting our own needs rather than some notion of what might impress others, we require less wealth to gain control and therefore focus. We may be able to retire earlier or work at a more rewarding endeavor on less money, should we choose… which leads us to the second key idea from Housel’s definition.

Time Is Money Is Time

The familiar phrase “time is money” comes to us by way of Benjamin Franklin, writing in colonial Philadelphia. Housel writes that wealth is about using your money to control how you spend your time. In short, he turns the idea upside down: money is time.

Carried to its logical conclusion, when we have enough wealth, we may retire and gain control over the time we formerly spent working. In the form of Social Security and pension benefits, investments and 401(k) balances, the money we’ve earned then buys us time. Money is time!

Housel adds a layer to our understanding of wealth, which magnifies the good it may do us.

When you are ready to talk about your time or money, email us or call. We’ll be ready to talk with you.

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Don’t Let Anybody “Should” All Over You
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Trying to lose weight? Maybe you could focus on exercise, on diet, or on a combination of factors.  

Trying to repair something around the house? Maybe you could watch a tutorial and try your hand at it, or maybe you could hire out the work. 

But which way should you do it? 

The thrilling answer for many of life’s challenges and goals is that it depends. Lots of paths can lead to success. When we work with you, our clients, on your financial challenges and goals, the same is true.  

  • “What should I be doing to plan for retirement?” 
  • “What should I do with this inheritance?” 
  • “What should I do about this account?” 

It depends. That’s why we’re here to work with you, wherever you are in your process. 

Telling people what they “should” do with their money seems, to us, kind of gross. And we don’t want anyone to “should” all over you! 

I first heard this advice years ago from speaker and author Amy Florian, and it has roots with German theorist Karen Horney who talked about the “tyranny of the shoulds”: if we get too wrapped up with what we imagine what we “should” be doing, we lose sight of what we have and what’s within our control. 

The idea comes to mind whenever I read or hear some supposed expert on whether you “should” pay off your mortgage early or “should” retire at a certain age or “should” do anything. (I believe, quite often it comes from financial planners who seem to think they’ve been ordained to tell people how to live.) 

We think the first priority when you engage us on any issue is to outline the range of possibilities; then we can look together at the options and their ramifications. We’ll tell you what we think, but we will not tell you what to do.  

It is your money, your choice. What will help you sleep easy each night? What dreams are worth  pursuing each day? 

So what “should” you do? Well, we’d gently recommend that you not let anybody “should” all over you! 

Clients, let us know when we can help you address any of those “should” type of questions you may have.

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The Next Best Thing to Free Money

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We are always gratified when clients find themselves with money to invest and their first thought is to put it to work with us. We pride ourselves on our ability to help clients work towards their financial goals, and believe that we provide a compelling service. But regardless of how good we might be at what we do, there are some situations where you can definitely do better with your money elsewhere.

Occasionally, younger clients who find themselves with extra money to invest will ask us whether they should contribute to their brokerage accounts or their employer retirement plan. Sometimes, their employer plan has an employer match they have not yet maxed out, which makes this question a real no-brainer. A dollar-for-dollar employer match is essentially a guaranteed, instant doubling of your investment. We might be good—but we’re definitely not that good. Even if you are unhappy with your employer plan’s performance, an employer match lets you take quite a lot of losses and still come out ahead of a more successful portfolio that doesn’t have the match.

Another situation where it makes sense to put your money elsewhere first is debt. In today’s low interest environment, you might not feel a lot of pressure to pay off cheap loans. However, if you have debt you’re paying 8, 10, or even 12% on, you should put some serious thought into paying off that debt before you invest that money in the markets.

If you pay off $5,000 of credit card debt that you are paying 12% interest on, your $5,000 “investment” will save you $50 a month, $600 a year, like clockwork. You’d be hard pressed to find any other investment that will pay you that kind of return—and if you did, it would likely have many risks associated with it. But once you pay off your debt, those interest payments are gone forever. We can’t really compete with that.

This is basic financial literacy you can use to improve your financial situation before you think about investing. As always, everyone’s situation is a little bit different, and we’re more than happy to discuss the particulars of your situation with you—even if the obvious conclusion turns out to be that you have more important places to put your money.

Investing involves risk including loss of principal. No strategy assures success or protects against loss.