orchard season

Checking the Couch Cushions

by Mark Leibman, President

It’s been a while, but I do remember scrounging for change—flipping over couch cushions, checking the slot at the vending machines, walking a parking lot for anything that’d been dropped or forgotten.

A paper route and other gigs soon changed my focus, and I discovered the power of steady income. Whether we’re talking about one-off opportunities or streams, there are plenty of ways to check for change in the couch cushions.

Maybe you’ve heard someone advise you, “Don’t leave money on the table.” It often comes up in negotiations or sales situations, but there are scrounge-worthy lessons for many areas of our financial lives. Some ideas we love?

  • Knowing what you need—and not just what you want or could use. This self-knowledge provides great perspective. When we keep the basics in mind, we know where the bar is. Anything above the bar is extra, bonus, a cherry on top. The practical implication is that awareness makes us more patient. If a purchase or expenditure is not an immediate need, we know we can afford the time to wait for a sale, a deal, a change of season, or any other more opportune moment. This is saving your scrounging for the right time.
  • Asking for what you’re after. You know we believe in the practice of transparency: there’s not much to be gained by withholding our goals or expectations. It gives the other parties involved—a boss considering your next raise, a mentor, a new financial advisor?—a chance to do their best for you. And if people still aren’t in alignment, wouldn’t you rather know sooner than later? This is a method of scrounging for time to work toward your goals.
  • Remembering you don’t know what you don’t know. This could be a productive conversation starter for anyone in your circle you trust. It’s something you could ask your tax professional, your employer’s human resources department, or even our office: “In your experience, what’s something I may not know that I don’t know?” There could be opportunities people wouldn’t know to think of! This is scrounging for possibilities.
  • Maximizing those matches. Yes, you know this is a favorite of ours: take full advantage of any employer match on retirement contributions. It’s more bang for your literal buck. It’s free dessert for eating a balanced meal.

We should note that we believe in leveraging opportunities: we do not believe in abusing any system to the detriment of the community. (Many of us learned our lesson in childhood: our siblings’ rooms are not fair game for scrounging the way the couch cushions are!)

There are, however, plenty of aboveboard strategies for scrounging. Opportunities abound. Which are worth it?

Clients, when you’d like to explore this topic—or anything else—write or call.

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Checking the Couch Cushions – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

Working What We’ve Got

One investment supersedes all others: an investment in yourself. It adjusts for inflation. It helps you have a more interesting life. When we invest in ourselves, we are seeking to improve our value to others. The more valuable we make ourselves, the more an employer or customer will pay us.

The collection of attributes that create this value are called human capital. Many aspects of human capital are free. Years ago, I became acquainted with a senior officer of a large publicly traded company whose most obvious superpower is kindness. After they moved on to a leading role elsewhere, people familiar with them always remembered that trademark feature—and how they had helped them in the past, how they made them feel.

Kindness is free. So are dependability, punctuality, enthusiasm, diligence, and all the other traits we seek when we deal with others. (Others desire those same traits in us.)

Some aspects of human capital require time and money, sometimes lots of both. Think of the education and training required of surgeons, for example. Educational paths and career planning are beyond the scope of this essay, but the value and wisdom of all of your choices ultimately comes down to whether you figure out how to add value to the rest of society.

We have heard the idea of “follow your passion” debated back and forth. Understand the difference between doing what you are passionate about and being passionate about what you do. One of them has a wider range of opportunity than the other.

The source of our wealth is our earning power, which arises from our human capital. It all starts here.

Clients, if you would like to talk about this or anything else, please email or call.

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Play the audio version of this post below:

Working What We've Got – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

Look Rich or Be Rich?
© Can Stock Photo / ragsac

Some people have so much money, it doesn’t matter what they do with it. On the other hand, some don’t have any. Our work tends to be with those in between, those who need their money to work effectively. Clients, that’s where you and I live.

Many financially independent people we know faced the choice of a lifetime: they could look rich, or be rich. And they chose to be rich. The cost of impressing others is quite high when it manifests in expensive homes, vehicles, and conspicuous consumption.

The difference between a $250,000 home and a $500,000 one is not just $250,000. The recurring expenses connected with the more expensive home may include higher property taxes, larger utility bills, more interest expense, and greater maintenance costs. Those recurring expenses reduce room in the budget for accumulating wealth to live on in later life.

A recent article about $10,000 watches had the headline, “Affordable Watches That Will Make You Feel Like A Millionaire.” This seems funny to us. We delight in asking people whose invested wealth has reached the $1 million mark whether they identify as a millionaire now. Not one has answered ‘yes.’ So if a million dollars doesn’t make one feel like a millionaire, what chance does a $10,000 watch have in getting that done? (A large fraction of the millionaires I know wear $39 watches.)

The paradox is that those who strive to look rich may never accumulate much in the way of assets. Meanwhile, those who chose to be rich may eventually learn how to spend well. They can afford the vehicles that provide the most comfort, the homes that make daily life better, generosity to descendants or charities, and travel to bucket-list destinations.

The flaw in attempting to impress others is, we do not control what others think. We only control our own choices. Those everyday millionaires (and those on the way) in our acquaintance seem to have learned this early, and made the wise choice.

Clients, if you would like to talk about this or anything else, please email or call.

Free Wins

canstockphoto25929752

People or companies may confer benefits on third parties without cost, as a side effect or byproduct of their actions. Planting a tree improves the neighborhood and provides shade to a neighbor. Keeping bees results in the pollination of nearby crops. Providing first-aid training to workers may save lives outside of work. A video or blog post created for clients might contain an idea that helps people who are not clients.

These are examples of what economists call positive externalities. These things are all good. They make the world a better place.

I believe the concept applies in our interactions with others, as well. Have you ever had your day brightened by the laughter of a group of passersby? Watched someone hold a door for someone with an armload of packages? Overheard a “thank you” being given for an otherwise thankless task?

All of these things are benefits that they produced for free and you enjoyed at no extra cost. They are positive externalities, on the small scale of daily life.

Having a tree planted improves our home as well as the neighborhood, but generating positive externalities can also help us beyond business transactions. Friends and family members respond to the empathy, kindness, and thoughtfulness embedded in any of those little actions we can take. If employed, those in our network are likely to sense the intangibles we add to the workplace environment. Our teammates across the community likely enjoy our interactions more.

Generating positive externalities is not charity. There are no costs involved, only benefits for giver, recipient, and neighbors and passersby. Win-win-win.

The general concept has been around for a long time, and is often expressed more simply. Be kind. Fill up the buckets of others. Do unto others.

Clients, if you would like to talk about this or anything else, please email us or call.