MONEY matters

Years ago, there was a commercial on TV where the actor would look seriously into the camera and say: we make money the old fashioned way, we earn it. He was speaking of a stockbrokerage company that successfully utilized that slogan for years. I mention this commercial because I believe we’re headed back to the old fashioned days, where a penny saved was a penny earned.

Prior to the recent stock market crash, our homes and investments were going up in value each year and in many cases, faster than many of us anticipated. That was good news for many, but it also came with consequences.  Due to the rapid rise in net-worth, many people neglected or just simply forgot how to save money during these times. And if you ended up not saving and spending too much one year, cheap money was available in the form of refinancing your home mortgage. Those days are gone.

There’s a new flurry of Your Money or Your Life readers discovering or in some cases rediscovering this amazing jewel of a book. This is great news on many levels and I’m grateful to be hearing from many of you. From the recent calls and emails I’ve received, what’s most on your mind seems to be how to achieve financial independence (FI) early rather than later in life. Early semi-retirement is a huge boomer trend by the way and one I feel that’s still operating below the radar screen of mainstream media, but I’m sure, not for long.

If you work in the corporate world, you know you’re in trouble when the leadership of the organization starts talking about the need to “increase productivity”. This is a clever euphemism for working two, sometimes three jobs for the price of one. Profits stay high for the corporation while your quality of life sinks.

As I was asking a new client to describe her earliest memory around money, she started recalling how her parents dealt with money. She remembered how often they disagreed about managing their money, how often she remembers hearing her Dad say how “you kids are going to drive us into the poor house”. She grew up in Long Island and was raised in a Irish Catholic family with 9 kids. There was a constant sense of scarcity in her life and that feeling of never having enough stayed with her as adult and permeated her relationship with money in many ways that were unconscious. At the current age of 58, and by all intents and purposes, very well off financially, she still feels, after all these years, that if she’s not careful, she’ll wind up in the “poorhouse”.

The reason I bring this story up is to remind all the parents reading this post of how powerful your words and actions are when it comes to your relationship with money. What you say, or sometimes what you don’t say about money is being recorded by your kids for future use. How you spend, save and earn money as well as how you talk about it has a huge impact on your children’s future relationship with money.