By Figuring out what’s driving your financial behavior can help us help you.
In our office, we see different approaches to money that tend to fall into a few distinct categories. In my business, I often find myself serving as a financial therapist for the families I work with, and that sometimes means figuring out why certain people fall into one of these categories. Finding and addressing the why can also help change any patterns that might be working against you.
First, picture the Scrooge McDuck types, playing the game of collecting as many gold coins as possible – without a clear plan as to what to do with all that loot. In this situation, often ole Scrooge leaves his fortune to his kids after he (finally!) passes away, but by the time this happens the kids are well into their own retirements. The financial therapist in me encourages these types to think about how that money could be used to benefit their children and families now, perhaps to pay for family gatherings so they can actually interact with one another, or helping pay for education for kids or grandkids. Of course those things reduce that pile of metaphorical gold coins, but that might be money better spent than hoarded.
Then there are those folks who make a lot and spend a lot, but they don’t necessarily use their spending as the excuse not to save. They’ve decided they’re going to work forever because they think they’ll die young anyway. Then they let themselves go, health-wise, so they won’t have to work till they’re 90. They couldn’t get to the point of delaying gratification, and so they create a self-fulfilling prophecy of working longer and dying younger.
Third, we have the people who aren’t rich, they’re just the average families who save, want to help their kids through college, live in a modest home and drive paid-off cars. These clients have usually had the same life experiences that led the Scrooges and work-till-I-die groups to their financial attitudes, but most of these clients tell me they want to make sure their children have better lives than they did. Even if it means having a smaller pile, they put their families first.
Again, from a financial therapist standpoint, it’s not that any of these groups are more content or more miserable than the others – even when they probably should be – those folks are simply in denial. But here’s the point: Everyone has a “why.” The Scrooges may have been affected by their parents or grandparents living through the Great Depression, job losses or unexpected health expenses. The work-till-I-die group is often scarred by the early death of a parent and figure they’re bound for the same fate, so they use that as an excuse to overspend and live an unhealthy lifestyle.
It’s my job to help you uncover these underlying whys that drive your financial behaviors, and help you create a plan to work toward the best financial future possible for you and yours. It’s never too late to get onto a better path, and our team would love to help.
As you read this, who do you identify with? Or is there a fourth group that illustrates your financial why? I’d love to hear your thoughts.
Article by David Smyth, CLTC, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.