Reflecting Through These Challenging Times
This blog is meant to encourage us to grow personally through the current pandemic. Unfortunately, tragic loss has been suffered personally by so many. We mourn with those who are experiencing such loss and recognize there is no benefit in your loss.
One of my favorite speakers and authors, Andy Stanley, has a saying: ‘Pain with no gain is a shame’.
Our experience with COVID-19 over the last several months has brought several challenges. It would be a shame to endure this time without reaping a harvest. As I think about what we have gone through, there are three areas I think we need to evaluate and make the required improvements, so we do not have to endure the same pain again in the future:
Three financial planning fundamentals stand out:
- Spend less than you make – You cannot create financial wealth unless you do this and do it for a long time.
- Limit debt and focus on reducing it – The borrower is a servant to the lender. Have you thought about why we are inundated with credit card offers, ‘don’t pay a cent events’, 0% financing and bank offers to increase personal lines of credit? Someone else is making a great deal of money off you! Getting into debt is much, much easier than getting out of debt. When the unexpected happens, it becomes obvious that someone else controls our financial situation. In other words, we are their slave.
- Have an emergency fund – It is recommended to have enough savings immediately available to cover at least three months of expenses, preferably six months. This also applies to businesses. Can you imagine the stress that would have been avoided if everyone had followed this principle prior to COVID?
Perhaps you have followed these principles, accumulated financial wealth, made what you thought were wise investments only to see their value drop massively in just a few weeks. That is SO discouraging! The good news is, you can escape the market swings and still generate solid returns. Higher net worth investors have options, they are referred to as Non-Traditional investments. These are investments whose returns are not dependent on public stock, mutual funds, bonds, or ETFs and therefore do not swing with the stock and bond markets. Our clients enjoy the benefit of a Portfolio Manager that specializes in Non-Traditional investments. All our client’s 1-year performance has never dropped even close to negative returns throughout the COVID-19 turmoil.
COVID-19 may provide the time and motivation for coaching that can be applied immediately to reduce their stress and implement corrective measures that can last a lifetime.
You may follow the financial planning fundamentals above, but what about your children? Our experience shows, most higher net worth individuals are so busy, they have not made it a priority to teach money management principles to their children. If this is the case, your children will not follow in your financial path. COVID-19 may provide the time and motivation for coaching that can be applied immediately to reduce their stress and implement corrective measures that can last a lifetime. Not to mention, leaving money to heirs that are not equipped to manage it well is a tragic end for all your hard work and sacrifice.
Beyond successful money management principles, what are your success principles for life? Have you learned lessons from your COVID-19 experience that you want to prioritize? There has been a lot of talk about this experience helping us better recognize what we value most. What changes do you need to make so that you don’t forget these priorities when busyness returns? This has been another reminder of how quickly financial wealth can disappear. Have you taught your children the principles you have learned to create financial capital? It is much more valuable to teach them how to create financial capital than to give them financial capital. What about the other forms of capital, have you taught them how to create those forms of wealth? Pass these lessons, so the next generation can launch from where you end rather than starting from scratch.
We all have a worldview, whether we are actively creating spiritual capital or not. Our worldview is how we see the world, the principles, and perspectives we use to guide our decisions and life path. The COVID-19 crisis has shaken our view of many things. As you have looked to your worldview to make sense of what is happening, has it held up? If it held up, did it give you the level of peace and solace you desire? If not, what needs to happen to increase your peace in troubled times? Or have you found your worldview unable to guide you through this challenge? If so, it is important to invest time and energy in this area to be better equipped to weather the next storm without anxiety.
Humans are adaptable and innovative, and we are addressing the COVID-19 challenge. What lessons have you learned? What one or two things do you need to do to better position yourself and your family so you can avoid some of the pain from the next major surprise? Make sure you get a dividend from your current pain. If we can help you better position yourself, please contact us today.