Family Calendar
At the time of this article, California is feeling the brunt of our second Atmospheric River in the span of four days. This weather event has brought record-breaking rainfall and substantial disruption across various counties in Southern California. Fortunately for Orange County, the rainfall has been consistent but not overly disruptive and generally a welcomed change (especially for my boys). There is one caveat to this, which is that we are not made for actual winter weather. Whenever rain comes, there is a slow-down from all the traffic and accidents that always catches me by surprise. This wouldn’t be a problem, except my family calendar is booked back-to-back with various family commitments, and so the slowdown from rainy weather pushes our weekly activities off-course, leaving us feeling frustrated and late. The frustrations of this past week have reminded me that I can hold my life plans too tightly and become distracted from seeing the bigger picture of life.
Seeing the Bigger Picture
I’m reminded of an old saying in business, “if it can be measured, it can be managed.” I can’t recall many parts of life that are so easily measured as the world of finance. From budgeting to portfolio allocations, the list of tools available to measure financial hygiene is virtually endless. And so, equipped with the knowledge and resources of the internet, we closely monitor our financial goals in minute detail. We can fall prey to the temptation to treat our financial goals just like my family calendar, stacked back-to-back with expectations, only to be left feeling frustrated when life doesn’t go according to plan. So, when life events force us to go 50 miles per hour when we want to drive at 75 miles per hour, it’s helpful to take a step back and look at the bigger picture.
Home Building
During client meetings, I often remind families that building wealth is like constructing a home. Each home is unique to the family, and its features are all specific to your preferences. The timeline of construction, quality of materials, and city laws are all factors in the construction process and should be managed well. But those aren’t the most important things. The people who live in your home or the impact you leave in your community are the greater focus. Every so often, it’s helpful to remind ourselves that money is simply a tool. I’ve been working with an individual who is going through a very difficult stage of life. During our conversations, she made a comment that weighed heavily on me, “I have all the money I could ever need, but no longer have the one I want to share it with.” It was a helpful reminder that while we should take care of how our wealth is built, we should not lose sight of what it’s all for.
Reflecting on What Matters Most
This weekend will be Super Bowl Sunday, and there is no doubt that the 49ers and Chiefs are watching game film, refining their process, and carefully drafting each play for the game. They are operating at a level of detail that an amateur sports fan like me can’t possibly fathom. But I do know one thing: they’re doing all of this with one end goal in mind – winning the Super Bowl. In the same way that sports teams keep the end objective in mind, I encourage our readers to take time every 6-12 months to reflect on their intangible goals. Wealth is simply one of many tools we use to build our lives. Unfortunately, the never-ending pursuit of increasing your wealth has a particularly strong temptation for some investors. A few examples come to mind where the tension between building wealth and the intangible parts of life can come into conflict.
- Tax Strategies | It’s no surprise that humans are averse to pain. Many studies have shown that the pain of losing $10 is greater than the joy of gaining $10. We have a self-protection instinct that kicks in during tax discussions and prompts investors to consider some extreme life decisions in the name of “tax mitigation.” Don’t let the tax tail wag the dog.
- Retirement Saving | There is an online community called “FIRE: Financial Independence Retire Early,” where the core belief is to embrace the hustle and prioritize retirement savings above all else. The intent of these folks is simple: commit to extreme self-restrictions to enjoy a prolonged season of financial independence. I have seen some good outcomes from this mindset but also significant damage to relationships with spouses and children.
Looking at my own life, I have a temptation to stack up my financial goals and squeeze the most out of every investment opportunity. Just like I tend to block my calendar with back-to-back commitments. And then, when the rainy days come and throw my well-made plans off-course, I can either respond with frustration or accept that life can be messy at times and embrace the opportunity to let go of control and choose to invest in the things that matter most.
James Andrews
Private Wealth Advisor
jandrews@thebahnsengroup.com
Trevor Cummings
PWA Group Director, Partner
tcummings@thebahnsengroup.com
