Financial Awakenings

About

Rick Kahler

  • President & Founder, Kahler Financial Group
  • Certified Financial Planner, MS, ChFC, CCIM
  • Co-Founder: Healing Money Issues Workshop
  • Co-author, Conscious Finance
  • Co-author, The Financial Wisdom of Ebenezer Scrooge

A proud five star member of the Paladin Registry.

Recent Posts

  • Steps to Take While You're Holding On
  • What's Your Reason for Watching "The Apprentice"?
  • CFP With Passion Wanted
  • Rick In The Washington Times
  • Home Ownership--The American Dream for Everyone?
  • It's OK To Spread Our Newsletter Around!
  • Past Performance is No Guarantee of Future - Even with Cruise Lines
  • Olivia Mellan Interviews Rick on Marriage and Money
  • KFG Clients Can Now Automatically Reset Passwords on AdvisorClient.com
  • Thoughts for a Prosperous New Year
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Giving Liberally? Or Conservatively?

Watch Rick's Column Here or Listen to Rick's Column Here

Until recently, I was convinced that Ebenezer Scrooge was a conservative, at least before his transformation. His refusal to give to the poor at Christmas time personified our perception of a conservative as cold-hearted, stingy, and even miserly. I would also have given you high odds that his loyal clerk, Bob Cratchit, was a liberal.

Now I am not so sure.

In late November, John Stossel’s ABC special 20/20 report, “Cheap in America,” changed that probability 180 degrees. Indeed, the preponderance of the evidence suggests the stingy-hearted Scrooge was most likely a liberal and Cratchit a conservative.

Let me explain. Stossel’s report centered on Arthur C. Brooks' new book, Who Really Cares. The book examines our societal myths around giving and then reveals the facts. The focus of the report was on what and how much Americans give. It caused me to pause and consider a few of my own unconscious beliefs around giving.

One of those was a belief that “liberals” give more than “conservatives.” I’ve always assumed that those who are philosophically identified as champions for the poor and downtrodden would give more to those in need than would conservatives. Conservatives, after all, philosophically embrace individual responsibility and capitalism, both attitudes having less "heart" than a more liberal philosophy, right?

Not true. According to Brooks, of the top 25 states where people give the greatest amount of money in relation to their income, 24 are "red" states. In fact, conservatives give 30% more than liberals and actually make less. This turns my stereotyped money scripts on their noses. There must be some mistake. Why are the people identified more with championing the issues of the poor apparently champions in word only and not in their actions? That almost sounds hypocritical.

Stossel suggests that at the core of progressive philosophy is a belief in large government, as well as a belief that it is the government’s responsibility to aid and support the poor through the redistribution of wealth. People who believe it is the government’s job to make incomes more equal are naturally less disposed to giving.

Another predictor of a person’s generosity is whether the person is religious. Religious individuals give four times more to charity than the non-religious, and interestingly enough, not just to their churches. They give more to other charities, to the homeless, and even more blood to local blood banks.

I found it interesting, however, that Stossel suggests the best thing for billionaires to do is not to give away their money at all. He contends that the wealthy, through investing their money, create more jobs than government or charities. According to him, “Creating jobs is a better way of helping people than giving money away.”

Maybe tight-fisted rich liberals who don’t give to charities aren’t as selfish and "Scroogish" as Brooks' findings would seem to indicate. By keeping their money working to create more money, via creating jobs, they may actually be doing more for the poor. To me, this sounds like what I've always thought of as classic conservative thinking and behavior. Now we know it is just the opposite, since conservatives are givers and liberals are hoarders and even the real “job creators.”

Could it be that the conservatives who give are really the liberals, and the liberals who keep their money are really the conservatives? I suspect that once this information is disseminated, there are going to be a lot of very unhappy liberals who find out they are really conservatives.

That shock may be greater than the shock Ebenezer Scrooge felt when he saw his ghostly visitors. But who knows? The experience may be equally life-changing.

29 December 2006 in Money Relationships, Weekly Column | Permalink | Comments (0) | TrackBack (0)

Conscious Giving

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Bell_ringer It seems almost obligatory this time of year to write a column about giving. Pressure to give, give, give is everywhere. Ads urge us to buy everything from sweaters to screwdrivers to SUVs on the grounds that they will be perfect gifts to delight our loved ones. Charities send out solicitation letters. "Angel tree" displays in malls and bell-ringers in front of stores hope we'll share some of our shopping dollars with those less fortunate. All of it can be overwhelming.

We all have our own unconscious beliefs, or money scripts, when it comes to giving. In addition, we're surrounded by beliefs our society and religions have about giving. Both the personal and the societal beliefs can range across a broad spectrum:

"It's better to give than to receive."

Girl_1 "At this time of year, good people help the needy."

"You have so much that you have an obligation to share."

"Giving takes away people's initiative to take care of themselves."

"If poor people weren't so lazy, they'd provide for their own kids at Christmas."

"There are plenty of agencies to take care of those who need help."

Like all money scripts, all of these contain partial truths. Giving, whether to family members or to charity, is not a simple black and white issue. Some of the questions it raises might include: How do you know whether you are helping people or enabling them to avoid helping themselves? How do you give to children without encouraging them to be greedy or feel entitled to the latest and greatest of everything? How do you balance helping others and taking care of yourself?

One often overlooked factor is whether the giving is done more to help the recipient or to help the donor feel better. For example, I remember being in a church group one evening when people were discussing giving. Two of the women there, years earlier when they were struggling single moms with young children, had experienced people from a charity coming to their doors with gift boxes of presents and food for Christmas dinner. Both of them had been humiliated and mortified rather than pleased and grateful. The well-intentioned gifts had felt like a judgment that they weren't capable of taking care of their own families. No one had asked first whether they wanted or needed any help.

Giving can sometimes be an attempt to hold onto people, to make up to them for one's past failings, or to be loved by them. One common example of this is divorced parents who overspend on gifts for their children. Public giving may be a way to look good or to gain acceptance or recognition in the community.

One way to respond to the complicated issue of giving is to avoid it. You can close your wallet completely, out of fear that you'll be taken advantage of, fear that you'll offend, or simple frustration. Another response is to try to give to every charity that asks and to spend yourself into debt buying lavish gifts for everyone you care about.

Neither of these makes a lot of sense. Like many other of life's decisions, the question of how to give, how much to give, and to whom is a personal, individual matter. There isn't a formula for doing it right.

The only suggestion I have is that you give as consciously as possible. Consider the beliefs behind your giving. Discuss giving and receiving with your spouse and your kids. Stop and think before you decide to give or not to give. Then you're more likely to give wisely and with thoughtful compassion.

15 December 2006 in Conscious Cash Flow, Money Relationships, Weekly Column | Permalink | Comments (0) | TrackBack (0)

Ebenezer Scrooge and Your Christmas Spending

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ManThis time of year, I see Ebenezer Scrooge everywhere. My office is decorated with figurines of Scrooge and Tiny Tim, various editions of A Christmas Carol, and other representations of the classic story by Charles Dickens.

This isn't necessarily because I want to take Ebenezer Scrooge as a role model. Oh, I suppose that, up to a point, being associated with English literature's most famous miser is not a bad thing for a financial planner. Only up to a point, however. I'm pleased to have clients think of me as "thrifty." I'd prefer they didn't regard me as "stingy" or "miserly."

It's an important distinction. "Thrift" is prudent, careful management of money and other resources. "Stingy" is a lack of generosity, with a connotation of meanness and selfishness. "Miserly" takes hoarding to a dysfunctional extreme. It implies a lack of conscious choice.

That lack of choice is exactly what makes Ebenezer Scrooge such a useful figure in my work with clients. In recent years, I have begun to use his story as a metaphor for helping people change the way they think about money. I've even used it in a book, The Financial Wisdom of Ebenezer Scrooge, co-authored with Dr. Ted Klontz and Dr. Brad Klontz.

Megan During his unhappy, lonely childhood, Ebenezer Scrooge developed a set of unconscious beliefs, or "money scripts," that he carried into his adult life. Among those were beliefs that having more money was the way to happiness, that spending money on himself or others was wrong, that people could not be trusted, and that money was more important than people.

The quality that most people associate with Scrooge is his life as an unhappy miser and his attitude of "Bah, humbug!". Yet what's most important about A Christmas Carol is his transformation to a joyful, generous man. The visits of the Spirits of Christmas Past, Present, and Future helped Scrooge understand that his beliefs about money were false. With the guidance of the Spirits, he was transformed into ". . . as good a friend, as good a master, and as good a man as the good old city knew . . .".

If Ebenezer Scrooge could change his deep-seated, painful need to hoard every penny, there is certainly hope for the rest of us to change our destructive financial patterns. We may not have magical ghosts to help us transform overnight, but we certainly have the same ability as did Scrooge to become joyful and generous of spirit.

The Christmas season has become far more complicated than it was in Scrooge's time. The pressures of shopping, decorating, entertaining, and traveling can trigger all kinds of less-than-ideal financial behavior. You might find it helpful to re-read A Christmas Carol, not simply for the story, but for some possible insight into your own money scripts. The stress of the holidays can help you begin to identify some of your habitual money behavior that you might want to change.

If you'd prefer to listen to Scrooge's story, as portrayed in The Financial Wisdom of Ebenezer Scrooge, you're welcome to join me by telephone or online for a special recitation. (You can register at www.rickkahler.com.) It will be at 4:00 p.m. MDT on Thursday, December 14, and will subsequently be available on my website as a podcast. I'm looking forward to sharing one of my favorite Christmas stories.

In writing A Christmas Carol, Charles Dickens probably intended simply to create a sentimental story celebrating the spirit of Christmas. His talented pen, however, produced a classic piece of literature. In addition, his psychological insight created a parable that today is as useful as it is enjoyable.

08 December 2006 in Money Relationships, Weekly Column | Permalink | Comments (0) | TrackBack (0)

Moving Toward Money Harmony, 20 years and counting…

Rick's note:  Our "guest blogger" today is Olivia Mellan, psychotherapist, money coach, speaker and business consultant, who hosts "Money Harmony with Olivia Mellan" on WWDB-AM 860 on Wednesdays at 10 am in the Philadelphia area. She's appeared frequently on the TODAY show, Oprah, and ABC's 20-20. Her column, "The Psychology of Advice," appears regularly in Investment Advisor magazine.

Olivia_mellan_book by Olivia Mellan

More than 20 years ago, my professional and personal life was changed forever when a colleague, with whom I was about to offer workshops, said, “You know – we should really do one on money. It’s harder to talk about money than sex or childhood trauma.”

I realized that when clients were in my therapy office, and the topic of money (rarely) came up, it was as if there were ghosts of family members sitting all around – their ghosts and my own – and NOBODY was talking about it. So we did the first “money harmony” workshop in 1983, helping individuals and couples explore their ongoing, lifelong relationship to money.

We discovered that not only was this the last taboo (and for some, it still is!) – but that when you unload the symbol of money and what it represents, you are provided with the most wonderful opportunity for personal, spiritual, emotional (and financial!) growth and transformation.

I never intended to write four books, have my own radio talk show, do teleclasses and workshops, or write a column in Investment Advisor that’s been going on 7 years – but the work was so satisfying that it transformed my professional life into a much more vibrant and varied practice. Some of the most fulfilling activities I’ve loved lately are the teleclasses and workshops I’m doing, and my new call-in radio talk show on WWDB-AM 860 in the Philadelphia area.

The teleclasses are an opportunity for financial professionals, therapists, counselors and coaches (that’s Money Psychology 101 and 201) to learn from each other as they learn from me, and to practice “money harmony” principles and exercises as they do. Reading these folks' “money dialogues” – conversations between them and their money about how it’s going, with commentary by mom, dad, other strong influences, and God/Higher Power/voice of inner wisdom – is always inspiring to me. Watching them “practice the non-habitual” in their moneylife and come back to talk about it is wonderful, too.

And since I began as a couples therapist (now couples coach), and have specialized in this for over 30 years (gosh, I sound old!), starting a new teleclass exploring gender differences, couples polarization patterns, and good communications tools, seemed the logical next step.

Another exciting area that I’m thinking about is finding deeper meaning in our lives as all of us baby boomers enter their 60’s. (For me, that was last month). Besides writing some spoof songs about the experience (“I Enjoy Being a Crone,” “There Is Nothing Like A Crone,” and “Try to Remember” about memory loss), I loved being on a recent panel in Sarasota, Florida, on “Living Your Legacy – Not Just Leaving It.” Entering the world of ethical wills – where folks write down, videotape, or record their memories, life lessons and precious messages of love and respect to their loved ones – is a vehicle I want to embrace more and more fully in my own life.

Several years ago, when I was about to have surgery for a condition that turned out to be minor, I was moved to write a letter of love and gratitude to my husband, Michael and my son, Aniel. I wanted them to know how filled up I felt in my life, and how much I loved them both. It was the beginning of an “ethical will” for me, and they both loved reading what I wrote and shared. I urge all of you to begin doing this while you are well and fully functioning. It's never to soon to start!

In general, I enjoy helping folks move from guilt to gratitude, from “poverty consciousness” to rooting themselves in abundance. Once of my favorite exercises to do in my workshops, for those who believe in the money myth that “Money is Happiness,” is to ask folks to write down what makes them happiest, how much it costs to do that, and whether it’s better done alone or with a partner. Invariably, almost everyone comes up with one or both items that cost little or no money (walks in nature with loved ones, sex for free!). So, though having enough money (how much is enough is always an important question!) is important, living a life of balance and meaning is what creates a sense of true abundance. Creating money harmony in the context of life balance is what it’s all about.

I invite you to call into my radio talk show some Wed am EST between 10 am and 11 am (610 664 4100) and ask a question or make a comment. My next live show will be on December 13th (they’re taped repeats till then, since I’m out of town). And consider joining me for my teleclasses, beginning January 2nd and 9th , every other Tuesdays, from 5:30 pm est . Download 0612mellanteleclass_registration_form_january_2_and_9_2007.doc

01 December 2006 in Money Relationships | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: financial planning, financial therapy, kfg, money harmony, olivia mellan, rick kahler

Surgical Investing

Listen to Rick's column here: Download surgical_investing.mp3

Surgery I learned a few months ago that I needed shoulder surgery to repair a torn rotator cuff. My best guess is that I injured my shoulder over two years ago doing "power yoga." So much for the idea that yoga is a gentle, passive activity.

In preparation for the surgery, I spent a lot of time researching on the Internet, talking with people who had undergone the procedure, and asking questions of several physicians and a physical therapist.

Amid all this research, there was one question I never asked. How much would it cost?

I wasn't totally ignorant about the possible cost. I knew I had insurance, I knew the deductible was $2,500, and I knew I would pay 20% of the cost over that amount. Yet cost didn't even factor into my decision to have the operation.

I find this interesting, especially for a financially conscious guy like myself whose work is helping people assess the financial costs of decisions. It's also interesting that not once did my surgeon offer to tell me the cost of the operation, ask me how I was going to pay for it, or indicate that he even considered the cost of the procedure and its effect on my pocketbook. By the way, my surgery, MRI, and physical therapy ended up costing around $15,000.

My mindset was that I needed the operation, regardless of the cost. I had been told that the tear would only get worse, it would never heal on its own, and my pain would continue to increase. Eventually, the physical and emotional cost of putting off the operation would exceed the cost of having it done now. My response was to hire the best surgeon in the region and get the operation done. Even with only a vague idea of what it would cost, I assumed the results would be worth that cost.

So far, I have no reason to question my assumption. With the help of time and physical therapy, my shoulder is healing well. I'm even back doing yoga—minus the "power" part for now.

It recently occurred to me that part of my work with clients is similar to the whole process of my surgery. One of several specialties of my practice is doing intensive work to help high-income overspenders change their destructive financial patterns. When such potential clients call me, they usually have two questions. Can I help them? And how much will it cost?

My answer to the first question is a comfortable "yes." I can't guarantee success, of course, any more than the surgeon could guarantee success with my shoulder. Yet, like him, I can assure them the process I use is clinically proven to work and has a high success rate.

It's the second question I have trouble with. I'm still uncomfortable asking clients to spend more money to help them stop overspending. Yet the process to help these clients involves three professionals working with them for one to four days. The cost, ranging from $10,000 to $30,000, is similar to the cost of a surgical procedure.

The benefits to the clients are also similar to the benefits of such surgery. Given the incredible transformations that I've seen in our work, I know logically that this process is worth every penny it costs. For example, if I can help someone reduce their spending by $20,000 a year, for a one-time cost of $10,000, the return on that investment is pretty darn good.

The value of such changes can't be measured only in terms of dollars and cents. To remind myself of that, all I need to do is raise my arm. A pain-free shoulder? Priceless.

17 November 2006 in Conscious Cash Flow, Money Relationships, Personal Notes, Weekly Column | Permalink | Comments (0) | TrackBack (0)

What's Scarier Than a Heavyweight Boxer?

To listen to Rick's column click here: Download heavyweight_boxer.mp3

I recently read an interesting article by Timothy L. O'Brien of The New York Times. It was published on September 18, 2006, in the online edition of the International Herald Tribune under the title, "Fortune's fools: Why the rich go broke." (To read the complete article, go to http://www.iht.com/articles/2006/09/18/business/web.0918broke.php.)

Grill  O'Brien interviewed former boxing champion George Foreman. Today, many of us associate Foreman more with oven mitts than boxing gloves. Yet his successful second career as a marketer of George Foreman grills came only after Foreman made boxing history. In 1994, after coming out of retirement and at the age of 45, he won the heavyweight championship against an opponent young enough to be his son.

Why would a middle-aged man, a former champion who had earned millions, choose to subject himself again to the punishing demands and high risks of the boxing ring? To prove he could still do it? For the challenge? Those factors may have been part of it—though, speaking as a man who just turned 50, it would have seemed a lot easier to deal with a mid-life crises in the traditional way, by buying a sports car.

Foreman told O'Brien his real reason for returning to boxing—money. In the late 1980s, he was facing bankruptcy, a more frightening opponent for him than the most aggressive competitor in the boxing ring.

Interestingly, Foreman seems not to have blown his early winnings on high living. Instead, he invested his money. Unfortunately, his investments were unsuccessful. After he made his second fortune, he was wise enough to seek out better advice, and today he is by all appearances a wealthy man.

Yet, in what to me was the most interesting part of O'Brien's article, Foreman revealed he still didn't feel comfortable about money, saying, "I will never feel secure again."

This is a man one has to admire for his determination and capability. Even more important, he has had the wisdom to learn from his mistakes. Yet not even his current success has been enough to erase the scars left by his earlier difficulties.

O'Brien quoted Foreman's assessment that real wealth is more than just one's net worth. "If you're confident, you're wealthy," he said. "I've seen a lot of guys with millions and they don't have any confidence. So they're not wealthy."

Even though Foreman has apparently not achieved that confidence himself, his definition is right on target. Your level of fear or discomfort about money has little to do with how much of it you have. Lying awake at night worrying about money is a stressful way to live, regardless of your income level.

The fact that someone with money may worry about it or not have the sense to hire competent investment advisors may come as a surprise to you, as it once did to me. I believed that if you had money, you felt secure, you were smart, and you knew how to manage it so you would always have "enough."

Over the years I’ve found out these beliefs were more often incorrect than correct. This is why I have broadened my financial planning practice to include helping clients develop healthier relationships with money. Much as I enjoy managing portfolios and the nuts and bolts of investing, that aspect of my work alone is no longer enough for most of my clients. It's much more rewarding to help people move toward emotional confidence as well as financial security.

My wealthiest clients are not necessarily the ones with the highest net worth, but the ones who are comfortable with what they have and able to use their resources to build satisfying lives.

29 September 2006 in Financial Integration, Money Relationships, Weekly Column | Permalink | Comments (0) | TrackBack (0)

Money Secrets or Money Privacy?

Click here to listen to Rick's column:Download money_secrets_or_money_privacy.mp3

Finger One of the projects I'm currently involved in with co-authors Ted and Brad Klontz is a book for couples about financial infidelity. In that work, a question that came up is the difference between financial secrets and financial privacy.

Our society does not encourage us to talk about money in personal ways. For example, making a public announcement of your salary, your net worth, or the amount of your debt would be a social faux pas. On the other hand, we tend to expect couples to be completely open with each other when it comes to money. In most cases that expectation is reasonable and useful. Keeping financial secrets within a marriage can have lasting and destructive consequences.

Yet where do couples draw the line between keeping harmful secrets and respecting one another's privacy and autonomy? This can be a complicated question for any couple. It gets even trickier for two-career couples, those in second marriages, and those in non-traditional families.

Privacy One thing we tell couples in our Healing Money Issues workshops is that each of them needs to have a certain amount of money that is theirs to spend in any way they wish. The amount will vary according to the family income, but having this separate personal allowance is important. It gives both partners a chance to spend some guilt-free money on themselves. This money is clearly private.

Other situations are less clear. Here are some possible circumstances where limits on a spouse's knowledge might constitute privacy rather than secrecy:

· The couple has agreed to keep their income and assets separate and has established a method of sharing the expenses (such as housing) that are their joint responsibility.

· One spouse owns a separate business with which the other spouse is not involved. It's reasonable for the non-owner spouse to expect to be kept informed of the business's earnings, significant changes or problems, and the like. The details of its day-to-day affairs aren't necessarily the non-owner's concern.

· One spouse manages the financial affairs of an elderly parent or other relative.

· Spouses in a second marriage have children from previous marriages and have brought separate assets into the marriage.

In any of these examples, it's not possible to define a one-size-fits-all boundary between privacy and secrecy. Each couple needs to draw that boundary for themselves, depending on their particular circumstances.

One factor in establishing such a line could be how much support or help spouses might need from each other. If you are paying your mother's bills, for example, you might want your spouse to be able to step in at times you aren't available. If you own a business, you might want your spouse to know enough about it so you can discuss problems or plans for the future.

Another significant factor might be other relationships and commitments within the family. Suppose you are in a second marriage and have adult children who have previously been told they will inherit your assets. Keeping those assets separate from your spouse's assets might be the best way to avoid confusion, misunderstandings and hurt feelings.

The key to deciding whether keeping a money issue separate is secrecy or privacy is the reason behind the decision. If you don't have a lot of energy around the matter one way or another, it's probably a privacy issue. If you would feel embarrassed, ashamed, or otherwise uncomfortable with your spouse knowing something, it's probably a potentially destructive secret. There's a simple way to judge: if you really, really don't want to talk about it, talking about it is probably exactly what you need to do.

11 August 2006 in Financial Integration, Money Relationships, Rick Kahler's Podcasts! Listen or Load Now!, Weekly Column | Permalink | Comments (0) | TrackBack (0)

"I Love You, You're Perfect, Let's Talk About Money."

CLICK HERE TO LISTEN TO RICK'S COLUMN: Download lets_talk_about_money.mp3

Young love can be a wonderful time of discovery and sharing. New couples, regardless of their ages, need to get to know one another and explore the possibilities of building a life together. For this reason, they tend to be great talkers. They discuss their histories, their philosophies of life, their goals, and their dreams.

Unfortunately, not many of those conversations include discussions about money. This may be one reason why "money issues" is the number one cause of divorce in America.

We think of marriage primarily as a romantic partnership, which it certainly is. At the same time, it is equally a legal and business relationship. If you don't believe that, ask the 50 percent of married people who have suffered a divorce.

Ideally, all engaged couples would discuss the following questions.

· What do we each believe about how money works? Perhaps she has been taught that it is essential to save as much as possible to build security against a rainy day. Perhaps he grew up with an attitude of, "money is to spend, and there's always more where that came from." Such conflicting beliefs are likely to foster serious disagreements and resentments, especially if they are never discussed.

· What are our most painful memories around money? This question can be an effective way for couples to learn one another's "hot-button" issues about money.

· How will we manage our money as a couple? It is common for each partner to assume that money will be managed in the same way it was done in his or her family. If a bride has grown up with parents who managed everything jointly, she may be offended, hurt, or angry if her new husband suggests having separate checking accounts. A man who saw his father take care of all the family finances may well expect to do the same, and if his new wife wants to be involved he may feel she doesn't trust him.

· What is mine, yours, and ours? Having a clear understanding about what money or property is individual and what is part of the marriage can prevent a great deal of misunderstanding.

· What are our philosophies about college education, saving for retirement, and debt? If she sees debt as a normal way of life and he views it with horror, such decisions as whether to buy a new car or using credit cards can become relationship-damaging minefields.

· Will we have a prenuptial agreement? Even raising this question can douse a warm romance with a dash of cold water. A prenup isn't often necessary, but in some situations it can be a valuable tool to head off potential conflict over money.

· How will we handle any financial inequalities in our relationship? This question isn't necessarily only for couples where one is wealthy and the other isn't. One of my clients, in a new marriage which created a stepfamily of five children, became a stay-at-home mom for the first time in her life. She told me how much it meant to her when she and her husband created a spending plan, and he included a budget item of equal personal allowances for him and for her. His action made clear to her that he valued her contribution of managing the household equally with his contribution as the breadwinner.

Because money issues are so crucial and can be so destructive, they should be an important topic of conversation for any couple looking to tie the knot. Talking about money may not be romantic. It is, however, an important way for any new couple to make a wise investment in their relationship.

30 June 2006 in Money Relationships, Weekly Column | Permalink | Comments (0) | TrackBack (0)

"Could I get your phone number? And your net worth statement?"

CLICK HERE TO LISTEN TO RICK'S COLUMN: Download financial_inequality.mp3

Words "Could I have your phone number?" That isn't the most creative line to use when you're interested in getting to know a member of the opposite sex, but it's certainly straightforward. You will either get the number, or you won't.

But here is a line that may assure you of never getting the number. "Could I have a copy of your most recent net worth statement?" How unromantic is that?

Yet, hard as the question may be to ask, the answer to it is important. A marriage between two people who are unequal financially can be asking for trouble.

One way to address the problem is through a prenuptial agreement. This is especially important in a second marriage, where there may be "my" kids, "your" kids, and sometimes "our" kids. Sorting out assets and doing some clear legacy planning are important.

Even in a first marriage, a prenuptial agreement is often wise if one spouse has significantly more assets than the other. It can put clarity and intention to the saying, "But dear, you know I am not marrying you for your money." It can also turn a warm and delightful romance into a seemingly cold business transaction.

Blending There is another question, however, that should be considered well before the relationship is at a point where a prenuptial agreement is even an issue. That is, "Why am I in a financially unequal relationship in the first place?"

Okay, I realize I am about to suffer the wrath of every romantic in the world. Ironically, that includes myself. In the past I would have been the first person to say that when it comes to love, money doesn't matter. Today, I am not so sure.

I've had several clients express resentment and fear when they've found themselves in a relationship with someone who is a financial unequal. Take the case of Jill, who inherited a sizeable amount from her parents when they were killed in a car accident. Educated and responsible, she found herself managing an estate of ten million dollars. Enter Brandon. He was a happy-go-lucky free spirit who had neither a dime to his name nor a job. Still, he was charming, and he won Jill's heart.

They dated. They traveled the world—on her money. Eventually, Brandon proposed marriage. Something kept Jill from agreeing. Brandon continued to bring up the topic, but she continued to hold back. Finally she sought advice. Who did she talk to? Her pastor? A therapist? No, her financial planner.

What she told me was that she wanted to marry Brandon, but she felt uncomfortable about their financial inequality. Was he just "gold digging?" As we talked, she admitted feeling angry and used, less because of his relative poverty than because he didn't have a job. She also discovered a pattern in her life of attracting men who needed to be mothered or in some way taken care of. As a result of our conversation, she engaged a counselor who helped her further explore her issues with relationships and also with money.

Eventually, Jill broke off the relationship with Brandon. Her stated goal in the future is to date men who are her peers. Will that mean she asks for their net worth statements on the first date? I doubt it. She isn't necessarily looking for a man who has financial assets equal to her own. She does want someone who is responsible and capable of taking care of himself, someone who clearly doesn't need her for her money. Her intention is to become involved with a man who is more of an equal in every way: emotionally, physically, spiritually, and yes, financially.

16 June 2006 in Financial Integration, Money Relationships, Weekly Column | Permalink | Comments (0) | TrackBack (0)

Dr. Gordon's "Dirty Dozen"

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Part of my job as a financial planner is to help clients change behaviors that aren't serving them well. I've tried to do that in many ways. Some work, and some don't.

People The late Thomas Gordon, author of Parent Effectiveness Training and Leader Effectiveness Training, created a list of common methods we use to try to influence one another. Most of these are so ineffective that Ted Klontz, Ph.D. renamed them Gordon's "dirty dozen." They are:

1. Ordering, directing, commanding. Nike ads notwithstanding, "Just do it!" isn't a very good motivator. Neither (as most parents have learned) is "Don't do that!"

2. Warning or threatening. "You're asking for trouble if you keep doing that." All this usually does is dare listeners to prove you wrong by continuing exactly what they are doing.

3. Giving advice, making suggestions, providing solutions. "If I were you, I would . . ." "Why don't you do this?" It can be helpful to offer new information about options someone may not have considered. Going beyond that and telling them what they "should" do is usurping their power to make their own choices.

Book 4. Persuading with logic, arguing, lecturing. This is the one I have the most trouble with and that I still find myself doing unconsciously. I’ve learned that when someone can't seem to make a decision, quite often the problem is more emotional than logical. The person simply can't take in a logical argument until he or she has dealt with the emotion that is blocking the decision.

5. Moralizing, preaching, telling them their duty. To understand why this doesn't work, just think about how you react when someone tells you what you "should" do. Motivation by guilt is manipulation, not leadership.

6. Judging, criticizing, disagreeing, blaming. Telling people they are wrong, selfish, or caused their own problem doesn't help them change; it merely makes them feel stupid or defensive.

7. Agreeing, approving, praising. It might seem odd that this is considered a negative motivator. Yet it can be. One reason this doesn't work is that it tends to take away the person's power to decide whether his actions or decisions are the right ones for him. It also can be received as condescending.

8. Shaming, ridiculing, name-calling. This method is not much different from number six, except that it is bad manners as well as poor communication.

9. Interpreting, analyzing. From the outside, you aren't in a position to know what someone really means or what the real problem might be. You might offer possibilities for the person to consider, but phrasing them as conclusions or judgments is not helpful.

10. Reassuring, sympathizing, consoling. Again, it may seem odd that this approach is not helpful. Yet telling people, "Things aren't really that bad," or "You'll be fine," can minimize what they are going through. It also can encourage them to feel like victims and thus discourage them from actively seeking solutions to their difficulties.

11. Questioning, probing. The word "Why?" seldom helps people change. If they knew why they were doing what they were doing, they could probably take steps to do something different.

12. Withdrawing, humoring, distracting, changing the subject. This approach merely helps someone avoid or postpone a problem.

After reading this, your response may be similar to my first reaction to Dr. Gordon's work. “So what’s left?” The answer truly is, “not much.” His approach was based on a simple but powerful concept—effective listening. When people feel heard, they are often quite capable of talking their way through to their own solutions.

I have found Dr. Gordon's work extremely valuable. For more information about his approach, you might check out www.gordontraining.com.

09 June 2006 in Life Aspiration Planning, Money Relationships, Weekly Column | Permalink | Comments (0) | TrackBack (0)

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