There’s a passage in the Old Testament that says “With the aged is wisdom and with life comes understanding.” I’m still working through the idea of being “aged” but I can tell you that the wisdom and understanding I’ve acquired over the years has come from my own mistakes and by observing others whose lives I admire and want to emulate.
I’d like to begin with a little background and perspective on my history with money. My father grew up during the 1920s and 30s. Like many of his generation, his views on money were significantly influenced by the Great Depression. After flying 30 combat missions over Nazi Germany, my father went to work for Merrill Lynch in the 1950s. So, I grew up around the financial services business. Money, in our home was to be earned and saved for the future. It was not to be given away.
In 1983, after college, I went to work for a large Wall Street firm where the focus was on selling investments. In 1990, I determined I could better serve clients as an independent advisor and affiliated with Raymond James. I built a nice practice over the years based mostly on investing in individual stocks.
In 1999, we bought a bigger house, joined the country club, and put the kids in private school. I thought that having more and doing more would make me content and satisfied. The very next year, we entered the worst bear market of my career- and that’s when my “lessons learned” education began.
At the same time my portfolio was taking a hit, I was helping to start up a ministry called Childspring International, which brought children to the U.S. for medical care not available in their own countries. Through Childspring, I had some opportunities to travel to Ethiopia, Haiti, and parts of Central America. While I was stressed out over the club dues and next tuition payment, I saw children dying from malnutrition and easily curable diseases. As you might imagine, my views on money were radically influenced by those experiences- and my education continued.
So, it was during that time, and through those experiences I learned what I’ll share about planning and managing financial resources, and especially what I learned about wealth and happiness. Today, we’ll cover creating a financial plan, managing investment portfolios for accumulation of wealth, and some of what I’ve learned on the topic of wealth and happiness.
I believe that if we leverage wealth in pursuit of these things, we discover the meaning of true happiness. I have also come to believe that the management of personal financial resources is an issue of stewardship, not ownership. I am a manager of resources that have been entrusted to me.
So, now let's talk about stewardship and generosity. I believe true giving is not so much an act of generosity as it is an act of love. It is possible for me to be generous without love (i.e. for a tax benefit or to get my name on a plaque) but it is not possible for me to truly love without giving. So my desire is not so much that I grow in my capacity to give, but that I grow in my capacity to love.
Let’s discuss why I would want to grow in my capacity to love, and by extension, my desire to give. First, giving helps release me from the fears I have over money. Some things defy explanation and this is one of them. If I have fears over money and I give money away, you’d think I’d have even more fears over money. But the opposite occurs. It’s a real paradox. When I release my grip on money, money releases its grip on me, and the fears subside. It’s kind of supernatural. Next, giving allows me to live in the present. Fears over money always relate to the future. Will I have enough? Will I be OK? When I give, I am able to live more fully in the presence of each day. Third, giving grows my faith. When I give, I am placing my trust not in my own provision, but in that of my Creator. And finally, giving is a source of joy as I share my material blessings with others.
I’ve also learned through my own experience and by watching others that generosity is a response to gratitude. I have never met an unhappy grateful person- nor have I ever met a truly grateful person who is not a generous giver. The more I reflect on my blessings, the more grateful I am. The more grateful I am, the more I give. The more I give, the more joyful I become. It’s a cycle. So how do I grow in my capacity to love- and my desire to give?
First, I stop comparing myself to others. When I compare myself to others, I think about what I don’t have. And when I think about what I don’t have, I’m not very generous.
Next, I view the world with an abundance mentality. In my humanness, I view the world with a scarcity mentality. But, God’s economy is one of unlimited abundance. King Solomon wrote:
“One person gives freely, yet gains even more; another withholds unduly, but comes to poverty. So a generous person will prosper as whoever refreshes others will also be refreshed” (Proverbs )
Third, I set up a separate account for giving. Having a separate account is a game-changer because it frees me from constant decisions on whether or not to give. My main decision is simply to fund the account. I keep a percentage “uncommitted” for unexpected opportunities to give. So when a friend asks for support for a mission trip, of course I’ll give- the money is already there! A separate account also simplifies record keeping and tax reporting. My wife and I were recently audited by the IRS for our charitable giving and it was very easy to provide statements and documentation for every reported donation.
And finally, I teach generosity to my children- What’s more important than the legacy we leave for our kids? I want to leave my kids with a spirit of generosity and compassion for others. Here are some ideas for cultivating generosity in the hearts of the next generation.
Model Generosity. For example, be a generous tipper. Next time you take your son or daughter to Waffle House and have a $15 check, leave $25 on the table and watch the server’s response while walking to your car. Your kids will love it. We’ve actually had waitresses run out to the parking lot to tell us we made a mistake and left too much money. I just tell them they are excellent waitresses and we appreciate the great service!
Give children control over some of your family giving budget- When our kids were very young, we began to have them do research and write notes to accompany checks for charities they chose to support. Sometimes, we even had them write out the checks so their first memories of writing a check would not be to spend or even to save, but to give. As a parent, it will give you great joy to see your kids grow in their capacity to love and develop a heart of compassion and generosity.
Let’s wrap up by re-visiting three myths and the corresponding truth of what I’ve shared.
Many believe financial planning is a time consuming and complex process. That is untrue. Financial planning is quite simple. Many believe investment success is determined by the stocks, bonds, or mutual funds one owns along with an ability to predict the market. That is untrue. Investment success is determined by ones behavior, faith in the future, asset allocation, and patience. And finally, many believe that wealth and happiness is achieved by accumulating enough money to have things and to do things. That is untrue. Wealth and happiness is achieved by the quality of relationships, by serving others, by engaging life with enjoyable activities, and by giving generously.
So put a financial plan in place. I’ll even give you the napkin. Then, invest for long-term accumulation of wealth according to the principles I’ve shared. You can do it. But if you choose not to educate yourself or to put in the time to prudently manage your own financial affairs, don’t be foolish. Find a competent and trustworthy advisor and let them help you. But most importantly, don’t buy into the myth about wealth and happiness. Having more and doing more will not make you content and satisfied. In fact, it could lead to regrets and it could hurt the people you love.
Cultivate meaningful relationships, serve others to make a difference in the world, engage life with enjoyable activities, and give generously of your time, your talent, and your treasure. In closing, I want to thank my professional colleague Nick Murray, who has mentored me over the years and helped shaped my philosophy as a husband, father, friend, and financial advisor. Thanks for reading this essay. I hope our time together has helped reshape some of your ideas about planning and managing financial resources, and especially your views about wealth and happiness. May God bless you and those you love.
1, 2, 3, 4, 5- Murray, Nick Behavioral Investment Counseling (2008)
6- Geller, David Wealth & Happiness (2012)
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation to buy or sell any investment. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment decision. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Any opinions are those of Kevin Latty and not necessarily those of Raymond James Financial Services. Asset allocation and diversification do not ensure a profit nor guarantee against a loss. Individuals cannot invest directly in any index, and indexes are unmanaged. Performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. You should discuss any tax or legal matters with the appropriate professional. Raymond James is not affiliated with any organizations or individuals mentioned.
