Should You Trust Your Bank?

My 25-year young niece (let’s call her Millennial Woman) is employed full time earning a reasonable income. Being a savvy saver, she’s now taken the first step to becoming an investor by opening an investment account with her friendly neighborhood bank. Why did she choose Friendly Neighborhood Bank? I asked the same question.

Millennial Woman (WM). “Well, I have my bank account with them so I thought it would be convenient to have my investments there too.”

BuddhaMoney (BM). “And the bank suggested what for your investments?”

MW. “The person I dealt with was super nice and said my money should go into a Balanced Mutual Fund.”

BM. “Why a Balanced Fund?”

MW. “I don’t know exactly but the bank said it was suitable for me given my age and risk tolerance.”

BM. “Hmmm. As for the Balanced Fund, is it managed by Friendly Neighborhood Bank.”

MW. “Yes, how did you know?”

BM. “Call it a wild guess. Did the bank suggest any other investment options?”

MW. “No, but it seemed fine and, like I said, the bank person was so nice.”

BM. (silently) Oy.

Banks Are In The Trust BUSINESS

TD Bank is the 10th largest bank in the USA (NYSE:TD), 2nd largest in Canada (TSE:TD), and ranks number 13 globally. Here’s what Bharat Masrani, CEO of TD Bank, recently said:

“TD is in the trust business. We know we must earn our customers’ trust before we earn their business.”

https://www.thestar.com/business/2017/03/13/report-that-td-bank-employees-broke-law-doesnt-reflect-workplace-culture-ceo-says.html

Masrani is absolutely correct. People deposit their money with financial institutions they believe are trustworthy.

From what I gather, Millennial Woman agreed to open an investment account with Friendly Neighborhood Bank, and follow the financial adviser’s advice to place her funds in an investment product managed by Friendly Neighborhood Bank, because the financial adviser came across as ‘nice’. And ‘nice’ translated to trustworthy.

Look, here’s the thing you have to recognize: first and foremost, banking is a Business. A huge business with tremendous profits at stake [in December, 2016, TD reported quarterly profit of $2.3 Billion (CAD); in January, 2017, Wells Fargo – the largest American bank – reported quarterly profit of $5.3 Billion (USD)]

In business (I’ll state the obvious here), you’re selling services and/or products. And when you’re selling something to the public, the odds of closing the sale are a whole lot higher when you put on a smiley face and make nice with the buyer (i.e., you, the potential bank customer, are the buyer).

So when you’re saying that the salesperson (i.e., financial advisor) is ‘nice’, I’m saying: that’s all fine and good and yes most, if not all, of us would prefer to interact with kind, respectful people. But when it comes to deciding how best to manage your money, really, the salesperson must be offering something more than a pleasant disposition, an attractive face, or a free pen! The salesperson absolutely must convince you why Friendly Neighborhood Bank is the best place for your money to grow.

Banks Are In The Sales, Sales, SALES BUSINESS!

The above quote from Bharat Masrani? It was given in response to media stories detailing TD Bank’s aggressive sales tactics at its Canadian based branches.

Should I be shaking my head, waving a finger, or judging TD Bank for allegedly aggressive sales tactics that are nevertheless within ethical boundaries? Nope. I mean, come on, banks are in the Sales Business! You want to be successful at sales, well, you’ve got to step up and SELL (i.e., persuade, convince, coax, sway, influence, cajole …).

And as a potential customer, my responsibility is to know who I’m dealing with and what is their objective (SALES!). My responsibility is to know that one of the prime mandates of business is growth, and growth comes both from attracting more customers and selling more products and services to existing customers.

Not so coincidentally, Wells Fargo (NYSE:WFC) was recently subject to similar charges as those levelled against TD Bank. The difference being that Wells Fargo was found to have gone a step further, crossing the ethical/legal line of permitted sales practices and subsequently having their knuckles rapped by financial regulators.

https://www.washingtonpost.com/business/economy/it-goes-beyond-wells-fargo-concerns-grow-over-sales-tactics-in-banking-industry/2016/09/16/d83bf4c0-7b73-11e6-beac-57a4a412e93a_story.html?utm_term=.114a4f895a41

Let me be clear here: banks crossing ethical/legal lines should be held accountable and the public should be protected from predatory practices. That said, there’s nothing offside about driving employees hard for the purpose of increasing sales and thereby increasing the bottom line. It happens, and it will continue to happen, and blathering and complaining about a bank’s behavior won’t do much but raise the complainer’s blood pressure.

So … as a consumer, my best line of defense is educating myself about the workings of the financial industry. Because the old saying, ‘knowledge is power’ rings true. And I’m a HUGE fan of self-empowerment.


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Enter Buddha

Unconditionally trust your Self, advocate for your Self, know when to place your Self first.


Trust, But Not Blindly

What could Millennial Woman have done differently?

  • Before meeting with Friendly Neighborhood Bank, research the competition. Learn about the offerings of other financial institutions. With this knowledge in hand, MW would be in a strong position to determine whether Friendly Neighborhood Bank is truly offering the best solutions for her.
  • Recognize that, while an effective salesperson will make you feel good about your self in the moment, employees of Friendly Neighborhood Bank are not in the business of making friends. They are in the business of sales. So put your ego aside and don’t be flattered by the salesperson’s fawning attention. This is a part of their job that assists with closing the deal with a potential customer.
  • Knowing you are dealing with a salesperson, ask questions. For example, given that there exist thousands of mutual funds offered by hundreds if not thousands of mutual fund companies, why should MW buy a mutual fund sold by Friendly Neighborhood Bank? Is there a conflict of interest here? (short answer: yes, of course there is; banks push their own products not because their products are necessarily best for you, the consumer, but because this is more lucrative for them because they earn management fees from their own Funds).
  • Ask not only why you should buy a particular mutual fund, but why you should buy a mutual fund at all? This doesn’t mean that you should not buy a mutual fund, but you should explore the investment universe, and especially consider Index Funds, which typically carry a much lower management fee and perform as well or better than an actively managed mutual fund.
  • Ask why you even need a financial adviser when a Robo-Advisor may perform better for your portfolio.
  • At the end of the meeting, do not commit one way or the other. Simply say that you will think about the information you have been given and will contact Friendly Neighborhood Bank shortly to let them know of your decision. This avoids you being pressured into making an impulsive decision, and gives you time to conduct as much research as necessary to determine which financial institution and which investment products best suit your needs.

Caring For Your Self

As for MW, she’s one amazing person who’s excited and nervous about  entering the world of investing. And she’s agreed to think about what I’m saying here in this post, and to take time to process how this all applies to her situation. Because while she’s still holding fast to her opinion that the financial advisor at Friendly Neighborhood Bank is nice, she also recognizes that her financial future is best cared for when she’s fully informed of all options, and by making decisions that are best for her financial health.

Omar’s Rooftop Yoga

It is Saturday, 9:30 in the morning. I’m wearing yoga shorts, t-shirt and sandals. Together with my wife, we make our way to the 4th floor rooftop of a non-glitzy West Hollywood hotel tucked into a quiet neighborhood. Once outside, the world falls into place. Gigantic blue sky, sunshine, comfortable temperature of 70 degrees (21C), warm gentle wind, and birds singing their songs.

After removing our sandals and unrolling mats, we join eight other yoga devotees, each of whom are lying face up toward the heavens, smiling. Smiling because this is as good as it gets. This is life at its indulgent finest. This is complete and total inner peace amidst external tranquility.

Settling in, body feeling heavy, feeling like I could return to restful slumber, the instructor appears. The yogi. The Omar.

The Omar

If you can, try to imagine a mix between Eddie Murphy, the comedian, and Buddha. The result would be Omar, former New Yorker, now plying his craft in L.A.

Omar is not only an amazing yoga instructor but also the funniest yogi I’ve met. He had me laughing so hard at some points during class that I had to stop posing and simply let the side-splitting laughs run their course. And I’m not talking little chuckles here. No, it was more like face contortions, body convulsions, stop, please stop, kind of laughter.

But it wasn’t like Omar was bent on doing a stand up routine. First and foremost, he’s a yogi imparting his teaching of yoga. It’s just that, while leading us through poses, he shared his gift of humor. Humor is part of his nature. And thankfully for all of us, he chose to share.

Now, if Omar had led the class similar to other yogis, providing good instruction, tossing in spiritual sayings, my experience would have still been enjoyable. But the fact that Omar generously added another dimension of himself, one not strictly associated with teaching yoga, made the class memorable. And after class, I told him of my appreciation for his efforts, for his being, for sharing his humour with all of us … because this was my way of giving back what I could to Omar. And he was gracious enough to accept my gift.

Every Choice Has Consequences

I’m super thankful for Omar choosing to share his gifts for teaching and humor. And I also recognize that I would not have met Omar if I didn’t make certain financial choices for myself.

If I didn’t spend moderately and within my budget, consistently contribute to savings, and wisely invest my money, I would not have been fortunate enough to travel to California and enjoy a vacation.

The thing is, this vacation was planned well in advance, and I made a fair calculation as to how much I was willing to spend.

To remain within my spending parameters:

  • Points accumulated on a credit card were used to pay for airline tickets (except that payment of taxes, which was a few hundred dollars, came out of my pocket as the credit card companies don’t allow points to be used to pay for taxes);
  • The least expensive rental car was reserved because smaller cars are less expensive and require less gas and there’s no reason for me to rent anything other than a small car;
  • We ate at restaurants a couple of times but for the most part bought food for snacks and meals at Trader Joes because it gets tiresome and needlessly expensive going to restaurants;
  • We stayed at moderately priced but pleasant hotels for the three days, two nights we were in Palm Springs …

(okay, I know what you’re thinking … Palm Springs? Really? Why? I’m not interested in shopping or getting a facelift, and I don’t golf – it’s not really a sport … it’s mind numbingly boring … golf courses are horrible for the environment, a ridiculous drain on water reserves – oops, excuse my mini anti-golf rant. Okay, here’s the thing about Palm Springs that I focused on: the scenery. Stunningly beautiful, magnificent scenery with the mountains, desert flora, and spectacular hiking trails!)

  • img_3091While spending a few nights in Joshua Tree National Park (https://www.nps.gov/jotr/index.htm), we camped, not because it cost less but moreso because it was absolutely amazing to camp in the midst of the Mohave Desert’s unbelievable beauty and stare wondrously at a night time sky overflowing with stars.

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Shape Your Life

Following the Middle Way, balancing spending against saving and investing, I put myself in a position where I could enjoy a fantastic get away. Consciously choosing to exercise discipline when it comes to spending, saving and investing, and knowing I was saving for a specific goal, I reaped the reward: memorable experiences with people, and feeling awed by Mother Nature’s extraordinary artistry.

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Day Trading: How To Lose Your Money

A website banner advertisement on the front page of a major online news site read: ‘Free Day Trading eBook – The Complete Guide to Day Trading’. I clicked on the ad, curious as to how exactly ‘Day Trading’ was being peddled this time, and was greeted by the following screaming headline: ‘THERE’S NEVER BEEN A BETTER TIME TO TAKE CONTROL OF YOUR FINANCIAL FREEDOM’.

Manure For Sale

Talk about selling a big ole’ stinky pile of manure! Let’s get this straight right off: if it smells like manure, it is manure. Day Trading will NOT lead you anywhere close to financial freedom. In fact, the gigantic, overwhelming, stupendous odds are that you will lose money, time and again, if you try your hand at Day Trading.

Why? Because Day Trading is gambling, buying and selling securities on the same day, placing bets as to which securities will go up, which fall down, during a time period lasting anywhere from milliseconds to seconds to minutes to several hours. And just like casino gambling, the odds are hugely stacked against you. Oh, sure, you might garner a win here and there, enough to keep your hopes up, convince your self that you should stay in the game. But eventually, losses will far outstrip gains.

And despite what Manure Salesmen tell you, a Process, a Strategic Game Plan, will not help. ‘Naturally’, these folks say, ‘you’d be a fool not to have a Process before you start trading, you know, because a Process allows you to succeed no matter what the market conditions. A Process moves the odds in your favor so it’s not about dumb luck, it’s not gambling. Rather, it’s a proven method that leads to your success!

A Process? Strategic Game Plan? More and more and more Manure! 99% of those who stay at day trading long enough will lose all of their money. Ah, but what if I’m in the 1%, you ask? Well, if you want to take on those odds, go for it, roll the dice, knowing that you will most likely, almost definitely, probably certainly, lose.

Sure, there exist a tiny percentage of people who consistently make money at Day Trading. But let me tell you something about these folks: typically, they work for large financial institutions; trained in the field of finance and have years of work experience; use other people’s money; have access to company specific and market moving news before the public; and benefit from computers programmed with the most current analytical software designed to make trading decisions every millisecond based on a thorough review of fluctuating prices, incoming orders, and financial news.

As for go-it-alone individuals, they have limited technological resources, bet with their own money, are less skilled, and are prone to let negative biases and emotions interfere with rational decision-making. The result? Risk of loss is much, much higher.

Who Makes Money

Manure Men, predators, scam artists, who pitch ‘Read my book! Attend my seminar! Sign up for my online course guaranteed to make you rich!’ – these are the ones who make money. And they do so off the backs of vulnerable people who fall for the pitch delivered by people lacking a conscience, blind to ideas of ethical right and wrong, all too willing to sell a Brooklyn Bridge or two to anyone who comes calling.

But hey, we live in a world of buyer beware, right? Besides, as Manure Men will tell you, ‘I did so incredibly well at Day Trading that I felt compelled to share my secret because I want everyone to be rich like me.’

When I hear baloney like this, I laugh and cry at the same time. I laugh because the claim is so absolutely false and ludicrous. And I cry because vulnerable people believe it, then end up losing money, maybe even their life savings.

Why People Willingly Step in Piles of Manure

What’s the hook, the angle, the catch that keeps drawing in more customers? It’s a multi-layered lure.

Part 1

Independence. Ditch your 9 to 5 job and work at home on your own schedule but within market hours.

Part 2

Easy Money. On the surface, this is how Day Trading is sold. ‘I became rich day trading – you can too!’ Driven by greed, seduced by the fantasy of fast, easy money, time and again new victims buy into the program only to lose their shirt.

Part 3

Thrill Seeking. The forces that light up the human mind when playing a slot machine, buying a lottery ticket, or sitting down at a Las Vegas table to play Texas Hold’em, are the same forces operating for Day Traders.

There’s an adrenaline rush, an instant feedback from trading (whether win or lose) that satisfies the appetite for instant gratification. Buy and hold a stock for a few months or years? How boring is that!


unknownEnter Buddha

The goal is not to achieve wealth as soon as possible because to arrive all at once would be self-defeating. The goal is to grow – be it material, spiritual, psychological and emotional growth – and in the process experience all that life has to offer.

Be An Investor NOT a Day Trader

Day Trading is not Investing. Do your self a favor: don’t even consider Day Trading. Ever.

Unlike Day Trading, investing is not about entertainment. Investing is boring. It should be boring. Because investing is about:

  • Diligently and wisely putting money to work for you.
  • Accepting a level of risk that allows you to sleep well.
  • Understanding your investments. And if you don’t understand the investment, then don’t invest.
  • Knowing the associated costs, whether these are transaction fees, account fees, fund management fees, and tax treatment of income, dividends or capital gains.
  • Diversifying your holdings to minimize risk and reduce volatility.

Invest in YOU

If financial management is not your occupation, and you’re not really interested in managing your investments, then hire a Robo-Advisor or Financial Advisor. What’s most important is to invest in YOU!

Whatever your strengths, your passions, invest time and effort in developing your self further, going deeper, because bringing value to your self, your family, your community, is a worthwhile endeavour.

 

 

How Media Influences You

No matter who or what is your source of information, how do you know whether the information is accurate or trustworthy? And even if you discard the information as bunk, how do you know that the information you have read, watched, or listened to has not somehow seeped into your subconscious thereby influencing your decision-making without you even knowing?

The Business of Imagery

Within moments of logging onto the Internet, flipping through a magazine, or leaving home and entering an urban village brimming with signs, signs, everywhere signs, we are inundated with images. All these signs, all these images, they’re ‘normal’, just the way things happen to be in our world. And we don’t often think twice about it.

I mean, we know that the underlying purpose of images, particularly when used in advertisements, is to grab your attention, and ultimately sell products or services. But what else do we know, or don’t we know, about the way in which marketing employs images to connect not just with our pocketbook but our heart? Because it’s the emotional connection that advertisers want with consumers; the emotional connection that forms an attachment between consumer and product / service; the emotional connection that seduces us to buy, buy, BUY!

Image Maker Take #1: Don’t Follow The Bus

I can’t seem to get away from it. Nearly every day that I drive, I find myself behind a city bus transporting the image of a beautiful woman with glowing skin shilling for a dermatologist. Having seen the image so many times, I started thinking about its purpose.

The image exists to tell me, the viewer, the consumer, maybe eventually the sucker, that my skin is deficient. And the solution to my deficient skin? Retain the services of this particular dermatologist and I too may be blessed with glowing skin just like the woman in the ad.

And wrinkle / blemish free skin is not the only promise. Oh no. In this case, the effects of beauty are more than skin deep. Below the surface, what is being promised is that glowing skin will transform me into a beautiful person, someone whom others envy, someone who will be liked and loved by more people. With glowing skin, I will no longer feel anxious about my appearance. As a result, I will be happy and life will be good. So you see, that’s the real promise of the ad: happiness.

Image Maker Take #2: What Price Thy Vacation

The back cover ad on an internationally distributed magazine shows an athletic man wearing nothing but a swim suit, a pretty woman decked out in a small, colorful bikini, and two cute kids, a boy and a girl, all of whom are shown to be smiling and running on a golden sand beach fronting turquoise colored ocean water.

The ostensible purpose of this image? To sell vacations somewhere in the Caribbean or Mexico or the Mediterranean or Hawaii or Spain or any other destination that may be packaged and sold as a dream getaway.

And like the bus ad, the underlying message is meant to trigger anxiety, i.e., my life is deficient because I am not half-naked playing on a beach. Gee, the people in the ad seem to be having so much fun. I want to have fun too. Sign me up!

The image is designed to have me compare my life to the fantasy portrayed in the ad. And I will find my life lacking. And I will be envious; I will want the fantasy to become my reality. And if I’m primed to suspend reality for long enough, I’ll decide that, for the price of vacationing in an Eden like hotspot, I will be transformed into someone just like the models in the ad. Then I will be fulfilled, happy, life will be good. As a bonus, my ego will be stroked when friends and family envy me because I have (temporarily) escaped the doldrums that is their life.

Agh! It Works!

Advertisements may useful by informing people of their choices. It’s a medium for spreading messages that we may not otherwise hear, and that may be to our benefit.

But here’s what we may not be considering: ads tell us that we’re not good enough. That if we have this or that product or service then we will be better, our life will be better. And reality just doesn’t play out that way.

The financial industry, including financial media, often promotes a similar message: if we become richer, if we retire early, and are then able to devote our life exclusively to play or leisure (as opposed to purpose) then we will be happy and fulfilled.

Money: The Source of True Happiness.

Hah! Quite the subtitle, yes?! Alright, backing up here, let me be clear: the subtitle is drivel, hooey, nonsense.

But that’s not what media would have you believe. I mean, does a day go by where one publication or another does not publish a mindless article about who is now the richest person in the world? How much money a superstar pro athlete is being paid for playing catch or bouncing a ball? Telling readers about all the expensive cars and homes and jewellery and clothes owned by this or that celebrity?

Why do we need to know who has what stuff? Well, we don’t. But the thing is, we live in a consumer society. If you stop buying as much stuff, and corporations sell less, then the wheels of our system grind down. So, to grease those wheels, illusory need is manufactured.

This is done through publicity that makes the 99% feel deficient for not having enough money nor enough stuff. And savvy media knows that effective publicity is tied to a story, preferably told by a well- known person who offers an image that aligns with the product/service being sold. And people see this well-known person and, presumably, say to themself, well, if its good enough for so- and-so celebrity then it’s certainly good enough for me. Human see, Human do.

Let’s say a luxury car maker placed an ad that said: ‘Buy the X car because it’s a solid, reliable car.’ That’s it. That’s the sell. How many cars do you think would be sold? Other than me, I’m guessing not too many consumers would even consider the car. Why? Because the ad doesn’t tell a story and the message is not delivered by someone whose face is on television or film. With no story delivered by an attractive pitch person, why would I buy the car? Why would I feel that owning the X car would fill a psychological/emotional emptiness in me?

Just take a look at the recent Mercedes ad placed during this year’s Super Bowl. Background music for the ad was the song, Born To Be Wild, and it starred (now ads have ‘stars’!) Peter Fonda, 1960s counterculture icon, who was in the 1969 film, Easy Rider (to sum up the film ever so briefly, the script followed two rebel motorcycle riders through the American South).

The message that was sold through the story? Aging Baby Boomers don’t ride bikes anymore, they drive a Mercedes. So if you’re a Boomer in your 60s or 70s with excess dough, and you want the cool, rebel image (i.e., fantasy) of Peter Fonda in this particular ad, then get yourself a cool, rebel car, a Mercedes. Then you’ll be happy and fulfilled and your friends will envy you.

Living The Good Life

Believe it or not, my intention is not to be cynical in this post. Rather, if you don’t already have your eyes open, I’m trying to give you a little nudge in that direction. Trying to get you to think about the stuff that you buy; the services you pay for; the resulting benefits you receive; why you buy what you buy; and who or what is influencing your decisions. Then maybe you’ll assess what belongs in your life and what doesn’t; and hugely important, what’s holding you back from feeling free and unencumbered.

Because I can tell you this: in itself, having enough money, being rich, being able to buy, and buying, STUFF, will not bring about feelings of peace and freedom. The human animal just doesn’t operate this way. I mean, when we buy something or pay for a service we want, sure, desire is fulfilled but only for a moment. When that moment passes, new desires arise. And on and on it goes, where it stops … it doesn’t.

Same as when you earn lots of money. Your portfolio grows, you feel good watching the numbers go up, but this too is momentary, there is no lasting satisfaction no matter how high the number climbs. And your search for freedom remains never ending until you realize that ‘The Good Life’ is a state of mind, a perspective, it’s being grateful for every moment that you’re walking this planet. And doubly grateful if you’re fortunate enough to have family and friends in your life, a rewarding occupation, hobbies you enjoy, and peace. Huge bonus points if you’ve brought a dog (I’m partial to dogs but any other non-human creature is just fine, more than fine) into your pack.

So when financial media repeats the same stories, tirelessly yakking about how to save for retirement, how to retire young, how to become a millionaire … basically, why you should worry about your financial situation until the day you die, well, tune it out. Money is an ongoing concern, you know that and you don’t need to be told repeatedly. Because you’re a member of the BuddhaMoney community who knows that when you increase savings, are wise about spending, and pay down debt (i.e., The Middle Way, the balanced approach to money) then you can feel good about turning your focus to all the other parts of life that matter.

 

 

Fight Fear, Get Rich

Shortly after the end of the 2007-2009 recession, a relative (between you and me, we’ll call him ScaredyPants) asked me to manage his money. He was seventy, widowed for many years, generally a happy-go-lucky sort of guy, and his portfolio was worth about a million bucks.

Eighty per cent of the portfolio was cash, the other twenty per cent was invested in one-year term deposits with the total portfolio earning less than 1.0%.

In 2010, inflation ran at 1.5%; in 2011, 3.0%. Meaning, as long as the rate of inflation exceeded investment return, ScaredyPants was losing money. But he was fine with the slight hit to his portfolio. Because after the Great Recession, ScaredyPants was terrified of losing money.

Today, more than eight years later, ScaredyPants asset allocation has not changed. Drawing seventy-five thousand a year for living expenses and to pay income taxes, having no revenue sources other than his portfolio and a small government pension worth about sixteen thousand annually, his liquid assets have dropped from a cool million to less than $500,000. At this rate, ScaredyPants will be broke if and when he reaches the age of eighty-five. Yet, he refuses to change his portfolio – such is the debilitating grip of fear.


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Enter Buddha

It is perfectly natural to be fearful. When fear comes upon you, embrace it, watch what is happening to your physical body, how it tightens. Watch what is happening to your thoughts, how they turn cloudy and negative. And wait for the feeling of fear to pass, because it always passes. And once fear passes, only then may you make wise decisions.


Sidestepping the Groove

Here’s the thing about fear: it stops us from getting to that really groovy place where we want to dance and sing and shake it all out because we feel financially independent and free!

As investors, as managers of our own money, we don’t have a whole lot of constructive use for fear. Rather, fear is a destructive emotional anchor, driving us to stuff money under the proverbial mattress, miss out on investment opportunities, let cash sit in a bank savings account earning next to nothing, or invest in ultra-safe-barely-pays-any-interest federal government bonds. All of which are surefire ways to NOT walk the path toward financial freedom.

Nervous Nellies

No one enjoys lingering in a state of fear or high anxiety. Still, it happens to all of us because we’re biologically wired this way: fear being an evolutionary mechanism designed to (1) signal danger, threat or conflict, and then (2) activate an adaptive response.

Okay, so we’re locked into human biology. But for the purpose of retiring early AND not running out of money before reaching our final resting place, isn’t it possible for savers and investors to flip the fear off switch?

Hey, smart guy, look around. The world is crazier than ever; the reasons for being fearful are endless!

I know, I get it, you don’t have to look too hard to find one geopolitical crisis or another that makes you want to stockpile supplies and hide out in a desert bunker. On top of this, there are your personal financial circumstances, be it shaky job security, unexpected expenses, or any other uncertainty that holds you back from contributing more to investments.

But the thing is, running away from financial markets is not the solution to being the CEO of your own show one day. In fact, it’s the exact opposite. If you let fear stop you from investing, then financial independence will remain a pipe dream.

Shift Your Perspective

To manage fear, to build wealth, shift your take on events. For example, when ScaredyPants thought of investing in the stock market, all he could see was the risk of loss. Well, there’s also the other side of the coin, the risk of gain, especially for long-term investors.

Granted, ScaredyPants represents an extreme example. For many others, risk is acceptable when it seems there is little chance of loss. So … when does the stock market offer such conditions? Well, when stock prices are going up, positive vibes fill the media, and fear has been relegated to the backseat. But, but, but … this is the exact wrong time to invest!

You want to invest when fear is in the air, when stock values are depressed and ON SALE.

But this is not what happens for most investors. Instead, time and time and time again, people do the exact opposite of what should be done; they buy high (when fear has receded) and sell low (when fear is ascending).

Your path to financial freedom would be that much shorter if you could shift perspective, and see depressed prices as actually presenting less risk, and potentially greater reward.

Easier Said, But Definitely Do-Able

Here’s BuddhaMoney’s guide to what needs to be done to address your fears, and maximize portfolio performance:

  1. Diversify. You’ve heard it so often that maybe you tune it out: don’t put all your eggs in one basket. Because a diverse pool of assets goes a long way to reducing fears, minimizing risk, and lessening major moves in portfolio value.

What kind of risk gives rise to fear? Market performance, economy performance, interest rates, inflation, and longevity (the possibility that you will outlive your money). To alleviate fear (and ulcers) caused by stock market value gyrations, hold some bonds. If you think the domestic economy is about to tank, buy foreign securities. If the bull market is slowing and you’re fearful of an impending crash, increase your cash position.

  1. Balance and ReBalance. Naturally, given that you’re a BuddhaMoney devotee, you have an investment plan setting out how much money is allocated to certain assets. For example, 60% stocks, 30% bonds and 10% cash, invested in domestic and foreign securities, exchange traded funds (ETF) and/or individual securities.

Well, if your stocks have increased in value and now make up 70% of your portfolio, then its time to rebalance, to sell 10% of the stock holdings (sell the winners; and when you sell at the ‘high’ price, it sure feels good) and allocate the proceeds to bonds and/or cash. Why do this? Because rebalancing reduces risk, reduces those situations where you feel fearful, and when you have a thoughtful investment plan in place its best to stick to that plan to achieve future goals.

  1. Pay Less Attention

The stock market is a roller coaster. And the ride makes a whole lot of folks queasy. But by no means does that mean you should jump off. Instead, tweak your behavior: stop checking prices every day or even every week. Because it’s dangerous for your health. When your hyper-focused on daily stock prices, you become more and more emotionally invested in both small and large movements. In turn, this may cause you to forget your long term goals and make poor decisions based on short term price swings.

  1. Keep Costs Down

Managing costs contributes to minimizing financial risk, i.e., the lower your investment costs, the more money in your pocket.

This may mean choosing low cost Index Funds; using the services of a Robo-Advisor; managing your own investments with a discount broker; or negotiating lower fees with a financial adviser.

  1. Recognize Noise For What It Is

Media knows that we read what we connect with, and most often that connection is on an emotional level. When the stories lean negative, this may affect our decision-making, and not necessarily for the better. So don’t let the stories suck you in and throw your well thought out plan off course. Because your financial plans, your financial future, should not be adjusted based on media stories or even what you discuss with friends. Instead, your plans should be based exclusively on your current needs, short, medium and long-term goals, and tolerance for risk.

Sure, we’re all susceptible to fear. But when you’re able to harness that fear, you sure do stack the odds in your favor that financial independence will be reached according to your plan.

Money Rules For Women

My fifteen-year young daughter (‘SmartyPants’) is brainy, enterprising, kind and compassionate. She cares for her family, friends, thirty-seven chickens, eight goats, four cats, two dogs, and one parakeet. Elected president of the poultry chapter of her local 4-H club (https://en.wikipedia.org/wiki/4-H) for the past two years, SmartyPants knows her calling is to be a Veterinarian, her love for animals is so deep.

 

34-budgerigar-strzelecki-qld

 

Like many girls / women, SmartyPants is a Giver, a Nurturer, often putting the concerns of others ahead of her own. All of which is wonderful and amazing and beautiful and I’m super proud of her. Still, with a nod to one of the 4-H mottos, To Make The Best Better, I’m supporting her to become better in the sense of Balance.

In other words, I’m encouraging SmartyPants to take care of her self, to cherish her self, to give time to her self, as much as she does for others. And part of taking care of her self includes learning to take care of money.


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Enter Buddha

Self-care is not the same as being selfish. Rather, caring for your self is positive, constructive, makes you stronger, and gives you more energy that you may share with others. If your energy is depleted because you have given it away, what use are you to others, and to your self?


Venus Is Her Name

Okay, I’m definitely not going to wade too deep into the arena of gender differences; I’ll leave the heavy psychological lifting to the folks who think women are from Venus, men from Mars. My planetary domain, as you know by now, is money. So, I’ll stick to what I know and talk about the unique financial concerns facing women.

  1. Permission To Look Out For Your Self

In the event of an emergency, airline flight attendants give instructions to place the oxygen mask on our self before helping the child sitting next to us. Upon hearing this announcement, the frightened parent responds, ‘No! I have to take care of my child first!’

Sure, I get the selflessness that comes from love. But what happens if the parent passes out before they are able to assist the child?

I know, I’m repeating what I said to SmartyPants, about taking care of your self first, but it bears repeating. In the context of finances, if you’re faced with the dilemma of paying for your child’s non-essential items or retirement, choose retirement. Same with paying for your children’s education or saving for retirement, choose retirement if you don’t have enough money to contribute to both.

Your children can work, they may apply for scholarships or other financial aid. No such aid is available for retirees with inadequate savings. And if that doesn’t persuade you, think about this: guess who becomes financially responsible for your retirement years if you haven’t saved enough? Right, your kids.

  1. Longer Life

Women typically live longer than men. So … women need more money. The challenge is complicated by the fact that women generally earn less than men (the usual statistics show women earning about 75-80% of what men earn for doing the same or comparable work. Why? Gender bias, plain and simple – and irrational and harmful and hurtful and foolish and backward and …).

Still, take up the challenge by making saving a numero uno priority. Because your future self will thank you for wisely funding your retirement, and providing your self with financial security.

  1. Be The Change

The more money you have, the more you may give to others. Consider that at most income levels, woman championed homes (i.e., women who earn more than their husband and enjoy fairness and respect in their relationship, and women who are single, divorced and widowed) make more charitable donations than homes where men make the financial decisions. Meaning? Meaning that more women earning more money and taking responsibility for making financial decisions results in more sharing of wealth and, ideally, a more just and equitable world.

  1. Take The Reins

You love your spouse, your partner. Excellent! But this is no reason to stick your head in the sand and charge him/her with exclusive money management responsibilities.

Here’s the thing: a whole lot of women are comfortable with paying bills and making decisions about household expenditures. Good! Everyone (that includes you too, guys) should have at least basic knowledge (although more is better in this instance) of budgeting and saving.

But then along comes this, this, this … way of thinking that says, when it comes to investments, that’s a guy thing or … what do I know about investing or … I don’t have time for managing investments. Effectively (and unfortunately), this type of thinking strips women of control over their financial destiny.

This way of thinking has got to go. Take off the blinders and, if not manage your investments then, at a minimum, learn and educate your self about investing so you may know what’s going on and may take a seat at the table when it comes to planning your financial future.

Yes, yes, I know, investing can be intimidating, it can be boring, it can be this and that. Alright, now, get over it. Because the earlier you start investing, the more likely you will be walking the path to financial freedom. The earlier you adopt a laser focus on building wealth for the long run, and recognize that it is not your patriotic obligation to spend money needlessly, the more your savings will grow and the wealthier you will become.

  1. Set Goals

Let’s say you want to buy a new home but can’t afford to do so today. Okay, how long will it take you to save enough for a down payment, and what changes will you make to your saving, spending and investing to help your self reach this goal?

Goals help to motivate us. Goals help us to not buy that new pair of pants because even though you look amazing in them, you have lots of pants and really don’t need another pair. AND, it’s better that you forgo the expense and put the money towards saving for your goal. Because your goal, buying a home, is your priority.

  1. Ask And You Shall Receive

My wife and I were walking through Carmel Market, a Tel Aviv bazaar jam packed with merchants selling everything from jewelry to linens to spices, clothing, electronics, flowers, appliances, fruit … you name it, the market sells it. And there were a million different scents in the air, and so many people, and it was loud and festive and incredible fun. For the kids, I was on a mission to buy t-shirts emblazoned with the Coca Cola logo in Hebrew script. Because they asked for it and thought it looked cool. So who am I to argue about taste?

coke

I approach the merchant and ask the price for 3 shirts.

“100 shekels,” he says.

This works out to about $26 USD, which seemed like a decent price for three shirts. Still, this is the Middle East. They negotiate here. For everything. It’s just the way it is. And they expect you to negotiate too.

“75,” I counter (about $20 USD).

After more posturing and gamesmanship, we agree to 90 shekels. Was it worth it, to bargain for a price reduction of less than $3? Yes! Because it’s a game, and it’s a marketplace with buyers and seller, each vying for the best possible price, and why should I pay more than necessary? The merchant knows his cost, he knows his lowest price where he will still make a profit. And he knows the game better than most buyers. So it’s up to me to ask for a price lower than advertised. If I don’t ask, I won’t get.

In North America too, we are better off if we learn to negotiate, especially when we don’t like the price of what’s being offered. Of course, we don’t have bazaars, and retail stores place a bland price tag on merchandise and we robotically pay the list price. But we can negotiate matters in life; because it’s a matter of advocating for your self. And advocating for your self is akin to taking care of your self.

Want a lower price on that new car, expensive shoes, luxury handbag? Ask for it. Demand it (in a kind, respectful, BuddhaMoney sort of way).

More importantly, advocate for your self when it comes to your personal value. In this regard, employers or clients, should ALWAYS pay full price for your goods/services. If you’re an underpaid employee, if the guy working next to you, doing the same job as you, is making 10% more, then you deserve a raise. But you’re employer may not even think about giving you a raise if you don’t ask for it. I mean, if you don’t fairly value your self, is it realistic to expect others to do so?

And if your goal is a financially secure life, then you have to ask for what’s fair to you. You can’t settle for less to please other people because you’ll be harming your self. It’s about putting your self first because you matter.

  1. Vulnerability Is A Strength

There are soooo many resources available to assist with any and every aspect of money management. If you prefer to learn on your own, well, of course BuddhaMoney is here to assist! That said, do an online search for whatever it is you’re looking for and a slew of websites will pop up. For human guidance, consider consulting with an experienced and competent CPA or certified financial planner who is able to review your financial situation and provide direction. However you go about your learning process, know that educating your self is self-empowerment. Self-empowerment leads to more knowledge that leads to more effective decision-making, and greater wealth.

SmartyPants Rules

SmartyPants is an amazing girl. And I have no doubt she will grow into an amazing woman, as will so many more girls of her generation. These are girls who will continue to be true to their inner nature, to compassionately care for others, and also know when it’s important to place them self first, and be comfortable doing so.

 

34-bird

 

Pot Investors Go Up in Smoke

Marijuana investors are stampeding for the exit these past few days. Why? Well, in keeping with herd-like behavior, there isn’t a rational explanation. Rather, this is a classic example of investor anxiety running rampant.

Here’s what stoked a fearful run for the exit: Bill Blair, leading the Canadian Federal government’s legalization effort, commenting in the Globe and Mail on the timeline for recreational legalization stated, “We will take as much time as it takes to do it right. I’m pretty reluctant to suggest a specific time frame, frankly, because I don’t know how long this will take in each of our 10 provinces and three territories.”

http://www.theglobeandmail.com/globe-investor/investment-ideas/marijuana-stocks-drop-as-trudeaus-pot-czar-says-canada-wont-rush-into-legalization/article34230589/

It’s All Been Said

So, this comment alone is reason enough to bolt from pot stocks en masse? The thing is, Blair is not saying anything that hasn’t already been said. Consider the following:

  • November 27, 2016. The Globe and Mail quotes Anne McLellan, marijuana legalization task force chair, who says that marijuana will be moved “… from a criminal regime, where this was an illegal substance with criminal sanctions – some of them very serious – to a legalized product in a regulated marketplace. It’s important to move slowly, and deliberately, in implementation. [emphasis added]

http://www.theglobeandmail.com/news/politics/report-on-marijuana-legalization-in-canada-due-this-week/article33065608/

  • November 30, 2016. The Financial Post (FP) quotes Brendan Kennedy, CEO of private equity firm Privateer Holdings, “It’s a long path to legalization. Investors sort of have these expectations baked in that are unrealistic. I think January 1, 2019 would be optimistic … even 2020, when all said and done.” FP goes on to repeat Anne McLellan’s statement that ‘it is critical the government goes slow on reforming the laws. [emphasis added]

http://business.financialpost.com/news/agriculture/long-path-to-legalization-marijuana-companies-not-convinced-of-legal-recreational-market-by-2018

  • January 2, 2017, Canadian Broadcasting Corporation (CBC) reports “While the federal government plans to table its new marijuana legislation in the spring of 2017, it will take much longer to study the bill and eventually pass it into law. It will likely be at least 2018 by the time the legalization process is complete.”

http://www.cbc.ca/news/canada/toronto/marijuana-toronto-2017-1.3896575

  • March 2, 2017, the Canadian Department of Justice website states, “In the spring of 2017, the Government of Canada will propose to Parliament and Canadians a new legislative framework for the legalization of cannabis.”

Addressing the issue of when legalization will happen, the website states, “It’s a serious, complex matter that will take time.” [emphasis added]

http://www.justice.gc.ca/eng/cj-jp/marijuana/info.html

The Facts Please

There you have it. No new information was announced. Neither Bill Blair nor the Canadian government changed the game.

Any informed investor knows that, owing to the nature of the legal and consultative process, it is not possible to give an exact date on which marijuana will be legalized for recreational use. And any of the listed marijuana companies worth their buds know full well that the magic date may not happen until 2018, 2019 or 2020. And these companies have organized their business model accordingly.

On the face of it, the fundamental nature of the business of producing, distributing and selling marijuana remains the same; and the prospects for a massive market remain the same (report from Deloitte estimates a +$22 Billion industry in Canada – http://www.businessinsider.com/deloitte-weed-could-be-226-billion-canada-2016-10). Then why are investors panicking?

Chalk it up to blind fear and a crowd mentality where one lemming follows another off a cliff simply because that’s what the other guy is doing.

Unfortunately, too many investors are short-term players who pay too little attention to available information. These are the investors who foolishly sell at a loss, because they’re consumed with fear, then kick themselves when the stock bottoms and resumes its upward climb. The winners are those who sit tight or, better yet, realize the opportunity and buy stock at depressed levels.


unknown

Enter Buddha

When fear and panic arise, accept these feelings. Recognize and make friends with them. But do not take action while in their grip. These feelings will pass. And once they pass, and your mind is clear, only then may you make wise decisions.


And Then There’s Organigram

A few days before the general downturn among pot stocks, Organigram Holdings Inc. (CVE:OGI) was hammered owing to filing of a class action lawsuit. The basis of the lawsuit is a claim that the company sold pot containing unapproved pesticides.

Now, if OGI had intentionally or grossly negligently spiked the weed to juice harvests, then it may well be on the financial hook for some serious dough beyond the retail cost of product. As importantly, if not moreso, the OGI brand would take a big hit, with the possibility that it would not recover. And a serious haircut to OGI’s stock value would be warranted, at least in the short term.

But none of the facts point to OGI being guilty of corporate shenanigans. Which brings up the question: what’s the deal with the extreme reaction by investors? Did investors inform themselves of all details concerning this issue or did they simply scramble to sell as soon as the plaintiff’s law firm informed the media of its filing? My guess is the latter.

The Facts Please

An exhaustive internal corporate investigation was unable to determine the source of pesticide traces. And Health Canada responded to the issue by:

  • Stating that it had not received any patient complaints about adverse reactions from product recalls;
  • Confirming its own test results determined that the affected products represent a low health risk; and
  • Declining to take any enforcement action against OGI.

That’s all fine and good but couldn’t OGI still be held liable for damages, or agree to a settlement payment just to make the lawsuit go away? Yes, to both of these questions.

Fortunately, the company employs a skilled management team that has taken the following actions to diminish any financial fallout from the lawsuit and, in the process, bolster its performance and its brand:

  • All potentially affected product were voluntarily recalled and destroyed;
  • Enhanced testing protocols, exceeding Health Canada’s regulatory requirements, have been implemented;
  • For the purpose of transparency, as of mid-March, 2017, future test results will be posted on the company’s website;
  • All customers who purchased affected product have been issued a credit equivalent to their cost;
  • According to OGI, the majority of its customers have accepted, and are using, the credit; and
  • Financial exposure has been minimized by allocating sufficient funds to cover losses related to the recall.

In addition, OGI’s currently suspended organic certification, which sets it apart from its pot growing peers, will likely be reinstated by Ecocert in March or April, 2017. Ecocert validates organic standards (http://www.ecocert.com/en).

Crystal Ball

Where will OGI go tomorrow and beyond? As you know, stock market investing does not offer guarantees. But if we keep our eyes open, if we take the time and exert energy necessary to fully inform ourselves about a particular investment, and not let emotions carry us away, then we stack the odds in our favor as far as good, and profitable, decision-making is concerned.

Full Disclosure: As of the date of this article, I’m a chilled shareholder of OGI.

 

Millennials Path To Wealth

We all have to learn about money. Well, it’s not exactly mandatory but here’s the deal: if you choose not to learn, if you remain money illiterate, then financial freedom will remain a fantasy.

Now, I’m not saying you should devote all your spare time to becoming a money expert (besides, that’s what BuddhaMoney is here for!). But I am saying that once you start educating your self, and developing a certain degree of competence regarding all money related issues, only then will it be possible to minimize or, ideally, eliminate financial stressors. Only then will you be walking the path where debt is a distant memory, savings are abundant, and comfortable retirement is an option.

Millennial Savvy

Millennials get what I’m talking about. Still, this gigantic, diverse, flock numbering 83 million plus (25% of the American population) and near 10 million in Canada (27% of the population) seems to be struggling with money issues more than the past few generations.

Why?

Hmmm, could be because they’re smarter than Boomers and Generation X and Y folks.

If they’re smarter, then why do they struggle?

North American Millennials (naturally I’m speaking generally here; when you’re describing a 93m strong group, speaking in general terms is about all you can do) do not worship money or make it a first priority. Unlike their parents and grandparents, they do not seek to make as much money as possible while sacrificing other aspects of life; will not take the big salary and perks if it means working for a ‘values deficient’ organization; and do not view the accumulation of assets as defining success.

Boomers, X’ers and Y’ers, may be saying, ‘uh, what exactly is the problem with this newfangled generation? Why don’t they follow our lead?

The thing is, Millennials are wiser than their predecessors. They seek a balanced life, prioritizing relationships and health ahead of money. And they define success holistically: being part of a loving family, reaching personal (i.e., non-money) goals, maintaining physical/psychological wellness, and staying true to one’s faith.


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Enter Buddha

 A Balanced Life Flows from:

Knowing that Greed is not a virtue.

Knowing to Spend in Moderation, being neither extravagant nor miserly.

Knowing not to live life on borrowed money; not to succumb to seduction by material things; not to buy what cannot be afforded; and to use credit Wisely.

Knowing to assume a Mortgage only if you may afford payments.

Knowing there is no suffering in having ‘things’ but there is Suffering in our Attachment to things.


Adding Money To The Mix

Full disclosure: I’m part of the X’er bunch. But this doesn’t stop me from being a big fan of Millennials. They seem to share a collective wisdom about living life, an entrepreneurial bent, and bounds of positive energy that bodes well for the future of a society that, presently, is wayyyyy too top heavy, with too much money in too few hands, resulting in social discontent and political upheaval. Case in point: the U.K. exiting the Eurozone and Barnum and Bailey’s ringleader elected president of the U.S.A.


Chewy Bit

Credit Suisse, Switzerland’s second largest financial institution, released a report in 2015 stating that the world’s richest 1% (0.7% of the global adult population) own 45% of the world’s wealth.

And people with a net worth of less than $10,000 account for a whopping 71% of the global adult population.

http://fortune.com/2015/10/14/1-percent-global-wealth-credit-suisse/ 


Listen BuddhaMoneyLama, we’ve heard it all before; the rich get richer. This isn’t exactly breaking news. And complaining is boring and destructive and it doesn’t help anyone.

Definitely! That’s why we’re moving forward. Not getting stuck on what others have, not complaining, coveting, or carping. But encouraging you to accept what is, then adjust focus to your self. Look at ways in which you can bring more money into the mix. Why? Because money smarts reduces money struggles and contributes to the wisdom of living.

Giving thought and strategic planning to earning, saving, and investing dough is what’s needed if your future entails buying (or renting) a home, creating and nurturing a family, eating well … shoot, even paying the monthly $9.99 to Netflix! (for those of you living off the grid, sure you’ll need fewer greenbacks but you still need some). And for those who want to gain entry to the 1%, well, go for it! With the right approach, big time dough is within reach.

So, ummmm, dealing with the here and now … how do you achieve financial stability, build enough wealth to pay off student debt, support a family, pay for a home, check out of the workforce and fund retirement? Begin by learning more about money.

More is Less

The more you know about managing money, the less stress you experience.

More is More

The more you know about managing money, the more peace you experience.

More is The Real Thing

The more you know about managing money, the more assets to your name, the more you are able to contribute time and/or money to making the world a better place.

Where to Start

1. Make a Budget

Oh, the pain of it! The mind numbing monotony!

Uh huh. Try this on for size: the Road to Financial Independence.

Making a budget is the first step, the foundational step, to taking control of your finances and building wealth. So, for the sake of your financial health, here’s what you do:

  • Buy in to the idea that drafting a budget is good for you.
  • List all sources of regular income.
  • List every regular expense so you know monthly household costs. These are fixed expenses.
  • Once you’ve paid for the fixed expenses, list your financial priorities such as paying down debt, contributing to your rainy day fund, retirement account, or other savings or investment account. Then  determine what percentage of your monthly earnings, if any, you will allocate to each of these priorities.

The amount remaining (after deducting fixed expenses, and contributions to financial priorities) may go toward ‘discretionary’ expenses. In other word, give yourself permission to indulge, to reward your self for your discipline and commitment.

2. Ignore the Jones

Your worth is NOT equal to what you own.

Contrary to claims from Corporate America, you do NOT need a certain toy to be happy or better or good or worthy or noble or likeable. Nor do you need a certain car, house, clothes, perfume, phone, or any other material thing being peddled to you.

So pay little heed to what things your friends and neighbors have. Block out advertising intended to make you feel emotionally insecure; with the solution to your insecurity being to BUY stuff.

Recognize that desire for material things can be harmful, lead you into debt, deplete savings, raise blood pressure and cause general havoc with your well being.

You want early retirement, financial freedom? Stick to your smart, thoughtful, budget.

3. Develop Champion Saving Habits

Regardless of how much earn, some of your earnings should be going into a savings account. If you’re just starting out, and your income is lower, you still want to contribute something to savings. If that means reducing expenses, then bite the bullet and give up some spending.

And when your earnings increase, don’t make the mistake of increasing spending significantly. Sure, indulge a bit more if you like, but only if you’re sticking to budget AND also increasing savings and investment contributions.

4. Take Control of Your Destiny

Plain and simple, like most parts of life, financial success is up to you (still, know that you’re not alone, that BuddhaMoney will happily walk by your side!).

It’s up to you in the sense that you have the choice as to whether or not to take responsibility. No one is forcing you to spend money on anything other than true needs (um, so sorry but bling and the latest tech gadgets are not needs).

Choose not to spend unwisely, Choose to save and invest … this is you taking responsibility, assuming control of your financial life. This is you realizing that life is an opportunity and you’re in charge of deciding how to deal with this amazing opportunity.

I’m not saying it’s easy to give up spending today for some seemingly mythical retirement many years or decades into the future. But if you can tap into a long-term vision of your life, balance out todays wants with caring for your future self, you’ll experience the joy of feeling (and knowing) you’re in charge of your destiny.

And the thing is, us humans, when we feel like someone else is running the show we call “My Life”, when we operate haphazardly, lacking a certain degree of order and structure, then stress, anxiety and frustration levels all increase.

But when we have some measure of influence over “My Life”, when we make money a priority, bringing it into the holistic mix that defines success, then this in itself empowers us to achieve our goals and realize a sense of inner fulfillment, harmony and success.

 


Chewy Bit

For those interested in deepening their knowledge of physical fitness, check out this comprehensive, hugely informative guide to getting in excellent condition, i.e., cardio, strength, flexibility, nutrition and lifestyle:

Ultimate Guide to Fitness

Full disclosure: we’re not receiving anything on our end for this link, other than a reciprocal link.

 

 

 

Teaching Kids About Money

When my daughter (let’s call her Sunshine because, hey, she brings the light in every day) was 6, I started her on the path to savvy money management. Her first step was to accompany me to a bank where we opened a savings account. The account was in her name but connected to my personal account so I would be able to monitor all transactions.

Next, she was given an allowance because, as Sunshine so astutely pointed out to me, what’s the point of having a bank account if you do not put money in the account. Owing to her tender age, and the fact that the Bank of Dad would be bankrolling her for some time to come given sky-high unemployment numbers among five to ten year olds, we agreed upon $2 / week.

At this stage of life, how much money I gave to her was not hugely important (that said, I kicked around the numbers, vacillated between $1 and $2, and eventually settled at the upper end, knowing the exorbitant cost of candy these days).

The purpose of the allowance was to teach her, little by little, about handling money. I figured that she knows how to floss her teeth, tie her shoes, and count beyond 100 … so its time to start learning another practical skill that will benefit her throughout life: saving and spending money.

And I wanted Sunshine to learn with her own money, exercising her judgment, taking responsibility for decision-making, learning from her mistakes. Sure, I was there to help out as needed but she needed to “do” for her self. Because that’s how we learn best: by doing for our self. And when we take care of our self we empower our self. Not only does personal empowerment make us feel good and competent and strong, it sure helps with navigating the corners, straightaways, and ups and downs of life.


unknown

Enter Buddha

Empowerment means not simply gaining power, but continually orienting one’s life in the most positive direction.

A self-motivated positive change in one’s inner life creates a change in one’s destiny. This in turn beneficially impacts the destiny of one’s family and, ultimately, one’s community.


Rolling in Dough

So once a month Sunshine and I trekked to the bank to deposit her allowance money. Most often, she hadn’t spent a cent. Turns out she was, and still is, a natural saver. Of course, Sunshine was also wily enough to know that she didn’t have to dip into her pocket because Dad is a sucker for buying her candy and toys.

When she had accumulated more than $50 (her balance buffed up by cash birthday gifts from relatives), I said to her,

“Now what?”

“What do you mean?” answered Sunshine.

“You’ve got all this money, right? Well, what are you going to do with it?”


Parental Guidance

As a parent, my role is not to dictate. I’m not here to tell Sunshine what to do with her money. But I do try to give guidance. Because my goal is for her to be comfortable with managing all aspects of money, meaning saving, spending, investing and sharing. And the only way she’s going to become comfortable is by taking responsibility for her decisions.


Buckets

In the guidance department, my rule of thumb works like this: money is apportioned among three imaginary buckets (for adults, a fourth bucket, investing, is added):

  • Saving
  • Spending
  • Sharing

When money is received, it’s placed into each of the three buckets, ideally in equal parts. This is a simple way to provide money management parameters.

That said, the amount to be deposited in each bucket may be a conversation waiting to happen. For example, if Sunshine were saving up to buy a scooter, then we would talk about her savings goal, how best to get there, and how contributing more to the savings bucket would impact available spending and sharing.

The benefit of setting savings goals is huge. It helps kids ‘buy in’ to the value of savings, and has the positive effect of limiting spending and reinforcing the notion of becoming a conscious consumer (i.e., thinking about each purchase and the effect spending money will have on savings, sharing, the environment, etc). If kids start thinking this way about money at a young age, they will most likely carry this perspective forward into adulthood.


Money Lessons

#1. When To Start Teaching

The sooner the better. Kids are more receptive to your ‘lessons’ before adolescence strikes, a time when growing brains tend to go wonky and haywire, and those lessons you used to teach are now perceived as nagging, boring lectures. Still, regardless the age, it’s never too late to start.

#2. Saving

The little ones should learn that money is a tool. It’s used to satisfy needs and wants. And distinguishing between ‘wants’ and ‘needs’ is essential if you want to achieve financial freedom one day. (http://buddhamoney.com/money-and-happiness/day-two-enter-the-buddha/)

#3. Spending

Thinking in terms of wants and needs when deciding whether or not to make a purchase sets the stage for minimizing impulse buys and, at the same time, encouraging delayed gratification (http://buddhamoney.com/money-and-happiness/willpower-leads-to-wealth/).

The fewer impulse buys, the more you stick to spending on ‘needs’, the more money you have to put toward savings. Kids who learn this sort of self-discipline morph into adults who realize that freedom comes from living within your means.

#4. Sharing

My daughter absolutely adores animals so she’s been making charitable contributions to local animal shelters. Knowing that her gift helps to provide food, shelter and care for animals makes her feel amazing. And she’s learning not only the value to others that comes from giving, but also the intrinsic reward she receives through the act of giving.

#5. Mistakes

Let your kids fall down. And teach them to get back up. Because there are no mistakes, only experiences from which we may learn. And when we’re talking about money, it’s best that mistakes be made when kids are young, still under parental care, when damage will be minimal. They will learn from their mistakes and become better money managers as adults.

#6. Credit Cards May Be Dangerous

When young, say under 10, most kids don’t immediately grasp how credit cards work. They don’t get that three or four weeks after your purchase is made, you have to pay the lender. And they certainly do not know anything about exorbitant interest charges so kindly added to your account when payments are overdue.

Kids should be taught about the perils of credit cards, of spending money you do not have, of the price you will pay for buying what you cannot afford in terms of debt, stress and, owing to interest payments, stopping your self cold on the road to financial freedom.

#7. Pay To Play

When Sunshine was six, her $2/week allowance was tied to making her bed on the weekend and clearing her dishes from the dinner table. Because I didn’t want her to grow up with a sense of entitlement. And I wanted her to experience the reward that comes from giving back, of being a good citizen of the BuddhaMoney family.


Teenage Balance

Today, my daughter is fifteen and remains a conscious saver. I’m guessing that part of this is a result of what I’ve been teaching her over the years and part owing to who she is, i.e., someone who appreciates what she has and doesn’t crave ‘stuff’.

Still, she spends money on clothes, movies and music … typical teenage things. She does so knowing how much is in her bank account (she has access to her account online), how much she wants to retain in savings, and what is a reasonable amount of spending.

Sure, she’s still young but she’s on track to becoming an adult who will not dig debt holes for her self; who will manage money responsibly and enjoy the peace of mind that comes from maximizing savings, limiting spending, and giving back.