The last few years in the stock market have actually been quite boring. Up a little, down alittle. We may be lulled into a false sense of security, believing that making money in the stock markets is a foregone conclusion. We become complacent. Sharp declines over the past couple of weeks have jolted many nerves. The markets are currently seeing the biggest correction to hit U.S. stocks in four years. A 10% drop in value is the definition of a “correction.” The S&P dipped over 10% at one point in just a few days. While this can be alarming, such periodic pullbacks can also be instructive. They help to keep greed in check, and remind us that making money in the stock market involves risk.
A few weeks ago, I had coffee with a woman who said, “I really love money! I just wish I didn’t feel bad about saying it.” Yeah, I love money too! I identified with her feelings, especially remembering my college years when the prevailing cultural message was that greed and money are bad, suggesting that being poor is somehow noble. It prompted me to think about why loving money feels like an important step toward bringing more of it into your life.
With recent data breaches in the news – from Target and Home Depot to Sony, Anthem and government agencies – I decided to attend a talk last week on identity theft. I used to regard this as one of those “not likely to happen to me” things. Not any more. What struck me most in the presentation was the amount of effort needed to relieve people of their money: i.e., not much!
Lately the media has been frothing over the rocky financial situation in Greece. Banks and stock markets closing, on top of high unemployment and chronic recession – surely these dire circumstances must have important repercussions for investors here, right? How concerned should we be and what should we do?
Lately I have been reflecting on the importance of values as a compass for our lives. Now that the boys have moved out I can’t help but wonder if they will eventually live the values that we worked so hard to instill as parents.
For those of us who have gone through a divorce, the signs become clear, though too often in hindsight. Maybe you avoided important conversations, stopped coordinating schedules and planning regular date nights, or tried therapy and still were not able to reestablish your connection. Whatever it was, at some point it becomes clear that the writing was on the wall. Once that point is reached, you feel like your world is falling apart. You may feel totally unprepared for how to deal with the process that now ensues — emotionally, financially, and legally.
In How Much is Enough? part one we talked about the Fulfillment Curve. It is a great visual representation of the concept of enough money. When we ask the question “how much is enough?” we find that the answer is unique for each person. The objective is to fund survival, some comforts and only the luxuries you consider most important.
A woman approached me recently after a talk I had given on the psychology of money, and asked the following question: “If I know I’m engaging in retail therapy and have it named, does this make it conscious spending?” At first, I gave her credit for recognizing that she was spending money to feel better. But as we talked, I began to sense that a degree of semantic acrobatics might be involved. Could it be that she was naming the behavior in order to give herself permission to indulge in spending money that she wouldn’t have otherwise?
Being a relative newcomer to dating, I’ve been intrigued with how people get to know one another and what they look for in a prospective mate. Often, people are adamant about being with someone who shares their political and religious beliefs, yet fail to have any discussion about money. The money discussion can be harder than even politics or religion, partially because it’s been ingrained in us not to talk about it. You can hope the person you’re interested in has his financial house in order, but that won’t tell you much about his beliefs about money. I often see partners who are exact opposites when it comes to money: One is the saver, the other, the spender. Differences that seem charming and attractive early in a relationship may emerge years later as a constant source of tension.
I recently came across a recipe in The New York Times for Catalan stew with lobster and clams. As I looked at the picture and the list of ingredients, my imagination began to work. I saw steam rising from the bowl, filling my nostrils with the sweet scent of fresh seafood. The dish was slightly thick from the tomatoes and fragrant from the red chiles and ground nuts. Big chunks of lobster and wide-open clamshells beckoned. All my senses were engaged and I wanted to eat! It may sound crazy, but financial planning is actually a lot like cooking.
I’m thinking about how the Steely Dan lyrics, “When Black Friday comes, I’m gonna dig myself a hole…” seem fitting for the way some people approach the day after Thanksgiving. We make so many unconscious choices with money throughout the year, but during the holidays, no sooner does the mania of Black Friday strike, than we race out to shop.
Planning is about answering the questions, "When can I retire?" and "Will I have enough money to last my lifetime?" Planning starts with generating ideas about what you need and want in retirement. Visualizing what retirement looks like for you is a step in planning that tends to be overlooked. Planning for the future can seem abstract, almost like fantasizing. In order for us to get excited about it and hold it as a goal, it needs to be attractive to us. We will be more likely to put our money toward it if it is something real in our mind's eye.