That’s Y

May 30, 2013 Leave a comment

Lazy, entitled, technology-addicted narcissists more obsessed with uploading self-portraits onto social media sites and tweeting the contents of their latest meal than contributing meaningfully to society. The constant onslaught of criticism against Generation Y appears to have reached boiling point with the recent lambasting of this rising generation in Time magazine’s feature article by Joel Stein entitled “The me-me-me generation”. Stein paints a grim picture of this age group (otherwise known as the Millennials) which also happens to be the largest generation in history, with some 80 million Millennials in the United States alone – almost double the size of Generation X.

Members of Generation Y have constantly been berated by generational theorists for being money-obsessed, self-absorbed “over-sharers” who live in constant need of acknowledgement and who suffer from overwhelming FOMO (or fear of missing out). FYI and BTW, the fact that they have an acronym for pretty much anything appears to be another trademark of this generation. LOL. It’s argued that their self-worth is measured in the number of Facebook “likes” achieved on any given post, and their overwhelming belief in their entitlement is probably a result of the inordinate number of ‘participation’ trophies awarded at school – futile awards just for bothering to pitch up. Stein opines that Millennials are convinced of their own greatness and obsessed with achieving fame – albeit futile-Kim-Kardashian-style – quoting frightening research revealing that three times as many American school girls aspire to be PA to a famous person rather than become CEO of a major US corporation. Although there’s much to be said about the shortcomings of this generation which ranges from age 13 to 30, there’s no doubt that they’re uniquely fascinating if only in their approach to money and finance.

Having grown up through numerous boom and bust cycles, one might be surprised to know that as investors Generation Y is surprisingly conservative. According to a recent survey by Merrill Lynch, Millennials are savvy, independent and skeptical, with a strong sense of familial and social responsibility. They have an overwhelming desire to build careers doing what the love most, and they want to use their careers as a platform to give back to society. Having witnessed their Baby Boomer parents work long hours for mega-corporations only to lose their pension funds through the stock market crash and the great recession, Millennials are wary of aggressive investing and prefer a “buy and hold” strategy. In fact, the survey shows that 43% of them describe themselves as conservative investors. However, increasing longevity coupled with a desire to extend their careers long after the prescribed retirement age of 65 made meaningless by the boomers, retirement is so far off for the average Millennial that it’s almost not worth talking about.

Lambasted by Stein and commended by Merrill Lynch, it appears that there’s a classic mis-match between the way the world sees the Millennials and who they actually are. Adding to the list of criticism leveled against them, the Millennials are often perceived by financial advisors as being wreckers of the parents’ retirement funding as a result of their penchant to “boomerang” back to the familial home in the face unemployment or under-employment. Given the high rate of Millennials moving back in with their parents (there are more Millennials living at home with their parents that with a spouse) it’s unsurprising that they have less household and credit card debt than any previous generation. Given the status quo, it’s also no surprise then that research shows a huge level of career frustration amongst this generation who seems to be waiting it out in the parental home whilst the Baby Boomers over-stay their welcome in the job market. Undoubtedly the best educated generation in history, it’s somewhat disturbing to know that the net worth of someone aged 29-37 has dropped 21% since 1983. In fact, as a direct result of the recession and the increased longevity of Baby Boomer careers, it’s believed that Generation Y now has the highest likelihood of having unmet expectations and the lowest level of satisfaction with their careers.

Given the challenges facing this interesting generation, one can’t help but feel that much of the criticism leveled against them is fundamentally unfair. Often caricatured as “navel-gazers” for the manner in which they remain fixated with their smart phones, this generation has merely adapted to an environment which isn’t necessarily of their own making. In fact, it’s the Baby Boomers a.k.a. Steve Jobs, Bill Gates et al who invented the very technology that the Millennials are now being chastised for daring to use to its fullness. Being young and adaptable, the Millennials are merely trying to keep pace with a world that changes quicker than a status update, leaving older generations bewildered at Generation Y’s desire to use their smart phones for everything other than talking. The fact that Millennials understand the muscle of their smart phones to change the world is perhaps frightening to those who haven’t yet conceived the power of technology to do good.

Other than using smart phones to price-check and do on-line banking, Millennials have harnessed the power of these intricate little devices to mobilise global action in the form of rape-crisis hotlines, blanket drives for indigent communities and fundraising for victims of tornadoes, tsunamis and earthquakes, while the bureaucratic powers-that-be were still befuddling over red-tape and arguing over landing rights for UN aid workers. Perhaps there’s solid argument that the perceived impatience of this generation is in fact frustration coupled with an overwhelming urgency to get things done. This is a generation of problem-solvers who’ve been raised to believe there’s an app for everything. They’re global natives who, spurred on by the remarkable success of self-made You Tube and social media super-stars, are happy to go it alone in an unshakeable belief that they too can become great.

With an ever-growing client base of Millennials, we’ve found it imperative to evolve our business so as to meet the needs of this exciting group of people. Taking nothing at face value, Millennials are vigilant and full of enterprise. They ask meaningful questions and, with constant online access, they research everything. Like us, they understand the value of fee-based financial planning and, in our experience, are both socially and financially responsible. Far from being narcissistic and self-absorbed, we delight in this generation’s diverse passion for causes which range from saving the environment, finding homes for rescue dogs, to ensuring the welfare of their retired parents. In spite of the seemingly unfair arsenal of criticism leveled against the Millennials, we choose to believe in their ability to make this world a more beautiful place.

Have a super day!

Sue

Self-absorbed narcissists or global game-changers?!

Self-absorbed narcissists or global game-changers?!

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From high street to i-street

May 15, 2013 Leave a comment

Having seemingly perfected the design and allure of the modern day mall, large property developers and retailers are both fearful of and flummoxed by the online purchasing revolution. With billions of Rands invested in a mass of monolithic malls that stretch from Milnerton to Matatiele, retailers are understandably bewildered by the rally on on-line transactions. While high street retailers were intent on negotiating exorbitant rentals and price-perfecting their products to cover excessive operating costs, it appears that they failed to notice their customers taking to the clouds – quite literally. With the same breed of gilt-edged glam and rows of homogenized stores, it’s somewhat unsurprising that high street consumers have taken to online shopping like mall rats to a month-end sale.

With the obvious advantages of time-saving and sheer convenience, there are a host of other factors driving consumers to i-street. The relative ease of online credit card payments removes the mechanics of purchasing from the consumer – a somewhat double-edged sword for the compulsive shopper as online transactions only serve to disassociate the buyer from reality. That said, the online consumer is able to shop at leisure at any time of the day or night with shopping aisles and queues being something they might well tell their grandchildren about. Add to this free shipping and door-to-door delivery, and most people are left wondering what the mall appeal was all about in the first instance. Ease and convenience aside, the real value of online shopping lies in consumer empowerment through the likes of price comparison engines, product reviews, social media groups and after-sales service discussions in chat rooms. The new consumer is shopping in a truly global ‘mall-in-the-clouds’ where nothing is ever out of stock and everything is for sale.

Gone are the days when granny would drive from Checkers to Pick ‘n Pay to OK Bazaars to find the best bargains on butter or the lowest price on lamb. Technology is completely transforming the shopping experience and retailers are being, albeit somewhat reluctantly, forced to reinvent their raison d’etre. Modern thought amongst retail experts is that stores will mutate into mere showrooms for their available products and brands – a place where would-be consumers can experience the brand, touch the product and view the wares, following which purchases will be made online. This school of thought follows the rise of a new trend in high street shopping now dubbed “showrooming” – where people use their smart phones in-store to determine whether prospective purchases are available cheaper either online or elsewhere. Without discriminating, it appears that “showrooming” is an under-40 phenomenon, with Millennials and Generation Z being far more digitally connected than any other generation.

Although high street is under threat by recession, high rentals and the surge towards online purchasing, it certainly isn’t facing outright extinction. Experts believe that high street will evolve into an advertising place for brands, where outlets will need to offer consumers an engaging and exciting experience of their brand. The new high street showroom will need to employ visualisation technology so as to provide the consumer with an incomparable experience of the product. Digital placement of that couch in your lounge, simulated 4×4 trails in off-road vehicles, virtual dressing and hairstyling – this is the future of high street where outlets will be physical ‘brand cathedrals’ for the online purchaser.

One definitive fatality of the i-street revolution is the outmoded salesman who regularly knows less than the uber-informed consumer who’s price-checked, compared products, read product reviews and discussed the product on Facebook and Twitter no less. With the advent of this new breed of online consumer, it is somewhat disturbing that, according to research firm Accenture, 75% of retail executives admitted to not understanding the changes in online purchasing, whilst 4 out of 5 executives admitted to not taking advantage of opportunities offered by new technology.

When Jeff Bezos, a former hedge manager, wrote his business plan for amazon.com, he estimated it would take a decade to turn over $100 million. It took two years. Hailed as Silicone Valley’s greatest visionary, he almost embarrassingly admits that he only ever intended Amazon to sell books, and only to Americans. Amazon now employs 70 000 people, turns over $48 billion per year and has made Bezos a wealthy man with an estimated personal fortune of $21 billion.

Although Bezos is blamed for being the leader of the internet trend that is defacing local high streets, he defends himself by saying that Amazon is only forcing retailers to be smarter and more innovative – and one can’t help but agree with his sentiments. Boasting overly ostentacious interiors, ill-informed sales people, regular lack of standard stock items, congested queues, indifferent customer service and downright horrendous music, innovation is long overdue. Only thirteen years in, the 21st century has already had its share of revolutions, and the i-street revolution may be one worth watching.

Have a super day!
Sue

Online shopping

The online revolution!

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Fiscal fibs

April 25, 2013 Leave a comment

Fiscal infidelity may not be the worst form of betrayal to afflict a relationship, but its ability to destroy trust and wreak enduring harm at the core of any marriage should not be underestimated. Whilst it’s an accepted axiom that money problems can cause deep-seated marital problems, the harbouring of financial secrets can spell the death of any marriage teetering on the edge of even minor instability. Not quite as severe as physical infidelity, the reality is that financial infidelity can be wrought with all the same emotions as the former infraction – betrayal, guilt, shame, bitterness, resentment and anger. Although somewhat lower on the rungs of marital misdemeanours, the root of this form of infidelity emanates from the same place – miscommunication, lack of trust and a complete inability to understand each other.

With financial woes being blamed for the breakdown of most marriages, it should come as no surprise that 71% of recent survey participants admitted to keeping money secrets from their partners. Although merely an inanimate object, money has a de facto emotional connection between the various facets of our lives. Money links our hopes and goals to our achievements and successes, and is the accepted enabler of many of our dreams. From little white lies to deep dark financial secrets, financial infidelity can place the entire family’s welfare at risk, especially where one partner has blind faith in the other when it comes to managing the family’s money.

Frighteningly, over one third of married couples claim that there is one ‘financial controller’ in the relationship, with the other spouse (willingly or unwillingly) abdicating all financial powers to their partner. Only 11% of couples practice a true ‘division of labour’ approach where both take equal responsibility for the financial management of the family’s fiscal matters regardless of each partner’s income levels. And although the majority of adults surveyed did not consider financial infidelity as grounds for divorce, they did agree that it is a major violation of marital trust.

Financial infidelities range from minor acts of omission, such as hiding credit card statements or low-blowing the cost of purchases, to acts of commission involving the operation of secret bank accounts or surreptitiously changing the contents of one’s Will. Whilst many couples surveyed indicated that most financial infidelity could be resolved, 62% considered the secret bank account (sometimes referred to as ‘the runaway fund’) as the most serious financial violation, originating from the heart of distrust and impermanence.

Perhaps most devastating of fiscal fibs when it comes to the family’s future welfare is the concealment of debt. 38% of people claim to be in the dark regarding the levels of their partner’s debt, and a staggering 25% of survey participants claimed they wouldn’t tell their partners if they were to encounter financial difficulties. Add to this that 21% of people claim they’re not completely honest about their spending habits, whilst 7% have admitted to hiding bonuses from their spouses. Marriage counsellors the world over will attest to the fact that there’s nothing blissful about financial ignorance and, without stating the obvious, open and transparent discussion about one’s financial affairs is as essential as a double-bed when it comes to marriage. As someone once said, “If you’re going to have secrets, join the CIA. Don’t get married.”

Having made huge progress from the days marital power where keeping separate bank accounts was akin to keeping separate bedrooms, there are still those who raise eyebrows at partners who operate separate banks accounts. Whatever your stance on joint or separate bank accounts, the experts are unequivocally clear – as long as one is transparent about one’s money and accepts joint responsibility for the family’s finances, the chances of money being the cause of familial failure are greatly lessened.

Financial woes typically develop where two people lead separate financial lives. Seemingly harmless little white lies soon transcend the definition of ‘minor fiscal fib’ and morph into full-blown financial falsehoods that become a major source of conflict, causing couples to stake out their territory and refuse to meet on any middle ground. Whatever the reason for the financial infidelity and fibs, the words of Sara Gruen resonate with relevance: “With a secret like that, at some point the secret itself becomes irrelevant. The fact that you kept it does not.”

Whether the financial infidelity is a cry for help by an overly controlled house-wife, a form of passive-aggressive rebellion against a miserly mate or the last resort of a partner desperate for some autonomy, the end result is inevitably a breakdown of trust that resonates at the very core of the relationship, giving fresh meaning to the words of Cassandra Clare in the Clockwork Prince – “Lies and secrets, they are like a cancer in the soul. They eat away what is good and leave only destruction behind.”

As with any aspect of marriage, the financial component of one’s relationship needs to be a transparent ledger available for inspection by one’s partner. As co-managers of the family’s financial affairs and joint custodians of the marital estate, full disclosure of one’s financial affairs allows for joint decision-making, co-responsibility and mutual respect – the essence of any formidable partnership. Earning potential and income levels aside, lasting victory on the path to a family’s financial future begins with less regard for each other’s net worth and simple recognition of each other’s self worth.

Have a blessed day!

Sue

Little white fiscal lies can become deep dark financial secrets.

Little white fiscal lies can become deep dark financial secrets.

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Eggstravaganza

March 27, 2013 Leave a comment

As large retailers zealously flog their chocolate-coated, rabbit-shaped, calorie-uncontrolled delicacies in preparation for this long weekend, the irreligious would be forgiven for thinking that Easter was in fact a celebration of the versatility of pastel colours. With over 80% of the population intent on celebrating Easter in some form or other, it’s little wonder retailers are reveling at the opportunity to cash in on this post-Christmas, pre-Winter, end-of-Lent celebration in all its sugar-coated glory.

With 90 million chocolate bunnies, 700 million marshmallow eggs and 16 billion jelly tots sold in the United States alone, Easter is now the largest confectionary holiday on the annual retail calendar. Producing enough jelly tots to circle the earth three times over, an average spend of R200 per person on candy-coated delights is anticipated this Easter. With prices starting at a mere R1 for the humble marshmallow egg, there appears to be little reason for an empty basket. In a world seemingly saturated with attention-deficit hyperactive children, retailers understand the marketing limitations when it comes to flogging sugar-fuelled Easter must-haves, which is why they have gradually mutated the Easter product offering to include everything from pink baskets, feathered accessories, pastel hats and an endless array of novelties with little regard for their utter irrelevance to the true meaning of Easter.

The Easter basket, for instance, originated in eighteenth-century Germany where woven baskets were used to transport seedlings to pagan temples so as to increase the chance of a good harvest. The idea of putting grass in the basket came from the Dutch tradition of celebrating the Easter hare, where children would create a nest for the hare to leave eggs. Through opportunistic marketing, the Easter basket – or in some instances, an Easter bag – now forms an integral part of our culture and a necessity for any child intent on a good haul this Sunday. Woolworths retails an Easter hunting bag for R99.95 or a hunting back-pack for R129.95 – an additional R30 for the pleasure of having both hands free for the big hunt. If you’re not content with the quality of your lawn grass, you can purchase Easter grass seed from Spots & Lady Bugs via Amazon.com for a mere R150 per packet. The seeds are guaranteed to grow within 10 days of planting to create the perfect landing for your eggs. For the more artistic hunter, PAAS retails egg-dying kits for anything between R30 and R140 depending on your chosen theme.

Eggs, having long been a symbol of life and re-birth in many cultures, were surprisingly incorporated into Easter celebrations for an entirely different reason. Originally forbidden during the traditional Catholic Lent, the masses celebrated the end of their period of abstinence by indulging in eggs. A few hundred years later and we’re still indulging unashamedly in eggs, albeit the less healthier, sugar-infused variety. From hollow, mass-produced eggs to ornately hand-crafted works of art by chocolatiers par excellence, the price of Easter eggs range from the easily affordable to prices that could make you choke on your chocolate.

Significantly outperformed by the Easter egg, the lowly hot cross bun consistently makes its annual appearance as if deliberately testing the retail industry’s capacity to innovate. Having pushed the creative envelope with the advent of the extra-spicy and chocolate-coated hot cross bun, one wonders of the future of this Easter icon whose origins are traditionally Christian, being a favourite treat during the period of Lent. Over-shadowed by Christmas, Mother’s Day and Valentine’s Day, florists claim that Easter is the fourth most important event on the floral almanac, with lilies being the flowers of choice at an average price of R20 per stem. If accompanied by an Easter card at an average price of R25 per card, a simple Easter arrangement could set you back a couple of hundred Rand with ease.

From glow-in-the-dark eggs, chickens that lay jelly beans, dancing pink rabbits to home-grown Easter basket grass, it’s little wonder that Easter has become a retailer’s oasis. If you can imagine it, eat it or paint it pink, there are literally throngs of consumers happy to pay the price for pastel-painted paraphernalia in the name of a religious holiday. The true price of Easter has already been paid and, as with all good things in life, the gift of Easter is free for all.

Have a blessed Easter weekend!

Regards

Sue

Easter

From left: (i) Easter bags and baskets are popular kids’ accessories, (ii) Easter grass seeds retail for R150 per packet, (iii) Lindt chocolate bunnies retail for R89.99.

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No place for greed

March 7, 2013 Leave a comment

Whilst it’s true that modern psychology is founded on the assumption that, in general, humans tend to think and behave rationally, this assumption has become somewhat of a misnomer in the realm of investing. Enter the relatively new field of behavioural finance where psychologists and behavioural specialists are still trying to fathom why, in the face of clear logic and indisputable facts, investors are driven to abandon their clearly-mapped financial plans and prejudice their financial futures by their irrational, emotionally-fuelled behaviour. And of all the emotions that investors are confronted with on a daily basis, it’s greed and fear that are most likely to take the blame for wealth destruction.

Although the human species is hard-wired with a series of in-built emotions that are designed to ensure our ongoing survival, it is curiously ironic that our innate emotions of greed and fear, when given free reign in the investment markets, can serve to work against our primal survival instincts to so greatly prejudice our financial futures. At the top end of the investment market, greed drives investors to purchase stocks in insatiable quantities, whilst at the bottom of the market, irrational fear moves investors to shed their stocks quicker than you can say ‘low-risk investments for me, please’. And while endless volumes of research, statistics, graphs and guides reiterate what everyone already knows – that investors are notoriously bad at timing the markets – many investors continue to bow to the emotional pressure of overriding greed and irrational fear to their very own detriment. How is it that rational, thinking and educated people can make such irrational, uneducated and inexplicable investment mistakes?

Greed, in the context of investing, is defined as an excessive desire to create as much wealth as possible over the shortest possible period of time – and it’s this ‘get rich quick’ mentality that makes it difficult for investors to maintain their gains and stick to a strict investment plan. Any financial planner who’s worth their weight in gold will advise any client to maintain a long-term investment horizon when it comes to funding for retirement, and to stick to his game plan regardless of inevitable short-term market volatility. As advisors to many retirement funding clients, our advice is (and has always been) to paint ones retirement lifestyle and then develop an investment plan geared towards achieving these goals. Remaining intently focused on ones retirement goals will reduce the possibility of being side-swiped by the latest stock craze or get-rich-quick scheme. Sticking to ones longer-term investment plan in the face of personal feelings of greed or fear will result in inevitable investment success. You definitely won’t get rich quickly, but you will create genuine, sustainable wealth.

Fear, being an intense feeling of awareness of danger or loss, can wreak havoc in the stock markets as investors bid to stem their losses by moving out of equity markets into lower risk investments. As share prices drop, investors tend to behave as a frenzied flock as they flog their shares and buy into lower-risk, lower-reward money market investments – with absolutely no regard for their long-term investment plans.

To exacerbate the problem, fear itself is further fueled by what is known as loss aversion – the fear of losing something that one already owns. Psychologists believe that our fear of losing something is greatly outweighed by our desire to gain more. Into the fray is thrown the fear of regret, which is the fear that investors feel when they think they’re missing out on a once-off investment opportunity, a get-rich-quick tip-off or a sure-thing investment. Through fear of missing out, investors are driven to behave with a herd-like mentality whilst their behaviour flies in the face of all logical explanation.

The reality is that, whether an investor’s behaviour is driven by fear or greed, scrapping ones long-term investment plan for the latest stock craze can damage ones financial plan just as much as irrationally switching ones investments to a lower-risk, lower-reward portfolio out of fear. Behaviour driven by either of these emotions generally results in nothing but a worthless financial plan, an irate financial planner and an embittered investor.

After thirty years of research we now understand considerably more about investor behaviour than ever before, although there is still much to be uncovered. In the emerging field of neuro-economics, recent studies reveal that investors are not only influenced by their emotions, but by the time of day, the weather, their attire and hunger. It’s been proven that a woman’s hormonal cycle can influence her tolerance for risk, whilst men with higher testosterone levels have a greater propensity for risk than their lesser-fueled peers. When taking investment decisions with their fellow investors, people tend to take riskier decisions than when on their own, and people who’ve just made a lot of money will be less cautious when it comes to risk-taking in general.

Investment markets are, by their very nature, riddled with the volatility of peaks and troughs, the unpredictability of booms and crashes, and the inexplicable reality of market highs and lows. Accepting that the investment graph will rise and fall many times over one’s long-term investment horizon is the first step towards adhering to a well-constructed investment plan. As difficult as it may appear, the answer lies in the ability to de-sensitise oneself to the inevitability of market fluctuations and ensure that one remains invested to achieve a pre-determined set of retirement goals. The peaks and troughs that occur in-between are nothing more than peripheral investment noise and shouldn’t impact one’s investment strategy in the longer term. Successful investing towards long-term and sustainable wealth is about remaining focused on one’s financial plan, unaffected by market noise and vigilant against the ever-destructive nature of greed.

Have a blessed evening!

Sue

Stop greed

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My budget speech

March 1, 2013 Leave a comment

As far as experiences go, most humans consider the task of preparing a budget as slightly more enjoyable than root canal and not quite as riveting as standing in the queue at a Clicks pharmacy. Tomes of evidence exists to prove that people who run monthly budgets are more in control of their futures, spend less recklessly, succumb to impulse shopping less often, are less likely to be duped by advertising campaigns, generally have emergency funds in place, have less debt and are more positive about their futures than people who don’t. And yet, despite the mass of evidence in support of the humble, but ever-so-powerful budget, we avoid it like a mall at month-end.

With consumers the world over seemingly in the grim grips of austerity, the mere mention of the word ‘budget’ only serves as an unwelcome reminder of their fiscal realities. The word ‘budget’ seems to imply something less – less freedom, less fun, less quality, less happiness and a lesser lifestyle. Many of us equate the word ‘budget’ with the inevitable tightening of the belt, restricting of spending, down-scaling, doing without luxuries and somehow living a poorer quality of life. Preparing a budget should be the punishment of the reckless spender, the innumerate masses or the unrehabilitated shop-a-holic, not so? Being forced into a position of succumbing to the agonising task of preparing a budget means one has somehow reached financial rock-bottom with the noose of debt tightly wound around one’s neck, and the only glimmer of light at the end of the fearfully long fiscal tunnel is the down-right demeaning task of preparing a budget.

Countries, governments, companies, trusts, schools, charities and churches the world over run and operate perfectly respectable budgets, but it appears that the lesser favoured personal budget doesn’t receive the same deference. Whilst some may blame it on an aversion to numbers, it seems more likely that the real reason we avoid drawing up our personal budgets is because, well, it’s personal. It’s about our lives, our children, our partners, our lifestyles, our choices and our futures. Budget aversion is less about the fear of facing financial reality and more about emotional trepidation at the possibility of having to make life-altering decisions having had the bottom line bared.

While many may prefer to claim ignorance over their monthly spending habits, immunity from the consequences is unlikely. And though ignorance may be bliss for some, the euphoria is generally short-lived. Despite the recklessness of not knowing what you’re spending your money on, the sad reality is that ignorance robs you of knowledge, and lack of knowledge is the thief of power. Simply put, ignorance makes short work of making sure you have absolutely no control over your financial future. The starting point of budget preparation is to accept that, as a financial tool, it is the supreme enabler of personal financial power. In many instances, preparing a budget forces couples to confront issues in their relationship that are causing stress, anxiety and marital tension. Although money itself has no power per se, it can be used within a relationship in such a way that it leads to mistrust, dishonesty, selfishness and in many instances, divorce. After the physical survival of the family unit, its emotional survival depends largely on financial stability and tranquility within the home, with the starting point being the family’s budget.

A budget is an under-rated, under-utilised, highly effective and incredibly powerful tool that can be used to more clearly map one’s financial future. A budget forms the basis for making informed decisions, taking firm control of one’s finances and securing a family unit’s well-being. Far from being a necessary evil that restricts and inhibits one’s lifestyle, a budget is an essential good that has the power to set one free financially. Let’s use it.

Have a super weekend!

Sue

The Budget is this week's hot topic!

The Budget is this week’s hot topic!

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Too much, too soon

February 21, 2013 Leave a comment

In a world where every human emotion or mental state of being has a corresponding psychological term ascribed to it, it’s unlikely that that we’ll escape this planet without being afflicted with ADHD, OCD, HOH, ODD, MND, FAS, GAD or IRS, or possibly a combination of any of the above. Whilst unwittingly acquiring some unpronounceable affliction or syndrome falls way down on most bucket lists, there’s one syndrome that more than a handful of people would undoubtedly clamour to acquire – Sudden Wealth Syndrome or SWS.

A rather uncommon pseudo-medical condition, SWS is difficult to acquire and not in the least contagious. It appears that lottery winners, overnight IPO millionaires and unassuming beneficiaries of large inheritances experience a roller-coaster of emotions ranging from euphoria to guilt, suspicion, isolation and disorientation as result of their sudden financial windfalls, resulting in the coining of yet another syndrome and a whole new area of psychology. Enter an optimistic group of so-called mind-and-money practitioners whose purpose is to help distraught clients come to terms with the emotional and sociological fallout of getting rich.

Research shows that very few instant millionaires escape the clutches of Sudden Wealth Syndrome, although younger beneficiaries of sudden wealth are ostensibly more vulnerable. As with the four stages of grief, studies show that sufferers (if one can indeed call it suffering) of SWS tend to experience a series of emotional states starting with what is referred to as the ‘honeymoon’ phase. Powerful, invulnerable and euphoric, the recipient of new money generally embarks on super-charged spending sprees, uncalculated investments and interest-free lending to all and sundry. After the inevitable drop in happy hormones, which research suggests take about six months to normalise, the rich recipient enters a phase of wealth acceptance in which his view of himself as powerful and invincible is mixed with the realisation that there is an inevitable need to set limits. The baffled beneficiary is often confronted with the enormity of his wealth, his lack of money management skills, the fear of losing his fortune, as well as an identity crisis flowing from the disparity between his previous need to work and the present ability to do absolutely nothing at all.

Many instant millionaires report feeling a complete loss of identity after the reality of their financial windfall sets in. The gargantuan gulf between their austere middle-class existence and their unfathomable bank balance seems to create a rift in reality that takes time to adjust to. With their initial euphoric invincibility being nothing but a distant memory, many beneficiaries feel paralysed by their wealth, intimidated by their lack of financial savvy and burdened by suspicion of advisors and lawyers over-zealous to impart investment advice.

As with any life-changing experience, a sudden shift in financial status can be hugely traumatic, and it appears that it’s during the third stage of ‘identity consolidation’ that the recipient of riches reaches an understanding that he has money but is not defined by it. Coming to terms with one’s transformed financial fortune and future involves re-visiting one’s core values and principles to a point where the beneficiary has a clear sense of who he is, regardless of his bank balance. Reaching a mature resolution of what money really means to them occurs in the final stage of ‘stewardship’ – becoming a responsible custodian of the wealth that, through nothing more than good fortune, has been entrusted to them.

During the acceptance of the role of stewardship, a phase which not all sudden wealth recipients ever reach, the beneficiary of fortune is encouraged to hone his money management skills and accept responsibility (albeit with the able assistance of qualified planners and lawyers) for his wealth. Coupled with the need for financial education, it’s at this stage that many beneficiaries develop a charitable attitude as they recognise the full force of the wisdom that “from the one who has been entrusted with much, much more will be asked” (Luke 12:48). Reaching this point of maturity is what truly sets human beings free from any power that money might previously have held over them. Understanding the deep rewards of charity and their own power to use money as an instrument for human upliftment is unquestionably the greatest windfall of all.

Have a blessed day further!

Sue

Too much too soon

Sudden Wealth Syndrom is yet another condition for which psychology help is available.

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