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To Your
Wealth Update - The Message for Our Times The
election is technically behind us and as tumultuous and emotionally draining
as it was, the really hard work is still in front of us. The theme of the election was change--
everywhere we turned we were pelted with the need for change. Cries for
change reverberated in the air and took on almost surreal power like a
mythical antidote to all ails. Now
that the hubbub of the election drama has subsided and the votes have at last
been cast and counted, we have to face the hardest part of change– actually
changing our behaviors, attitudes and beliefs. The time of speeches and rhetoric has
passed, now it’s time to act. And the
call to action will test our collective mettle. Change
brings uncertainty. What will the
future bring? How do we successfully
transition from where we are now to this new beginning? More specifically, will we successfully
transform our economy (both domestic and global) to a more sustainable
model? These are weighty questions
without clear answers and as such increase our feelings of fear and
anxiety. We see our emotional turmoil
playing out in our financial markets and spilling over into our overall
economy. So what
does sustainability look like as it relates to our financial landscape? I
believe the changes we will have to make to move toward greater
sustainability will involve fully addressing our propensity for overconsumption – consumption based on a non- renewable
model. This includes addressing our
current consumption that exceeds our production of goods and services which
results in a negative savings rate. It
also involves our over reliance on non-renewable energy sources and a
retirement model based on long-term deficit spending which has the negative
result of enormous debt for future generations and contributes to a general
disregard for our environment. My
vision for the future is a world with boundless opportunity based on best
practices of sustainability. A
starting point is naturally around our own individual consumption. Long term
sustainability with our personal consumption means we spend less than we
earn. What is left over goes to
savings and investment. I
realize I am probably “preaching to the choir” as it is unlikely someone
would be working with a financial advisor for very long and maintain a
habitual negative savings rate. I
wouldn’t be a very good advisor if I didn’t address that issue. But based on our nation’s overall negative
savings rate, the majority of Americans consume more than they produce. That will have to end and the faster we get
our spending under control the sooner our economy will be able to sustain
long-term growth. Sadly,
this is not a quick fix. A contraction
of consumer spending in the short run is recessionary, but the remaining
consumer consumption will have a higher priority as less important items are
removed from one’s budget and what is left is most highly valued. I call this conscience spending. We can
be supportive of our families and friends around their spending habits. Encourage best practices of personal
finance. As we prepare for the holiday
season, let’s be conscience around our own spending and the spending of
others in exchanging gifts. What are
the best gifts we can exchange? Maybe
we can reframe our giving to include experiences that have lasting returns
rather than things that have diminishing value. Consider a gift of a learning experience
that helps prepare the recipient to best manage their life. This could be an educational opportunity or
just time spent together in an activity of enrichment such as a day at the
library or a museum. These gifts do
not have to be costly and they help us address over-consumption which is more
likely to occur during holiday spending sprees. An
example of a learning opportunity for a couple interested in changing their
financial behaviors and getting control of their money is to participate in Because
we have your peace of mind always top of our minds, we can provide you with
resources to help guide and support you and the people around you who want to
change their behaviors toward a more sustainable financial model. Appreciatively, Michael Haubrich,
CFP |