Money is a muscle.
Learning new skills is hard, but practice makes you better. Driving is a great example of this. When my oldest turned 15 he got his permit and the thing about learning to drive (a lot like life) is that there are no training wheels. It’s 5pm in Silverdale …gentlemen start your engines! He did a lot of turns successfully; blinker, look over the shoulder, change lanes while keeping speed, …then we run a red light, …cut off a person in the roundabout, …and miss our driveway. “It’s okay, it’s okay” I say, “Just keep going and look for a place to pull over to the right side, back into a driveway, and then pull out forward onto the road.” He says, “Okay.” And we keep driving. So I say it again real nice like, because nerves don’t mix well when you’re 15 years old and trying to control a 1.5 ton battering ram going 40 miles an hour down Chico Way. He responds “Dad I’m going to do a U-turn instead and I’m just looking for a good spot.” And so – two miles later – he picks the narrowest part of the road and we do a three point turn in the middle of the street. The good news … still alive! And now he’s a great driver, mainly because he had a lot of practice.
There is something significant happening right now that will require a lot of practice. We are at the start of the largest wealth transfer in history. According to research firm Cerulli Associates there is an estimated $14 trillion of wealth that will be given to Gen X over the next 10 years. And $46 trillion that will be given to Millennials over the next 25 years. A trillion is an incomprehensible amount of money. If you have one trillion dollars you could spend $92 million a day for 30 years straight.
This inheritance is inevitable and makes “Sudden Wealth” a very real thing. And sudden wealth comes with very sudden challenges. It’s a brand new skill set. Imagine driving an automatic car your whole life and suddenly your parents pass away and leave you a $4.4 million dollar Shelby Cobra Daytona Coupe….which is a manual stick shift. Now you are 15 years old all over again and have to learn how to drive. If you practice today how to drive a stick, then you are prepared in advance. Even if you don’t have the Shelby yet.
Our natural drive, when it comes to money, is to look inward. In the most quantum physics type of way, the emotions we have about money become a living breathing thing. We either push money out by spending it to make our lives easier, or we pull money in by clinging to it out of the fear of losing it. It all distills to worry about not being comfortable or fear of losing security. (Side note: This is why it’s so important to work with a wealth advisor to make sure you have a financial exercise plan, and why it’s so important to upgrade your advisor as you get financially stronger.)
There is a secret to building money muscle. And weirdly, the antidote to worry and fear is to give money away.
The act of giving can often feel unnatural and that’s exactly the point. It’s natural to cling to money, but the actual action of giving money away (from each paycheck!) proves to yourself that you are in control of your money instead of your money being in control of you. You are actively repeating that you have enough to give some away. It’s doesn’t have to be a lot, but it has to be consistent. You are actually rewiring how you feel and act regarding money. Then when you get an inheritance, a sudden wealth event, you get to hold on with strong, open hands and determine how to use this as a tool for your future.
During this holiday season is a perfect time to start. Choose a charity or non-profit with a cause you like and set up an automatic monthly gift. Flex. Start asking what version of you that your future self wants to be. Set the goal that changes you, and the numbers will follow. Statistically the average inheritance is gone in three years. Why? Because money is a muscle. And often that muscle has not been exercised. So get strong for your future.
Advisory Services offered through Strong Retirement Solutions; an SEC Registered Investment Advisor.
