Family Wealth 2024
Start By Saving Yourself
During tax season I take a look at income, expenses and cash flows. I do this at different levels:
Individual
Couple
Family
Multigenerational
Consolidated
The idea of looking at the numbers from different perspectives is to balance:
Today and Tomorrow
Near and Far
My Self, My Marriage and My Family
Navigating The Great Recession
The last time we made changes with our family finances was the spring of 2009. We were in the middle of the Great Recession and I found myself unemployed, at short notice.
Our changes:
2009: reduce family spending & tap new sources of income
2010: purchase investment properties
2012/2013: downsize and move
These were major changes:
Unemployment
New jobs and a business turnaround
Multiple Moves
Changes in spending habits
Buying and selling real estate
Things we got right:
We cut expenses quickly, and dramatically. It was painful but we rapidly adjusted to our new reality. Years along, the pain is a distant memory.
We changed the balance sheet slowly, and deliberately. Asset allocation choices are important to get right, we took our time.
Those years were well spent for our future selves. By well spent, I mean the changes bought our future selves time.
Four Stages of Family Life
The last two years have seen changes.
Realizing assets, purchased in the last recession.
Changing my allocation of time.
Launching a new business.
Our kids starting the process of becoming adults.
In short, our “young family” has transformed into a “family.”
It won’t be long until we start the transition to empty nesters.
When I look back, the transitions are easy to see.
The Crazy Years - with babies and preschoolers
School Years - they can do stuff with us, yay!
High School Years - teenaged athletic calendars take over the family schedule
Transition To Empty Nesters
I’m grateful I didn’t build a portfolio to suit any of those periods of our life.
Worth emphasizing that point.
Family life is temporary, and often stressful => these are poor conditions for constructing a portfolio.
Across that period, I’m grateful I downsized the asset side of our family life.
Moving into the High School Years, I’ve started a project of dismantling the cost base built up since the Great Recession.
Reducing The Discomfort Of Change
From 2009-2013, I was willing to “spend” to bridge from one lifestyle to the next.
Allow me to explain.
We lived in a large house that I wanted to sell.
So we moved into a well-located, but small, rental property.
Then we moved into a suitable family house.
We moved twice => huge-to-small => small-to-family.
It was a psychological trick, done knowingly, to make us feel like we were moving into a bigger home. It worked great, by the way. Well worth the rental income we spent.
Over the last two years, I made a similar move, but different.
This time I changed my allocation of time, rather than my living situation.
Launched a writing business.
Returned to public life.1
Reallocated time towards triathlon training.
Spent whatever was required to protect my time.2
Took time to think through exactly what I want to achieve over the next five years.
Built a life that will enable me to move towards my goals.
…and I watched everyone around me.
…and looked at the detail of where we are spending money.
In doing this exercise, I realized I was placing pressure on myself to provide things that weren’t valued by my family.
The pressure went further…
I was placing pressure on myself to provide things in the future for people who are able to take care of themselves.
Define Better
This past winter has been different, and far better, than the winter of 2019/2020 (just before covid arrived). Back then…
We had a season rental at Vail.
We were living in luxury, weekly, with our ski club.3
That season, I was outside, strong as hell and touched snow for more than 100 days. Then covid arrived and changed the trajectory of all our lives.
Roll forward to 2024.
I spend a ton of time indoors:
under the bubble at the YMCA pool,
on my treadmill and
riding my bike-that-goes-nowhere.
We’re nearly always in town, due to our kids’ activities.
This simplified life feels “better” than our pre-covid & covid lives.
I’ve been asking myself:
Why is that?
Is our spending aligned with the aspects that are “better?”
The “why” has been easy to figure out.
VIBE - Several times a week, I’m in the same “room” as world-class people working towards difficult goals. I say “room” because it’s actually a swimming pool and the “people” are Olympians. It’s an awesome vibe. Associating with excellence lifts us.
DRIVE - I’ve removed the #1 trigger for the worst aspects of my personality (sitting behind the wheel).
MISSION - I’m working towards challenging tasks.
Create a reference book for one of my favorite sports.
Build world-class SuperVet fitness.
CONNECTION - The missions provide an opportunity to learn and work alongside my mentors.
SERVICE - Every single week, I help other people. As Arnold says in his recent book, I am “Being Useful.”
Vibe - Drive - Mission - Connection - Service
A Family Meeting Agenda
The answers to the second question are something we will need to figure out as a family.
Where are we spending our money?
Is our spending aligned with our goals and living well?
How often should we…
Drive more than an hour for a sporting event?
Get on a plane?
Spend more than $X,000 on a trip?
Separate Mom & Dad?
What are reasonable guidelines for screen time?
…and other questions I’m sure we will dream up.
If you see my IRL then please and say hi. It makes my day to connect with readers.
By way of example, it costs our family to take my share of driving to zero. Something I found was time spent in the car RUINED my creativity and brought out the worst in me. Spending, even significantly, to avoid being my worst self is a bargain.
Looking back, I was compensating (via luxury spending) for the reality that my day-to-day life with preschoolers was chaotic & stressful. Grateful, I had the wisdom not to capitalize that spending.