Linda Lubitz Boone, CFP®
September 9, 2021

During the months since we began to “self-isolate” due to the COVID pandemic, we’ve all had the opportunity (but maybe not taken it) to reflect on some of the important aspects of our lives, our family and our community. There has been a surge in the purchase of journals and many people have been keeping a daily gratitude practice to stay grounded. 

One of the areas for self-reflection can center around your relationship with Money. Has it changed during the past months? Has your spending changed? Have your savings habits changed? While it seems we may have a few more months before the hectic, pre-pandemic world envelopes us again, here are 4 questions that might help you think about money and your relationship with it. If you are a client of ours, my guess is that you’ve heard us ask these questions of you during our meetings.   

1. What does money mean to you?  

According to Webster’s dictionary, the meaning of money is something generally accepted as a medium of exchange, a measure of value, or a means of payment. There are no right answers to this one as it is a qualitative and emotional response. To me, it means having choices in my life, having flexibility and freedom, and the opportunity to help others. I found a quote from the actor Will Smith that I think, sadly, reflects what money means to many people: “Too many people spend money they have not earned to buy things they do not want to impress people they do not like.”    

2. What is your first memory of money? 

According to a Cambridge University study by David Whitebread and Sue Bingham, a lot of our beliefs about and understanding of money are set by age seven! Right about that time, I remember starting to get a weekly allowance, and the first thing my parents did was take me to the Franklin Savings Bank in town to open a savings account. I got a paper passbook in which my $5.00 was written in – now you can probably guess about how old I am. So for me, saving was an important early lesson

3. What was your parents’ relationship with money and how does that shape your relationship with money? 

Let’s all be honest, everyone ends up with baggage from their parents, good or bad. The way your parents viewed money likely has had a big influence on a lot of decisions you make in life. Where did your parents learn about money? From their parents. In my case, my grandparents lived through the Great Depression, so one of my family memories was each Christmas, I was told to not rip open my presents since we would have to save the wrapping paper for next year. The family motto was “Use it up, wear it out, make do or do without” and that stuck with my parents throughout their lives.  

4. What are you scared of when it comes to money? 

People have real anxiety when it comes to money. It isn’t the actual physical money that causes the anxiety, it is about what happens when things go wrong. What happens if the market goes down? What happens if I lose my job? What happens if I don’t save enough? These are questions that a lot of people think about a lot of the time and the answers may scare them. Sometimes that anxiety causes people either to make a bad decision or no decision at all. We know from numerous studies that the biggest detriment to an investment’s return is not the actual investment, it is the investor’s behavior, especially when volatile markets make them anxious. 

We recognize that each person has different experiences and emotions around money, as do each of us at Meira. One of the ways that we can help control these emotions when we are managing our client’s portfolio is to have a disciplined process that is maintained when emotion creeps into the picture. This process is founded in the concept that by investing in a globally diversified markets portfolio, we can help you achieve a desired return while attempting to minimize drops in value. 

BUT, as the following chart illustrates, this diversified portfolio never feels very good if compared to just the familiar U.S. stock market return of the S&P 500 over the past 20 years. But feelings aside, if you look at the returns of a diversified portfolio as indicated, the actual return was higher as was the ending value than if you’d just invested in the single market of the S&P 500. Bottom line, we believe that it’s imperative that you think about your feelings about money so that you create a healthy relationship with it.  

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