The Best of The Blunt Bean Counter - Are you Selfish with your Money and Advice?

This summer I am posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I go way back to July 2012, for a post on whether you are selfish with your money and advice.

Are you Selfish with your Money and Advice?

I think it is commonly accepted that most people do not like to discuss money matters. In fact, I have posted on several taboo money topics ranging from discussing the family will to intergenerational issues surrounding money. I find the fact that people are not willing to discuss money quite ludicrous in some cases and potentially harmful in certain other situations.

But, should this disinclination to discuss money extend to investment or cost saving opportunities where you may be able to financially assist family, friends and acquaintances? Are there situations in which you do not have to reveal personal financial details, such that one can disengage from the money taboo?

So, where am I going with this? Let me ask you the following questions:

1.  If you are a stock picker and have a new favourite stock, would you inform your family, friends and acquaintances about this stock?
2. What if you found a great cottage to rent this summer at a great price, but you can only use it two weeks of the summer, would you inform your family or friends of its availability?
3. What if someone came to you with a private investment which you thought was the next Facebook, would you offer this opportunity to your family, friends, acquaintances or clients?
4. What if you found a great real estate property you felt could be fixed-up cheaply and flipped quickly, but you would be stretched to purchase it yourself. Would you offer a piece of this property to your family or friends?
5. Finally, what if you have a client or contact who is a distributor for Armani suits for men and Christian Louboutin shoes for women and they offer you a standard 50% discount and allow you to bring a guest, would you bring a guest?

Personally, I would answer yes to all the above and not think much about doing such. To me, if I can make money and also help someone make money or save money, I am happy to share the wealth, so to speak. In fact, I have done all the above in some shape or form. This does not make me a good person, I have several other faults; but I am just not selfish where I can share the spoils of a good investment or opportunity. 

However, some people are not as forthcoming. The question is why?

I see a couple of potential reasons.

The first and most justifiable reason is that although many people are willing to take a personal financial risk on a stock pick or investment opportunity, they do not want to be held responsible if others lose their money. I think this is a very valid concern. The only counter argument I have for this concern is if you know your family and friends well, you probably know to which people you can say, "Here is the opportunity and here is the risk. You are a big boy or big girl, make your own decision, but I am partaking in this investment and if you follow suit, you do so with the same risk I have assumed".

I would suggest for the people in the subset above, most would probably inform family or friends about the cottage rental opportunity and Armani suits/ Christian Louboutin shoe sale, because in these cases, there is no risk of financial loss and blame, as you are just helping others save money.

This leads me to an alternative reason for not “sharing” investment opportunities or cost saving opportunities. Many months back I wrote a blog post called “How we look at money”. The post centered on a study by Dr. Brad Klontz a financial psychologist.

The study which deals with money through a concept of “money scripts” says money causes certain people to be “concerned with the association between self-worth and net-worth. These scripts can lock individuals into the competitive stance of acquiring more than those around them. Individuals who believe that money is status see a clear distinction between socio-economic classes.”

I would suggest it is this subset of people that do not involve or inform others of these investments and cost saving opportunities. Their actions are a result of their competitiveness in acquiring more than those around them, such that they feel more powerful with the exclusivity of being involved in these opportunities while excluding their family and friends.

These people feel that if their investments work out, they will have more money than their family,  friends and acquaintances and reinforce their financial superiority. In the case of the cottage they would not let others know about the deal they received, yet they would invite guests to the cottage to show it off. The same would go for the suits or shoes; they would rather show up in the Armani suit or Christian Louboutin shoes to reinforce their perceived power and status and would not want others to present the same image.

As I have stated on numerous occasions, I find the psychology of money intriguing. Think how you and the people you know would respond to the above five situations and whether these situations would provide a view into your/their financial psyches.

P.S.-- Just so none of my family and friends think they were the inspiration for this blog post, it is based on "Someone that I Used to Know" as music artist Goyte would say.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

The Taboo Of Money - I Will Not Talk About It- Part 3

As discussed in my blog post last week, I suggest you consider a frank discussion with your beneficiaries about your will. Today I conclude that discussion with the final four reasons you may wish to consider holding a family meeting.

The Benefits of Having a Family Meeting

The following are the final four benefits of having a family meeting about your will.

5. Giving the Kids what They Really Want

We all have a tendency to assume we think we know what assets our children want. In many cases we are correct, however, in others we are way off base. A family meeting allows you to discuss individual assets to ensure the assets are given to the child who really appreciates and wants the asset. That is not to say that whatever a child wants they will get. In some circumstances more than one child may want the same asset and if you intend to equalize your will equally, the equal proportion may be distorted by allocating assets according to your children’s likes and dislikes.

The determination of the wants of family members will often revolve around larger assets such as cottages.  Some children may have an attachment to the family cottage while others may not; or maybe you are not sure whether any child would want to take over the property when you pass. A meeting provides the opportunity to raise the issue for your children to decide amongst themselves if they will want to sell the property, share the use, or have one child inherit the property. Sometimes the meeting may bring you to the realization that the issues surrounding the second property are so divisive that the prudent decision would be to sell the property.

Don't forget to sweat the small stuff! I have spoken to many corporate executors from the big banks over the years, and they often comment that family disagreements are as likely to occur over personal and sentimental items as they are over large assets such as cottages or even money.

Many wills do not properly address personal and sentimental assets. The reason for this is typically twofold:

1. The parents assume naively that the children can deal with these assets, especially where there is little real value to them.

2. Where personal assets such as art and jewellery have significant value, the parents do not wish to pay income tax on the disposition of these assets or, have no idea of the tax consequences of disposing of these assets. Consequently the assets are ignored in the will. This creates future problems as the executor is required to report the value of these assets for both probate and income tax purposes and may face penalties if he/she does not report the assets and pay the taxes.

It is thus important for you to discuss these items at the family meeting or at a separate informal meeting. Where there is no clear agreement over who should get a personal asset, you can have the beneficiaries’ rank the assets one to ten and the assets are then allocated to the beneficiary with the highest ranking. Alternatively, you can undertake a lottery and the assets will be distributed in your will according to the lottery results.

The key is that you should address these personal items, as if you leave them unaccounted for in your will, the possibility that they could become contentious is very large.

6. Succession Plans for the Family Business - Keeping it Going

Where there is a family business, the succession of that business is one of the most important issues facing the family. The value of their estate and hence the value of the assets in the will are directly correlated to the value or succession of their business.

In my opinion, the succession planning decision is so large in importance with the potential to be so divisive that it should not be part of any family meeting discussing your will. For family succession issues, is it often best to bring in outside specialists to work with the family.

However, if all the children will be given equal shares in the business, the topic can be brought up as part of the family meeting. If you have already made it known to your children that you had decided to leave the business to one child or only some of your children who work in the business and that you plan to equalize the other children with cash or other assets, the topic should be broached.

However, parents must understand that the value of the business can fluctuate wildly over the years, with the result being that the child(ren) who inherit(s) the shares may in essence have inherited a significantly larger asset than the other child(ren). Alternatively, the shares of the company may prove to be worth substantially less than the assets distributed to the other child(ren) if business conditions cause the value of the business to diminish. The parent will have no control after their death on the potential disparities in value. I have seen situations where asset distributions were equal at the time of death, but the inherited business grew astronomically and the children who did not inherit the company shares felt wronged by their parents. Consequently, this topic needs to be discussed and explained at the meeting. You need to make it absolutely clear to your children that the company value could go up or down and that they must understand these valuations are beyond your control and that is one of the uncertainties of your will and an issue that may continue on beyond your death.

­7. Helping your Kids plan their Future

It is also a kindness to your beneficiaries to let them know, generally, what they can expect as an inheritance. Even if it is not your intention to gift money or assets over to them while you are alive, at least they can get a sense of what their financial position will be so they can arrange for their own lifestyle and retirement planning. If you are aware that your child is expecting a large inheritance, and you are planning to leave most of it to charity, it is only fair to let him know so that he/she does not overextend himself financially on the assumption that he will someday be wealthy. On the other hand, if your child is living very frugally in order to save for a retirement, and you know that you will be leaving her enough that she will be well off in retirement regardless of her savings, it is fair to her to let her know so she can "live it up" a little! This is a very contentious issue that I wrote about previously in this blog post.

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8. Children's Roles in Administering the Estate

A side benefit of a family meeting is that you can broach the topic of your executors. Assuming you wish one or more of your children to be your executor(s), you can use the meeting to discuss the responsibilities and the burden of being named an executor of the will. You can explain the duties of the executor and determine if the child you wish to be an executor is willing to undertake the position. If he/she is not, you will then have to consider whether you hire a corporate executor or name family friends or business associates.

You could also take advantage of the opportunity to discuss whether you wish a family member to be your power of attorney of your assets if you become incapable of managing your affairs, and whether you wish to appoint a child to be responsible for your medical affairs or living will, should you also become incapable of making medical care decisions.

A meeting provides our children with some clarity towards their inheritance. Obviously the clarity is still somewhat murky, as there are several variables such as life expectancy, health, re-marriage, changes in wishes etc. However, it still provides some direction for your children’s own financial planning. If you intend to provide partial inheritances while alive, this is very important information for the children to be aware of, if these partial inheritances are significant.

This concludes this mini-series (excerpts from my abandoned book). I hope it provided some food for thought.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

The Taboo Of Money- I Will Not Talk About It- Part 2

As discussed in my blog post last week, I am going to post small excerpts of a book I was writing on money taboos which I have abandoned. Last week I suggested you consider a frank discussion with your beneficiaries about your will. Today I discuss four of the eight benefits I see in having a family meeting to discuss your will; I discuss the final four benefits in next weeks blog post.

The Benefits of Having a Family Meeting

The following is a brief summary of what I believe to be the main benefits of having a family meeting about your will:

1. Avoiding Future Conflict - and Litigation!

Fans of Charles Dickens' Bleak House will of course remember the fictional case of Jarndyce and Jarndyce in which generations of family members fought over a large estate until the estate was completely consumed by legal fees. If you don't discuss your will with your children, any perceived actual or perceived inequalities in your will cannot be explained rationally to them, and conflict and estate litigation might well result. Of course, the kids might "lawyer up" despite your best efforts, but at least you have done your best to avoid it!

One of the key reasons for even considering a family meeting to discuss your will is the opportunity it provides for you to outline in a rational manner and hopefully in a calm setting why you have left certain assets to certain children, to charity or to whomever else you have decided to leave assets. It is a bit of a guessing game whether you will have properly perceived what your children perceive as inequalities; but in most cases, it will be obvious.

2. Explaining Intentional Inequities

An example of an obvious and deliberate inequity is where you have left more money to one child than to the others. Where you have left more money to one child (perhaps he or she makes less money than the other children), you can use the meeting to explain why and explain that it has nothing to do with loving that child more, you are just helping him since they have not been as fortunate as the other siblings.

The fallout on this decision may come from two sources. Most of us are familiar with the biblical parable of the prodigal son, in which the first son asks for his inheritance from his father early, blows through all the cash and then goes back to his dad for more. Rather than telling his son to suck it up and support himself, the dad then dishes out even more to the prodigal son, leaving his hardworking younger son angry. Remember that there may be reasons why the children are not equally successful - perhaps the least successful one is also the laziest and most unmotivated of the children. The others may question why they are being penalized in your will for their sibling's lack of performance. It is your right to give your money to whomever you wish, of course, but you should expect at least some resentment from the other siblings should you wish to proceed with this course. Be prepared to justify your decision.

Secondly, and more surprisingly, fallout may not come from the children who are not receiving equal inheritances, but from the child receiving the additional money. They may feel insulted that you feel they have been less successful, and embarrassed by your desire to give them extra help, rather than regarding the extra allocation as compassionate recognition that they require some additional financial assistance.

3. Avoiding Unintentional Inequities

There may be less obvious inequities. There may be consequences arising from your legacies that you did not anticipate, creating unintended conflicts between your family members. For example, in striving to be fair, you may bequeath a cottage or other secondary property to all your children equally, without realizing that doing so actually creates a burden on those of them who do not want the cottage but will be required to pay for its upkeep. You may also miss the opportunity to consider other ways of disposing of your assets, perhaps by intervivos gifts that will ultimately minimize taxes.

4. Clarification of Prior Gifts and Loans

Many of my clients have wanted to help out their kids during their lifetimes by providing them with a little (or a lot) of extra cash. The money might be used for a down-payment on a property, for education or to bail out a child who hits a bad financial spot. The most important thing is that the child must know whether the money was a gift or a loan and whether that money was expected to be an "advance" on the inheritance. How to intend to characterize these gifts or loans is an important issue to discuss in the family meeting, especially where you want to avoid an unintentional inequity if you were to die without making your intentions down and where one child has already received a significant portion of your estate.

The above issue can often be dealt with by utilizing a “hotchpot clause” in your will. Over the years, a legal concept now commonly known as a “hotchpot clause” has evolved to deal with the equalization of the beneficiaries of an estate, where one or more of the beneficiaries have already received money during their parent’s lifetime. When a hotchpot clause is inserted in a will, the clause will prevent a beneficiary (typically a son or daughter) from “double dipping” where the parent intended any money advanced during their lifetime to be considered a pre-payment of an inheritance, rather than an advance over and above an intended inheritance. See this post I had on the hotchpot topic for more information.

Next week I conclude this series with the final four reasons to consider a family meeting.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

The Taboo Of Money - I Will Not Talk About It -Part 1

As discussed in my blog post last week, I am going to post small excerpts of a book I was writing on money taboos which I have abandoned. Today and next week, I write on the taboo of discussing your will with your children, either individually or in a family meeting, while you are alive.

The Taboo

One of the biggest money taboos people have is discussing their will openly with family members.

People hate talking about their own death. People hate talking about their own money. People hate conflict within their families. Combine all of these hang-ups and a perfect storm of neurosis results, creating a virtual tsunami of taboos involving openly discussing one's wealth, one's death and disclosing one's personal opinion about family members. Many people view the thought of this discussion with horror, but my advice is simply - "get over it and do it!"

Reasons for the Taboo

In a 2016 Google Consumer Survey conducted by Legalwills.ca, the survey found 62% of Canadians do not have wills. The survey also noted that 12% of Canadians have an outdated Will (most never updated their Wills once they married and/or had children), which means that 74% of Canadians do not have an up-to-date Last Will and Testament.

I suppose the most common, although rarely admitted, reason for this is, that people are in denial that their lives will eventually end and that their lives will probably end at a time that they cannot control. Understandable, but foolish. None of us get out of this world alive, so get a move on and arrange your affairs so that all of the money, jewelry, collectibles and personal items you have worked for will ultimately be distributed in the most beneficial and tax-efficient way possible.

Once someone has faced up to the necessity of drafting the will, why then the fear of discussing its contents with family members - those who are actually going to benefit from the will? I have heard both rational and irrational reasons for avoiding the discussion. Here's a sampling of some reasons/excuses I have heard over the years for people not discussing their wills/estate planning with their beneficiaries:

1. It is none of their business.
2. My parents did not discuss their will with me, so why should I discuss it with my children.
3. It is bad luck.
4. If my children know what is in my will, they will be hovering over me like the Angel of death waiting for me to kick the bucket.
5. Discussing our intentions will just cause tensions amongst my children.
6. My will does not split my wealth equally among my children.
7. My children are not equally responsible and I have a trust for one child; I don’t want them upset at me while I am alive that I don’t trust their judgement.
8. I am leaving a substantial sum to charity, my kids will “freak” when they find out.
9. I have no idea how long I will live, my assets may be depleted by the time I pass away and the kids will be expecting certain assets that may not be in existence.
10. I have not drafted a will (see above).

Consequences of adhering to the Taboo

If you do not discuss your will with your children while alive, the following are possible

consequences:

1. Perceived or actual inequalities in your will that can be explained rationally while you are alive will never be explained. 
2. You may create unintended conflict amongst your children.
3. You may not have an accurate understanding of which assets your children truly want.
4. Income taxes may not be minimized.
5. Estate litigation may result.

There is no doubt that money brings out the worst in some people and a full disclosure of your family assets and planned distribution may cause problems in your relationship with your children and in their relationships with each other. But it is my belief that it is better to know the problems, confront the problems and solve the problems before you die and this can only be done by a full and frank discussion with your beneficiaries.

Next week I will discuss the benefits of having a family meeting to discuss your will and estate planning.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

Breaking The Money Taboo – It Makes Cents

In 1913, Sigmund Freud recognized the taboo of money when he wrote, “money questions will be treated by cultured people in the same manner as sexual matters, with the same inconsistency, prudishness and hypocrisy.”

One hundred years later, sex is often openly discussed, yet many money matters are still considered taboo. As consequence many people make bad financial and personal monetary decisions because they avoid the topic. This lack of communication can impact anything from your estate planning, to your marriage, to the selection of your executor, to even losing friends over how to split a restaurant bill.

In my opinion, the money taboo is out-dated and potentially detrimental from both a familial and financial perspective and needs to be broken.

The Free Dictionary defines a taboo “as a ban or inhibition resulting from social custom or emotional aversion”. I think that is a simple and elegant definition. Whether the taboo’s origin is Victorian, French, or biblical in nature, our parents and their parents have propagated the notion that it is bad social etiquette to discuss money matters of any kind.

Every culture and every family have different money taboos. For example, North Americans dislike revealing how much money they earn. It is taboo. Norwegians, on the other hand, have the tax records of all citizens available as public record and have no expectations of privacy.

I have observed first-hand, the financial cost to clients, friends and family and the related personal cost in regard to marriages, sibling and personal relationships where people did not have open frank discussions about money. This issue caught my attention to such a degree that in 2013 I decided to write a book on the topic, encouraging people to confront and/or consider various money taboos.

As they say, the best-laid plans of mice and men often go awry and unfortunately two years later, due to time and work constraints and the realization that many of my proposed topics had psychological bents I was not qualified to discuss, I had only finished two (way too long) chapters of my proposed 17 chapters. I thus decided to set aside the book on money taboos and wrote Let’s Get Blunt About Your Financial Affairs (which was a collection of my best blog posts and thus required more editing than writing). Check - bucket list item taken care of.

As I expect to go in a different direction should I ever write another book, I figured I may as well get some use of the time I spent on my proposed book, so I have decided to post excerpts of the two chapters I wrote (the first chapter over the next couple weeks, the second likely in September). These two chapters are:

1. I Will Not Talk About It – this chapter revolves around our reluctance to discuss our will with our family

2. Asking For Money: The Intergenerational Communication Gap – this chapter discusses situations where children need money (example to escape abusive relationship or start a new career) and situations where parents need money (example: need to reverse mortgage their home since they have no money left and have medical bills or just daily expenses they can no longer afford to cover).

In these posts I am going to discuss reasons people have given me for continuing specific money taboos and review the consequences they face by adhering to these off limit discussions. I attempt to explain why we should consider challenging these prohibitions and how to break some of these taboos.

Hopefully by the time I conclude this “mini-series”, you may understand why I think Canadians need to talk about money.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

Should You Discuss Your Salary with Friends, Co-Workers or Family?

I have written several blogs on various money taboos; from discussing your will with your family to planning for inheritances. I enjoy writing or discussing these sacred topics because I like to challenge some of our financial conventional wisdom's. Frankly, I find some people just so uptight on these topics that I enjoy watching their reactions and/or reading their comments on my blog.

A major taboo is discussing your salary with friends, co-workers and family. Although I am personally fairly open to discussing many sacred money topics, I think discussing your salary is generally not a prudent action. However, are there any situations in which a discreet discussion of salary may be advantageous to one or both parties?
  

Friends

Personally, I see few if any circumstances that would ever merit discussing your salary with your friends. The one possible exception may be where your friend is in the same or similar profession. I will discuss that exception in detail below. Otherwise, I see only risk in discussing this topic with friends. Some may lack discretion and inform others of your salary, while others may be jealous or harbor resentment. 

Co-Workers

In the case of co-workers and friends in similar professions, I can see at least 2 reasons why someone would divulge their salary. The first reason being to ensure equality of salary. Many people want to know they are being paid equally, especially in industries where there may not be gender equality. The issue becomes what you do with that information? Do you run to your employer and tell them Don down the hall told you he is making $2,000 more? You put Don at risk with your employer (which is why Don may be hesitant to discuss the issue in the first place), and if you confront your employer you risk your own job, whether your employer is legally entitled to dismiss you or not.

On the other hand, if an employee is discreet, they can use their knowledge of wage inequality in salary discussions to know how far they could try and push for a salary increase, assuming they feel

confident they are a valued employee. Both the above situations involve risk to the employee and their co-worker which is why I would suggest many co-workers do not discuss their salaries (Although, I may have employer bias; as I would not be pleased if someone told me during a salary review that they deserve to be paid as much as Mary or Sam).

Another reason for discussing your salary amongst friends and co-workers in the same profession would be if you or they are job shopping. If you know Jane makes $70,000 working for an engineering firm and your engineering firm only pays you $60,000, you may wish to consider applying for a job at Jane’s firm if all other employment variables are equal. Alternatively, this information may be helpful in pushing for a raise at your current firm, as knowing what other firms are paying and what your firm really needs to pay to compete would be valuable knowledge.

Family

I would think that most people share their salary with their spouse. However, I know there are spouses who try and keep that information private or provide partial disclosure. In some cases they think the information is private, in others they feel their spouse will spend more money if they know what they earn, and finally, many spouses are not forthright so their spouse will be in the dark should there ever be a marital breakdown.

I see no reason to provide such information to siblings, unless it would be useful information for their own careers. Even the most well intentioned sibling could say something by accident and we all know about sibling rivalry and jealousy.

How about younger children? I found a couple of articles on this topic, specifically this New York Times Article titled “Daddy Are We Rich? and Other Tough Questions”. The author, Ron Lieber, discusses ways to handle the question without providing specific income in various situations. The article puts forth an elegant solution by Gary Shor, a financial planner, where he suggests parents turn the question upside down by detailing the expenses they incur to live their current lifestyle. This provides their children with a sense of how much salary would be needed to afford those expenses and what kind of professions could provide such income for their children in the future.

For full disclosure, the reason I wrote this blog is that I recall as a university student considering following in my father’s footsteps. He was a baseball player (a left handed pitcher who was asked to try out for a Cleveland Indian farm team when younger) and I asked him how much do major league pitchers make? 

Just joking about asking him how much pitchers make, but he was asked to try out for a minor league team and believe it or not, in the late 50’s accountants made more than baseball players. Then there was my grandmother who forbade him from trying out for the Indians, so in the end my father decided against baseball and he became an accountant. I have digressed as I often do, however, I do remember having a frank discussion with him about what he made as an accountant that I found very enlightening in making my career choice. In retrospect, I would have preferred it if he had framed our discussion based on what accountants make per hour they work (given the hours I have worked over my career), instead of on a gross annual basis.

Anyways, as I stated at the outset, I would generally dissuade anyone from disclosing their salary, other than where that information provides them or someone they trust, with knowledge to leverage a greater future salary. And in those rare cases when you do disclose your salary, always understand you are taking a huge risk with that information being leaked – intentionally or unintentionally.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

Are you Selfish with your Money and Advice?

I think it is commonly accepted that most people do not like to discuss money matters. In fact, I have posted on several taboo money topics ranging from discussing the family will to intergenerational issues surrounding money. I find the fact that people are not willing to discuss money quite ludicrous in some cases and potentially harmful in certain other situations.

But, should this disinclination to discuss money extend to investment or cost saving opportunities where you may be able to financially assist family, friends and acquaintances? Are there situations in which you do not have to reveal personal financial details, such that one can disengage from the money taboo?

So, where am I going with this? Let me ask you the following questions:

1.  If you are a stock picker and have a new favourite stock, would you inform your family, friends and acquaintances about this stock?
2. What if you found a great cottage to rent this summer at a great price, but you can only use it two weeks of the summer, would you inform your family or friends of its availability?
3. What if someone came to you with a private investment which you thought was the next Facebook, would you offer this opportunity to your family, friends, acquaintances or clients?
4. What if you found a great real estate property you felt could be fixed-up cheaply and flipped quickly, but you would be stretched to purchase it yourself. Would you offer a piece of this property to your family or friends?
5. Finally, what if you have a client or contact who is a distributor for Armani suits for men and Christian Louboutin shoes for women and they offer you a standard 50% discount and allow you to bring a guest, would you bring a guest?

Personally, I would answer yes to all the above and not think much about doing such. To me, if I can make money and also help someone make money or save money, I am happy to share the wealth, so to speak. In fact, I have done all the above in some shape or form. This does not make me a good person, I have several other faults; but I am just not selfish where I can share the spoils of a good investment or opportunity. 

However, some people are not as forthcoming. The question is why?

I see a couple of potential reasons.

The first and most justifiable reason is; that although many people are willing to take a personal financial risk on a stock pick or investment opportunity, they do not want to be held responsible if others lose their money. I think this is a very valid concern. The only counter argument I have for this concern is; if you know your family and friends well, you probably know to which people you can say, "Here is the opportunity and here is the risk. You are a big boy or big girl, make your own decision, but I am partaking in this investment and if you follow suit, you do so with the same risk I have assumed".

I would suggest for the people in the subset above, most would probably inform family or friends about the cottage rental opportunity and Armani suits/ Christian Louboutin shoe sale, because in these cases, there is no risk of financial loss and blame, as you are just helping others save money.

This leads me to an alternative reason for not “sharing” investment opportunities or cost saving opportunities. Many months back I wrote a blog post called “How we look at money”. The post centered on a study by Dr. Brad Klontz a financial psychologist.

The study which deals with money through a concept of “money scripts” says money causes certain people to be “concerned with the association between self-worth and net-worth. These scripts can lock individuals into the competitive stance of acquiring more than those around them. Individuals who believe that money is status see a clear distinction between socio-economic classes.”

I would suggest it is this subset of people that do not involve or inform others of these investments and cost saving opportunities. Their actions are a result of their competitiveness in acquiring more than those around them, such that they feel more powerful with the exclusivity of being involved in these opportunities while excluding their family and friends.

These people feel that if their investments work out, they will have more money than their family,  friends and acquaintances and reinforce their financial superiority. In the case of the cottage they would not let others know about the deal they received, yet they would invite guests to the cottage to show it off. The same would go for the suits or shoes; they would rather show up in the Armani suit or Christian Louboutin shoes to reinforce their perceived power and status and would not want others to present the same image.

As I have stated on numerous occasions, I find the psychology of money intriguing. Think how you and the people you know would respond to the above five situations and whether these situations would provide a view into your/their financial psyches.

P.S.-- Just so none of my family and friends think they were the inspiration for this blog post, it is based on as Gotye says, "Someone That I Used to Know" (My Own Advisor, how is that for a current music reference?).

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.