I recently attended a family reunion where 40 people spanning 3 generations from across the world gathered to enjoy the outdoors, good food and each other’s company. On one of the evenings, over wine and juice, three speakers from the oldest generation shared with the middle generation (those of us in our late 20s to early 40s) their advice on personal finances.
Now, as probably many of you have experienced, giving and receiving personal finance advice to and from family members can be tricky and oftentimes fraught with challenging family dynamics. Particularly here in the United States, where talking openly about money is taboo.
And, of course, not all families are harmonious all the time, or even some of the times. This is what keeps many of our family lawyer and trust and estate lawyer colleagues gainfully employed.
One problem with getting personal finance advice from family members is that, even when given with the greatest of intentions, it can be wrong, but because it’s coming from your dad or your hotshot cousin lawyer, we ascribe more value to the advice than it deserves. Some gems from my own experiences include “real estate prices never go down” (before the real estate-driven 2008 recession) and “you’re a lawyer, you should be driving a better car.”
However, let me make clear that I don’t think all family advice on personal finance is bad. Quite the opposite. Much of the foundation of what I know has come from my family, and I am incredibly lucky and privileged that almost everyone in my extended family have been smart with their finances and afforded me a head start in life.
There is a lot of wisdom that can be learned from other people’s experiences. I certainly thought so from the advice given by our three speakers, a retired physician, a retired technology hardware executive and a current vice president at a MegaCorp. Sure, there may be issues with survivorship bias and statistically insignificant samples, but much of the advice that was given resonated with me and are items I wanted to share to my Internet “family” on this blog.
I wish people had more candid conversations about money. At our reunion, we were able to do so without judgment.
Here were the best pieces of advice from the evening:
1. BE CURIOUS IN YOUR CAREER – Shared by the retired technology executive, the message here is to develop and maintain curiosity throughout your career. Always be learning something new because it will keep you engaged.
Otherwise, you’re really just showing up to work for the paycheck. And, while there’s certainly nothing wrong with making money and supporting yourself (indeed, this is a necessity), developing your curiosity will not only help you learn for learning’s sake, it may also open doors to new opportunities.
I have seen plenty of lawyers dip their toes in, learn and develop expertise in areas adjacent to or completely unrelated to their original practice areas and end up building amazing practices as a result.
What I love about this advice is that it encourages you to maintain a growth mindset, even if you don’t particularly like your job or employer.
As a corollary, I hate the advice that is frequently given to others to “find a career that you’re passionate about.” I think it’s an impossible standard for most. And, judging by all the career satisfaction surveys out there, and the high levels of lawyer depression and substance abuse, this isn’t actionable advice.
2. SAVE, SAVE, SAVE. Regular readers of this blog know my view about saving money: the more you save, the more you will grow your wealth. And, on average, us lawyers make a lot of money, which means we have a higher capacity to save.
There was some debate among the older generation over how much one should try to save each year (e.g. 15% or 20% a year). To me, it’s hard to be prescriptive about percentages – so much depends on one’s goals and own personal finance plan (e.g. save 50% per year if you want to FIRE), but the bigger point is that you can’t build wealth without saving.
As the VP at MegaCorp said that evening, it’s not about your income, it’s all about your net worth. If you’re doing a great job getting raises and bonuses but your net worth is flat or going down, you may be doing something wrong.
3. INVESTING. There is no one right way to invest your money, but there are certainly some bad ways.
With all the myriad investment opportunities out there, from the simple to the complex, both the VP and the retired doctor recommended putting money into stock index funds. Regular readers know I’m a HUGE fan of index fund investing – see HERE and HERE.
The retired physician also talked about his own balanced portfolio of stock investments, rents from real estate investments and social security. I plan to spend some time talking about non-index fund investments in future posts.
4. UTILIZE PRIVILEGE. At our family gathering, we all acknowledged the good fortune we have to have a great support system in our family. Many of the older generation started with nothing. By virtue of not having to start from nothing, many in the middle generation are extremely privileged. Not “bribe your child into college” privileged, but privileged nonetheless.
The advice given to the middle generation was that we owe it to ourselves to take advantage of those privileges and improve ourselves and do well.
I think this message is very applicable to lawyers. I think of practicing lawyers as a privileged group. Whether you’re the first lawyer in your family (like me) or you come from a long line of lawyers, we have a special knowledge and skill that can be utilized. At a minimum, it’s a platform to help clients and make a good living while doing so.
As lawyers, we have tremendous amounts of agency. We should use it.
5. PERSONAL FINANCE SOFTWARE. For those just beginning to assess their own personal finances and aren’t handy with Excel, there is personal finance software out there that can make things easier for you.
While it’s been some time since I’ve used third party personal finance software, Quicken is a popular software used and recommended by many at the family reunion. It can help you track your spending and saving, and you can link Quicken to your various bank and credit card accounts to automatically pull in data.
