I see people do reckless things with their money all the time. They stole his retirement savings for a trip to Disneyland. They take equity out of their home to buy an expensive but depreciating toy that they will rarely use.
I’m seriously considering a big-ticket luxury purchase. And the best thing about not having a partner is that there’s no one to tell me I can’t buy it. Is it a midlife crisis? I don’t know, and I don’t care.
But someone said to me, “Aren’t I worried that people will think evil?” There are three reasons, which I’ll share in order of importance, why this doesn’t bother me one bit.
First, and probably least important, is that I’m not trying to impress anyone. I am considering this purchase for myself, not what others think.
Second, and more importantly from a client’s perspective, it can be poor judgment to choose which financial professional to work with based on that professional’s lifestyle. This goes both ways, either choosing to work with someone or choosing not to work with someone.
That’s what I mean. Let’s say you based your choice of financial professional on the type of house the advisor lives in or the type of car he drives.
Warren Buffett is the world’s best investor and one of the richest humans to have ever lived on earth. But for years he lived in a modest house in Omaha, Nebraska, and drove a used Volvo. Imagine choosing to pass up an investment opportunity with Buffett because he didn’t drive a flashy car. big mistake
On the other hand, if your advisor drives a Ferrari, that doesn’t make him a good advisor. It doesn’t even mean they are good with their own money. There are many examples of people who live an expensive lifestyle, but have no real wealth, or even financial security. We call this situation “big hat, no cattle”.
But these two reasons are secondary. The real reason I don’t care what people think of me as a financial advisor if I make a high-priced luxury purchase is that anyone who has thought along these lines is completely missing out on financial planning.
The essence of financial planning is doing the things you need to do to be in a position to do the things you want to do.
So yes, after being careful with my money for three decades, I can afford nice things. They add up to thirty years of planning and achieving a good return on my investments. I don’t apologize for that.
As an advisor I see people do reckless things with their money all the time. They stole his retirement savings for a trip to Disneyland. They take equity out of their home to buy an expensive but depreciating toy that they will rarely use.
Here is the vital difference. If I go ahead with my big-ticket luxury purchase, and at this point I think it may be inevitable, I won’t have to give up anything major.
I won’t have to dip into my retirement savings or my child’s education fund. I don’t need to cash out my TFSA. I would be spending quite a bit of my son’s future inheritance and I’m totally fine with that. They would still have more than enough left over when I finally get there.
Buying nice things at this stage in my life is not reckless. Reckless would be buying big-ticket luxury items 30 years ago.
Buying good things now is not irresponsible. It is harvesting the seeds I planted many years ago.
This is what successful financial planning looks like.
Brad Brain, CFP, RFP, CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at www.bradbrainfinancial.com.
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