December 31, 2013
Last New Year’s I resolved to have fewer business lunches in 2013: they add up to a lot of time and money over the year. This resolution lasted about two weeks until I realized that a) my clients were used to having lunches with me and b) the relationship-building aspects and the time spent together was invaluable.This year I am much wiser -- of course! – and so I have thought through all the angles around financial resolutions for the new year. My financial resolution for 2014 is to be more conscious of what I am spending my money on and why. I hope to become clear as to whether or not my spending is properly aligned with my values. If, for example, I spend five percent of my annual after tax income on fitness clubs or swimming pools while I am on the road, I am okay with this because it supports my overriding objective of being healthy and productive. There is a common view that every twenty-something should start investing as soon as they graduate from school, but that’s not every woman’s choice. As part of my ongoing research, I interview accomplished women about their life lessons around money. One Greek-Canadian woman said to me last week: “When I was seventeen I gave my boyfriend $100 to invest for me in my first stock. I’ll never forget Northumberland Mines. It tripled within a short period of time and I told him to sell! I felt guilty making money so quickly. My approach has been quite different since then.” “I retired before I started working: I spent 15 years in Europe, travelling and enjoying great food and wine and getting an education in life. I returned to Canada with only €20 in my pocket…well, €10, actually: after a cappuccino and a croissant in Milan Airport. Only then did I ‘settle down’ and get a career, a house, a husband and step kids. My advice to young women would be to invest in yourself until age 35, and then invest in finance.” As a portfolio manager and Chartered Financial Analyst, I am used to thinking about spending and investing as two different categories. If a client gives me $1,000 and I buy them a stock or bond for their portfolio, then that is an investment which can be recorded on a balance sheet as an asset. But if they take that same $1,000 and spend it on a European vacation, clothing, or dinner and a night at the opera - then that doesn’t show up on a balance sheet, isn’t an asset and does not appreciate in value over time. Or does it? The answer is more complex than what we learn in first year economics: sometimes a thousand dollars spent on supporting an African orphanage or travel may provide more value over time than owning even the best performing stock. Clearly there is a big difference between ‘conscious spending’ and mindlessly frittering away money. One of my financial resolutions for the new year is to make sure my spending is an investment in the things that matter to me.