IS THE ROOT OF ALL FINANCES
By
Copyright © 2012
Gunn & Company Consulting, Inc.
ISBN: 978-0-615-61513-4
All rights reserved. No part of this book shall be reproduced, stored in retrieval systems or transmitted by any means without written permission from Gunn & Company Consulting, Inc.
To my Lord and Savior Jesus Christ who gave us His parables so this book would have meaning.
To my phenomenal wife Kathy who listens, critiques, suggests and encourages me every step of the way, every day.
To my family members who provide support and encouragement to fulfill my dreams and create our Legacy of Love.
To my staff who make me look better than I am and support my dreams.
To all of the clients who have given me the pleasure and honor of serving them.
If you want to get to know the truth about someone, just take a look in their checkbook. Wherever their love is, that is where their money is going. Since we are made in God’s image, God is no different. The good news is that God wants to bless us. God wants us to prosper and not be consumed with worry about money. But the enemy, especially through our society, is doing virtually everything possible to keep us from God’s blessings. It isn’t just about the money. It is about our time and talents as well.
The Bible addresses the subjects of love and money repeatedly. However, as a financial advisor, each time a client comes to us to help them with their financial plan I remind myself that the plan must identify and reflect their money of love. As the scripture below addresses, it is the love of money, not money that is the root of all evil.
1 Timothy 6:10-For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.
When our clients entrust their wealth with me, I am reminded of one of the parables Jesus used to teach us. It is a humbling responsibility that can never be taken lightly. They are the Masters of their Money of Love!
The Parable of the Bags of Gold – Matthew 25: 14–30
Again, it will be like a man going on a journey, who called his servants and entrusted his wealth to them. To one he gave five bags of gold, to another two bags, and to another one bag, each according to his ability. Then he went on his journey. The man who had received five bags of gold went at once and put his money to work and gained five bags more. So also, the one with two bags of gold gained two more. But the man who had received one bag went off, dug a hole in the ground and hid his master’s money.
After a long time the master of those servants returned and settled accounts with them. The man who had received five bags of gold brought the other five. “Master,” he said, “you entrusted me with five bags of gold. See, I have gained five more.”
His master replied, “Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!”
The man with two bags of gold also came. “Master,” he said, “you entrusted me with two bags of gold; see, I have gained two more.”
His master replied, “Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!”
Then the man who had received one bag of gold came. ‘Master,” he said, “I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed. So I was afraid and went out and hid your gold in the ground. See, here is what belongs to you.”
His master replied, “You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest. So take the bag of gold from him and give it to the one who has ten bags. For whoever has will be given more and they will have an abundance. Whoever does not have, even what they have will be taken from them. And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.”
Having been a financial advisor for over three decades has afforded me the opportunity to observe and learn from people from many walks of life. But in reality there are common threads of every plan that have become extremely apparent. The most significant of which is, that it is not about the money; and it is about the love.
There are eight consistencies that occur to varying degrees in the contents of every financial plan:
1. To provide for retirement in a lifestyle in which one has become accustomed.
2. To provide the best education one’s children and grandchildren can obtain.
3. To provide for one’s family in the event of their disability.
4. To provide for one’s parents and their long-term care, if needed.
5. To provide for the fulfillment of one’s plan in the event of an early death.
6. To provide a financial legacy for one’s heirs.
7. To provide a living or ethical legacy for one’s heirs.
8. To provide meaningful contributions to the institutions that one believes are fulfilling a greater good to society.
To break it down in simplest of terms, the money of love is the root of all finances! It starts with the love of ourselves, our spouse, our children and our institutions. We protect and provide for those persons and institutions we love.
This is the true story of two men named John. The first, “John E.,” is the son of a financially successful man. John E. inherited several million dollars of stock in a company his father had invested in. This stock provided a nice income to John E. in addition to his regular salary. The second, “John B.,” is an associate pastor at a small church.
One morning I got a call from my receptionist that John E. was here to see me. It was about 11:30 and he did not have an appointment. I asked her to bring him back to my office. When he came in he literally flopped down into the chair. I said, “John you look distraught; what is up?” He said, “I don’t have money for lunch!”
You have to realize I found this comment a little strange. My office was across the street from his bank and I was sure he knew how to use the ATM.
I immediately reached into my wallet and pulled out a twenty dollar bill. I handed it to John and said, “No problem!” He just looked at me and repeated, “Marshall, I don’t have money for lunch.”
I’ve never inherited several million dollars, so I assumed that maybe twenty dollars didn’t cover lunch. Fortunately, I had recently cashed a check and the teller gave me a fifty dollar bill which I promptly tried to hand to John. Again he looked at me and said, “Marshall, you aren’t listening to me, I don’t have money for lunch.”
At last I “heard” him. What he was telling me was that although he had wealth and income, his finances were so out of order that he didn’t have money for lunch. He went on to describe how he was embarrassed because his wife had to buy “used” furniture for their new waterfront home. After several minutes of his lamenting over the disconcerting state his family finances were in, he consented to allow us to perform a financial analysis to determine where his money was going and how they could better manage their finances.
We analyzed their income and expenses for the prior year. When they came in for the meeting to review our findings they were astonished to realize they had spent about fifty percent of their income on the used furniture called antiques. They agreed to allow us to help them set up a tithing, saving and spending plan. You should have seen the smile on my assistance’s face when I asked her to prepare a plan spending $5,000.00. She asked, “Is that per month?” I replied, “No, that is per week.” She grinned and said, “I think I can handle that.” Shortly thereafter we met with them to present the plan and I am pleased to say they agreed to and stuck to the plan for years to come.
My next order of business with John E. was to talk about diversifying his portfolio. As I tried to explain, having all of your investments in any single position is way too risky. He would never hear of it. This was the company his father had invested in and he wouldn’t even think of selling any of the stock to diversify his portfolio.
You already know how the story ends. Unfortunately, years later the dividends stopped coming and the company went bankrupt. Their family wealth and income was cut by about eighty percent. The cash flow earmarked for educating their children, providing for their retirement and endowing future generations evaporated.
John B. is also married with children. They have a simple lifestyle focused around their church functions and children’s activities. John B. always knew where every dime of their money went because the margin for mistake was very small. Yet there was always room in their budget for their tithe, an amount, though small, for offerings, money for their individual retirement accounts and savings for their children’s educations. John B. would call me periodically to talk about savings options for the IRAs and education funds. I must admit I was impressed with their ability to steward what God provided for them.
John B. has advanced as you might expect to pastor his own church. As we have updated his plan over the decades, the amounts have changed, but the concept is still the same. Keep it simple, keep God first; others second and there will be plenty for his family.
If financial planning God’s way is so simple, why is it so hard? It is not a secret. Why are bankruptcies at an all time high? Why are couples arguing and divorcing over money at an alarming rate? Why is credit card debt reaching new heights almost daily?
The plan is easy. The implementation is the challenge. I will teach you the concepts and techniques to help you stick to the plan and do it God’s way.
Chapter 1. Retirement: Are We There Yet?
Chapter 2. Selecting a Financial Advisor
Chapter 3. Basic Financial Concepts
Chapter 4. The Investor Ten Commandments
Chapter 5. Noise: It Can Deafen Your Financial Plan
Chapter 6. Pursuing Your Plan Prudently, Not Wishing Upon a Star
Chapter 7. Being Stable in a Volatile Cycle
Chapter 8. Building Blocks of a Financial Plan
Chapter 9. Investment Pieces of a Financial Plan
Chapter 10. Equity Investments
Chapter 11. The Wide World of Investment Options
Chapter 12. Expressing Love by Setting Goals and Solving Investment Challenges
Chapter 13. Analysis of Four Investment Personalities
Chapter 14. Four Documents You Don’t Want to Leave Home Without
Chapter 15. Leaving a Financial Legacy of Love
Chapter 16. Leaving an Ethical Legacy of Love
For most workers, they don’t begin to think about retirement until they have been on their first job for about an hour. From that point, on they begin plotting their winning the lottery, marrying into a wealthy family or discovering they were switched at birth and are actually the heir to a tremendous fortune. But reality is cruel and soon they discover they must actually work for a living.
For decades the concept of retirement was the same; you turn 65, pick up your gold watch, collect your monthly pension and head for the rocking chair. Later retirement progressed to an active lifestyle of yoga, tennis, golf and grandchildren. Today, sadly for many people, retirement as they once thought it would be is a fantasy. There is no gold watch, no monthly pension, but there is still a time clock.
Did they really think that a two income couple, who spent every dime they made and then some in the form of credit card debt, could lower their income and maintain their lifestyle? Yes, they did. Did they ever imagine that at age 65, there is a good chance they will need to support themselves as retirees for 20 or more years? No, of course they didn’t. Failure to plan early and stick to the plan could make the phrases “Do you want fries with that?” or “Welcome to Wal-Mart!” part of your daily routine. There is good reason to consider that you might outlive your money.
When are you financially ready to retire? You are financially ready to retire when your investment income and retirement income (pension and Social Security) are sufficient to support your retirement lifestyle and you have built-in growth to cover anticipated inflation. This is the day when you are able to look in the mirror smile and say, “I am going to work today because I love what I do, not because I have to!”
When should you retire? Assuming you are financially able to retire, ask yourself a couple of questions. Do I still enjoy going to work and doing what I do? Do I still make a positive contribution to my employer and coworkers? If you still enjoy yourself and are making a positive contribution, don’t leave. You may want to consider reducing your hours and spending the additional time on some social good like mentoring or volunteering. There are plenty of opportunities for volunteer service.
How much income will I need when I retire? This amount is one of great debate prior to retirement. When I hear people say, “we will probably only need about half of our working incomes,” I get frightened for them. They haven’t really thought it through. People generally need 75 to 80 percent of their pre-retirement income to support their lifestyle during retirement. They will spend it on different things in retirement than they did when they were working, but they will spend it. There are medical expenses, living assistance, health insurance and travel costs they didn’t spend before.