By Amanda Morrall (email)
On a business trip awhile back, a Maori delegate I was travelling with us gave a closing speech in his native language and translated it into English afterwards. I can't remember the talk chapter and verse but it closed with an important lesson about how the real value in this world, "what counts most" is "people, people, people.'' I was reminded of that sage bit of advice after reading this piece from financial advisor Liz Koh on the value of investing in personal relationships.
Invest in Your Relationships
One of the most interesting aspects of wealth creation is that it is virtually impossible to do on your own. Put a person on a desert island and he or she will not create any additional wealth than is already present on the island. Give that person the best technology available to communicate with others and suddenly there is an almost unlimited ability to create wealth. There is a direct correlation between your wealth and the nature and extent of your relationships with others. Think of any super wealthy person – Bill Gates, Mark Zuckerberg for example – and think about how many people in the world they interact with either directly or indirectly. It is through these connections that their wealth has been created. There are, of course, many different types of relationships that we all have which contribute in different ways to our financial wellbeing. The better your relationship with your partner and immediate family members, the happier you will be and the more likely you will be to succeed financially. Separation, divorce and arguments about money on the other hand, lead to financial loss. Good relationships in the workplace lead to increased opportunities for career development and pay rises. Developing networks with people in the wider community can lead to both career and business opportunities. Professional relationships with experts such as accountants, lawyers and financial advisers will help you make the right financial decisions in life.
So many people live their lives with a narrow circle of friends, barely interacting with the rest of the world, and wonder why there is little change in their financial position. These days, with the advent of social media networks there is little excuse not to be well connected. You can achieve financial success by investing time and effort in developing your relationships.
2) 10 traits of a good leader
I don't think it's any coincidence those who invest in their inner circle, on an authentic level and not just an exploitative how to get ahead basis, make good leaders. People are drawn to them and inspired to reach their potential as well. Here's an article from pickthebrain.com on the 10 traits of an outstanding leader. Good food for thought for those trying to cultivate success beyond a six figure salary.
3) Tooth fairy money lessons
My youngest looked me square in the eye last week and asked me whether the tooth fairy was "for real.'' I crossed my fingers behind my back and replied "Yes, of course.'' We visited the tooth fairy's den once in Kaikoura on a cave tour I reminded him. I know the gig is up soon but it's nice to stretch the magic of make belief a bit longer. Here's a piece from the Globe and Mail on making financial mileage out of the tooth fairy by using her as a opportunity to engage your child on the subject of money. A survey, out of Canada, shows 87% parents give between $2 and $5 per tooth so the lessons x32 could be valuable one day. And here's another from frugal zeitgeist on the benefit of early education in money.
4) Lifestyle inflation
It is a fact of life that for all but the most restrained the more you earn the more you spend. Call it lifestyle inflation. I was talking money with a friend the other day who confessed that he had more money and less worry of it as a "broke student" than an active and thriving member of the workforce because as a student, his financial life was relatively uncomplicated. No money, equals no spending. It also equals no savings which is no good but by adopting this student mindset and habit, most of us could stand to gain.
On that note, I also found this financial confession from sustainablelifeblog.com quite interesting. In it, he talks about how despite a pay increase that came with a new job, he ended up blowing more of his discretionary income. A shrewd inventory of his expenses found the main culprits were take-aways, taxes and a one-off splurge on an engagement ring. Can't fault the guy for spending on love but the added tax grab for worker trying to get ahead is a burn to be sure.
5) Tax deductions
The aforementioned blog resonated with me on a few levels. The move from Christchurch to Auckland was sweetened by a pay increase but lifestyle inflation, even though I seldom go out, has been a burn. In my case, the lifestyle cost increase came in the form of a beach. School expenses have been another unanticipated gobbler of income. This year's fees went up almost 20% to $300 per kid. I understand that's not bad compared to what others are paying but still. A reminder to parents that school fees are a claimable tax deduction. See Inland Revenue's website here for other eligible tax credits.