Look

There is an alarming rise in individuals on social media platforms who offer financial advice to the younger generation. This trend, often referred to as the rise of the 'finfluencer,' reflects the growing demand for accessible and relatable financial information, particularly among younger generations. Finfluencers often break down complex financial topics in engaging, bite-sized content, which appeals to millennials and Gen Z, who prefer informal and digital sources of knowledge.

However, this trend poses risks to the financial planning profession, as many finfluencers lack formal credentials, leading to the potential spread of misinformation. As a result, young people may make financial decisions without fully understanding the long-term consequences, which can undermine the value of professional financial advice. It's crucial to be cautious and verify the credibility of the sources you follow.

 

 

Listen

If you have children, have you ever thought about what you would like to teach your children about money?  In one of financial writer Morgan Housel’s recent podcasts, he shares a letter he wrote to his daughter when she was born.  He gives her great financial wisdom in this letter, which I want to share with you.  Some of my favorite pieces of advice were:

  • It's easy to underestimate the role of chance in your life.  A lot of your life is driven by chance and entirely out of your control.  Understand the value of hard work and that much of what you achieve is due to chance.  Remember this when judging others!
  • The most potent thing money gives you is the ability to control your time. 
  • Learning that you cannot have everything you want helps children distinguish between needs and desires, an essential life skill.
  • Simple, consistent investment strategies.
  • Living with less than you earn is the most important financial skill needed to succeed.
  • Everything has a cost.  It might be worth paying, but make sure you understand the price.
  • Relationships are more important than money.

One of the best pieces of advice I ever received was that you cannot give something you don’t have.  As an example, if you don’t live within your means, it’s hard to teach your kids to do the same.  So, it’s an essential reminder when we think about the lessons we would like to teach our children. 

What else would you add to this list?

 

Learn

Financial wellness is a holistic concept that speaks to various areas of wellness that contribute to living a happy and meaningful life. Chris Heye’s article puts these different areas into a pyramid with different levels, much like Maslow’s hierarchy of needs. The levels include organisational, physical, cognitive, behavioral, and holistic wellness.

 

 

Interestingly, he says that the importance of each area changes continuously as one ages and is also affected by life transitions.

  • Aging changes what matters: As you age, maintaining physical, cognitive, and behavioral wellness gets tougher. While you get better at managing finances as you get older, there’s a point where it starts to decline, usually around your 50s. This can be risky when people have more wealth but may struggle to make good decisions because of cognitive decline. 
  • Life transitions: Big life changes like retirement, divorce, or losing a spouse drastically affect your financial wellness, especially in later life. These transitions often come with emotional and financial stress.

Therefore, it is essential to plan for financial well-being across life stages. Financial planners need to adapt their advice depending on whether someone is younger, still learning, or older and dealing with health risks or cognitive decline.

As for the hierarchy of needs, as you age, the focus shifts. Earlier in life, the basics like "organisational wellness" (managing your finances) are key. But as you age, physical wellness (health) and cognitive wellness (mental sharpness) become more critical.  Can you identify the most important areas in your life?  How can your financial planning support this?

You can read the full article here.

 

Ponder

In this section, I invite you to think about a question I may pose or a thought I may share.

From The Marginalian:

Allow yourself the uncomfortable luxury of changing your mind. Cultivate that capacity for “negative capability.” We live in a culture where one of the most significant social disgraces is not having an opinion, so we often form our “opinions” based on superficial impressions or the borrowed ideas of others without investing the time and thought that cultivating true conviction necessitates. We then assert these donned opinions, clinging to them as anchors to our reality. It’s enormously disorienting to simply say, “I don’t know.” But it’s infinitely more rewarding to understand than to be right — even if that means changing your mind about a topic, an ideology, or, above all, yourself.

 

Oenophilia

“Oenophilia simply refers to enjoying wine, often by laymen.”

I recently enjoyed a delightful lunch at Chefs Warehouse Tintswalo Atlantic.

The setting is breathtaking, but the food and wine steal the show. One of the wine pairings we enjoyed reminded me of a unique and unusual wine from Newton Johnson called Albarino.

It’s a grape with its origins on the wet and cool Atlantic northwest coast of Spain and Portugal, where monks are fabled to have brought it from the Rhine River in central Europe on their pilgrimages centuries before. It pairs beautifully with fresh line fish and sushi.

 

 

 

I hope you enjoyed this month’s edition.  

Stay curious,

Elke Zeki