How I Manage My Money

On his recent podcast, the New York University Finance professor and investor, Scott Galloway, revealed his very personal thoughts about his own money. He explained his anxieties about money, his thoughts on marriage and how it relates to money, his approach to investing and what financial independence means to him. While his wealth is on a different scale than mine - kind of Tiny Archibald to Wilt Chamberlain – our thoughts and approaches are similar. So, I thought it might be helpful to share his thoughts in contexts that make sense for me and, hopefully, you.

• Marriage: Scott emphasizes the importance of having open, candid conversations about money with your spouse. Talk about your goals and your expectations about expenses. And be sure to talk about debts and other obligations before you actually tie the knot. Learning after the fact that your spouse has a boatload of debt and it’s now yours too is no fun;
• Money anxiety: Scott talked about being anxious about money because of the financial troubles of his family when he was in college. As a result, he has always strived to accumulate wealth to avoid that experience again. I am the child of parents who were born near the end of the depression and who, because of that experience, have always been very careful with money to avoid not having enough. I learned to respect money as security and independence rather than a vehicle to acquire things. I’ve been a saver my whole life and, fortunately, so is my wife;

• Professional advice: Scott talked about seeking professional mentors and, now, being a client of a firm that is a fiduciary. Meaning, like Moneywatch, his firm must provide him advice that’s in his best interest. Lisa and I became clients of Moneywatch in our early 30s and found our instincts to save an excellent match with their financial planning advice. Furthermore, having a financial plan allowed us to focus on our careers and our kids, knowing that we were contributing enough to reach our goals. Knowing we were on track meant less anxiety when we did spend money;

• Less emotional: Scott talked about being more analytical and less emotional about his investments after some earlier poor decisions. He went “all-in” by investing in a couple of early-stage companies and losing his entire stake when the companies collapsed. I don’t have that experience but I have learned the value of never taking more risk than necessary to reach one’s goals and the importance of diversifying one’s portfolio;

• Financial independence: I have always viewed true financial independence as having enough to be able to choose to work, not have to work. Scott’s thoughts go a step further as he, now that he has reached financial independence, divides his tasks into three buckets:

• “Have to” tasks are those you can’t escape. I have to complete 30 hours of continuing education every two years in order to maintain my Certified Financial Planner designation;
• “Want to” tasks are those you do solely because they give you pleasure. I play golf because it’s fun and gives me outdoor social time with the fellas;
• “Should do” are those tasks you can give up when you’ve reached financial independence. I probably should have gone to that Chamber of Commerce luncheon last week but I decided to play golf instead.

If you’re interested in hearing Scott’s personal experiences his podcast can be found as Prof G Pod with Scott Galloway on Spotify or wherever you get podcasts. (If you’re easily offended by bad language, probably best to avoid)

Steve Byars, CFP®