Prepare, Accept, Live
Breaking Free from the Reserve Mentality to Embrace Today
Good friends of mine live on the North Carolina coast. They are about to take a 2-month road trip in their camper van. I asked the husband if he was afraid to be gone for so long during the height of hurricane season. He said no; their storm shutters were up and the house was ready. Time to enjoy life!
They could have stayed home, vigilantly watched the weather reports, and sprung into action if a hurricane approached. Knowing what was coming at them, maybe they could have taken some additional measures to protect their house. Hard to know what would have happened.
What I do know is that they would have paid a steep price to stay home.
They would have lost their great adventure—to see the country, visit friends and family, connect with each other—just to protect their home from the possibility of a storm that might never come their way.
In my 30+ years as a wealth manager, I saw many of my clients adopt this reserve mentality. They held onto their money tightly just in case they might need it at some unspecified date in the future for some unknown reason.
Financially speaking, they stayed home waiting for the hurricane.Â
Not knowing what potential threat was lurking around the corner, they believed it made sense to have as large a financial reserve as possible. If trouble comes, they can buy their way out of it. They can pay for experimental medical treatments, provide lifelong care for a future grandchild unable to care for herself, or even flee the country if a civil war erupts.Â
I used to tell my clients that every choice has a cost. What’s the cost in holding onto the money, in having a reserve mentality? Very high. For the reserve mentality to work, the holders of the money must search constantly for potential threats to themselves and their family. Vigilance requires them to focus on what might happen in the future, inevitably distracting them from living in the present.
Distracting yourself from the present is always a bad strategy for life.
The future threat may never materialize. Even if it does, money often can’t solve the problem. The very wealthy die of diseases that no amount of money can cure. Wealthy families lose troubled children to addiction and suicide despite being able to send them to the best treatment centers.Â
The reserve mentality prevents people from embracing opportunities to enjoy a more fulfilling life—full of loving relationships, engaging experiences, and a deep sense of meaning.Â
The more money you hold in reserve, the less you have available to take your family on an African safari and create lifelong memories, redo your kitchen so you can entertain, help a friend whose spouse died suddenly, or to fund a tutoring program for economically disadvantaged kids.Â
Still, we don’t know what the future holds, and we do want to be prudent. So, what’s the answer?
You prepare, accept, and live.
Prepare for foreseeable events with a reasonable likelihood of occurring. Prepare for retirement. Save enough money to meet your needs and most of your wants in your post-income earning years. Prepare for your potential long-term care needs as you age. Set up a college fund for your children or grandchildren. We live in a litigious society—purchase adequate liability insurance.
Accept the reality that all people, regardless of their wealth, are always vulnerable. We don’t know what challenges life will give us. Have faith that when the unforeseen occurs, you will use your time, talents, wisdom, network, character strengths, and money to navigate it as best you can. That is all any of us can do.
Live your best life! Knowing that you have prepared for the future, enjoy the present. Splurge. Celebrate a friend’s birthday with an extravagant dinner at her favorite restaurant. Take that long desired, once-in-a-lifetime trip with someone you love. Invest in a new hobby. Spend a week at a retreat center, just being still and connecting with your inner voice.
Life is short; embrace it fully!
Until our next conversation,
David
Small Steps & Worthy Questions
Are you confident you are on track to retire comfortably, educate your children, and cover your long-term care expenses? If not, consider working with a competent financial advisor to help you devise a program to get on track.Â
If you have a reserve mentality, what eventuality are you most concerned about? Would money solve the problem, or just provide a temporary fix? How might you use your other elements of wealth to address this issue?
If you allowed yourself to dream, what would you like to do that would leave you with a deep sense of satisfaction? How much would it cost? Would it be worth it?
Please let me know what you think about my attitudes toward money. I’d love it if you’d tell me, even if—maybe even especially—you think I’m misguided. And please share the blog with people who would like to join this conversation.
We all suffer from the illusion of control, to greater or lesser extent. More money = more control, right? Except, not in many crucial situations, as you outlined. The less crucial situations where money does help are, well, less crucial.
Being at peace with your decisions requires aligning your actions with your beliefs and risk-tolerance. We’re all wired a little differently in that regard. This post is a call to evaluate how closely our wiring matches reality.