Wealth and Privilege
Today is Remembrance Day, and with lockdowns in Manitoba and across the country it will be a strange one. It seems to have been forgotten amid all of the pandemic chaos and the US election craziness, but this is actually the 75th anniversary of the end of World War II. With the very youngest veterans now at least 93 years old, it will also likely be the last milestone Remembrance Day for that generation. I am not sending out a market comment this week (you can find RBC’s Monthly Global Insight here), but instead wanted to reflect on the privileges that I enjoy, and the responsibilities that privilege entails.
I have found myself having the same conversations over and over—with different groups of peers—in the last while. I’ll see someone I know out for a walk, or be speaking on the phone with a colleague or one of my clients’ other professionals. The conversation usually goes something like this, and almost always starts with an apologetic.
-Me: "How have you been keeping lately?"
-Them: "You know what? I hate to say it, but absolutely fantastic. The kids and I were able to spend the whole summer together, and it was probably the best 8 months I've ever had. but I understand how few people are in my position and how fortunate I am..."
Aveeve and I are incredibly privileged. We are both employed in professions that were functionally unaffected by the global health crisis. When our offices closed we were simply chased into our relatively comfortable home offices. We needed a second office space, so we went online and ordered everything we needed to set one up. We both have multiple computers, cell phones, and tablets. And if we needed something Amazon had it on our doorstep in 24 hours. In fact, if anything, both of our businesses have grown considerably over the past six months. I was able to work from the cottage whenever my relatively spacious home office started to seem a little too restrictive. We were able to maintain childcare throughout, so neither of us had to prejudice our work like to do school around a kitchen table. If for some reason one or both of us had lost our jobs it would have been quite a number of months before we had exhausted our credit lines, let alone our savings. All of this leaves aside that Aveeve, Leila and I are healthy, so our risks in a health crisis are generally lower than those with age or health concerns.
My mother, always a wellspring of wisdom, said something to me when I was younger that has stuck with me through my life. She explained that wealth wasn't about how nice your house or your car were. It wasn't what you could buy, or what's written on the bottom of your bank statement. True wealth was about having options when you needed them. It was about the ability to fix problems and avoid tragedies. True wealth is always having another choice when you don't like a possible outcome.
That advice never seemed more relevant than when the world's collective rug was pulled out from under all of us, and options and outcomes narrowed. It wasn't, however, the only lesson my mother taught me. One of the most important gifts I received in my life was my parents' passion for community work. For as long as I can remember, both my parents have juggled charitable work, and they involved my brother Roy and me from the very beginning. They taught us the value of helping others, and the responsibility we have to our community and our neighbours. The matron of a great Winnipeg family lived by the credo, "To whom much is given, much is required" (a paraphrase of Luke 12:48). I think that the two lessons can be combined. True wealth is always having another choice, and choosing to give other choices to those with fewer options.
So how, then, does a family build wealth. The first way is the most obvious: spend less than you make. Or, as was coined by Robert Kiyosaki in his seminal finance book, The Richest Man in Babylon, “Pay yourself first.” Aveeve and I started keeping a household budget right out of university when we started living together. Looking back on those old budgets now I’m always astonished how far we stretched a dollar. A good budget in the years when you are building wealth takes the end point (usually retirement, a business sale, or a major life change) and works backwards. That typically means putting a financial plan in place, making some wild guesses about what your life will look like (the younger you are, the wilder the guesses), and figuring out how much money—and when—you’ll need to do all the things you want to accomplish. Knowing the major goals, you can now figure out how much you need to save during various periods to accomplish them all. Before you figure out everything else, remove this from the budget, and commit to actually saving it. And if you don’t have one already, the very first goal should be getting an emergency fund together in the event something comes out of left field (the “giving yourself another choice when you don’t like an outcome” part of the advice above).
Another part of building wealth is building flexibility. A budget or a financial plan that is stretched to the last cent (savings included) is much more likely to not be achieved than with lots of slack and lots of flexibility. Starting small, that can be as simple as leaving 5-10% in your budget for the incidental expenses that inevitably come up over the course of a year. If nothing comes up, great: you have a little bit more for your savings. But if a car breaks down, or you forget a bill, or a great band comes into town and you want tickets, you're not upending your budget by forgetting that life happens. Same, too, if a catastrophe like a pandemic affects your neighbours and friends and you want to help out in some way. As your finances get more sophisticated, buffers and safeguards can be built into your financial planning, from assuming underwhelming rates of growth on your investments, to building more diversity into investment holdings and styles, to building pension-fund-like income streams. As wealth grows, so too does the flexibility to support causes you care about, not just by giving more money but by giving in a more tax-efficient way (allowing you to do more with less after-tax dollars) and by giving you the most valuable flexibility of all-time.
This Remembrance Day, in addition to remembering the privilege of living in a safe and free country at the expense of the sacrifice of so many, Aveeve, Leila and I will be reflecting on all of the good things that we have, and we will be looking for opportunities to help our community more. We have increased most of our regular donations this year, and taken on a few new ones. There is no "right" amount that anyone should give, and the needs will always outstrip the resources of the few with the ability to help. Aveeve and I try to be very deliberate in our giving. There are lots of ways to give, as well, from money to time, cookie drives to frontline volunteering, board and committee work to writing cheques. Aveeve and I are fortunate enough to know some excellent people as resources for information on who is working in the not-for-profit space and we lean on those resources frequently. Most of my clients know this, but if anyone ever wants to talk about the giving landscape, I'm always open to talk.
Below are the links to a few online resources that provide some excellent information.
In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.
Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.
- Lt. Col. John McCrae
Link: A reading by Michael Enright
Charitable resources on the web
CRA Charities List
This is a surprisingly good listing of all of the charitable organizations in Canada. Searchable, with the information on revenue, expenses, and other information in their T3010 filings. It’s also a good check if you want to ensure you’ll be able to claim a charitable contribution. Link
Canada Helps
Online charitable giving platform used by many charities to simplify the process of giving and receipting. Can be searched by category, campaign type, and location. Not comprehensive, but useful if you’re searching for giving ideas. Link
United Way Winnipeg
United Way Winnipeg partners with agencies to provide mainly core- and sustained- funding. This allows them the flexibility to plan long-term. Hundreds of volunteers working with dedicated staff work with agencies to review and evaluate their programs, ensuring that deep stewardships of donor dollars. Their partner agency list links to the website of all of their partner agencies. They are currently also partnering with the Winnipeg Foundation, Endow Manitoba, and the Canadian Red Cross to allocate the Government of Canada’s “Emergency Community Support Fund” to organizations providing direct services to vulnerable populations in Canada.
RBC Wealth Management: Charitable Giving
Excellent, in-depth publication covering not just how to give, but why, as well as including examples and illustrations of almost every option for every type of charitable gift that you can make. This is one of my favourite resources. Link
Take Control Over Stress
As a final note, Dr. Toby Rutner, who runs a psychiatry practice here in Winnipeg, recently shared some thoughts with me, along with a fifteen-minute audio clip of guided meditation. It has been a stressful time for all of us of late, and it doesn’t look like the daily stresses will be abating. Consider taking some time to lighten your personal burden.
“These are difficult times. We are faced with a challenge that threatens our health and safety. We have had to upset our normal and familiar way of life. We have been required to make changes to the way we live our lives. These changes have produced hardships and stress. Many of us can no longer go into the office or school and instead we now work from home, remotely. We no longer have a healthy separation between work and home. We are constrained and housebound. We miss our friends and colleagues. We feel alone and stressed.
Imagine freeing yourself from the stress of working remotely, freeing yourself from feeling isolated from your colleagues and associates, imagine yourself no longer emotionally distant from your friends and family, cut off from social stimulation and human contact. Imagine yourself no longer feeling alone, frustrated and stressed.”
Take Control Over Stress (YouTube)