with Elizabeth Rhodes
I believe you have to make up your own rules
for how to live and how to manage your wealth in relation
to your life’s goals. My husband is a banker and he
knows a lot about personal and corporate finance. When I
met him, I truly knew next to nothing about finances, but
I was making a lot of money, and so was he. Over time, this
led to conversations about having more money than we need
and what we should do with the rest. When he asked me, “How
are you managing your money? How are you thinking about
the future?” I said, “It would be great to put
my kids through college, live in a nice house, and live
comfortably.” When he asked about giving money away,
I said, “I want to give away what I don’t need
as I go along.” That was more comfortable to my way
of thinking than building up money to leave at the end of
my life. When he made me aware of what was possible to accumulate
through sound investing, it was hard for me to believe the
numbers could be that substantial. It took me months to
finally believe it.
If a person or a couple inherited $1,000,000 at age
21 and invested the money at a ten percent rate of
return, at age 85 the value of their investment would
be roughly $446,000,000. If, instead, they gave away
50% of the original $1,000,000 and invested the remaining
50% for the same period of time, they would have $223,000,000
(roughly half of the other amount).
that, I consciously set about to create money so that I could
give it away. We came up with a set of ideas, rules, and aspirations.
We got a financial planner. We set up trusts so our children
would be provided for. (We didn’t want to give them
all of the money, because that’s usually a recipe for
disaster.) And we created a life plan, with wealth-planning
and giving goals included. Because of the power of compound
interest, which makes the early years of working so important,
we decided that I would work for profit at least until around
age 40, so that we would have a stronger legacy to leave.
After that, I could use my education and skill set, which
have served me well in the corporate world, to benefit the
non-profit sector (thereby giving in ways other than financial).
Now we meet with our planner once or twice a year to be sure
we’re on track.
year, I saw former U.S. president Jimmy Carter interviewed
on television. He said Americans tend to give away a much
smaller percentage of their income than Scandinavians do.
The interviewer asked, “What is your greatest fear
for the longterm security of America?” Carter’s
answer focused on the disparity that exists between the
global haves and have-nots. He said that narrowing that
gap will ensure peace in a way that’s not on our radar
screen right now. I thought that was so profound. And then
I thought about the Scandinavians giving away so much of
their income and I thought, “How much am I giving?”
This has become a guiding principle for me.
basic ethical commitment I’ve made is to doing well
to do good. That raises many other ethical questions regarding
wealth, like, How much is enough? Where should we live?
And how much do we give now to causes we support when we’re
trying to save and invest to create a more substantial legacy
later? Whenever we have to make such decisions, my husband
and I ask ourselves three questions:
1) Are our intentions in the right place?
2) Will this decision be in the best interests of the people
we serve? (e.g., ourselves, each other, our communities?)
3) Is this a decision that we will be proud of?
also ask other questions, like, Have I evaluated all the
information fairly and honestly? Am I using all the data
I have in the best way possible?
we make a mistake—as when we moved into a neighborhood
that did not reflect our values favoring greater diversity
of race, age, and economic class. (We subsequently moved.)
But the mistakes have generally occurred when we did not
follow this process ahead of time. If I can answer “yes”
to those few simple questions, I can feel pretty confident
I’m making a good decision.
on an interview with Pamela Gerloff
Rhodes is a corporate trainer for True North Performance
Improvement, LLC, which she co-founded.
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