More Than Money
Issue #31

The Everyday Ethics of Wealth

Table of Contents

“Doing Well to Do Good - Leaving a Lasting Legacy”

A Conversation 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.

Go Figure
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).
After 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.

Last 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.

So the 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?

We might 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?

Sometimes 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.

—Based on an interview with Pamela Gerloff

Elizabeth Rhodes is a corporate trainer for True North Performance Improvement, LLC, which she co-founded.

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