A Neglected Operation
Today, in 2013, at a time of tension in government both at home and abroad, economic recession topped by inflation, stock market uncertainty, and jolting career adjustments for business executives and professionals, many people still fail to safeguard themselves and their families by taking good care of their personal finances.
Many a man or woman who should know better - whose business or professional income is, say, £30,000 to £70,000 or more - treats his or her personal business like a second cousin who turns up in town in search of a loan: In a word, the personal affairs get a quick brushoff. There is some stewing and fretting about personal finances, true. But aside from some halfhearted resolutions to take things in hand, the personal business goes hang.
In the face of a real need to straighten things out, this corporate executive, say, is apt to have a precariously balanced bank account, top-heavy or lop-sided insurance coverage, a non-saving monthly budget (if any), a too flimsy school-financing plan for his kids, and a hodge-podge investment portfolio that is clearly the result of innumerable uncertain decisions. He buys a share of stock here, sells it there, borrows to buy more stock (often on the strength of somebody's luncheon table tip), dabbles in corporate bonds without knowing how, digs up thin-ice tax saving ideas over cocktails, and sells off real estate inherited from his parents to pay his debts, buys a high-gas-mileage Mercedes, and backs up any margin calls that come in from his stockbroker. You name it - this gent does it; and it's makeshift, sandy, jumbled non-planning, or worse.
He very urgently wants to "hedge against inflation" in his investments, and he talks about this at parties, business lunches, and at country stores when he is on vacation. But he never really plans a hedging program, no more than he plans ahead for retirement. He lets inflation go hang, too, at least for the most part; and it squeezes him tighter every year.
In a climate of corporate shake-up and change, his career moves tend to be haphazard, and he is unable to untangle from too many extra-curricular business activities that take up far too many evenings. He lacks enough time for his wife and teenagers, and finds it hard to unearth a free day for his annual physical exam, much less a needed hour every day for physical exercise.
If he is over 50, he worries about his sex life which he suspects could be better (it could be, if he would learn to uncoil after a taxing day). He puts off such things as dentistry, hernia repairs, foreign films, quick trips to Mexico with his wife (to celebrate important anniversaries), and Saturday ball games with his kids. When his golf clubs get their monthly workout, usually it's a hypertensive 18 holes with the boss. Or with a customer.
As for home chores, his wife chides him because he hires people to do everything from paint gutters and fix screens to trim backyard trees and shrubs. In truth, he would like to put on old pants and do these chores, and raise tomato plants, too.
At times, feelings of guilt get him down. When this happens, he takes the whole family to an overpriced resort for a long weekend but finds the routine a strain because he can't really afford the expense (true) or the time (he thinks). While away on such weekend junkets, he discovers that thoughts of Monday morning creep into his mind, without fail. This begins on Saturday along about 2 P.M. In fact, Monday morning invades his thoughts most weekends, no matter where he is.
He works for a competitive company or in a similar uptight situation where the pressure to survive as a manager is greater than it need be. The pressure, though, isn't as great as he imagines. He blows hot as a pistol for the company all day and keeps on firing like a capgun in his off hours. He burns up a week's worth of energy in the course of two days at the office, but spends barely three days a year (if that much) attending to his own personal finances.
He simply lets them happen.
For this high-income earner, too much is never too much. He takes two weeks of vacation each summer, instead of a possible three or four - and he even splits the two weeks to quickly duck back into the office to do some work (or fret over some work) that could and should be done by others. No wonder he has a third whiskey-and-water when one or two should do!
He is on a corporate ladder, and this is true even though he may work for a school, or trade association, or the government, in a management job. The escalator he is on may boost him to his level of expectations. It just may. In the process, though, it may leave him high and a little dry. With it all, he is decent, honest, sincere, and his abilities - though they are strained to the tension-point - place him in the above-average category.
His solace - to which he clings for dear life - is that he makes good money. The trouble is, that for all his work, he fails to cling to much of the money. He may even cling to none at all. This is one of the problems emphasized in these pages: How to do a bit of money-clinging without hurting anybody!
To compress this profile into a few lines is difficult because the case is as complex as it is classic. And if the profile appears to be a bit strained and somewhat unhappy, so be it. "He" - whoever he is - is slightly strained and unhappy, too. Anyway, the whole picture, taken honestly, shows the figure that many men cut these days, even if the shadowing is a trifle on the harsh side.
The fact is that the habit of mismanaging or non-managing personal affairs is prevalent among people who are intelligent, hard-working, and successful. No man should feel alone in this, though it is a question of degree. It comes in bunches and, like the tax form 1040 in April, is everywhere. It can be estimated that neglect of personal finances, especially - to one extent or another - is a well-established fact of life among a good 50% of all "junior" executives. This means any school grad who is in business, aggressive, and the owner of at least two £30 shirt-and-tie combinations. And the habit sticks through the years as the junior man works his way up the line and one day makes the grade as a top-rank manager.
Pay special attention to the individual variable-annuity contract. This idea will be big in the 2005-80 period, and may be worth a look. It's a long-range retirement planning idea, and already is available in enough variety to let you do some sensible shopping around.
After long delay, some big names in life insurance Aetna
Life & Casualty, Travelers, Lincoln, State Mutual, Paul Revere, Connecticut General, and British General, among others - are now selling directly or through subsidiaries. Prudential, Connecticut Mutual, Massachusetts Mutual, and New England Mutual are part of a sizable list of top companies that are in this business now or will move in soon.
But... see: Hedging Bets For Your Retirement