I’ve never been to Disney World. When I was younger, we simply couldn’t afford it. It never seemed to bother me though because I had something much more valuable: cookies.
My father used to get cookies at a discount. When I was 5 years old, they became the treat of my life. I have a vivid memory of him walking through the door with a box full of cookies, and I remember being so excited and thanking him profusely. However, amidst my exuberance, his response is what hit me the hardest. It was the first time I heard this family motto (here’s another one), which ended up shaping my life in many ways: “Just make sure you do it for your kids someday.”
At age 5, the comment struck me as odd, as I’d never before considered that I could have my own kids one day. But my father’s words were extremely intentional, and I picked up on that and held onto them for years.
Fast-forward to age 18: My parents were paying my college tuition, and when I thanked them, my father responded with the now very familiar motto—just as he did when I was 5. Of course, my family’s financial situation had changed over the course of 13 years, but my father’s marching orders remained the same. His legacy was defined. He created a culture of having a strong work ethic, believing in your true self, and humbly sacrificing all that you are to ensure the next generation is in a better situation than you. It has helped shape who I am as a man, husband, and father, and I’m forever thankful for my father’s natural leadership.
Don’t forget your living legacy
If you’re like most people, when you hear the phrase “legacy planning,” you probably think about how you’ll pass your assets to your heirs. However, whether you realize it or not, you also have a legacy that you’re imparting right now; I call this your “living legacy.”
Your opportunities to pass on a living legacy are endless; I’ve presented some ideas below, some of which are inspired by a recent Vanguard advisor symposium I attended called “Yesterday, Today, Tomorrow.” This is by no means a comprehensive list, but my hope is that these topics get you thinking and drive you to be intentional (which may include engaging with certain professionals to get advice on what’s best for you and your family). And while some of these actions may have a financial impact, I’ll argue that what’s more important is the life impact you can have.
Teach loved ones about finances and share your mistakes
Talking about money is often taboo. It’s a private topic that doesn’t get much dialogue beyond basic budgeting and saving practices. While those are important, what’s missing is transparency—elderly family members being open about how they’ve handled their investments, both the positive and the negative.
To get the conversation started, here are several basic questions you can answer for your loved ones:
- What financial mistakes have you made? How did you correct them? How did they impact you?
- What investment successes have you had?
- How have you navigated different market environments?
- What are your core investing considerations (for example, asset allocation, diversification, costs)?
- If you partner with a financial planner, how do you select the right one for you and where do you find value in the relationship?
The goal is to pass along valuable knowledge and help prevent others from making the same mistakes you’ve made. Focus on those whom you’re closest with, as the opportunity to share your experiences will likely come up naturally. And once you’ve started the conversation, use resources to keep it going.
Be a role model for how to enjoy your savings
Wait! Legacy planning means you don’t spend extra money and pass everything you can on to your heirs, right? Not necessarily.
Consider this case: Andy and Ann worked long, hard days for over 40 years. They’d always talked about their American dream: having an exciting retirement. But when they retired, they didn’t make the time to do everything they’d planned. And while Andy and Ann’s children were critical of their idleness, their children’s own retirement years were looking eerily similar, as they repeated what was modeled for them. Don’t let this play out in your family.
Here’s how to be balanced:
- Start with some budgeting to understand your nondiscretionary expenses.
- Make a commitment to fulfill some of your dreams.
- Enjoy your life savings while ensuring you stay disciplined.
Demonstrate the benefits of a healthy lifestyle
We all know consistent activity has many physical, emotional, and cognitive benefits. And eating a balanced diet promotes overall health. But I’m not naive enough to believe we have full control of our health (case in point: I have asthma). Despite that, doing what you can to stay healthy will likely contribute to better management of your health care costs throughout your lifetime, which is great for you. But helping others do it too is even better. Plus, it’s much more fun to exercise and eat with someone else!
So get creative:
- Invite your children/grandchildren for a walk around the neighborhood, no matter how young they may be.
- Have your neighbors over for dinner and make them a healthy meal.
- Focus on “breaking the cycle” if exercising and eating healthy are new to you. And partner with a couple of friends so you can hold each other accountable.
Sure, improving your health could help your wallet, but more importantly, it can enhance your lifestyle.
Encourage others to stand for a cause they believe in
Some of my most cherished memories with our family aren’t our vacations or Christmas morning but, rather, when we’ve had the opportunity to serve others.
I have a vivid memory of my young children on their tippy-toes reaching for cans of vegetables when we were buying goods for a food drive. My daughter and I looked really silly wearing hairnets when we packed meals for families in another country this past fall. A few years ago when one of my kids was cleaning his room, he said, “Dad, why don’t we give some of our toys to kids that don’t have any?” Creating a culture of giving and serving is life-changing for everyone involved.
Impact others by:
- Getting your neighbors together to do yard work for those on your block who can’t do it themselves.
- Finding a cause that your family is passionate about and serving together through an organization.
There’s also a potential financial planning benefit. I truly believe when you serve or contribute to a cause, you gain additional life perspective. That perspective will remind you of the true priorities in life, and you’ll likely realize that your investment portfolio isn’t at the top of the list. (And this coming from a financial planner!) I believe you’ll then be less likely to worry about your portfolio day to day and more likely to stay focused on a long-term plan.
Give during your lifetime and watch people enjoy it
Leaving assets to loved ones upon your death is the traditional way to pass on a financial legacy. But if you’re able to, giving during your lifetime allows you to witness the joy and impact you bring to others. Speak with your tax advisor and estate planning attorney to determine what’s right for you, but here are some ideas:
- Surprise someone. The annual gift tax exclusion is $15,000 in 2019. This allows you to give a nice surprise to a loved one or maybe help someone in need during a difficult time.
- Pay someone’s college tuition or medical bills. The IRS allows you to pay tuition directly to a college or pay medical bills directly to an institution without treating the payments as taxable gifts. College is expensive, as is health care, so what a great way to alleviate someone’s financial stress!
- Make charitable contributions. Giving financially to organizations you believe in is another way you can have a big impact. Donating outright is one option; leveraging a trust or other charitable giving strategies is another method. Also, find a way to involve your loved ones so they get into the practice of giving and can experience firsthand the joy of providing for others.
So what will your living legacy to be?
What do you want your children, grandchildren, friends, neighbors, and co-workers to remember you for? Equally as important: How do you want to impact the lives of others forever? Again, my list is just a start. If you have other ideas or simply want to share your story, please reply in the comments below.
- All investing is subject to risk, including the possible loss of the money you invest.
- Please consult an independent tax or financial advisor for specific advice about your individual situation.