Under the Affluence

If the two couples take enough time to talk about all this (possibly more than once), they will come to understand each other's desires and limits. Moreover, by slowly inoculating his parents against their fears of new pleasure, the son may eventually find a way for them to accept at least some of his well-meant gifts.

My client's 7-year-old daughter recently asked him if they were as rich as the family of a classmate. He's wondering how to explain the concept of being wealthy in a way that doesn't lead to comparisons. Any ideas? I would not encourage this father to waffle on whether his family is more or less affluent than the classmate's family. First of all, I don't think it's possible to avoid comparisons. Second, dealing with the issue head-on will only help his daughter.

If his family is wealthier than most others, he needs to tell her that they are fortunate to be in that position. He may want to explain how they came to have the money ("We inherited it from Grandpa, who used to have a store" or "Mom and I worked very hard and saved as much as we could"). I think he should also urge his daughter to be kind and sensitive to her friends' feelings by not bragging about how many birthday presents she got or how much her new shoes cost.

This can also become an opportunity to help the girl understand that it's important to respect everyone, whether they have a lot of money or a little. Many jobs that are very important and useful don't pay as much as others (teaching and nursing, for example). By turning the question of "Are we as rich as the Joneses?" into a lesson about pride and prejudice, and what money is and isn't, your client can not only help his daughter now but also open the door for further discussions in the future.

A college professor who will soon be retiring has come to me with an unusual request. She wants me to help her figure out how little money she will need so she can give away the rest. To begin with, she asked whether she should disclaim a real-estate inheritance because of the anticipated hassle of managing it. I'm all for people simplifying their lives, but this woman isn't as well-off as she thinks she is. Should I go along with her potentially risky plan? I don't think there's any need to shelve your professional judgment here. Your client's desire to contribute to society in a meaningful way is a legacy she wants to leave.

I would spend some time exploring her motivations, though. What does she want to accomplish? Does she yearn to make a real difference? Is she feeling guilty about something she did–or didn't do? What kind of charitable giving or volunteering has she done in the past? See if you can empathize with her decision to give away money she's unlikely to need.

Then discuss some ways she may be able to live on less and still take good care of herself. By examining various scenarios, she can reflect on how simple she wants her life to be, and how she can be most useful to the causes she wants to help.

As part of this conversation, you can address her question about the inheritance. You may think it would be wise for her to retain the real estate, either to provide more financial security or to serve as a potential charitable gift later on. She might consider hiring a property management firm to ease the administrative hassle.

When clients come to you wondering what they should do with their money, what would make their lives more meaningful, or even how much money is enough, help them identify the values and goals that are most important to them. Take time to explore their feelings and desires on the deepest level, so you can help them move from fantasies to goals that are grounded in reality.

Then, consider discussing the changes and sacrifices that may be needed in order to achieve these objectives. You might want to encourage them to "try on" their desires in incremental steps, instead of flinging themselves headlong into the unknown.

The more willing you are to hear them and put yourself in their shoes, the more likely they are to listen to your opinions, concerns, and suggestions. Then you can truly help them achieve some of their most cherished dreams, making yourself an irreplaceable resource in their lives.

Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of The Advisor's Guide to Money Psychology, available through www.investmentadvisor.com. You can e-mail Olivia at [email protected].