By Jaimie M. Blackman, M.S.Ed., CWS
Welcome music retailers and MI suppliers to part one of a three-part series exploring the technical and emotional roadblocks for conducting effective money conversations, key to successfully building and selling your business.
Let it be known that I come with a bias; I was previously a music educator and owned an MI store. My name is Jaimie Blackman and today, with more than 15 years’ experience as a financial life planner and wealth manager, I created an “artful” way to talk about money using ample music metaphors to help you learn quickly. Whether you are a music maker or music lover, music has much to teach us about money. Because I capsulized dozens of issues of wealth down to seven, I call this language of money, MoneyCapsules.
And since many of you are familiar with the language of music, learning to use the MoneyCapsules tool will help you learn how to speak the language of money while making sure your financial decisions are in tune with your personal values. Kind of like using a guitar tuner – green, you’re in tune; red, you’re not.
This language of money will work equally well with your spouse, children, or team of financial professionals. Whether you just opened up your first MI business or you are devising your succession plan, staying in control of your financial conversation will make sure everyone is singing from the same page. And while having a written personal financial plan or succession plan for your business is the best place to start, it is only the start. Being able to engage in effective real-time conversations separates those who will succeed and those who will fail.
Often under great duress, business owners have to make fast, irreversible decisions. It’s best to heed the advice of former heavyweight champion Mike Tyson: “Everyone has a plan until they get punched in the mouth.” Being able to ask good questions at the right time requires confidence and language skills. Often there is no time to check with your “plan.” What’s the solution? Learn the language of money.
ORGANIZE – Turning Chaos Into Harmony
“When you know the notes to sing, you can sing most anything.” – From the song “Do-Re-Mi,” The Sound of Music
A great deal of music that sounds very different on the surface is organized using the seven-note scale, which makes up the building blocks of music. Many of you learned the names of these seven notes in school – Do-Re-Mi-Fa-So-La-Ti. Knowing these seven notes, instrumentalists and singers can create an infinite variety of music, which may include all music styles such as jazz, rock, classical, or pop. These seven notes reveal a deeper meaning of music and they exist in dynamic relationship with each other to create a beautiful melody, a sweet harmony, or a hot, burning rhythm. Knowing these seven key notes helps us to better engage in musical conversations, which ultimately leads to greater musical understanding, an ability to share, and a refinement of our music-listening choices for greater listening pleasure.
Similarly, whatever type of financial decision you are struggling with, whether it is saving for retirement, funding college for a grandchild, or ensuring funding for long-term care for yourself or your parents, it might surprise you that financial decisions that sound very different from each other on the surface are in fact organized using the same seven financial notes.
How do people orchestrate the large quantity of financial combinations into sound financial decisions? In three simple steps: Organize, Understand, and Decide.
Music is organized sound. Organization is key because without it, music is just noise. A guitarist organizes all the potential sound combinations through a system of scales, arpeggios, and chords that are used to rearrange the sound palette. Now think about your financial life. Is it organized? Does it sound like music, or more like a cacophony?
Sound financial decisions happen when your financial life is organized. To help people organize the many different aspects of their financial lives, I have encapsulated key issues of wealth into what I call MoneyCapsules. Instead of Do-Re-Mi-Fa-So-La-Ti, we use Values-Cash-Return-Tax-Risk-Time-Giving. These seven MoneyCapsules help organize our finances the way the scale system helps organize the billions of potential sound combinations into music. The process creates a capsule for each of these financial notes. Let’s define each one:
Value defines what’s most important to you. Values-based decisions make for a more meaningful life. What is most important to you now? Why? What do you need clarity on?
Cash is the lifeblood of your financial health. A healthy financial life requires that cash flow and cash reserve are properly balanced. Consider asking questions on how your specific life theme will affect cash.
It’s important to consider the total return on all your investments. Return is where you discover what matters most to you over the short or long term and how market volatility affects your behaviour. Consider asking questions on how your specific life theme will affect the return on all your investments.
The preservation of family wealth requires an integrated approach to managing taxes. Consider asking questions on how your specific life theme will impact your tax bite.
Knowing when to self-manage or transfer unexpected life challenges to an insurance company is essential for good financial health. Consider asking questions on how your specific life theme will affect risk.
Time is the one resource that can never be replaced. Managing timebased goals and anticipated events effectively is important. Consider asking questions on how your specific life theme will affect your time horizon.
Giving and receiving are powerful forces in our lives. Transferring wealth and values as part of a legacy is at the heart of giving. Consider asking questions on how your specific life theme will affect giving.
Here’s how some of these words could be useful during a money conversation:
- What are the things you value most?
- Financial security?
- Retiring early?
- Putting your kids through college?
- How is your cash flow organized to help you understand it?
- Is your income in harmony with your expenses?
- What kind of return are you looking for on all your investments?
In part two, we will explore the importance of values-based understanding, which responds to the question: “Is my financial life in harmony with my values?” You’ll learn why anyone can become a financial virtuoso by understanding how the various parts of your financial life impact each other. In part three, we connect the dots by helping you learn how to make sound financial decisions for you and your business.
Each person’s unique set of values – like the musician’s musical preferences – should determine how and why they use their finances. A healthy financial life emerges when all of our financial decisions are a direct outflow of the things we value most.
For example, if you prioritize giving, you will choose to share your wealth in a generous way and perhaps get involved in philanthropic projects while someone who values a comfortable retirement and providing a legacy for their family may seek to maximize and build their wealth to ensure a financially secure future. An individual’s financial decisions should reflect their values, just as a musician’s musical style will reflect the way their instrument is played.
When you listen to music, you react to it emotionally. But underlying that music there is structure, and knowing that structure increases your listening pleasure. The seven MoneyCapsules take your needs and translate them into a solid structure helping you communicate your financial self with confidence and clarity.
So what does your financial life sound like – music, or haphazard noise? Perhaps it’s time to Organize, Understand, and Decide.
Jaimie Blackman is the President of BH Wealth Management and Creator of MoneyCapsules®. Jaimie’s team offers solutions to help guide music retailers and manufacturers through the complexities of succession planning. To subscribe to Jaimie’s newsletter, Succession Success, visit moneycapsules.com.