Financial challenges might seem astounding given her talent, reputation and popularity. Generous to a fault, Franklin’s lifetime habit was to spend or give away all that came in, never making provision for the future. When big expenses arose, such as unpaid tax bills or medical care for her father, who was in a coma for many years, she would return to work to pay off her debts.
While few of us will be blessed with the sublime talent and earning potential of Aretha Franklin, many of us will fall into similar money traps. Here are some unhelpful money habits we might have in common with her and what to do about them.
Inability to trust
Franklin carried a purse stuffed with cash everywhere, even on stage, as she found it hard to trust anyone with money. While it can be challenging to know who to trust, some of the signs to look for in an adviser, are their willingness to openly discuss risk, transparency about their fees and their commitment to educating you rather than just wanting to make decisions for you. Getting references from an adviser’s existing clients is a great place to start. A terrific tool providing third party validation of an adviser is The Most Trusted Adviser Network , which lists some of the best advisers in Australia as rated by their clients.
Franklin’s sister recalls visiting her home and finding a $20,000 royalty cheque among books and litter, completely forgotten. While she struggled to trust others with money, Franklin lacked a system to manage it herself. Increasingly there are terrific, inexpensive programs such as Pocketsmith that are easy to set up and give you the tools to see your real time net worth in one place, in addition to keeping track of income and expenses. There is a classic management saying that you “can’t manage what you can’t measure” and having good, clear data about your financial position allows you to feel in control of your own decisions.
Embarrassed by lack of knowledge
Many high achievers like Franklin feel embarrassed they are world class in their chosen domain, but lack expertise in their finances. The fear of looking foolish stops them from seeking help and costs them dearly by making sub-optimal decisions. Ironically research shows that asking for help actually makes you appear more competent and many of the world’s best investors have flourished as a result of their being unafraid of looking foolish in front of others. The next time you feel out of your depth financially, consider that the greater your willingness to ask a ‘stupid’ question, the more alike you are with the best investors, like Warren Buffett.
Failure to plan for the future
In the days since her passing, it emerged that Aretha failed to leave a valid will, opening her estate to the prospect of legal dispute. None of us like to think too much about our own demise, however failure to plan for the future can have devastating consequences for those we love. Putting in place a good estate plan can be one of the most valuable gifts we can leave to those closest to us, regardless of the quantum of our assets.
While work fulfils many needs beyond providing an income, Franklin’s biography postulates that her self-made money troubles were a subconscious motivator to keep working. If this is the case, we can be grateful that this financial impetus may have been responsible for some of her fabulous performances. However, we can also learn from her experience and get the help we need to ensure the more we work, the more we build a nest egg that facilitates genuine financial freedom.
Article by Catherine Robson. Published by The Sydney Morning Herald, August 24, 2018.