Prof G Markets: How Scott Navigates Money with His Family

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0:55Support for this show comes from strawberry.me. Be honest. Are you happy with your job or are you stuck in one you've outgrown? or never wanted in the first place? Sure, you can probably list the reasons for staying, but are they actually just excuses for not leaving? Let a career coach from strawberry.me help you get unstuck. Discover the benefits of having a dedicated career coach in your corner. Go to strawberry.me slash unstuck to claim a special offer. This week's number, 400. That's how many people applied to adopt Pepper, a foul-mouthed parrot, from a Niagara Falls animal shelter. True story, Ed.

1:36The Pope has said that pets should not replace children. I guess he doesn't want priests practicing bestiality.

1:54Welcome to Prop G Markets. Ed, what's going on? Is that too much, Ed? Is that too much? On point, as always. There you go. There you go. What was my other pet joke? Oh, supposedly one-third of people let their pets sleep in their bed with them, so I gave it a try and the goldfish died. That's good too, right? That's good. If I could just weave in goldfish and pedophilia, I could have it all. I could have it all. Welcome to Prop G Markets. Ed, what is going on today? We're going to talk about money as always, Scott, but this time we're going to focus on a specific topic that we get a lot of questions about, and that is how to deal with money when it comes to family.

2:33So I'm going to run through a series of questions about how you think about money when it comes to your own family, and hopefully we'll get some advice for our listeners. Does that sound good? Sounds good. So you have a famous piece of advice, which is that the most important financial decision that you'll make is who you partner with. So I just want to focus on partners for the beginning of this. How did you know that you and your partner were aligned financially? Well, it's not easy to sort of have that conversation with your young because you're not entirely sure you understand each of your approach to spending.

3:06You get a sense for it. A lot of it just comes down to what sort of turns you on. I've always been very attracted to women who were exceptionally competent. My current partner worked at Goldman Sachs, has an MBA, has always made a lot of money. And I just find that sexy, not so much that they make money, which is obviously very helpful. You know, two incomes are just so powerful relative to one. But I've always just been drawn to people who are really competent. My girlfriend before her was a surgeon. And my first wife also had an MBA and was the COO of a retailer. So that shit just works for me.

3:45And I think it's an individual thing. I got very lucky that way. And that is I chose partners who were really financially viable, not because I was thinking about money, but because I just personally find that very attractive. And do you have conversations with your partner? Have you always had conversations with your partners about money and about your financial goals? Yeah. Although in the beginning, we didn't really have a lot of conversations. It was just with my first wife. It was just like we're both working so hard. And she had sort of these Midwestern values. I've always spent more than my partners.

4:16I don't know if it was purposeful, but I've always found partners that are fairly, not frugal, but really responsible with money. And I'm always the one like, no, let's buy the Range Rover. You only live once. And I've never gone into debt. But I've always been a spender, and usually my partner is sort of more of a saver, or not even a saver, but less of a risk taker. If it were up to my partner, we would have Krugerrands buried in the backyard. And maybe buying, like, risk for her is buying Deutsche Bonds that yield 1.5%. And I'm like, no, it's this great new technology that sends pets into space.

4:51It's a no-brainer. Um, what I will say is, and I think this is really important or the approach I have tried to take. And this is a story of privilege because I've always had more money or most almost always made more money than I was spending. one of the really wonderful things I really value about my relationship is that I encourage my wife to spend money. I want her to enjoy the money. I want her to live life. And I'm the one, she'll call me and say, hey, I'm looking at this. And she calls me because she doesn't like to buy expensive things for herself. And she knows I'm going to say, yes, go for it.

5:32I'm a conduit for happiness. And that is, I'm never that happy myself, but the way I register joy is when other people are happy. So I've always really enjoyed if money can buy people happiness in my family, I want them to indulge and engage in that. But that is one part of my life that has always been really positive. What's your approach to sharing with your partner, like sharing assets? To what extent is it two financial lives versus one merged together for you? Well, I think it's individual. I think some people, especially later in life, who come to the table with pre-existing assets want to keep their assets sequestered from each other.

6:14I get that. But in all of my relationships, including this one, I've been in this current relationship for over 20 years. I didn't really have any money when I met my current partner. I mean, it's really rewarding to build economic security is rewarding, but what's incredibly rewarding is to build it with someone else. It's just fun. You just feel like you're building something. And if you buy your house together and you make money and you can build a nice life together that includes economic security, it's just so much rewarding than building it on your own. It's almost like it doesn't really happen.

6:47I love investing with other people. That way, if the investment goes well, you both celebrate it and it's just so much more fun. I've never had separate accounts. even when I wasn't married to my ex-wife when we were just living together. I'm like, what's mine is yours. We had one checking account. We didn't track who was spending what. We both had similar approaches to money. We were both responsible. We were both making money. I have never checked my partner's credit card bills. I've never done any of that. And again, a lot of that is because we had the luxury of having a decent amount of money.

7:22This stuff is so important because they say the majority of divorces are a function of economic stress. And that is just one stress. I've had stress economically, but it has never been injected into my relationships. What kinds of economic decisions do you think should be made together? I mean, it sounds like when your wife calls you and she wants to buy something expensive, she's kind of asking for permission to make the economic decision together in a way. I mean, which, Where's your line on when you got to call the partner? Yeah, the dynamic is a little unusual there because here's the thing.

7:59She doesn't need to call me. She doesn't need my permission. What she is doing is she wants me to validate it because she has trouble spending that kind of money on herself. And she knows, she knows what I'm gonna say, which is the following. You should absolutely buy it. Oh my God,$38 ,000 for a pair of antique earrings. That is such a great value. you, it would be economically irresponsible of you not to buy it. For the well-being of our family, I need you to buy those earrings. She knows I'm going to say something similar to that. And it makes her feel better about buying it. Again, see above, very privileged.

8:36Well, let's throw out a hypothetical for you then. You want to buy a car. Not a crazy sports car, but a car. Is that a shared decision? No, if it's something over a few hundred thousand, we're renovating a house and she'll talk to me about decisions and what it's going to cost. So we share a discussion and it's not permission, but it's joint decision making to try and make sure wisdom of crowds around spending big ticket purchases, buying a house or renovating a house or big purchases. We talk about that stuff. I mean, I make big investment decisions that are multimillion dollar decisions without her permission.

9:12What we do on money, though, is because I manage the investments, is that on a regular basis, I tell her where we are. And that is I'll sit down with her probably every three or it's probably every six months and I'll say, this is how much money we have. I have, I don't know, 25 investments. And I'll say, this is how they're all doing. And I try to give it to her very sober and very straight. Last week, I think I told you two weeks ago, I had an investment, a$5 million investment go to zero. And the next day I just said, oh, FYI, do you remember that healthcare text messaging company. I'm like, it went to zero.

9:43And, you know, and immediately she said, that's it. No more sex for you for the rest of the year, Mr. Fucking idiot ruining our economic security. But I think what strains relationships is obviously economics, but I think what ruins them is surprises. And so I always want my partner to know where we are economically. And I'm, look, I'm good at money. And so she outsources that part of our life to me and pretty much she does almost everything else. but around investments and maintaining kind of top line wealth and wealth decisions. I make those decisions, but on the big ones, I check in with her.

10:20This is what I'm thinking. This is what we're investing in. And I just want her to know what's going on. I don't want her to ever feel surprised. I don't want her to feel like she's reading the markets are up 30%, but our wealth got cut because of our investments are down. I never want her to be surprised. So I tell her exactly. I always, I would say, have a little bit of a, I kind of give it to her a little bit, I don't know, worse than what it is, but I'm very quick to tell her about the losses and not as quick to tell her about the wins. I mean, I eventually do, but the key is you never want your partner to be as surprised about this.

10:53I mean, losing money is bad. What's worse is surprises. Yeah. It sounds like you don't have much stress around the economics in your relationship. One, because you have money. I think that's an important point. But two, it sounds like there's just generally a high level of trust. So you don't have to be tracking stuff because you just trust that the other person is going to make the right decision. Would you say that's sort of the key? I just think you need to be cognizant of what your partner or potential partner's approach to money is. A, if and what will their contribution be on both sides?

11:29What economic weight class do you expect to be in? Who's responsible for maintaining that economic weight class? And what is your approach, each of your approach to spending? Just some very basic general questions ask yourself and each other. And also have an honest talk about, all right, we live in Chicago. This is probably what it's going to cost to live. This is how much money I'm going to make. How much money do you think you're going to make? Are you planning to make money? Because you just need to get some sort of alignment. And then I think where you need real alignment with your partner in a very open conversation is when things go awry.

12:08When you have economic stress, maybe it's a healthcare costs or one of your parents gets sick and you have to come up with money, one of you gets laid off, whatever it might be, but you end up with economic hardship, then you need to really be transparent and sit down and get alignment and have some difficult conversations around what's required to rebuild as a team. We'll be right back.

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15:34We're back with ProfG Markets. Let's talk about parents. Do you think people should feel a responsibility to provide for their parents once they start making money? I don't know if they should. I know I always did. You know, my dad had such an unhealthy relationship. My dad loves me more than my sister because I make more money than her. My dad has such a fucked up relationship with money. He grew up in Scotland during the Depression in an era where if you didn't have money, you could literally starve. And he just has such an unhealthy relationship to money. And it was always a constant source of stress for him, his approach to it.

16:12It scarred me. If I can't pay for everyone when I go out, I won't go out. When I was younger, if I couldn't pay for everybody, not that I was expected to, but my dad was so cheap that I went the other way. And I was one, I just wouldn't go out unless I felt like I could pay for everybody. Anyways, that's a different talk show. But I take care of my dad financially now. It cost me a shit ton of money. I spent about, I think about$250 ,000 or$300 ,000 post-tax taking care of my father, having him in a home, having a full-time health aide. I helped out my mom, but I was in a position to, and it felt really nice.

16:50It felt really good to be able to do that. So what I would say is that, you know, hopefully you have siblings. Hopefully your parents are economically responsible and saved enough money. But yeah, I think the definition of family is you take an emotionally and financially invested, you're invested in their success and their well-being. And so ideally, you and your siblings get together and figure out a way that your parents are comfortable. What's been really wonderful in terms of like, for example, my father's, there's different ways to contribute. My father's kind of needed a lot of care or financial care over the last 10 years as he's gotten older and divorced for his fourth time.

17:37I have the money to do it, but my sister handles all of the logistics and hiring and firing of the nurses and negotiating with the facility he's at. And to be honest, my part's the easy part. I pay for it all because I make more money than my sister, but I see that as the easy part. She has to get on the phone with these folks and figure out if they're going to have a full-time nurse, what the hours are. It's been a great partnership. I'm really grateful that me and my sister are really aligned around this. But yeah, every family's different. But if you're in a position to help your parents, why wouldn't you?

18:14It feels good. It feels right. It feels natural. Do you take care of your sister financially? No, I don't take care of her. Her and her husband are really successful professionally. What I do is just because it's fun is occasionally I help out with things like the kids school or something like that. More just because it makes me feel good, but they don't really need it. But it's something I really enjoy and I want a really nice relationship with my niece and nephew. And I just love the idea of them finding out at some point that, you know, I helped out with their school. I do it just as a means of hoping that it'll strengthen my relationship with them when they're adults.

18:48Do you think people should kind of factor that in when it comes to economic planning? I mean, you talked about planning with your partner. How much do we intend to make? What are our goals? Do you think people should be thinking, and this is how much I want to be providing for my family? This is how much I want to have stowed away to take care of my parents when they're old, et cetera. No, I think that because at the end of the day, your ability to do that is going to be based on how much money you have. And so I think you should just be focused on, you know, what we talk about, the algebra of wealth, finding something you're good at, doubling down on it, becoming great at it, which will give you economic currency in the marketplace, trying to spend less than you make, invest that money, develop an army of capital you can deploy.

19:33recognize time's going to go faster than you think and then diversify such that you're in a position to be generous with your family and extended family. So you need to affix your own oxygen mass first. And when you're young, your parents probably aren't sick and don't need help. You don't have kids to take care of. That's the time to develop that savings muscle and that professional currency and put yourself on a path to financial security. Let me flip the question back to you, Ed. You have parents. You're making good money, but you're not wealthy. What's your approach and your thinking around helping out your parents and your approach to saving for that, is that something you're actively thinking about?

20:08Both of my parents are fine. So I don't, I don't, I'm not worried about them from that aspect. But I think the thing that you mentioned with your sister, the fact that your sister is doing the hard work, getting on the phone, figuring out where they should be staying, how to take care of them. Those are things that I have been thinking about progressively a little bit more. I mean, my granddad is very sick at the moment. I'm about to go visit him this weekend. And I've been seeing this play out in real time of just the responsibility of everyone. It suddenly kicks in at that point when you suddenly realize that life is finite, and everyone suddenly gets their act together and starts thinking, okay, how do I pay it back?

20:52I guess I just asked the economic planning question because I'm only just now thinking of that. I'm only now seeing it because I see death around the corner. And now I'm thinking, oh, should I get my act together right now? I'm not necessarily sure how I can. When you say act together, what do you mean? Do I need to be planning such that I can provide for my parents? Do I need to be making sure that I'm taking care of them too? which, you know, my parents have always taken care of me. So I guess there's a moment where you start thinking that the script should be flipped. It feels like for you, when your mom got really sick, that was that moment.

21:33Yeah, and it happened at about exactly her age. My mom first got diagnosed with cancer when I was exactly your age. And it was a real wake-up call for me because we had economic stress and I couldn't take care of her. and she ended up with shitty healthcare. And it was just like hugely emasculating and frustrating and humiliating, quite frankly. I was in graduate school and I think I've told this story. She got discharged from the hospital early, having gone through batteries of chemo and a mastectomy. And she was at home and called me and I had to rush home. And it was just such an ugly scene that I walked into.

22:07And I started calling around to get a nurse and nurses were$35 an hour and we didn't have that money and I just didn't know what to do. But you're thinking about it exactly the right way. You're thinking, hey, you're just thinking about it. But the way you address that is that you're smart and you're doing all the right things. You're working hard. I get the sense you're saving. You're trying to invest. Most people don't invest at your age and you're working hard and trying to establish professional relevance. So that, quite frankly, with your parents, money kind of solves not all problems, but most of them.

22:39If you have enough money, as long as one, do you have siblings? You have siblings, right? Yeah, I have two sisters. Between the three of you, especially if you have a good relationship with them, and they're like-minded and generous around and feel obligated to pitch in and help with your parents, one of you might be wealthier than the other two and be able to help more with money. One might have a better relationship and be able to spend more time with your parents because they just get along with them better or have more time. And one might hopefully have their shit together logistically and be able to kind of handle and negotiate stuff that, you know, there's the money part.

23:12But the thing that's, I think, been rougher that my sister's had to deal with is there's just so many decisions to be made every day. And not only that, sometimes your parents aren't cooperating, right? They don't want to leave their house and move into an assisted living facility. My dad starts leaving the facility and taking walks and no one knows where he is. And I have to like, you know, call him and try and get through to him and tell him he's not allowed to leave the facility. I mean, and, you know, and meanwhile, he thinks I'm his brother, not his son. So, you know, this stuff gets complicated fast.