26 February 2021
Matthew Barrovecchio
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Your Legacy Is More Than Just Your Portfolio
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I’ve never been to Disney World. WhenI was younger, we simply couldn’t afford it. It never seemed to bother methough because I had something much more valuable: cookies.

My father used to get cookies at adiscount. When I was 5 years old, they became the treat of my life. I have avivid memory of him walking through the door with a box full of cookies, and Iremember being so excited and thanking him profusely. However, amidst myexuberance, his response is what hit me the hardest. It was the first time Iheard this family motto (here’sanother 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 asodd, as I’d never before considered that I could have my own kids one day. Butmy father’s words were extremely intentional, and I picked up on that and heldonto them for years.

Fast-forward to age 18: My parentswere paying my college tuition, and when I thanked them, my father respondedwith the now very familiar motto—just as he did when I was 5. Of course, myfamily’s financial situation had changed over the course of 13 years, but myfather’s marching orders remained the same. His legacy was defined. He createda culture of having a strong work ethic, believing in your true self, andhumbly sacrificing all that you are to ensure the next generation is in abetter situation than you. It has helped shape who I am as a man, husband, andfather, and I’m forever thankful for my father’s natural leadership.

Don’t forget your living legacy 

If you’re likemost people, when you hear the phrase “legacy planning,” you probably thinkabout how you’ll pass your assets to your heirs. However, whether you realizeit or not, you also have a legacy that you’re imparting right now; Icall this your “living legacy.”

Youropportunities to pass on a living legacy are endless; I’ve presented some ideasbelow, some of which are inspired by a recent Vanguard advisor symposium Iattended called “Yesterday, Today, Tomorrow.” This is by no means acomprehensive list, but my hope is that these topics get you thinking and driveyou to be intentional (which may include engaging with certain professionals toget advice on what’s best for you and your family). And while some of theseactions may have a financial impact, I’ll argue that what’s more important isthe life impact you can have.  

Teach lovedones about finances and share your mistakes 

Talking aboutmoney is often taboo. It’s a private topic that doesn’t get much dialoguebeyond basic budgeting and saving practices. While those are important, what’smissing is transparency—elderly family members being open about how they’vehandled their investments, both the positive and the negative.

To get theconversation started, here are several basic questions you can answer for yourloved 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 topass along valuable knowledge and help prevent others from making the samemistakes you’ve made. Focus on those whom you’re closest with, as theopportunity to share your experiences will likely come up naturally. And onceyou’ve started the conversation, use resourcesto keep it going.

Be a role model for how to enjoy your savings 

Wait! Legacyplanning means you don’t spend extra money and pass everything you can on toyour heirs, right? Not necessarily.

Consider thiscase: Andy and Ann worked long, hard days for over 40 years. They’d alwaystalked about their American dream: having an exciting retirement. Butwhen 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, theirchildren’s own retirement years were looking eerily similar, as they repeatedwhat was modeled for them. Don’t let this play out in your family.

Here’s how tobe 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 knowconsistent activity has many physical, emotional, and cognitive benefits. Andeating a balanced diet promotes overall health. But I’m not naive enough tobelieve 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 tobetter management of your health care costs throughout your lifetime, which isgreat for you. But helping others do it too is even better. Plus, it’s muchmore fun to exercise and eat with someone else!

So getcreative:

  • 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, improvingyour health could help your wallet, but more importantly, it can enhance yourlifestyle.

Encourageothers to stand for a cause they believe in 

Some of my mostcherished memories with our family aren’t our vacations or Christmas morningbut, rather, when we’ve had the opportunity to serve others.

I have a vividmemory of my young children on their tippy-toes reaching for cans of vegetableswhen we were buying goods for a food drive. My daughter and I looked reallysilly wearing hairnets when we packed meals for families in another countrythis past fall. A few years ago when one of my kids was cleaning his room, hesaid, “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 everyoneinvolved.

Impact othersby:

  • 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 apotential financial planning benefit. I truly believe when you serve orcontribute to a cause, you gain additional life perspective. That perspectivewill remind you of the true priorities in life, and you’ll likely realize thatyour investment portfolio isn’t at the top of the list. (And this coming from afinancial planner!) I believe you’ll then be less likely to worry about yourportfolio day to day and more likely to stay focused on a long-term plan.

Give duringyour lifetime and watch people enjoy it 

Leaving assetsto loved ones upon your death is the traditional way to pass on a financiallegacy. But if you’re able to, giving during your lifetime allows you towitness the joy and impact you bring to others. Speak with your tax advisor andestate planning attorney to determine what’s right for you, but here are someideas:

  • 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 willyour living legacy to be? 

What do youwant your children, grandchildren, friends, neighbors, and co-workers toremember you for? Equally as important: How do you want to impact the lives ofothers forever? Again, my list is just a start. If you have other ideas orsimply want to share your story, please reply in the comments below.

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