The Waste Of Abundance
Financial Planner Kevin Cork thinks money matters. He wouldn't have a job if it didn't. And he wants to help you invest for the future amidst the illusion of excess.
As a young teen, one of the comic strips that most stuck in my mind came out of the Calgary Herald one day, a Frank and Earnest (I think) that had the planet Mars looking at a sick Earth (complete with a thermometer stuck out of its mouth and a downcast look) and saying in sympathy: "Ohhh, you have such a bad case of peoples." This image pops into my mind each time I watch a re-run of "The Matrix" – which, to my wife's less-than-silent suffering is whenever I can – where Mr. Smith looks at Morpheus and says "You humans are a virus, a dis-ease."
One of my favourite parts of the movie is the speech pattern actor Hugo Weaving uses for Mr. Smith, so I was disappointed when he didn't use it for Elrond the Elf King from "Lord of the Rings." Now imagine how flashback-y, re-incorporatingly it would have been for Elrond to glare over at Aragorn and say "You humans are a virus, a disease." Anyway the humans-as-a-curse thing is kind of hard to shake if you ask a dodo, a quagga or gently, the Caspian tiger. I am sure coyotes still like us, and rats so...that's good, right?
As a financial planner, my job is to make sure clients are using their assets as efficiently as possible to help them realize their future plans and dreams. I spend a lot of time helping people think about their future, about making sure their assets are sustainable and economical. The terms "sustainable and economical" boil down to one key theme: not using up more than you can replace.
I am hampered in this pursuit by two core elements of human nature. One of the key enemies of sustainable and economical is excess, or, worse, the illusion of excess. People get caught up in this, financially, all the time. In a boom/bust town like Calgary, people head into a new year expecting their income to be at least what it was last year. If you received a $200,000 bonus last year and expect the same this year, dropping $40,000 on a fancy new ski boat that you will use three times a year does not seem to be such a big deal. If the bonus ends up being just $40,000 or, worse $0, then you are very quick to realize the ski boat was "excess-ive."
The other related element of human nature is our sense of relative worth. If you are buying a big screen TV for $3000 and you find out the same TV is being sold elsewhere for $2990, most will not bother to go get the cheaper one as it's "only $10." However, if you are buying a CD for $19.99 and you see it is on sale at another store for $9.99 most of us will make the trip to the other store as it is "half price!"
These two elements of human nature conspire with our North American desire for luxury and consumption to create a world that is very hard on our environment. Or, in financial terms, our current lifestyles are ringing up huge charges on our environmental credit card faster than we can pay it off, which means our kids will inherit our "debt." We see that today in debates about who is responsible for cleaning up land that was polluted 100 years ago. If it costs $22 Million, who foots that tab?
Why does a financial planner care about our environmental issues? Mostly, I have to admit, I do not. If a particular slug or rare "weed" (more on weeds next time) goes extinct, it will not impact most of my clients' retirement plans. However, if oil is $200 a barrel, water has to be rationed, pollution is causing mercury poisoning or cancer or a drought, that expensive Palm Springs retirement condo could drop 75 per cent in value. That WILL impact their financial plans by making retirement far more expensive, either because things they want to do cost more OR by forcing them to spend more on treating sickness and disease.
As a planner it would be irresponsible of me not to include inflation when I do a retirement projection. What a dollar buys now is going to need two or three or more dollars to buy in the future. Traditionally, a three per cent inflation rate is used as a figure averaged over the last forty years. But, looking forward, I wonder if I should not be adding an "environmental degradation premium" into the mix to reflect the cost compounding effect of shortages. No one can say that gasoline, for example, has only gone up three per cent a year for the last seven years. The actual number is 24.5 per cent per year!
We waste water, power, food, gas and land because we are used to having so much of it and many still live in this illusion of abundance left over from our immigrant forefathers. If you need 10 litres of water a day and have 10 million litres of river water flowing past your door, the concept of "water conservation" seems a huge waste of time. But if you are surrounded by a million people and EACH needs 10 litres a day, how long is that river going to last?
Next time, I want to talk about some incremental changes that I have seen or been introduced to by environmental experts. Some of these choices are going to cost more than we are used to spending on some things, meaning either you have less money to spend elsewhere ...OR, selfishly, you need to have a financial planner hired to make sure you have more money in the future than you do right now.
Written by Kevin Cork
Photography by Shane Yuhas
