Financial Lessons from Downton Abbey: Invest in What You Know

Financial Lessons Downton Abbey

Are you familiar with Downton Abbey? It is a TV series, set  in the fictional Yorkshire country estate of Downton Abbey, and it depicts the lives of the aristocratic Crawley family and their servants in the early 20th century, with the great events in history having an effect on their lives and on the British social hierarchy.

My wife and I have been hooked on it since we started watching it a few years back (it’s now in its 5th season). It is filled with great acting and great story lines.

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When the series starts, the servants seemed to be resigned to just being servants forever. But as time passes and British society is changing, some of them begin to think of different possibilities.

The Situation: Investing for the Future

In a recent episode, the topic of investing for the future came up. The head cook in the Abbey, Mrs. Patmore, receives an inheritance from a distant relative.

She wants some advice on how to put that windfall to work for her future. She asks Mr. Carson, the butler who is in charge of the entire service for the house.

As such, he is the overseer of all the servants and everyone looks up to him with respect.

Mr. Carson agrees to offer her some advice about investing. However, his information only comes from a brief conversation with Lord Grantham, the head of the family.

The family has been considering some renovations in the estate and he mentions a particular building company to Mr. Carson. Mr. Carson does not ask many questions about it, but he thinks he has enough to go back to Mrs. Patmore.

He tells her that investing in a building company would it be a good place for her money. But, as she asks questions, it is obvious Mr. Carson does not know much more of what he heard. He can’t even tell her if the company has gone public and it is open for investing.

Mrs. Patmore is not too comfortable with Mr. Carson’s advice. She eventually figures out a different option for her investing.

She decides to purchase a property that she could rent now, and then later it could serve both as a retirement home and also as a guest house which could generate some income.

When she conveys her decision to Mr. Carson, he is a bit disappointed that his advice is not taken to the letter. He says this option is just “very small beer”.

However, Mrs. Patmore explains that she is thankful for the advice. But she has to invest in something she understands. The way she puts it I think is brilliant: “It’s my kind of beer and I know how to drink it.

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The Lesson: Invest in What You Know

There are some great lessons we can learn from Mrs. Patmore and her investment decision.

First, it is good to think and plan for the future. Mrs. Patmore was thinking ahead to the day she would no longer work at the Abbey.

You may be just concerned with the day to day operations of your household, but planning for the future should always be part of your financial plan.

Second, when it is time to invest your money, asking for advice it is always a good thing. Mrs. Patmore looked for advice from Mr. Carson, someone she respected.

Ask for advice from trusted friends and professionals and gather as much information as you can.

Third, invest only in what you understand. Mrs. Patmore understood food service and lodging, so she was comfortable in dealing with that and not with investing in the market directly.

You need to invest, not because someone on TV said so or because some family member told you about it.

You need to understand the investment vehicle well enough, so you can explain it to someone.

Of course, learning more about that particular type of investing is always an option so you can invest in it later. So maybe it is not right for you today, but down the road once you know more it could be an option for you.

Finally, and perhaps more important than anything. It is your money so it is your decision. Mr. Carson was not too happy with Mrs. Patmore’s decision.

But here is the thing: It was her money and not his money.

As you gather information and ponder your options, not everyone is going to agree. But you are in control of your financial destiny.

So have the courage to make your own decisions. At the end of the day, we are talking about your financial destiny.

Cast your bread on the surface of the waters, for you will find it after many days.
Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
Ecclesiastes 11:1-2

Keep on Running: Don’t Give Up on Your Financial Goals

Keep on Running: Don’t Give Up on Your Financial GoalsHow do you feel when you hit a goal you have set for yourself? It’s amazing, isn’t?

One of my goals for this year was to lose weight and get in better physical shape.

As I get older (47 years old now), I know I have to take better care of myself.

But I also added another goal this year: to complete my first 5K (3.1 miles) race.

Now, if you know one thing about me, it’s that I don’t run anywhere.

I had not run for anything since I played basketball in High School and we would run up and down that court.

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But last night, I did run in and completed my first 5K. I am still on an extremely high note.

As I made that final turn for the finish line, I had a surge of energy I had not felt in years. I even beat the time I had set for myself as a target.

What about Your Financial Goals?

As we close down on this calendar year, what about your financial goals? How are you coming along?

I am assuming you set some financial goals for yourself this year. We all have a desire to manage our money better.

So as you consider where you are with your goals, let me give you some encouragement as we close on this year and prepare for the next.

Decide on your Goal

I set my sights on a 5K. Even though it is a modest distance by most standards, it was a tall order for me.

But I set my mind to do it. I wrote it down as one of my goals for this year.

For you, it may be simply to learn how to budget or finish your beginner’s emergency fund, or pay off that credit card.

Whatever your goal maybe, write it down.

Start taking Action

Once I decided on my goal, I had to actually do something about it. I had to start training.

First, I had to actually at least be able to walk 3.1 miles. Eventually, I added running in small spurts until I was able to run most of the distance. That’s what I did last night.

So when you look at your financial situation, once you decide to do something, go ahead and do something about it.

Prepare your first budget. Make a list of things you could sell in a garage sale to finish your emergency fund. Cut up your credit cards to remove the temptation to borrow more money.

You may need to read on the topic, you may need to ask someone for help, but do get started.

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Keep on Running

As I started running more and more, I kept gaining more and more confidence. I did a training run a couple of days before my race and I felt better than ever before.

So going into the race last night, I was ready. Consistency gave me the confidence to execute my plan to hit my goal.

I have to tell you that your first budget will not be perfect. You will hit some bumps on the road as you seek to pay off your debts. That’s life, but you have to keep at it.

You have to keep on running, because that’s the only way you win.

If I can run my first 5K at 47 years old, surely you can learn to win with your money.

Go for it!

“You can’t build a reputation on what you’re going to do.”
Henry Ford, American Industrialist

Frightful Finances?

Frightful FinancesAre you one of those people that really gets into the Halloween celebration?

You spend a lot of time deciding on your costume and you love to attend a Halloween party.

You might be one of those that fills the house with candy in preparation for all the trick or treat visitors.

On the other hand, you might be one of those people that looks forward to Halloween just so you can watch the all weekend horror movie marathons.

After all for you, watching Michael Myers, Jason, or good old Freddy Kruger never goes out of style.

Speaking about scary things, you might prefer to spend the night in a haunted house than 30 minutes looking at your budget for the next month or thinking about what will happen when you reach your retirement age.

And if you watch too much CNN or Fox News, you might conclude that winning with your finances is a terrifying and impossible proposition.

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But just like there is a way to deal with a werewolf or with a vampire, there is a way to deal with your frightful finances.

  • Afraid of not having enough money to cover your bills every month?
    • You need a plan for your money before you spend it.
    • Prepare a budget every month before the month begins.
    • You still have time for the month of November and it is easier than you think.
  • Afraid of all the consumer debt you have piled up?
    • Afraid of what new fees banks will create to take more of your money?
    • There is a way out of the bondage of debt.
    • You simply have to decide to live a different way.
  • Afraid of the next time the car breaks down or the furnace goes out?
    • You would not be afraid if you had 3 to 6 months of expenses saved away in an emergency fund.

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  • Afraid you wont’ have enough saved for retirement and that Social Security won’t be there?
    • There is a way for you take charge of your retirement.
    • You need to be saving 15% of your household income into retirement every month.
    • Of course, that’s a lot easier when you have a budget that works and your money is not constantly going to pay credit card bills or car loans.
  • Afraid you won’t be able to cover college expenses for your kids?
    • You can put a plan in place to save $2,000 per kid every year and have it grow tax free.
  • Afraid of the housing crisis and a foreclosure?
    • You can put a plan in place to pay off your house early.
    • Nothing will give you more peace than the security of a paid-for house.

To deal with your frightful finances you need two things: knowledge and the will to act.

I can help you with the first one and I can coach you through the second one. But it is really up to you.

You can choose to live in fear and worry or you can decide to take control and begin the journey towards financial peace and freedom.

“Whoever is slothful will not roast his game, but the diligent man will get precious wealth.
Proverbs 12:27 (ESV)

What’s Your Financial Compass?

Financial CompassMy wife Stacey and I just returned from a great 10 day vacation. It was our third straight year of going on a baseball tour road trip.

You see, we are huge baseball fans and we have a goal of attending a game in each of the 30 Major League Baseball (MLB) stadiums.

This year we hit numbers 14 (Chase Field, AZ) and 15 (Coors Field, CO).

I usually do all the driving and because I don’t have a great sense of direction, I leave all the navigation to my very bright wife.

All I need to do is follow her directions because she has planned the trip and is constantly looking at the map. She is my compass.

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Because I have a sense of peace and direction, I can focus on my driving which requires my full attention especially if I am going to places I have never been.

A compass will always tell you which direction you are headed, but most importantly what is the true north.

When it comes to your money, what’s your financial compass? How do you know you are headed in the right direction with your finances?

Your financial compass is defined by your view of money, who is influencing you on money, and your priorities and goals.

What’s Your View of Money?

This is a most fundamental question to answer. Do you see money as something good or something evil?

Do you see money as a tool to help you achieve your goals or do you see money as the goal to achieve?

Do you believe you can win with money are you convinced that the game is rigged and only the rich get richer?

Do you tend to be generous with money or are you more of a hoarder of money, the more you have, the more you want? In other words are you a river or a pond?

Your attitude, your philosophy about money will frame your financial compass and your actions.

Who is Influencing You on Money?

Your first influencers are your family of origin. What did your parents teach you about money? More importantly, what did they show you about money?

Were they spenders or savers? Did they rely on debt for anything and everything or were they patient and saved for what they wanted to buy?

Did they work together on money or fought about it constantly? Or did they simply not talk about money at all?

However your parents dealt with money, it will have an influence on what you do with money, so you need to understand that and adjust as needed.

And what about today? Your friends and immediately family are your influencers. They probably have their opinions on money and are not shy about expressing them.

Is that driving your decisions and views? More importantly, are they winning with money? Is their advice worth something?

And then you have what the world says about money. There are lots of people (including me!) offering advice and counsel on what do about money.

Are you going with the majority opinion on money matters?

Just let me say one thing: conventional wisdom is not the same as common sense.

Whose advice are you following?

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What are Your Priorities and Goals?

Do you know what you want to do with money? What is it that you want to achieve?

Is your end goal merely living for yourself and for the moment? Get what you want, when you want it, regardless of the cost. Just because you deserve it.

Or is one of your goals to love your family well and take care of them first? To leave a legacy of wise financial management for generations to come.

Do you want to work at that job forever just because you need it to pay bills? Or do you want to have options and do things on your own terms?

Is your goal simply to look inward and take care of you? Or do you want to extend your influence with generous, extravagant giving?

The answers to these questions put the final frame on your financial compass.

Your view of money, your influencers, and your priorities and goals will define your beliefs and will drive your actions.

Give yourself honest answers and you will know what your financial compass is and where you are headed with money.

Question: Is your financial compass pointing to the true north?