As I think of building an effective financial community, my mind is drawn repeatedly to concepts outlined by Stephen Covey, based on his best-selling book The 7 Habits of Highly Effective People, published in 1989. He pictures community in these fascinating terms:
. . . . a complementary group where your strengths are maximized and your weaknesses become IRRELEVANT because of the strengths of others.
What would this description look like if re-worked to apply to a financial community?
. . . a complementary network where all individual strengths (earnings and accumulated wealth) are consistently and continually being maximized, and all individual weaknesses (poverty and losses) are rendered IRRELEVANT because of strengths (shared knowledge and support) of others?
Getting Back on Track.
Sadly, my life’s dream to build this kind of financial community has been derailed. How do I get back on track? Not surprisingly, the maturity continuum outlined by Covey to evaluate personal development has helped me think through personal financial development. We begin with dependence, move to independence and ultimately aim for interdependence. If we avoid getting stuck in a mindset of independence, we can break the stranglehold of poverty and begin moving ourselves and others into a space of power and wealth, thereby creating a highly effective financial community.
First, let’s set the scene. A financial community consists of three parts: poverty, middle-class, and wealth. Much of popular rhetoric centers on preserving or protecting one group or another. We view the three groups as separate entities and we promote policies that benefit one more than the other. However, when we gain a fuller understanding of the workings of a financial community, we conclude that one person’s poverty makes us all poor just as much as one person’s wealth enriches everyone in the community. Now we are incentivized to rigorously fight poverty and actively build wealth for everyone.
Financial Dependence.
Those trapped in a cycle of poverty tend to be financially dependent. They rely on family members, social agencies, the government and the kindness of donors for survival. Caring for those who are dependent is a natural outpouring of generosity and love that should characterize any community. However, supporting dependency will not benefit a community any more than keeping a child in diapers benefits a family. Many are coming to believe that while redistributing wealth through subsidies and handouts will result in immediate relief to human suffering, this practice does not provide a long-term solution.
Financial literacy education and a mindset shift for the poor is essential. Research indicates the key to shifting the mindset in a culture is to support and educate the mothers in a household, who will in turn pass on a better mindset to the next generation. So let’s empower moms!
Financial Independence.
The middle-class practice of setting personal and family goals for financial independence is an admirable starting point.But many baby boomers (like me) pressed this goal too far, allowing it to morph into an unhealthy self-reliance and self-sufficiency.Leaving home en masse in pursuit of lucrative careers, many of us boarded a fast-moving train that took us farther and farther away from family and community.
When I first ventured out, my parents were still young and healthy, and my family did not need me to stay “down on the farm”. My intention was to achieve a level of success that would allow me to re-locate my family and set everyone up with housing and jobs in the vocational promised land I found. But I discovered that each individual person or family unit opted to stay put or pursue a different dream – elsewhere!Now, fifty years later we are scattered and struggling. Pockets of poverty arose in the family, caused by divorce, single parenthood, unemployment, aging and disease. My family, my nation, my world cannot combat these issues because of the limitations of our chosen lifestyle of financial independence.
So many independent choices emerge from this mindset and result in unworkable situations. We find single people in their 60’s who have single children in their 40’s who have single children in their 20’s, and the three generations all insist on living in separate households that cannot be sustained in this troubled economy. People who are elderly and ailing move off to Florida alone, pursuing a dream to live on the beach, ignoring their own need for a safety net of family for physical and financial support. These strategies fall into the pit that I call imaginary independence. While independence works well for individuals and families, the illusion of independence is a dangerous mindset for everyone.
Financial Inter-Dependence.
While growing into effective financial communities requires members to relinquish the illusion of independence, we must also dispense with a natural tendency toward a “displaced distrust” of other financial classes, whereby the poor don’t trust the middle class or the wealthy, the middle class does not trust the poor or the wealthy and the wealthy don’t trust anyone! Socially and politically, we as a culture seem to have adopted a mindset where individuals or groups of like individuals push to gain benefits for themselves. Those who are successful will create a society of have’s and have not’s. The unsuccessful will be consigned to poverty. These practices drag everyone into a downward spiral, squeezing the very life out of the middle class.
A better strategy is to create a community cycle of mindset and behavioral upgrades for everyone, wherein the dependent poor become independent middleclass, the independent middle class become inter-dependent and wealthy, and the wealthy grow wealthier from inter-dependence on a thriving community of upwardly mobile members.
At this point I want to repeat our definition of an effective financial community:
. . . a complementary network where all individual strengths (earnings and accumulated wealth) are consistently and continually being maximized, and all individual weaknesses (poverty and losses) are rendered IRRELEVANT because of strengths (shared knowledge and support) of others?
All in favor, say “Aye”! Let us banish the illusion of independence – Forever!
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