Power Up Wealth podcast – Episode 99 – The Counterintuitive Magic of Giving: More Wealth through Generosity
James Derrick 0:00
Creating a legacy of giving can help pass on values and can even help preserve wealth. I’m James Derrick, President of Smedley Financial, and today I’ll be talking with expert and guest Mikal Aune about creating a legacy of giving.
Shane Thomas 0:20
Welcome to the SFS Power Up Wealth podcast where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
James Derrick 0:36
Thank you for joining me today, Mikal.
Mikal Aune 0:38
Glad to be here, James.
James Derrick 0:39
Mikal is the Executive Vice President of Smedley Financial Services. He has a Certified Financial Planning designation and has done an incredible amount of research on generational wealth. And in a recent article you wrote, you talked about the counter intuitiveness of giving. And I have to admit, this surprised me a little bit, but the idea was that in giving away money, you can actually make sure that you have more.
Mikal Aune 1:05
Yes, and whenever I bring that up to somebody and say, hey, you need to teach your posterity to give your money away, they’re like, wait a second. They do a double take. And they’re like, I thought you want me to keep my nest egg and make it grow as big as possible. So why are you telling me to teach my kids or grandkids to give it away, and so they always question it, and it’s, I said, it depends on where you want to go with the money and the impact that you want to have, and what you want to teach the next generation about money.
James Derrick 1:31
And all of that makes sense. How does it turn into more?
Mikal Aune 1:35
When people learn to give money away, they see the impact that it creates on other people, and they see what people live like on the other side of the tracks, and they can see the good that money does. Because a lot of times when you’re inheriting money, it comes easily, and it’s sometimes hard to truly appreciate the work and the sacrifice and the discipline that it took to create that wealth. It’s kind of easy to lose sight of the good that money can do. When you start going out and giving that money away, you see the impact that it has, and you change the way that you think about money. So here was a really interesting study that they did, because they went into inner city Los Angeles. They took kids that had been on the government dole their whole lives. They gave them $500 a piece. They had a group, you know, four of them that went out, they had to do research to figure out what charity to give money to. Go out and give that money and do service at the same time and then come back and write a paper about it. Now, those kids that had been on the government dole like, just their world flipped 180 degrees, and they could see the impact. Like money can do good, rather than just like becoming focused inward of well, here’s this money, what can I do with it? Is wow, money has impact, and it can do good. What can I do with it? And it just changes the whole dichotomy in the way that you think about money.
James Derrick 2:52
Let’s dive a little deeper into that idea of service, because you said these kids, then they gave the money, but then they gave the time.
Mikal Aune 3:01
Yes, because some people, you fall into the trap of, hey, I need to sell save myself on taxes, so I’m going to give some money to charity so that I can get away, you know, or avoid taxes. And that’s good, but there’s a higher purpose to it, right? If you really want to change how people think about money, especially kids and grandkids, then they need to be involved in it. Because I’ve seen some families where they’re like, hey, I want to get my my family involved in charitable gifting. So we’re going to give them 500 bucks, and they can choose a charity to give it. And if, if those kids just give the 500 bucks to some charity, they’re like, yeah, fine, give it over there. I don’t really care. I wish that grandpa gave me the money. But if they go and do service with it, it’s like, they start to see the impact. Some people start thinking about this, like, well, I don’t have millions of dollars, so I’m not going to give it. You know, teach my kids to give, because I don’t have that much. It’s like, it’s not about the dollar amount. You can give 100 bucks, you can give 10 bucks. You can give your time. And a lot of times, your time is more valuable than the money, but if you give your time and service, it just changes the way that you think about the world and about other people and the impact that you can have for good.
James Derrick 3:01
And then suddenly, even the money that you’re keeping for yourself, you are looking at it differently.
Mikal Aune 4:02
Yes, and that’s what I see on my side of the table. Is when people inherit the money, they’re like, wow, I realize that I’m inheriting this much and I can go do good with it, right? Rather than just how I’m inheriting this much, I’m going to go buy a car. That’s one statistic that stuck with me forever, is that a new car is purchased within 72 hours of receiving inheritance. So people are already thinking about this, like, okay, you know, mom and dad passed away. I’m going to get money. What do I want to do with it? Well, I’m going to buy a car. And that’s the first thing that happens. Well, if they start thinking about money differently, they’re like, hmm, yeah, new car would be nice. But look, if I use this money and I can grow it for the future, look how much more good I can do in the world.
James Derrick 4:51
One of the nice things about this idea, too is that, and I know as a parent, you want your kids to struggle to a certain degree, but you also don’t want them to struggle.
Mikal Aune 5:02
Yeah.
James Derrick 5:02
And so this is a good way you can provide for your children, but also teach them some lessons that you really hope they will learn.
Mikal Aune 5:11
And sometimes you can’t manufacture struggle. Sometimes people struggle because of just things that are happening. And a lot of times that’s good people learn from struggle. But sometimes life just isn’t a struggle for some people. There’s enough money going around, and then things are easy and it’s not too hard. It’s like, how do you help those kids or those grandkids? Well, and this is one great way to do it is get them involved in the charitable giving so that they can see exactly what it can do.
James Derrick 5:40
Well, it seems like to me, everybody struggles in some way. And if you’re not, maybe the bomb is still going to go off soon. But this could also prepare you for that.
Mikal Aune 5:49
Yes.
James Derrick 5:50
So it’d be very helpful. You’ve got a great quote here from Denzel Washington. Do you want to give your best Denzel impersonation here?
Mikal Aune 5:56
No, I can’t do it impersonation, but I love it. You know, of our generation, we know Denzel well. He was an Academy Award winning actor, but the thing that he said, you know, picture this, this is a guy who has it all. He’s been in a lot of movies. He’s made tons of money. He’s had everything. That’s not what he’s focused on. He says, the most selfish thing you can do in this world. Maybe I’ll pause there and be like, What do you think it is? Right? What is the most selfish thing that you can do in this world. What he says, it’s to help someone else. The reason is, it’s because of the gratification, the goodness that comes to you, the good feeling, the good feeling from helping others. Nothing is better than that, not jewelry, not the big house, not the cars. It’s the joy. That’s where the joy is in helping others. That’s where success is. If that’s what you want to give to your kids and your grandkids, that’s why you teach them to give. There is a side benefit that they treat the money right, that they inherit and it grows. That’s kind of a side benefit. So when you use money, it should be done with a purpose. And so think back to not just I’m going to give money away, but what do I really want to accomplish with this? And then who do I want to benefit? And is it just this charity, or are there other people I want to involve in this so we can all benefit in that joy together?
James Derrick 7:12
I think that is so beautiful. One last question, Mikal, you are a financial advisor. You meet with people each day that you are helping. What is your role in helping people give away money?
Mikal Aune 7:24
Well, a lot of times we talk about it to say, okay, sometimes it starts from a tax perspective, to say, hey, do you realize that at a certain age you can do this? Right at age 70 and a half, you can donate from IRAs directly to charities? Now that’s a great thing to do, okay, and tax wise, it’s going to help you. But let’s talk about the purpose behind it. What is it that you really want to accomplish? So a lot of times it’s just, if I can help people think through it and think through what they want to accomplish with the money, then it has more of a purpose behind it than just giving money away.
James Derrick 7:57
It’s just such a beautiful sentiment. Thank you, Mikal for coming in to talk to us today, connecting these dots between the giving and the loving and the changing of our hearts.
Mikal Aune 8:07
Thanks, James.
Shane Thomas 8:08
Thank you for joining the Power Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn. The views expressed are Smedley Financials and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Smedley Financial Services, Inc.® Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
