‘I’ll huff and I’ll puff, and I’ll blow your house down!’
An iconic line and terrifying statement if you are little piggy in an ill-prepared house. When we started brainstorming Halloween costume ideas for the office, I quickly suggested my favorite fairy tale about financial planning. Yes, I’m talking about the three little pigs. What? The three little pigs aren’t synonymous with money lessons for kids? Let me refresh your memory….
The Wolf: Unexpected Headwinds
Bulls, bear, and now wolves. We love a good animal reference. In this story, the wolf represents all the things that are trying to blow your financial house down. These blows can show up in the form of unexpected medical bills, market correction, job loss, disability, or a death. The wolf is a sneaky animal and just like these blows, they can sometimes come out of nowhere and knock your house down.
Straw House: Spend
Mrs. Straw was only concerned with the here and now. She didn’t put much time or thought into planning for her future. The straw house was quick and easy to build and did not take any preparation or thought. She avoided difficult conversations and lived a carefree life. When the wolf came, it was very easy for him to blow her financial house down.
Stick House: Save
Mr. Stick put some thought and time into building his house. He had some good tools and materials, but his house still had some gaps. He didn’t take the time to research home-building but thought it was good enough for now. When the wolf came for him, it took a few more blows, but eventually, he was able to blow Mr. Stick’s house down as well.
Brick House: Invest
Ms. Brick worked very hard to build her house. She did a lot of planning on the front end and consulted architects and wolf experts. While Mrs. Straw and Mr. Stick were out at the local pigpen, Ms. Brick was constructing a house that could withstand the strongest blows. The wolf eventually showed up at Ms. Brick’s house and tried his best to blow the place down. He tried the windows and the chimney, he circled the house, but couldn’t find any weak spots. After several attempts, the wolf gave up and Ms. Brick lived happily ever after.
The Morals of the Story (and Financial Planning)
- Hard work pays off. – Getting your finances in order takes dedication, time, and effort.
- Know your limits. – It also takes some help! Your plan encompasses many areas including tax planning, estate planning, risk management, investments, retirement planning & education planning. Knowing when to ask for help is key.
- Short cuts can cost you big time. – If it’s cheap concrete or DIYing a major aspect of your financial plan, these short cuts can have major impacts down the road.
- Be Philanthropic. – Did I mention that Ms. Brick took in Mr. Stick and Mrs. Straw, saving them from the big, bad wolf? Being in a good position puts you in a better position to help others.
Okay, so maybe this fairy tale is not EXACTLY about financial planning. I still think the story has great lessons for life and for financial planning (and I really want to dress up as a piglet!). Make sure you are sharing meaningful money lessons with your kids and grandkids over time. They will thank you for your money wisdom later!
Any opinions are those of Alexa Kane and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected.