Have you ever heard of the Aesop’s Fable about The Ant and The Grasshopper?  The general gist of the story is that the ant is busy collecting food for the winter, while the grasshopper is singing, dancing and enjoying the summer.  The grasshopper has access to the food they need at that moment and doesn’t think the work the ant is doing is necessary.  The moral of the story is that there is a time to work and a time to play.

By nature of our work in financial planning and wealth management, our clients are above average in terms of income and assets.  That coupled with their goals is what causes them to turn to us.  Often the driving force is wanting to know some form of where they are in relation to their goals and how they use their resources to best meet their financial goals.

That said, I often find that clients who grew up in a household where resources were limited often gravitate toward the ant or the grasshopper in terms of their money behaviors.

Those that gravitate toward the ant may have an ingrained fear that they will never have enough money. They save and save and save. In retirement, they are often more nervous than usual about distributions, their spending, and portfolio performance.   It is the nature of the “ant” to accumulate and then use those resources as slowly as possible.

Those that follow the behavior of the grasshopper, on the other hand, find it harder to save.  Temptation, and dare I say justification, can be found everywhere, and a grasshopper often wants to compensate for scarcity they experienced in the past. Their higher than average income allows them to make up for lost time.  Fortunately for us, the grasshoppers we work with want help.  They know that left to their own devices, they likely won’t be prepared for the future.

Behavioral coaching and financial planning is a fast-growing component of comprehensive financial planning that advisors discuss amongst themselves, but don’t often discuss openly.  For us to work effectively with clients, we have to understand how clients think about money and what influences their decisions to spend and save.  We’re asking questions and listening for clues around this in all our interactions.

With “ants,” we often find calling out the behavior helpful.  We spend extra time discussing why they are okay financially and how much wiggle room they have. Our fear for ants is that they won’t live the life they want because of fear. That’s a problem for us because our work is focused on helping our clients live the life they want so we have to find ways to help clients get comfortable.  One way we help find security is by showing them how much would need to go wrong for them to no longer be okay financially.

“Grasshoppers,” being on the other end of the spectrum, need different strategies.  We’re likely to focus more on saving and ways they can trick themselves into spending less.  We may find more systematic ways to help them spend and save for their goals.  We can set up their accounts to be more “out of sight and out of mind” and remind them frequently about what specific pots of money are earmarked for. 

My point isn’t that people will be either ants or grasshoppers when it comes to money.  It’s that we all have a story, and patterns of behavior based on experience, and that history plays a vital role in a financial planning relationship.

If you’d like to know about my story and experiences, you can visit this page of our website.