I just completed reading Fortune’s Children, the fall of the House of Vanderbilt by Arthur T. Vanderbilt II. This is the life story of the Vanderbilt family and its founder, Cornelius Vanderbilt. The Commodore as he was called, had a passion to amass the largest fortune possible at any cost. How the wealth was accumulated and spent along with the celebrations of such riches is rather astonishing even by today’s standards. The family would spend on gaudy parties, multiple mansions, yachts, and a fleet of maroon Rolls Royces. All these actions and purchases were acceptable and encouraged by other prosperous families of this era. They all competed against one another for what seemed to be best in show status. The massive amount of people and corresponding payrolls that were necessary to maintain this life of extravagance is mind blowing. In the end, the music stops as resources cannot last forever regardless of the amount of wealth the family had to begin with.
Applying this story in today’s financial landscape several lessons may be learned to avoid a similar fate. First, understand the true costs to run your financial house each month or year. Second, set aside cash for planning margins, errors, and opportunities. Third, save as much as possible not only in your retirement plan but also in after tax investment accounts. Finally, create a sustainable plan that is revisited annually that may guide your choices and priorities. This approach is available to anyone, regardless of their level of wealth. Choosing to think proactively about your choices today and planning for tomorrow pays off in the long run. You don’t need to accomplish this all by yourself, partnering with a trusted financial professional may make it a reality.