What Van Halen and Brown M&M’s Can Teach You About Money

Blues Guitar

What does Van Halen have against brown M&Ms?  The band famously included a provision in their performance contract that the backstage food options contain M&M’s, but with all the brown ones removed.  While it may seem like rock stars being jerks just because they can, there actually was a very good reason for it, as explained by lead singer David Lee Roth:

The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes …” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”

So, when I would walk backstage, if I saw a brown M&M in that bowl … well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.

In a nutshell, they were worried that if a venue couldn’t be trusted to handle the small stuff (M&M’s), how could they be sure they were handling the big stuff (safety, etc.).  It was a simple test, and a good excuse to trash a dressing room too!

Sweat the Small Stuff (but Sweat the Big Stuff First)

That story got me thinking about how a lot of us tend to approach money matters.  Is the presence of candy-coated chocolate of the wrong color going to derail a concert?  Absolutely not.

But is it a lot easier to pick M&M’s out of a bowl than make sure the technical specifications of stage construction, power, pyrotechnics, sound, etc. have been met?  Absolutely yes.

Given the choice, which one do you think most people would end up doing?  Obviously the M&M’s because it’s easier.  It allows you to get a win.  If you still get the satisfaction of accomplishing something, why not do what requires the least effort possible.

That mindset pervades our thinking, especially when it comes to finances.  It’s much easier to focus on getting better credit card rewards than to optimize your portfolio’s risk/return balance.  The extra couple percent I get from remembering to use the right credit card for gas saves me maybe $20 a year.  The cost of an inefficient portfolio could be hundreds if not thousands of dollars per year.

There’s nothing wrong with sweating the small stuff, just make sure you sweat the big stuff first.

So What’s Big?

Quite simply, big things are the ones that have the most potential to impact your financials in the most meaningful way.  This can either be through increasing financial resources or reducing risk of loss.  Some of them, like having a well thought out Investment Policy Statement, don’t directly impact your financials, but give you the direction necessary to achieve things that do.  It’s hard to hit the target if you don’t know where you’re aiming.

  1. Investment Policy Statement.  Set the direction for how you want to manage your investment portfolio.  What are your goals and objectives and how will your portfolio support them?
  2. Optimize Risk/Return.  Make sure your investments in-line with your risk tolerance.  Where are the time bombs in your finances and are you adequately covered?
  3. Wills, Powers of Attorney, etc.  Hopefully self-explanatory.  There are multiple examples of bad estate planning wiping out vast amounts of money for heirs when a simple fix would prevent it.  This also covers who will be responsible for handling your finances if incapacitated.
  4. Tax Planning.  Includes everything from appropriately locating assets based on their tax profile, timing capital gains and losses to offset and tax loss harvesting.
  5. Savings/Spending budget.  Making a budget and keeping with it.  This is especially important if you’re just starting out and your portfolio isn’t large relative to your income.
  6. Social Security Claiming Strategy.  Evaluate different dates for beginning benefits, considering what other funds you might have available.

Action Items for You

Think about all the things you’ve been putting off financially and that’s probably a pretty good list of what needs your attention.  Prioritize and make a plan to check them off.  Revisit as necessary to keep them fresh.

When you have an idea for something impacting your finances, ask how meaningful it really is going to be.  Don’t spend time haggling over your cable bill if you don’t have a will.  Who takes .

Get the help you need to figure out more technical topics.  Go see an attorney.  Visit a social security office or a fee-only financial planner if necessary.

Sweat the Small Stuff (but Sweat the Big Stuff First)

John started Present Value Finance in 2017 to share his experiences and insights on personal finance to help people make better decisions and take control of their financial lives.  

He achieved financial independence in 2016 by walking away from the high stress world of corporate finance to focus on his family. He’s a husband, father, family CFO, and all around finance geek.

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