Five Lessons on the "Up"s and Downs of Financial Life

Disney’s Pixar masterpiece, “Up,” released in 2009, is about more than marriage, adventure, and friendship. Beneath the touching storyline, “Up” is also about the ups and downs of financial life. Finances, actually, determine the plot. It is because of financial emergencies that Carl and Ellie, the starring couple, never get to travel to their dream location, Paradise Falls. It took ruthless urbanization and little temper tantrum to propel Carl, along with the naïve and endearing Russell, to the lush greens and blues of Paradise Falls. But perhaps, if Carl and Ellie had chosen a different financial path, the fulfilling of a dream would not have taken so much and been so long. “Up” teaches some vital financial lessons about what it takes to fulfill your dreams.
 

Expect the Unexpected

A falling tree, a damaged car: life happened. With the advent of each unexpected emergency, Carl and Ellie were forced to shrug their shoulders and break into the precious Paradise Falls fund.

An unanticipated run to the emergency room, a downsized company: life happens. The unexpected is bound to happen, and finances must be planned accordingly. Home finance experts recommend an emergency fund that can cover three month’s worth of general expenses, determined by averaging the costs of one month. It is only to be used as a bastion against sudden and unforeseen onslaughts.

Cut Your Losses

When Russell exuberantly and mistakenly chucks his GPS out the window of Carl’s floating residence, their one chance at pinpointing their location departs with it. Rather than bemoaning their circumstances, Carl and Russell quickly move on and address their problem. Many investors fail to follow their example.

In the financial arena, deals can go sour fast. Paper millionaires are reduced to paupers by the chess-like manipulations of a few billionaire CEOs. Good financial players admit defeat, move past the problem, and focus on a solution. When:

•       Stocks plummet;
•       Insurance rates skyrocket;
•       College costs go up (and they will);
•       Salaries are slashed;

And other calamities arrive, don’t wallow in self pity or pathetically hope for a bounce-back. If it looks like the best deal, settle for a 20% loss, and continue.

No Plan is Foolproof

How the gods make mockery of mortal man’s plans. Ellie and Carl made many sure-fire plans to raise money for Paradise Falls; the contractor is sure he is going to get Carl into the retirement center; Charles Muntz knows he is going to capture his legendary creature. And yet, they are all wrong. Their plans, like New Orleans levies and Holland dikes, have holes.

Don’t be caught in the oncoming flood from arrogant and self-sure planning. Failure is the natural companion to success. Every poker player expects to lose some hands. Going all in – on one real estate lot, one burgeoning foreign company, one business investment – is likely to end up with your chips swept into someone else’s pile and a closed door in your face.

Watch Out for Heroes

Muntz, the renowned discoverer of Paradise Falls, returned to the area when questions were raised about the authenticity of his skeleton of a giant bird-like creature. From childhood, Carl and Ellie were his obsequious followers, completely devoted to Muntz’s daring and adventurous spirit. In the end, Muntz becomes the villain, consumed by humiliation and self-importance.

So the heroes fail. Enron, Arthur Andersen, Global Crossing, Merck, WorldCom, Dynergy – these a but a few of the recent travesties in the business arena, led to the slaughter by embezzlement, fraud, corporate deceit and ignorance. Sycophantic devotion to any financial entity, be it a bank, a business, or any sort of investment, is irrational and dangerous. Syndrome, the villain in Pixar’s “The Incredibles,” chooses his wayward path after being disappointed in his role model, Mr. Incredible. Take a lesson from Syndrome and count your cards carefully.

Money Isn’t Everything

Without Ellie, without companionship, Paradise Falls is meaningless to Carl. His travel had become the shell of a dream. All the funds saved and promises made were meaningless without Ellie. The real adventure, one without quarterly statements, was Carl's and Russell's friendship as a quasi-father-son relationship developed. The real dream did not take money, just smiles and laughter.