On the Money: How Financial Issues Differ On-Island

“Martha’s Vineyard is a special place.” This oft-repeated phrase may or may not be true generally, but when it comes to money, it’s false. Money behaves the same here as everywhere else, and so do people.

When asked about financial issues unique to the Island, Martha’s Vineyard Savings Bank CEO Chris Wells simply mentions that this “special” place has an especially high cost of living – 60 percent higher than the mainland, according to a 2006 Martha’s Vineyard Commission study – and that means people have less of a margin for error. But sadly, Vineyarders make the same basic error as people everywhere: living beyond their means. Chris estimates that out of fifty loan requests at the bank, forty-nine are simply to cover routine expenses for people who spend more than they make. “They want the new truck,” Chris notes with a shake of his head. But it rarely makes good financial sense to buy it – especially if you can’t make rent.

To cure “financial illiteracy,” the bank’s marketing manager, Beth Burns, suggests websites dedicated to personal finance and for its budgeting and other tools. The solutions for money troubles are simple and not sexy: budget, spend less than you earn, save, and invest. To help, the bank hands out a book to customers: The Wealthy Barber, a homespun sort-of Socratic dialogue about financial discipline from a barbershop. Beth breaks down the essential lesson: “Like your grandparents who lived through the Depression said, ‘Pay yourself first.’” This means saving; the book recommends saving 10 percent off the top of every paycheck. Over the long run – decades – this 10 percent grows substantially, so even a modest income can beget huge sums.

Aside from saving and investing, The Wealthy Barber recommends preparing a will, being properly insured, investing cautiously, planning for retirement, reducing debt sensibly, and sticking to a household budget. Once the money you save begins accumulating, a certified financial planner can be invaluable. Chris says the key question to ask when seeking financial advice is, “Who do you trust?” But even with someone you trust, he warns, “The only person who’s going to watch your money is you.”

Q: In financial planning, what are the unique concerns for Island clients?

A: Tim Madigan moved from Lexington last year to work for Martha’s Vineyard Financial Group (MV Savings Bank’s “wealth management” division): Most people we work with have universal concerns. Am I going to have a nice life? Am I going to run out of money? The big distinction between here and off-Island is that we manage more real estate. But even in real estate, the concerns over property and estate taxes are no different than family farmers in the Midwest forced to sell to pay taxes. What is unique is how much people value their experience on the Island, and the great importance many clients place on keeping a Vineyard home in the family so the kids can experience the Island. That’s unique. That does not happen in Lexington.