PERSONAL FINANCE
3 Tough Money Truths Worth Grappling With
“Financial independence”…from what, exactly?
Expectations shape happiness.
Beliefs shape expectations.
For better or for worse, the financial peace you’ll experience has more to do with what’s buried in the recesses of your mind than with anything measurable—or even fully conscious.
It’s essential to unearth the buried assumptions that shape our beliefs, expectations, and ultimately happiness with regard to money. (And far beyond, but that’s a topic for another day.)
That process has led me to a few conclusions. They’re not written in stone, but I believe each touches on some inevitable truths that can work for or against our financial peace of mind.
I’m not a financial professional. This is purely opinion and entertainment, not advice. Do what’s right for you, and if in doubt about what that is, then it’s important to find someone who’s legally able to tell you.
Financial independence may be overrated
Them’s fightin’ words, and I’ll go down swinging.
Can you stash away enough that your reasonable expenses (and even some unreasonable expenses) are covered without ever lifting a finger again?
Yes.
I’m chugging along that track. Odds are your parents or grandparents, maybe even you, have been there awhile.
It’s a fine goal.
But how much will it take to buy your way out of grave illness or decrepitude or the mother of all earthquakes knocking your house to the ground or…?
I’ll wait while you run the numbers.
The only truly unsettling things—the ones we most deeply crave independence from—are the inevitable things.
To be sure, it’s astounding to occupy a time and place where some us can even entertain the thought of not working until our bodies give out. That was even the middle-class norm well into the twentieth century, and remains such in most of the world.
But as tantalizing as “financial independence” is, it can address only financial things. It can smooth mountains back into molehills, can take the bumps out of the road, and that’s good. Seriously. That covers a large chunk of everyday life.
But it doesn’t do much for existential concerns, and you’ll be wildly disappointed if you assume it will.
If you woke up to a large deposit that meant no need to work ever again, do you think any void or fears might persist?
That’s a “yes” for most of us, at least to some degree. And there’s no easy answer, but it’s best to start seeking one now. To be financially independent yet captive to deeper malaise seems like an underwhelming next chapter in life.
Having more won’t make us generous
We all like the idea of being generous, but we underestimate the fact that generosity is first and foremost a consequence of habits.
Just like we can’t wake up and decide to be lean and strong without years of consistent action, we can’t hit some magical net-worth number that will flip on the generosity switch.
We give more freely and joyfully when we believe there’s more than enough to go around. For instance, I love watching my son take joy in giving a toy to his little brother or sharing food with others. He knows there’s plenty.
But whether it’s just something in our nature, or the direct result of growing up (as I did) in an incessantly penny-pinching environment, it’s sometimes hard to instill that belief from scratch.
However, there’s one foolproof technique…
One time-honored tactic that will turn Scrooge into Carnegie…
Just give a little.
A few bucks here and there, without running the numbers about tax benefits. This isn’t a business proposition.
Just give a little.
If you’re legitimately penniless, then give an hour or two of your time. And do that even if you’re not penniless, because sometimes it means more and goes farther.
Just give a little.
That begets momentum which begets an enduring habit which begets a virtuous cycle.
“Hedonic adaptation” is no joke
We absolutely can buy our way out of certain causes of misery. Just ask anyone without shelter, or struggling to get simple but life-changing medical care, whether a big old lump of cash would make them happier. We all know the answer.
In other words, money is sort of the meta-solution to certain types of problems. But its power dwindles as we climb up Maslow’s hierarchy. Unfortunately, we tend not to notice that limitation until our spending has turned the hedonic treadmill up to an unsustainable pace.
It’s a sad and strange thing to meet someone rich enough to be basically free of worldly problems, yet not much happier for it.
If you knew that exceeding your financial goals would leave you exactly as happy as you are this minute, would that change your priorities?
There’s no correct response. That’s a prompt, not a quiz.
But I think most of us would say “yes.” If we knew that meeting audacious money goals wouldn’t nudge us up the happiness scale, then we’d take care not to order all of life around those goals.
Of course, falling far short might be disastrous, so we wouldn’t ignore or totally flout those goals, either. But we’d absolutely relegate them to their (very limited) place in life. It’s only reasonable.
Underestimating and overestimating the power of money are equally disastrous in their own ways.
There are problems it can’t solve, virtues it can’t instill, and desires it can’t satisfy.
But when managed with balance and self-awareness, money can also eliminate struggles that were (and often remain) the norm throughout most of human history.
Like many of you reading this, I’m grateful to have enough that these questions—what to do with it, what to expect of it—even cross my mind.
But all this points back to the belief that money is a tool. That’s a simple, even cliché observation, but it has deeper implications for our own expectations (and therefore happiness) than we might initially realize.
