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There is really only one reason to read any book about money: to give yourself the gift of a better life. Money is not really the thing you’re after—after all, would you lock yourself in a dark, silent box forever in exchange for becoming a billionaire?
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Instead of a dark box billionaire, you are probably hoping to become a lighthearted, productive, free person who just happens to never have to worry about money again.
Endless desire is one of the pitfalls of human nature, and one of the first things you need to cure if you want to get ahead more quickly.
Young people fledge into a world where their bachelor’s degrees don’t guarantee incomes sufficient to ever pay off their debts, where everyone—no matter what their job—is in the YOYO class: You’re On Your Own.
Today, more than at any time in history, the old rules have become fluid enough that you can move freely wherever you want—in location, in career, in your personal life, and in your purpose in life—no matter where you started. It’s scary—and exciting. People from all walks of life are navigating these rapids of change, some better than others.
Nobel laureate and best-selling author Daniel Kahneman, in his research on money and happiness, found that beyond a certain level of sufficiency (currently about $75,000 a year in the United States), more money doesn’t buy more happiness.
Correlating participants’ income with “how much would it take to make you happy,” almost everyone, in every income bracket, said: 50 percent more than I have now.
While no two conscious money mavens are entirely alike, they do seem to follow certain trends. These aren’t the only way to go, but it’s useful to know what others out there are doing. I refer to the current crop as Ninjas, Minimalists, and DIYers. Ninjas: Personal finance Ninjas love to run the numbers, optimize systems, exploit niches, study personal finance blogs, mess with investments, hack the system to get free flights and hotel stays. Subcategories are the Frugalistas, who love bargains, clipping coupons, free-cycling, and deal making; and the Supersavers, who love beating last month’s
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Along with racism and sexism, our society has a hidden hierarchy based on what you do for money. That’s called jobism, and it pervades our interactions with one another on the job, in social settings, and even at home.
Even though the official workweek has been pegged at forty hours for nearly half a century, many professionals believe they must work overtime and weekends to keep up. A 2015 study from the Organisation for Economic Co-operation and Development (OECD) discovered that nearly 12 percent of Americans are working fifty or more hours per week.2 In addition, a Conference Board study of the same year found that less than half of Americans are “satisfied” with their jobs.
We are working more, but enjoying life less. The result? We have developed a national disease based on how we earn money.
According to the US Bureau of Economic Analysis, the US personal savings rate has hovered around 5 percent over the past four years, up from a low of less than 2 percent in 2007 but down from the pre-1980 days when Americans saved well over 10 percent.
The bottom line is that we think we work to pay the bills—but we spend more than we make on more than we need, which sends us back to work to get the money to spend to get more stuff—that sends us back to work again!
The results astounded us. They told us that not only are most people habitually unhappy, but they can be unhappy no matter how much money they make. Even people who are doing well financially are not necessarily fulfilled. On those same worksheets we asked our seminar participants, “How much money would it take to make you happy?” Can you guess the results? It was always “more than I have now” (by 50 to 100 percent).
Americans have come to believe, deeply, that it is our right to consume. If we have the money, we can buy whatever we want, whether or not we need it, use it, or even enjoy it. After all, it’s a free country. And if we don’t have the money . . . heck, what are credit cards for? Born to shop. Whoever dies with the most toys wins. Life, liberty, and the pursuit of material possessions.
Psychologists call money the “last taboo.” It is easier to tell our therapist about our sex life than it is to tell our accountant about our finances.
The Fulfillment Curve The fulfillment curve (see Figure 1-2) shows the relationship between the experience of fulfillment and the amount of money we spend (usually to acquire more possessions). In the beginning of our lives, more possessions did indeed mean more fulfillment. Basic needs were met.
This is why downscaling, frugality, and thrift sound like deprivation, lack, and need. On the contrary! Enough is a wide and stable plateau. It is a place of alertness, creativity, and freedom. From this place, being suffocated under a mountain of clutter that must be stored, cleaned, moved, gotten rid of, and paid for on time is a fate worse than dearth.
It also comes from unconscious habit. Take gazingus pins. A gazingus pin is any item that you just can’t pass by without buying.
There are two parts to this step: A. Find out how much money you have earned in your lifetime—the sum total of your gross income, from the first penny you ever earned to your most recent paycheck. B. Find out your net worth by creating a personal balance sheet of assets and liabilities.
B. WHAT HAVE YOU GOT TO SHOW FOR IT? For the years you have been working for wages, a certain amount of money (which you just calculated) has entered your life. The amount that is left in your life now is your net worth. • • • Be prepared. You will be calculating your net worth (your total assets minus your total liabilities), perhaps for the first time in your life. Brace yourself. You may discover that you are deeply in debt, and until this moment you have been unaware of the awful extent of it. Now is the time to face that truth.
The net worth exercise might be humbling or heroic. You will confront many hard truths, which can be painful or liberating. Whatever you find, it’s important to remember that net worth does not equal self-worth.
Remember, adding “Why?” to the end of any question will take it deeper. Adding “How has society shaped my answer?” to any question will take it wider. There are no right answers. Who gave you your first lessons about money? What did you learn? What messages did you get about money growing up? Where did you get them from? Parents, teachers, ads, or . . . ? Talk about an early memory of money and how it affects you now. Talk about a money mistake. What would you do differently? What does “enough” mean to you?
Money is something you trade your life energy for. You sell your time for money. It doesn’t matter that Ned over there sells his time for a hundred dollars and you sell yours for twenty dollars an hour. Ned’s money is irrelevant to you. The only real asset you have is your time. The hours of your life.
“Knowing that money is simply your life energy puts you in the driver’s seat of your money life. How much of my life am I willing to sell to have money in my pocket? Looking around at your accumulation of stuff you can ask, ‘How many hours of my life did I invest to have this . . . chair . . . car . . . matched set of cookware . . . diploma on the wall?’ See what this does to your next purchase.”
Knowing that money is your life energy transforms your relationship with money, shining a bright light on all your false notions.
Assuming about half of your time is spent on necessary body maintenance—sleeping, eating, eliminating, washing, and exercising—you have 178,000 hours of life energy remaining for such discretionary uses as: your relationship to yourself your relationship to others your creative expression your contribution to your community your contribution to the world achieving inner peace and . . . holding down a job Now that you know that money is something you trade life energy for, you have the opportunity to set new priorities for your use of that valuable commodity. After all, is there any “thing”
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Financial Independence has nothing to do with rich. It is the experience of having enough—and then some.
There are two parts to step 2: Establish the actual costs in time and money required to maintain your job(s), and compute your real hourly wage. Keep track of every cent that comes into or goes out of your life.
Using the suggestions in the epilogue for how to have a Money Talk, raise these questions in your daily reflections, with your partner, or in social groups. Remember, adding “Why?” to the end of any question will take it deeper. Adding “How has society shaped my answer?” to any question will take it wider. There are no right answers. What is money? Describe your relationship with money in five words or less. Why those words? Do you experience more stress when you have money, or when you don’t have it? Finish the sentence “If I had more money, then I’d be . . .” Elaborate! Are you earning what
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Did I receive fulfillment, satisfaction, and value in proportion to life energy spent? Is this expenditure of life energy in alignment with my values and life purpose? How might this expenditure change if I didn’t have to work for money?
A purpose in life higher than satisfying your own wants and desires, because you can never have enough if every desire becomes a need that must be filled. What is a purpose higher than getting what we want? The opposite of getting is giving—and therein lies a secret to fulfillment. Beyond the point of enough, we achieve happiness by expressing our natural desire to offer our gifts and talents to others.
What do you want for your children/loved ones that money can buy?
“Did I receive fulfillment, satisfaction, and value in proportion to life energy spent?” Asking this question every month about each of your spending categories increases your consciousness about your choices and thus results in an automatic reduction in your total monthly expenses, giving you the pleasure of seeing the expenses line on your chart go down.
The Bible, Romans 7:19, puts a sharp point on this all-too-human habit: “I want to do what is good, but I don’t. I don’t want to do what is wrong, but I do it anyway.” The
Debt has become the American way, making it hard to see that it is debt that chains us to our jobs. It’s debt that keeps us with our noses to the grindstone, making a dying to pay off pleasures we’ve long forgotten and luxuries we scarcely have time to enjoy.
We once heard an advocate for the homeless say that most Americans are two paychecks away from homelessness.
Try this: Ask yourself how you would spend your time if you could take a year off with pay.
Frugality is enjoying the virtue of getting good value for every minute of your life energy and from everything you have the use of.
Waste lies not in the number of possessions but in the failure to enjoy them. Your success at being frugal is measured not by your penny-pinching but by your degree of enjoyment of the material world.
Veblen’s book, social commentator and writer Stuart Chase summarized his thesis this way: People above the line of base subsistence, in this age and all earlier ages, do not use the surplus, which society has given them, primarily for useful purposes. They do not seek to expand their own lives, to live more wisely, intelligently, understandingly, but to impress other people with the fact that they have a surplus . . . spending money, time and effort quite uselessly in the pleasurable business of inflating the ego.
People don’t need enormous cars; they need respect. They don’t need closets full of clothes; they need to feel attractive and they need excitement and variety and beauty. People don’t need electronic equipment; they need something worthwhile to do with their lives. People need identity, community, challenge, acknowledgement, love, joy. To try to fill these needs with material things is to set up an unquenchable appetite for false solutions to real and never-satisfied problems. The resulting psychological emptiness is one of the major forces behind the desire for material growth.
Respect the life energy you are putting into your job. Money is simply something you trade your life energy for. Trade it with purpose and integrity for increased earnings.
