My money philosophy

I’m attempting to distill my thoughts about money into talking points for All the Money in the World publicity. In my maturation as an author last time around, I had a little light bulb go off: the vast majority of people who hear of your book are not going to read your book. In essence, your book becomes your talking points. This can be frustrating if you think the prose is one of the more attractive parts of the book, but I did become a little less obsessed with, say, a single sentence’s construction on p. 87.

I also thought, more, about writing the book with talking points in mind. Here goes:

1. Sweat the big stuff. For most people, the key to less financial stress is to spend less on their houses (and to a degree, cars) than the real estate calculators say you can. Sure, houses can be investments, but so are other things, like actual investments. Spending less on your house frees up space for all manner of small indulgences which do a lot to boost happiness. You can also do what we did and move to a cheaper state.

2. Don’t scrimp more, make more. Money is a tool. As such, having more of it enables you to do more things. High income people, for instance, are more likely to save. They are less likely to live paycheck to paycheck. Sure, some people suffer from lifestyle creep, but not everyone. If you’re big into frugal practices, you might try spending an equal amount of time pondering ways you can earn more money. Income is more malleable than we often think.

3. Rethink retirement. The usual retirement goal, to build up enough assets to live comfortably off the investment income, is going to be a stretch for most people. Fortunately, most Americans say they wouldn’t stop working if they won the lottery, so perhaps we’re asking the wrong question. A better question is to figure out what kind of work you’d enjoy doing in your later years — hopefully something flexible, creative, fun. Something you’d never want to retire from.

4. Spend to make your life easier. We all have 168 hours a week, and all the money in the world can’t buy us a second more. Money can, however, buy us back hours from life maintenance and non core competency tasks so we can spend more of those 168 hours on things we enjoy.

5. Money is completely fungible – a dollar spent on one thing can always be spent on something else. Figure out what you love to do, and how much that costs, and then view all purchases in light of that. A $50 sweater could also buy you and a friend a trip to an art museum, complete with lunch. A $200 impulse buy could be viewed as four lunches and afternoons with your friend, or a weekend getaway with your spouse. What would you enjoy more?

6. Use your money to create a better world – starting with your own neighborhood. You can build strong social institutions with your philanthropy, and figure out ways to invest in order to create a thriving community in which you’d want to live. Shop local and spend your money on people.

7 thoughts on “My money philosophy

  1. Great points!

    I struggle a lot with #4…I’ve definitely been guilty of trading my time for more money at times when I should have been doing exactly the opposite. I have two kids and left my job a few years ago to get a Ph.D. My husband works. I cook, he cleans.

    Time is valuable, so what I should be doing is teaching him to make a couple of simple meals so he can share in the cooking, and then hiring some help for the cleaning. But I don’t do that…for some reason I keep thinking that money is the thing we need more of (we don’t, really) and I do stupid things that value small amounts of money over my time.

    My extreme example of this: one semester a couple of years ago I was actually insane enough to agree to teach two classes as an adjunct instructor for a local community college, in addition to the class I was teaching for my graduate assistantship and, of course, my own course work and research. There really wasn’t enough time to do everything properly, and the extra money was largely offset by increased food costs anyway, since we ate a lot of take-out and drive-through.

    That was easily the biggest mistake I’ve made in the last five years…but I like to think I’m learning. Some day I’ll find that balance between money and time!

  2. Two additional point suggestions
    1) Know what you have control over and what you don’t in terms of earning and spending.
    For earnings: If you’re a nurse, you can make more money by working more hours, but your salary scale is fixed. If you’re a teacher, your raise is set by the union and better districts usually pay higher salaries. If you’re a bus driver, your salary is set by your employer. In relatively few jobs is earning significantly more realistic, unless you moonlight at another job. You can make choices about housing or cars but usually not medical bills.

    2) Remember your marginal tax rate. My husband or I has to earn two dollars for each dollar I save at “low value” activities (using a coupon for an oil change, etc.) to break even. I used to double the rate I paid my housecleaner to account for taxes and realize I only broke even. (which was OK- I hate houscleaning)

  3. I agree with all this including the retirement stuff and also the comments about taxes. We should change our tax structure so it encourages more work and doesn’t encourage so many folks to work off the books. I love to “buy” things with Am Ex points b/c I don’t have to count that as a draw from my business and then pay taxes on that, which kills me since as a business owners for many years I drew no salary. I do probably pay less taxes than a regular W-2 employee but I also have to do a lot more with my money than a regular employee (pay my employees, a good accountant thanks to our complicated tax policy, childcare, business investments)
    I also think that at this time of year when folks are planning their new year’s resolutions if we add stuff ot our lists we should think about cutting something.. that is if I want to do x,y and z maybe I need to not do a, b, c. I think an article and examples of this would be a nice take on the whole new year’s resolution list.

  4. Agreed on all points. The word “retirement” is pretty much gone from my vocabulary. Heck, I’ll be almost 60 by the time my youngest gets her bachelors degree (assuming she sticks to the 4-year plan, lol!). Expecting to retire at 65 in my case is insane.

    I loved 168 Hours, Laura, and I’m looking forward to the next one. All the best in ’12.

    1. @Bruce – I think “retirement” should be gone from most of our vocabulary. The idea should be to find some kind of money-producing endeavor that one wants to do. It needn’t be full-time or year-round, but hopefully something flexible and fun… All the best to you too!

    1. @Arden – thanks! Two months until the book is out. I’m quite excited to see the first run copies myself…

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