What does it mean to be “good” with money? Does it mean spending very little of it, spending a small portion of it relative to one’s income, spending it judiciously, or does it consist of some other quality? Conversely, what does it mean to be “bad” with money? Does it mean spending a lot of it, spending a large portion of it relative to one’s income, spending it wastefully, or does it consist of some other quality?
By and large, I don’t believe there are any “wrong” ways to spend money (aside from otherwise immoral/illegal purchases). I think a case could be made for sacrificing one or one’s family’s financial security in exchange for wasteful things, but where to draw the lines that define what those words mean is problematic and fraught with interpretation.
One thing I struggle with is knowing whether I’m spending my money well or not. If you don’t mind the $10s, they turn into $100s. If you don’t mind the $100s, they turn into $1,000s. If you don’t mind the $1,000s, well, you get the idea. Wasteful or otherwise inefficient spending adds up. At the same time, the value of $1 is relative to how many $1s you have. I’m no longer a broke college student desperately trying to save money while my car falls to pieces. If I inefficiently handle several $100s, it doesn’t really affect me, but does this make me “bad” with money?
Uh…I don’t know.
Over the course of my life, generally, people who experience increased earnings but continue to live as they did before usually get to see their money grow quite substantially. But how far does that need to go? I think lifestyle inflation is something to be guarded against, but I don’t know that all lifestyle inflation is necessarily bad. Living below your means is an intelligent way to benefit financially from contentment, instead of chasing endlessly the excitement of spending, but it’s also not desirable to be a miser who is psychologically tortured by the thought of owning or buying nice things, when circumstances permit it. There is no shortage of people who, having “won” the money game, simply refuse to enjoy anything “nice” because they insist on the image they have in their minds of what it means to be “good” with money.
So there’s a lot to think about here.
“Judge not, lest ye be judged”, so we say; but in practice, this is extremely difficult. When somebody tells me about something new they bought, I immediately form a judgement of this in my mind, sometimes positive, sometimes negative. I can stifle the thought, I can even acknowledged its disconnect with reality, but what I can’t do is not have it entirely: it is there, no matter what I do. And it is based largely on what I believe to be “good” spending and “bad” spending, and I’m sure this reaction is very similar for others.
I don’t know that there is any point to objecting to other people’s spending, though, and I think that’s why I have felt so free to speak my mind in this blog: I’m not having a conversation with an individual, and therefore don’t feel the need to mince words so as not to offend. It is true that my friends of course do not share all of my opinions, and this is perfectly fine, but it doesn’t change the fact that there are certain approaches to money that I find odious or regressive based on my own personal goals, and I often have few qualms calling these out for what I believe they are. At the same time, I rarely have any reason to actually approach people with these opinions, knowing that their goals and perspectives are different from my own. What I write in this blog and why is an interesting conversation, but not particularly relevant at this point: what I do know, though, is that my thoughts often come across as judgemental, sheerly, I suspect, because they are so honest; an honesty that doesn’t typically get expressed in polite conversation. But I have mixed feelings about this some times, as I haven’t solved the question of honesty vs. politeness. And this is just a blog, written largely for myself, with hopes that the ideas can be adapted by others. Not everybody sees it this way. I do understand.
The reservation of conclusion I think is the only way to try to live without judgement. That we formulate opinions so quickly and irrevocably I don’t think can be avoided, but what can be done is simply to not hold too tightly to these, or to not place so much importance upon them.
Money is such an interesting subject, though, because there are so many angles from which spending can be viewed, and it’s extremely difficult to compare even just the lives of two people. Some people may go through life saving relatively little and things still work out, while others work very hard and still come to ruin. This isn’t an indictment of principles, which represent valid strategy, rather than luck, but I think it’s safe to say there are many ways in which life can still “turn out” financially, though I think following principles is an excellent way to help eliminate the necessity of luck. As I like to say, you can get lucky and things can turn out, or you can make decisions that don’t require you to get lucky in order for things to turn out. I generally vote in the direction of robusticity, when it makes sense. Contemplating robusticity is half the reason I write.
At the same time, consider somebody who saves 30% of their income. They are considerably efficient with their money, and they amass quite a lot over time. But say they fall upon hard times and this brings them to the edge of their money. Should they have saved 40% instead, just to account for the rare future in which some temporary calamity brings them to the edge of their money, no matter how much they have set aside? I think this is why compassion is so important when it comes to financial matters, not because personal responsibility isn’t critically important (it is), but because we all face a host of unknowns. Preparing for the unknown is important, but I don’t know that we should expect somebody to so thoroughly prepare for the unknown that they live in miserly fear of anything even slightly negative happening in their future.
Relative to my income, I save quite a lot, but I seem to keep coming up against these snags throughout the year. A little money here, a little money there. It all adds up. At the same time, it’s hard to say that these snags, or mistakes, if you will, make me particularly bad with money, at least not compared to the fact that these quantities pale in comparison to what I effectively save. But I still feel bad. I still recognize some of those decisions as almost objectively poor. And there’s value to learning from past mistakes (which I have!) but I’m not so stoical that I buy nothing throughout the year. I’m in every position to simply ignore these mistakes, but as I’ve mentioned, $100s turn into $1,000s, turn into (…) . If I were more efficient, would this not be desirable? Or perhaps it is better to not let the perfect be the enemy of the good?
Would, perhaps, a sliding scale be better? To recognize one’s efforts on a spectrum?
Or perhaps by goals, the attainment of which being an indicator of how well or poorly you are handling your money?
It all seems very touchy-feely. I don’t know that you could find much objectively.
Having a lot of money could be a sign of good money habits and decisions. Or it could be in indicator of excessively risky investments that turned out fortunately. Or even simply a very high income, of which the saving of a small percentage equates to otherwise large sums. Perhaps, even it could be the sign of crime or exploitation. It would seem that how much money you have is not actually a great indicator.
I, personally, am very in favor of it being a sort of efficiency, the idea that what one owns either has high aesthetic value or high usefulness, being used on a regular basis. This naturally limits how much own, as only so much can be used on a regular basis, and there is only so much space for aesthetic elements, and this makes for a relatively financially stable life, not characterized by expenses of excess. But then there are no shortages of financially successful people with houses full of unused possessions.
Perhaps, then, we can assume a sort of goal achievement as an indicator of being “good” with money. If your goal is to work until age 65 and then retire, this is often (though certainly not always) attainable over such a very long period, and you can often get there with plenty of excessive spending (though certainly not unlimited). If in fact you attain this goal, is that not financial success? Except that there are many objections to this, namely that people do this because it is culturally recommended, and it may represent more luck than anything, as some simply won’t live that long. Sure, you could “successfully” retire at age 80, but that doesn’t mean it’s going to be a pleasant working life, especially after age 50. Besides, it is easy to fabricate deliberately weak goals in order to succeed at them. There are many very simple goals that most people would not consider especially noteworthy, though they may represent a successful step in the right direction.
Quite frankly, then, I’m not actually sure what being good at money necessarily means. Perhaps it means achieving your goals sustainably over time. Perhaps it means that you utilize resources in such as way as to bring the most happiness with the least amount of waste or worry. I’m not sure.
Perhaps it’s easier to describe things from the converse. Perhaps being “bad” at money means having very little of it, but this is clearly false, since there are many with low incomes who very judiciously handle what comes their way, they simply don’t have the means for amassing large quantities of it. Perhaps being “bad” with money means having very little of it relative to one’s income, but this isn’t true in the case of people who must afford expensive medical treatment, or give large sums, or take care of family. Being the converse of the former considerations, I think we still encounter the same types of problems. I think there is something that can be got at, but presently, it eludes me.
I don’t know, but I would like to think more about it. What is clear is that whatever the answer might be, it is likely much more nuanced than broad categories. Isn’t this how most things are? If I can coherently form any more ideas, perhaps I’ll write a part 2.
[Also, what does it mean to call somebody “good” at something? Are they always good? Good most of the time? Net good, compared to bad?]