Money

My father told me two things about money that had a profound effect on my life. They were:

“Money should buy freedom, not chains.”

and,

“It is easier to make money doing what makes you happy than to buy happiness with the money you are paid for doing what makes you miserable.”

Even though I can remember my father’s explanations, at the time (age 17) I thought he was off his rocker.

He explained that if you had a certain amount of money, and then someone gave you more money, you should have more options open to you.

This seemed self-evident, but I didn’t buy the part about chains.

Imagine someone who always wanted to be a school teacher who, in order to make more money, became a principal, then moved to the private sector as a salesman, manager, and finally a senior vice-president earning ten times his potential salary as a school teacher.

Since our hypothetical teacher had given up teaching for more money, you would expect that finally, as a highly paid executive, she (or he) should have plenty of money to finally fulfill an ambition of being a teacher without the money worries that plague most teachers.

But for nearly all, such a person sees their options dwindle rather than expand. They measure their success in how much money they make and the prestige that comes with position. From Senior Vice President, they only want to become President.

Worse yet, this person often borrows against an expectation of a rosier future and finds themselves a slave to home payments, credit card debt, private school bills, college tuition, and the economic cycle.

I recently had lunch with a friend who has started a financial consulting firm. His distinguishing feature is that he will tell his clients the truth rather than what they want to hear.

He said, “Ninety-percent of Americans live beyond their means — no matter what their means.” He gave an example of a client in mid-life who was worth $15 million from which he earns $650,000 a year. However, he spends $1.2 million a year and he wants my friend to find him a safe investment to support his lifestyle. This is a mathematical impossibility. My friend could calculate how quickly the client will find himself on welfare.

I wonder how much misery must this client need to overcome when $650,000 a year doesn’t do the trick.

I like to end these pieces with succinct words of wisdom. I can do no better than to repeat what my dad said to me during my Senior year in High School, just before he gave up a career in the business world to return to sculpture full-time.

Money should buy freedom, not chains.

It is easier to make money doing what makes you happy than to buy happiness with the money you are paid for doing what makes you miserable.