Societal attitudes towards money and what money means to me
I have an embarrassing confession to make:
I am obsessed with and fascinated by money.
There, I said it. It’s fair to say that money is a dirty word. The desire to make lots of money is something often frowned upon in society.
It is associated with greed and materialism. Not freedom or altruism.
I used to subscribe to this way of thinking. In many respects, I still do. Money is an intrinsically personal and emotional thing. Your attitude towards it is greatly shaped by your financial circumstances and upbringing.
Raised in a lower-middle-class family, I have a contradictory view of money. On the one hand, I have had the privilege of never going without. Like the vast majority of those in the so-called First World, I do not know what it means to feel hungry.
That is not a statement that should be read lightly.
Money to me has meant a life of comfort. Because I take this for granted, I could not possibly desire a well-paid job the same way that those living in poverty do.
For many people, the accumulation of wealth is a ‘way out’. A way to radically transform the world they live in and for their loved ones too. This should not be overlooked. There’s a reason the ‘rags to riches’ story is timeless.
I’m currently listening to Money: Know More, Make More, Give More by Rob Moore. Considering I was a left-leaning Humanities student only 24 months ago, it is an eye-opening and challenging book. In a nutshell, it’s a defence of capitalism and an often compelling one at that. It’s hard to deny its premise that money is a vehicle.
It might corrupt some, but money helps good people do more good (and those it corrupts perhaps weren’t so good in the first place).
When the discussion turns to Ferraris, Moore’s arguments lose some of their conviction but it’s clear the man is extremely well read and means well.
The idea that you don’t have to get rich at someone else’s expense might seem obvious to you but it wasn’t necessarily obvious to me.
It’s easy to think that the shop-owner driving a nice car paid for it at his workers’ expense. But this view neglects to acknowledge that by starting the business he created their jobs and provides a desired service to his customers.
Generating wealth for yourself, when done responsibly with fair payment and pricing, can generate wealth and value for others too.
This can be a great source of motivation for us all.
The saver’s mentality
When I say I am motivated by money, I don’t actually mean spending it.
I wouldn’t say I’m particularly materialistic. I drive a 15-year-old Renault Clio, with no intention of changing it any time soon, and rent accommodation no better than my student digs to save on rent. You won’t find me in designer labels either.
Both my parents are responsible savers who skipped on expensive holidays to make sound investments. I am grateful to have inherited the same mentality, always looking for value. I feel physically uncomfortable wasting money.
From my very first pay cheque, I have been stashing away as much as possible into savings accounts and most recently a new investment account. These habits seem second nature to me but I know a lot of friends who continue to live in their overdrafts.
It might sound strange but I see saving as a kind of game.
I think it stems from the fact I am highly motivated by progress. As an individual, I have to be able to feel like I am moving forward, and in a way that is quantifiable.
In school and university, progress is easy to measure. You are handed grades and can add up your marks. You always know where you stand. As soon as you step onto the career ladder, this solid structure disappears. You might stay in the same job for years, seemingly making no day-to-day progress.
For a lot of people, increasing their salary is a way to feel like you are at least trending upwards. I can sympathise with this as money is ultimately about value.
To an extent, the more you are paid, the more you feel valued. Or at the very least, when you are underpaid, you feel undervalued. This means that money, even for the least materialistic people, can have a big impact on motivation.
For me, especially on a starting graduate salary, it isn’t so much about earning as saving. The game is about being smart with my money. Cutting out shop-bought coffees and saving £50 per month. The same way I tried to ‘hack’ the assessment criteria back in school, I now look for money-saving shortcuts. I take pride in the fact that I can make a smaller salary go a lot further than more flashy and impulsive peers.
The need for financial education
It amazes me how the vast majority of us are allowed to leave school with little to no knowledge of personal finance. Dealing with household bills for the first time, translating the various tax deductions and cryptic codes on a pay slip are significant challenges.
Even for someone with an A-level in Maths like me.
It wasn’t until recently when I read a very simplified analogy in Sapiens by Yuval Noah Harari (which I cannot recommend enough) that I got my head around the mechanics of credit:
How £1,000 deposited in a bank is lent out to a borrower, creating an additional £1,000 of ‘imaginary’ money (credit) – additional because the original depositor could still withdraw their £1,000. This multiplication can take place up to 10 times within regulation and greatly explains economic growth as well as financial crashes.
Like many people, I had no idea about the 2008 housing crisis until I watched The Big Short and was inspired to start Googling the recession to educate myself.
There are basic principles that everyone would benefit from understanding.
Like the idea that storing all your money in a savings account isn’t as safeguarded as you might think. Not when you get an interest rate of 0.5% and inflation sits at 2.5%. People don’t realise they are losing 2% of their hard-earned cash every year.
I’m not saying all 23 year-olds should have a financial five-year plan. Or spend their Friday nights researching compound interest and exchange-traded funds. But unlike Monopoly, money is a game you have to play, whether or not you understand the rules.
A little bit of knowledge goes a long way and there are so many resources out there. Why not take 30 minutes and learn the fundamentals from one of the richest men on the planet and history’s most success hedge fund manager, Ray Dalio: