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#101: The life cycle of a financial idiot
22nd August, 2022
Welcome to the Idiot Money newsletter. This week, how to mess yourself up with money at every stage of your life.
Every one of these is a real thing done by a real client, leading to a real regret. Wherever you are on this timeline, you may like to try to avoid repeating these mistakes.
1. Childhood. I’m living a typical childhood, psychologically speaking. Not that I know that now, of course. My world is built on parental praise, like a dog working out how to win a ‘good boy’ and a pat on the head. My parents praise expensive things. My value system thus quickly becomes myopically material. ‘The child’s inevitable aiming for praise becomes the adult’s inevitable aiming for money’ as someone once wrote. This worldview will remain unchallenged, and I will remain a psychological child for the rest of my life.
2. School. I’m at school, where comparing possessions is a popular pastime. It’s important at this age to establish solid rules of judgment. And solid rules need solid measuring sticks. It’s all very well to talk about character-building, and I’m fairly sure my school’s website advertises just that, but you can’t very well actually make that your aim. Where’s the league table? Where’s the membership badge?
3. University. I’m at university now. It’s one of the proper ones, thank you for asking. It’s largely an extension of school, only now the comparison games extend to the whole world. At least they didn’t have social media when I was at school! Most students don’t have any money. No students – including, or perhaps especially, the ones that have loads of it – have any idea of how money really works in context. Although of course I am blissfully unaware of this right now. Dreams start to form of what I may do to earn it. Dreams start to die about what I may do to enjoy earning it. I do an internship that confirms that the point of work is to be miserable, and to earn as much as possible to justify this.
4. Starting out. As I enter the ‘real world’ my parents give me a financial helping hand, by helping me buy a house. I don’t get a huge say in which house is bought, or any alternative means of the transformative experience they’re really trying to afford me (like, say, backing my vision for a business venture instead). It would of course be terribly ungrateful to worry about this, so I don’t. On some level, I understand that the two key features of any such gift are that its monetary amount is a measure of how much I’m loved, and that the gift is made less to me, and more to the ghosts of my parents themselves when they were my age.
5. Career choice. On the one hand, I want to be a theatre director. I’d be great at it, I’d enjoy the journey to get there, and those I know doing it are all remarkably fulfilled. But on the other hand, have you seen the starting salaries at top law firms? The purpose of a job isn’t purpose, but protection. And nothing says financial security like being a lawyer. Never mind the relationship-ruining, hobby-killing hours, and the fact lawyers rapidly lose the ability to smile. What sort of security is a smile? I’m so confident this is the right call that I’ll do it for 50 hours a week for the next 30-40 years without ever questioning it again.
6. Living it up. I’m in my 20s and have disposable income. I’m living as if the point of having money is to not think about it. I mean, I think about how much I’m earning – and will earn – all the time. Because how else am I supposed to know if I’m being successful? But spending is different. Which is lucky, given how much of my spending I simply don’t remember. A friend told me that if you invest the same amount between 20 and 30, you end up better off than if you start at 30 and go until 50. But he doesn’t even own one Hermès tie; if he won’t respect his neck, I won’t respect his advice.
It’s arguable that regularly dining in places that are trying to out-do Abu Dhabi in their garishness, and where people are employed purely to say hello to you with an insincere smile as you walk in is maybe a bit silly, but one’s got to get with the times: camaraderie and connection are out and envy-likes on Instagram are in.
I am a bit worried about my waistline though. And my skin. And in truth I probably spend more time reliving old sporting glories than actually playing sport these days. But that’s fine. It can wait. I’ll have plenty of time for that when I’m retired. And I’ve just hired a new personal trainer. The old one wasn’t much good. I paid him a small fortune for six months and I’m no fitter now then I was at the start. Despite him promising he could work around my lifestyle, he’s now trying to blame prioritising the odd drink and the occasional deadline over his time. Take some responsibility, man! I p-a-i-d you. These are your problems now.
7. Career ladder. My job keeps getting better. By which I mean it keeps paying me more and giving me new titles. I’ve turned not worrying about how it directly contributes to making everything else worse into an art form. It’s so handy how all that stuff it makes worse can’t be measured!
8. Housing ladder. Square footage maketh the man. It must do, otherwise why would everyone sacrifice so much for it? I’ve moved maybe five times now. I’ll assume you’re as impressed by that as you are by the unused possessions I’ve accumulated along the way. My home is a museum for the ‘optionality’ of money – money definitely does buy the opportunity to do all sorts of things that don’t really make much of a difference, doesn’t it? I jest; it’s all for the wife and children, really. Obviously, none of these possessions move me even as much as something like listening to Bach’s St Matthew’s Passion, but you can’t very well put that on a net-worth statement!
9. Momentary mid-life reflection. I’ve been charging along for decades now, and ‘security’ and ‘freedom’ still feel so far away. As far away, in fact, as they ever did. I still worry about money. They’re different worries to those I’d have on a different path, I guess, but they’re still worries. The brain isn’t terribly good at distinguishing such stuff. I guess ‘worry’ doesn’t scale linearly. If it’s not one thing, it’s another; rather than it being everything all at once.
I found out the other day that my Hermès-tie-less friend ‘retired’ at 35. He claims to do everything he enjoys doing, but I know he’s really ‘worse off’, because he spends 10-20x less than I do. He’s never even flown first class! That, or it’s ‘real’ but he’s secretly won the lottery and actually has an Aston hiding in his garage. Maybe that’s it. I thought about interrogating him on this when we were both at a wedding the other day, but he was always busy in the centre of a group of people, and despite flashing my new Rolex at the bar on my own all night, he never came over my way. Not that I didn’t chat to a few people. But I didn’t have anything in common with any of them. Frankly, I think they were a bit simple. I cracked out this jolly interesting story about this deal I’d done, and how it was so clever that the taxman didn’t have a freakin’ clue what was going on, and how it took months of back and forth and a jolly expensive QC to finally settle it – all worth it, of course – and everyone I told it to looked at me like I was talking Greek!
10. Back to the grind. On the back of a particularly clever deal, I’ve bought another holiday home, as one does when one finds oneself with a spare chunk of cash. In truth, holidays now are nothing on those I had when I was in my early 20s. But that’s because I’m older now, not because I’ve given up exploring in favour of desperately seeking compliments on my choice of chalet, and the car I drive to them in, which is the only time it gets a proper run out, given the demands of the job and the fact I live in London. Plus of course I can sell the homes on, which will come in handy, even though I doubt it’ll happen until I’m dead. But what else am I going to do?
11. Retirement. I’ve been pondering retirement for years. I’ve even seen a financial planner about it. After embarrassing me helping me undo some of my more maverick investment decisions, discovering that the expensive investment managers were actually selling snake oil, or taking advice from friends, or the Sunday papers (even the good ones) they convinced me I have ‘enough’ to do so. I pretend to be unsure about this, but really I know when people talk about me they start with my salary, and I’m afraid of what they’d say without that. Though obviously I’ll gather up some non-exec income. Besides, while I’m definitely not extravagant, I’ve been thinking of getting a yacht. And proving how much you care for your children isn’t cheap. I feel sorry for those parents that are too poor to prove this. Heck, can you imagine living on less than 100k a year? Yes, I know basically everyone that’s ever lived does, and it feels weird to think that they’re all miserable – and yes people on millions a year can clearly still be miserable too, but who knows what’s going on there? But still, it’s weird, right? Right?
12. Divorce. And I thought it’d be the hours in the office that ended the marriage, not having more hours at home! Pretty ungrateful if you ask me. I gave that woman everything. How could she claim that ‘something’ (which she couldn’t define, by the way!) was ‘missing’? Not to worry, I have a much better lawyer than her; it won’t cost me that much.
13. Problem children. What is it with children? One runs away. Another gets into drugs. And even the good one, well, I’ve a feeling I’ll be funding him forever. What is it with giving people the best of everything (school, clothes, coaches) and them screwing it – and themselves – up? I blame society. It’s a wonder every kid isn’t screwed up. I guess some get lucky. How unfair is that?
14. Problem health. I’m… not well. This certainly wasn’t part of the plan. Rather restricts my retirement options. The doc says it’s manageable, but incurable. He obviously doesn’t know how stubborn I am. I’m flying to the US to find a better doctor. The doctors over there charge a lot more money. They’ll find a way. Great health has been a goal of mine (and everyone else, I suppose) since I was 20. And, true, I’ve never prioritised it as well as I could have, but who’s got time to live like that?
15. Happily ever after? I can’t do much these days. So I don’t. I go on holidays to hotels where the point is for other people to do stuff for you, and meet with other people doing nothing. These people, like me, are ‘well connected’. Except I don’t feel well connected to any of them. Or anything else.