Idiot Money
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  • #1: The correlation between having money, managing it well, and living a good life
  • #2: Don’t know where to begin sorting out your finances? It’s not where you think it is
  • #3: Your relationship with money is complex. But it needn't be complicated.
  • #4: Spending £450k on being bad parents
  • #5: Idiot Profile: Private-Jet Guy
  • #6: What the bloody hell is a ‘relationship with money’ anyway?
  • #7: What fund managers can teach us about what really matters
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  • #9: Idiot Profile: An oligarch with a gun
  • #10: If Kanye West were a financial adviser
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  • #12: Financial Independence: An (Actual) Idiot’s Guide
  • #13: Let’s talk about money, baby
  • #14: New Year's Non-Idiotic Financial Resolutions
  • #15: New year, old message
  • #16: "Just tell me what to do"
  • #17: How to choose better investments
  • #18: You cannot count. This leads you to make idiotic financial decisions.
  • #19: What's your number?
  • #20: 7 magnificent money lessons that have nothing to do with money
  • #21: The merits of money are negative
  • #22: The psychoanalysis of money, or How to screw up your children’s financial worldview
  • #23: The ghosts of money... and how to bust them
  • #24: My favourite way to think about investing, part 1
  • #25: The ABC of money, part 1: the three self-deceptive poisons
  • #26: Consider the pineapple: the perfect symbol of idiot money
  • #27: The ABC of money, part 2: financial nobility, an overview
  • #28: My favourite way to think about investing, part 2
  • #29: The ABC of money, part 3: financial nobility, step 1
  • #30: My favourite way to think about investing, part 3
  • #31: The ABC of money, part 4: financial nobility, step 2
  • #32: The idiocy of ignoring impermanence (the ABC of money, part 5)
  • #33: The six financial stress responses: what's yours?
  • #34: My favourite way to think about investing, part 4: betting beyond the basics
  • #35: The ABC of money, part 6: financial nobility, step 3
  • #36: My favourite way to think about investing, part 5: cost-benefit investing
  • #37: The ABC of money, part 7: financial nobility, step 4
  • #38: The best diet advice and the best financial advice are the same
  • #39: The ABC of money, part 8: The Eightfold Path and interdependence
  • #40: The dance of becoming wiser with money
  • #41: Building a better money brain (the ABC of money, part 9: neuroplasticity)
  • #42: The dumbest damn thing I’ve ever read in personal finance (part 1)
  • #43: The dumbest damn thing I’ve ever read in personal finance (part 2)
  • #44: A story of lions and loss
  • #45: The ABC of money, part 10: what meditation isn’t
  • #46: The ABC of money, part 11: what meditation is
  • #47: Idiot Profiles: Lord and Lady Jewellery Addiction, Teenage Ozymandias, and me
  • #48: Living mindfully with money (the ABC of money, part 12)
  • #49: Give, give, give, me more, more, more
  • #50: Our most costly money problems are the ones we don't see
  • #51: Align what you care for with what you care about
  • #52: Do what only you can do
  • #53: Money for many means happily ever after… but after what?
  • #54: The ABC of money, part 13: financial enlightenment
  • #55: Identifying your hidden money addictions
  • #56: Treating your hidden money addictions
  • #57: Idiot Money Maths #1: How much does it cost to keep you happy?
  • #58: The ABC of money, part 14: the secret shackles of financial freedom
  • #59: The ABC of money, part 15: freedom to, freedom from, freedom for
  • #60: If you go there blindfolded, you probably won’t like where you end up
  • #61: Idiot Money Maths #2: What is your default unit of spending?
  • #62: Balance isn’t stillness
  • #63: A problem shared
  • #64: How to live well, even in a palace (the ABC of money, part 16)
  • #65: Denunciation is still attachment (the ABC of money, part 17)
  • #66: “What do Blackheath people do?” (a story about how not to do financial planning)
  • #67: The ABC of money, part 18: Addicted to a dream
  • #68: What hot new financial knowledge are you likely to find in 2022?
  • #69: Red Pill Financial Planning: Escaping the Money Matrix
  • #70: The nasty narrowness of number-governed living
  • #71: Getting into Financial Flow
  • #72: The ABC of money, part 19: Denunciation bad, renunciation good
  • #73: I, Robot? Money and the misleading mechanisation of life choices
  • #74: Kondo your credit-card statements
  • #75: The rule of 72 (and its oft-overlooked implications)
  • #76: Forget about improving your decisions. Focus on improving your decision-making skills
  • #77: Seeing your financial world more clearly (the ABC of money, part 20)
  • #78: How to lose 2 1/2 stone in 6 months: an intro to the best non-fiction book I've ever read
  • #79: Your money worldview is (literally) half-brained
  • #80: Cost-consciousness beats cost-cutting
  • #81: Financial change that doesn’t start from your financial worldview is selling you short
  • #82: The overlooked truth of reality that is messing up how you live with money
  • #83: How money hijacks your hierarchy of attention
  • #84: The value of (almost) everything to you is nothing
  • #85: Financial philosophy > Financial psychology > Hot investment tips
  • #86: Five regrets of the rich
  • #87: Sum malfunction: a sure-fire way to spot if you’re being a financial idiot
  • #88: The Micawber Fallacy, or what your Dickensian maths misses about spending wisely
  • #89: The tell-tale signs of a poor financial worldview
  • #90: Wanting wisdom, craving financial fortune cookies
  • #91: You don’t need a scammer to be scammed: your desperation for an ‘answer’ will do almost as well
  • #92: Are you reading the wine list the wrong way around?
  • #93: Some personal finance puzzles and how not to solve them
  • #94: The main reason your relationship with money is so messed up
  • #95: The tyranny of the takeaway
  • #96: Deep wealth v shallow wealth
  • #97: What seeing your financial life more clearly looks like
  • #98: Making more of your money isn’t a maths problem
  • #99: Is what you’re doing for and with money working?
  • #100: Where to start, where to go, what to do about what’s stopping you
  • #101: The life cycle of a financial idiot
  • #102: I can read your financial mind
  • #103: Don’t worry about playing a game better when there’s a better game to play
  • #104: Reflections on two years of this newsletter, and why I’m taking a six-month break
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#18: You cannot count. This leads you to make idiotic financial decisions.

18th January, 2021

Previous#17: How to choose better investmentsNext#19: What's your number?

Last updated 4 years ago

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Welcome to the Idiot Money newsletter. The newsletter that knows a, b, c, isn't as easy as 1, 2, 3.

This week: becoming wiser with money by understanding that money isn't the universal, objective, instrument of calculation you thought it was.

To make wiser decisions, recognise that you cannot count accurately

You may have been doing it since you were three, but you’re crap at counting. Don’t worry, everybody is. Sure, you can add one to any given number, but you can’t count in a meaningful way. Recognising this is key to making wiser decisions.

In terms of how numbers translate to meaning, counting tends to go something like: one, two, three, some, lots, loads. We’ve seen how important precise appreciation of opportunity costs can be to making wiser decisions. Recognising commonly overlooked inputs is crucial, but if you can’t count them properly, your decision-making could still suck.

When it comes to getting a grip on making the most of your resources, it would be great if you could appropriately distinguish between a million and a billion, but you can’t. No one cares 1,000 times more about a billion than a million. They’re both ‘loads’. One is intellectually a bit bigger than the other, but in terms of guiding our actions, one unimaginably large number is pretty much the same as the next one.

This is a problem, because to make wiser decisions, we often need to be sensitive to this sort of scale, but our decisions are driven by feelings that aren’t up to the job. In these situations, we need to find a way to delegate the decisions to the calculators. This often feels weird and inhuman, but not doing so could lead to inhuman actions.

This is felt most keenly in donating to charity, where our gifts tend to be subject to the assertion possibly misattributed to Stalin, that ‘a single death is a tragedy; a million deaths is a statistic.’ One ‘identifiable victim’ will forever exert more influence over our wallets than a million otherwise identical souls.

As Nate Soares wrote:

The loss of a human life with all is joys and all its sorrows is tragic no matter what the cause, and the tragedy is not reduced simply because I was far away, or because I did not know of it, or because I did not know how to help, or because I was not personally responsible. Knowing this, I care about every single individual on this planet. The problem is, my brain is simply incapable of taking the amount of caring I feel for a single person and scaling it up by a billion times. I lack the internal capacity to feel that much. My care-o-meter simply doesn't go up that far. And this is a problem.

This isn’t just about charity (though as we’ll see later, that has a uniquely important role to play in – selfishly – allocating resources towards each individual interpretation of a Good Life). Just as Soares continues, that ‘prominent altruists aren't the people who have a larger care-o-meter, they're the people who have learned not to trust their care-o-meters’, so those living well aren’t those that are better calculators of the opportunity cost of every decision. They’re the ones who’ve learned to better control their decision-making machinery. Who’ve learnt to live examined lives with a view to focusing on what makes their lives better and ignoring everything else. Who’ve learnt, as per our earlier discussion of ‘the two types of financial errors’, to cultivate better filters for problem formulation, and better processes for problem solving.

Alas, the mind-altering drug of ‘more’ makes us abandon any idea of a filter. And it doesn’t matter how great your processing power is if you’re tidying up stuff that should’ve just been thrown away.

There is, however, a potential upside. Our inability to cope with big numbers is bad when thinking about the world, but it could be good if we’re thinking only of ourselves. If we learnt to trust that we were incapable of feeling any different if we hoarded wealth on any part of the ‘loads’ scale, from ‘can easily afford the odd holiday’ to ‘billionaire’, we’d probably waste less of our lives trying to gain more wealth simply for the sake of it and do something a bit more meaningful instead. We may come to understand, as explained by Derren Brown in Happy, that ‘while it remains clear that having less than you need is a source of unhappiness, having more than you need does not make you happier.’

Train to hear these words and phrases as you do you own name across a crowded room, then stop and check that the belief underlying your automatic reaction is true.

If you're making excuses for the quality of your life because you've confused it with the cost of your life, stop and ask yourself if it's really a matter of money.

Money of the week

This week:

You're already . You're quite possibly already in 'the 1%'. Unless you think only a tiny percentage of people living in a tiny percentage of the world's (mostly Western) cities are worthy of you acknowledging their existence.

Maxim
Trigger #10: Rich, 1%
rich