#20: 7 magnificent money lessons that have nothing to do with money

1st February, 2020

Welcome to the Idiot Money newsletter. The newsletter that wishes it were a library.

This week: becoming wiser with money by studying wisdom, not money.

Becoming wiser with money has almost nothing to do with learning about money. It has a lot to do with learning practically wise lessons from elsewhere.

A quarter of my degree was based on a paper entitled ‘Money’. I’ve got enough professional qualifications covering the finer points of tax, investing, and financial planning to ruin a civilised dinner party or scare off a first date. They taught me almost nothing of any practical worth when it comes to using money to enhance the Goodness of my life.

Other stuff I’ve learnt, however – from economics, philosophy, psychology, neuroscience, psychotherapy, sociology, and history – feels more valuable than getting in on the ground floor of the greater-fool GameStop elevator.

These are some big ideas that have transformed my – and I hope can transform your – ability to turn money into a Good Life.

1. Economics: Everything is a resource-allocation game (aka there’s no such thing as a free lunch)

Life is a resource-allocation puzzle. Economics is the study of how best to allocate scarce resources. Your job isn’t to accumulate resources, it’s to allocate them. And the more of them you have, the more important it is to allocate them well: the greater your ability, the greater your responsibility.

While as a subject economics is notoriously mostly nonsense, this misses the point that those trained to think like economists tend to think more clearly and creatively than most (there’s actual science on this; see examples in David Epstein’s Range if you wish).

We want to avoid the numbers-based forecasting part of the economics world, but we want to embrace an approach to our individual lives that understands that everything is a trade, and that most of the time what we’re trading isn’t money.

Becoming wiser with money is in part a process of seeing opportunity costs as clearly as monetary ones. And – because thoroughly analysing opportunity costs with every decision is impossible – of establishing them as the decision-making default.

2. Philosophy: The unexamined life is not worth living

Philosophy, before the logic-choppers and librarians invaded, is about how to live. As Pierre Hadot wrote: philosophical knowledge is ‘not just plain knowing, but knowing-what-ought-to-be-preferred, and hence knowing how to live.’ This knowledge is ultimately your only goal (see Maxim of the week below).

What financial philosophy is, and why it’s necessary, is the subject of this section of the book, (and indeed underpins the whole of Part One). We also covered the meaning of Socrates’ assertion that the unexamined life is not worth living in Idiot Money #1 and the pure idiocy of chasing money precisely to make unconscious choices in Idiot Money #8.

In the words of A.C. Grayling: ‘if you don't think about your values, and your aims, your goals, and what sort of person to be, and how to live your life, then you’ve yielded up the direction of your life to chance, and to others, and the decisions that other people make. And then you're no better than an animal being driven about by things that happen around you and you've lost autonomy; you're not the governor of yourself.’

In short: examining your life is necessary to living it well, and examining your money choices is at the heart of this process.

3. Psychology: Environment control

Psychology is surprisingly useless at helping us use our money to live better lives. As much fun as it is to point and laugh at the silly things we (or other people) do with money, the psychology of money usually goes no further than describing these silly things, rather than doing anything about them.

When it does move from description to explanation, or even on rare occasions to prescription, it’s usually in the sense of helping us to make better unconscious decisions (via environment control) rather than tackling the root causes that stop us from making better conscious decisions by default in the first place.

However well psychological nudges work, they all start too late. They save us from symptoms, but do little to cure the causes. Even the best-intentioned behaviour changes are doomed to stumble if the underlying worldview – which is being continually reinforced faster than any behavioural prescriptions can keep up with – remains looking at the world in a distorted, self-deceptive way.

All proper change happens not at the environmental, but at the neurological level...

4. Neuroscience: Neuroplasticity

Neuroplasticity – the capacity of your brain to rewire itself and cultivate more useful connections – is the framework for all meaningful success. It’s the magic link between seemingly insignificant actions and the hugely significant shaping of your life story.

If you want to change anything, what you really want to do is make one pathway in your brain weaker, and another stronger. This isn’t always easy, but it is systematic (and therefore simple to do if you care enough) and it’s the only sort of change that’s sustainable.

In many areas, short-term, unsustainable change is fine, but you live with money every damn minute of every damn day. There is no more valuable area for you to take conscious control of how your brain is wired.

As explained in this section, rewiring your brain is about paying focused attention to what is relevant to the Goodness of your life, in thought and action. As Norman Doidge wrote: ‘Paying close attention is essential to long-term plastic change […] While you can learn when you divide your attention, divided attention doesn't lead to abiding change in your brain maps.’

And to any old dogs out there: do not be dispirited! You can learn new tricks! As Michael Merzenich wrote, if an adult brain pays sufficient attention, ‘everything that you can see happen in a young brain can happen in an older brain.’ In short, if you find yourself using ‘that’s just the way I am’ as an excuse for unwise behaviour, you’re being an idiot.

5. Psychoanalysis: Becoming an editor of your life story

If you fully embrace your neuroplastic potential, psychoanalysis is of limited use. Because wherever an idea comes from, it looks the same to your brain, and if you can change that look, the origin story is unnecessary.

A psychoanalytic understanding of an idea’s origins may help persuade you how deeply certain stories are embedded, and how they needn’t necessarily be true. But if you can open your mind to the possibility of rewriting those stories anyway, where they came from is irrelevant.

All neuroplastic change involves catching yourself unthinkingly going down one path, stopping, and consciously going down a better one instead. Where psychoanalysis is most beneficial is if understanding unhelpful beliefs (e.g. as wording implanted by your mother or father, or as a symbol of an underlying fear or insecurity) makes it easier to catch them.

6. Sociology: The difference between society and culture

We want belonging, connection. In a society, belonging comes from rules; in a culture, it comes from traditions. Rules are something you have. Traditions are something you express, and help to create, or evolve. Where societies are bound together by shared external goods, cultures are bound by shared internal values.

Societies use symbolic possessions to know who is in, and who is out. Cultures identify each other through character. Luxury goods, for example, as symbols of the separation between different strata, are an expensive entrance-fee for playing by society’s rules.

One’s society, as defined by geography, may be wedded to unhelpful worldviews, but societies are wedded to all sorts of nonsense that, assuming one doesn’t live in an authoritarian state, one doesn’t have to choose to sacrifice their wellbeing to.

So screw society, choose culture.

7. History: Perspective, and ‘everything changes, except woman and man

History is the world’s greatest ever science experiment, disguised as a series of art exhibitions. While ‘other studies,’ wrote historian Will Durant, ‘may tell us how we might behave, or how we should behave; history tells us how we have behaved for six thousand years.’

It is both our gift and our curse that we can still learn so much from the study of a world that’s been obstinately refusing to do just that since man first put pen to papyrus. We’re living in the richest ever age, and while at the macro level, we’re slowly allocating better and better, at a micro level, we’re just as dumb as ever.

However we express our struggles with using money to live better lives, they’re all simply variations on an unchanging theme. To study history is to remember this and to get a sense of perspective. For example, if you can’t be happy being one of the richest 0.000001% of humans to have ever lived, your problem probably isn’t money. History prods us to stop and ask: if a belief didn’t work for billions of people, in millions of settings, over thousands of years – for example, equating money with Goodness – is it really likely to work for you?


There’s one deliberately major omission from this list. It’ll get a post all to itself soon.

Becoming wiser with money has almost nothing to do with learning about money. Knowing facts about money or making money does not indicate any sort of wisdom. But how you use what you know, and what you’ve made, is one of the surest signs of your wisdom… or your idiocy.

Money Maxim of the Week

This week: Principle #2: There is only one goal

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.

Every short-term goal is a subgoal of living a Good Life. Achieving a specific aim is a tree; living well is the forest. Don’t waste time on trees that don’t add to the health of your forest.

It’s amazing how much energy can be directed towards a goal while never stopping to check if it’s actually worth it – if it actually makes your life better.

Partly this is because the specifics of what makes your life better have a habit of changing, and we don’t tend to be fans of that. Partly it’s because we’re also not massive fans of working out what we actually like, versus being told what to like. Mostly it’s just idiocy.

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