#43: The dumbest damn thing I’ve ever read in personal finance (part 2)

12th July, 2021

Welcome to the Idiot Money newsletter. The newsletter that really should've lined up its happiness doesn't depend on external circumstances post earlier.

This week: becoming wiser with money by understanding that seeing money as a proxy for what you were praised for as a child is a sure-fire way to waste it

See also part 1.

What the rich won’t tell you tells you a lot about being rich.

Last time out, I claimed that a casual – likely unconscious – linking of one’s salary to one’s cleverness is both dumb and dangerous.

It’s worth repeating that this has nothing to do with the statistical correlation between IQ and income. Such a thing does exist, but it’s irrelevant here.

Because the danger comes from the way the belief constructs a worldview that makes it less likely you’ll make non-idiotic life choices.

Opportunity rich

The best thing about face-to-face financial planning is that it provides an expertly facilitated place for people to pay serious attention to the role of money in their lives. Given the inescapable contribution money makes to all our life choices, making the most of it without such serious attention is basically impossible.

In a world that’s so terrible at talking about money, this facilitation is obviously great for the people with oodles of money.

It’s also great for their advisers.

Many financial advisers will tell you theirs is a brilliant job because of the high margins and low need to do much actual work.

I, however, think it’s brilliant because few professions offer such an opportunity to help people live more meaningful lives, and by extension help the world better allocate its resources.

No one else comes close to being in the position to dig so deeply into an individual’s money worries.

(And if you think money worries go away when you have lots of money, you don’t understand money, or worry, and to do so, you should start here.)

That position presents the opportunity – and the responsibility – to identify and share the insights that emerge from doing this for multiple individuals… to bring to public light lessons otherwise kept in the darkest and most private prisons.

You can sometimes unwind the problems poor life choices create, but you can never unmake those choices. Investing in making better ones therefore always pays off. Someone with expert knowledge of what’s worked and what hasn’t for other people (and who can remind you of what’s worked and what hasn’t for you, when you’re so damn keen on ego-editing your own memories) is a great place to start.

Because of money’s role in life choices, becoming wiser with money is fundamental to making wiser ones. Unfortunately, because of how we, and society, are set-up to make money so screw with our minds, and to flee from the reality of uncertainty rather than give it a rom-com airport hug, life’s unrelenting rush of responsibilities is more likely to feel terrifying than empowering.

All those decisions on how to allocate money, time, and energy!

All those lives that could be led!

All those mistakes that could be made…

…and whose consequences could be catastrophic!

What a wonderful thing, therefore, that there are people who can help us learn from the experiences of others.

Who can help lessen the chances we’ll do something dumb…

…like prioritising our perceptions of other people’s perceptions of us over the real fulfilment of our potential to flourish…

…or sacrificing decades, and health, and relationships, and dreams, to a joyless job, the redeeming feature of which is the ability to buy expensive things that con us into believing they justify the sacrifices made to acquire them.

The private world of rich regrets

As I wrote last time: We live in a world where money excuses a lack of wisdom, character, and virtue, and therefore one in which on some level we believe it must be a substitute for those things.

On a societal level, a world that so casually uses money as a proxy for wisdom, character, and virtue elects idiots to high office. On an individual level, it leads people to make the sorts of choices with their lives that, when they finally stop to consider them, make them wonder what the fuck they were up to.

One of the reasons I left the world of one-on-one (usually – and better as – two-on-two) advice was because there are few things more frustrating than seeing your friends make the exact same choices your clients – the people who have what your friends (and so many others) believe they want and are dedicating their lives to obtaining – come to regret.

Especially so as the same world that leads people into these regretful choices also keeps the regrets private.

I imagine doctors feel a similar frustration when, upon looking at someone’s ‘one off’ food choice, they can’t help but see a patient they’re going to be diagnosing with diabetes in a decade’s time.

What’s going on here?

We live in the richest, most opportunity rich time in the history of humanity. And while at the end where money does make a difference, we’re doing a relatively wonderful job at creating opportunities for those who have none, at the other end – the end where everyone already has all the opportunity they could ever need – it’s fair to say we could be doing a smidge better.


Part of the reason, I think, has to do with the damned dumbness of using wealth as a proxy for wisdom. Which is why I’ve turned one casual quip into two weeks’ worth of newsletter.

The pet theories

At first, I wondered whether this bonfire of opportunities was simply another example of costly signalling taken too far.

Then I thought there’s an element of not believing in luck. Believing wealth correlates with wisdom is so much more comforting than it correlating with luck. We believe in our bad luck, of course. Anyone unfortunate enough to hear me make excuses for my cricket batting average knows I am far from immune from this.

But we don’t like to believe in our good luck, not really. And no, wibbling on about how ‘blessed’ you are in a gratitude journal doesn’t count.

Possibly this is because admitting to all the luck we’ve already got from living in this golden world of opportunity – and comparing it to what we’ve done with it – doesn’t tend to end well. And because when we profit from even more of it – as we surely will – we won’t want to admit it was down to anything other than our unique fabulousness.

We also, of course, live in a world constructed around the collective canonisation of self-interested motives. As Peter Singer wrote in The Life You Can Save:

Many of us believe not only that people are generally motivated by self-interest, but that they ought to be – if not necessarily in the moral sense of ‘ought’, then at least in the sense that they would be foolish, or irrational, if they were not self-interested.

Everyone in a developed society is constantly being bombarded with messages about how to save money, or earn more money, or look better, or gain status – all of which reinforce the assumption that these are things that everyone is pursuing and that really matter.

There’s so much more to be said about this, that I’ll save it for another day (and you should read Singer’s book immediately).

The most important point is that we believe other people are drastically more self-interested than they are… so we publicly praise self-interested motives (and denigrate their absence) to fit in not with others but with the collective myth. We’re all on the road to Abilene, in the dumbest of all possible ways.

For a while I settled on the ‘impressionable infant’ answer.

Because ‘intelligence’ was the chief source of judgment in the formative years before people began to be distinguished by anything else, accusing anyone of being an idiot is bound to piss them off. What luck that money – which any idiot can get hold of – can be used as a proxy! As I wrote in Idiot Money #22: The child’s inevitable aiming for praise becomes the adult’s inevitable aiming for money.

If you’ve ever seen how quickly a chest-beating business alpha gets defensive when rather than responding to their bragging with ‘ooh, nice’, you ask them if their choices were as smart as they could’ve been, you’ll have seen how sensitive everyone is to accusations of idiocy, regardless of what else they have to brag about.

However, I think this is a bit limited.

There’s something deeper at play.

Intelligence, like money, and other resources, creates opportunities. But what we really want is not to have them, but to make something of them, of ourselves. From hyperpalatable foods, to easy access into high-paying careers for the comfortably educated, sometimes having opportunities gets in the way of becoming someone on the back of them.

What we want is not money, nor even intelligence, but wisdom.

(See here for the difference between intelligence, rationality, and wisdom, as I use them in the book.)

Opportunity lost

We want to live well, not expensively. We want the Good Life, not the appearance of it.

This requires seeing clearly what our Good Life actually is. What we actually want at the level of our souls, not the level of our ability to respond to adverts.

And when it comes to that, we’re all basically drug addicts claiming that we ‘want’ a fix. It makes us feel good! And while we acknowledge it comes with some side-effects, we’re perfectly capable of dealing with them when we arrive at the magical world of ‘later’.

As I wrote in Idiot Money #41, we’re not crap at knowing what we want, as is often claimed. We know what we want when we pay attention. We’re just crap at paying attention.

Specifically, how we pay attention to how we construct the worlds in which we make our life choices.

The point of addiction, as we saw when we looked at the Second Noble Truth, is that it narrows our worldview so we see no alternative – so we substitute in some self-destructive addiction for what we actually want, but can’t see because our vision is all messed up.

This is why a casual conflating of having a higher salary with having become wiser is so damn unhelpful. Because it identifies (in some way) what we want and then sells us a useless, but all-too-tempting substitute for it. We get stuck in a world that while it could be worse, could also be a whole lot better.

We want to not be led astray by such shitty self-deceptive beliefs.

As the private regrets of those that have made the choice would show, if only they were more well-known, you can’t start to play the better game until you’ve stopped playing the worse one.

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