#70: The nasty narrowness of number-governed living
17th January, 2022
Welcome to the Idiot Money newsletter. This week, becoming wiser with money by understanding that money inspires us to narrow our vision in a heap of ways, and they’re all massively unhelpful… there is nothing more important to acknowledge, accept, and alter.
Because spaced repetition is cool (and because apparently I'm not above doing a clip show) for this, the 70th edition of Idiot Money, a recap of some stuff from the earlier days.
1. Living well with money is more about humans than money, so there’s more to learn from human-centric disciplines than investment textbooks
In Idiot Money #20, we looked at seven different disciplines and their major lesson to living better with money:
- 1.Economics: 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: examining your life is necessary to living it well, and examining your money choices is at the heart of this process.
- 3.Psychology: 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.
- 4.Neuroscience: How you do anything is how you do everything. Neuroplasticity is the magic link between seemingly insignificant actions and the hugely significant shaping of your life story.
- 5.Psychoanalysis: Becoming an editor of your life story. 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. 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.
- 7.History: 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. History is the world’s greatest ever science experiment, disguised as a series of art exhibitions.
2. The merits of money are negative
- Money enables Good Things at best unreliably or fleetingly. But a certain level of money is insurance against Bad Things.
- Cheapest usually signifies worst. But most expensive usually signifies waste.
- One benefit of money is that we don’t have to do things because of it. For example, having enough savings so you don’t have to take the first (possibly unsuitable) job you can following redundancy is great. But it’s not the same as actually finding work that energises you, rather than work you endure for a few decades in the hope of not having to do it one day.
- Much as it’s a bit crap at directly leading someone to live a fulfilling, flourishing, flowing life, money is a great tool for the sort of clearer seeing that brings this about. It is the examined life that is worth living, and there’s no easier way to examine your life choices than by reflecting on your credit-card statement.
3. Your most important money inheritance isn’t financial, but psychological
- Are you telling your story through money, or is an inherited and imposed money story telling itself through you?
- The reason the weeds of our wiring around money are so hard to even acknowledge, let alone do something about, is because so many of them have their roots in our childhoods (and your parents’ childhoods, and so on).
- Of vastly greater import than any actual money we may inherit from our parents are their money stories. Not least because we inherit them at a time when we have zero capacity to challenge them, and zero money to prove that they are probably bollocks.
- Come from a place where money meant meaning, and you’ll head off that way in search of it too. Praise expensive things and your sense of worth becomes unhelpfully – and self-deceptively – material. The child’s inevitable aiming for praise becomes the adult’s inevitable aiming for money.
4. We fail to make more of our money futures, because we’re ashamed to look at our money pasts
- A large part of our resistance to change is clinging to comforting, but disabling, beliefs that ‘that’s just how I am’. If we weren’t so desperate for certainty – for which money is the ultimate pin-up star – it would be a lot harder to sell it to us.
- Asking someone to contemplate what their spending says about their life inspires more terror than asking them to contemplate their or their partner’s possible death. And yet, assuming you actually traded money for things that made your life better, wouldn’t reliving those moments bring you joy?
5. My favourite way to get started thinking about investing
- All investments are gambles. Internalising the implications of this is the starting point for wiser investment choices.
- All the investment stuff that’s relevant to you isn’t complicated.
- Your brain is a prediction machine. It allocates your resources in the hope of yielding Goodness. This is why learning to see more clearly is at the heart of all practical financial planning – because while financial forecasts are usually a waste of time, money affects the predictions being made by your brain more than anything else.
- Given this, it’s probably better to stop being scared of bets and start working out how to make better ones. Especially in the context of the two big questions of investing: how to start, and what to invest in.
- The first and most important thing to learn about gambling was this: it’s not about picking winners. It’s about spotting mispriced percentages. It’s about odds, not outcomes. Successful gamblers know long-term profit comes from judging where the implied chances of each outcome happening are wrong, not from predicting the right outcome.
6. Because money choices are life choices, making better ones starts with seeing more clearly; luckily, we have a proven, centuries-old framework for doing this
- To see money more clearly requires a systematic approach to insightful vision, not mental shortcuts. You want a practice, not tactics; a clearer vision, not a cleverer app.
- How do you see more clearly if your vision is so caked in mental mud that you can’t even see that you don’t see clearly? It’s not like people set out to be delusional, greedy, or hating. But it happens all the same. We need to tackle what makes these arise, not howl into the void in our lives created when they do.
- Overcoming craving, or greed, isn’t about denial. Believing it is is why diets don’t work. The typical approach to overcoming aversion is to either denounce the object of hatred harder, or to suppress it. Yet denunciation is just fanaticism for angry people, and suppression is subconscious superglue.
7. Tackling the way money supercharges our self-deception should be top of every person’s to-do list
- All of life is threatened by self-deception. That’s how life works. You get to choose to succumb or see differently. That’s how living well works.
- Nothing inspires or entrenches this self-deceptive, self-destructive behaviour like your relationship with money.
- Our self-deceptions lead us to use money as relief from pain, as opposed to freedom from entrapment, and to succumb to the self-destruction it enables, rather than to embrace the opportunities it creates.
- The forces that shape your relationship with money are a constant threat to your sense of agency over your life… and therefore a constant threat of misery. Yet these same resources should be a source of opportunity for joyful, flourishing, fun.
8. The needs-wants distinction is needless and wanting; speak instead of wants and addictions
- A far more useful categorisation – in the context of living an examined life, in a bid to live a better one – is not ‘needs’ and ‘wants’, but ‘wants’ and ‘addictions’. Wants being ways of allocating your resources that makes your life (as a whole, it being a life, and you being a human) better, and addictions being ways that make it worse, whether that’s wasting other opportunities, or literally poisoning yourself.
- We fail to beat most of our addictions because we don’t treat them like addictions. Even when they’re trashing our health and raiding our wallets in the process.
- We fail to challenge our 'wants', despite the facts that, as humans, they’re guaranteed to change over time, and if we really wanted them, we’d invite challenges, not defensively avoid them. A major reason we fail to do so is because we forget that they are never the isolated events we kid ourselves into believing they are. That’s not how brains work. How you do anything is how you do everything. Every action makes one pathway in your brain easier to travel down next time, and another one harder.
- Money is the strongest spotlight we have to shine on such things… but without direction, it’s also the source of our blindness.
9. And finally…
- Simply a wonderfully instructive (and silly) story of the history of the pineapple as a status symbol. And another about how to buy indoor plants like an idiot). And another about how eating lobster used to be thought of like being forced to eat rats.
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