keeping up appearances

Two Secrets About Money and Time
photo shows a clock sitting in front of a calendar on a desk

“Wealth consists in caring less about what others think about you and more about using your money to control how you spend your time.” — Morgan Housel

We’re fond of the work of Morgan Housel, who strives to help folks change their relationship to money. In his definition of wealth, we notice two key ideas—ideas that could bring some clarity to our financial decisions.

Wealth Isn’t About Anyone But You

It takes only a moment to recognize the potential problems of using wealth to influence how others perceive us. The trappings of wealth can be had with borrowed money: a $10,000 watch for $200 monthly payments, a luxury car for a monthly lease payment. But the watch and the car are not proof of anything.

Ultimately, we do not control what others think. No amount of money gives us that power.

When we focus on meeting our own needs rather than some notion of what might impress others, we require less wealth to gain control and therefore focus. We may be able to retire earlier or work at a more rewarding endeavor on less money, should we choose… which leads us to the second key idea from Housel’s definition.

Time Is Money Is Time

The familiar phrase “time is money” comes to us by way of Benjamin Franklin, writing in colonial Philadelphia. Housel writes that wealth is about using your money to control how you spend your time. In short, he turns the idea upside down: money is time.

Carried to its logical conclusion, when we have enough wealth, we may retire and gain control over the time we formerly spent working. In the form of Social Security and pension benefits, investments and 401(k) balances, the money we’ve earned then buys us time. Money is time!

Housel adds a layer to our understanding of wealth, which magnifies the good it may do us.

When you are ready to talk about your time or money, email us or call. We’ll be ready to talk with you.

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Look Rich or Be Rich?
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Some people have so much money, it doesn’t matter what they do with it. On the other hand, some don’t have any. Our work tends to be with those in between, those who need their money to work effectively. Clients, that’s where you and I live.

Many financially independent people we know faced the choice of a lifetime: they could look rich, or be rich. And they chose to be rich. The cost of impressing others is quite high when it manifests in expensive homes, vehicles, and conspicuous consumption.

The difference between a $250,000 home and a $500,000 one is not just $250,000. The recurring expenses connected with the more expensive home may include higher property taxes, larger utility bills, more interest expense, and greater maintenance costs. Those recurring expenses reduce room in the budget for accumulating wealth to live on in later life.

A recent article about $10,000 watches had the headline, “Affordable Watches That Will Make You Feel Like A Millionaire.” This seems funny to us. We delight in asking people whose invested wealth has reached the $1 million mark whether they identify as a millionaire now. Not one has answered ‘yes.’ So if a million dollars doesn’t make one feel like a millionaire, what chance does a $10,000 watch have in getting that done? (A large fraction of the millionaires I know wear $39 watches.)

The paradox is that those who strive to look rich may never accumulate much in the way of assets. Meanwhile, those who chose to be rich may eventually learn how to spend well. They can afford the vehicles that provide the most comfort, the homes that make daily life better, generosity to descendants or charities, and travel to bucket-list destinations.

The flaw in attempting to impress others is, we do not control what others think. We only control our own choices. Those everyday millionaires (and those on the way) in our acquaintance seem to have learned this early, and made the wise choice.

Clients, if you would like to talk about this or anything else, please email or call.