Do you want to build wealth?
In modern society, we seem conditioned to say yes to this question. Who wouldn’t want to build wealth? Build is a positive verb, implying that we work hard to create something that lasts. And wealth sounds better than money, like it includes more than just physical possessions. Building wealth sounds sophisticated, prudent, and almost like a moral obligation. Who wouldn’t want to build wealth?
But why do you want to build wealth? Recently I read an article that really challenged my thinking.
Going back to before the dawn of civilization, our ancestors did not seem to accumulate, as reflected in a Bushmen society called Ju/’hoansi that still exists today.
One of the most distinct traits of Ju/’hoansi is that they do not accumulate surpluses. They only hunt and gather what they need. According to the Anthropologist James Suzman, the Ju/’hoansi exhibits “an unyielding confidence” that their environment will provide for their needs.
On the other hand, the Ju/’hoansi had the practice of “shaming the meat”, so that the hunter doesn’t think he is better than everyone else. This shows that even our ancestors may have had an innate desire to keep what they worked for, so the society created a system to counter what they perceived could turn into inequality.
So it appears that once humans decided to keep what they earned, there came a need to protect it, which led to the rise of kings, states, militaries, the defining attributes of civilization. Going down this line of thought, it’s debatable whether civilization represents progress. But that’s not what I want to discuss here.
Building wealth isn’t a goal
Let’s go back to the original question, why do you want to build wealth? Is it because of fear or insecurity? Or is it because of the desire for more? Without distinguishing our motives, we will fall for accumulating more possessions for the sake of it, or out of fear of lack of provisions in the future.
Once we’ve accumulated, the wealth and the continuous generation of wealth easily become the focus. Our money is too precious to spend down, but not too precious to leave behind. This is what causes the gap between the haves and have nots to widen and widen.
Contrary to what many think, building wealth isn’t a goal. It’s not your purpose on this earth. You derive no value from the wealth you built, unless you use it.
As a profession, financial planners preach the gospel of earning more, saving and investing as if that is what brings value to our lives. I sometimes fall victim to this mindset also. Since my clients hire me to help them with making better financial decisions, I could spend too much time and energy creating strategies that will maximize the dollar amount earned or saved, even though it perhaps does not make my clients’ lives discernibly better or happier.
I believe it’s time to stop the wholesale acceptance of building wealth as a good thing. Building wealth is only a good thing if it allows you to live with a purpose and create a better world for everyone other than you.
I’m not saying that everyone should stop saving today. As a financial planner for young people, I help my clients accumulate. I don’t question the need for some accumulation in modern society. Since our family and social safety net is thin, even if you are happy to work for a living until the day you die, there may come a day you cannot work anymore but still need to provide for yourself.
What I advocate is that you should have an answer to the question I posed. Why do you want to build wealth? Is it so that you have enough to live on at an old age? Make the world a better place? Support those who are not able to provide for themselves? As long as you have a goal other than building wealth, you are able to put a cap on the amount you need to achieve your goals, and you are less likely to fall into the trap of maximizing your wealth but not your life.
What happens when building wealth is no longer the goal?
Recently someone asked in an online forum I am a part of what everyone’s biggest financial regret is. Some of the answers were the actual loss of huge amounts of money because of bad life decisions, such as marrying the wrong person, or choosing a career that is not a good fit.
Nevertheless, I was surprised to see so many were around opportunities not taken that could have increased their wealth – not investing when they were young, or not buying a house when the price was still low.
Exalting wealth building makes us regretful, always looking for the lost opportunity that could have helped us build wealth faster. However, did lost opportunity really made you worse off? No, they only make us unhappy. Hindsight is 20-20. Most likely you made the decisions to “forgo” these opportunities because of something you couldn’t quantify in dollars, which takes us to the next point.
Make decision based on non-quantifiable opportunity cost
Wealth is only one dimension of your life, which is measured in dollars. By pursuing that alone you assign lower value to all the other resources in life, such as time, energy, health, and brainpower.
I’ve read somewhere that people who are good at dealing with money have the innate ability to evaluate decisions in terms of opportunity cost. It means that they know to pick out the best course of action by losing the least amount of dollars from all the other actions they can take.
That may be true if we evaluate all of our life’s decisions on monetary terms. However, most of our resources are hard to quantify. What’s the use of maximizing your wealth if you work so hard that you cannot spend time with your family and enjoy the fruits of your labor? What’s the point of keeping a high paying job if it does not utilize your human capital to make the world a better place?
If you assign an appropriate dollar value to these non-quantifiable resources, you may find that it’s easy to stop worrying about what to invest in, or whether to change careers. Not to throw out a cliché, but what you’ve heard is true – nothing can buy time, health, and happiness.
How to combat the urge to focus on wealth?
To me, Thanksgiving and Christmas are actually two holidays that remind us that our lives are more than building wealth. Thanksgiving helps us combat our greed for more and Christmas our fear of less.
People who give have a mindset of abundance, no matter how much actual material wealth they have. Our action actually informs our mind sometimes. If we are able to give, that must mean that we have more than enough for ourselves. And instead of building wealth as efficiently as we can, we choose to give to others. Giving is a powerful weapon that helps us focus on our life’s purpose and not our worldly possessions.
Christmas as a religious holiday celebrates the birth of Jesus. It’s an act representing God hearing our cry on earth and sending his son to suffer in our stead. Whether you believe this story is true or not, it tells us that we are not fighting for our livelihood alone. God cares and has provided, so we don’t have to worry about our own financial security. Building and protecting our own wealth should be the last thing on our mind if we celebrate the Christmas spirit.
As we are in the middle of the holiday season, I hope this provides a different way for you to view your personal finance decisions. Living life with a purpose is the goal. Building wealth isn’t. Viewing all of your financial decisions through this lens will make decisions easier and life happier.