Nov 102008

Actually, there’s three bad money goals:

“I want to have enough”

“I want to be comfortable”

“I want enough so I don’t have to worry about money”

The obvious problem with all three of these goals is that they’re not well defined. Good goals are well-defined and can only have a binary interpretation. That is, either you’ve reached your goal or you have not. A good goal formed like this might be, “I’m making $50,000 dollars a year and my expenses are less than $35,000 dollars, I save $10,000 dollars a year and spend the other $5,000 on whatever I like by 2010”. You can read more about forming clear goals in Steve Pavlina‘s wonderful article, “The Power of Clarity“. All of the above three fail this criteria by using feelings to gauge whether you’ve reached your goals. That would be fine if feelings were at all objective, but they’re not, so you find some curious patterns people go through for each of the above goals.

“I want to have enough” is a goal I had in mind for a while as an overarching goal in life, but the problem with that is that as my income has gone up (I’m making at least twice what I was making last year), I have found my expenses to increase in step, so “enough” which was generally having enough to cover my expenses is pointless. Every year, there’s lifestyle inflation as my income goes up, so what’s “enough” increases every year. I have some ideas of why this happens, including that I believe I have a belief that prevents me from having much more than necessary for my survival, so as my income goes up, my belief unconsciously pushes my expenses up.

This is actually an excersize I learned from Brian Tracy and I’d like you to do it. I hope I’m remembering this correctly. He asked some seminar participants to ask themselves how much money they would like to have and most of them quoted something two to three times more than what they’re making now. Then he asked them how much they were making when they first started working and they often quoted amounts two to three times less than what they’re currently making. I drew a couple of lessons from that. The first is that a lot of us are stuck in this rat race and don’t keep things in perspective. More about that in the next section:

“I want to be comfortable” is another thing people often cite when asked how much they want. The problem with this is again that what you consider “comfortable” increases every year. Last year you may not have had a dishwasher, but this year you bought one and now you feel you are living in greater comfort, even though that’s an additional cost. Of course, internally, you’ve probably habituated to the washing machine so you’re no longer thinking it’s a “comfort” item, it’s just a necessity.

“I want enough so I don’t have to worry about money” is a goal I personally thought was a worthy one until I realized what that meant. Basically, I was willing to be disciplined about spending and making money and doing a broad budget for the hope of some point at which I did not have to be disciplined at all and I could spend money however I wanted. I didn’t notice the problem with that for a long time, but it was that I will always have to be disciplined with money, and I may have to deny myself things because I don’t have the money at any income level. The thing is, while today I may have to deny myself a 5 dollar item, when I’m making much more than that, I may have to deny myself a plasma screen TV or a new car. I will still need to be disciplined, probably in broad strokes, while still giving me enough to enjoy life and indulge every once in a while. That is, say I put aside 10% of my income as play money, which I can do anything with, as my income grows, this amount will grow, but I will always have to stay within it. You can read more about it under the number 3 tip in “8 ways to prepare to be a millionaire” at Getting Finances Done.

If you’re reading this blog, odds are that you are rich. Read that again. Read that over and over again if you’d like to. I often forget this, and I need to remember it as often as anyone else. Compared to someone somewhere, I am rich. I have many of the amenities that money can buy, including a house, a computer, a cellphone, good food, clean water, I’m getting an education, I have clothes, warmth, friends, various technical goodies, access to great healthcare. Odds are good that you have access to all of these as well. That’s enough to survive and then some. Think about it, does that not make you rich?

All of the above leads to a curious conclusion, I believe feeling rich is an internal state, as is being comfortable or having “enough”. There are some people that spend their whole lives acquiring and making more and more because they feel poor on the inside and their pattern says that having more will make them less poor and thus they will have more of the “good life”. The pattern essentially says, “if poor or not rich, make more to become rich or well-to-do”. Because feeling rich is an internal state instead of an objective situation, I can feel rich and grateful right now. In general, people want money because of how it makes them feel. For different people, its different things, it could be security, it could be self-validation as a member of society, it could be the ticket to the “good life”, freedom, the end of self-discipline, etc. It means all of these things and none of these things. Money is money, but your relationship with it causes you to feel certain things.

Unfortunately, I do not have an answer for you, yet. I can’t tell you what’s a good money goal, or a good motivation for making much more than necessary for your survival, only what I feel are bad goals. In short, I can’t tell you why you should be rich. All of the arguments I’ve heard so far have not been compelling, but that might be because I have some beliefs that make them so. I’d love to hear your perspective on these things, so please drop me a line in the comments and help me figure this out. Thanks in advance! Any thoughts are appreciated, honest.

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