What Philosophy Can Teach Us About Our Finances

I recently asked my fellow planner, Brian Kelly, CFP®, to tell me about his personal financial wellness story. I expected a compelling tale. Brian has a dry sense of humor, a big heart and strong opinions, and I wasn’t disappointed. What I didn’t realize until he sent me this post is that Brian is also a philosopher who connects the dots between financial wellness, a 19th century movement and eighties music sensation The Talking Heads.  Here’s what Brian shared with me:

Do philosophers have something to teach us about financial wellness? I think so. There are practical lessons – not just facts to learn for SAT preparation.

For example, author Henry David Thoreau wrote about the value of the simple life in his book, Walden, over a hundred and sixty years ago, emphasizing independence, non attachment and nature. Thoreau observed how his fellow Americans spent their time and money. He concluded that most end up living their lives on desperate terms to meet someone else’s obligations, instead of by their own design.

Thoreau meticulously calculated and kept track of every dollar he spent while living by Walden pond. He challenged every financial decision to make sure it was something he really needed. While this is probably too extreme in our busy lives, we can use his example to help us live our lives by our terms, not by someone else’s.

I did an experiment a couple years ago and wrote down every penny I spent for a month. Just one month was enough for me to see the waste in my spending habits. It doesn’t seem like a lot when you purchase the gourmet coffee or the impulse item by the checkout, but I discovered that I “wasted” over $200 that month on items I didn’t need. And that was a month that I was consciously thinking about it. I probably turned down twice that amount that I would normally have spent.

That’s spending my money on someone else’s terms, not by my design. I discovered that if I could reduce the waste and save $250 per month, my family would be able to enjoy a $3,000 vacation every year. We set up an online banking account and have funded it since then. Two years ago, we drove from Omaha, NE to Los Angeles, enjoying the country along the way. Last year, we went on a 7-day cruise to the Bahamas – funded mostly by money we would have wasted if we continued to fall for the traps.

A modern day philosopher (actually the songwriter and lead singer for punk rock band Talking Heads) had his own version of living a desperate life. From the song Once in a Lifetime:

“And you may find yourself living in a shotgun shack
And you may find yourself in another part of the world
And you may find yourself behind the wheel of a large automobile
And you may find yourself in a beautiful house, with a beautiful wife
And you may ask yourself
Well…How did I get here?”

How DID I get here? Now, I love my beautiful wife and wouldn’t change that decision for the world, but some of my financial decisions in the past have been less than wise. During a three year period, I traded in 5 different cars because I couldn’t find the right one. Looking back, those car upgrades cost me over $10,000 in trade-in differences. The dealer sure liked me then.

I learned my lesson and have had the same pickup for the last 8 years. I plan on driving it for the next 8. I discovered that the new car sensation only lasts about a month or two for me. Then, it’s just a vehicle to get me there. That car payment can be used for a better purpose – like retiring earlier!

The philosophers have something to say about our financial wellness if we’ll listen:

Think Differently

Thoreau once said that the “mass of men live lives of quiet desperation.” Don’t be one of them! Live within your means, save (make it one of your bills) for the goals that are important to YOU. Go through your budget and challenge everything in it. Ask the question “does this item fulfill my life or could I use this money to start funding the life I really want to live?”

Do It Yourself

Thoreau did much, if not all, of his labor to build his home and tend his garden while living on the pond. Doing everything yourself isn’t realistic, but there might be some things that you could do to save a lot of money.

Be the Wiser

We are sold something everywhere we go these days – insurance, warranties, impulse items by the checkout. Do a little research to see if there is real value in these purchases. You only get to spend that dollar once.

You Are In Charge

You are in charge of your own life, your financial decisions, and your future! No one else is going to be more interested in your financial success than YOU! Take control of your financial life and start making the decisions today that will enable you to do what you want to do in the future.

How about you? Do you have a favorite philosopher who has something to say about financial wellness? Email me at [email protected] or follow me on Twitter @cynthiameyer_FF

 

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