💸 Untangling how much money matters

Money, meaning, and how the heck to reconcile the two

As a general mode of operation, I do my best to balance my budget. I assess my inflows, audit my outflows, and do my best to curtail where things unnecessarily overflow.

An impulsive Sephora splurge here. Or, the bespoke but exceptionally self-rationalized Dyson 3.0 product purchase there. I’m drawn to banter with these one-off bad decisions, though my budget begs me not to make a regular boyfriend of it.

Which, in some cases, I regretfully do.

Take, for example, the recurrent indulgence that’s been taking up way too much space on my balance sheet. One that I am, in fact, presently indulging in: an $8 cappuccino. Currently being slurped, sip-by-seductive-sip, at my local cafe from which I’m writing this blog post.

At that price point, even the tiniest rogue drop feels financially reckless. A clumsy spill into the crevices of my keyboard is a literal sunk cost. It mind as well be a quarter dropped into the dark abyss between the cupholder unit and passenger seat of my car. It’s maddening when it happens.

It’s also guaranteed to happen again.

And so, my coffee ritual is not so different.

It’s like the Grand Canyon of budgetary blunders — a bottomless pit. It’s scientific proof of my caffeine addiction’s acute, gravitational pull. Slyly targeting my innocent, unsuspecting financial butter-fingers.

But even when I manage to keep the caffeine safely inside the cabin of my cup at all times, I still don’t feel great about my financial decisions here. It’s $6 for the base model of warmed-up bean water. $7 if you want a dash of dairy in there. And $8 if you want a fancy French-sounding name. Latté. Cappuccino. Café au lait.

I’m still not sure what constitutes the frightful mark-up. (Fair trade farming? The ever-cryptic economic concept of “inflation?”)

But in the absence of a clearer explanation, it all just feels like some cruel je ne sais quoi that has me yelping sacre bleu! as I bitterly fork over my credit card to the barista at 7am each day.

It’s for these reasons that I keep a tight grip on my mug, lest I accidentally spill an entire line item of my budget onto my laptop. And as of late, it’s that death-grip that’s had me thinking:

Perhaps I should be delving a bit more deeply into this discomfort. The underlying addiction (beyond the caffeine one) at play.

Questioning my relationship with the thing that this unbridled routine relies upon. Indeed, all too much.

And that’s: money.

The messy and mixed messages on money

Regardless of how much we might claim to honor the doctrines of our inner Dalai Llama — valuing the ~truly important things!~ that ~actually matter!~ in life — happiness, fulfillment, connection, community, vague buzzword #63 — the reality is this:

Money matters. And it matters, a lot.

Financial autonomy is the undercurrent of so much angst, and so many life decisions. It matters to me. It probably matters to you. And it definitely matters to Zane — the 23-year old barista at my local cafe, with a bachelors and about $100,000 of student debt.

Money matters to everyone. There’s no shame in that. And anyone that tries to tell you differently, has probably never lived without it.

The only issue though, is that oftentimes, we do feel shame on matters of money. And that can take a variety of forms. We might feel unsatisfied about whether we need more. We might feel frustrated because we think we deserve more. We might feel insecure about how much we have and whether we’re even capable of making the amount that we want.

And, we might feel guilty about how we choose to use what we already have.

Case in point: $8 cappuccinos.

But I’d argue that all of those sentiments — though distinct— only have modest differences. And, in fact, stem from the same fundamental issue:

Decisions on matters of money are maddening because we don’t actually know how much money matters to us.

Or, we can’t decide how much it should. And I suspect that I fall into that bucket.

Because while I ruthlessly defend the fact that I don’t over-value money, all patterns of behavior in my life, leisure and professional inclinations— have squarely suggested otherwise.

When it comes to money, I certainly don’t under-use it, and I definitely don’t under-pursue it.

And it doesn’t help that inner conflict when we’re berated with more mixed messaging from the world around us:

• Value money too much — and you’re soulless! A foul, slimy excuse for a human. Surely signing away your scruples in blood to some Fortune 500 and evading taxes in off-shore accounts.

But also:

• Value money too little — and you’re off in La-la land, kid! Reckless, impractical and unwise. You’ve got your head in the clouds and no cushion to catch you at the first gentle breeze of destabilizing life events.

And those mixed messages leave us all in an uncomfortable, paradoxical spot. We can’t easily mediate an agreeable middle ground between the two. It’s a non-partisan “no-man’s land” on the meaningfulness of money. And when it’s hard to define where you stand, it just feels easier to be apolitical. And not think too much on the topic at all.

Plus, uncertainty on how much money matters to us is not entirely unreasonable. In fact, it’s pretty understandable. Even if we know how much money matters to us today, we can’t predict perfectly how much money will matter to us in the future. Our wants and needs inevitably change at different chapters of life. Some, from factors we can control. Others, from factors we can’t. And all of that unpredictability can feel pretty unsettling.

So, what do we do instead of actually confronting the root cause of that discomfort? What do we do instead of thinking too deeply and concretely on “how much” we should value money?

Easy.

We decide to “hedge” against the downside risk of not having enough. And in doing so, what many of us actually decide to do is this:

Quietly, and implicitly, and consistently, optimize for more.

How “hedging” in life can risk less, but cost more

As savvy investors in the stock market know, hedging is a great way to handle uncertainty on how the value of something might change over time. After all, I don’t really have much uncertainty about the value of money to me today, when I’m the only variable at play. Rather, I have uncertainty about the value of money to me in the future — as more variables enter my life, over the course of my life. Each, with their own capacities for entropy.

What if my partner gets a serious injury and can’t work for a prolonged period? What if my maternal urges start really kicking in, and I want the flexibility to be a stay-at-home mom? What if my little future Jim-bo or Jim-bette begs me for pricey private tennis lessons to cultivate their talent? What if the family as a whole needs a bigger house because it’s too cramped? Or, wants a bigger house, just because?

To be clear: it’s not like I wallow over these unknown-unknowns, so I wouldn’t label it “worrying.” But, I’m certainly hyper-aware of how impossibly unknown and unexpected life can be. My decisions have historically focused more on hedging against my potential future wants — many potential future wants — more than I realized. And in doing so, quietly distracted me from the work of articulating a prediction of my actual future wants.

At least, based on what I already know today.

And don’t get me wrong: a mindset towards money that anchors on hedging can have its purposes, in the stock market and in life. As a general rule of thumb, it’s good to put guardrails on things that limit your downside risks. But you don’t want to do it because you don’t actually know what upside you’re going for. Then, it becomes a distraction— guardrails built so high that you’ve quietly baby-proofed your life into a box.

And that’s the fundamental trap that I think many of us fall into:

We mistake decisions that hedge against unhappiness, for decisions in pursuit of happiness. Particularly in decisions that relate to money.

And those may sound similar — like they might lead to the same end decisions either way. But, they can actually diverge pretty significantly.

When money is a major factor in the tradeoff, the decision that you end up choosing can be highly influenced by the underlying philosophy — and whichever has a stronger foothold on your thinking.

So, the failure mode isn’t “which” money mindset you choose to adopt. Neither is objectively good or bad. We need both.

Rather: the failure mode is not realizing which philosophy is actually backing your money-related decisions.

In the past few years, I’ve tried to course-correct that by being more conscious about which mindset I’m honoring. For example, I’ve decided to stay in my corporate career. And that’s a decision to hedge against some flavors of future unhappiness. But, I’ve also decided to take a leave of absence at every opportunity, and in some cases, forego financially lucrative opportunities so that I could preserve the time to double-down on my writing pursuits.

That too, is a financial decision. And indeed, one motivated more by a conscious pursuit of happiness.

So, when does hedging make sense?

It sounds simple written out on paper. But there’s actually a lot of emotional duress that went into the decisions in that brief personal blurb above.

Hopefully by now, we can agree on this: hedging may be a great approach for money in the stock market, but it’s not a ~strictly~ great approach for money-decisions in life. And that’s because the nature of life and the nature of Nasdaq are actually not the same.

In the stock market, your returns are only realized at the “end” when you sell stock. Life, on the other hand, delivers ~precisely zero~ gains at your grave. Your deathbed doesn’t come with a pillow and a lump-sum payout on happiness. Instead, your contentment “returns” are distributed over time, day in and day out, and you want to be smart about how you smooth that curve.

You want to be selective in how you hedge. And, in particular:

Hedging is a great approach for limiting unexpected catastrophic unhappiness. And your money practices should absolutely hedge against those shapes of issues.

Things like sudden severe illness, being the most obvious example. But, you don’t want to fall into the trap of hedging against things that aren’t concrete. Things like: “potentially” wanting “more.”

That type of financial hedging is a slippery slope. It can get you stuck in the scarcity mindset — one that hedges against anything that “isn’t enough” without ever quantifying what is. And that can wield tremendous influence over your life decisions, inflicting collateral damage to the things that might matter most, and might indeed more proactively manifest happiness.

So, that circles us back to the original point: the more you let yourself linger in uncertainty on how much money matters to you, the more you’ll slide into the comfort of letting it always matter to you. And that will lead you to focus more on avoiding what you don’t want, and neglecting focus on what you do.

Alright, let’s finally get into it.

How do we really bring clarity to the question of how much money should matter to us?

Figuring out how much money matters to you

I promise I’ll get into some slightly more specific suggestions for debugging that soon. But, allow me to briefly pause here, to callout the obvious Serengeti-sized mammal in the room:

There’s an elephant’s-weight worth of privilege, (say— a ton or two?), implicitly baked into this blogpost.

It’s a privilege just to have the budgetary breathing room to be able to ask yourself “how much” money matters to you. And we best not forget that. But if you’re reading this right now from your iPhone 24, on a dangerously light-colored couch, in your mid-century modern apartment, with a potted Fiddle leaf in the corner, there’s a fair chance that you too are reclined on one of the higher rungs of Mazlow’s hierarchy of needs.

And this message may be all the more important for you to hear.

Because if you’re lucky enough to not need to operate from a money mindset of fear, you damn well better not.

It’s an insult to the life you’ve been gifted to make decisions from a place of fear, when you’re not actually in a position of being forced to. So while you surely have a ~crazy busy career~ that’s just ~so stressful and demanding~ — don’t fool yourself. You actually have all the time and flexibility to do the work to unpack the fundamental question:

What set of things actually matter to you, and where is money required to feed into that?

And in order to do that, it’s important to remember something obvious, but sometimes overlooked, upfront: although money matters — it doesn’t, like, inherently matter.

You know?

Money is just a digital rendering of digits in an account, tied to your name in a database. Cotton threads dyed green with an old white dude’s face on it that the government guarantees is backed by gold. And gold, in and of itself, though occasionally useful in the inner workings of electronics, is mostly useful as a pretty yellow stone.

Which is to say, not.

Money matters in the sense that it only matters as much as the things that it can afford matter to you — time, experiences, or things.

It’s fundamentally a tool. And that tool can be used to acquire things that may be meaningful to you. But, it has its limitations. It can’t promise to fix your relationship with an estranged son or daughter, or serve up the significant-other of your dreams. But it can certainly facilitate and accelerate many things that might be deeply meaningful to your life.

And so, the starting point to the exercise of determining how much money should matter to you is this:

You need to start with what matters. Clarify the concrete set of things that matter to you (unanchored on money at all), and after that, clarify to what degree money is required to enable those. And, the particularly hard part is this: you need to think about it on two separate time horizons.

• In the present — on a daily, weekly or monthly basis.

• And in the future — say, 10 years from now.

And the second one is where it gets even more hairy. Because you essentially need to audit your own risk appetite given you don’t actually know whether what matters to you in the future might change from what matters to you today. And if you’re anything like me — someone who comprehends actuarial concepts like “audits” and “risk” about as well as dead Latin dialects — consider thinking about it slightly differently.

If you can’t parse through the fuzziness of your own “appetite for future risk,” consider reframing to this instead:

Clarify your requirements for future optionality.

Selectively limiting optionality, to empower your life

There are a lot of potential life paths you’ve probably considered, or even fantaicized about, for your future. Perhaps each taking in different possibilities for housing, travel, toys and daily delights.

But the more of those options you’re willing to knock off— the more future fantacies you’re actually quite comfortable folding on— the more levers you’ll unlock for happiness today without accruing significant risk to your happiness tomorrow.

Put simply: you don’t want to keep everything as an option just for the sake of it. Because if you do, you’ll make decisions around money, that well, keep everything as an option.

And while it may feel hard to eliminate that delicious set of rich potential “upside” options that we want, it will actually set you up for easier decisions on money.

Not to mention, setting you up for more meaningful living, i.e.:

While it might seem “safe” to always make decisions that maximize long-term earning potential, it can also end up being far more suffering. It’s exhausting to live a life that’s perpetually wedging (and hedging) to keep every door open.

I’ll give you some examples.

I must have the optionality to pay for my kid’s college educations, and I’m unwilling to budge on that. I do not however, need the optionality to live in a condo in the Upper East Side of Manhattan — now, or ever. So, we can curtail any money-related life decisions today that might quietly be optimizing for that future, without me realizing it.

And that default behavior — “addiction,” even — to optimize for more, is hard to break. It’s because many of us are lucky enough to live in a country and era of optionality, that money has become so infinitely seductive, even on silly small scales. Walk down the aisle of a Safeway or Kroger’s and you’ll readily be served up forty-two permutations of peanut butters and baby carrot brands.

More than you want. And definitely more than you need.

So audit both — your wants and your needs — in the optionality of your future. And make deep cuts to any optionality that you might have been preserving out of default more than explicit desire.

It’s also important to note that the least amount of optionality for some, might still seem like a lot of optionality to others, and that’s okay. It’s an entirely personal framework. Anyone can spew strategies to budget your finances, but only you can effectively budget your fulfillment. And you want to make sure that you’re starting with that latter exercise — and arguably harder exercise — first.

It’s always about budgeting what matters in your life first, and based on that, backing out the budget on matters of money that serve that. That way, you can make smarter tradeoffs today that smooth the dividends on your fulfillment — neither excessively front-loading, nor excessively delaying, joy.

And while I recognize that this may all still feel a bit pedantic, and not without its fair share of abstract concepts, it’s the closest thing to a framework that I’ve found so far to be helpful for myself. I’m convinced that if you aren’t at least trying to go through this exercise, you’re not really “managing your money.” You’re managing finances, but not fulfillment. And the former is pretty meaningless without the latter.

So, let’s go back to where this all began, and where I’m presently seated.

Let’s return to the matter (or should I say, mug?) at hand.

Conclusion

After much emotional duress over the past few years, I’ve come to a comfortable, narrower set of optionality. Relative, at least, to the bloated set that I was unknowingly, and unnecessarily, safeguarding before.

I’m hedging against catastrophic future unhappiness, and adding a bit on top of that for the lifestyle leisures and flexibility that I know I want in the future. But, I’ve cut my future life optionality down to the smallest set that I feel comfortable with.

Based on that, I have a budget.

And, in that budget, I’ve consciously made room for an egregiously expensive indulgence with regularity: the $8 cappuccino.

And that’s because I already did the work to clarify upfront: coffee really does matter to me — indeed, a lot, and in ways that go a layer deeper than its frothy surface. While I delight in the taste of the cappuccino itself, I find the output fueled by it even more meaningful. And that’s writing.

Writing, and blogposts like these, are uniquely produced in cafes. If coffee gets me a seat in the setting that fuels my inspiration and creative throughput — well then, the cappuccino is worth every cent. It’s a conscious money-related decision to manifest happiness. For me, that’s a potential future career in writing, which is something I deeply want.

So, while I’d much rather cut out the Sephora splurges and the Dyson 3.0s — some things in the budget won’t budge anytime soon.

Some costs actually cultivate a disproportionate amount of meaning.

And my morning cappuccino — that tasty treat, and the typing that accompanies it — well, it’s most definitely here to stay.