It’s a Rich Man’s World

It’s a Rich Man’s World

Money, Money, Money was written by ABBA in 1976, the very year I graduated business school and started a forty-three-year (so far) life in the business world.  The song is ostensibly about a woman (presumably a lithe young Swede) trying to find a rich man to take her out of her misery of working all day and all night to pay the bills.  She wants to go to Las Vegas or Monaco to find the perfect rich man, presumably in search of happiness.  Of course, we all know how that story ends even if it does lead her to that rich man.  Despite this scenario not fitting my story, I still like the baseline lyrics because its an example of the superficial reality we are led to believe by the mainstream media fully occupies most young minds.

I have found that this is only one third true.  That’s a high degree of precision for a psychosocial observation, but its based on my view of the people I know.  They fall into three categories.  I have spent a moment thinking about this and I think that extends to my various workplace friends, my college friends, my relatives, my kids, and my personal buddies.  The splits may not be exactly 33.333%, but they are damn close in my experience.

The first cohort is just like the ABBA song.  These people live in a money culture where there is fundamentally never enough.  They are what economic anthropologists called people of limitless wants.  The sheer definition of limitless wants means that they are never happy because they spend whatever they have and are always of the opinion that getting more will solve all their problems.  Their focus in life is all about spending.  I used to read Mad Magazine as a kid and I thought the writers were brilliant.  I remember one cartoon strip in Mad that showed a businessman talking about his career.  The story went like this, “When I made $5,000 a year I thought I would have it made if I could make $10,000 a year.  Then, when I made $10,000 a year I thought I would have it made if I could just make $20,000 a year.  That was all crazy because now I make $20,000 a year…and if I could only make $40,000 a year I know I would have it made.”

The second cohort I call the accumulators.  They are the savers, who are not happy unless, like Scrooge McDuck, they can go into their vault and swim amongst their savings.  They do not have much of a spending habit though that is not to say they don’t live reasonably well.  Like the first cohort, they too are never happy, but its for a different reason.  They do not have a wolf at their door in terms of bills to pay.  They have a big bad wolf they think will come to their door if they do not have a massive bank account for that proverbial rainy day, regardless of the forecast.  These are the Millionaires Next Door as the Stanley & Danko book of 1996 details.  These people live in a money culture as much as the first cohort, but they don’t act anything like that first cohort.  Their issue is not the hedonism of the first cohort.  Their issue is security and the desperate need for it.  They believe that money will give them security, whether its “Fuck you” money or just a quiet cushion under the mattress.

The last group is the group that never thinks about money.  This is not to say they don’t need it, it just means that their lives are not focused on money to give them happiness.  I recently saw a sketch on TV about an NFL player of some note (the kind of guy who usually inhabits the first cohort with all the bling he can muster), who suddenly quit and gave away all his money except for what it took to buy a sport utility vehicle that he promptly used to take off on a worldwide “See the World” trip.  These people are all about living and gathering experiences.  Their wealth is denominated in happiness by virtue of abject lack of money wealth focus.  When I hear stories like that I wonder if he kept enough money for gas and food.  I can’t figure out if that makes me more Cohort 1 or Cohort 2.

As I approach my work horizon, or as a friend of mine is fond of saying in his stand-up comedy act, when they stop sending me a check each month, I wonder about money and its meaning more and more.  I neither have so much that I needn’t worry about anything and can do whatever I want, nor am I lacking enough money to live the life I want to live.  How’s that for a vague set of parameters?  On the one hand, I look at my investment accounts and think that will be enough and I’m fortunate to have it.  Then I get my annual Social Security transmission.  I almost wish they wouldn’t send that shit.  It gives me a run-down of everything I made on a Social Security and Medicare basis.  The difference is that the SS calculation was capped, and the Medicare was uncapped.  So, I get to see how much money I made over the years.  It always makes me reflect of the years of my career, both good and bad.  Mostly it makes me do some very dangerous math. This is the “Would-a, Could-a” analysis that is designed to just make me feel uber-stupid.  If I had saved this much on that year, just think about what it would be worth today.

I saw a Facebook post about a pilot who bought a Rolex in 1973 and kept the box and receipt (he is clearly a member of Cohort 2).  He had paid $548.39 including tax.  It turns out he has worn the watch very little over the years and the appraiser tells him it is worth over $100,000 now.  That sounds amazing and makes us all kick ourselves for throwing out all those boxes and receipts and even for using all the stuff we bought over the years instead of socking it away for future value.  My problem with it all is that I tend to pull out my HP 12C calculator and do the math about how much his investment return was on a compounded basis.  It tells me that he has only made a little under 12%, which sounds more reasonable (given the “who knew” risk of saving a collectable) than it does amazing.

So, once that HP 12C is unsheathed, I start doing more math.  If I had not bought that car in 1973 for $1,000 and had just invested it, what would it be worth today.  Well, at that 12% I would have $184,000.  That makes me feel stupid for having bought the car.  The walking would have done me good.  But then I stop and acknowledge that if I had put the money in the bank or bought an EE Bond I would have gotten at most 5%.  At 5% I would have $9,400 and I think, thank God I bought that car and had all those good times.  That makes me feel that I had better just put away the calculator and stop thinking so much.

Which one of these cohorts do I belong in?  I have spent money of useless stuff over the years.  The unused gym equipment and gym memberships alone would, if reinvested, make me a wealthy man.  I have clear and visible attributes of the money culture Cohort 1 person.  Hell, I did spend forty years on Wall Street, the motherlode of money culture.  But then again, I have socked away a bit here and there like my friends in Cohort 2.  I bought some life insurance along the way.  I made a few sound investments and refuse to discuss all the lousy investments.  And while I never gave it all away (I always worried about gas and food money), I did give plenty away and made sure to gather experiences and derive happiness from things other than money.

Obviously, most of us has parts of all three cohorts in us and probably prefers to think of ourselves as balanced.  The truth is that we are each probably more one than the others.  I will declare that I began life as mostly Cohort 1.  I then shifted to Cohort 2 for a period of time.  And now that I am older and wiser, I try to be mostly a member of Cohort 3.  The question might be, did I spend enough time in each cohort to optimize?  Who the hell knows.  I know I have saved some and spent too much and have a wonderful array of memories of experiences such that I can sit and write about them day after day.  I think that means that I did it more or less right or at least well enough to allow myself to think that way.  The mind is a beautiful thing.  It enables us to rationalize away all our prior mistakes and excesses and gives us the basis for saying, “I have no regrets.”  That is a wonderful place to end up.  The question then becomes what would we recommend to our kids?  Whatever you do, avoid the mistakes I made, right?  No, I would say, whatever you do, know the choices and don’t let blind Money, Money, Money thinking guide your life and certainly not on the basis implied by the song. Whatever you do, do it based on your own abilities and desires.  Go for it and spend it, save it or give it away on your own terms.