Universal basic instincts
Instinctively, everything points towards income being more important than expenditure, but this is a deception

Instinctively, income feels more important than expenditure

We focus on income over expenditure for several sensible-sounding reasons

The stories

Upon meeting a financial adviser, the typical client cannot wait to brag about their income. They are less likely to crow about their aggregate expenditure, though are happy to estimate it when asked, because it supports the story they want heard about how much they earn, and therefore how justified they are in trying to touch the ceiling with their sternum. Asking for a breakdown of that expenditure, however, causes sternums, shoulders and speech to shy away in search of a sharp change of subject.
Clients and advisers gush over income like a new-born baby, while treating expenditure breakdowns like a trespassing spider. Of all the pieces in the initial information jigsaw that marks the start of a new adviser-client relationship, the expenditure breakdown is always the last one to be slotted in – if indeed it’s not declared eaten by the dog and gleefully abandoned altogether. It’s not the homework, but what it reveals that’s unwelcome. I learnt the hard way that asking someone to contemplate what their spending says about their life inspires more terror than asking them to contemplate their or their partner’s possible death.[1]
This mismatch in motivations mirrors how we treat the ins and outs of our cash-flow in a wider context.
For income and expenditure there is both a number and what we think it says about us. There is the salary and the job title, the budget and the piles of stuff… and the contribution each makes to what we think others think about us.[2] Try divorcing the numbers from their meaning and you’ll realise you can’t.
The way we treat the numbers and the signals they supposedly send support the notion that intuitively, when it comes to corralling one’s cash in the service of living a Good Life, income feels most deserving of focus.
Consider both the way we talk about our monetary ins and outs, and how we count them. In the civilised world, and outside of an adviser’s office, one never talks directly about one’s income number. But indirectly, one cannot escape its influence. When it’s high, we can’t help but hint at it, especially when it’s just gone up. When it’s low, we shy away from revealing how low, complain about being repressed by The Man, or lie. And given the chance to find out someone else’s salary on the sly – say, an unguarded HR spreadsheet, or a media exposé on public-institution paygrades – who can resist the sirens’ call for a surreptitious peek?
When we talk about expenditure, it tends to fall into three categories: a) the big one-off humblebrag (the ‘it wasn’t cheap, but…’ or the ‘it should be, given how much it cost’); b) the regular first-world-problem ‘chore’ (e.g. the cost of children, architects, or constellation of Michelin stars); and c) the it’s-okay-because-it-was-a-bargain (this can be a bargain of the poundshop or designer-clothes outlet variety, the latter often being combined with the one-off humblebrag).
Importantly, in each case, what we’re talking about is not our expenditure, but our income. In each case, the focus is on the price of things to the world, rather than their value to us.[3] It’s a blind substituting of numbers for narrative. Yet spending blindly does not contribute to anyone’s Good Life. Spending wisely contributes to everyone’s. There is arguably no clearer sign of someone ruining their life than bragging about how much it costs them to run it. So that cannot be what we’re doing. We’re not talking about the cost, but our ability to meet it, and what that, in turn, says about us. Unfortunately, we’ll see in the next section that what it says about us is also bollocks.

The maths

As well as its influence on our talk, income also holds greater sway over our actions. The traditional model of financial freedom is a simple one: save enough so your money can do your earning for you. ‘Make working optional’ is a tried-and-tested adviser sales pitch. The time taken to do this exists on a spectrum. Ignoring other circumstances, if you save 100% of your income, you are already there and need to work for no more years. If you save 0% of your income, you’ll never save anything, and need to work forever. If you save about 80%, you need to work for about four years. If you save about 10%, you need to work for about 50 years.[4]
When it comes to saving, there’s obviously more scope for earning more than spending less. You can always earn more, but cuts can only go so deep before important bits start falling off. Of potential sources of savings, therefore, income can be seen as infinitely superior. Because salaries tend to rise as if set by a ratchet (i.e. they fall with a lot more friction than they rise) and because your current salary is such a strong anchor for your next one, any young careerist is advised to prioritise negotiation skills over job skills. This last assertion is certainly true. The other points are probably not.

Instincts often lead our wallets hopelessly astray

The reasons to focus on income over expenditure may be tempting, but they’re wrong
The traditional model of financial freedom on which the above instincts are grounded is flawed. For it to work, money must be about numbers, not narrative, its value to you must be about having not becoming, and its purpose to ease unthinking, not inspire thinking. None of these is true.
In each of the ways we talk about income, we signal our belief that the number is a sign of our worth; that it is, in some way, us. Why shy away from salary discussions as vulgar, but try so hard to hint at their height or their increase, if not to suggest that each are inherent markers of our value? And that’s before even considering the sacrifices of health or relationships we made so we could do such hinting. Making excuses for low salaries shares the same psychological source. Consider too the unthinking ease with which we throw around phrases like ‘done well for themselves’[5] when mental or physical or even life wellness could be precisely what the subject of the comment has given up to have you utter the phrase (usually out of their earshot).
In terms of expenditure, we’ve seen that humblebragging, first-world-problem complaining, and bargain-snapping are all ways of signalling our income. But it goes further. When we signal our income in this way, we’re equating income with intelligence, our ability to be a general problem-solving maestro.[6] We are trying to meet our goal of ‘being’ intelligent by ‘having’ acquired certain material possessions (or ‘having’ a high salary). This is one of the fundamental flaws in our relationship with money – a major self-deceptive block to using the power of money for good in our lives.
On the surface, this is ridiculous. In every other walk of life, intelligence is signalled by putting in less effort for no shortfall in the quality of output – doing something more quickly, more neatly, more efficiently, or more elegantly. Yet when it comes to living a Good Life (which is the only thing we should ultimately care about), we act as if achieving it for £10,000 per month is better than doing it for a tenth of that. [7]
The evidence of those spending the most is undeniable – their lives are not ‘better’, just more expensive.[8] Yet our actions continue to exhibit our belief that money inherently signals worth (even if – often particularly if – we preach the opposite). Many may agree in principle with Confucius that ‘To be concerned only with one’s salary is shameful’[i] but remain wired in such a way that in practice all worries lead to wages,[9] and thereby conclude that they’re too busy to be concerned about anything else right here and now, including, of course, the fact that ‘right here and now’ is where they always are, while their dreamy future is neither here nor there; no more than, to paraphrase F. Scott Fitzgerald, a phantom chase after a dream’s shadow.[ii]
The source of our income is a major building block in the edifice of our being, advertised as if it were something we are, rather than something we have. When we hear ‘what do you do?’ the second half of ‘…to earn money’ is so well understood that it goes without saying. We could mean ‘what do you do… with your time?’, or ‘…that makes your energy soar?’ We just don’t. And unless you’re a spy or a spiv, most are happy enough to be asked. In some parts of the world (hi America!), you don’t even need to ask because it’ll be volunteered long before such concerns as family, or fun. Let’s not forget either the millions that take and continue in jobs they don’t like simply for money they won’t ever spend. Everyone knows someone who is most commonly described with reference to their earnings.[10]
As covered earlier, viewed through our ‘turning resources into Good Life’ lens, having a healthy and helpful relationship with money relies on knowing thyself and allocating one’s resources in accordance with that knowledge. The thyself to be known is our ‘centre of narrative gravity’ – the story we spin about who we are from the internal and external circumstances we are constantly interacting with. Both our income and our expenditure are inputs into this story. But when we try to turn the number of either into a narrative, we sell ourselves short, for we are telling ourselves that ours is not a story of becoming, but of having (or being had), that our worth is a replaceable commodity, and that our unique potential isn’t so unique after all.
It is because the ultimate benefit of both our income and expenditure lies in their being inputs into our stories that expenditure is of far greater importance. Living a Good, flourishing, flowing, potential-fulfilling life relies on aligning the story you want to be telling with the one your actions are telling. The most reliable expressions of your actions are the decisions you make around money. And while the income side of the story can be tricky to shape without significant time, effort, and all sorts of other consequences (including plenty of unseen ones) you can take control of your expenditure instantly. The more fragmentary nature of our expenditure decisions may be part of the reason we do not so easily keep track of the aggregate in our minds, but it helps when it comes to making changes. Our expenditure is perfectly designed for just the sort of brain surgery we want to be performing.

The limits of no limits

There is greater scope for saving more by earning more rather than spending less, but it’s a misguided direction to go down

Earning big to justify thinking small

The argument that none of this really matters if you can earn the sort of money that makes the tax-return calculator build up a sweat and turns your most insecure friends crimson with envy is too strong to simply brush aside.
It’s true that there is no limit to how much you can earn, while there is to how little you can spend, and an awful lot of people are right up against that lower limit already. Of all the places where focusing on the numbers rather than the narrative feels like the thing to do, this discrepancy feels like it. Our expenditure may be worthy of more focus in our storytelling, but that doesn’t mean we can’t also seek to supercharge our salaries independently of this. Especially so, we may think, because if most jobs are kind of pointless, we may as well pick whatever profession we can wring most convertible resources from, and deal with converting them into a Good Life when we’re outside of the office.
Problems arise when we believe – because we believe money is about the numbers –that the Good Life is the more expensive life, and that earning loads leads to needing to think about what we do with it less, not more. Outside of actual poverty, there is no good reason to link expenditure to income, and yet everybody does it. It’s a huge error; an infallible sign of an idiotic relationship with money.
Regardless of the maths, it’s important to note that focusing on increasing your income can be done in a hugely positive way. Income increases that arise from building a business that’s a vehicle for distributing your creative potential to the world in a valuable-enough way for the world to reward you for it is a beautiful thing. There is only good to be said for monetising your potential for helping the world in a way that only you can.
In addition, the art of salary negotiation is undoubtedly one of the best things to learn, especially early in a career. Not only because small salary differences compound into enormous differences in lifetime earnings for the exact same input, and because your next salary anchors so heavily to your previous one, but because whatever you do, you will always be selling (negotiating) something. And if you can sell well, you’re instantly more valuable – including to the person you’ve just persuaded to pay you more (provided they put those skills to use, and assuming you’re negotiating to take home more of what you’re worth, rather than to spin a web of deceit).[11] Transferable knowledge beats transitory knowledge, and selling is the most transferable skill there is.[12] However, this positive way is not the common way.

The maths revisited

Let’s take a closer look at the maths. The evangelists for each extreme – the earning maximisers and the spending minimisers – know the maths well. What do they have to say?
The earners talk of infinite upsides, and point out that trying to save for retirement by cutting down on coffee and avocado toast is like trying to save the planet by unplugging your phone charger. The savers dream of Eden, or Walden, and point out that there’s a limit to the amount of people that can earn the megabucks that make ignoring expenditure even theoretically possible.
The earners think there’s a level of income that renders one’s level of expenditure irrelevant. They think lifestyle creep – spending based on income, rather than on what makes life better – is a thing that happens to other people. Yet just about all high earners I’ve ever met, be they friends, clients, or the paragons of this parable, the people I met while ‘living’[13] in Qatar, prove the opposite. Lifestyle creep strikes hardest at the keenest income maximisers. It has to: their narrow worldview that the numbers are all important guarantees it. Those most driven to earn the big bucks are driven by a desire to spend big bucks. And those most inclined to evaluate lifestyle wants via cost, rather than costing their lifestyle wants first are by definition those most susceptible to the creep. Many a tax-free Gulf-dwelling ex-pat manages to earn, often even outright save, a million in less than a decade. However, their annual expenditure ‘needs’ can jump from 20,000 to 120,000 at the same time, while they’re still the trim side of 30. This catapults them onto the well-trodden road to the sort of money troubles that beset so many entourage-laden professional athletes. Couple compounding with lifestyle creep and the biggest hindrance to traditional financial freedom is developing expensive addictions in one’s 20s.
Even worse than normal lifestyle creep is leveraged lifestyle creep: not only spending more when you earn more, but spending more when you merely expect to earn more. Pre-termism is even worse than short-termism. As Professor Dolan notes: ‘The gains from increases in income can be completely offset if your expectations about gains in income rise faster than does income itself.’[iii] Optimism can open-up opportunities, but blind optimism can be oppressive.
The earners know the compounding effects of early investing. They know, for example, that if you invest £1,000 each year between 20 and 30 and then stop and let it grow,[14] versus if you invest the same £1,000 p.a. from age 30, it would take about 50 years for the second pot to catch up with the first – and cost you about £50,000 rather than £10,000.[15]
The savers know the compounding effects of lifestyle choices. They know that what looks like isolated expenditure decisions never are; nothing is a one-off, because everything is a lifestyle choice. And while you may call something an exception, your neurons know better. Their strength gains are indifferent to your claims of each bead in a string of ‘one offs’ being an exception to who you ‘really’ are. If your mental connections say you can’t bear to see cake go unloved, you are no more ‘healthy on the whole’ than an LA waiter who spends more time serving than on the stage is an actor.
Seeing the world through a lifetime lens acknowledges that we buy not things, but a lifestyle. Choosing to dislike public transport, say, and taking taxis everywhere instead, is choosing to need to earn thousands extra each and every year (not forgetting the tax on that too) instead of using such journeys as a chance to get lost in a book, or learn a language, or balance on one leg, or meditate, or… well, you get the idea.[16] This sort of deception can be subtle, in the way most dieters deceive themselves with ‘treats’[17] that feel like exceptions even when they happen every other day.
The cost of a new pair of jeans (or ten pints) when one’s feeling a bit lost isn’t ‘only’ £50. It’s the accumulated cost of every single item you buy to scratch an emotional itch. Paying £20 for a luxury version of something where the functional version costs £10, when done because you identify with the luxurious lifestyle represented, doesn’t add £10 to your overall spending, it doubles it. Forever. And given the track record of ‘having’ material possessions in meeting the ‘being’ needs the mindset that inspired them is chasing, what happens is you not only double the cost of your living, but do so for zero sustained increase in the quality of it.
The earners espouse a version of ‘live fast, die young’, albeit confusing living expensively with living fast, and ignoring life-expectancy statistics. The savers acknowledge that increases in income may build a big pile of cash more quickly on the way up, but sustained reductions in expenditure do that and help you eat into the pile more slowly on the way down. Because lifestyle choices compound, and because people are living longer, the proportion of your life spent earning versus that spent spending is a good guide to the relative importance of each. And since life expectancy overtook the standard retirement age in about 1950, most people earn for less time than they spend – none more so than those most focused on some form of early ‘retirement’.
There are many good reasons to buy a thing; the level of our income is not one of them. It is a literal waste of resources to no good end, and if you are wasting your resources, you are wasting your life. If you treat life as a mad rush to build as big a pile as possible as quickly as possible, before swapping stress for therapy to deal with the effects, you overlook both the facts that if you have value to give the world, then the world will very likely reward you for it, and that the Good Life for which you are doing the rushing is not a destination.

Earning big demands thinking big

The earners and savers both make valid points, but each extreme misses the main point that managing your money isn’t a numbers game. Not only can you play with the variables (income, salary growth, expenditure, inflation, investment growth, etc.) to make either income or expenditure look like the most important number, but whatever variables you use have to be put in context: the Good Life is always more than the sum of its parts. If using the power of money for good were about the numbers, I’d settle for sharing a few spreadsheets, and forget about the encouragement to think beyond them.
Rather than changing the variables, you’re better off changing the view, bringing your mind to your money, rather than letting your money ambush your mind.
For every person that manages to rise within a money-making industry while saving and investing their way to ‘freedom’ and then using that freedom for whatever morally delicious and life-enhancing purpose they won it for in the first place, there are thousands that instead simply sacrifice the best hours, and best creative energies of their lives to buying a slightly nicer suit than the person at the next desk along.
Some really can work surrounded by mindless spenders and ignore their influence, maybe even still get promoted by boss-level mindless spenders despite having nothing in common with them. Some really like the jobs. But not many. And the few who do make it work would’ve most likely made it work without the money anyway (especially when high-paid usually means more hours and more stress, so you get less time to spend doing what you do actually like, and like it less when you do). If the get-in-get-out approach worked, you’d never see anyone working in the City over the age of 40. Or any retiree with sedentary and stress-related health problems.
It’s possible to believe both that making the most of your earnings potential and making spending choices driven not by that earnings potential, but by your life’s potential are good things to do. It’s also possible to earn your way out of short-sighted financial trouble and in doing so make your life worse.
Vanishingly few pay attention to the breakdown of their budget in private, let alone in public. Some, in the tribe of the extreme early retirees, focus more on their savings rate than their salary. Next to no one attends with equal vigour to how the allocation of their resources, be it towards a title, retirement, parsimony as an end in itself, or gout, aligns with their narrative nirvana. Take control of the alignment of your expenditure, however, and regardless of what’s going on with your income, you can be satisfied that you’re serving your story.

Comfort and confidence

Comfort and confidence with money can come only from becoming wiser with money, not from becoming richer

Orthotics is bullshit

We’ve seen that being led down self-deceiving paths because of a combination of numbers over narrative, having over becoming, or unthinking over thinking does not take us towards our Good Life. Despite this ultimately insane wasting of resources, each of these in-the-moment errors is eminently understandable. The better we understand our momentary motivations, the better we can set ourselves up to not be led astray so easily or so often in future.
In all financial decisions we are seeking comfort and confidence with money. In a profoundly important way, we want to become wiser with money, to feel this comfort and confidence within us. But becoming what you want to be when the very thing that will help you is the very thing you are seeking is not easy.
As we saw earlier, from Plato’s cave to rewiring your brain, the earliest steps in the process of becoming wiser are the toughest to take. Not least because the unthinking moving walkway of the numbers-based having-mode path also advertises comfort and confidence, and it does so with much better marketing and promises of much quicker results. Yet it’s heading in the opposite direction. And going more quickly the wrong way is a terrible idea.
Not all sources of comfort and confidence are created equal. Comfort and confidence can come from dark or light; from ignorance or understanding. This book is about moving out of the misleading short-term comfort of the dark, and into the long-term light. Because the unthinking path doesn’t work. The clearest prescription for better financial decisions is pointless if the very idea of money still leaves someone shaking with fear and confusion. If what we did already worked, we’d be well-advised to not worry about the philosophy, to dismiss the psychology and the neuroscience as too clever for its own good, and jump on the moving walkway.
True comfort and confidence with money comes not from money itself, nor from delegating the decisions about it to an external source. It comes from somewhere much deeper, and more secure: from comfort and confidence rooted in your centre of narrative gravity – in your story. Unfortunately, when viewed through a narrow lens, external comfort not only looks the same as internal comfort, it looks better.
Many people, having outsourced care of their skeletal health to the dubious anatomical expertise of heeled shoes, desk chairs and sofas, live their lives in posturally unsound positions. When they do have to hold themselves in shapes more traditionally becoming of a human, it hurts. Many a short-term solution has sprung up to help ‘heal’ this hurt. In the short-term, it’s simply far more effective to get comfortable in the bad position than it is to rediscover one’s innate human strength in the good one. Yet foot problems are worsened by orthotics, not solved by them. And mental orthotics are more devious, more deceptive, and more dangerous.
The can of discomfort can be kicked down the road only so far before it ends up in pain. If instead you stop and deal with it, you end up growing. How you deal with discomfort – whether you end up in chronic pain or whether you grow – is the fundamental determinant of the ultimate Goodness of your life.
Wrapping something in cotton wool doesn’t protect against decay, it just protects against seeing it. And refusing to look at something doesn’t mean it isn’t there. In the name of certainty, we narrow the scope of the universe of situations in which we’re comfortable, but this doesn’t make it smart. Far better to expand that universe, be it by letting your feet be feet, realising it’s possible to use public transport without contracting leprosy, or seeing that homeliness isn’t a function of square footage. Or, in this context, in deriving comfort and confidence from the firm foundations of understanding, rather than the shakier ground of your internal spin doctor.

Local and global maxima

For many problems, there is both a ‘local’ and a ‘global’ maximum, a basic solution, and a more advanced one. Think of them as two peaks in a mountain range, one higher than the other, except the higher one cannot be seen from the summit of the lower. It is possible to get stuck on the lower peak, the ‘local maximum’ and believe you have discovered your solution. Yet this may not be true. There may be a higher peak, a ‘global maximum’, a better solution, but to find it requires climbing down from your proud position, which many are reluctant to do. As Jon Elster wrote, ‘Because of its obeisance to the pleasure principle, the unconscious will always be stuck in a local maximum.’[iv]
The traditional numbers-based model of personal finance frequently gets stuck on local maxima. When you: a) need to actively think things through to be able to even see the global peak; b) reached the local peak precisely because of unthinking; and c) have to face the discomfort of going down before embarking on an attempt at the real summit (which you cannot see), the temptation to pretend your peak is the peak is strong.
The traditional model of financial freedom is about getting to the stage where you don’t have to think about money. It’s a noble aim. Money is involved in every decision, and were each of them to have to be meticulously thought through, your brain would melt. But there’s a big difference between an unthinking default and a consciously constructed and systematically reviewed default. If you start from unthinking, you never get anywhere other than stuck.

The conspicuous consumption con

We are wired to signal our worth through waste… but the sort of ‘worth’ built on waste is not the sort of worth you want

Want not to waste

We are wired to be show-offs. Understanding what it is we are showing off underlines the futility of focusing on income over expenditure.
Not only do we spend to signal our income, but we spend to some extent purely to justify the time and energy spent in our income’s acquisition. We are showing off not what we’ve acquired, but what we’ve lost.
In Rousseau’s words, ‘Expenditures are increased for the sole reason of having a pretext for increasing income.’[v] It’s almost profound in its pointlessness. We’ve attached our printers to our shredders and dedicated our lives to sorting out paper jams rather than just pulling out the damn plugs and going outside to play.
To quote James P. Carse:
Once [the owners of property] have drawn attention to what they have lost in acquiring what they own, they must then consume what they have gained in a way that recovers the loss. The intuitive principle here is that we cannot be justified in owning what we do not need to use or plan to use. One does not earn money merely to store it away where it will be protected from all possible future use.[vi]
We use both income and expenditure to signal our worth. And we signal our worth by wasting it. As Carse continues, ‘Consumption is a kind of activity that is directly opposite to the very form of engagement by which the title was won. It must be the kind of activity that can convince all observers that the possessor's title is no longer in question […] wealth is not so much possessed as it is performed.’[vii]
To understand the primacy of wealth performance over wealth possession is to understand the roots of all the idiotic shit we do around money.
  • The number that believe they want to be seen as being rich versus those that go about it by spending for the sake of being seen to spend.
  • The ‘curse of can’: decisions about how to spend our resources often rest upon our mere ability to do so, regardless of whether we expect the decision to lead to our life becoming any better… ‘what does it matter, I can afford it’ is not a justification of a purchase, it’s an admission of making poor life choices. We sacrifice the Good Life to look like we haven’t.
  • The ease with which we confuse having something for becoming something, as if being seen to be something by association with an arbitrary good were a guide to anything other than our possessing the means of acquiring it. Any idiot can own an Aston. Many do. It’s never made any of them James Bond.
  • Those that dedicate their energy to earning precisely to not have to think about money, and then spend those earnings in a way dictated by others’ views (or rather their perception thereof) in a merry-go-round of unthinking, all to avoid having to think about how to either earn or spend in a manner reflective of a Good Life.
Like all intensely common behaviours, conspicuous consumption, despite dancing in our faces, all the time, and in big showy robes, is easily overlooked. Yet unless your aim is to waste your life, it mustn’t be. For it’s the opposite of what we want.
Conspicuous consumption is more than an indulgent overspend… it’s an entirely unhelpful way to play the game of life. It’s the poster-child of self-deception. It’s the reason someone can never get anywhere near the Good Life despite apparently devoting all their energy towards it, and always believing that they’re only ever one more promotion, one more house move, one more somethingorother away from arriving at happily ever after. A prize for postponement can never be won.

Are you being eaten?

When something doesn’t make sense, ‘costly signalling theory’ – a showy display of apparent disadvantage that by its very showiness becomes an advantage – is often the answer.
Conspicuous consumption is a form of costly signalling theory. Thorsten Veblen, the man whose name economic theory now attaches to goods whose expense is counterintuitively a cause of their demand, first described people lighting cigars with $100 bills as an otherwise nonsensical sign of wealth. The same analysis has since been applied to college degrees (too costly for future bad-employees to obtain) and to all the best slightly-bonkers evolutions of the animal kingdom, from calamitously long tails and heavy horns to the fun way gazelles ‘stott’ (jump on the spot) when they see a cheetah, rather than immediately legging it.
Costly signals aren’t always stupid, or they wouldn’t ever happen. But they can be misguided. Stotting gazelles really do lessen their chances of being eaten. But if the Good Life is our goal, human stotting leads only to eating ourselves.
Conspicuous consumption is what happens when ‘because everyone else is doing it’ gets imbued with relevance it has no right to claim. Remembering that conspicuous consumption is to waste your wealth in a performance put on for other people, the only sense in which it ‘works’ is for those other people, not for you. It drags you into the insecure mire with them, so while neither of you live any better, those already in the mire appreciate the company.[18]
Like all cons, the conspicuous consumption one is most dangerous to those that believe themselves immune from it. Those that complain about the game are key to keeping the game going. If you own a yacht and no one is jealous enough to complain about it, you lose half the thrill of owning it. Every complaint is an admittance to the ‘winners’ that the game they’re ‘winning’ is the only one in town and the one everyone else wants to ‘win’. Complaints confer legitimacy on your prize. If winning such prizes correlated with feeling like one were living a Good Life, then everyone would be right to continue to play. But it doesn’t.
Silliness is, sadly, seductive. ‘Look at the number of things we buy because others have bought them or because they're in other people's houses,’ wrote Seneca, back when one Amazon was much bigger, and another much smaller. ‘One of the causes of the troubles that beset us is the way our lives are guided by the example of others; instead of being set to rights by reason, we're seduced by convention.’[viii] It’s a view echoed by Benjamin Franklin: ‘The Eyes of other People are the Eyes that ruin us. If all but myself were blind, I should want neither fine Clothes, fine Houses, nor fine Furniture.’[ix] Living other people’s lives is a tragic failure of imagination, for it is in a profound sense not to live at all.
However, both Seneca and Franklin stop too short. It is not the ‘eyes of other people’ that ruin us. The eyes of other people could elevate us. And there’s not a lot we can do about them in either case. What ruins us is our own eyes, and where we choose to focus them. It is ultimately our eyes that lead us to believing that we are numbers, rather than narratives, to believing in the legitimacy of the game that derives worth from waste, to believing that our becoming wants can be met with having needs, and to being seduced into unthinkingly and systematically picking the wrong path.
Being wired to pick the wrong path, and with no controls in place to stop and think that maybe this isn’t a wise move, doesn’t lead only to wasting a bit of cash. It leads, as Paul Tillich explains, to existential despair:
The man-created world of objects has drawn into itself him who created it and who now loses his subjectivity in it. He has sacrificed himself to his own productions. But man still is aware of what he has lost or is continuously losing. He is still man enough to experience his dehumanization as despair. He does not know a way out but he tries to save his humanity by expressing the situation as without an “exit”.[x]
In this way, mankind has – in the very act of searching for meaning – created meaningless. Bugger.
There is, of course, a better way. For the other path leads not to existential despair, but towards enlightenment. It’s a different game altogether. One where status and self-esteem aren’t products of possessions marketed by lost children playing make-believe, but side-effects of cultivating inherently rewarding character traits. Underneath our self-deception, we all already know this. If you think of the people you most admire and come up with a job title and a bank account, rather than a personality and behaviours, then you’re beyond help.
With all money decisions we are seeking comfort and confidence. We delegate the decision-making process, hoping it’s a more effective way of obtaining them. Yet this is to try to become comfortable and confident in our own skin by buying cotton wool in which to wrap ourselves.
There is no glory in winning battles that needn’t be fought. To do so is to be a modern-day Dr Frankenstein,[19] squandering all the potential in the world to create a monstrous form of life, rather than something more fitting of his talents, while creating life the more traditional way.
Comfort and confidence come from one’s self not one’s suit. In all my experience, regardless of what rich people owned, those living obviously better lives were those who knew what mattered most to them and used their resources in alignment with this knowledge. The implications for your savings are clear. As Morgan Housel wrote: ‘Past a certain level of income, what you need is just what sits below your ego […] One of the most powerful ways to increase your savings isn’t to raise your income, but your humility.’[xi]
We deceive ourselves in this way because it’s easy. It’s easier to fake the signals of income than those of expenditure. Because, actively or passively sent, expenditure signals are more honest. Our comfort and confidence with money can be honest or dishonest too. And while the fake way usually looks like the shortest way, it never actually gets where you want to go.

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[1] Partly this is fear of the unknown. The consumer industry’s focus is after all on ways to make us open our wallets without having to think about doing so – usually by finding new ways to not have to physically open a wallet. Partly it is fear of feeling guilty. Of revealing secrets known only to the credit-card statement. We know what we do, but feel bad about it, and telling the world would be like publishing a food diary, or an internet browsing history. Partly it is fear of the interminably moralising frugality speech. Fear not – this book is no paean to parsimony. Reducing your expenditure should probably happen, but as a side-effect and expression of a joyful life, not as some sort of self-flagellation.
[2] Despite knowing others are too busy worrying about our judgments of them to care about their judgments of us.
[3] Something we’ll look at in detail later in Section 2.3 of this chapter.
[4] Maths footnote to come.
[6] In ‘The conspicuous consumption con’ below, we’ll see that we’re also signalling something else of great importance, which highlights even more why this approach is so doomed.
[7] I knew a client once, a ‘Lady’ no less, who was shocked in the way that only clueless posh people can be, that her £10,000 per month jewellery and hats habit was met not with deference but pity, as if I’d misheard hats as heroin.
[9] Having worked with those in the top teeniest tiny percentage of high earners, the amount of those wages is irrelevant.
[10] One wonders if this is an inevitable reflection of a world full of bullshit jobs. When so few jobs are defined by meaningful tasks, we need a proxy, and money is often all there is (those with meaningful jobs tend to lead not with a title, but a description of how they help bring value to the world).
[11] Taking a job primarily because of the money may be cripplingly stupid (we’ll get to that later), but getting paid up to the limit of your true worth for doing a job you’d do anyway is just wise.
[12] For those (like me) who still cannot hear the word ‘sales’ without their shoulders twitching and images of Glengarry Glen Ross or the Wolf of Wall Street coming to mind, learn to remould those images into one of a hostage negotiator or a therapist. This is about long-term helping someone else help themselves, not about a short-term con.
[13] However many ‘exist’ there, very few actually ‘live’ in Qatar.
[14] In this crude example, at a constant 7% p.a.
[15] Maths footnote: all such simple models will be available in online calculators at some point.
[16] Of course, if the intangible benefit of being able to be the sort of person that brags about never using public transport (and no one that’s ever chosen to dislike public transport has ever avoided mentioning it at every opportunity) unquestionably makes your life better than the extra income demands and such alternative uses of mental energy, then it would be a sound investment. I’m not here to judge specifics.
[18] The manufacturers of white sofas also make more sales, of course, but it’s at least debatable that making profits in such a way contributes to anyone’s quality of life.
[19] Actually referring, for once, to the scientist, not his creation.
[i] Confucius, The Analects
[ii] F. Scott Fitzgerald, The Beautiful and the Damned
[iii] Paul Dolan, Happiness by Design
[iv] Jon Elster, Nuts and Bolts for the Social Sciences
[v] Jean-Jacques Rousseau, Discourse on Political Economy
[vi] James P. Carse, Finite and Infinite Games
[vii] James P. Carse, Finite and Infinite Games
[viii] Seneca, Letters from a Stoic
[ix] Benjamin Franklin, Letter to Benjamin Vaughan
[x] Paul Tillich, The Courage to Be
[xi] Morgan Housel, Collaborative Fund blog
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