a podcast plug and the wealth and wellbeing balance
Early August and I was invited to add detail and definition to two very hot — and very different — topics from the world of finance.
I’m about to recommend you listen to a couple of episodes from The Wallet miniseries, brought to you by Emilie Bellet – founder & CEO of Vestpod and author of bestselling book, You’re Not Broke, You’re Pre-Rich.
I know, I know … oftentimes when friends suggest to me a series, podcast or boxset they’re basically listing a bunch of things I’ll never get around to.
Nonetheless, I’ll ask you to please get your ears into Investing With Confidence (make your money work for you), and Wealth and Wellbeing (finding the balance) – which is the topic we’ll focus on today.
NB they’re only ~25 minutes. Less if you skip the ads. Winkyface.
Money life and context
We’ll start by saying that there are tons of stats, produced by various organisations and institutions, showing how more money, after a certain point, doesn’t offer any more happiness. We’ve cited this research a bunch of times before and it’s pretty airtight.
Also, research into people nearing the end of their lives consistently reports how few of them dwell on the items and assets they accumulated. No, people in their later years tend to reflect on their life’s purpose, experiences and fulfilment therein.
I love the quote by the late, great George Carlin: “Trying to be happy by accumulating possessions is like trying to satisfy hunger by taping sandwiches all over your body.”
Agreed and agreed. Life’s not about money. Money alone doesn’t equal happiness. Stuff’s just stuff. That said, money is still a vital ingredient in the cement of life because it funds essentials, and covers the costs of the people, places and things we love …
What are we balancing?
Sometimes it helps to think of wealth as how and wellbeing as why: money is the practical tool that covers how we live, while wellbeing is the desired result. It’s why we bother at all.
Balancing the how (essential spending) and the why (non-essential spending that’s essential in its own way) can be a delicate thing, especially when times is tight.
Engage a financial planner in this process and they’ll reveal one of our most annoying habits, which is adding more line-items to your essential, or how, list.
Meet one of us and it’s no longer just about food, travel, rent and utility bills, no. Our list of essentials includes things like emergency funds, life insurance, savings, pensions, investments and so on …
More essential items to pay for equals less hard cash to spend on treats and enjoyable things. This is the how and the why of it … so where’s the balance?
The balance is your balance
Some people might recommend you find the wealth / wellbeing balance via a magic formula. A common one is the 50 / 30 / 20 approach whereby 50% of income covers essentials, 30% fulfilling things and 20% future planning and security.
Other people pull together a clinical, ruthless cashflow sheet where spend items are worked out to the penny and you dare not deviate.
Cool, but you may be equal parts relieved and frustrated to hear that I don’t think there’s a one-size-fits-all to this. In my experience, very few people can consistently afford all of their how and why items. Things change month to month. There will be new priorities, sacrifices and compromises that force alterations and improvisation along the way.
Balance. I think of a tightrope walker – it’s not always a clean, calm march from A to B. There will be wobbles, missteps, maybe even a fall. An outdoor walker cannot affect the wind … but they can lean in and compensate.
More on your why
For me, the wealth / wellbeing balance isn’t a static thing. It’s fluid. An immovable financial plan sounds nice in theory but life doesn’t work like that. There will be unforeseen events, expenditure and emergencies, hence the best plans have inbuilt wiggle room.
This is why people like me see emergency funds et al as essentials, not just nice-to-haves.
If we consistently fail to meet our essential and / or non-essential expenditure, it’s time to rethink and replan. Options include:
a) increase your income
b) save for longer
c) take more risks
d) lower your expectations
Anyway, it’s also worth saying that just the act of putting together a financial plan (even though it’s a plan that will change) has value too. A good financial plan is a platform to question your why and scan your life-line-items for purpose.
This is hugely important. We’re so good at comparing nowadays, but this exercise will ask if you really envy someone else’s luxury Instagram lifestyle. If a Land Rover will really make you happy. If a £500-per-month membership at Oak House Country Club is worth it … or if Tuesday pub quiz at The Dolphin scratches the same itch.
There are no wrong answers but it’s an illuminating, fact-facing exercise. It’s identifying items your ego thinks it wants but your soul may not need.
Where will you put your sandwiches?