Your Money Philosophy

By Abhishek Chatterjee
Singapore

Let’s face it, money to most of us is not just something we exchange for goods and services, it is much more, and how we employ or spend our cash tells a lot about us, our goals and aspirations. In some ways, ‘money behaviours’ indeed define our personalities. There is therefore little doubt that money is almost an emotional issue. And as with most emotional issues, it can take a heavy toll on our well-being, and given the nature of the beast, a difficult relationship with money can lead to more than just emotional damage; it can cause real and physical shortages, which inevitably leads to even more stress, thus perpetuating a vicious circle of fear and anxiety.
Sameer Singh, a Singapore based media executive, is 28, single and successful. His relationship with money is, well, ‘irreverent’, in his own words. “I never think about it”, he says. “I know I make a decent amount of it, so I don’t ever think about a worst case scenario. And I don’t have a fixed spending pattern as such either and generally spend as and when I like. Weekend getaways and the latest gadgets are particular focus areas. I absolutely hate living on a pre-drawn budget…I like a bit of flexibility.” And what of savings and the future? “Yes, when I blew up over a thousand dollars on a designer jacket last month, I did feel guilty about it later, but you only live once, right? In the end it’s simple math, isn’t it? Whatever’s left in the bank account at month end is the savings.” he grins. “I’ll think about a serious savings plan in a couple of years.”
This attitude towards money is quite symptomatic of the larger prevailing attitude to money amongst many of Sameer’s age-group. The ‘my cash, my way’ and ‘have money, will spend’ slogans are popular ones, and indeed we are no one to judge; after all, what one spends on is purely a case of ‘chacun-a-son-gout’. The glitch with this is an undercurrent of guilt and anxiety that builds up over time, aided by a gnawing realization of thoughtlessness and a search for a more considered approach to managing one’s finances, amidst the constant temptation to splurge, either for that fleeting fuzzy and comforting feeling after a purchase, or simply to keep up with the rest of the gang. The continuous acquisition of the latest gadgets and luxury items and a disregard to savings and the future, does give a short term rush, but in the long run, it can be devastating. With indiscriminate spending comes the precarious situation of being just one unexpected event away from financial Armageddon.
A way to rise above this constant tight-rope is to define for oneself a personal ‘money philosophy’. What is that, you ask? Well, according to Alla Sheptun, a well known Russian finance academic, "The philosophy of money is the mode of the intellectual inquiry of the essence of money as a social phenomenon and its influence on the world of things, the world of people and the inner world of the individual." To put it simply, having a money philosophy is to know the 'how' (much money is enough), the 'why' (is money important to you) and the 'where' (will you spend it). It should ideally work like this. We all have our goals, both short term and long term, and in most cases, we need money to realize them. In that sense, money is just a means to an end and not the end itself as a lot of us make it out to be. The money that we make, according to well known personal finance writer, Dave Ramsey, is only good for 3 things - creating wealth, having fun with and giving away. One would largely agree with him. Therefore, all we need to do is figure out what our goals are, and then allocate our spending patterns accordingly in the 3 categories above mentioned, the composite result being our money philosophy. For example, 29-year-old investment banker, Prashant Nichani’s long-term goals involve retiring from active corporate life by the age of 45 to pursue interests in the arts, a house in the suburbs of Chennai and a small independent business of his own. To achieve this over the next 15 years or so, he would therefore need to use most of his disposable income to create as much wealth as possible to take care of his and his family's future needs as well as to invest in his business idea. Using his money to have fun would therefore sadly have to occupy a much smaller piece of the pie. How this pans out is, of course, open to conjecture and only time will tell of its success or failure. But putting together the philosophy, and importantly, internalizing it, engenders a clear thinking and an internal peace. The benefit of thinking up a clear personal philosophy helps to articulate clearly what our money is going to do for us, and more importantly, helps to filter out all the money noise we hear all around us every day, both positive and negative, thereby eliminating a bit of the stress, fear and self-reproachful negativity that stems from financial mismanagement. Again, being mindful of the long term and being conservative with spending patterns comes highly recommended. “Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like", said actor Will Smith, very sagaciously, one might add. Having a money philosophy (more importantly, a positive one) in place, will help us take a step back from unproductive spending, purchases that will get us no further to our goals, and crucially, will help to keep us grounded.
It’s clearly hard not keeping up with the Banerjees, but a constructive philosophy of money can certainly help us remember that the measure of all things must in the end always more than just 'stuff'.