How to Worry Less About Money: Financial Planning Lessons from Goethe
By Maria Popova
The question of how people spend and earn money has been a cultural obsession since the dawn of economic history, but the psychology behind it is sometimes surprising and often riddled with various anxieties. In How to Worry Less about Money (public library) — another great installment in The School of Life’s heartening series reclaiming the traditional self-help genre as intelligent, non-self-helpy, yet immensely helpful guides to modern living, which previously gave us Philippa Perry’s How to Stay Sane, Alain de Botton’s How to Think More About Sex, and Roman Krznaric’s How to Find Fulfilling Work — Melbourne Business School philosopher-in-residence John Armstrong guides us to arriving at our own “big views about money and its role in life,” transcending the narrow and often oppressive conceptions of our monoculture.
He begins with a crucial distinction, the heart of which echoes James Gordon Gilkey’s 1934 advice on how not to worry. Armstrong writes:
This book is about worries. It’s not about money troubles. There’s a crucial difference.
Troubles are urgent. They ask for direct action. … By contrast, worries often say more about the worrier than about the world.
So, addressing money worries should be quite different from dealing with money troubles. To address our worries we have to give attention to the pattern of thinking (ideology) and to the scheme of values (culture) as these are played out in our won individual, private existences.
While modern money-advice tends to fall into two main categories — how to get more money and how to get by on less — Armstrong points out that this bespeaks our culture’s fixation on troubles rather than worries. He writes:
This is a problem because the theme of money is so deep and pervasive in our lives. One’s relationship with money is lifelong, it colors one’s sense of identity, it shapes one’s attitude to other people, it connects and splits generations; money is the arena in which greed and generosity are played out, in which wisdom is exercised and folly committed. Freedom, desire, power, status, work, possession: these huge ideas that rule life are enacted, almost always, in and around money.
He draws an analogy from the philosophy of teaching, which distinguishes between training and education:
Training teaches how to carry out a specific task more efficiently and reliably. Education, on the other hand, opens and enriches a person’s mind. To train a person, you need know nothing about who they really are, or what they love, or why. Education reaches out to embrace the whole person. Historically, we have treated money as a matter of training, rather than education in its wider and more dignified sense.
Underpinning our money worries, Armstrong argues, are four main questions that have far less to do with our financial standing than with psychoemotional and social factors — questions about why money is important to us, how much money we need to achieve what’s important to us, what the best way to acquire that money is, and what our economic responsibilities to others are in the course of acquiring and using that money. We’ll never overcome our money worries, he argues, unless we first recognize those underlying questions:
Our worries — when it comes to money — are about psychology as much as economics, the soul as much as the bank balance.
Key among Armstrong’s strategies for alleviating such worries is developing a good relationship with money, which parallels human-to-human dynamics:
One thing that’s characteristic of a good relationship is this: you get more accurate at assigning responsibility. When things go wrong you can see how much is your fault and how much is the fault of the other person. And the same holds when things go well. You know that part of it is your doing and part depends on the contribution of your partner.
This model applies to money. When things go well or badly, it’s partly about what you bring to the situation and partly about what money brings. What money brings is a certain level of spending power.
What you bring to this relationship includes imagination, values, emotions, attitudes, ambitious, fears, and memories. So the relationship is absolutely not just a matter of pure economic facts of how much you get and how much you spend.
In discussing research indicating that more money, after a certain threshold, doesn’t mean more happiness, Armstrong offers a necessary definition of happiness:
When we talk about happiness, what do we have in mind? Probably a mixture of buoyancy and serenity; you feel elated but safe.
The relationship money has to these attributes, he argues, is “real but diminishing.” While money can buy the accoutrements of buoyancy — chocolate, weekend getaways, expensive shoes — many people feel unhappy despite having these. His explanation, echoing the philosophy of Alan Watts, leads to the obvious conclusion:
Money can purchase the symbols but not the causes of serenity and buoyancy. In a straightforward way we must agree that money cannot buy happiness.
Since Armstrong’s main argument is premised on the idea that our culture is geared toward addressing troubles rather than amplifying well-being, which parallels the disconnect that Martin Seligman observed in the field of psychology when he founded the positive psychology movement, it comes as no surprise that Armstrong’s key construct in solving the conundrum mirrors Seligman’s philosophy of flourishing over “happiness.” Indeed, Armstrong argues that while serenity and buoyancy are appealing, they fall short of reflecting what people really want out of life:
Most people realize that they really need to do things for other people. There is a deep fear that one’s life will be lived in vain — without making a contribution, or a benign difference, to the lives of others.
Flourishing means getting on with the things that are important for you to do, exercising your capacities, actively trying to “realize” what you care about and bring it into life. But these activities involve anxiety, fear of failure and setbacks, as well as a sense of satisfaction, occasional triumphs and moments of excitement.
And yet this is in no way a motion to flatten the full dimensionality of the human experience:
A good life is still a life. It must involve a full share of suffering, loneliness, disappointment and coming to terms with one’s own mortality and the deaths of those one loves. To live a life that is good as a life involves all this.
While the things money can secure — like power, influence, and access to resources — may not be shortcuts to serenity and buoyancy, Armstrong argues, they are inextricably linked to flourishing by enabling you to pursue the things that are important to you and, in the process, to contribute to the lives of others. Here, the relationship between amount of money and potential for flourishing doesn’t flatline the way it does in a more narrow conception of happiness:
Armstrong’s key point, however, is that while this correlation of growth might be directly proportional, money isn’t a cause of flourishing but an ingredient in it, a mere resource with which to build the life we want, catalyzed by virtue:
Money brings about good consequences — helps us live valuable lives — only when joined with “virtues.” Virtues are good abilities of mind and character.
Reminiscent of Ben-Franklian virtues like temperance, frugality, and moderation is another essential skill in alleviating our money worries — the ability to distinguish between wants and needs. The need-desire distinction, Armstrong suggests, is useful in warding off mere desires, like the longing for the latest shiny gadget, even if it’s of little utilitarian value, or that sleek new bike, even if the old one works perfectly fine.
If we want to be wise about money we should resist the impulse to follow our desires and concentrate instead on getting what we need.
Need is deeper — bound up with the serious narrative of one’s life. “Do I need this”? is a way of asking: how important is this thing, how central is it to my becoming a good version of myself; what is it actually for in my life? This interrogation is designed to distinguish needs from mere wants. And that’s a good distinction to make.
But it is important to see that this is not the same as the “modest versus grand” distinction. Our needs are not always for the smaller, lesser, cheaper thing.
The ultimate purpose of purchases, he argues, is to help us flourish. His strategy for mastering the needs/wants balance thus rests on not conflating this dichotomy with familiar ones like basic/refined (“a distinction about the level of complexity of an object”) or cheap/luxurious (“a distinction to do with price and demand”). Instead, he recommends a seemingly counter-intuitive approach — to consider our needs first, without taking price into account.
But, ultimately, Armstrong points out that the things most essential to our flourishing — despite what our monoculture might dictate — are often unrelated to material goods:
The crucial developmental step in the economic lives of individuals and societies is their ability to cross from the pursuit of middle-order goods to higher-order goods. Sometimes we need to lessen our attachment to the middle needs like status and glamor in order to concentrate on higher things. This doesn’t take more money; it takes more independence of mind.
There are quite profound reasons why we should care simultaneously about having and doing. Both are connected to flourishing.
What we do with our lives is obviously central to who we are. What we expend our mental energy on, what we put our emotional resources into, where we deploy courage or daring or prudence or commitment: these are major parts of existence and are inevitably much connected with work and earning money. And we need these parts of existence in order to find proper application in activities that deserve our best efforts. We don’t’ want to reserve our central capacities for the margins and weekends of life.
Despite certain cultural stereotypes, Armstrong points out that, precisely because of these parallel forces, doing well and doing good don’t have to be mutually exclusive, and there could in fact exist a straight positive correlation between intrinsic worth and extrinsic, material reward:
At an individual level, one is trying to find a way of making this happen in one’s own life. But because intrinsic worth isn not just what is good for me, but what is actually good, this is a public service as well. It’s not greedy to want to make quite a lot of money — if you want to make it as a reward for doing things that are genuinely good for other people.
In considering yet another essential difference — that between price and value — Armstrong makes a key distinction, which most of us intuit but can rarely articulate with such eloquence:
Price is a public matter — a negotiation between supply and demand. A thing’s price is set in competition. So the price of a car is determined by how much some people want it, how much they are willing to pay, and how ready the manufacturer is to sell. It’s a public activity: lots of people are involved in the process, but your voice is almost never important in setting the price.
Value, on the other hand, is a personal, ethical and aesthetic judgment — assigned finally by individuals, and founded on their perceptiveness, wisdom and character.
Armstrong finds a certain artfulness to the issue of managing our money-worries:
Ultimately, one is cultivating an art — one of the minor political arts, the art of domestic finance. By saying that it is an art, one is getting at the idea that there are multiple motives and rewards, which are integrated. There is an aesthetic or order — a physical beauty that is connected to neatness and clarity — like the beauty of the periodic table, or the elegance of a mathematical equation, or the rightness of a note in a sonata. It is a classical beauty.
In a chapter considering the problems of the rich, who are able to use money to fulfill their desires, Armstrong writes, with a wince and a wink at the “hedonic treadmill”:
Money does not liberate people in the way that we assume it must.
There is a very imperfect relationship between desire and flourishing. Desire aims at pleasure. Whereas the achievement of a good life depends upon the good we create. And the opportunity to follow whatever desire one might happen to have is the enemy of the effort, concentration, devotion, patience and self-sacrifice that are necessary if we are to achieve worthwhile ends.
Armstrong goes on to outline a number of practical strategies for improving our relationship with money and thus mastering our worries, concluding with a wonderful anecdote of a man who epitomized that relationship at its healthiest: Goethe.
From his many writings about his own experiences, we know that he was determined to get well paid for his work. He came from a well-off background but sought independence. He switched careers, from law to government adviser so as to be able to earn more (which made sense then; today the trajectory might be in the opposite direction. He coped with serious setbacks. His first novel was extremely popular but he made no money from it because of inadequate copyright laws. Later, he negotiated better contracts. He was very competent in financial matters and kept meticulous records of his income and expenditure. He liked what money could buy — including … a stylish house-coat (his study has no heating). But for all this, money and money worries did not dominate his inner life. He wrote with astonishing sensitivity about love and beauty. He was completely realistic and pragmatic when it came to money but this did not lead him to neglect the worth of exploring bigger, more important concepts in life.
Quoted text excerpted from How to Worry Less about Money by John Armstrong. Copyright © 2012 by The School of Life.
Published May 13, 2013