Taking Stock is a book written by a hospice doctor, it is about his advice on financial independence, and how to build wealth and live a regret-free life.
Our fears of dying mean we play it safe or follow a path that’s not our own. Sometimes we become so enamored by the mirage of wealth that we spend our lives chasing some elusive goal that does not exist. It is only when we find out that we are dying or terminally ill that the illusion shatters.
When they face their impending nonexistence they begin to openly and honestly evaluate their life. The answers to these questions are instrumental in filling the oft-ignored holes that exist within when it comes to our identities and purpose. Such gaps must be filled in preparation for a good death. It is time to mend relationships, fix that which has been broken, and fulfill last-minute “bucket list” items. The end is both a gift and a hardship.
There was a comparison of money to oxygen. If you have enough, it does not affect your life all that much. If you don’t have enough, good luck thinking about anything else! This reminded me of an undercover boss reality show, his net worth is close to a billion. He is only provided HKD 50 per day and worked as a cleaner. He quit on day 2, he mentioned that he could not even think about the future, he could only think of how to afford food at the Cha Chaan Teng (HK restaurant). Only when our basic economic needs are met do we have the luxury to say that money does not matter.
Let’s take the oxygen metaphor a step further. If life is not possible without at least a certain level of oxygen for comfort, what happens when you have excess? Does extra oxygen get you anywhere? Do you live longer, or even feel better? There is nothing gained by having more oxygen than your lungs and body need to survive. This is the same truth about money. Why do we chase higher and higher amounts, when we have by far surpassed “enough”? Furthermore, why do we feel that after getting our basic needs met, more money will somehow lead us to greater self-fulfillment or self-actualization?
This is the fallacy of enough. Once you reach some plateau, a great calm will overcome us. I have found that once we reach our goals, fear sets in. We start to worry that we lose everything we worked so hard to gain. We become terrified of falling. We start chasing the next goal before we even celebrate reaching this one.
The hedonic treadmill is the endless lust after shiny objects from time to time: cars, jewelry, houses, and many others. A fresh purchase will provide us with a momentary sense of happiness. With time, we return to our baseline and are no longer happier, and a little more broke. The hedonic treadmill is about human beings adapting to changes so quickly that we tend to stay at a basic level of happiness no matter what positive or negative life changes we experience. Our purchases bring us short-term well-being that disappears almost instantaneously because we adapt. Consumption is addictive, it puts us on a treadmill and we get nowhere.
The evil twin is called overdrive, it is common for those drawn to the idea of financial independence. Saving and making money, and seeing it grow gives us momentary bumps of happiness. Our money wins do not permanently elevate happiness. Whenever the shine of the new milestone fades, we are back to our baseline, which sends us off to the races to try to make even more money.
We are working harder and longer. We are skipping vacations, and filling up nights and weekends for jobs that we for the most part find at best mediocre or possibly poor. Why do we trade our most precious commodity, time, for this unhappy scenario? Could the reason be fear?
We are looking for money to do what it was never designed to do! Wealth has transitioned from a tool into a goal. We think if we just make enough money, it will somehow turn us into good people, solve our day-to-day problems, or better help us with that great fear that we will come to the end of life without enough. What if we defined what “enough” really looks like so that we could pursue that goal with clarity and purpose?
This is the process of “life review”. Life review is a holistic and structured process of evaluating one’s past and present, including events and memories, in an attempt to find meaning in and achieve the resolution of one’s life. Which accomplishments am I proud of? Have I nurtured my relationships? Is there anything I regret?
The best way to overcome the fallacy of enough is to change our relationship to “the climb”. We can think of the climb as consistent progress toward a meaningful goal. That’s it. When we are doing purposeful things and aspiring to something of great personal meaning. Live a life true to themselves. The climb is striving toward own unique purpose, identity, and connections. There is no finish line. There is no goal, no reward, just a series of roads ahead of us and a choice of which is to be taken. The dying take on the urgency of now because there is no longer term to set goals for. “Enough” becomes “joy” in the process. One day at a time, one step at a time until there are no more.
Our goal is true independence, dispel the notion that we will reach some magic moment when we never have to work again. The nirvana the young retirees experienced was fleeting. Face with at least five more decades of life and view work as anathema, a lack of direction ensued. These people were fairly clear about what they did not want to do but had no idea how to bring passion back into their lives. They were passionate about making money but once they had enough, what was the point? Till the age of 40s, I knew what I disliked but I am still finding my passion.
Work is something that we do all our lives. It never stops, not even in retirement. Work is an activity we do to create goods and services. When we are doing it for others, we call it employment. In exchange for work, we get paid through money. The concept of money is an intermediary for the potential energy we collect when we perform work for other people.
When making life decisions based on money, such as retiring on a set net worth, we are simply relying on this intermediary as a goal instead of an instrument. We should think deeply about how to use this energy to fulfill our purpose, identity, and connections. I felt at a loss when I reached my financial goals.
Retirement comes when you have saved enough so that you can cover your future needs for goods and services, minus those you are willing to provide for yourself. Leaving retirement is not the ultimate goal. Instead of saving enough to leave retirement, the goal should be to accumulate enough of these potential energies to allocate them in such a way as to maximize our precious time so that we can do things that we want to do, things that give our lives meaning. FIRE should drop the RE and focus on a more thoughtful reallocation of our time and energy.
When you concentrate on the audacious goal of financial independence or some net worth number, you push everything else aside. Your dreams, aspirations, and bucket list items. You become so fixated on the illusion of financial achievement that all else becomes peripheral. Why shouldn’t it? Life is finite and we may die and not accomplish our true goals.
We are failing to consider the key life concepts that have the most impact on day-to-day emotional well-being, self-actualization, and life satisfaction: purpose, identity, and connection.
We must consider our purpose before we are financially independent and certainly before we become hospice patients. Did you use that potential energy to change the world or yourself positively? Did you use your knowledge, resources, and yes, capital to do something meaningful? There is no right or wrong when it comes to purpose. When was the last time an idea kept you awake at night tossing and turning in your bed? Did you pursue it? Your purpose can change over the years and even contradict itself.
Imagine that you are on your deathbed and saying, “I regret that I never had the energy, courage, or time to…” Whatever comes next in that sentence is your unique purpose.
Your identity is what comes directly after the words “I am”. You can recognize parts of your identity that you have been denying, activities that you neglect because of fear or a perceived lack of time. You may have to say yes to activities or people that you usually avoid, volunteer to do something you have never done before, or socialize with those outside your comfort zone. What makes me feel most alive, most myself?
Surround ourselves with people whose values and passion dovetails with ours, they help to build meaning in our lives and add richness and texture. Whom do you feel most connected to?
Beware of one more-year syndrome and golden handcuffs. These phenomena are used to instill fear and incentivize against any change. Even after achieving financial stability or independence, we become victim of the “what ifs”. What if …
- The market crashes?
- Real estate evaporates?
- I can’t find health care?
The more difficult questions arise:
- Am I anything outside of my job?
- What if this is the best it gets?
- Will my life have lost meaning?
We decided to remain in unfulfilling jobs for one more year because we were afraid. What could be the harm? There are so many great reasons to stay, extra money, more time to plan for the future, or even corporate health care. Then a year passes, and years turn into decades. We may eventually accumulate more material wealth than we need, but we are no closer to a greater sense of well-being or personal understanding. We are simply putting off the difficult work.
Our definition of “enough” presupposes an external monetary goal that is our reward for fighting to the end and never giving up on our dreams. I encourage you to see the climb, and consistent progress toward a meaningful goal as the true objective and the more important work. What is meaningful to you has everything to do with your unique purpose, identity, and connections, and nothing to do with your net worth.
This is not to ask you to abandon your career or deny the importance that money plays in our overall goals. How do we better align our careers and yet stay true to our underlying purpose and identity?
The parables of three brothers
Three brothers who set off on the journey of a lifetime by embarking on three separate roads. Each brother is unique. The eldest brother was considered the most efficient, he chose a path that was straight and clear of time-wasting roadblocks. The middle was a strong walker but easily distracted, there were many detours and he had trouble concentrating on the task at hand. Teh youngest was neither moving forward too quickly nor got distracted too easily. He was deliberately slow.
The eldest brother had a concrete plan in mind, he had no fondness for the road, and he just wanted to get to the destination in the shortest time. When he came to the end of his journey, he enjoyed a long period of freedom. The road had battered him but it was a sacrifice he had been willing to make.
The middle brother split his journey into more manageable increments. When he found his energy low, he would follow a flight of fancy. The trips off the path lengthened the journey and cost him time, he found his joy refreshed and stamina rebuilt with each foray. He had less time to enjoy his freedom but a good deal more energy.
The youngest brother was much slower and deliberate. He enjoyed the road and saw the path as a joyful journey. He felt no hurry. When he finally reached his destination, he did something neither of his brothers could understand. He turned around and started to walk back the way he came.
The three brothers help us understand our relationship with employment. How we see our jobs and what role they play in our lives. How you do anything is how you do everything.
Choice 1: Front-Load the Sacrifice.
This is the road of the eldest brother. Rapid accumulation of assets to build a secure nest egg. Exponential net worth growth is garnered by high savings rates, frugality, and stock investing. The power of compounding is a key ingredient in shortening the length of time until retirement. Money saved in the first decade of employment is squirreled away into investments. Getting to financial independence requires hard work, planning and often, missed opportunities.
Every pilot knows that the greatest expenditure of energy occurs during takeoff. Once the plane reaches cruising altitude, fuel needs decrease drastically. Your financial timeline is no different. The fuel burned early in the journey will propel you even faster for the rest of the journey.
The pitfall is falling into extreme. Saving and making money become so addictive that we find ourselves spinning our wheels rapidly but getting nowhere.
Choice 2: Passive Income and side hustles
Middle brother chooses to define financial independence as a state in which passive income streams and side hustles create enough to cover daily needs. Passive income at the beginning is anything but passive. It needs hard work.
In the FI community, the idea is to build a perpetual money machine over a short time and reap the benefits for decades. We need to ask how much time should we expect to spend on maintenance. Passive income that requires countless hours of nurturing is no longer passive, it becomes a job. The trick to being truly passive is front-loading.
Choice 3: The Passion Play
They believe if their job provides cash to cover basic needs as well as fulfill purpose, identity, and connections, there is no need to wait on compounding interest. This is the “passion play”. This refines financial independence as the ability to fill one’s time primarily with meaningful activities while making enough money to survive.
If you do something you love you will never have to work a day in your life.
We need to be intentional about weighing the positives and negatives of each brother’s path. We need to put our financial house in order today so that you will be prepared no matter how many or few tomorrows you have in front of you.
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