"Most of us live our lives by accident - we live it as it happens. Fulfillment comes when we live our lives on purpose."
I’m in the economics department talking to two of my professors about my future. One of my professors thinks I would do well in a Ph.D. program in economics. He thinks, at the very least, I ought to pursue a Master's degree. The other professor thinks I should consider law school. I’ve also considered a Master of Business Administration degree. Further, I have a finance professor who thinks more training in investments would suit me - specifically the Chartered Financial Analyst (CFA) program. There are too many options, and I’m not used to this. Frustrated, I ask my professors what I should do. One wants me to further my economics training, one wants me to study law, and I sort of want them to decide for me.
Instead of making my decision for me, which I’m looking forward to, they simply ask me one of the most challenging questions I’ve ever been asked:
What do you want to do?
I’m stumped. I’m even frustrated. How dare they ask me what I want to do. I asked them first!
This is the first time I’ve ever really even thought about deciding for myself what I want out of life.
Two years later, I’m sitting in the library studying for the first level of the CFA exam. Well, I should say I’m “studying” for the exam. Truth be told, I’m always on the lookout for distractions from the reading, practice tests, flashcards, and word problems.
Instead of studying, I flip through a brochure from CFA Institute - the organization that administers the exam. The brochure offers all the reasons we should all become CFA charterholders. One of the reasons is pay. I find myself drawn to the chart that shows the average salaries for professionals with the charter versus those without. First, I’m shocked to see that the average salary for those without the charter is high, but the charter, on average, will earn me $100,000 more per year. This is incredible to me. It’s another reason I should be actually studying instead of “studying.”
I have no idea why I want to make that kind of money. I certainly am not thinking about what it takes to have a job that pays that kind of money. I assume that’s what I’m supposed to do. More money is always better; that’s what I’ve learned. So it is, I put my head down and keep studying.
I’ve never thought about what money is for. I’ve always thought the collection of money was the primary goal I should have.
It took me years to realize that I can live my life on purpose instead of reacting to whatever happens. It took me even longer to understand what I needed money to do for me.
MONEY IS STRESSFUL
Money is the top source of stress for those of us in the west. It’s also a top source of conflict in relationships. This is a bummer, because life is already hard and scary. We will have to overcome setbacks, there will be times when nothing seems to go our way, and we have to deal with the fact that life is finite.
Money skills don’t come naturally to us. Our distant ancestors didn’t have to learn about money. In fact, most of the wiring passed on to us around survival doesn’t translate to doing well with money. There is no equivalent of money in nature, yet money skills are our modern survival skills.
Layer in the fact that we have direct access to our own experience, and only our own experience. We know exactly how it feels to be financially stressed. Others’ experiences - including their financial stress - has to be communicated to us somehow. There’s always something lost in translation, and money is a taboo topic.
Experientially, it feels like we are the only ones who feel financial stress, and everyone else has it together.
MONEY IS EVERYWHERE
There are many topics that are taboo to talk about, including politics, religion, sexuality, and health issues. The biggest taboo topic, though, is money. Once someone starts talking about money, they open themselves up to be judged - and we don’t like to be judged. Unlike the rest of them, money touches every area of our lives; we can’t escape it.
Money has a way of sneaking up into our lives. You don’t even have to talk about money to talk about money. What you buy (or don’t buy) acts as a signal to others that says something about money, whether we want it to or not. Likewise, you (likely) judge others when you see what they drive, wear, live in, etc. We are social creatures, and social comparison is hardwired and takes confidence and practice to get over.
There are few financial decisions that don’t impact your life and few life decisions that don’t have a monetary component.
LIVING ON PURPOSE
Living on purpose means to design your life and live with intention. It sounds simple, but in my experience, most people don’t do that. Most people float around life from circumstance to circumstance, reacting to whatever life throws their way.
The opposite of reacting to whatever life throws at you is to design the life that you want to live. By designing your life, you make it less likely that you’ll look back on your life with regrets.
Living life on purpose means to live in a way that you tried to live. There will be obstacles, but by having something you want out of life, you have a way to redirect your life when the unexpected happens.
LIVING WITH PURPOSE
Living with purpose, at least with respect to your money, means you know what your money is for; you know your money’s purpose.
What’s your money for? This sounds like a simple question, but it’s deceptively difficult to answer. Once your basic needs are met, they say money doesn’t buy more happiness. If you’re not getting more happiness, then you don’t “need” any more money, in the strictest sense of the word “need.” The fact that you are still earning and collecting money means there’s a reason. Why?
Living with purpose means that you know money’s role in your life. It means you are using your money to live a life that is in alignment with your personal values and life aspirations.
One of the best ways I know to use your money with intention is to increase the space between stimulus and response. For those of you who tend to overspend, that means increasing the space between your impulses and your purchases.
The stimulus (impulse), which is usually just a thought, happens quickly and usually without us knowing. When we act on those thoughts blindly, we tend to make impulsive decisions and won’t necessarily be in our long-term best interest.
When we put space between the thought and the action, we make sure it is a decision that we want to make. We make sure we know we are making the decision. Having a financial purpose statement is one powerful way to make sure our financial decisions align with what we need money to do for us.
Once you know your financial purpose, write it down. Carry it with you. Memorize it. Your financial purpose statement is like a mantra you can use to make sure you are using your money as a tool to support the life you want to live.
We get one shot at life. Spend some time deciding what you want out of life and choose how to use your money to support that life. Do everything you can to live the life you will be proud to look back on without regret or remorse.
You only have one life. Live intentionally.
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Related Money Health® Reading
References and Influences
Frankl, Viktor: Man's Search for Meaning
Hagen, Derek: Your Money, Your Values, and Your Life
Hagen, Derek: Money's Purpose in Your Life
Klontz, Brad and Ted Klontz: Mind Over Money
Lindsay, James: Life in Light of Death
Peterson, Jordan: 12 Rules for Life
Richards, Carl: The One-Page Financial Plan
Wagner, Richard: Financial Planning 3.0
Wallace, David Foster: This is Water
Ware, Bronnie: The Top Five Regrets of the Dying
Note: Above is a list of references that I intentionally looked at while writing this post. It is not meant to be a definitive list of everything that influenced by thinking and writing. It's very likely that I left something out. If you notice something that you think I left out, please let me know; I will be happy to update the list.