Fool’s Golden Handcuffs
FEATURED ON HOMEPAGE
In a previous post, I wrote about my growing doubts with the gospel of careerism. I realized I didn’t want to continue my chosen career path, and I really didn’t want my job to define who I was. I was finding that the longer I worked, the less I wanted to keep working.
With the benefit of hindsight, I was wrestling with two separate but related issues. First, how long was I supposed to pursue my career to attain whatever higher purpose or level of achievement I was supposed to attain? Second, how long did I have to work out of necessity? There was still the issue of money to contend with. The reality of needing to make money is a sobering reminder that discovering your true calling isn’t the only thing a job is for.
When it comes to making any kind of career change, the practical matter of needing to work for money can’t be discounted. For most people, myself included, there are bills to pay and financial obligations to meet. Even “good” debts like mortgages require a source of income.
Have you ever tried to think through the financial aspect of not working or is it just too scary and unrealistic to bother with? Practically speaking, how much money would you need to stop working? How much money would it take to pivot to a career you are happier with, perhaps that is closer to your true calling? If you made that kind of a change, how would you pay for the things you need? How would you pay for the things you want?
As you consider these questions, it will become obvious that your chosen lifestyle can create a dependence on perpetual work. It’s pretty simple actually. If it’s expensive being you, it’s going to take more money to stop working. If you want choices about if or how to work, however remote the possibility may seem, you have to start by carefully considering the type of lifestyle you want. Then you have to determine how much it will cost, and consider what tradeoffs you are willing to make. This amounts to consciously and intentionally designing your life, not just for your current self, but for your future self.
How Much Does Your Life Cost?
How much does your life really cost? Obviously, we all need basic things for survival: food, water, shelter, and clothing. But as the saying goes, man does not live by bread alone. Beyond simple biological needs, there are things we need mentally, spiritually, and aesthetically. Things that give our lives joy and meaning. And some of these cost most than others.
As you are determining how much your desired lifestyle costs, don’t start with numbers or a budget. Start instead by reconciling your needs and wants. Think about what you truly need, versus what you think you need, versus what you know is just a plain want. For example, I need a roof over my head. But, I don’t need a home in California that costs more than twice the national median and carries a hefty mortgage for the next 25 years. I want to own a home in California. For now. I don’t need to travel or go on vacation. Strictly speaking it’s not essential. You know what else is nonessential in my life? Pets. Pets are not essential for human survival. Good coffee, craft beer, and expensive gravel bikes are also not essential, but I’m convinced my life is far better with them. To me, they’re worth every penny.
For the parents out there, what about your kids? Are they a need or a want? They’re expensive to the tune of $17,000 per year, I know that. Did you really need to have kids? Now that many of you are aghast, I promise I’m not trying to be caustic or inflammatory. I’m just trying to illustrate how deeply personal these choices are, and how much of a philosophical rabbit hole it can be to clearly distinguish a need from a want. Most people would acknowledge that being a parent is more like a choice than a necessity, but at the same time couldn’t imagine life without their kids.
At the end of the day, one person’s wants are another’s needs. I avoid spending money on clothes unless I have to. Other people insist on dressing in the latest fashions. I’m happy buying pre-owned cars, other people only buy new. I’m content inheriting my wife’s old iPhone, other people want the latest model. I’ve never flown first class, others wouldn’t be caught dead in coach.
It doesn’t matter if my want is your need or vice versa. There’s no judgment. I have to finance my lifestyle, not yours. However, even if the labels might feel arbitrary, it’s still worth critical reflection. If forced to categorize your expenses into “wants” and “needs”, are you comfortable with how the ledger balances? The only “judgment” is if your spending is controlling you, or if you are controlling your spending. Is your chosen lifestyle creating a dependence on perpetual work? Are you okay with that? Is your lifestyle really chosen, or is it closer to lifestyle creep?
Remember What You Used to Live On?
Think back 5, 10, 15 years ago. How much money did you used to live on back then? I often think about my grad school days when I was living on government loans and a $15/hour job. That actually wasn’t bad for a college student in the early 2000s, but after paying for essentials I didn’t have a lot left over. That said, I never felt like I was left wanting for much, and I never recall feeling anxious about money. Could I live on that amount of money today? Absolutely not.
I’m not in college anymore and neither are you. We’re (probably) not as willing to drink Milwaukee’s Beast and Boones Farm, or eat ramen for dinner. The old clunkers we inherited from our parents finally broke down and we needed a proper vehicle. We started dressing like adults. We didn’t want roommates anymore. We bought homes and had kids. It’s not a fair comparison. Forty-two year olds don’t have the same expenses as 22 year olds.
I acknowledge that, but here’s the real question - are you any happier now? Were you less satisfied with what you could afford back then? What did you really need that you didn’t have? Did you ever feel stressed or anxious about money? How often to you feel stressed or anxious about money now? What happened? Of course our lives get more expensive (and complicated) as we get older, but it’s more than that. Sure the champagne of beers doesn’t taste as good after you’ve had champagne, but why does it keep taking more and more to make us happy? What creates the lifestyle creep that turns our former wants into our current needs?
The Cycle of Work and Spend
Economist and sociologist Juliet Schor has a name for this whole syndrome. In her 1992 book, The Overworked American: The Unexpected Decline of Leisure, Schor introduced “the cycle of work and spend”.
According to Schor, the cycle of work and spend occurs because companies continue to pump out products and services that require buyers. They claim these goods will create happiness for their buyers. Workers go into debt to buy the goods they believe will make them happy, but that they don't really need. They find themselves working longer to keep up with the payments that arise from their spending.
The happiness from the last round of spending is fleeting, so they consume more, and the cycle continues. Many people can imagine a less materialistic way of life, but as their wages lag behind the cost of living, and their debt accumulates, they find it hard to break free from the cycle.
This is closely related to what psychologists call the hedonic treadmill. The psychological explanation for the cycle of work and spend is that we tend to have a happiness set point that we return to over time, independent of how much we consume. As we adapt to new, higher levels of consumption, we pursue more, falsely believing it will makes us happier.
As a follow up to The Overworked American, specifically as a response to interest in the book’s chapter on work and spend, Schor wrote The Overspent American. Here are what Schor had to say in the opening chapter:
(The millionaires next door) “…feel no need to let the world know they can afford to live much better than their neighbors. Millions of other Americans, on the other hand, have a different relationship with spending. What they acquire and own is tightly bound to their personal identity. Driving a certain type of car, wearing particular designer labels, living in a certain kind of home, and ordering the right bottle of wine create and support a particular image of themselves to present to the world.
This is not to say that most Americans make consumer purchases solely to fool others about who they really are. It is not to say that we are a nation of crass status-seekers. Or that people who purchase more than they need are simply demonstrating a base materialism, in the sense of valuing material possessions above all else. But it is to say that, unlike the millionaires next door, who are not driven to use their wealth to create an attractive image of themselves, many of us are continually comparing our own lifestyle and possessions to those of a select group of people we respect and want to be like, people whose sense of what's important in life seems close to our own.”
This amounts to what we all know as keeping up with the Joneses. But the according to Schor, the Joneses have changed. Previously our reference group was our close friends, and neighbors - literally the people who lived next door. Today, “the neighborhood has been replaced by a community of coworkers, people we work alongside and colleagues in our own and related professions.”
Both Schor’s books were written 25-30 years ago, but her core concepts have aged well. She presciently pointed out the growing influence careerism would have on social comparison. The factor she couldn’t have fully anticipated was the widespread adoption of social media which put social comparison on steroids. Careerism and social media combined together created the perfect catalyst to fuel the cycle of work and spend.
"many of us are continually comparing our own lifestyle and possessions to those of a select group of people we respect and want to be like, people whose sense of what's important in life seems close to our own.”
Careerism’s Impact on the Cycle of Work and Spend
Careerism propels us to work longer and harder for identity and meaning, but also for pay, promotions, and bigger job titles. Titles and pay, and the status that comes with them, is tangible evidence we are living up to the tenets of careerism…both to ourselves and our social circle. What do we do when we increase our title and pay? We reward ourselves. We attempt to live in the manner befitting of our new station in the careerist pecking order. What type of car should a newly minted Vice President drive? What type of house should they live in? How should they furnish that home? What types of clothes should they wear? What type of restaurant should they eat at, and what type of food should they dine on? Where should they go on vacation? Where should they send their kids to school? If we’re not sure, we only have to consult social media to figure it out.
Careerists are big earners, and big spenders. And they’re hooked on work. Deep down, they know they should chip away at the college debt that was the price of entry to their career in the first place. They know they should set aside a rainy-day fund. They know they could contribute more to their retirement plan. We all do. But don’t we deserve to live a little? We’ve already consulted social media. Everyone else is doing it, so why shouldn’t we? So, we spend. If that means we’re overly dependent on work to fund our increasingly expensive lifestyle, well, that’s okay. That’s what work is for.
But wait. If our jobs can provide both means and meaning, isn’t that all to the good? What’s wrong with working hard to create a nice life for yourself and your family? Isn’t the benefit of a good career the lifestyle that it can buy you? What’s wrong with taking some pride in that? If our social media posts give our Instagram followers and LinkedIn connections the impression we’re living our best lives, isn’t that is okay? It might even be true, right? Maybe. It might work for you.
You might be perfectly content with your job, and perfectly comfortable with how you’re spending your money. You may feel like you can continue your cycle of work and spend indefinitely, or at least for many more good years of your career. That’s all fine. But what happens if your feelings change? Don’t you want options? If the day comes that your career isn’t something you want to keep doing, do you want to know where the off ramp is? Getting stuck in the cycle of work and spend is unwittingly shackling ourselves, not in golden handcuffs, but handcuffs of fool’s gold.
The motivations, goals, and aims of your future self may turn out to be very different than those of your present self. One of the hardest things we can do is anticipate what's going to make us happy in the future. It’s hard enough to know what will make us happy in the present. But that’s the point. So I ask again, don’t you want options?
There is a way to give yourself options. There is a way to unshackle yourself from the fool’s gold handcuffs. There is a way to break the cycle of work and spend. It’s achieving financial independence. Simply put, financial independence is having enough income to fund your chosen lifestyle for the rest of your life, without needing to be employed or dependent on others.
Financial independence may sound like the domain of trust fund babies, lottery winners, or the uber-wealthy. It isn’t. Achieving financial independence isn’t based on luck or circumstance, and it isn’t easy. There are no quick fixes, no prosperity gospels, and no radical life transformations. What there is, is hard work, focus, dedication, consistency, and persistence.
Financial independence is the result of slow, steady, incremental progress. It’s boring. It’s possible to achieve financial independence in 10-15 years, and for some in as little as 5. It depends on a number of factors such as your current savings, your savings rate, cost of living, income level, etc. It depends on how you have designed your chosen lifestyle, reconciling your wants and needs.
financial independence is having enough income to fund your chosen lifestyle for the rest of your life, without needing to be employed or dependent on others.
But, to give you something concrete as a starting point, let’s assume it will take you anywhere from 5-10 years to achieve financial independence. Quitting your current career with all the money you will need for the rest of your life in 5-10 years will sound like an insanely short timeframe to some people. For others who can’t wait to get off the hamster wheel, it will sound like an intolerably long time.
Know Your Why
Sticking with any goal for that long, no matter how important, will take a great deal of conviction and persistence. In my view, pursuing financial independence takes more conviction and persistence than most other goals. On the path to financial independence you will encounter strong headwinds from the cultures of careerism and consumerism. You will have your own beliefs about your career to contend with. You will have spouses and partners who may not be onboard. You will have people tell you you’re being unrealistic because we all have to work.
Your personal “why” will be your touchstone when the going gets tough and the world continuously reminds you what you are trying to do isn’t realistic. It will be your touchstone when people tell you that you are being ungrateful and you should count your blessings. It will be your touchstone when people tell you a career is what you really want.
No one’s reasons for pursuing financial independence are exactly the same, but there are some common themes. Peace of mind, as well as the time and freedom to do what they want, more than leaving work are what most people point to. The same is true with respect to early retirement. And that is a good distinction to make - financial independence is not necessarily the same as retiring early.
May people who achieve financial independence continue to work. If your career is important to you, and it’s something you want to continue, you should. Continuing to have a career is perfectly compatible with financial independence. It might even make you better at your career. It might permit you to pursue the career you’ve always wanted. What you can’t do is continue to be a careerist. What you can’t do is trap yourself in the cycle of work and spend. What you can't do is unwittingly shackle yourself in handcuff's of fool's gold.
In Summary...
Designing you life involves reconciling your wants and needs
Your chosen lifestyle can either create options, or it can make you dependent on perpetual work
Careerism, combined with social comparison, fuels the cycle of work and spend
Financial independence provides your future self options, and is how we can break the cycle of work and spend