The Psychology of Money Chapter 7: Freedom

When Housel was in college, he wanted to be an investment banker. He earned a four-month internship his junior year but only lasted one month. As he recounts, “On my first day I realized why investment bankers make a lot of money: They work longer and more controlled hours than I knew humans could handle. Actually, most can’t handle it. Going home before midnight was considered a luxury” (italics added). Around the office it was said that if you didn’t come in on Saturday (not technically required), you shouldn't come back to work on Sunday (which was required). 7 days per week, 15+ hour days.

Compare this to Derek Sivers, an entrepreneur Housel writes about, who once told the story about how he got rich: Sivers was working a job he didn’t enjoy and was only making $20,000 in New York City. He wanted to be a musician, but the gig income wasn’t stable, so he saved his $500/month surplus for two years until he had $12,000 in the bank. He then quit his job, started taking gigs, and made about $1,000/month to pay all of his necessary bills. Ironically, this is where Sivers ends his story of getting rich. Though he would go on to sell a business for 8-figures (and give most of it to charity), it was at the point that he could choose to do what he wanted with his time that he considered himself rich. He was making $12,000/year, spending $12,000 per year, with $12,000 in the bank.

So, would you rather be like Sivers or Housel? If you’re like me, you wouldn’t want to be either—I’d want more financial security than Sivers, and more time control than the investment bankers. Housel’s point isn’t that one is clearly better. Instead, the fact that this wouldn’t be an easy decision proves his point, that one of the primary purposes of money is to let you do what you want. In Housel’s words, “The ability to do what you want, when you want, with who you want, for as long as you want, is priceless [...] Money’s greatest intrinsic value—and this can’t be overstated—is its ability to give you control over your time.”

Ironically, as people in the U.S.  on average have gotten wealthier over the last 50 years, many haven’t traded that extra wealth for more time, but rather more stuff. In 1955, the median family income was $29,000 inflated for today’s dollars. In 2019, it was $62,000, more than twice as much. In 1955, the median American home was 983 square feet, and in 2018 it was 2,436. Again, more than twice as much. And actually, since more jobs now than ever can be “taken home” (emails, phone calls, thinking over decisions to be made, etc.), we’re often trading more of our time rather than less of it.

Housel’s next chapter explores further the trade off between time and stuff, but for now I’d like to end with my personal response to this chapter. My goal firstly is to help bring the content of this book to you in a summarized fashion, but from time to time I plan to share where I might differ from the text. That said, I’m not sure this is as much of a critique as it is a clarification on points Housel might agree with. To Housel’s quote above about doing what you want, when you want, and gaining further control over your time, I have three responses with some commentary.

1. A desire that’s primarily influenced by external factors is still a desire—still something we want.

• Whether we want something because of internal or external motivation, we nonetheless want it. In this sense, we do the things we don’t want to do because we also want to do them. It’s just that the desires to do them outweigh the desires to not do them.

• Housel likely is referencing doing things based on internal rather than external motivation, but clarifying this language is helpful to make sure we don’t draw the wrong conclusions or misapply what’s true in this chapter.

  
  

2. Even if we only considered internal motivations, our desires would still conflict with one another.

• Let’s say we have the income of the investment bankers and the career of Sivers. We could want to get better at guitar, piano, vocals, etc. all at the same time, but would have to choose between which one to work on at each moment. When we decide what to practice, when, and for how long, we have competing desires and can’t have exactly what we want and when we want it, even apart from external financial considerations. That’s because, no matter how much money someone has, they will still have a limited amount of energy and time.

• Beyond this, this freedom invites a decision fatigue that not only can be exhausting psychologically and emotionally, but can in turn influence (whether positively or negatively) our decisions. Those who can do whatever they want financially, often feel the need to do things that nobody else can do. Being able to constantly ask yourself, “What do I want?” itself might not be what we want.
  

3. Being “forced” by external factors to do something you don’t want to (i.e. doing something you want to do despite other desires to not do it), is often the thing we ought to do and are later most glad we did.

• Recently I heard an interview with an actor and he was asked, “Who are you jealous of?” His answer: Anyone with little kids at home. He talked about how his sense of purpose and feeling of fulfillment have never been higher, despite his career success and mega-millions (I’m considering contacting him to do some baby-sitting for us).

• While that’s not always what middle-aged adults are jealous of, it’s a common sentiment. The common sentiment of the parents who have those little ones at home? Usually something like, “Please send help. And coffee.” Being a parent has hard moments, and frequently requires you to do what you don’t want to. It’s also what most people reflect on as the best and highest use of their time throughout their entire life.

• Within a work context, how many of you would like to be served by people who simply stop the moment they no longer want to keep doing their job, or who no longer want to strive for excellence in serving you? Imagine a school where teachers just walked out in the middle of the day, or nurses in the middle of a shift, because things were hard and they no longer wanted (intrinsically) to be there? Much of life’s value comes in serving others sacrificially, which means doing what we don’t want to (because we want to).

As with many things in life, we can have too little and we can have too much freedom from external motivations. Thinking of control over our time in this way, there likely is a “golden mean” that money, amongst other things, can help us get to.

If you’d like to engage further, I’d love to know

• If you had more money to increase your freedom from external motivation, to increase your control over your time, what would you change?

Until next time, happy reading!