This is a guest post by Robert, who lives in Calgary and works as a financial adviser. He is married, has three kids and plans to retire at age 35. Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.
Recently, I attended a screening of the film Race to Nowhere at the Calgary Public Library. This documentary puts forward many of the challenges faced by children in the pressure cookers that American schools have become. One of the major themes of the film is to question how we define success. Does it mean getting into the best colleges? Does it mean making bundles of money? In a competitive environment, not everyone can be first, or get accepted to their preferred school, or make the most money. But everyone wants to be successful.
People, who are consumers, tend to define their success by their patterns of consumption. Why should this be the case? I know instinctively that I am more than the clothes and jewelry I wear, the car I drive or the restaurants I eat in. But when I meet others, my first reaction is to try and form an opinion of them based on what is outwardly visible: their patterns of consumption. I think this mental habit is what causes us to try and define ourselves to others based on our consumption, and then we slip into deriving our own value from our patterns of consumption. Even people who don’t earn more can still spend more, thanks to easy credit.
Financial success is a narrow definition. It is handy, because it can be easily measured and compared. Happiness is impossible to measure, and it’s more difficult to create and sustain. Abraham Maslow suggested a hierarchy of needs that helps us think about what things we seek and how they contribute to our happiness. In the lower levels are physical needs, which allow our survival. This is where money and consumption typically fit. Above that come our social and emotional needs, which are more likely to contribute to our happiness. This explains why many people place so much value on their job, given that it provides income and also an opportunity to interact socially. Ideally, a job will also include meaningful work, actions that make a difference, which corresponds somewhat to Maslow’s highest need of self-actualization.
This suggests two conclusions to me. First, when someone feels they need money (which is just a tool) in order to be happy, there is a chance that they have in mind something else they really need. It may be more social interaction (eg. eating out) or more meaningful activities (eg. management position). It’s possible however to meet these needs without money. For the examples I gave, a person could have the same social interaction with friends over food by eating in; a person could also have a position of responsibility and influence through volunteering for leadership in their community. The second conclusion is that people must find a way to define their own success and happiness that is separate from their job and their ability to earn and spend money before they retire. Because retirement means removing oneself from the workforce and living on a fixed income, defining happiness based on work and income will no longer be possible.
One example of someone’s self-perception in financial independence follows: “But it is not like I don’t work. For income in addition to that from my annuity (that is double what I need to pay the bills) I own rental units and I write, publish, and market books. To stay engaged I do some money coaching (pro bono), always have a home renovation project going, and, being financially independent, I have the time to devote to being a husband and Dad to an 11yo. And therein lies the real payoff: When you achieve financial independence, your time and your life can more closely reflect your own vaules. The trick is to figure out those values and then build that life.” (comment by tmgbooks)
What constitutes success in your life? How do you derive meaning and happiness? Do you expect that to be the same in retirement?