Musings Report 2018-21 5-25-18 How Much Money Do We Need?
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For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
Welcome to May's MUS (Margins of the Unfiltered Swamp)
The last Musings of the month is a free-form exploration of the reaches of the fecund swamp that is the source of the blog, Musings and my books.
How Much Money Do We Need?
A recent Bloomberg article How Much Money Do You Need to Be Wealthy in America? tills familiar ground: how much money do we need to be happy and secure?
Many studies have found that a modest amount of money has an outsized impact on happiness and security, but beyond a certain point, the correlation between "more money" and "more happiness" breaks down: having more money (or more stuff) doesn't generate additional happiness/security.
This makes sense, as humans habituate very quickly. One of my favorite examples is homes with expansive views of a beautiful mountain, coastline, etc. Visitors are in awe, but the residents are blase; they're accustomed to it and it's now just the background of their lives.
I rarely discuss my own life in the blog or Musings because it's ordinary and not noteworthy. But for today's discussion, I will confess that the last 18 months have been extraordinarily chaotic. Family circumstances (elderly Moms in two states separated by 2400 miles of ocean) require constant travel, and various family medical crises and unexpected business demands have forced seemingly endless changes to whatever plans I make. As a result, I'm often tired or even exhausted.
The Bloomberg article lists what people seek with wealth: to afford anything they want (presumably this is normal consumer goods, not $400,000 super cars, etc.); to spend time with family and friends; leading a stress-free life; taking time for oneself, and enjoying experiences. ("Having good health" was only cited by 7% of the respondents.)
We can all relate to each of these forms of "living rich" rather than "being rich."
The respondents reckoned $1.5 million was the minimum wealth needed to be financially comfortable and $2.5 million was required to be wealthy.
What wasn't addressed is: what assets make up this wealth, and do they generates income? For example, many homes in hot housing markets are now worth $1.5 million, but they don't generate income (unless the owners rent out rooms)--rather, they cost a small fortune in property taxes and maintenance.
Having $1.5 million in safe Treasury bonds yields around $30,000 annually unless you take a big risk that inflation will remain low for the next 30 years--hardly an income that enables all the benefits of wealth.
So what people are really talking about is cash on hand that can be spent. $1.5 million in cash that can be freely spent is indeed a sum that would enable all the good things listed in the article. But as a general rule, wealthy people (and families) maintain a nest egg to generate income, so families with over $1 million in cash to spend have multiples of this sum set aside in income-producing assets.
My own response to "how much money do you need?" is: however much you need to respond positively to chaos and crisis in your life, and however much you need to free your most precious resource: time.
Since healthcare is ultimately a cash purchase in the U.S. when it comes to new treatments, I would also say: however much you need to buy experimental treatments should you fall seriously ill and standard care offers little hope. Many new drugs carry price tags in the $10,000 - $15,000 per month range, and having enough money to potentially extend one's time is the one really valuable use for "wealth" measured in money.
I've found that money can't really make chaos and crisis go away. All it can do is offer a wider spectrum of options on how we deal with chaos and crisis. Money can't fix everything, but sometimes it can lower stress levels and resolve problems. Sometimes there is no substitute for money, other times money is of little use.
My summary: what really counts is having enough resources to remain flexible when life puts on a full-court press. Money is one resource among many, and sometimes money isn't the solution; in other circumstances, there's no substitute for it.
I believe financial wealth is the means to help those we care about in times of need, and provide flexibility when life becomes overwhelming.
From Left Field
Korean Anchor Wore Glasses On TV For The First Time, Here’s Why It’s A Huge Deal (via Nicole D.)
AI will spell the end of capitalism -- it will certainly impact the current iteration of capitalism...
An Incredibly Detailed Map Of Medieval Trade Routes -- the difference between this and the Roman era is most of the Medieval trade was in luxury goods available only to the wealthy...
Jordan Peterson, Custodian of the Patriarchy-- I haven't followed the controversies swirling around him...
China's social credit system has blocked people from taking 11 million flights and 4 million train trips -- ouch...
Europe's Italian Problem Is Bigger Than Brexit-- I have always maintained the euro currency was unworkable...
The Coming Collapse: It is impossible for any doomed population to grasp how fragile the decayed financial, social and political system is on the eve of implosion. -- Chris Hedges tells it like it is...
The Tragedy of America’s Public Pension Tsunami
Deconstructing The U.S. Jobs Market (long)
History Is Now a Quantitative Science (Peter Turchin)
History Is a Quantitative Science II
Steven Pinker’s Ideas About Progress Are Fatally Flawed. These Eight Graphs Show Why.
"Only great pain is the ultimate liberator of the spirit...I doubt that such pain makes us ‘better’; but I know that it makes us more profound." Friedrich Nietzsche
Thanks for reading--
charles |
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