Personal finance is personal. We all come to our beliefs about money in different ways.* What makes perfect sense to one person can seem nonsensical to another. That’s due, in part, to our lived experiences. Michael Batnick at the Irrelevant Investor writes:
There is one thing that trumps everything else when it comes to how you feel about money. It doesn’t matter how much you make. It doesn’t matter how much you’ve saved. It definitely doesn’t matter where interest rates are. The thing that most influences how you feel about money is how you grew up around money.
We can try to overcome our innate biases, but its difficult. Morgan Housel at Collaborative Fund writes:
No lesson is more persuasive than the one you’ve personally experienced.
You can try to be empathetic and open-minded to other people’s lives, but when you’re trying to figure out how the world works nothing makes more sense than the unique circumstances of what you’ve lived through firsthand.
Studying history can provide some antidote to these lived experiences, but not all the way. Kenyon Sayler at Humble Dollar writes:
My portfolio will not be identical to those who didn’t live through high inflation, didn’t have parents who lost everything during the Depression and didn’t personally know a survivor of an oppressive government. By studying history—and realizing that my life experiences are unique to a time and place—I can avoid putting all my money in gold or Series I bonds.
In the end, we don’t invest to have money. We invest to do something with that money. Cullen Roche at Pragmatic Capitalism writes:
Money is so personal to all of us and it really screws with people’s minds in a lot of ways. We’ve become so married to our bank accounts and brokerage accounts that we have a hard time finding balance between growing those accounts and actually using the money to do the things that make us happy.
We should all recognize that it’s hard enough to get our own lives in order. Therefore worrying about, or even worse trying to fix other people, is an unwinnable one. As JC Parets at All Star Charts writes:
One of the most important things I’ve come to understand about markets, and life, is that you have to worry about yourself first, you have to take care of your family first, and then you can go out and help others.
If your own house isn’t in order, not only are you not able to help other people, but you may actually do more harm to them than good.
Life is difficult. Money is hard. You have a lifetime of experiences pushing and pulling you different directions. Don’t fool yourself thinking you have it all figured out.
*For more on how our lived experiences affect our beliefs check out this recent The New Bazaar podcast with host Cardiff Garcia talking with Ulrike Malmendier who is the premier economic scholar for understanding how our experiences affect our decisions, even in ways we might not recognize.