Okay, so the nation is stuck in the quicksand of a subprime crisis, millions are driving away from their split levels, banks are hemorrhaging red ink, the battered stock market is teetering on a free fall, and President Obama’s first day as Commander-in-Chief will be focused on declaring war on a full-blown recession.
As wise and creative as he may prove to be, he will likely tackle it the wrong way: the economists’ way, with all kinds of technical maneuvers five people in the Monetary Brain Trust pretend to understand. They will jiggle the discount rate and manipulate the money supply and create guaranteed mortgages and dole out health insurance and play 101 Washington games that completely avoid why we got into this morass in the first place and why we will do it again and again and again and again.
We formalize it all and make it sound inevitable by calling it economic cycles, but it’s really just a total personal failure on the part of Americans to treat money with the respect it deserves. Does this mean to worship money? Of course not. But it does mean to respect what money can and cannot do for you.
We all work for money. We all earn it. We all want it. The difference between the members of the religion of the rich and the atheists of the rich is that the former truly achieve financial independence from it while the latter watch it slip through their hands. And no matter how much they earn, they never feel rich. And they never are.
The idea is not to make as much money as you can, but instead to live life as fully and completely as possible. Of course, the two intersect. You need money to own a nice home (one you can actually afford), to vacation, to send your children to school, to weather the inevitable storms and curve balls, to indulge in luxuries now and then, to retire if and when you want, and to walk away from your boss or your client when they don’t deserve your time and your talent.
The only way to have this kind of wealth, this wealthy life, this independence, is to:
* Recognize that the most important money you have is the money no one can see. It is the money you don’t spend, it is the money that builds your financial bedrock, it is the money you worked for, yes, but that then turns around and works for you because it is invested in appreciable assets.
* Learn the importance of making money while you are sleeping. No one of real wealth earns it, grows it, and keeps it by simply working harder. They work smarter. They find a way to create a portfolio andor to build a business that generates profits while they are fast asleep in their beds or dozing on a beach.
* Stop spending a dime to impress other people. This is incredibly shallow, hollow, and self-defeating. It prompts millions to buy homes and cars and Christmas gifts they cannot afford. It makes them slaves to jobs they hate, to bosses and careers they detest. It assures they will never have financial independence. It is the real reason for the mortgage crisis. It is the real reason people don’t have the money to retire after a life of labor. It is the real reason why people with no money for health insurance spend hundreds on lottery tickets. It is the real reason why men, women, and entire families with very significant incomes have no money in the bank and need sleeping pills to escape the night.
Working hard is noble. Working smart is even better. Making money this hard, along with smart work, produces a wonderful reward.
But unless you treat that money with respect, unless you live below your means, unless you treat the creation and protection of wealth as a near religious experience, you will always wonder why it’s you who comes up short.
When it’s no mystery at all.