Learned Along the Way

Jonathan Clements

IMAGINE YOU TOOK a group of folks—mostly male, mostly older, mostly upper-middle class, mostly well-educated—and had them describe their financial journey. They’d all be pretty similar, right? You might be surprised. I was.

Next Tuesday marks the official publication of My Money Journey, which you can now order from Amazon and Barnes & Noble, as well as directly from Harriman House, the publisher. When I asked 29 writers for HumbleDollar to join me in contributing essays to the book, I wasn’t quite sure what I’d get. But as the last few essays trickled in and I looked over the submissions, what struck me most was the diversity of the stories.

There are many paths to the top of the mountain. Most journeys start haphazardly, trying one route and then another. But eventually, successful investors settle down and do mostly the right thing for many years, and they end up with surprising wealth—and nobody’s more surprised than the investors themselves, who discover that a huge pile of dollars has resulted from decades of prosaic prudence.

While each journey described in the book is unique, you’ll likely notice that certain themes crop up again and again. Here are the eight themes that struck me:

1. Our parents mold our financial beliefs. This comes shining through in almost every essay. Trust me: If you’re a parent, it’s scary to realize how much influence you have on your children. Really scary. What beliefs from our parents should we hang on to, and which should we discard? For some contributors to My Money Journey, it’s been a lifelong struggle.

2. The key to financial freedom is good savings habits. It’s banal to say it, and yet it can’t be said enough. The virtue of thrift is a theme that runs through almost all 30 essays.

3. Complexity is unnecessary. Again and again in My Money Journey, you’ll hear mention of the same simple strategies. Dollar-cost averaging. Extra-principal payments on a mortgage. Maxing out retirement plan contributions. Indexing. To the uninitiated, the world of personal finance can seem baffling. But once you dig into the details, you’ll discover that complexity is usually the route to high costs and mediocre returns, while simplicity offers not just better financial results, but also a comforting sense of control.

4. We don’t need to be great investors. That’s just as well, because most of us aren’t. In fact, most folks end up with investment results that trail the market averages, which is why indexing—humbly accepting the results of the market averages—is a strategy embraced by virtually all contributors to the book.

5. Success is apparent only in retrospect. It usually takes decades to achieve financial independence, and, along the way, progress often seems grudgingly slow. And then one day, we look back and realize how far we’ve come—and how all those small, sensible decisions have compounded one upon another to ensure a comfortable future. Are you early in your financial journey and saving regularly, but it feels like a game of inches? For inspiration, look no farther than the stories in My Money Journey.

6. Don’t discount the role of luck. Our financial success often hinges on things beyond our control. Does our boss take a shine to us—or instead favor others for no apparent good reason? Does our employer prosper, or do we find ourselves struggling to survive in an organization beset by red ink and constant layoffs? Once we have a healthy sum invested, does a booming stock market fatten our nest egg even further—or are we hit by a vicious downdraft?

It seems almost all of us get dealt a bad financial hand at some point in our life. The wound might be self-inflicted, or it may come out of the blue—a major medical bill, a bad investment, a family member needs our help, unemployment, divorce. Such financial hits may set us back, but—as you’ll learn from some of the book’s essays—the damage doesn’t have to be permanent.

7. We infuse money with meaning. Money is just money in the same way that a Maserati is just a car and the silver cutlery we inherited from our parents is just flatware. My point: These inanimate objects hold meaning far beyond their objective attributes—and how I feel about such things will likely differ from the sentiments you harbor.

It’s worth spending serious time pondering the meaning we attach to money and its many uses. Are we buying the Maserati because we love finely engineered automobiles—or because we want to impress the neighbors? Are we saving diligently because we want the financial freedom to pursue activities we find fulfilling—or are we over-saving because we’re terrified that we’ll end up destitute? In the essays, many of the writers discuss their relationship with money and their efforts to make their peace with the almighty dollar.

At its best, money is a tool that delivers a sense of security, lets us devote our days to activities we’re passionate about, allows us to have special times with loved ones, and lets us help those around us, not just family and friends, but also those we’ll never know personally. How should we divvy up our money among these possible uses? It comes down to our values—to what each of us believes is meaningful and finds fulfilling.

8. At some point, we need to declare “enough.” Then comes the next hard task: learning to be satisfied with what we have—and enjoying the money we’ve accumulated. This may be the destination we’ve long had in mind, yet most of us find that the journey never quite ends and contentment remains elusive. That isn’t so terrible. We humans are built not to rest and relax, but to dream and strive. There’s great satisfaction to be had from that striving.

The above article was adapted from My Money Journey’s introduction.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.

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