|Because the phrase “my money” is an oxymoron.|
What do we know of money? We work with it every day, handling it for both clients and ourselves. We have studied its workings and tried to maximize its powers. We know how important money is to individuals and how much folks hurt when they don’t have it.
That said, I’ll ask again. Do we even know what money is? Do we know where it comes from? Do we understand its requirements? Do we grasp how it has changed over the decades and centuries? Or perceive its psycho-social implications and imperatives for individuals and communities?
Do we see how money has changed its demands on people from the early 20th century to now? Could we conceive of an alternative to the current scheme of international trading currencies, for example? Or do we imagine how much we are now asked to subsidize our extended life spans with something that has no tangible value and that we aren’t even earning?
Where are the counterbalances to those impersonal macroeconomics conversations of academics and industry people who forget there are real people on the other end of the statistics?
I suggest we have a deep and collective need for intelligent conversations about money. Not only to get a grip on it as a force, but to get people to understand its social relevance.
We have long known how to ask our clients deep and intimate personal questions. It has been more than 20 years since I first heard Bill Bachrach ask, “What does money mean to you?” The question is brilliant. When I first heard it, I was blown away by how this simple question could peel back psychological layers. I continue to think it is an extraordinary, wicked question.
Today, the psychological aspects of money are receiving even greater attention as psychologists and others finally figure out that money is at the root of many crucial personal issues. As their work matures, they will undoubtedly develop better techniques to ferret out people’s behavior.
But even that field misses the point that money is a social construct—that it is quite literally meaningless without the human beings who trade it.
So it is not enough to talk about how money affects “me.” We have to talk about how it affects “us.” We have to expand the personal questions to relevant social explorations. This is another “wicked question.” Unfortunately, it is hardly ever asked—by financial planners or anyone else.
But we cannot avoid it when our social structures are increasingly reliant on money. It is incumbent upon the financial planning profession to begin asking these questions out loud—and then hold our end of the rope with fierce determination.
I know. I know. It is hard enough to take care of clients one at a time much less to take into account millions and billions of total strangers. But the social ramifications must be addressed.
Discussing these social aspects has become strangely taboo. The best we can do is pit two theories against each other: capitalism, Adam Smith and The Wealth of Nations against communism, Karl Marx and Das Kapital. But these two economic theories flowered in the adolescence of the industrial revolution for economies that were still primarily agrarian. Can we not do better? Is it not time for Financial Theory 2.0?
The United States is in the throes of one of the worst economic crises in its history. Certainly, the broad economy has had its share of bubbles and blues. Budget deficits, tight money, increased joblessness and escalating personal financial insufficiency and illiteracy have made their marks on us all. But so have the taboos on talking about it.
How can we be expected to make intelligent social decisions around money if we don’t know what money is? If we cannot conceive of alternatives to the current domination of international trading currencies? If we have not asked how suitable money really is for the things it is asked to do? How can we make intelligent decisions about it when we continue to confuse money with “wealth” and “rich” with one year’s high income. What are the critical differences? First, you cannot eat money. Second, one year’s income hardly ever makes one “rich.”
Money in its current form is a relatively new phenomenon, after our population moved from resource-based economies where the stuff of life was manufactured or grown close by. And yet even though it’s relatively new, in the last 60 years we have built virtually all of our current social and physical structures on the foundation of it as if it were of actual substance.
We have continued to expand governmental budgets with it. We have told people they must depend on it more to take responsibility for their own financial care. No society in the history of humanity has relied so much on something so intangible like modern money.
Because of money, our basic needs have become more and more intertwined and delocalized. For the first time in history, “care” is mostly institutionalized, professionalized and monetized. Childcare, elder care, health care, social work, education, welfare and most other forms of “compassion” have been substantially removed from family and community and are now resting on foundations of money in ways unseen before World War II.
We now ask people to plan to live for an extra 30 to 40 years and to finance it primarily with unearned income or “other people’s money.” These issues are huge, yet we don’t talk about them.
The simple fact is that “money” is actually an agreement. It is only what everyone within a particular society says and believes it is. Better still, it is a deal we make with ourselves.
As I see it, money as we know it is simply humanity’s best effort at self organization to do what must be done. It is an effective mechanism for matching unmet needs with unused energies. Its chief virtues are that it is nonviolent and non-coercive. In theory at least, it enables the creation of wealth more effectively than any other incentive system. In truth, money is pretty amazing.
That being said, it is not impervious to injury, misunderstanding or misuse. These issues require our attention. If money is an agreement, it is one we must be able to discuss.
In his presentations, economist and professor Bernard Lietaer (the author of The Future of Money: Beyond Greed and Scarcity), often shows slides depicting a man trying to put an elephant to work. First he attempts to pull the elephant. No luck. Then he gets behind her and tries to push. No luck there either. Then the light bulb goes off: He tries food. It is only in the last slide that the elephant is cheerfully productive. So it is with humans and the fundamental beauty of money as our primary incentive system. Of course, money can also be used violently and forcibly to push, pull and thrash folks about. That is not money at its best. But it is another reason we have to talk about it.
For millennia, money has been used primarily for trade and conquest, not for social purposes. Money’s social use is valid and valuable. But we also have to examine whether these social uses of money mean using it effectively and productively as it is currently designed and constructed. Could complementary currencies do some jobs better? Are there dangers to money itself if we use it for inappropriate purposes?
Unfortunately, these discussions generally develop into screaming and yelling sessions between people of different political prejudices and also between people with different sorts of skin in the game. I suggest we can no longer afford any of these arguments. As we watch the national debt climb to unprecedented levels and the international monetary system hint at unraveling, these issues take on greater importance. The fights, the pocketbook politics and the political prejudices threaten our republic and our world.
As professionals, we need to know how to create powerful learning conversations and allow people to talk honestly about what is happening. We need to create new partnerships with our clients and inspire them to learn. We also need to allow them to take responsibility for the decisions they make in the uncertain environment we live in. We need to have conversations with other professions and learn to deal with money issues at all levels of the system.
We are the financial advisors in the closest proximity to ordinary people. Accordingly, we are in a unique position to see how money affects them.
Money is important. It is our species’ primary relational tool. Accordingly, we must talk about it and help others talk about it. These are conversations that matter.
Richard B. Wagner, JD, CFP, is the principal of WorthLiving LLC, based in Denver. He is the 2003 recipient of the Financial Planning Association’s P. Kemp Fain Jr. Award, which recognizes a member who has made outstanding contributions to the profession.