It is given that one should constantly keep change their perspective about money based on the status of their wealth during their lifetime. As you grow rich and create more wealth, it becomes important to learn to deal with the accumulated riches. I keep thinking about this topic and continue to read a lot about how the rich deal with their finances. I recently wrote a post on how i think about money.
I plan to create a series of post where I would understand how people from various walks of life dealt with money once they were rich and successful.
Firstly, Abigail Disney, the grand daughter of the founder of Walt Disney Company. She recently gave a fantastic interview to the cut. I would suggest all of you to read it.
She inherited huge sums of money from her grandfather at the age of 21. The first quality which struck a chord with me was that she started giving away a lot of money. More money than her parents gave away. In her early 20’s. She quotes in the article –
I was totally independent at 21. So I started giving money away. Within a couple of years I was giving away more money than my parents, who had much more money that I had, which they told me was embarrassing to them.
We have learnt and we keep hearing that the magic of compounding starts after you have made the first million dollars. Either you inherit the money or earn the money, you need the money to see the effects of compounding work. She handsomely quotes in the article –
But it’s the easiest thing in the world to make money if you start with money. And then people give themselves credit for being that smart when they’re not.
We think that the rich spend a lot of money on luxury. Honestly, I believe that we must think how much are they spending as a percentage of their total net-worth instead. And if you look into the details, you’ll realize most of what they spend is negligible considering their net-worth. Ofcourse there are exceptions which we will talk about some other day. Ramit Sethi talks about the same thing in this article titled conscious spending. Abigail has been conscious all her life on the amount of money she spends on herself. She mentions in the interview –
I live in a constant state of tension about that. I really love a very good meal at very good restaurants and a very good bottle of wine. I really love a beautiful pair of shoes, and I’ll spend way too much money on that, or a purse. Luckily, I’m not a real-estate girl; I don’t need a ranch and a ski resort and whatever else. And I don’t want a private jet because it hollows you out from the inside. So I’m lucky that the things I love are really not expensive, considering. But to most normal people, what I spend on a really good dinner at a really good restaurant, that would be horrifying. They couldn’t even imagine spending that. So I wouldn’t pass muster with a lot of lefties, I have to say.
There is plenty to learn from Abigail.
The key lesson is to spend enough so that what you have continues to grow despite your expenses.
Stop being conscious about money and donate.
And at the end of the day, understand that you need money to make more money. Work towards being rich first.
I learnt about Aminatou from another article with the cut. She is a businesswoman, digital strategist, writer, and a podcast host.
For a long time now, I have had a reservation of my own against paid influencers. There are a lot who are not credible, sell the wrong products and preach consumerism. And consumerism is exactly the opposite of minimalism. Aminatou earns a lot of money from influencer marketing but she gives away most of it. Which makes us think if it makes sense? I think it does if the money is being put to right use.
We know that it is important to make “enough” money. And preserve that money. But it is more important for women to make money and seek independence. Aminatou emphasizes on exactly the same thing in the interview –
I grew up predominantly in Africa, watching women who could not make choices because of who they married. That had a profound effect on me — I learned that money is the freedom to say “fuck you” and leave. My mom was trained as an engineer and ended up being a housewife. She was the parent who could help me with my math homework. All these assumptions about housewives were exploded in my own home because I was like, “My mom is really smart — why is she not working?” Growing up without a lot of resources, I just knew: Being rich doesn’t solve everything. But it certainly buys you time and space.
There is no better teacher of psychology of money than Morgan Housel. He mentions that each individual has his own perspective of money based on his experiences. He says –
One reason finance is a breeding ground for disagreement is because everyone gets their own version of history based on their own unique life experiences.
Animatou does not disagree with Morgan. She herself mentions that money is very emotional and psychological subject. She mentions –
But money is very emotional; it’s very psychological. I almost died last year, so I spend my money like somebody who’s going to die. I don’t believe in hoarding it. I don’t have kids or a mortgage. I like to treat my family and friends, and one day I might not be alive to do that.
Rich or poor, each one of us has a different opinion about money. The key lessons I draw from Animatou are as follows:
- Understand what is your source of income and spend accordingly.
- Seek financial independence early in life.
- Figure what you think about money.