Financial independence part 4

Reporter: “How much money does it take to make a man happy?”

John D. Rockefeller, Sr.: “Just a little bit more.”

Much has been written about the temptation of wealth, about greed, about the nature of money and the nature of those longing for it. But there is something else yielding the same answer: Fear.

The last part of this series focused on a rational approach to an asset architecture for withdrawal including a definition of done.

Calculating that for the first time feels good, because it shows the plan, what it takes to throw off the lines. Of course, more than the currently owned amount. Yet! Until the day when the goal has been reached. Suddenly, a thorough check feels in order, to discover that inflation requires a new calculation, a new goal that has not been reached yet. A sigh and the expectation of overall happiness starts a last giant effort. But when that day comes, it does not feel great at all. Just a little bit more, for safety. A buffer. Math cannot answer how large that should be.

Enough in case the odds are not in our favor. Enough, should something bad happen. Enough for everlasting safety. And there we have it.

The truth is that nothing lasts forever. “Just a little bit more”, despite having a reasonable budget, is an excuse to stay out of fear of the unknown, with the illusion of a stable and safe environment despite yearly layoffs. A year of work, a year of salary. And then the next. Maybe. Unless approached by HR with paperwork. Yearly raises below inflation. Maybe no raise. Yet, the overall situation is considered to be stable and mostly safe with intermittent threats. Those create fear, asking for more safety margin despite a filled budget.

It is worth understanding this reaction. We construct a mental model from everything we observe, and as adults, we typically add to existing models in a way that does not break anything. Having observed our parents during a more stable phase, we learned that jobs mean regular income and that provides safety. The observation of the presence adds the information that review times are dangerous, but the rest of the year is fine. We do not dump the model in favor of considering any employment unreliable. That differs from the so called generation Z that grew up in the present and developed a different base line model about work.

We use mental models to predict the future and prepare our actions. If we do not have a model, we cannot predict the outcome of actions and any choice may be very wrong. That stresses us and that is why we hate the unknown.

Buddha says that true safety is found not in avoiding change, but in mastering the mind and understanding the nature of reality. That is easier said than done, yet it is true. The suggested understanding requires to be aware of our mental models, to notice when we stop validating them just for staying actionable.

Psychologists recommend to keep repeating the question “what does that mean about me” to identify core beliefs that may distort our cognition.

A good engineer differs between facts and assumptions, always validating the latter, ready to drop them if new data violates them.

That is the same approach from three different directions.

How much is enough?

Math already gave the answer. If the math works out and the asset architecture, e.g. with three buckets, is complete, it is enough. Fear is a different problem and not cured with more money.