How do I think about money without having financial goals
December 16, 2018 1:01 AM   Subscribe

I saved through my 20s and hit 30 with more than I'll need for a long time, but no plan for what to do with it, or why I need to earn more. How do I find a direction when all the financial planning gospel is about the homes, cars, and kids I don't want?

So, I don't own a house and probably don't want to: every place I've lived and want to live is in some sort of housing crisis. I might get married at some point, but have no plan to have children. Never owned a car, and I don't want to. I have plenty of hobbies, but none of them are particularly expensive.

On the other hand, I have about $1.2M in cash and vanilla investments, with maybe about the same locked up in equity - so somewhere between 1-3M total. When the investment / bank / etc asks about my plans or risk tolerance, the only answer I have is sort of a shrug: I guess I just plan to save, forever? Maybe save to pay for a college tuition in 18 years, assuming I get into a serious relationship, marry, have kids, and then they grow up, which, now that I think of it, puts that more like 20 years in the future?

I realize this is very snowflakey, and a wildly fortunate situation to be in. I've ramped up donations, allowed myself to pay a little more for a slightly nicer apartment, but I still buy the cheapest black beans I can. I've mostly avoided the hedonic treadmill and will try to keep off it for the foreseeable future.

In terms of an overarching strategy or goal, I'm at a loss.

Has anyone set a sort of 'stop point' where they allow themselves to just not earn more, or radically de-emphasize the goal of earning? Or, if they continue walking to their 9-5, figured out a financial rationale that doesn't fit the standard house-kids-car-vacation paradigm – because that doesn't currently fit me and probably won't for quite a while. I basically feel like all the advice I can find is based on a story that I'm not living.
posted by anonymous to Work & Money (14 answers total) 14 users marked this as a favorite
Try Mr Money Mustache or Your Money or Your Life.

So yeah, there's a whole bunch of stuff out there about early retirement / financial independence - both how to calculate when you hit your personal tipping point and what you then want to do with your time.

We have nowhere near that much, but leveraged an inheritance to permanently lower our cost of living and allow us more work flexibility and more...time. It's awesome.

posted by jrobin276 at 1:33 AM on December 16, 2018 [7 favorites]

One question is what you would do with your day if earning enough to make substantial savings weren’t a top priority. Do you like your job? Is it meaningful to you? Do you feel like doing the job involves being your best self? If so, you might take the option of abandoning the 9-5 off the table, despite being financially comfortable—because earning enough to save isn’t your primary motive in going to work. (It might be your motive in working the hours you do, in which case you may want to cut back there.)

If your job isn’t so great in terms of meaning, enjoyment and challenge, you might now want to give some thought to what the most meaningful/interesting job for you could be instead. Your financial situation cushions you against some of the risk involved in experimenting with your career choices.

If you do like and find meaning in your job, and your problem is only what to do with the money, my suggestion would be to figure out your immediate and long-term spending priorities by reference to your values. You don’t want a house or a car, you may want kids someday (and do bear in mind that you may feel differently about owning your own home as and when you do have kids, because you may want more space and more security at that point). What else? Are there charities whose work you feel particularly passionate about? Are there skills you want to learn? Somewhere you want to travel? A degree you want to complete? I’m not encouraging you to leap on the hedonic treadmill but I do think there is some work to be done in deciding what you do value, granted the negative not-house, not-car. Your decisions about savings, in income/capital terms, will ultimately depend on those values. If you want to save enough for future kids and maybe a chunky donation to an important charity, but definitely not a house, then you may want to increase the income yield on your savings in order to fund experiences or goals that are meaningful to you now. Other people can’t tell you what those experiences might be—it boils down to defining your values, and how they play out in the choices you want to fund, both now and in the future.
posted by Aravis76 at 1:39 AM on December 16, 2018 [2 favorites]

My feelings on housing are roughly similar to yours. I don't feel like I want to own a house, because they're often money pits and it's often easier to just pay a landlord to deal with things like boiler breakdowns, roof repairs and other unexpected bills. But my viewpoint comes from a place of poverty - I live month-to-month and literally don't have the money to spend on a boiler repair if it breaks down. You're in a totally different place.

Have you ever thought about what happens when it all goes tits up? The bottom falls out of the industry that's paying you so well, or you develop an illness that means you struggle to work? You're 30, and a million dollars sounds like a lot of money on paper, but when your income stops that's going to be swallowed up a lot more quickly if you're paying rent to Mr Landlord every month, and you've got a long time to live yet.

The first thing I'd do if I had that sort of cash burning a hole in my pocket is buy a small house. If my preferred area had house prices over a million (mine doesn't!) I'd buy a house somewhere else. Rent it out if you don't want to live in it right away, and it'll be pretty much cost-neutral to you. Most areas have full-service providers who'll rent it out for you and take care of the repairs, if you're some distance away. At least then, I'd know that whatever happened, I'd be able to keep a roof over my head pretty much permanently, even if it wasn't in my dream city.

I know that's not the advice you want to hear, and I apologise for that, but in many respects we're similar. I've never been one for the standard life path, I know I never want kids, and if I had a shitload of money I'd still drive round in my little Toyota because it's fun to drive and easy to fix. If I won the lotto I wouldn't buy a flash car and a load of stuff, I'd live the same simple life and maybe travel a bit more. But I'm going to hazard a guess that you've never been in abject poverty and had homelessness hanging over you, and my advice comes from a place where I've had that.
posted by winterhill at 1:46 AM on December 16, 2018 [13 favorites]

I know a lot of people like you. An undeserved market for financial planning advice to be sure. It's not at all unusual for people in high paying careers to accumulate a lot of money without ever having thought about what to do with it. A bunch of them still go to their 9-5, because they like it or are risk-averse or both. A bunch are doing passion projects that run the gamut from "will definitely never make any money" to "could make a billion dollars, maybe?" And many of them drift in and out of the workforce depending on what seems good to them at the time and what opportunities they're excited about. $2.5 million dollars is a good chunk of change, but likely not enough to retire completely and permanently on at 30, at least not where I live. Probably a different story if you want to move somewhere cheap. Do you want to move somewhere cheap? Oh, max out your retirement accounts if you aren't doing that already.

You can still have a risk profile even if you don't have goals. How scared would you feel about the thought of losing half your money? How excited would you feel about doubling it? How easily could you get another high paying job if you lost yours? The answers to questions like that will help you figure out your risk profile. But do the banks' standard risk strategies actually work on a 50+ year time horizon, now that I have some real questions about.

There's also a subreddit that may or may not be useful to you, /r/financialindependence/. I haven't really checked it out myself.
posted by phoenixy at 2:35 AM on December 16, 2018 [1 favorite]

Props to you for doing so well. When advisors ask you about your plans, they're trying to inform their advice by determining how soon you'll need the money. Barring plans to buy a house, etc., a good answer is "retirement", because that tells them you have a decades-long time horizon.
>>I basically feel like all the advice I can find is based on a story that I'm not living. Retirement is also an appropriate answer here. The story you are living is this: the odds are very good that one day you will be unwilling or unable to work. That's when all that money comes in handy.
posted by mama penguin at 4:22 AM on December 16, 2018 [2 favorites]

Time is money. You have saved a bunch of money, which means you have time. What do you want to do with your time?
posted by clawsoon at 5:32 AM on December 16, 2018 [8 favorites]

Money is also safety. I had a quite early stage cancer three years ago, diagnosed young with no family history. My insurance company was billed $692,000 for a year of treatment. Some people with my cancer stay in treatment for years and years. You could blow through your whole savings with a medical problem in a very short period of time. Now, maybe you have good insurance (or live in a country other than the US). but with the state of the world right now, I wouldn’t count on anything continuing to be true that seems reliable about the way we pay for and have access to medical care. So, you keep working and you keep saving for the What If.

Also, there’s a good chance your own priorities will change at some point and you WILL want the house or car or to spend four months in Madagascar or whatever. Save for the freedom of possibility.
posted by something something at 5:46 AM on December 16, 2018 [6 favorites]

Many people in your position aren't sure what to do when their ordinary working lives accrue an extraordinary amount of capital. The existing system asks of you that you leverage your capital to earn marginal dollars. It isn't clear to you what you would do with a marginal dollar. Your needs are met, and then some.

I'm glad that you are taking seriously your discomfort at deciding what to do with the amount of capital that you've accrued, rather than brushing those feelings aside and learning to be a capitalist, which will be the theme of most of the advice that you will receive.

Some people in your situation give away a radical percentage of their capital and/or income to organizations that really could use marginal dollars to improve human lives, and you could be one of them. Others opt not to maximize their incomes in favor of seeking less remunerative work that serves a positive societal mission. In your position, I would commission a panel of people to help me decide what to do with my capital and my working life. I'd include at least a trusted finance friend who understands my values and goals, a friend who works on effective altrusim in academia, and an M.Div friend who is an expert in ethics and service. I'd fly them out, put them up for a weekend, and make a plan for doing something with my capital besides leveraging it to the small advantage of me and the financial industry. Consider who would be on your panel. You are in an enviable position and you've got time.
posted by Kwine at 6:01 AM on December 16, 2018 [9 favorites]

Aye, you might find the effective altruism movement interesting. Some of them conclude that the most good that they can do in the world comes from working as hard as possible and giving away as much of their money as they can.
posted by clawsoon at 6:06 AM on December 16, 2018 [2 favorites]

Has anyone set a sort of 'stop point' where they allow themselves to just not earn more, or radically de-emphasize the goal of earning?

I had always been a saver, nearly a money-hoarder when I was younger and saved quite a lot of money living a lifestyle that was frugal bordering on flinty. Then both my parents died within a decade leaving me with not only some more money but also a lot of responsibilities (houses and stuff to deal with) so I took some time off from working in order to manage those things. And having that money meant I didn't have to think, at all, about whether this was the right plan, I could just do what was right for me. I have no family (except a sister who I co-manage this stuff with) a partner who does his own thing who I don't live with, I rent a place (renting is the shit!) and I drive a ten year old car. My health is good but not stellar.

That decision (and watching my money basically not go away even as I was spending it because of the market etc) led me to be a little less frugal/flinty with the money I did have. So I donate more to charity especially local ones (anyone on facebook raising money I'll flip a $20 to), buy the better soap and cheeses because I like it more but still cheap out on beans because who cares? I pick up the tab when I am out with a friend more than 50% of the time. I have no endgame plan but I DO have a good will that distributes this to people and places of my choosing and if you don't have that I'd suggest it. Since I've been working less I've been hurling myself into local civic stuff (joining a Conservation Commission, joining the board of the Vermont Humanities Council, doing a lot of work for the Vermont Library Association) and that's been gratifying to me.

But honestly? You're fine just in a slightly lonely position. You can think about the things you want, but if you're like me all you want is to maintain and save that money. So... do that until you have another plan. Maybe the market will tank? Maybe there will be a catastrophe. Maybe things will go sideways at work and you'll have what we like to call "Fuck you money" (and tell yourself that, because that is truly what you have)

The biggest issue is that most people in my rural community are not living this life. I am super lucky in that I share my general "thing" with my sister. She's more of a shopper and clotheshorse than me, so she's a good role model for actually spending that money (I dress like a scarecrow). She owns a house that brings her joy (I don't think it would bring me joy) but she understands me and my thing. She nudges me to spend the money I have to make things marginally better for myself. We do good works together with some of it and some civic activism with some of it. There are many ways to work this plan, more than many other plans, so congrats, it just means you have to think more "No, but seriously, what do I REALLY want" Happy to chat more if you'd like.
posted by jessamyn at 7:23 AM on December 16, 2018 [9 favorites]

Buy yourself some state legislators, or pick a charity. Seriously, you’ve got more money than you want or need — do some thinking about what you want to hold onto for security, and then start thinking about what you think is wrong with the world, at whatever scale you’re interested in, and figure out who’s working to change it and what they need. You could have a whole lot of fun giving money away, at whatever rate you’re comfortable with.
posted by LizardBreath at 10:24 AM on December 16, 2018

Have you ever thought about what happens when it all goes tits up? The bottom falls out of the industry that's paying you so well, or you develop an illness that means you struggle to work? You're 30, and a million dollars sounds like a lot of money on paper, but when your income stops that's going to be swallowed up a lot more quickly

Yes. I don't want to suggest you live a miser's life and think some of the suggestions here about ways to consider conceptualizing are good, but I often feel that many of the "early retirement" people on the Internet are not taking a proper assessment of risks--both the general risks of life and the specific risk taken on by dropping out of the workforce, having one's contact network weaken, one's skills get out of date, eventually exposing oneself to ageism, etc., meaning it will be much harder to earn more money if you find you need to later.

That money "locked up in equity" isn't fully real and you shouldn't act as if it is. If it's in some startup, it isn't real at all. If it's in, I dunno, Google stock options, you can put a little more faith in it, but stock market movements could still theoretically take it all away. I'll split the difference--let's say that you reliably have about $2 million in assets. It sounds absurd to say it, but, when you're thinking about a lifetime, $2 million ain't shit. Using the (old-fashioned, insufficiently conservative) 4% drawdown rule, that's only throwing off $80K a year, pretax. No goal of absolute safety is attainable in this life. But it sounds like you live in a very expensive city. The goal of being able to weather a serious life crisis (what if you became ill and unable to work?) in the midst of a downturn is a good sort of "baseline" goal. If you don't care for your work, the goal of having the option of retiring somewhat earlier (not now, whatever they tell you) isn't a bad one. That takes more than people will tell you. A project I'm working on now exposes me to retired people who own their home but can't meet their expenses. These are very sad stories.

My assets aren't 20% of your net worth. I don't have or want a car. The only reason I'd buy a house, really, is financial. I'm still in the situation of working for more basic security. There was a time when I was earning substantially more, but most of that money was going to loans; once they were gone, I felt strange, in that I truly was earning more than I needed. "Fortunately," that was always going to be a short-term period of my life, and now I am back to laboring with the sweat of my brow for my bread. But I understand that feeling. I'm only here to tell you that, when you're talking about security, $2 million ain't shit--especially if you want a family!

(Also, dude, the hedonic treadmill is real, stay thoughtful!--but buy yourself some nicer beans. The amount of energy eaten up and aggravation caused by choosing the cheapest possible option everywhere in life is huge and won't get any less as you get older.)
posted by praemunire at 1:33 PM on December 16, 2018 [2 favorites]

One thing you might want think about doing with some of it is seeing a lawyer and setting up a trust. If you were to die suddenly, or be incapacitated, whatever relatives you have would be left with a mess, and the government would get a lot more of it than you probably want. If I'm understanding right, the only reason not to do that is that not everyone can afford the lawyer's fees, but that's clearly not a problem for you.

As for the rest - what everyone above said: keep a good safety net. Spend more on things you enjoy without going nuts about it. Quit working whenever you want. And if you don't worry about what to tell the bank or planners - they're just trying to do their jobs the way they know how.
posted by still_wears_a_hat at 2:59 PM on December 16, 2018

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