The Way to Find Financial Peace of Mind

“Wealth is the ability to fully experience life.” Henry David Thoreau said. He’s the guy who went off to live in a cabin in the woods and wrote a copious number of books, essays, journals and poetry. Oh, and he was also one of our earliest environmentalists. One hundred and fifty-three years after his death, a NY Times columnist wrote a book that picks up on Thoreau’s philosophy of wealth. It’s an easy, informative read. I finished it in one afternoon. (Ok, I skimmed fast.)

The Thin Green Line: The Money Secrets of the Super Wealthy by Paul Sullivan has a catchy title that can lead you to believe it is an investment manual. Thank goodness it is not that boring. It is a contemporary read about the true meaning of wealth. It is thought- provoking and I recommend that you read it. In fact, give a copy to your kids. Some highlights of the book follow, which are just a small part of the entire work.

The thin green line is the dividing line between those who “were living in financial comfort regardless of the balance in their brokerage accounts … [and] people, rich or not, who did not have the security of true wealth.” Wealth is having whatever means the most to you. Wealth is not a number. Having more than enough wealth is relative. You can have less money than someone else who is worried about going broke, but you are actually wealthier than they are due to your financial stability. People who have a lot of money but still spend beyond their means are facing financial risk instead of financial security. Sullivan interviews Dr. Richard Thaler, one of the leading economic thinkers of his generation and author of the book Nudge. Thaler defines wealth as “having enough money that you don’t have to worry about money.”

Sullivan tells us that many Americans will have some level of affluence during their lives, but few will sustain that level. Adam Carriker, a former defensive end for the Washington Redskins, felt like a lottery winner in 2007 when he received a five-year, $14.5 million contract in which $9.5 million was guaranteed. His biggest fear was losing a lot of money, not being able to play and not being able to make it back. The best line he had heard was, “Don’t live like a king for a little bit; live like a prince forever.” I hope Carriker did just that because he was injured in the beginning of the 2012 season and two years later was released from his contract.

Like Carriker, Sullivan wants us to avoid being overwhelmed by money. Based on his interview of Dr. Thaler, he suggests that you create buckets for your spending. Just putting a label on cash as “emergency money” doesn’t change the money, but it does have the effect of calming us down and giving us a sense of security. Manage your money in buckets instead of scrambling to make sure your one pot of money does not hit empty before you have more money to fill it back up. “These fictitious money buckets help us organize our financial lives and make better decisions… They give us the chance to think like a wealthy person, even if we earn far less than what it would take to be considered rich.”

This is all about choices that allow us to become or continue to be wealthy and financially secure. Sullivan points out that we can see the money we have earned as we read our bank statements and look at our cars and homes. But we cannot actually see the choices we have made. He encourages us to sit back and look at the implications of choices you have made relative to the successes you have had. For some people, the choice is to put off facing financial issues because you are too busy, too tired, too over-committed, too scared. He urges us to face our fears and look at our long-term financial future. This is exactly what I help my clients do. This is what everyone should do. “Anyone who hopes to get on the wealthy side of the thin green line will know where his or her money is and what it will be used for.” Like those buckets.

And one last word from that guy in the cabin … “Our life is frittered away by detail. Simplify. Simplify.”