Some Thoughts on Money

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How do you manage your money?

When I graduated college almost a year ago, I walked off the stage with a breadth of knowledge spanning international economics, statistics, and financial accounting.

I was responsible for managing technical projects worth millions in revenue but didn’t have a lick of sense about how to handle my full-time salary.

During college, my summer internship money was spent funding Chipotle runs and Sponto’s to Nashville, while my part-time gig as an econ teaching assistant covered Coors lattes on the weekend.

You step into a real job and suddenly you have a lot more cash to work with.

There is a catch.

The Notorious B.I.G. put it best in the title of his hit song, “Mo Money, Mo Problems.”

Moving to California quickly put this into perspective.

Immediately, I had to begin managing my rent, utilities, weekly grocery runs, and more. At the same time, I was responsible for saving for my future self via my company 401k and other investment vehicles.

Over the past 12 months, I have read several books and countless articles trying to figure out what the heck a Roth IRA is, credit card points, and portfolio diversification.

Yet, the biggest takeaways I’ve adopted relate more to how we as humans think about money as opposed to what we choose to do with it.

So, in this article today I will share the most important ideas that have shaped my view of money in the past year.

Let’s rock.

Money is The Most Seductive Scorecard on the Planet

For the last 8 years, my life has been driven by metrics.

What’d you get on that exam?

How did you score on the SAT?

What’s your GPA?

The answers to these questions often tell a story. Ones of success and potential or ones of failure and mediocrity.

As students, we measure ourselves against others based on these metrics, not only for our self-esteem but because our world values us based on them.

The colleges you attend, internships you land, and companies you work for after graduation are a reflection of these performance-based stats.

Once you enter adulthood, none of the A+’s or ACTs really matter.

The metric has changed.

In the professional landscape, the ultimate scorecard is salary, and everyone is always competing for the highest score.

It’s a seductive measure that tells the same stories as an SAT or a college GPA.

One’s of success and potential or one’s of failure and mediocrity.

Higher salaries indicate greater standards of living, expensive material goods, and first-class tickets to The Bahamas rather than a middle seat on Spirit.

They often also equate to above-average working hours, high stress, and difficulty finding time to build new relationships or maintain old ones.

As you exit college, it can become very easy to make your bank account your #1 priority.

Many of our smartest graduates today go on to work in careers or positions that offer the greatest incomes rather than those fields they are interested in or passionate about due to the allure of money.

I am not here to say that this is wrong or even a bad thing.

What I am here to say is it’s important to take a step back and think about the game you are playing within, to consider the potential winnings as well as the potential costs.

The fastest way to maximize one’s earnings as a new college graduate may be to start a business, work in IB, or land at a FAANG company as a SWE, but are these the routes everyone should be pursuing?

Making the most amount of money as fast as possible makes sense if you have debts to pay off, families to provide for, or other ambitions that require high levels of capital.

Others may opt instead to spend their money traveling, go back to school, or work in a field they know they are already passionate about, forgoing the potential earnings they could choose to accrue otherwise.

While many of us have no clue what we want our careers to look like 10 years from now, I don’t know if optimizing your life for the biggest paycheck is the best route right now.

On a similar note, it can be alluring to save all of one’s disposable income and throw it in a Robinhood account for some later date.

Movements like F.I.R.E. have great appeal, but that does not mean they are right for you.

While I believe saving is critical for one’s future, I think there is a balancing act we need to engage in.

Not every dollar we have should be put in the bank.

It is very easy to be caught up in the rat race for a bigger balance where ultimately there is no winner.

Money is always relative, no matter how much you have.

We all have very different goals and ambitions. I believe the worst thing you can do is forgo thinking about your own, assuming a lot of money will be a good long-term replacement.

Know Thy Spending

When you’re in college, you can have -$3.70 in your bank account and be OK.

Soon, you’ll be graduating and likely making more money in a single year than you had made in your previous 22 years of life.

Once you’re out, the story changes. You have to be strategic.

You can’t throw caution to the wind and blow every paycheck on Saturday night bar tabs and trips to Lululemon.

I think many young people who begin working full-time fall into two categories when it comes to their spending.

The first continues to maintain the lifestyle they may have had in college when they had financial support from their parents and zero responsibilities.

A budget isn’t used, assuming that every paycheck will provide them enough money to have fun while paying for their expenses.

In college, it was low-risk to think this way.

You didn’t have the opportunity to make a lot of money due to being a full-time student and you knew you could save once you started working.

The problem is if all you’ve done until graduation day is spend, spend, spend, it is going to be really hard to reflect, spend, and save.

Even those who are making 100k+ after school struggle to put money aside.

As of September 2023, more than half of six-figure earners live paycheck to paycheck.

On the other end, are the individuals who know it’s important to save and avoid spending money at all costs. They are the most frugal people you know, regularly saying “no” to even those opportunities that light them up.

I think this mentality stems out of fear.

Young people hear about looming recessions, rising cost-of-living, and older generations’ collective inability to pay for homes or their retirement and become scared.

They decide that the only solution is to save as much as possible to give themselves a fighting chance, even at the expense of their current selves.

Your money can be your greatest enemy, invoking inescapable fear and worry.

It can also be your greatest friend, granting you peace of mind and the freedom to do what you like, when you like.

The only difference between how you see your money is how well you know it.

The ‘Life’ Value of Money Matters

In the fall of 2022 while on exchange, I blew about $10,000 in 4 months.

This was all the money I had made during the summer as an intern and it was supposed to last me until starting my full-time job the next spring.

Instead, I shelled it out on flights, Eurorail tickets, and an ungodly amount of Wienerschnitzel.

Reflecting on those 4 months, I thought, “Should I really have spent all $10,000?”

As a broke college senior with another semester of bar tabs ahead with no income, I wasn’t so sure.

Now, almost a year out of college, I have a different answer.

No.

I should’ve spent double.

That semester-long experience was one of the most influential periods of my entire life (so far).

Traveling to 13 different countries, learning about new religions and cultures, and making lifelong buddies from around the globe was priceless.

The ‘Time Value of Money’ is the concept that a dollar today is worth more than a dollar tomorrow.

This is intuitive because a dollar today can be invested, earning interest and thereby worth more than a dollar (or its inflation-adjusted equivalent) the next day or year.

While I agree with this concept, I think a dollar today is worth more than a dollar tomorrow for a different reason.

One weekend in the summer before 8th grade I had friends over for a sleepover.

Like any 13-year-old, we wanted to get a bunch of snacks and candy to watch movies, play video games, and hang out.

So, my mom gave my few friends and me $40 to spend at Jewel-Osco on whatever we wanted.

We were PUMPED. At 13 years old, $40 is like a pile of gold. You can buy anything.

So, we decided to indulge in a complete spread of chips, soda, and Sour Patch Kids.

Below is the photo I took almost 10 years ago that night.

For us at 13, that $40 gave us the world.

Give me $40 or even $100 today and while I certainly would be grateful, it wouldn’t give me nearly the euphoria it provided that night.

When you’re young, the value of each individual dollar you have (even during your early twenties), is worth so much more than it would be 10 years into your career.

Many of our most memorable & time-sensitive experiences happen while we are young and able-bodied enough to have them.

If you were in college and in the position to choose between saving a couple of hundred bucks or going on that weekend trip with your friends, you’d be crazy not to pick the latter.

Those couple hundred bucks you saved won’t be worth a dime when you’re 60 years old regretting not living that experience.

The ‘Life’ Value of Money represents what a dollar can do for you right now.

Down the road, a dollar with interest may be worth more on paper, but it can’t buy you that feeling you had at 13 on a summer night with a mountain of goodies.

To clarify, I am certainly no financial expert and none of this should be taken as legitimate financial advice.

However, I hope it provided you with some new ideas to consider the next time your paycheck comes in, you are invited to go somewhere new with friends, or you (like me) are starting your first full-time gig.

I’ll leave you with one of my favorite quotes about money from a 19th-century showman.

He does a pretty decent job summing up in a single sentence what I tried to distill in a 2000-word blog post.

See y’all next week.

-John Henry

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