Talking about money | Thinking Out Loud No. 32

Why is it so hard?

Hi friends,

Welcome to all new subscribers! 2020 is ending with 587 of you here. Hello everyone! It feels like a real privilege to be able to share my thoughts with you — thank you all for giving me your attention.

May I be the first to wish you all a HAPPY NEW YEAR. It’s been one hell of a ride, hasn’t it?

As the year is ending, I’m grateful for the fact that around a million people here in the UK have now been vaccinated against COVID-19. While there’s still a difficult winter ahead, I hope that we’ll step excitedly into spring with a new sense of freedom and optimism. And then may 2021 bring us all what we need and desire after the challenges of 2020.

And at some point I will do an annual review, but this is not that.

Instead I want to talk about money. Seeing as how I just quit my job and am heading out into self-employment, money is very much on my mind.

But it’s so hard to talk about, isn’t it?

It seems to be easier, for me at least, to be vulnerable around emotions, insecurities, fears and dreams than to talk about money. Would you rather discuss your mental health with a stranger, or disclose your monthly income, expenses and net worth? What about exploring the emotions and insecurities behind some of those numbers? Eurgh.

We’re largely terrible at talking openly and constructively about money and it hurts us, both individually and collectively.

One example in my mind is this transition out of conventional employment and into self-employment that I’m making. I’m about to lose my annual salary of £75.5k ($103k today), plus a range of benefits like private medical insurance, lots and lots of sick leave, 27 days of annual leave, pension, bonus and so on.

First of all, before I go on: what was it like to read that? Is there an emotional response? Does it go in the direction of quiet unease, or even disgust? What about jealously, if it’s more than you earn, or smugness if it’s less than you earn? Is there a meta judgement of that emotional response, a sort of “I shouldn’t feel this?”If so — interesting.

So back to talking about money. I’ve been earning roughly the same amount since I was 27 (and I just turned 33) and it’s always been of the secure, consistent every month, kind.

From February my income will be anywhere from £0 to ‘whatever I can sell’.

That’s a big shift! It’s also an exciting one, but it’s still an enormous move away from my current experience of security and my notions of self-worth and status. I keep noticing how much my mind is anchored around that number. All my revenue scenarios (because of course I have a spreadsheet) are benchmarked against my current £4k net monthly income. It’s like my implicit goal is “how can I replace exactly my current wage?”

Why? If I just wanted that salary I’d stay in my job. Clearly I do not want that, and yet there’s that ‘baseline’ cell in the spreadsheet. That number is essentially arbitrary, an echo of a past self that will become increasingly distant from the me that emerges in the months to come.

I think the reason behind this is precisely that we, as a society, struggle to talk about money. Instead, we keep these things hidden from each other, while still carefully signalling how much we make. The actual numbers are conversationally off limits, but a nice new watch is part of not-so-subtle status games that we play. And in this game money is a proxy for our value as people — an excellent example of the Total Work trap.

What would it be like if money were such a ‘not a big deal’ that we could talk about it in the same way as we talked about the weather? What would that represent? Well, I think it would go a long way to removing the sting of the status game. For now, to share your salary is to reveal your position within the status hierarchy, where the person you tell can immediately peg your place relative to them.

You are now able to judge me — on one axis, anyway.

Because we don’t do this very much, and because our self-worth can be so tied up with how much money we make, sharing the numbers usually elicits an emotional response in another person very much like what you may have experienced earlier when I shared my own salary. Depending on how that emotional response is interpreted and navigated, that can make the conversation awkward in a variety of different ways, and that discomfort stops us from sharing again.

But this lack of talking about money causes distortions and actively prevents people from making the choices that, deep down, they want to make.

Let’s come back to quitting a job and going self-employed. I suspect many of you are subscribed — particularly those who have joined more recently — because I’m sharing much of the behind the scenes of this move from mainstream job to ‘online creator guy’. Perhaps some of you have dreams to do something similar. That’s great!

But each time you see someone make the leap, you’re only seeing the status-signalling hey look at my nice new watch version of the story, while the actual information-containing numbers remain hidden. It’s inspiring, perhaps, but it isn’t necessarily useful.

I suspect that not talking about money openly is preventing people from taking their own leaps, or is at least making those leaps slower and more painful than they need to be. Important questions become hard to ask and answer.

  • How much should I have saved?

  • Will I run out of money?

  • What are reasonable expectations for making money when self-employed?

  • How do I protect myself from downside financial risk?

  • Who will I be if I don’t earn as much? What will my friends and family think?

  • … am I crazy for doing this?

I want to play my own part in helping overcome this barrier, so I’m going to be increasingly transparent with my own financial context before, during and after the transition to self-employment. Judging from the reaction on Twitter, lots of people want this.

I’m not sure yet what format that will take or where it will happen (Thinking Out Loud will definitely not turn into a finance newsletter, that’s for sure), but it will be somewhere. More to come!

My intention here is to help remove some of the stigma attached to money. Money is an important part of life, but it shouldn’t be one that we feel weird talking about. The benefits of being open, I think, far outweigh the initial awkwardness we may feel.

What about you? Is this something you want to talk about more? Is it something you struggle with? Are you one of those people who is on a similar journey as me? Hit reply and let me know!

Picture of the week

We had a storm here recently (Storm Bella) and, while I don’t know if this is just an excellent example of British humour or the puddle was bigger before I came across it, I did enjoy this scene.

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