Breaking the Money Taboo

A Honest Talk About Our Twisted Relationship with Cash

Photo by Andre Taissin on Unsplash

You're standing in line at your favorite coffee shop, fumbling through your wallet. A twinge of guilt hits you as you hand over your hard-earned cash for that overpriced latte. "I should be saving this money," you think. But the aroma of freshly ground beans overwhelms your financial sensibilities, and you succumb to the temptation of caffeine.

Sound familiar?

Our relationship with money is as complex as a Shakespearean tragedy, filled with desire, fear, shame, and occasional moments of ecstasy. We chase it relentlessly, yet often feel uncomfortable talking about it.

We need it to survive, yet some of the happiest people on Earth have very little of it. It's a paradox wrapped in a riddle, served with a side of cognitive dissonance.

As a consultant who often monitors the burn rates of companies, I've spent years studying the peculiar ways humans interact with money, starting with my own. What I've found is that our financial behaviors often defy logic and fly in the face of traditional economic theory.

We're not the rational actors that Adam Smith envisioned; we're more like impulsive toddlers let loose in a candy store, guided by emotions and cognitive biases that would make any financial advisor weep.

Speaking of Adam Smith, picture a smartly dressed Scotsman in the 1700s, quill in hand, trying to make sense of the economic chaos around him. This philosophical heavyweight became the reluctant father of modern economics with his book "The Wealth of Nations" - the closest thing we have to a holy text.

But, this isn't holy text or just another article telling you to skip the latte and invest in index funds (though that's not bad advice). Instead, we're going to dive deep into the murky waters of our financial psyche, armed with data, counterintuitive insights, and a healthy dose of economic irreverence.

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The Money Mindset: A Historical Perspective

To understand our current relationship with money, we need to take a quick trip back in time. Contrary to popular belief, money isn't as old as civilization itself. For most of human history, we got by just fine without it, relying on barter and social obligations to meet our needs.

The earliest forms of currency date back to around 3000 BCE, with the Mesopotamians using silver as a medium of exchange. Fast forward a few millennia, and we've gone from precious metals to paper notes to digital cryptocurrencies. But while the form of money has evolved, our attitudes towards it have remained surprisingly consistent.

Consider this: In ancient Greece, the philosopher Aristotle grappled with the ethics of money-making, distinguishing between 'natural' wealth acquired through activities like agriculture and 'unnatural' wealth gained through trade and usury.

Sound familiar?

It's not too different from modern debates about 'honest work' versus 'greedy capitalism.

This historical consistency suggests that our complicated relationship with money isn't just a product of modern consumerism. It's deeply rooted in human nature, a psychological tug-of-war between our desire for security and our fear of scarcity.

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The Paradox of Plenty: Why More Money Doesn't Always Mean More Happiness

Now, let's tackle one of the most persistent myths in personal finance: the idea that more money always leads to greater happiness. It's a belief so ingrained in our culture that we rarely question it.

But the data tells a different story.

A famous 2010 study by Daniel Kahneman and Angus Deaton found that emotional well-being rises with income, but only up to about $75,000 per year (adjusted for inflation, that's about $100,000 in 2023). Beyond that point, additional income doesn't seem to increase day-to-day happiness.

This finding flies in the face of conventional wisdom. If money can't buy happiness after a certain point, why do we keep chasing higher salaries and bigger bonuses?

The answer lies in what psychologists call the "hedonic treadmill" - our tendency to quickly return to a relatively stable level of happiness despite major positive or negative life changes.

Imagine a treadmill where you keep walking but stay in the same place. In life, we might get a raise, buy something new, or experience something exciting that temporarily boosts our happiness. However, over time, we tend to get used to these changes, and our happiness levels go back to where they were before called "hedonic treadmill."

Here's a provocative question: What if the pursuit of more money is actually making us miserable? What if we're all hamsters on a wheel, running faster and faster but never getting anywhere?

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The Scarcity Mindset: How Poverty Changes the Way We Think About Money

On the flip side of the coin, let's consider how a lack of money affects our psychology. Research by Sendhil Mullainathan and Eldar Shafir has shown that poverty imposes a kind of "tax" on cognitive bandwidth.

When you're constantly worried about making ends meet, it becomes harder to make good long-term decisions or resist short-term temptations.

This creates a vicious cycle: poverty leads to poor decision-making, which in turn perpetuates poverty. Our relationship with money isn't just about personal choices; it's deeply influenced by our circumstances and environment.

The Raise Dilemma: Why Asking for More Money Is So Damn Hard

Now, let's address the elephant in the room: asking for a raise. It's something most of us dread, even when we know we deserve it. But why?

Part of it is cultural. In many societies, talking about money is considered taboo. We're taught from a young age that it's impolite to discuss salaries or financial matters. This social conditioning makes it uncomfortable to broach the subject with our employers.

But there's also a psychological component. Asking for a raise triggers our fear of rejection and taps into our deepest insecurities about our worth. It's not just about money; it's about validation and respect.

So, how can we overcome this mental hurdle?

Here's a framework I call the "Value Proposition Approach":

• Quantify your contributions: Before asking for a raise, gather concrete data on how you've added value to the company. Did you increase sales by 20%? Save the company $50,000 through process improvements? Hard numbers are your best friend here.

• Research market rates: Know what others in similar positions are earning. This gives you a solid benchmark for your request.

• Practice the conversation: Role-play the discussion with a friend or mentor. This helps reduce anxiety and refine your pitch.

• Focus on the future: Don't just talk about past accomplishments. Outline how you plan to add even more value going forward.

• Be prepared to negotiate: Have a range in mind, not just a single number. This gives you flexibility in the discussion.

Remember, asking for a raise isn't about greed; it's about aligning your compensation with your value to the organization.

It's a business transaction, not a personal favor. And here's a hard pill to swallow: your company is not your family. Your colleagues are not your personal friends. You are a figure on a balance sheet.

This might sound cold, but it's a reality check. Companies often encourage a "we're all one big happy family" culture, but don't be fooled. This warm, fuzzy rhetoric can actually work against you when it's time to negotiate your worth.

This doesn't mean your workplace relationships aren't valuable or that you can't enjoy your job. It just means you need to approach your career with clear eyes and firm boundaries.

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The Freelance Factor: Raising Your Rates Without Losing Clients

For those in the gig economy or running their own businesses, raising rates presents a different challenge. The fear of losing clients can keep freelancers and small business owners trapped in a cycle of undercharging.

Here's a counterintuitive insight: raising your rates can actually attract better clients.

Why?

Because price is often used as a proxy for quality. When you charge more, you signal to potential clients that you provide premium services.

But how do you make the leap without alienating your existing client base?

Try this staged approach:

• Grandfather in existing clients: Keep your rates the same for current clients, but introduce the new rates for all new business.

• Improve your offering: Along with higher rates, provide additional value. This could be faster turnaround times, premium support, or expanded services.

• Communicate the change effectively: Don't apologize for raising your rates. Instead, frame it as an investment in better service for your clients.

• Be prepared to let some clients go: Not everyone will be willing to pay higher rates, and that's okay. Focus on attracting clients who value quality over rock-bottom prices.

Remember, your time and skills are finite resources. By charging what you're worth, you're not being greedy; you're ensuring that you can sustainably provide high-quality

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The Challenge: A 30-Day Money Mindset Makeover

As we wrap up this exploration of our complicated relationship with money, I want to leave you with a challenge. For the next 30 days, try these exercises to reshape your money mindset:

• Track every penny you spend, but don't judge yourself. The goal is awareness, not guilt.

• Each day, find one way to add value to someone else's life without spending money.

• Wait 24 hours before making any purchase over $50. If you still want it after the cooling-off period, go ahead.

• Have one honest conversation about money with a friend, family member, or colleague.

• Identify one skill you have that could potentially earn you money, and take one concrete step towards monetizing it.

At the end of the 30 days, reflect on how these exercises have affected your relationship with money.

• Have your spending habits changed?

• Do you feel differently about your earning potential?

• Has your overall financial anxiety increased or decreased?

image credit by Giphy

In Conclusion: The Money Paradox

Our relationship with money is paradoxical. We need it to live, yet the pursuit of it can consume our lives. It can be a source of great stress, yet also a tool for immense positive change. It's both deeply personal and inherently social.

Maybe the way to deal with this paradox isn't to solve it but to accept its nuances. After all, understanding the psychological, cultural, and economic factors that shape our relationship with money might not make us rich overnight, but at least we can make more deliberate decisions about earning, spending, saving, and giving away our financial resources.

And who knows, maybe we'll finally figure out why we keep buying those novelty socks. The ones with the tiny unicorns and the furry cats.

Thank you for taking the time to read, comment and restack!

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