| Real Life Strategies for Building Wealth

…and the lives of those around you. This is what a group of professors at Harvard and the University of Utah found. But let me take you through this one a bit more gently.


In June, 2013 Daily Finance and other reputable sources reported on the results of research published in Organizational Behavior and Human Decision Process. This research suggests that focus on money can result in unethical behaviour. It all came from experiments involving a group that was primed (by having to unscramble sentences about money) and a control group that had not been exposed to such ‘priming’. After that, the participant were asked to either comment on scenarios involving unethical behaviour or to play a game where cheating earned more money.

Yep, you guessed it: the members of the ‘primed’ group were more likely to report readiness to engage in unethical behaviour and/or to cheat.

Before we jump to any conclusions about the evil of money let me make some general remarks about this kind of studies.

Experiments are popular amongst psychologists and behavioural economists; most other social scientists shy away from them and for good reasons:

  • Usually, the subjects are students because of considerations for ease of access etc. This is quite obviously not a ‘representative’ group; apart from that we should account for possible biases because of authority etc.
  • Control groups are tricky when it comes to establishing a causal relationship. Translated this means claims like ‘people made unethical choice because they were exposed to the notion of money’ – which is clearly the claim of this research. Why? Because to be able to do this one ought to ensure that participants in the compared groups are identical, or even highly similar, in terms of all other characteristics; which is NEVER the case.
  • One of the unethical behaviours that the group exposed to notions of money was more likely to condone was taking a packet of paper from the University office. I have to say that this is very, very border line – I, for instance, bring paper home from the office and use it to print my work, which is to the glory of the University. Am I stealing? Don’t think so!

It is probably already apparent exactly what I think of this research – too many critical points to be reliable – and that I do understand the need of ‘professionalised’ personal finance for catchy titles. Irrespective of that, I do believe that focusing ONLY on money can ruin your life and the life of those around you. Here are some examples of that:

Having children

You know, it is true: children are very expensive. Some calculations show that raising a child will set you back by between $170,000 and close to $400,000 in the first 18 years of their life. This doesn’t include university fees!

Tell me about it! I remember when we paid about $4,000 for IVF (our son is a miracle baby) back in 2000 and John’s comment that ‘…this is nothing yet.’ But would I consider saving by not having our son?

Absolutely not! Because:

  • He brings so much joy and excitement in our lives (this is changing because he is hitting puberty but still).
  • Money is to nourish our lives whatever our chosen life style is. Choosing to have or not have children is not a solely financial decision.
  • I find the thought of not leaving something behind me – a legacy – unsavoury. One thing we gift to the world – our legacy – are our children; well, when they become great grownups.
  • Not having a child doesn’t mean that we’ll have the money we spend on him. Most likely it would have gone where a lot of what we earn used to go – on things that don’t nourish our lives and we don’t even notice.

Even more importantly, this doesn’t make sense biologically (after all the main purpose of species is to ensure their survival and reproduction) or economically – fewer younger people in the labour force mean all kinds of financial problems I am not even going to get into.

So, you see…Deciding whether to have children or not only thinking about money is probably not the thing to do.

Getting education

Please do note that I am talking about education not a degree. I see too many young people who fritter away their chance for getting an education because they are so hung up on getting a degree: focusing on marks not knowledge; all frustrated expectations of information rather than gaining the ability to learn.

There generally has been a backlash against education and many PF bloggers develop arguments solely around money, value for money and return on investment. But education is not only and not directly about how much your earn at any point in time. In fact, it is like any other ‘good’: over supply can lead to lower premium of university degrees, even the ones considered ‘safe’.

What education gives is not only and not simply economic capital; it also provides us with cultural and social capital that can be converted into economic capital.

Deciding whether and what to read at university only looking at the average salary one may get – or only thinking about money – may be a mistake.

Entertaining at home

It is one of the mantras of personal finance – if you want to save money entertain at home. Well, thinking only about the money this doesn’t make much sense either and instead of making your life more fun it can create a lot of stress that you probably could do without. Further, it usually doesn’t save much if you include the cost of your time in the calculation.

So, to decide whether or not to entertain at home, apart from money you need to think about:

  • do you like cooking;
  • how do you cope with the pressure of expectations;
  • does having a party stress you;
  • are you set for the cleaning and organising after the party.

If you don’t enjoy any part of entertaining at home or this stresses you crazy – don’t do it.

Can you think of other examples where focusing only on money doesn’t make sense? I would love to hear about it!