Many years ago, John Maynard Keynes, who is famous for Keynesian economics theory, predicted mass accumulation of wealth and a three-hour workday. In the following decades, his predictions were somewhat accurate.
The world is richer than ever before. Rich countries are already discussing a reduction in the workweek. Recently, Finland’s new prime minister proposed a four-day workweek and six-hour workday. The wealthiest people in the world like Bill Gates and Warren Buffett are using their wealth to make the world a better place to live.
The world is not a happy place, though. Income inequality is as much a reality as is absolute wealth. Just under 10% rich in the world are controlling 80% of the world wealth. A worker at the top of the income level earns an average $7,475 per month while the one at the bottom earns $22 per month, according to the latest World Employment and Social Outlook Report by the International Labour Organisation (ILO).
In an essay titled ‘Economic Possibilities for our grandchildren’, Keynes described the love for money as a pathological condition. He argued that money should only be used as a means towards well-being and not as a possession.
The obsession with possessing money and poor policies towards redistribution of wealth has resulted in a world split between the haves and have nots. The pursuit of happiness is increasingly linked to the possession of money.
Being in love with money is tricky. Money and love are the two most sought after things. No matter what stage one is in life. Talk to the Gen Z (people born after the year 1996), and there is an outpouring of idealism. As they join the workforce, priorities take a dramatic turn. The same people want the highest paying jobs. More ambitious ones set out on their own to make a fortune. For a lot of things you love, you need money. At least, that is a general belief.
Money is also turning out to be a source of conflict in personal relationships. Marriages are getting strained due to differences over money between spouses. Our conversations with financial advisors reveal that one in four cases of divorce is over money matters.From being in love with money to making it a bone of contention in personal relationships is a heavy price to pay.In the wonderland of investments, one needs to be a realist. Benjamin Graham, a famous American author who wrote the book ‘The Intelligent Investor’ years ago, argued that an intelligent investor is a realist who buys from the pessimist and sells to an optimist. In a single line, he perhaps explains the need for you to put logic over emotions.
What should you do?
Financial planning is essential for your well-being as well as to your relationships. When you set out to do financial planning, your financial advisor will ask about your dreams. Things you love to do, and you are passionate.
He or she would then help you convert that love or passion into life goals. Goal setting is an exercise you do right at the start of financial planning. Your financial advisor would then help you with the money path to your goals. You can create an investment for every goal and work towards saving or investing for it.
Your investments and savings are a means to fulfil your goals. They are not the end in themselves. If you are in love with your finances or the money in the bank, there is a good chance that you may not utilise it well. There is a need to separate happiness from money. Your money should be an enabler for you to create experiences that bring joy to you and your loved ones. There are a lot of books on the topic.
You may want to read them as a first step. People tend to get emotional about their possessions. That could be property, gold or stocks of companies. They take pride in owning them. However, investments need you to be a rationalist to profit from them. A professional financial advisor can help you plan your finances. He or she can share a perspective that could make allow you to make informed decisions. That is an excellent first step in keeping investments and emotions separate.(The author is editor-in-chief at www.moneyminute.in)
Wealth inequality remains critical concern globally
$7,475 Average earning of a worker per month at the top of the income level
$22 Average earning of a worker per month at the lowest income level
Income inequality is as much a reality as is absolute wealth. Just under 10% of the world’s rich control approximately 80% of global wealth