This is a post that I first put to the Motley Fool board on January 9, 2001 as part of a thread titled "Your Money Personality."
There's an angle to this that I believe sheds some light on why the national savings rate is so low, and which I believe suggests ways of persuading larger numbers of people of the merits of the Retire Early idea.
For me, savings has been an all or nothing proposition. Prior to discovering the Retire Early idea, I had zero savings (at age 35). After discovering it, I think it would be fair to say that I became an "intense" saver. At the high point, I was saving 80 percent of post-tax income. There is little that anyone could have said to me in the old days that would have persuaded me to save more. The problem wasn't that I hadn't heard the arguments for saving, or that I didn't understand them. It was that I didn't care.
Most pro-saving arguments are presented in terms that makes sense to Thinking types. Thinkers love to look at charts showing how investment returns compound over time. Feelers do not. Pull out a calculator, and most of the Feeling types leave the room. Or, if they worry that walking out would hurt the Thinkers' feelings, they patiently endure the lecture until they have a chance to get back to a subject that holds their interest. That is, a subject relating to humans and their personalities.
What the Retire Early idea did for me was put a human face on the concept of saving. Before, the purpose of saving was to make money, to be secure, or to be able to join in discussions of how various stocks are doing. Boring stuff.
But achieving financial independence was not about money. It was about changing the type of work I did. Money was just a tool, and Feeling types have no objection to picking up tools when they see a clear purpose for doing so. In fact, the goal in mind serves to humanize the tool used to achieve it. Feelers play guitars not because they enjoy the feel of wood and nylon string, but because they like how the instrument can be used to express emotions.
All of a a sudden, saving was not a Money issue for me. It was a "Spending more time with my family" issue. Or a "Do work where you spend time helping people solve problems" issue. What was once boring was now compelling. Every budget category reduced was another song composed. Once I had a savings goal that made sense to me, it was spending that became boring. Spending was what was keeping me from having more dealings with people. Who needed it?
The advertisers realize how many people are looking for greater human interaction in today's world. When they sell soda, they don't put on the package "Sugar and water inside!." They offer the experience of being part of the new generation, or of teaching the world to sing. But personal finance texts sell the sugar and water aspects of saving. "Save this amount today, and it will produce this other amount over time," they claim. For many of us, it goes in one ear and out the other. You are more likely to teach the world to sing by saving money than by buying a Coke, but the Feelers among us rarely hear that message.
Acquiring motivation is the first step to achieving any money goal. And different types of people are motivated by different things. I believe that a focus in most personal finance literature on quantifiable goals turns off a good number of the people who most need help. It is important to quantify things at some point. But motivation must come first if the message is to hit home.
Some would argue that Feeling types should be motivated to save by the need to provide security for their families. Thoughts along those lines probably kick in at later ages. But many Feeling types in their 20s and 30s have no reason to save that makes sense to them if they have not heard of the Retire Early idea.
But tell them about the chance to spend more time with their families, or to do charitable work, or to pursue cultural interests, and watch out!
There's an angle to this that I believe sheds some light on why the national savings rate is so low, and which I believe suggests ways of persuading larger numbers of people of the merits of the Retire Early idea.
For me, savings has been an all or nothing proposition. Prior to discovering the Retire Early idea, I had zero savings (at age 35). After discovering it, I think it would be fair to say that I became an "intense" saver. At the high point, I was saving 80 percent of post-tax income. There is little that anyone could have said to me in the old days that would have persuaded me to save more. The problem wasn't that I hadn't heard the arguments for saving, or that I didn't understand them. It was that I didn't care.
Most pro-saving arguments are presented in terms that makes sense to Thinking types. Thinkers love to look at charts showing how investment returns compound over time. Feelers do not. Pull out a calculator, and most of the Feeling types leave the room. Or, if they worry that walking out would hurt the Thinkers' feelings, they patiently endure the lecture until they have a chance to get back to a subject that holds their interest. That is, a subject relating to humans and their personalities.
What the Retire Early idea did for me was put a human face on the concept of saving. Before, the purpose of saving was to make money, to be secure, or to be able to join in discussions of how various stocks are doing. Boring stuff.
But achieving financial independence was not about money. It was about changing the type of work I did. Money was just a tool, and Feeling types have no objection to picking up tools when they see a clear purpose for doing so. In fact, the goal in mind serves to humanize the tool used to achieve it. Feelers play guitars not because they enjoy the feel of wood and nylon string, but because they like how the instrument can be used to express emotions.
All of a a sudden, saving was not a Money issue for me. It was a "Spending more time with my family" issue. Or a "Do work where you spend time helping people solve problems" issue. What was once boring was now compelling. Every budget category reduced was another song composed. Once I had a savings goal that made sense to me, it was spending that became boring. Spending was what was keeping me from having more dealings with people. Who needed it?
The advertisers realize how many people are looking for greater human interaction in today's world. When they sell soda, they don't put on the package "Sugar and water inside!." They offer the experience of being part of the new generation, or of teaching the world to sing. But personal finance texts sell the sugar and water aspects of saving. "Save this amount today, and it will produce this other amount over time," they claim. For many of us, it goes in one ear and out the other. You are more likely to teach the world to sing by saving money than by buying a Coke, but the Feelers among us rarely hear that message.
Acquiring motivation is the first step to achieving any money goal. And different types of people are motivated by different things. I believe that a focus in most personal finance literature on quantifiable goals turns off a good number of the people who most need help. It is important to quantify things at some point. But motivation must come first if the message is to hit home.
Some would argue that Feeling types should be motivated to save by the need to provide security for their families. Thoughts along those lines probably kick in at later ages. But many Feeling types in their 20s and 30s have no reason to save that makes sense to them if they have not heard of the Retire Early idea.
But tell them about the chance to spend more time with their families, or to do charitable work, or to pursue cultural interests, and watch out!
