(no. 005)
Where are my numbers already?
I have deliberately put off completing my FI-Ometer because I’ve been thinking carefully about whether or not I should share our net worth and all our numbers. I have been following personal finance blogs for a number of years now and the camp is definitely divided on this topic. According to the Rockstar Finance Directory, at the time of writing, only 513 out of the 1,528 blogs share their net worth. That’s just about a third (34%). Why is this?
A Brief Look at History
First of all, lets briefly look at the current fascination with measuring and accumulating personal wealth. It would seem that this is a luxury of our modern times. Historically, people did not measure their well-being based on monetary terms, in pounds and dollars. A few centuries ago, people were just happy to be alive and not sick with a disease or illness. Every day would be a struggle to ensure that there would be food and shelter. Policymakers back then used what was called ‘moral’ and ‘social’ statistics. They cared most about data relating to things such as illiteracy, suicide, abortion, divorce, prostitution and crime. The unit of analysis is in stark contrast to a measurement such as net worth at the personal level or GDP per capita at the macro level.
As the years went by, these older measures, although still used, have generally fallen out of fashion as capitalism and globalisation began to take pace. Technology and advances in medicine meant people lived longer, illiteracy improved, people ate better and they stayed warmer. It was the Scottish economist Angus Maddison who noticed this rapid improvement in education, lifespan and economic growth from around the 1820s. He even noted that up to that point, growth was essentially non-existent. Focus now turned to other things. Now that many people had their basic human needs met, attention was now on how they were benefiting society as a whole. In other words, what is their output and how productive are they? Money became the unit of analysis.
We have even reached a point where we place a value on a life. The NHS (National Health Service) in the UK put this number as somewhere between £20,000 to £30,000 per quality-adjusted life year. In essence, a treatment that cost anything more than that is not considered cost-effective. As a result, the individual is unlikely to receive treatment unless they pay privately. A similar cost versus benefit measure is also used in the medical insurance industry.
Since the idea of net worth is relatively new in terms of human history, could this contribute to why not all bloggers share their net worth? It’s just something we are not quite comfortable with yet.
This whistle-stop tour is meant to reinforce the idea that money is only one measure. It is also a measure that is determined externally and based on what others believe the value would be. If you have the time, read more on the topic of self-worth. This is the concept of evaluating your worth based on your personal values and beliefs.
Your net worth is just a monetary value for all your assets minus liabilities. That is all. Nothing more. Although it is personal, it is not a measure of how much you are worth, because quite frankly, every life is invaluable and the worth of a thing is relative. For example, a homeless person would value having some clean water to drink and wash much more than say, you or I who may take such a thing for granted, regardless of the price tag.
“Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusement of human life…The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command.” – Adam Smith (1776)
Value is therefore very different to worth. Something is more valuable to someone who would find it difficult to obtain and least valuable to someone who could purchase it with what they consider as loose change. As a result, don’t get too caught up chasing the number and become completely blinded by it as you progress towards your own financial independence. Try not to compare yourself to others. Net worth alone does not tell you much without understanding what the individual values and how they spend their money. Measure it by all means, but do not use it as a basis for all the decisions that you make. Just because a course of action may increase your net worth, it may go against your values or beliefs, thereby reducing your self-worth. Reaching FI in such a manner would be to sell yourself short.
So, back to the question: to share or not to share?
To Share
Credibility – It would be very difficult for me to show the community how I am doing it without sharing some real numbers. Plus, if I am going to encourage others to do the same through my Humans of FI project, would it make me a hypocrite if I decide not to do the same? I think to have credibility in what I write, I need to be able to openly demonstrate what I am doing.
Progress – Sharing allows my readers to track how I am progressing. Sanitised numbers make this difficult; especially if they are just simple percentages.
Accountability – Once my numbers are out there, it makes it more accountable not only to myself, but to my readers. It serves as an extra motivation to reach my goals.
Inspiration – I find that in general, I actually enjoy blogs which share their net worth more than blogs that do not. I think this boils down to the fact that it makes it more real to me. Without genuine numbers, the concept of FI can be very abstract to me.
Learning – We learn from our successes, but even more so from our mistakes. If my net worth was to fall, the best way for me to impart any lessons I took from it would be to share all my numbers, break it down and pinpoint exactly where it went wrong. This way, others can also give me their take on it and provide an alternative view.
Not to Share
Privacy – Sharing my net worth and numbers now may make it difficult for me to reveal my identity in the future should I decide to do so. I value my privacy and I although I like to share my stories and thoughts so that others might be able to benefit, I still find it strange to tell the whole world exactly what I spend, save and how much money I have. Perhaps I am still very dated in my view. In Norway, everyone can know how much each other earn. Their tax returns are made public. This income and tax transparency is actually a breath of fresh air before you find out that Norwegians have been doing this since the early 1800s. Depending on the study and the measurement, they are ranked top for having the least income inequality in the world. Perhaps this is why money is less of a taboo for them?
Showing Off – I wouldn’t want to be seen as potentially showing off. I don’t consider myself rich in terms of my bank balance, but I am aware that I am more fortunate than others. Then again, bragging and flaunting your wealth is very different to sharing in the hope that others can learn. We can’t stop how people perceive us, but we can be more careful about how we express ourselves.
Embarrassment – Even with blogging anonymously, I imagine I might feel as though I am being judged. It may also place me under unnecessary pressure to perform, worried about airing my silly mistakes or showing everyone my financially sub-optimum decisions. Also, I don’t want others to think that I am judging them because I really do think we all earnt our money and should be free to spend it (or not) as we please…oooh, you bought a car on finance, you bad, bad person!
Treated Differently – There is the risk that should my identity get blown or if I decide to reveal myself in the future; friends, colleagues and family might treat me differently. Would they expect more gifts or unfairly rely on me to bail them out of a financial difficulty because they took unreasonable risks automatically assuming that I would help them?
Security – Would it make me a target to scams and hackers because they know how much money we have? It may also increase the chances of identity fraud because they feel like they have more to gain from me.
The Decision
As public sector workers, our pay scales are made public anyway! It isn’t too difficult to figure out approximately how much we earn. However, we still feel that it would be very strange to make everything public. Perhaps this mentality is the very reason why so many people are bad with money. It is the inability to break through this barrier, to have open and honest discussions about money which prevents accountability, personal responsibility and learning. Sometimes burying our heads in the sand is much easier than confronting the truth and dealing with a problem. The attitude of: “if no one knows how bad I really am with money, then I don’t need to do anything about it”.
I haven’t made my decision yet. My next post will be about our money. You’ll know then whether or not I will be completely open or continue to be coy about our numbers. I am leaning towards sharing. If only because it is so much more effort in trying to disguise our numbers than in just revealing them.
What do you think? Would you benefit from me sharing all our numbers? Would you be open and honest about your finances with family, friends and work colleagues? How about to complete strangers?
Further Reading
Living Optimistically Through FI
Sources
How Money Became the Measure of Everything by Eli Cook
A History of Personal Wealth by Classic History
Norway: The Country Where No Salaries Are Secret by The BBC
Judging Whether Public Health Interventions Offer Value for Money by NICE
Why Self-Worth Is More Important than Net-Worth by Joshua Becker
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I understand you completely on this one. I share my finances but always with a heavy heart. I worry will people think I am too rich or too poor? I am not by any means financially minded and worry people will laugh at my newbie ness. Whatever you decied, it will be the right decision.
Little Miss Fire
https://littlemissfireblog.wordpress.com
Hi there LMF. I do think we live in a very judgemental society. Just read some of the comments every time the mainstream media publishes an article about a young couple ‘retiring’ early. There are just so many haters out there and I’ve learnt to just ignore all the noise and focus on comments that add value. Most of those haters are doomed to living from one payday to the next into their old age. That’s fine by me. There has to be some sacrifices and the world can’t have everyone reaching FI early. Spenders help to ensure our investment portfolio grows, taxes are paid and essential jobs are filled. It’s a bonus that there are so many people willing to do this, but little do they know that they are actually helping us reach FI sooner.
People in the FI community are different. I have found them to be very open-minded and critical in a good way (constantly striving to improve and figuring out if there is a better way to do things). The fact that you have a blog despite your belief of your ‘newbie ness’ has already shown you’re willing to learn and not scared to put yourself out there to do it. I think you are far from a newbie and way ahead of the majority of the population in terms of managing your finances.
Great post. I’m semi-anonymous on my blog – ‘semi’ because that is me in my profile pic, which all friends and family would recognise if they happened to stumble across my blog, plus I have attended several UK FIRE meetups so have met some readers and other fellow FIRE wannabes in person. That said, I’m not sure I’m ever likely to reveal my full identity in a ‘ta da!’ moment on my blog as I’m not sure what purpose that would achieve, to be honest. If I did, it would probably be my final ever post!
Anyway, I decided from the start that I would share my numbers on my blog. Of course in real life, I don’t discuss my salary or net worth with friends or family – far easier to share with total strangers! However, I find that although I enjoy many FIRE blogs, the ones I enjoy the most are the ones which show numbers – numbers provide context.
At first, I wondered if I was doing the right thing as it seemed like everyone was earning FAR MORE than I was and had huge net worths, compared to my own puny figures. I eventually realised that it was pointless comparing myself to what others earned or the size of their net worths as they have no relevance to me – what’s important is what I’m doing myself against my own plan.
Another reason for sharing my numbers is precisely because there are so many high earners in the FIRE community and very few who are basic tax rate payers. Barring something absolutely extraordinary happening, I will likely remain so until the end of my career. I don’t see this as a bad thing as I enjoy a good life on what I earn and do not covet being a HTR and the trappings which inevitably come with it.
So, I like seeing people’s numbers, big or small, but I also understand why others are reluctant to share, for the very reasons you have pointed out.
I look forward to seeing what your decision will be.
Thanks for sharing your thoughts on this Weenie. It’s difficult to not compare ourselves to others when starting out and give ourselves a hard time because we are not doing ‘as well’ as they are. I still find myself doing it at times, but I am much more conscious of it when I do and give myself a mental kick in the face to put the focus back on my own journey.
So none of your friends and families knows about your blog? As ridiculous as it sounds, I do sometimes go to work thinking to myself I’ve been rumbled and everyone knows that I have this blog. Of course, I know this is irrational because there are just so many blogs out there and so many police officers, so how on earth are they going to figure it out. Even if one day someone might suspect who I am, all I would have to do is play ignorant.
Nope, whilst close family and a few friends are kind of aware that I am aiming for early retirement (though I don’t believe they think I’m being serious when I mention it), they don’t know about the blog. I daren’t even mention FI or FIRE to my friends as I don’t really want them to do a google search and come across my blog by accident – perhaps when I’m nearing the end of my journey as I probably couldn’t care less who knows by then, haha! I think the FIREstarter got rumbled by a colleague or someone he used to work with but I seem to recall it was quite a positive reaction!
I’m the same. At the moment only my wife knows about this blog. I’ve tried to mention FI to my younger brother but he just doesn’t seem interested. I’ve learnt to accept that despite how much all this just makes perfect sense to me, it just isn’t for everyone. I know I was gutted to discover FI late in life and wished I knew about earlier. Perhaps I just wasn’t ready to look when I was younger. Or perhaps I didn’t know what to look for. When the time is right for him, I hope my younger brother will begin his journey. I don’t want him to look at me once I reach FI and regret that he didn’t start sooner.
I won’t reveal my net worth. There are only a couple of friends who accidentally know about my blog. I can see the downsides in telling others but no upsides. My paid side gigs have nothing to do with my blog and I prefer to be named in those but unnamed in my not for profit blogging.
Hi Steve. I can totally understand why you don’t. Out of curiosity, what did your friends think when they found out about your blog?
One never commented, the other enjoyed the fact I used him in a blog.
I like your logical thinking about this, and the discussion of each point.
There are plenty of bloggers who share not only their net worth but also their monthly income and spending, and all matters money. Well, good for them if that’s what they choose to do. I don’t.
Mostly for privacy reasons. I do think that in the current environment it is probably safe to do so, but things change and attitude change, and the past has a way of becoming the present. The past does not always stay in the past.
Thanks for stopping by and commenting Smile If You Dare. Yeah, I don’t think there is a right or wrong answer to this. Just whatever people are most comfortable with doing.
Hi there
good post. just started on the FI journey myself and started a new blog. I am wrestling with the same issues regarding sharing all my financial details. I think its just down to what you feel comfortable with. good luck
cheers
Hi there FU MON CHU. Yeah, it’s a very personal choice and reasons are perfectly valid whichever side of the camp you decide to fall on. I’ve decided to share my numbers apart from my net worth. Although, with time and persistence, I think anyone can roughly guess my net worth.
I’ve just checked your page. I don’t know if you’re aware, but there is an SSL certificate error on your site. My browser is warning me not to go to it and I had to jump through a few hoops to access your site. Worth checking it out as you might be turning away a few visitors. (Note: I am using Safari browser).
Hi again
I think i’m going to share my numbers but I am still in the process of working everything out and knowing waht my exact position is.
thanks for the heads up regarding the SSL error. I’m new to all this so i don’t even know what that is , but i’ll look it up and try and resolve it.
cheers
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Hi Cashflow Cop,
It is indeed a very interesting topic and one that will never have a right or wrong answer. There are so many factors that can influence whether someone chooses to show their income. i.e. culture, age, location, upbringing, etc.
People love to read the numbers on other blogs. I think that comes down to the need for everyone to compare themselves against each other and determine where they fit. On another article I was reading, the author had just stopped showing his blog earnings as he was getting bombarded with emails directly relating to his blog income. I guess that is another downside of displaying your income?
Through my blog I don’t show numbers of my investments. I don’t really have any issues with credibility, or progress, as I still report monthly percentage increases and decreases. It may not be flashy, but for the time being, I think it works well.
Matt
Hi Matt – it’s such a personal decision and I completely agree that there is no right or wrong. There is also nothing wrong if we keep on changing our minds about this particular issue. That’s because our circumstances change which dictate how comfortable we are with disclosing our earnings or net-worth.
I’ve decided not to disclose my net-worth at the moment but basically disclose everything else. When I no longer feel it adds value to me or my readers, I’ll stop.
Seems such a simple decision, but it took me a while to grapple with it.