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?
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.
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?
How Money Became the Measure of Everything by Eli Cook
A History of Personal Wealth by Classic History
Why Self-Worth Is More Important than Net-Worth by Joshua Becker