AHHHHHHHHHHHHHHHHHH! That’s the voice inside my head. It’s the voice of fear. The voice of doubt. The voice of worry.
Worrying. We all do it. Although certain worries may be personal, there are common themes that a lot of people worry about. We worry about our careers ( What do I want to do with my life? What if I lose my job?). We worry about our relationships (Will I ever find the right person? Am I with the right person? Will my heart be broken?). We worry about death (What if something bad happens to my health? What if I die?)
Perhaps the most prominent worry and the leading cause of stress for most people is with money. How am I going to pay the bills this month? Can I afford this? Am I in too much debt?
I think about money a lot. I write about money a lot. And I worry about money a lot. But what is it that I’m worried about? What is the worst thing that could happen with my finances?
What if I lost my savings and my job, and could not find a job even remotely similar to what I am currently doing…
Could I survive?
Let’s take a look at some bare minimum expenses…
I did a quick Kijiji search, and I could find furnished rooms for under $500 per month ($6000/year) near the Toronto area, including utilities. I could exchange something like lawn care or other help to reduce rent.
The average American spends $8,698 a year to own and operate their car. That’s expensive. I would have to take public transportation to get around instead. In Toronto, the monthly bus / subway pass costs $141.50, which is $1698 per year. This cost could be cut down too if I could walk or bike to work, then only pay the $2.90 fare to use the bus or subway each time I needed to.
Food & Other: ~$1000/year
I recently read about the Elon Musk challenge for food spending. When Elon was a teenager, he spent $1 per day on food to see if he had what it takes to be an entrepreneur. Musk lived off mostly hot dogs and oranges, and also had some pasta. Someone replicated the challenge in 2016. The $1 that Elon spent per day is equal to about $2 today, when adjusted for inflation. This person lived off of oatmeal, peanut butter, bread, pasta, and bananas for the most part. And they were successful. So I will set this level as the bare minimum that can be spent on food. $2 per day is $730 per year. Also, basic hygiene expenses (i.e. toothpaste, deodorant) would be appreciated, although I guess not necessary. I rounded this category up to $1000 for the year to account for hygiene and a few additional food expenses.
So the absolute bare minimum expenses for the year is around $9,000. Here are a few of the many assumptions I made…
- This excludes any existing debts, having a cell phone bill, having any sort of entertainment expenses, getting a haircut, paying any emergency medical expenses, etc.
- I am not starting from complete scratch (i.e. I already have clothes to wear and do not need to buy some).
- The expenses are just for one person, me. If I had other dependents, like children, the cost would be higher.
In terms of income, at the very least I could find a job getting minimum wage. I worked at a golf course for seven years growing up, and I’m sure I could find a job doing something similar in customer service. Or I could get a job working at a local fast food restaurant. Minimum wage in Ontario is $11.25 per hour, or $450 per week, or $23,400 per year, before taxes (assuming a 40 hour work week). After tax that is $20,906. So my income could cover my expenses.
Life would not be glamorous with these expenses or income. I would likely not be able to afford my own apartment or housing – I’d have to rent out a room. I would likely will not be able to afford my own car – I’d have to take public transportation. I would likely not be able to go out to eat regularly – I’d have to cook at home. I would likely not be able to go on vacation. I could not spend much on entertainment. It would be a very, very basic life, but I would survive.
If I am not going to die if I lose my job and my money, why am I so worried about my finances?
I am currently reading a book on psychology called Influence by Robert Cialdini. I think that the third chapter of this book may have at least part of answer as to why we are so worried about money.
The answer: consistency. Once we have taken a stand, especially when we have made that stand public, there is a strong drive to maintain that stand in order to look like a consistent person.
Everyone wants to appear successful. We go to school. We get a job. We buy some stuff. We portray an image of “success” by purchasing fancy clothes, exotic cars and an expensive home. But how well off are we?
Recent survey results show that 76% of Americans are living paycheck to paycheck, and 52% would need to either sell something, or borrow money to meet an emergency of $400.
We are worried about money because we are living lavish lifestyles with no buffer. We have worked so hard to be viewed as successful that we are terrified of appearing a failure. Failing is inconsistent with success.
So how can we reduce our fear of money?
Test out living on less
“Comfort is the worst kind of slavery because you’re always afraid that something or someone will take it away. But if you can not just anticipate but practice misfortune, then chance loses its ability to disrupt your life.” ~ Tim Ferriss
I have mentioned this before, but I am a big fan of the Tim Ferriss show. One of his more recent podcasts was titled, “How to Practice Poverty and Reduce Fear.” Every so often, Tim takes a week to “practice poverty.” He commits to wearing the basics in terms of clothing and eats cheap food like rice and beans.
The idea comes from the philosopher Seneca, who said, “set aside a certain number of days, during which you shall be content with the scantiest and cheapest fare, with course and rough dress, saying to yourself the while: ‘Is this the condition that I feared?’”
This isn’t about sleeping on the street or starving for a week. But it is about limiting luxuries that we have become accustomed to. The goal is to rehearse the situations that we fear, to take the fear away from them. If we purposefully practice living with less every once in a while, we may realize that we are not as scared of having less money as we may think we are.
Would our happiness level be much lower if we…
- Went for a run or worked out at home instead of buying a pricey gym membership?
- Cooked a budget meal instead of going out to eat?
- Wore the same clothes this week as we did last week instead of buying new ones?
Probably not. Well not for me at least.
Things don’t bring me happiness. People do. Experiences do. And I have realized that I don’t have to spend a lot of money to have meaningful experiences with meaningful people. I just made a simple, home-cooked meal with my girlfriend. I am warm, clothed, sheltered, and full. I am happy.
I think I will always be a natural worrier. I won’t be able to stop worrying, but I can take action to worry less. “[Andrew] don’t worry, about a thing, cause every little thing gonna be all right.”