I was listening to a podcast recently that got me thinking about being alone in the universe. The podcast began with a journalist, who also happened to be a particle physicist, who was having an emotional conflict with a science principle known as Fermi’s Paradox which states that there is an enormous probability that we are completely alone in the universe. This journalist explained that it made him feel really sad every time he thought of Fermi’s Paradox. His perspective was, “If we are alone…completely alone in the universe, then that means…this is it. There is nothing else out there that we can learn from or experience beyond what we, as human beings, can create.”
I hadn’t really given it much thought before, but it was sort of sad if you thought of it the way he did. But then I had another thought. What if we are 100% alone in the universe, and it is up to us to explore, and chart, and amass great knowledge of this inconceivable giant space called the universe. It isn’t really sad. It’s exciting and a little scary and an enormous responsibility.
So, in the midst of this pretty existential conversation I was having with myself, I thought it would be interesting to share this story and tie it to something a little closer to home. In this article, I want to discuss excitement, fear, and responsibility, and how they are so closely tied to money and finances.
Everyone’s money story is different and the way they perceive success, happiness, finances, experiences, etc. is equally unique–much like Fermi’s Paradox because we may feel and think very differently about what it means.
We all get excited about different things. What may be an incredible surprise for one person is an utter disaster for another. Money and finances are not an exception to this. When money begins to accumulate and you have expendable income there are several things that can be done with it. You can save it, spend it, or invest it. The responsible thing would be to craft a plan that incorporates all three of these, though that is not always what happens. Often, this is due to what excites us.
Some people get excited at the prospect of spending money. The idea of something new and shiny can help to serve as a reminder of what they have earned. Some people get excited about saving money. Watching their hard-earned dollars accumulate and grow is satisfying and rewarding. Still, others are mesmerized at the prospect of investing their money and watching it grow exponentially in a short time period. All of these emotions are understandable but, when they lead to poor financial choices, it can jeopardize your long-term financial health.
The choices that we make about money are closely tied to fear, or the lack thereof. Fear is what stifles our ability to consider the long-term, it can paralyze us to move forward and it can cloud our judgment and cause us to make decisions out of perceived necessity rather than choice. On the flip side, living a life without caution for consequences can invoke similar outcomes.
Considering the excitement I discussed in the prior section and how it can relate to fear is a good place to begin. Those who feel excitement about watching their money accumulate in savings may have a fear of losing their money. With this mentality, they may not spend money on things that could bring them joy and knowledge, like travel, dinners with friends and loved ones, or tickets to a concert. It could also stifle their ability to fulfill their long-term financial needs. While saving is a vital component of any long-term financial plan, it alone cannot typically satisfy one’s financial requirements in life and retirement. Funding college tuition, medical expenses, retirement, and outpacing inflation would require quite a savings rate if investing was out of the equation.
The excitement of investing in stocks and seeing the potential of what a dollar can do can be intoxicating to some people. Their lack of fear for losing can also create money challenges that could hinder future financial security. Taking on too much risk can bring great wealth very quickly, but the higher you climb, in some cases, the farther you fall.
Spending, in my opinion, is a mixture of fear and excitement. Many people who tend to overspend feel a false sense of fulfillment from the things that they buy. There is inherent fear in that sensibility. Perhaps it is the fear of being alone, or going without, or not being accepted that drives some people to spend too much of their earnings or even beyond their means. This, coupled with the excitement of having something new, can be a toxic equation for a healthy financial plan.
The second most common reason people get divorced is money. One of the top reasons people commit suicide is because of money troubles. Research has shown that stress about money can lead to symptoms of depression and PTSD.[i] Issues surrounding money can make us sad, lonely, and helpless. Unfortunately, it is often what excites us and what scares us about money that can lead to situations where money is causing us stress and sadness.
Excitement, fear, sadness—these are all natural emotions that we have when it comes to money, spending, saving, and investing. And these emotions, if left unchecked, can perpetuate behavior that may not do you any financial favors. Taking responsibility for the choices you make and looking at how your short-term choices can impact long-term outcomes can help you create a balance in your financial ecosystem.
Fermi’s Paradox suggests that we are alone in the universe. I look at this as an opportunity and an enormous responsibility to do the very best we can by working together to learn as much as we can about this unique and vast space we inhabit. Similarly, each of us is alone in our money story and we each have the wonderful opportunity to build a relationship with a financial advisor to make the very best of our personal story.