Against Saving Money
Saving money is perhaps one of the most rational, least controversial things one can do. So, it seems like a good thing to argue against in my first substack post.
Let me get right down to it. The main reason that you shouldn’t save (too much) money is that it can undermine your family. If you don’t have children, or you don’t plan to, the argument might not apply to you. If you do have children, saving money can undermine them in several ways:
Saving Demonstrates the Wrong Priorities. Every dollar you save (i.e., invest in financial assets) is a dollar that you aren’t investing in your children.
Financial Independence Undermines Familial Interdependence. Before people saved for retirement they would rely on their family for support in their old age. This gave parents an strong incentive to invest in children, and created a sense of responsibility in the children.
Financial Immortality Corrupts. If you save so much money that you and your family become financially independent (i.e., demi-gods that no longer need to work to live), it undermines the sense that your continued existence depends on developing and demonstrating virtue.
There are other reasons, too. I won’t go into them too much here, but two that come to mind are: low interest rates make saving money less financially desirable, and a society full of people that save money leads to a lot of old people with money - which can undermine the dynamic nature of the economy.
But my main reasons for doubting the ‘save money” mentality are about individual or societal impacts. It’s about the impact of saving money on the family. So let’s dive into those three main reasons.
Demonstrating Priorities
Not long ago I watched a tv series called Shantaram about a man (Lin) living as a fugitive in India. In one episode, Lin’s love interest, Karla, explained a little about her past. She says that as a child she knew two things: she would never want for money, and her dad loved her more than anything. Then her dad killed himself and her utopia was shattered.
Ok, so what does this have to do with saving money? When you spend money, it reveals your preferences. By spending money on your family, you reveal at every point in your life what your priorities are. By saving money, your choice is essentially to accumulate power.
In many instances, people want to accumulate power so that they can do right by their family. But there are also many selfish reasons to accumulate power. If you save money, your family can never really be sure that you prioritize them over power.
In some cases it is important to accumulate power so that you can spend it on certain high return investments (say, helping your child get a college education). If you do this, it should be clear enough to your family where your priorities lie. But saving money for retirement prioritizes your future financial independence over developing the human capital of your children in the present. In short, if you save for retirement you are signalling that you do not love your children more than anything and on some level they will know.
Perhaps the idea that parents love their children more than anything is a white lie that children need to grow out of eventually, like Santa Claus or the tooth fairy. But if you keep up the lie until you no longer have anything else to give, it eventually becomes the truth.
Family Interdependence
One of the main reasons people give for saving money is that they don’t want to be a burden on their children. This is patronizing. If you really don’t want to be a burden you could just give them the money you saved. That would be the opposite of a burden. But the hidden side of the statement that you don’t want to be a burden is that you don’t trust your children to carry that burden, even if you give them every means of doing so.
Furthermore, if you invest wisely in your children, every dollar you spend now will result in much more than one extra dollar in future earnings. So by refraining from investing in your children now you are not doing them a favor. You are simply holding back.
In any case, the real reason people don’t want to be a burden on their children is that doing so creates a level of interdependence that makes us uncomfortable. It means we have to invest carefully and wisely both in human capital, but also in relationships. If you don’t think your children are a worthy investment, or you don’t trust your relationship with them, this is a big risk.
If you commit to spending your money building up your family instead of saving for retirement, it creates a strong incentive to do that well. Your future self depends on it.
If you save for retirement instead of investing that money in your children, your children will rightfully conclude that they have no moral responsibility (or a reduced moral responsibility) to care for you (or about you) when their earning power comes to exceed yours. If you want independence, you will get it, including independence from your children. Just be sure you really want that.
Embrace Financial Mortality
I recently read (actually, listened) to a book called Circe about a witch who was born immortal, but chose to become mortal.
The moment Circe became interested in mortals was when she saw the skill with which a fisherman manipulated tools and weather and their own body to survive. Mortals have skills because if they don’t develop skills they die. The gods have no skills, and no virtue. They don’t need it.
To become financially independent is to become financially immortal. Your future welfare no longer depends on your labor. Therefore, it no longer depends on your virtue. If you provide your children with financial immortality, you will sever the natural relationship between who they are and whether they survive (or thrive). This will eventually corrupt them.
When I was young I worried a lot about dying. When I had my first child my perspective started to change. I began to view my child as an extension of myself, as something that could justify my existence even my if future in this body is finite.
I will always be afraid of dying, but part of life is coming to peace with your mortality. You can do this by embracing the cycle of life. This means allowing your children to become the hero of the story as they come of age. By letting your light dim, you make room for them to glow brighter. This includes letting them make financial decisions for the family, including you.
If you can come to peace with actually dying, coming to peace with financial mortality should be easy. At some point you will no longer be able to earn a living by your skills and your labor. At that point, the next generation should be controlling the money. Let that time come. Embrace it. Find ways to remain valuable to them.
Embrace the idea that survival should depend on health, ability, virtue or whatever allows you to earn a living. You might embody these concepts now, but plan for a time when you don’t. By ensuring a comfortable retirement for yourself (or worse, complete financial independence for you and future generations of your family) you (and, with enough wealth, future generations of your family) will just become a financial zombie before your physical death.