Do people need a purpose to accumulate wealth?

A financial website in the United Kingdom offered an interesting perspective on the accumulation of wealth. Written by Amanda Smith, the article at Money Marketing wondered if people needed a specific purpose to save or invest.

Many people are accustomed to working all their lives, so saving may not be a priority. Amanda recalled her grandmother’s response when well-meaning family members were encouraging her to stop working when she was in her 70s.

“Why do you think I want to be put out to pasture?” her grandmother asked.

“She’d been financially independent since she was 14 and work was bound up with her sense of purpose and identity,” Amanda recalled. “The only reason she eventually retired was to nurse my grandad through his illness – again, driven by a sense of purpose.”

In recent years, Amanda detected a change in the way people save money today compared to her grandmother’s generation. Older people grew up saving for a “rainy day;” whereas, younger folks tend to save for specific things, such as a house or a vacation.

“Their money has a clear purpose right from the start and I think that makes it easier for them to stick with their financial plans than it would if their financial destination was unknown,” Amanda wrote. She may be right.

Easy credit displaces need for ‘rainy day’ fund

As a child, I grew up in a broke and broken home. Money was always tight after my parents divorced in the late 1960s. Money came in as fast as it went out as my mother lived from paycheck-to-paycheck with minimal child support and no government assistance at that time.

Consequently, I never learned to save or invest, nor did I see it modeled. So, when I got my first job as a teenager, I spent as much as I made without contemplating a “rainy day.”

When I was in college, banks and department stores actually mailed people, like me, credit cards without even requiring an application or credit check. Suddenly, a rainy day no longer mattered because plastic money was always available.

Today, members of the millennial generation seem more concerned about the amount of monthly payments than they are with the total cost of whatever they are buying.

By the time I was 30, I had three children so investing was a foreign concept because it required money above whatever it cost us to meet monthly expenses. Saving for “retirement” meant setting aside money for an event that was nearly four decades away. That was hard to do when we were struggling to make ends meet that month.

My experience very closely resembled Amanda’s grandmother. From the time I was 17, it was rare that I wasn’t working at least one job or trying to run a business on the side. The need to save for a future event, like retirement, seemed unnecessary because I was always able to make money.

Yes, that was extraordinarily short-sighted because I could easily have been sidelined by an injury. That’s why Amanda’s comment about purpose may resonate more with younger people.

Lifestyle financial planning

The relatively new concept of lifestyle financial planning shifts the focus away from money itself — and from how much you have or haven’t got — toward the things people want to do with the money they have or could have, Amanda explained.

Rather than pitching saving and investing as a way to prepare for a rainy day or an event years in the future, I may have taken it more seriously if I saw accumulating wealth a way to create a second income. Then, with that, I wouldn’t have to work so hard.

I also think way too much emphasis is placed on “saving for retirement,” especially when retirement is a matter of income rather than age. People are technically retiring in the 30s after developing businesses that generate recurring monthly income without having to be parked in an office chair somewhere.

“I’m not saying people shouldn’t put money aside ‘just in case’. But where money is tight, having a specific purpose for saving is more engaging because it’s tangible,” Amanda wrote. “It’s also easier to weigh up your choices against other things you could do with your money, which I think gives you confidence.”

Indeed. The idea of saving looks more interesting and appealing when people realize having money gives them more options in life. A better lifestyle, such as traveling around the country in an RV because you have multiple streams of income, certainly sounds better than just squirreling away a few dollars in your 20s and 30s so you can slowly spend it in your 70s and 80s.

I never could grasp the concept of scrimping and saving in my youth to save money so I could scrimp and save as an adult just so I wouldn’t blow through my financial reserve before I died.

Giving a purpose to wealth-building seems to make better sense for maintaining a short-term commitment to a long-term benefit.

Personally, I plan to teach the idea of planning for a lifestyle to my children and grandchildren. Hopefully, they will listen to wisdom accumulated after making mistakes rather than having to learn the same financial lessons I did the hard way.

Amanda’s full story is available at