Another Thursday, another interesting client discussion. I should probably make these into a series. In fact, I should probably serialize a few of my topics like I used to do, as having buckets for the information is useful. However, that is not what this article is about this time.
In the session today we were talking about how money gets used and I asked a question that might be interesting to consider, although it would need to be "translated" into the local conditions.
What do you think the life of someone who earns €10,000 a month looks like?
€10,000 is about 3x the average salary in Finland, so localize it that way to think about how it might apply to you, otherwise it is all irrelevant. When we visualize things, we do so from our own experiences, which means we have to do some translation work. It is probably hard to relate to earning €10,000 a month for someone who lives in a place where that is twice the yearly salary or, for someone who earns 10M a year. What I find is that people compare some of the things I say in relation to their own conditions, without doing the translation, where for example someone will say "I would be happy earning the 3000 a month" because it is a yearly salary where they are, but they have no experience of living life in Finland.
Do the work.
Anyway.
The answer my client gave was exactly what I expected them to do; stereotype based on their opinion about what the €10,000 earner would have. For instance, a large, modern house with lake views, a hybrid 4WD or higher model Tesla, and brand name clothing.
This is interesting, because the stereotype isn't necessarily based on the reality, but it is based on the conditioned characterization of the persona, and then what we would do if we had that kind of money. However, I brought up an example of a friend from about 18 years ago who was earning €8000 a month (13,000 in today's value), was renting a small apartment, had no car, and by the end of the month needed friends to buy him food until payday. The reason was that in a weekend, he could drink around €2000 worth with his friends, investing nothing. At the time, he was earning almost 5x more than I was a month.
There is this expectation that people who earn well, spend well, but that isn't the case at all, especially those who earn well easily. Making money doesn't automatically mean that someone is good with money, which we see time and time again with sports stars, who go from making tens of thousands or more a week, to being destitute and declaring bankruptcy in the space of a few years after their sporting career ends.
When we think "what we would do" if we earned more money, we make a lot of assumptions that in general, we will use it well, not waste it. For example, I might think that if my salary doubled, I would keep my current lifestyle the same and put the majority of the difference onto the mortgage so that I could knock it out and be debt free in a handful of years, instead of a couple decades. I would then invest the rest into generative vehicles to build up a portfolio, so that in the future, I would be debt free and have a significant income coming in passively.
What are the chances?
Slim.
While I might have the knowledge and hold the ideals, the reality is that I am unlikely to behave as I would want to behave once I was in that situation. There is a massive difference between knowing and doing, but there is also a massive difference between thinking we know what it is like to live in certain conditions, and actually having the experience of being in those conditions. Most of us are earning near the average, so we don't know what it is like to consistently earn 3x as much, so we don't know how we would actually behave if we did.
It is important to recognize that our judgement of our own behavior is not as good as we might think, especially when we are predicting how we are going to act under conditions we have not experienced. The amount of people who say, "If I won the lottery, I would..." should be tempered by all the stories of people who did win the lottery, and then lost spent it all.
It is obvious that we have preconceived ideas about others, but we also make assumptions about ourselves, because we think that we know ourselves. Yet, we might be the worst judges of character when it comes to our own behaviors, because not only are we overly soft, we also look to protect our ego, to make us feel better about ourselves in our own eyes.
Stereotypes are stereotypes for a reason, but they do change over time, so we have to be careful that the heuristic we are using to make our judgements, is still valid for the moment. And similarly, we have to also come to terms with the fact that we are likely part of that stereotype also, meaning that we will behave predictably according to our conditions. And, there are many factors that go into this, including our cultural programming.
It is very hard to significantly change our own behaviors for the better, because it feels "right" to do what we have always done. So, we fall back on our defaults, maintaining a status quo, getting average results. When my client visualized a person earning 3x the average, he was betraying his conditioning, as we all would. Perhaps someone who earned €10,000 a month or more, would have a different answer, and rather than focusing on a house and car, they looked at the work it took to have what they have instead.
We all have our own perspectives.
There is what we think we would do.
And there is what we actually do.
A 3x salary sounds nice.
Taraz
[ Gen1: Hive ]