Money Gets Better with Age

When I told my wife I was writing this, she said "Do you really think people need to be reminded that it's good to make money?" I do. Too many people in my social milieu have internalized that it's uncool to want to make a lot of money. (But that’s for another post)

This is mostly me writing something I would have benefited from internalizing a few years ago. I've oscillated between viewing success simply in terms of making a boatload of money, then swinging all the way to acting as if money above a modest threshold would have very little utility. I've moved away from both worldviews, but the second has proven more wrong in surprising ways.

I told myself the comforting lie in my 20s that money's utility was highest while young. This was probably a rationalization for my abysmal savings rate, but also a reaction against being raised in a culture emphasizing financial stability. Nothing could be further from the truth.

When you're young and not in touch with yourself, you're less likely to invest excess money into a fulfilling life. I spent money on things that, in hindsight, weren't very fulfilling—mostly because mimesis dictated how I used discretionary income rather than any positive vision of how money could improve my life.

But as you learn what makes you happy - perhaps spending significant time outdoors, writing, or building things - money becomes increasingly powerful as a tool for enabling those activities. Dr. Gena Gorlin , a substacker I’ve been late to catch up on, sums it up in her post about money:

Money is liquid economic influence. One can do many amazing things with money, and the more creative and high-agency one is, the more one can do with it. More money means more ambitious projects. Money can fuel companies, political advocacy, art, and research. Money can be spent to perfect the furniture of one’s life in widening circles. Why wouldn’t a builder want lots of money? Money can be used, generally, to build, and more specifically, to build your own life, along many dimensions of that life.

This connects to another misplaced intuition. Right out of college, I optimized for money with the maturity you'd expect from a 21-year-old. I took a job everyone said would be mind-numbingly boring and a terrible temperamental fit because it paid 50% more than my peers made. I spent this money on things that made me miserable, then concluded money wasn't that important.

I now recognize this as a basic error of cognition. It’s my poor judgement, not the usefulness of money that should be apportioned all the blame. Even if you do know how to use money well, uses for money expand as you get older. What's "enough" for a single 25-year-old isn't sufficient to scale that lifestyle to support a family in your city of choice.

Moreover, being the top earner in your peer group in your 20s is, in absolute terms, insignificant. The difference between $110k and $80k might mean a bigger TV. The difference between millions in disposable income and a typical professional salary is the ability to completely redesign your life. The hedonic treadmill is no match for high agency. I know wealthy people who used excess money to construct fundamentally lower-stress, higher-joy lives. They spend time on meaningful projects rather than projects that pay bills. The utility jump from "comfortable" to "wealthy" is probably enormous. If you see my writing a post every day and spending more time on Substack, you won’t have to wonder why.

What does all this point to?

1. Money is good. It’s utility doesn’t diminish nearly as fast as pop psychology will have you believe. And it probably gets better with age. It’s worth thinking really hard before making career decisions that will foreclose on the possibility of higher incomes or picking career paths that have a hard ceiling.

2.Compounding is real. It’s spending that needs justification, not saving.

3. But money is not the only thing that compounds. Any early career delta in annual salary and thus excess savings is worth contextualizing. An extra $20,000 in annual savings compounded at 5% for 20 years, is an extra $50,000. Good but not life-changing. If the cost of that extra 20,000 was sticking to a career path despite poor fit, it’s very unlikely to be worth the trade, certainly in utility terms, but most likely in monetary terms too. More on that in my next post….