For almost 15 years, I worked in the finance industry. The people I worked with had a number of things in common: a taste for Gucci loafers; a predilection for the $39 Lever House breakfast. And we all believed in a kind of holy grail. We referred to it as The Number.
Everyone in finance had their own individual number—the amount of money we had to have in the bank before we could quit our jobs and spend the rest of our lives traveling the world or tinkering with entrepreneurial ideas or spending time with our kids or otherwise devoting ourselves to what we really wanted to do. The Number was a silver bullet for all the problems in our lives. It was what would make all the grueling hours worth it.
I believed in the Number for a long time. I always thought that I was just a couple zeroes from achieving a personal safety net that would allow me to finally live worry-free. But then I stopped—because I realized that The Number was a lazy shortcut that allowed me to avoid evaluating the meaning of my own life.
A tricky calculation
Here’s how people in finance figure out their number. First, they figure out the amount of money they’d spend annually in their dream state of retirement. Then, they divide that number by the annual investment return they can expect on all of their savings and investments.
So, to keep the math simple, if you could live your dream life on $150,000 a year, and you assume cautious investment returns of 2% annually, your number is $7.5 million. If you think your investments can match the long-term average of the S&P 500 (8%), then you’d need $1.9 million before you can retire. You can also adjust these calculations to take taxes into account, and to include predictable life events like having a wedding, buying a home and paying for your children’s college tuition.
Personally, I had my Number, and while I won’t specify it here, I will say that it changed over the years as I added and dropped zeroes. But eventually I dropped the entire concept, because it has some inherent flaws.
First, the Number is impossible to calculate accurately. That’s because it requires you to make too many assumptions about what will happen in your life.
In retrospect, I think what made me cling to the idea of the Number was that it gave me the illusion of control. The idea of the Number was firmly entrenched among people in their 20s and 30s. And it was certainly logical to use financial planning to help us achieve our goals. But the reality is that many of us couldn’t actually predict whether—or when—we’d get married, since that depends on meeting the right person first. We couldn’t say with certainty whether we’d have children, or how many we’d have. In retrospect, I think what made me cling to the idea of the Number was that it gave me the illusion of control. Plugging my aspirations into a spreadsheet was a way to assure myself that my life was on track—or at least, that it soon would be.
Another problem with the Number is that it can lead you down a dangerous path. It’s intended to be strictly a financial tool. But for me it became much more of a scoreboard—a proxy for success and a race to see who could run it up the most.
Once I fell into this way of thinking, my Number expanded rapidly. I noticed myself gravitating towards material status markers. For example, I knew nothing about watches. But I started to envy all the newly minted VPs and directors with oversized Panerai watches on their wrists. I wanted one too—no matter that they were worth a few months’ rent. Soon I compared everything: engagement rings, apartments, summer vacation destinations. I was addicted to what entrepreneur Ben Casnocha calls “Status Cocaine.”
My experience was in keeping with research that has shown that people who seek extrinsic goals, such as money, recognition or status, tend to have lower self-esteem, greater drug use, and (wait for it) more television consumption. Worse still, relationships with friends and romantic partners suffer when people focus on fancy watches and other status markers. Interactions tend to be infused with jealousy. And so, despite having a great career, family, and group of friends, the Number left me feeling grossly inadequate and insecure.
Thinking constantly about how much money you need to live the life you want deprives you from enjoying the present moment. But the Number’s greatest flaw is its singular focus. Thinking constantly about how much money you need to live the life you want deprives you from enjoying the present moment. Even worse, it sets you up for a deferred life plan. I was constantly saying to myself, “When I reach the Number, then I will be happy and my life will begin.”
This way of thinking manifested itself in my behaviors. I would be eating an appetizer while thinking about dessert. Or I’d be on vacation, ignoring the beach and palm trees, already planning my next destination.
All this added up to make me pretty dissatisfied, even as I kept getting closer to the Number I thought wanted. And the more I thought about it, the more I realized that I’d been thinking about money and success all wrong.
When I stopped to reflect on the things that actually contributed to my happiness, they included the flexibility to be with my wife and daughter, the need for quiet time (such as being completely disconnected from the internet), wearing Air Maxes and skinny jeans each day instead of single-pleated chinos, and having the time for exercise, meditation, and journaling—activities that nourished my body, mind and soul.
I needed a baseline amount of money to provide for my family and pay my gym membership dues and do other important, everyday things. But I didn’t want to focus solely on saving for an extraordinary, distant future—instead I wanted to savor the precious moments with my growing family. I needed a fulfilling, happy life now.
These days, I’ve left finance behind for the life of an entrepreneur. I’m aware this path has a high rate of failure, and I’m striving to be smart about money. But while I still value financial stability, I now try to strike a balance between prudence and unnecessary worry. When it comes to the future, there are some things I can predict—my daughter going to college, for example—and some things I can’t. So when I look at my bank account these days, I’m not expecting to get affirmation about my life choices or a reflection of my self-worth. I understand that money won’t do that work for me. I just see numbers now.
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