Your mid-20s is a financially confusing time.
Confusion leads to anxiety, especially when combined with the insecurity and lack of self-awareness that 20-somethings have. Many would argue that this is the age at which financial uncertainty is at its zenith.
But it isn’t just 20-somethings who experience these feelings. All phases of life come with their own distinct types of money-induced worry.
The questions never end
When you’re a child, you probably don’t realise the direct effect that money is having on your life. You may wonder why you have to share a bedroom with your siblings or why you can’t go to Legoland or why you only get one present for Christmas, but it’s unlikely that this is linked to money – you only feel the effects.
In your teenage years, most people basically don’t have any (money), unless you worked a lot or managed to acquire handouts from Mummy and Daddy. Despite this, anxiety starts to creep in. You can’t help noticing who had the nicest and most-expensive clothes on non-uniform days at school. You can’t help comparing your battered, boring trainers to your friend’s cool, new ones. University, or life post-school, is much the same. Everyone is living cheap.
After this period, things start to diverge. Some go straight into corporate jobs earning £50,000+. Some in highly-competitive industries embark on a series of unpaid internships. Some elect to travel. Some continue with education, in the form of a master’s degree and even a PhD. The more entrepreneurial start something on their own or join a startup.
This means that by the time you find yourself in your mid-20s, the people around you are in very different financial situations, with very different financial worries. Some are thinking of if they can afford to pay their rent this month whilst others are worried that they’ll only be able to buy a flat in zone 4, rather than zone 2.
Despite this, there are common doubts, most of which are the result of not knowing exactly what to do with your life (financial uncertainty is a subset of general uncertainty). It’s at this age that people start to wonder: am I saving enough? do I need to invest? what should I invest in? how much risk should I take? should I be saving for a house? should I take some time off to travel? should I move to a higher-paying industry? should I try and start a business?
Anxiety in this phase is based on the above questions.
When you’re older, you know what you have to do (and should have done), the question is how to do it. How can I pay my mortgage this month? Do I have enough to feed my kids? When will I have to start taking care of Mum and Dad? The stress isn’t due to uncertainty, it’s based on responsibility.
From there you worry about when you can relinquish those responsibilities. Are my kids financially stable? When can I retire? How luxurious can my retirement be? The doubts here centre on the question: have I done enough?
According to my knowledge of psychology acquired on the internet and in books that now makes me an expert, the core of who you are is determined by the age of around 6. The consequences of early experiences manifest themselves for the rest of your life, unless you actively fight against them.
For example, if you grow up poor, you learn that money is the cause of most of your problems. That life would be wonderful if you just had lots and lots of wonderful, magical money. This can lead to constant money anxiety; to obsession with making money and being financially secure; this is something you’ve been craving your whole life. It can lead to depression when you get lots of money and still find yourself dissatisfied. Or to struggles with self doubt when you feel yourself questioning – do I deserve this?
Your initial relationship with money is determined by how finances were dealt with in childhood. Complexes are built from an early age. If your parents used money for emotional blackmail, or for control, you can’t help having a heightened sense of financial anxiety.
Those who grew up wealthy face a slightly different challenge. Some of the skills and attributes required to make money do not lend themselves to being a good parent. There’s a fairly good chance your parents are competitive, materialistic, and less emotional than average. You might have learned that having nice things was very very important; you must “move up in the world”, otherwise you’re a failure.
This manifests itself in the form of subtle pressure applied by friends and family. You’re expected to go to (a good) university, get a high-paying job, and live a certain life. One with skiing and nice houses and private schools.
This is a good problem to have. People rise to the level of expectations set by those around them. And growing up wealthy gives you innumerable advantages. But there’s a lot of luck in life. More than we think. Your parents, friends, those you went to school with might just get this luck rather than you. This can be tough to ingest.
This obsession with money and financial security and “making it” are sad, unnatural consequences of modern society. People neglect their true talents and desires just to make money. To try and get rich instead of doing what they know deep down they’re supposed to be doing.
And they usually don’t. Get rich. Because life is brutally unfair and random and complicated. People don’t always get what they deserve or desperately want. This is particularly disheartening if you live in a society which emphasises individualism. In societies in which, supposedly – there is this illusion that – anyone can “make it” or “get rich” as long as you work hard and keep your head down, face the front and make sure your shoelaces are tied. As Alain de Botton alludes to in Status Anxiety, feeling like you can do anything is amazing until you end up doing not all that much.
In this economically-driven, market-based society, people are constantly worrying if they have “enough”. And if their neighbour has more. Life viewed through this lens is a 0-sum game: I’m not happy unless I beat other people. So even if I get more, which should make my life more enjoyable, I could have lost in relative terms.
To “win”, either by beating those around you or by accumulating enough that you can stop playing, you have to be obsessive. You have to optimise. People turn life into a set of equations. Where can I get the highest wage for the lowest amount of effort? How can I earn the highest wage possible to decrease my time to retirement? Decisions are often financially-driven.
Financial anxiety comes from both being financially insecure, and feeling financially insecure.
No matter how much you have, you’ll always feel financially anxious unless you fix the latter part of that equation. Mentality is a bottleneck to your financial security.
But you need to work on your mental state as well, starting with the acknowledgement that money will not solve all your problems.
Only your money problems. In some ways having more money can be more stressful. More money = more to lose + more stress about what to do with it.
It’s difficult to have both components of the equation at the same time. The sad fact is that worrying about money makes you more financially driven and probably more financially secure.
The mental state required to get more is the opposite of the one required to be content with what you have.