Something strange happened last weekend.
My roommate and I went to a house party thrown by some new grads, and when we arrived I heard someone say, “Stephen must have invited some of his older work friends.”
I am not only old. I am so old that I must also be a work friend.
Apparently twenty-five is old in San Francisco.
Getting old certainly has its disadvantages. For one, I’ve learned that I’m a lot worse at beer pong than I used to be, and I wasn’t that good to begin with. But there are also some good things about getting old. Like the fact that today I have a much healthier relationship with money than I did when I first moved here as a new grad. I faced the typical challenges — finding an apartment, working a real job, making friends — but one challenge I never saw coming was how to think about money.
As I reflect on the beer pong champions of last weekend, many of whom are starting at cushy tech jobs like mine, I can only imagine that some of them will come to face a similar challenge. Insofar as my experience may be helpful to someone else, I’d like to share my story and my strategies for maintaining a healthy relationship with money. This is the essay I wish I could have read when I moved to San Francisco.
Before I dive into things, I want to offer a disclaimer. Money is an important topic, and it is also a sensitive one. Some may find my thoughts useful but I realize that others might find them inappropriate or insular, as if I think that my financial “problems” — which, as I will come to explain, are minor — exemplify those faced by everyone. I do not. On the contrary, I understand that my situation is rare and privileged, and despite this I believe that some people might benefit from hearing my story. I do not proclaim to write the essay on money. I merely wish to write what I know.
What do I know? I know that I’m new at this. Up until the time I moved here I spent almost no time thinking about money, and was therefore perhaps unprepared to live in one of the world’s most expensive cities. Looking back, I never had much reason to concern myself with finances. I grew up in the blue-collar town of Springfield, Ohio where the median household income is $31,327, less than half of San Francisco’s $77,734. As a kid, my income came from my allowance ($2 a week) and from picking up walnuts that had fallen from the tree in our yard (a penny apiece), and 100% of it went toward Pokémon cards.
I went to a public high school in a district where 84% of students qualify for free or reduced lunch. (A family of four may qualify for free or reduced lunch if their household income is less than $44,123.) Springfield’s economy is a shadow of what it once was. There is little money to spend and nothing to spend it on, so there is no culture of spending. My family moved to Springfield largely for this reason. Springfield is my mom’s hometown and my dad grew up in another blue-collar Ohio town. Having later lived in affluent suburbs of Los Angeles and Pittsburgh, they wanted to raise my sister and me in a town with, to put it in my mom’s words, “less social stratification and conspicuous consumption.” I think they succeeded. In Springfield, money played little role in determining friendships. I was fortunate to have friends from all kinds of backgrounds. We amused ourselves with boardgames and we rarely bought anything. One exception to this stands out in my mind. In the senior year of high school my Xbox broke so my friend and I took it to the store. When we learned that it was unfixable, I bought a refurbished Xbox on the spot. My ability to spend $150 at will left my friend stunned.
After high school I attended Emory University, which was in many ways the opposite of my hometown. Emory was expensive. The total cost of my education was over $200,000. Not surprisingly, expensive schools like Emory can mostly be afforded by rich families. According to the New York Times, “The median family income of a student from Emory is $139,800, and 58% come from the top 20 percent.” That means that the median income of an Emory family is roughly 4.5 times that of a Springfield family.
But despite the vast differences between Emory and my hometown, I did not have to think about money very often while in school, for two reasons. First, I was in an extremely privileged position in that my family paid for nearly everything. I earned a scholarship and worked two on-campus jobs but they took care of the rest. Second, there was hardly a culture of spending at Emory, either, at least among the people I knew. We studied and partied. What else was there to buy aside from textbooks and beer?
Like many colleges Emory was a bubble, and I spent my time there blissfully unconcerned with finances. It was during my summer internships that I first began to pay attention to money. I spent my first summer doing computer science research at a college in Michigan and received a stipend for $5,000, an amount I had trouble understanding. Two years later, when Microsoft paid me $20,100 for a three-month internship, my sense of scale went out the window. I made more that summer than many Springfield families make in a year.
That summer at Microsoft brought a sense of unreality, but it also brought a taste of adulthood. It was my first time buying my own groceries and paying my own rent. In college I worked as a resident advisor in a freshman dorm, so I had no experience living on my own. I didn’t know how to think about money so I spent as little as possible. I lived in an extended-stay hotel on the Microsoft campus — the cheapest housing option available — and ate oatmeal and took the bus everywhere. I read books on investing and, at 21 years old, calculated how much money I would need to retire. I had never thought about money before, but once I started I couldn’t stop.
Moving to San Francisco the following year only amplified this feeling. My rent tripled and I joined a startup that paid half of what Microsoft had offered. I went to parties where people talked openly about their financial situations, which made matters worse. I became overwhelmed.
San Francisco is lovely but it can be a nasty place to answer your financial wake-up call. With sky-high tech salaries on one hand and the nation’s largest homeless population per-capita on the other, it epitomizes lopsidedness. To make matters worse, many of the rich people here are young, have never lived anywhere else, and have no experience thinking about or managing money. For young tech workers like myself, it is the blind leading the blind.
It is therefore not surprising that upon moving to San Francisco I found myself in an unhealthy relationship with money. This was generally characterized by a pervasive nervousness, a tendency to look over my shoulder. I began to compare myself to others using yardsticks that I did not understand and that I’d never cared about before: salaries, stock options, job titles, rent checks. It is a little disturbing how easily all of this comes if you let it.
This constant anxiety came to form the backdrop of my life here. It was like a song I couldn’t get out of my head, and after a while I forgot that it was playing at all. I thought about my salary nonstop and hated myself for taking a lower-paying job even though I liked what I was doing and the friends I had made. During performance reviews I would feel a great sense of entitlement and become upset if a salary negotiation didn’t go my way. I interviewed at other companies merely because I wanted to know how much they’d pay me, as if an offer from Google or Facebook was the final word on what I was worth.
It wasn’t that I needed more money. I was making enough to live comfortably, especially since my company provided free meals and a long list of other perks. (Yes, tech companies are really like that.) The honest reason that I cared about earning more was because I wanted to elevate my status. I know how ridiculous this sounds, and I can only imagine the looks my Springfield friends would give me if they heard me say this. But this is how I felt.
I lived this way for about two years. Slowly I began to notice cracks in the way I was thinking. Some of my friends were susceptible to the same neuroses I was — it’s a lot easier to notice them in others than in yourself — and I witnessed the toll it took on them. I gradually realized I was acting the same way.
I also found myself doing irrational things. My favorite example of this was my daily habit of checking the stock market. Back at Microsoft I had gotten into investing and picked up the bad habit of checking my accounts multiple times a day. Eventually, I realized that regardless of how the market had performed, the act of checking my accounts would leave me more anxious than I had been before checking. If my stocks went up I’d worry that they were overvalued and that I should sell. If they went down I’d be upset because I was losing money. In both cases I would do absolutely nothing; a stock could go up or down by 20% in a single session and I wouldn’t change my position. I was disciplined enough not to give in to my emotions, but I still checked the market several times a day. And the only thing I accomplished was stressing myself out.
As these patterns emerged I adjusted my routine to encourage more rational habits. If I wasn’t going to do anything after checking the market, why bother? I stopped checking my stocks altogether and removed the app from my phone. I also got rid of my credit-card apps because staring at my account balances achieved nothing. I was pumping financial data into my brain and getting zero value out of it, so I turned off the tap.
By recognizing how I felt when I thought about money, I was able to realize a simple fact: thinking about money made me anxious. Why, then, would I think about money more than I needed to? If this seems like the most obvious thing in the world to you then you have a much healthier relationship with money than I did. Looking back, I’m surprised at how revelatory this felt at the time, and how great its impact on my happiness has been.
This simple idea is the first of two that I wish to convey:
Recognize how thinking about money makes you feel.
By being mindful of how thinking about money makes us feel, we can better organize our lives around financial decisions, and be better prepared to handle our emotions when those decisions need to be made.
This has been especially helpful for me because since graduating from college, it seems that I can’t go a day without making a financial decision. Fortunately, this doesn’t mean that every financial decision gives me anxiety. Some purchases don’t stress me out at all while others keep me up at night. My mattress is the single most expensive purchase I have ever made and I have never regretted it for a moment. I adore my bed so much that I am now a mattress evangelist. Incidentally, Drake and I are in the same boat here. “I only love my bed and my momma, I’m sorry,” he raps in his new song “God’s Plan.”
There are also purchases I would like to take back. I bought a set of All-Clad pots and pans in my first week here because I assumed that you should always buy the nicest version of something you can. In reality this purchase made little sense because the only things I had ever cooked were oatmeal and pancakes, and not much has changed since then. I would have been better off buying one good pan and saving the rest of my money.
Whether we feel great about a purchase or feel buyer’s remorse is determined by the value we perceive. These feelings apply to purchases both large and small. I buy a fancy black-and-white cookie from the same café every weekend because I derive a ton of joy from that cookie. However, I have stopped drinking cappuccinos because I don’t think they’re worth the premium over regular coffee. These two indulgences cost about the same, but to me one is worth much more than the other.
The more time I’ve spent in San Francisco, the more comfortable I’ve become making my own value judgments. This brings me to the second idea I’d like to share:
Develop your own value system.
Developing your own value system is useful because it prevents you from conflating cost with value. This point is worth making on its own: cost is a poor heuristic for value. This is intuitive to anyone who has walked around a store and wondered, “Who would pay that for this?” Still, it is one thing to understand this intuition and another to follow it. We flock to sales even though we generally understand that sales are the retailer’s way of telling us that something was overpriced to begin with. For some of us, looking at the price tag is not the last thing we do but the first thing, because an item’s price helps us decide how much we should value it. Backward thinking like this makes us susceptible to all kinds of advertising and pricing schemes, and can lead us to overvalue what other people think. By contrast, if we develop our own value systems, the retailer’s enticing sales and the opinions of others will mean less to us. If the sweater is ugly, who cares if it’s 50% off?
Last year a friend of mine proposed to his girlfriend with a gorgeous and expensive engagement ring. But when it came time to buy his own wedding band he decided that having a flashy ring didn’t matter to him. He ended up buying one on Amazon for $8. To me, this is indicative of a well developed value system. It’s not that he’s cheap — he spent a fortune on his wife’s engagement ring and lives in a fancy apartment downtown. It’s just that he knows what matters to him.
Likewise, I find that having my own value system helps me determine what matters to me. This applies to more than finances. Over the past few years I’ve gotten a better sense of which activities are worth my time and which aren’t. I now structure my free time around volunteering, writing, reading, attending dance classes, and spending time with close friends because these things are important to me. Recognizing which activities align with my value system helps me fit more value into every day. Conveniently, developing a value system has been a virtuous cycle. The more energy I dedicate to activities that matter, the less I worry about money; the less I worry about money, the more energy I have to dedicate to activities that matter.
And that’s all I’ve got: just two simple ideas. Recognize how thinking about money makes you feel and develop your own value system. My relationship with money is healthier as a result of following these two strategies, and I hope that others might benefit from them.
Obviously, and as I acknowledged earlier, my situation is not representative of everyone else’s. I cannot begin to prescribe what certain people need, especially those living in poverty or near-poverty. I can only say what has worked for me and generalize from there. I happen to believe that taking a high-level view of one’s relationship with money could benefit anyone, but this is only a guess. After all, it is far easier for someone like me to stop thinking about money and reevaluate spending patterns than it is for someone whose financial situation leaves them no choice.
I do, however, feel comfortable projecting my beliefs onto people in a financial situation similar to my own. I believe the importance of developing a healthy relationship with money does not decrease as someone accumulates wealth, but increases. The stakes are higher for wealthy people because their potential impact is greater. I want the richest people in this country to recognize how thinking about money makes them feel and develop meaningful value systems. Why? Because I want them to pay their fair share of taxes and support causes they believe in, and I don’t think they’ll do these things if they’re focused on hoarding money or outspending their peers.
Conventional wisdom holds that the richest people are those who have worked the longest, but in cities like San Francisco, Seattle, and New York, this idea is getting turned on its head. There are recent college graduates earning six-figure salaries, plus equity, plus bonuses. The new grads are becoming the new rich.
I expect that many of them will answer their financial wake-up calls in the months after graduation, and that this may leave them feeling lost and untethered, like it did me. If so, perhaps my advice will be of some use, even if my best beer pong days are behind me.