Debra Schwartz is a marriage and family therapist in California. She once ran a housecleaning company in Seattle, but when she sold the business, instead of investing the proceeds, she used most of the money to go to graduate school and buy a house. Today she works for a nonprofit agency and makes a fifth of what she previously made, but she doesn't regret the decision.
"I've always chosen freedom over money," she says.
'No money, good karma'
Schwartz is what I call an Idealist, one of the eight money archetypes defined in my new book, "It's Not About the Money." An Idealist is more likely to do such things as shop at Whole Foods, drive a Prius, buy carbon offsets or invest in socially screened mutual funds, or all of the above.
Quiz: What's your money personality?
More than any other archetype, Idealists are against money: They place the greatest value on creativity, compassion, social justice and spiritual growth, and their earning, spending, giving and investing decisions are influenced largely by these ideals.
If you hate money, however, you often wind up with too little of it. And that, in turn, can create conflict, as you need to spend more energy pursuing something you don't really want in the first place. (Later, I'll give you some tips for bringing your financial life in line with your ideals so you can achieve financial freedom.)
Sarah May Bates, one Idealist I know, is a senior art director at an advertising agency. She recently changed her stock holdings and withdrew from her 401(k) plan when she discovered some of her investments had ties to genocide.
If you could change one thing. . .
Another, Sage Knight, struggles with charging for her work as a spiritual counselor who organizes women's circles. "When I take care of myself, I'm bad" -- that's the line that runs through Knight's head when she thinks about making more money.
And some of her tough money decisions from decades ago remain a source of pain.
'I remember being told I was selfish'
Musician Eric Lynn thinks money isn't a reason for getting up in the morning but is unavoidable.
"Having to deal with it is a pain in the ass," Lynn says. "But if you don't deal with it, then it deals with you."
Idealists would much rather focus on their creative, spiritual or social endeavors than on money.
You're probably an Idealist if:
Your investments are primarily in small businesses,
individual pieces of real estate, art or music collections, or socially screened mutual funds.
You are more likely to give $5 to a person on the street than to donate to an organized charity.
Your primary vocation is artist, musician or entertainer, or you work for a nonprofit.
You rely on other people, from your past or present, for much of your financial support.
You don't earn enough money to file a tax return.
Idealists often feel like outsiders in middle- or upper-class business and social circles, and they may feel shame and embarrassment regarding financial matters.
When they think about money, they have a visceral negative reaction, with thoughts like: "Money is the root of all evil." "I'd be a sellout if I had more money." "Money isn't happiness; it's what's in the way of happiness." "The system is corrupt. Corporations and government are immoral."
Many of us have had these sentiments at different times. And for most of us, keeping on top of our finances is hard work and not always interesting. But for Idealists, finances are particularly challenging. They'd rather focus their intelligence and passion elsewhere.
For some Idealists, the focus on doing what they love and believe in leads to an abundant livelihood. Still other Idealists have no problem at all operating at the highest levels of the financial world. Musicians Bono and Jay-Z, while commanding economic empires, have built their fortunes by focusing on their art. They now use their plentiful resources to advance the causes they are passionate about, whether it's ending poverty in Africa (for Bono) or combating a global water shortage (for Jay-Z).
Just a few years back, Idealists were considered to be on the fringe. But today, 93% of U.S. consumers are willing to base some of their purchases on "concern for issues such as the environment and social well-being," according to a 2007 report by The Hartman Group, a consumer-research firm.
Here's why: The generation that invented the motto "Don't trust anyone over 30" is now between 50 and 65 years old, squarely in the peak years of wealth and earnings power. Many have flourishing careers, and others are benefiting as their parents leave them a cumulative trillions of dollars in inheritances. These former flower children collectively have a lot more money than they ever dreamed they would back at Woodstock, but many still hold strong to their values, even when it comes to their investments.
Socially screened assets grew 18% from 2005 to 2007, compared with just 3% for all investment-management dollars, according to the Social Investment Forum Foundation. In the U.S., 11% of all assets under
professional management in the U.S. have some sort of social screening applied. In 1995, there were 55 socially screened mutual funds, with a total of $12 billion in assets. In 2007, their number had grown to 260 funds, with $202 billion in assets.
Here are the four most important steps that Idealists can take toward financial freedom:
1. Get help. Almost every Idealist I've met has trouble trying to track spending, figuring out how to get out of debt or setting up an investment program without some help. There's just too much aversion to dealing with money. But you don't have to manage your finances alone. If necessary, hire a bookkeeper or make a barter arrangement with a friend who is good with figures and tracking spending. Empower this person to point out your blind spots, set up automatic debt-repayment and savings programs or dole out the cash you can spend each month.
2. Charge what you're worth. Because Idealists have an aversion to money, they're often unwilling to charge a fair market price for their services. Go to Web sites like Salaries.com to find out what your peers are making -- and then raise your rates.
3. Give something away today. Take action to express your ideals in the world. Link up with other people who share your ideals, or donate your time or money. As Mohandas Gandhi said: "Be the change you want to see in the world."
4. Invest like the pros. Just because you want to make sure your 401(k) or other investment dollars aren't increasing global warming doesn't mean you have to roll the dice with your financial future. Check out the Social Investment Forum, Social Funds or my company, Abacus, for more information on top sustainable investment options.
Published Sept. 18, 2008
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