The World’s Shortest Course on Your Money

How much to prioritize making it, spending it, investing it, or donating it.

Posted Nov 14, 2018

 Picture of Money/Flickr
Source: Picture of Money/Flickr

Eight months ago, I wrote a post of the same title, but there’s enough that’s improved that I wanted to write this.

Books could be, indeed have been written about each of this article’s topics. But the older I get, the more I believe that brevity yields more good even if attacked as reductionistic. Similarly, I believe that much benefit accrues from allowing the subjective into my recommendations, even though it often results in at least a few readers clamoring, “Where’s the data!”

The role of money in your life

Prioritizing dollars beyond a bare middle income is, to me, unwise. Chances are that the compromises you’ll have to make will outweigh the improvement to your lifestyle. Usually, to make more than middle-income, one must do less enjoyable work; otherwise, the employer wouldn’t need to pay so much. Or the work is ethically dubious.  Or it back-seats societal contribution.

Earning it

Of course, there are many ways to earn a living that offer good income, that many people find rewarding, are contributory, without undue ethical challenges, are offshore- and are automation-resistant. A long list is beyond the scope of this article. For that, you might read this post in which I tout 14, or my book, Careers for Dummies, which profiles 340. Here, I just offer three favorites:

Program evaluator. Most innovative programs funded by the government or a nonprofit require the program to be evaluated. While yes, some lead evaluators, especially on big projects, may have a Ph.D., that may not be necessary for many evaluator jobs. The career tends to be rewarding because you get to see innovation up-close and help determine if it’s worth continued funding, cutting, or revision. More info.

Optometrist: You help most patients, hours are regular, and unlike an MD, which usually requires an expensive decade of school post-bachelors, it’s only four years. And while measuring refraction (prescription for glasses and contact lenses) may be automatable, much of what optometrists do can’t. More info.

Government jobs. Of course, this refers not to a specific career but to a whole sector of employment. Government jobs exist in myriad careers, not surprising given that government is America’s largest employer: federal, state, local, and interstitial agencies. Perhaps more surprising, government tends to be more generous, not just in job security, benefits, vacation days, and holidays, but in pay. Unless you have a doctorate or other advanced professional degree, federal pay exceeds that for equivalent work in the private sector.

Spending it

For most people, the three biggest expenses are housing, higher education, and cars. For each, you can derive most of the benefit of more costly options while saving a fortune, therefore yielding you more degrees of freedom in choosing your career and time you can devote to volunteering efforts and to pleasure.

Housing. Living in a low-cost locale likely imposes smaller risk to safety or to how your children turn out that is often assumed. For example, in a dicey (not war-zone) neighborhood, your risk of assault or in-home invasion is likely quite small as long as you take reasonable precautions such as locking doors and windows and not strolling around alone late at night. The risk in a safer neighborhood is likely only modestly lower, while the cost difference is with 100% certitude, great. Similarly, while we like to place lots of faith in “good schools” causing better children, there’s correlation/confusion: kids in schools serving high-socioeconomic populations turn out better mainly because of who their parents are, genetically and environmentally. A parent who selects a reasonable public school even in a modest-socioeconomic neighborhood, occasionally requests a particularly well-suited teacher, encourages their child's good study and homework habits and good friendships will probably have a child who turns out as well as does a kid in a school in an expensive locale.

Higher education. Similarly, there’s little solid data to support that, after controlling for student quality, attending an expensive college is worth it, unless getting a helluva financial aid deal.  Of course, attending a Harvard of Stanford yields brand-name benefit and the rubbing-off effect of attending school with “the best and brightest.” But that should be weighed not only against the cost but against the fact that stress and burnout are more likely when most peers are brilliant and driven and the difficulty of obtaining a career- and grad-school-enhancing grade-point average, all of which can mitigate against a student participating in the often very enriching extracurricular activities, not to mention having fun, which does count. I might not try to convince a child admitted to Harvard or Stanford to turn it down for community college, but would if the student’s options were expensive but less prestigious private colleges, especially the large research-oriented ones, for example, NYU, Syracuse, Northwestern, Tulane, and USC, as well as the many small, low-prestige, struggling liberal arts colleges.

Community college, especially while living at home is underrated. Undergraduate teaching is, on average, better than at universities because faculty is hired and promoted mainly on teaching ability, while at universities, Priority One is research productivity, which often is inversely correlated with undergraduate teaching quality. Also, many freshmen, away from home for the first time and crammed into dorms with many others are too subject to unwise sex, drugs, and rock-n-roll, hence the low freshman-to-sophomore retention rate and, among those who remain, a less salubrious experience academically and personally than if spending their first two college years at a community college and living at home. For the bright child, there’s sufficient academic rigor at many community colleges: choosing professors known for rigor, honors programs, and extracurriculars that tend to attract bright students: for example, student newspaper and student government.

Vehicles. Over a lifetime, buying 5-8-year-old Toyotas and driving them for the decade ‘til they become unreliable compared with buying brand new cars of less reliable brands saves a true fortune while imposing little liability other than some shallow status.

Investing it

I recommend living a not-very materialistic lifestyle and investing the rest. I believe that the security derived well compensates for the lack of "stuff." Satisfaction in life is far more likely to come from good work, creative outlet, and relationships than from fancy restaurants, jewelry, expensive vacations, etc. You cannot spend your way to contentment.

I am not a licensed financial advisor, so take the following with grains of salt. A wise investment strategy is to review the many options at, perhaps with your financial advisor or one from Vanguard. (They are not on commission.) Vanguard’s commissions are dramatically lower than at other firms. You’ll probably be advised to first fully fund any tax-advantaged options such as 401K plan, Roth IRA, and to diversify by investing in one of Vanguard's many mutual funds. That gives you easy, low-cost diversification and an investment portfolio that matches your risk tolerance.

Donating it

I believe in donating to causes likely to yield big ripple effect that aren’t well-funded, and where administrative costs are low. For example, for five years now, through the Society for Neuroscience, I’ve funded an annual prize for the best dissertation on the biological basis of reasoning. It’s not a popular area yet holds great potential for improving humankind, as long as ethics remain primary. Other options are to fund a small, local underfunded nonprofit you sense is doing work that will make a big difference. I tend to avoid large nonprofits because of their high administrative costs and because the incremental value of my donation is small.

The takeaway

I believe that this may be one of my more important articles, central to the life-well-led. Choosing and performing in a career without undue emphasis on the pecuniary, spending wisely in the big 3 of housing, higher education, and vehicles, investing simply but prudently, and donating for maximum impact, can make the difference between an ordinary and extraordinary life.

On YouTube, I give a 22-minute talk that expands on this post.