It’s ironic: Money, the great enabler of freedom, can also be a terrible prison. There are the limitations of money you don’t have, of course, but much worse are the anxieties induced by money you’ve grown accustomed to and now desperately want to keep. Still, even in this latter category, there are differences.
Naturally, no one wants to give back the nice TV they bought with their hard-earned money, let alone see their investment portfolio drop by 20%. The most pernicious form of this loss aversion, however, is money we’ve been promised and are clamoring for to finally arrive: income.
A salary is income, of course, and if you’ve come to 100% rely on your company to provide yours, you might one day be in for a rude awakening. But a job is just a job, and so even if the layoff stings, sooner or later, you’ll find another one.
What about income you’ve generated yourself? Revenue created from your own business is one hell of a drug. You make it to $50,000, $100,000, $200,000 in a given year, and immediately, you feel on the hook for repeating the result. When your profit is your livelihood, it becomes nearly impossible to make unprofitable decisions.
If you want to see this dynamic wreak havoc at scale, look no further than your favorite company’s latest earnings call. Quarter after quarter, it’s “eke out more money before the bell,” and five years later, what used to be a great product has become an ugly but expensive, inconvenient necessity.
On Wall Street, the joke is extra sad because instead of people’s livelihoods, most of the profit goes into stock buybacks and C-suite pay packages. But even for an individual with ten grand in earnings to spare, the truth remains the same: Sometimes, unprofitable decisions are the only ones that work — and we should make them when we can.
When I quit a high-paying gig in late 2020 to write my first proper book, that was a highly unprofitable decision. It did, however, teach me a priceless lesson: I want to be a writer of books. The only way to find the path with more meaning was to step off the path of profit, at least intermittently.
In the long run, how you make your money matters more than how much you make. Take unprofitable decisions until you find the right financial track, and unlike public companies or anxious entrepreneurs, you’ll never have to look over your shoulder when committing to the next great thing.
