Following excerpts adapted from the author’s book, The Uncomfortable Truth About Money: How to live with uncertainty and think for yourself, published by Harriman House
Money is a cage, you need a strategy to live within its confines.
Chaos was watching my mother slowly give way from the inside out, like a pear going bad when I was three, four, and five. Cancer does that.
Order was gaining self-reliance, whether it was learning how to cook eggs or scaling a cliff.
When I became a father, I realized creating order also meant learning to be good with money. Up until that moment, I thought people who focused too much on money were narrow, risk-averse souls who were missing out on life.
In fact, I can name the exact moment when I realized I had misjudged.
It was 1997. I was 29 and standing on a Brooklyn sidewalk holding the hand of my three-year-old son, Sasha, and watching a line of rotund rats lazily amble back and forth between the entrance of our building and a stack of leaking garbage.
The thought floated up:
Paul, this is not working, something needs to change, fast.
I didn’t want to raise my kids among rats. But to change apartments, I needed money that I didn’t have.
So began a long journey from that time to today.
This book takes those money lessons learned, really a series of frameworks, and makes them accessible for any reader who, like me years ago, has no clue how money works.
Many things matter more than money.
Money certainly isn’t everything, but it is something. You can’t get away from money, but having a decent understanding is hard because money often means several things at once. For instance:
Money is cash today and cash for some distant tomorrow, like old age, if we are lucky enough to experience old age.
Money is cash but also credit.
Money is a dollar but also a euro or a yen to someone else in a different country.
Money is for things you know you need, like food, and for things you may or may not need, like emergency medical care, and for things you don’t need but want, like a snazzy shirt.
Money is numbers and facts but also emotions and sensations.
We are all caged by money. It contains us sometimes physically and sometimes mentally.
Knowing the mechanics of how the money cage works helps distinguish logic from emotion and, in the process, keeps us calmer and facilitates better decisions.
Yes, it would be easier if there were simple answers. But the truth is money is a series of trade-offs without fixed, permanent answers.
People have been worrying about money for thousands of years and will continue to do so.
We think about sex a lot, and most thoughts are probably happy ones. But we might think about money even more and many of the thoughts will likely be anxious ones, that terrible sense of being short or worrying about being short.
Talking about money makes people uncomfortable.
People are happy to tell you where they were educated. I’m told they will send naked photos of themselves on dating sites. But no one wants to tell you how much money they have.
Most everyone is insecure about the topic.
If they have too little money, they feel uncomfortable, like it is their fault. If they have a lot, they worry you will resent them for it or ask them for some. Sometimes rich people don’t feel rich. Instead, they feel poor compared to other rich people to whom they compare themselves.
Few people know how money works, even though many are forced to behave in a certain way because of how much money they have, as any person who doesn’t have enough money can attest.
Your life is easier if you are fluent with money. The thing that got me away from those rats was, pure and simple, studying how money works. It’s a basic life skill that doesn’t require more than high-school math, but it’s still difficult to learn because money flits like the flame of a candle in value and form, and requires both big-picture understanding and micro, detail-level understanding. That’s the goal of this book—to share that understanding with you so you don’t have to learn from scratch, as I did, which, while rewarding, is time consuming.
This book focuses less on “what should be” than “what is,” meaning how the system is set up. I find parts of the system to be unfair. The system is nonetheless a reality to be understood and navigated.
I got my money education in real-time, out of necessity, piece by piece. Money understanding appears gradually and for me was always tied to specific experiences.
At the time of the rat encounter in Brooklyn, I was toiling in the lowest rungs of financial journalism, filing reports about the cotton market. I was married, with a child, and living on $38,000 in New York City.
During the day, I’d interact with traders who seemed to understand things about money that I didn’t.
Tony, I’d say, this is Paul from Dow Jones.
Tony traded in the cotton pit, an institution that dated to the 19th century and established the price for cotton at some point in the future when the crop matured.
I got his name from a list of sources passed down from reporter to reporter.
Bid, weather, said Tony, then slammed down the phone.
At first, I had no idea what he meant. Then I got it. Cotton prices were rising (“bid”) because bad weather, like a tornado, risked hurting the crop and reducing supply.
Flash forward 20 years. I was now an equity partner at the biggest hedge fund in the world. By this point, I’d not only studied and traded
commodities like cotton, copper and oil, but also bonds, stocks, real estate, and currencies.
I had more money, but I still worried about money. Earning it was stressful. I was now older and life was short.
How long would I live?
How much money did I need?
To the outside world and maybe my kids, I might have looked like a stodgy guy, off to work in the morning, home for dinner, appearing at my kids’ sports events or guidance counselor meetings.
Inside though, there was another reality. I knew that experiencing a meaningful life was more important than accumulating money. Money was merely a tool to accomplish that goal, though an important one.
I felt and feel life requires us to mentally occupy two spheres at once—reverent awe and practical reality.
This belief in the importance of awe formed early on, well before I knew anything about money.
The moments of connection with my Mom before she died were precious few. But they existed and left a deep impression, like an early morning bird-watching jaunt at a Woods Hole, Massachusetts salt marsh, the scent of brackish water. Maybe I was three? Wet sneakers, my small hand in hers.
After that, I was always in search of moments that transcended the ordinary, that reminded me of what a miracle it is to be alive. I suspect we all are looking for such moments. Particularly after she died, I knew life was short and unpredictable and those magical, rare moments were to be both cultivated and treasured.
Sometimes these moments came on the side of a mountain, in a fierce snowstorm. Sometimes they came rounding a corner in a cobblestoned foreign city, picking up little smatterings of an unfamiliar tongue. Sometimes they came from reading the perfect sentence sitting quietly in a library or a cafe, like when I first tried a latte at a cafe in Berkeley while reading the poet Milosz.
I definitely felt it the first time I held my children, warm and defenseless.
Those were the times when I felt most alive. Life vibrated with possibility and connection.
Money wasn’t any part of it.
That feeling of awe was what I was chasing after when I lived in Moscow in my early twenties, working as a journalist. I wanted to be a writer and writers seemed to pursue writerly experiences early on, like Hemingway driving an ambulance in Italy during World War I.
Love fit right in among those elevated experiences. I met my wife Marina during that time. She was a guest at a party my boss threw. It was love at first sight, at least for me. Later, we drank wine and discussed everything, the kitchen window flung all the way open, Gorky Park’s verdant expanse visible across the river.
That dreamy state was rudely interrupted by very practical concerns, like needing to come up with the money to bribe the Moscow doctors and nurses to deliver our son, Sasha. In a place like Russia, and many other parts of the world, the doctors supplemented meager official pay with money under the table negotiated ahead of time. As I recall, it was about $2,000 in crisp $100s. The rat episode several years later only cemented my growing awareness of the need to focus on practical realities.
Money is a shackle that keeps us tethered to such realities, like rent, health insurance, and electricity bills. When I was young, I acted as if this chain did not exist. But it does. It is inescapable like our mortality is inescapable. That’s also why the very rich or famous often lose their way. When they become too rich or famous, they lose their tie to reality.
