Identity Economics

The moment a crisp $20 hit my palm growing up, I took it as a cue to coerce a friend’s older sister to chauffeur me to the mall so I could raid the disheveled sale rack at Hollister. I was a spender, not a saver, and my frugal parents were nervous. Their “waste not, want not” mentality seemed to skip a generation, as my mantra was, “waste freely, want everything.” 

Even in my early twenties, I was pretty unrecognizable from the person I am today (and not just because I was still “investing” thousands of dollars per year into my appearance). I spent money like it was an endless resource—because as far as I knew, it was. It came every two weeks! Why do I need to preserve this week’s paycheck?, my actions seemed to suggest, as I wielded my credit card like Wonka’s golden ticket for every bottomless brunch and poly-blend going-out top in a five-mile radius.

I was basically a college kid performing “working adult” drag, and I approached my career like I had school—determined to get a good grade, but not all that invested in the work itself.

So when I had my financial awakening—horrified to realize that in order for that money to keep coming every two weeks, I’d have to exchange 40 hours per week for the rest of my life—it wasn’t just my spending habits or asset allocation that needed to change. It was my identity. 

A few things had been true about me previously:

1. I was a spender, and very materially motivated (i.e., it was the stuff money could buy, rather than the autonomy it could provide, that excited me—I would’ve taken my paychecks in the currency of Louis Vuitton bags had the payroll department permitted it).

2. I mostly checked out during the week and lived for the weekends—careening around town with friends was my raison d’etre.

3. I lived under the jurisdiction of trends and fads, voluntarily handcuffing myself to the hamster wheel.

“Budgeting” is probably a generous label for my previous half-assed attempts at getting it under control. I was going through the motions, but missing a key component: desire. 

To become good with money, I realized I needed to become someone good with money. And that person had to live by a radically different set of values:

1. Be financially motivated (i.e., be excited by the value of the money in the accounts rising, rather than the ‘stuff’ it can immediately buy).

2. Find purpose in work. Or, at the very least, adopt less expensive hobbies (and preferably, some that earn—rather than incinerate—money).

3. Prioritize freedom above all else, especially the opinions and perceptions of others. 

Financial freedom was a magnet that pulled me forward. So I stopped shopping. I stopped getting my nails done. I stopped going out on Thursdays. I got a second job, and then a third. (As you know if you read a lot of my work, some of this was a bit of an overcorrection that I’m still in the process of unwinding.)

I started doing things that “savers” did. I started working in a way that people with purpose worked, experimenting in different industries on the side. And eventually, I started to feel it: I really was motivated by watching the number in my account go up (not just what that number could buy today).

As luck would have it, forming an identity around money savviness generates a fabulous, self-reinforcing side effect: Before long, I was staring at tens of thousands, and then hundreds of thousands, in my net worth spreadsheet. (It helped that this rebirth occurred during a roaring bull market.)

I evolved from someone who spent money before the ACH transfer had even cleared to a woman who most looked forward to increasing her savings rate by a few percentage points so she could jack up her automatic transfer to the brokerage account. I Reverse-Uno’d my old self and became someone else. 

Before the year 1968, nobody really knew what Earth looked like. We had hunches; we knew it was round and floated in space, but we didn’t really have a mental image for our planet. Then, in 1968, the astronauts on Apollo 8 snapped an iconic picture on their mission to the moon that came to be known as “Earthrise.” It showed our precious glowing marble: blue, green, and misty, suspended in the sky. Shiny and resplendent. 

And suddenly, we understood. In the 10 years that followed, nearly every piece of climate legislation that exists today was passed. Once we could see this gift we had, it suddenly felt real enough to compel action.

To make a meaningful identity change, I learned, you must first have a clear vision for the person you want to become. Then, you have to feel so desirous and magnetized toward that vision, that it acts as a counterweight to the gravitational pull of your current self and circumstances. 

To be clear: You don’t have to change your entire identity to become good with money, but you do have to change the part that’s blocking you from making progress (whether that be the part that overspends, or undervalues your work, or can’t envision a future worth saving for).

Maybe it feels like education is the only thing you’re missing—and consequently, the belief that you “don’t know what you’re doing” or that “money is too complicated” is the block. But for some of us, it runs deeper than being ignorant to Roth IRA contribution limits or underestimating compound interest. 

This also explains why the carrot will always be more valuable than the stick. The carrot creates desire, the ingredient you really need; the stick can only scare. Historically, the field of “personal finance advice” has carried around a stick, which is why so many people still need financial help despite there being no shortage of free information available. 

Sometimes, reverse-engineering it is your best bet: Imagine what it feels like to be this person. Then, start to do the things that person would do, so you literally see yourself being them. 

Before long, you’ll realize that the person you’ve been envisioning is just who you are now—and being good with money is just what you do.