Financial Wellness as a goal

Feb 06, 2023

In the early 1900s, Hetty Green was despised by some, but feared by many. In an age where women were not allowed to vote, she was a formidable character in high stakes finance who built a reputation as a ruthless loan shark.

I have often written on Hetty Green, who was called the Witch of Wall Street. Recently, my colleague and Morningstar’s director of financial psychology, Sarah Newcomb, used her as an example to talk about financial well-being.

The lady was born into wealth, inheriting a few million (varying accounts put it at $5 - $7 million) in her early thirties. Being a brilliant strategist and shrewd investor, she converted that to $100 million over a span of 50 years. That probably made her one of the richest women in the world during her day and definitely the richest one in America.

Unfortunately, her personal quirks and eccentricities were more newsworthy than her financial exploits. While she had the skill and laser-sharp focus when it came to making money, she detested spending it. Her frugality was legendary.

She refused to turn on the heat, even in cold weather. Using hot water was too expensive. There was no need to eat lavishly - Graham crackers, oatmeal, ham sandwiches and pies that cost 15 cents were just fine. She bought broken cookies for her children because they were cheaper and returned the berry boxes for a 5-cent refund. She haggled with local merchants over every penny.

Why spend money on a decent wardrobe when her worn out black shabby gown would serve the purpose? As a teenager, her father gifted her $1,200 to shop for clothes. She spent $200 and saved the rest. She instructed the laundress to wash only the hem of her dresses to save money on soap. It was her black attire (gown, hat, veil and cape - all in black) that earned her the sobriquet Witch of Wall Street.

She refused to pay for decent medical care for herself or her children. Renting and constantly shifting home was a smart move since having a permanent residence would attract property tax (property tax collectors first had to establish proof of residency to collect personal property tax). Once on her mantle she displayed a bouquet of “roses” made from dyed chicken feathers because it was cheaper and lasted longer than a bouquet of real ones.

Her penchant for thrift was as disgusting as it was bizarre. It even turned out to be historical (she entered the Guinness Book of World Records as the ‘World’s Greatest Miser’).

Known as the Queen of Wall Street, the Witch of Wall Street, Hetty the Hoarder, America’s first female tycoon, and Wall Street’s first female financier, the life of this idiosyncratic lady points to someone who is extremely discontent and could not even enjoy the wealth she created for herself.

Sarah Newcomb referred to Hetty’s story to illustrate the point that financial well-being is NOT only a number.

Why amassing wealth is a pointless goal

The Power of Enough!

In May 2007, John Bogle gave the commencement address at Georgetown University. He flagged it off by recalling a story.

At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, the author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel “Catch 22” over its whole history.

Heller responds, “Yes, but I have something he will never have... Enough.

In his book “Enough: True Measures of Money, Business, and Life”John Bogle elucidates further:

Enough. I was stunned by the simple eloquence of that word—stunned for two reasons: first, because I have been given so much in my own life and, second, because Joseph Heller couldn’t have been more accurate. For a critical element of our society, including many of the wealthiest and most powerful among us, there seems to be no limit today on what enough entails. That message is what Joseph Heller captured in that powerful single word, enough.

Is comparison ruining your peace of mind?

Enjoy what you have!

Money is a just a tool. A transactional tool. It is to get you what you desire. That could be status, security, lifestyle, a home, a car, a holiday, mental peace, etc. That is why accumulating money for the sake of it makes no sense. Because money is never an end in itself. It is earned and saved and invested, to serve a purpose.

So what must you do?

Get clear on your purpose. Don’t look at anyone else’s. Only then you will understand contentment and the power of “enough”. And you will be well on your way to attaining financial well-being.

Financial well-being allows you to enjoy the emotional security that comes from knowing you have enough to weather life’s storms, to rebound, and, if necessary, to rebuild.

On top of basic security and resilience, it is a sense of satisfaction and contentment in your life, a low desire to compete with others or impress society with your material capabilities.

If money is an end in itself, then you will never be satisfied. That is why it is essential to have goals, because it gives you clarity on what really matters to you.

How to set financial goals and smash them

Sarah Newcomb encourages us to remember this: 

# You are more than your money. People who attach their self-worth to their net worth are at higher risk for depression and life dissatisfaction.

# Hetty Green’s example reminds us that wealth alone is insufficient for well-being. A mindset of scarcity, bitterness, or fear is antithetical to contentment.

# The purpose of wealth is to support well-being, but well-being is not a necessary or guaranteed byproduct of wealth.

# Financial stability does reduce various life stressors. Research does reveal a positive relationship between income and life satisfaction. Having said that, it’s not necessarily true that more wealth will bring with it a higher quality of life.

# If your financial attitudes and beliefs are healthy and empowering, you can experience peace and well-being even in times of setback or loss. If your financial mindset is weak, you will still have a very low quality of life despite having lots of money.

More on behavioural finance and your relationship with money

Larissa Fernand is an Investment Specialist and Senior Editor for Morningstar India. You can follow her on Twitter
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