Can We Find Financial Freedom In An Uncertain World?
If you’re living in the western world today, you are experiencing a time of upheaval and uncertainty unlike anything we’ve seen since the civil rights era. A major American political party has been hijacked by a megalomaniac billionaire, whose potential presidency has been rated by Moody’s Analytics to likely ignite economic disaster. In Europe, The UK’s Brexit movement is putting strain on the European Union, while Poland and its neighbors have also become more isolationist, stoking fears of an even more fractious union.
France, like the United States, is simultaneously moving further to the right and left, leaving voices in the middle to become more extreme or be left out. Advocates of both wildly expanding and contracting social programs have found their way to the national political stage this year in nearly every sizeable western democracy. And that’s just the economic issues.
Non-economic issues like national security and social justice have not only divided both houses of the American congress to the point of 16-hour filibusters and dramatic sit-ins, but recent attacks by the self-proclaimed Islamic State have left cities like Belgium and Paris under temporary police-state status. The LGB community has both seen tremendous advances forward in places like The US and Mexico, while the T part of that acronym have experienced equally intense backlash.
You may be thinking, “what does any of this have to do with a blog on personal finance?” Well, I’ll tell you. It has long been our stance here at Monte Largo Financial that the only way to become wealthy and stay that way is to enter the capital markets that tend to outpace inflation. However, uncertainty is the enemy of progress, both financially and otherwise. Capital markets are threatened by divisive political rhetoric, and thus this uncertainty is an ebbing tide that may inevitably lower all boats. In places with higher economic uncertainty people are less likely to start businesses, spend money to stimulate the economy, and feel secure financially.
In times like these, when global markets are more interconnected than ever, you should be equally worried with the outcome of your presidential election as you are with the presidential elections halfway across the world. Of course the global political landscape is only one piece of the puzzle. Instead of relying on elected officials to prop us up, we must take responsibility for our own successes and failures.
Fewer than half of Americans have money in stocks, making their long-term chances of achieving financial independence about 0%. It is no surprise then, in an increasingly stratified world where many feel left behind, that calls for revolution are more common. People are more politically extreme these days because more and more, we do not feel the economic security we once did.
White men feel as if their best days are behind them, so the far right believes that building a wall to keep others out will pave the way to economic prosperity. The young and educated can’t buy homes and invest like their parents did, so the left believes that forgiving student debt and creating a basic income will do the same for them. What can be done to battle this uncertainty? How can you feel more secure in a world where the haves and have nots are getting further away from one another economically, politically, and socially? It isn’t easy, but I wholeheartedly believe that we can begin by reaching across the aisle.
Many people credit the speed with which the LGBT community have progressed to the proximity effect. Most people know gay people now. And the more straight people who were exposed to gay friends, the more they realized how very normal we were. Fear and ignorance melted through understanding and reflection. It should come as no surprise that the more time we spend thinking like the other side, the easier it is to empathize with them.
Your financial future and the financial future of the country as a whole is no different. Republicans in America are often universally and unfairly demonized as bigots, while Democrats have their fair share of would-be oppressors too. The left is often scoffed at for being ignorant of economic issues, championing more and more welfare benefits without contemplating the consequences. But the right often makes the same mistakes by blindly reducing taxes without analysis or cause.
Unfortunately, we are more divided than ever. When we segregate ourselves politically by zip code, self-select our Facebook feeds to “unfriend” people who post things we disagree with, and choose our news sources by their political leanings, we fall into a trap. Everything we read and all of our experiences support our view of the world instead of challenging it. Instead of growth, we invite stagnation. Stagnation leads to partisanship. Partisanship leads to gridlock. Gridlock leads to uncertainty. The cycle continues.
Most of my blog posts end on an upbeat note, excited about the future or the state of the world as we know it. After all, there is much to be thankful for and to appreciate when you have the power and knowledge to take control of your financial life. But as that control appears to increasingly slip away, perhaps there will be less to be excited about in the future.
Can we achieve financial freedom in today’s uncertain world? Yes. Unequivocally, yes. But only if you believe you are capable of setting yourself up for success. Relying on increasingly partisan politicians to increase your safety net or isolate you from your competition are not winning strategies. Yet more often than not, they are the only strategies that far too many of us are pursuing.
Nathan is the Chief Financial Advisor at Monte Largo Financial