Many people often pose the question why outdoor sports enthusiasts are so bad with money. It’s a fascinating question. Is it all the gear purposes? Does the money go blowing in the wind? What’s going on here? Well, let’s talk about it.
One of the reasons for the strange inability of outdoors people to handle money properly, stems from some of the ideals that outdoors people treasure. Many outdoors people choose that lifestyle because they want to pursue happiness. There is evidence that material success does not, in the long-term, contribute to happiness. For instance, research has found that winning the lottery does not contribute to the overall happiness of the lottery winners though it may contribute to their financial life satisfaction. This isn’t to say that money has no effect on happiness.
According to economists Betsy Stevenson and Justin Wolfers, the more money a person has, the happier they are. They drew this conclusion after examining World Bank data from over 150 countries. However, the happiness that money gives is not a dramatic kind of swinging-from-chandeliers happiness. According to 8000hours.org, each doubling of a person’s income is correlated with an increase in life satisfaction of 0.5 on a scale of 1 to 10. Put simply, if you doubled your income today, you’d only be 5% happier than you normally are. Nobel Prize winning economist, Angus Deaton, found that an increase in happiness as a consequence of having more money, is only really possible after a certain point. Deaton found that in the United States, $75,000 per year is the threshold income in analyzing the relationship between income and happiness. Below $75,000, having more money does indeed result in being happier. Abover $75,000, however, increases in happiness start to taper off and it begins to matter less and less if you have more money. WHat makes $75,000 so special? Well, it’s the number that researchers believe meets the basic needs of each individual. Abraham Maslow’s hierarchy of needs suggests that the most important needs that people have are their basic needs such as food, clothing, shelter and healthcare, whereas other needs are not so important. You could say this is a negative or preventive view of happiness. In other words, $75,000 inoculates you from the want of those basic needs and the psychological, and physical pressures one feels when one cannot meet those needs. Raising your income to $75,000 prevents the destructive emotions that arise from not having basic needs met. At a certain point, the relationship between money and happiness evaporates. Some wealthy people are miserable, some wealthy people are obscenely happy. The truth is, poverty is immiserating in more profound ways than many people imagine. In fact, one study found that wealthier people were less likely to enjoy positive experiences, compared to their less wealthy counterparts. When you can buy everything you want, you are likely to lose the ability to enjoy the simple things in life, like the setting sun, the smell of the grass…
Many outdoors people seem to have an at least naive understanding that money is not as important to happiness as most of us would like to think. I’ve met outdoors people who roll their eyes at the idea of investing. They don’t want to be rich. They have an allergy to wealth. Give them a fortune and they’d give it away or find a way to toss it to the four winds. They don’t want to hear about index funds, diversification, retirement accounts, buying a house, or other such things. If they own property, it’s property that helps them lead this alternative lifestyle. Many may, even late in life, barely own a thing.
But as the research shows, you need a certain amount of money to avoid the immiserating emotions that poverty leads one to. And many outdoors people don’t make $75,000 a year, they aren’t free from worry about their basic needs. A survey conducted in 2017 found that 78% of Americans live from paycheck to paycheck. In 2019, Bankrate found that 60% of Americans could not cover a $1,000 emergency with savings. Perhaps then, we can look at outdoors people as part of a more general American crisis rather than asd exceptions. The difference being that many outdoors people spend their youth outdoors, travelling, climbing mountains, swimming in lakes, and doing many other things and then find themselves reaching their midlife without any real assets to speak of. There’s nothing wrong with that if you’re a monk and have vowed a life of poverty. Certainly many monks are extremely happy people, but, crucially, they do not have to worry about shelter, rent, or food. Once again we return to the need to assure yourself of enough income to meet the basic needs of life. According to a Mind over Money survey by Capital One and the Decision Lab, 77% of Americans worry about their finances and 58% feel that finances control their lives, and 52% report being unable to control their money-related worries.
Part of why outdoorsy people are so bad with money is because of their free-spiritedness. Unfortunately, the American workplace is largely incompatible with free-spiritedness. Why is free-spiritedness so decisive? Well, people save and invest because they have some anxiety about the future, a need to reduce the pain they anticipate up ahead. People who are free-spirited tend to be free from such anxieties. They live for the moment.
Many outdoorsy people are not only allergic to wealth, they have negative associations with wealth. To them, money is something dirty, unspiritual, unenlightened. They believe in lifestyles free of money. They think the rich are evil, that it’s impossible to be wealthy and good. They believe in experiences over things, and love to live a minimalist life. It’s hard to hate money and be good with it. Unfortunately, as we said, because they lack the ability to meet their basic needs, many suffer the same anxieties and worries that the majority of Americans do. Money may not buy happiness, but it can close the door in the face of the immiserating power of poverty. That is why in this website we encourage you to manage your finances wisely and plan for the future.