Why $400 matters to a Badass Gentleman

Financial independence is a basic tenet of being a Badass Gentleman. Mastering your finances, and being beholden to no one, engenders a freedom that is immeasurably valuable. But for a large number of American families, this is a pipe dream. Turns out, the reality is even worse than I imagined. In a survey of US households by the Federal Reserve, 47% of respondents would have trouble paying for a $400 emergency. To do so, they would need to borrow or sell possessions. Put another way, $400 is enough to stress the finances of almost half of American households! How can America, one of the most prosperous nations in the world, have so many households that are so economically vulnerable?

Can you spare 4 of those Benjamins?

My exposure to this startling issue began with a recent Atlantic article by Neal Gabler. In it, he makes a courageous confession that despite his success as a writer with nearly upper-middle-class earnings, he is counted among those 47% unable to pay $400. Moreover, he had drained both his parents' retirement savings (for university educations for his daughters) and his own savings (for daughter's wedding).

Neal's predicament really struck a chord with me, because it felt like a form of self-imposed slavery. The Badass Gentleman has a severe allergy to slavery of any kind. Pondering this led me to three realizations:

1. Many Americans are afraid and vulnerable, whilst hiding behind a veneer of optimism. Neal makes a salient point that economic impotence is shameful, which is why he kept his financial troubles a secret. I gained a new perspective on the pervasiveness of this economic fragility, and its likely role in driving populist themes in the current presidential election cycle. People are losing control of their lives, and are seeking help to regain it.

2. The damage to lives wrought by basic financial illiteracy is both incalculable and inexcusable. A study estimates that only 57% of US adults are financially literate. Worldwide, only 1 out of 3 adults are financially literate (i.e., understand rudimentary concepts such as interest, compounding, and diversification). This lack of knowledge increases the risk of poor financial decision-making, which can lead to getting caught in very sticky traps (e.g., credit card debt).

3. We are being conditioned to want beyond our means, and even encouraged to do so (advertising, keeping up with the Joneses, easy credit). We place so much value on possessions, that we forget their near irrelevance for long-term happiness. We are constantly distracted from this truth by endless micro-shots of dopamine (social media, the latest Game of Thrones episodes, buying that shirt you don't need). And in this deluge, we forget who we are, why we're here, and what makes life truly worthwhile.

Don't forget yourself. Don't forget why you are doing what you are doing. Don't forget your purpose in life, and the step you're working on at the moment to achieve it. Last but not least, don't forget the people around you that matter, and that there may be many who are quietly suffering.