Of Ants and Grasshoppers
In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.
“Why not come and chat with me,” said the Grasshopper, “instead of toiling and moiling in that way?”
“I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.”
Aesop’s The Ant and the Grasshopper is a well-known fable, from over 2000 years ago, and it’s a pretty safe bet that you know the outcome: as winter set in, the Grasshopper’s pleas for food fell on the unsympathetic ears of the Ant.
Ant 1, Grasshopper 0.
Over the years, I’ve come to recognize that most of us – with all due respect – demonstrate a behavioral bias toward one of the two.
Time for some self-identification.
To help you decide which you might better relate to, here are some observable patterns that have led to my thesis.
Ants, throughout their lifetimes, have planned carefully for an uncertain future. They’ve lived beneath their means, saved diligently, avoided debt and have often literally watched their nickels and dimes.
In contrast, the Grasshoppers are drawn to immediate gratification which leads them to be more comfortable with debt as a means of acquiring lifestyle today and being willing to pay for it tomorrow. Grasshoppers tend to assess financial matters at a high level with less interest in detail and may underestimate the possibility and/or impact of a Black Swan event – those times when life and money collide both violently and unexpectedly.
Self-realization can be powerful. Once you’ve identified with one of the two categories, here are some simple (not to be confused with always easy) ideas for both Ants and Grasshoppers.
If you’re an Ant:
• You may find yourself with an unwarranted concern about money. For all the advertisements you see around investing wisely, our industry doesn’t do a very good job of taking the time necessary with clients to help them understand how much is enough. And Ants are not very good at believing it.
• Beware: Financial worry can evolve into an unhealthy attitude toward money, where it takes a seat of disproportionate importance in our lives. It can manifest itself as an unhealthy desire to control situations and loved ones, an inability to slow down and enjoy this journey of life, a lack of generosity toward others and a tendency to hoard.
• Don’t expect that, upon retirement, you’ll suddenly morph into a freer-spending, live-life-to-the-full Grasshopper. Sometimes we think that once we cross the finish line, we will be able to relax, do what we want to do without a financial care in the world. For most Ants, their tendencies have been developed and imprinted into their worldview over decades and perhaps generations. My experience is that Ants, even when they achieve financial independence, continue to demonstrate the behaviours that made them financially self-sufficient: their sense of financial discipline will continue to have them watch their money and expenses closely, spend carefully, avoiding debt and living well within their means. Ants will continue to be Ants.
If you haven’t already, make the investment of time to quantify ‘how much is enough’. And don’t be afraid to engage a third-party advisor with the expertise and tools to help you answer this question. The peace of mind that comes with knowing that you’re going to be OK can help put money in its proper place.
For the Grasshoppers:
• You may catch yourself presuming on the future. What I mean by this is that we all know that living beyond our means presents an unsustainable trajectory. We know that some of today’s decisions must be financed by tomorrow’s work and none of us has an entitlement to good health or uninterrupted employment.
• Grasshoppers are more susceptible to death by a thousand cuts. For some, it’s not the big ticket items that present the greatest risk, but rather the more surreptitious ‘latté factor’ – those lifestyle expenses that, in themselves, appear insignificant but with frequency leave a significant financial footprint. Smoking, exotic coffees and snacking are examples we easily relate to.
• Like the Ant, don’t expect that you will change your ways once your employment income ends. Cutting back on lifestyle can be much more difficult that it would first appear and, if it’s forced upon you, regret and resentment may not be far behind.
• Be careful of the ‘Sudden Wealth Syndrome’. Retirees are considering commuting their pensions more than in the past, largely out of either fear in the stability of their pension fund or a desire to have some income flexibility. While both are legitimate considerations, the value of a commuted pension can look like an awful lot of money and unrestrained access to those funds without a sustainable plan can spell trouble.
Action Steps: if you’re a self-diagnosed Grasshopper and are still working:
• Use an automated savings program to your advantage. Assign for yourself an adequate savings rate, then treat it like the other bills that you pay bi-weekly or monthly – your future self will someday appreciate your forward thinking!
• Limit your access to credit. This may mean reducing the number of credit cards you carry or reducing the credit maximums.
• Finally, confer with an insurance specialist who can help you to protect yourself against an interruption of earnings, whether temporary or permanent. Most such events are beyond our control and we don’t get to choose the nature or duration of the interruption. However, creditors will be quick to expect repayment despite your personal circumstances.
Keeping the End in Mind
To tie a bow on this discussion, the fable closes,
“Then the grasshopper knew… it is best to prepare for the days of necessity.”
Whether you relate most closely with the Ant or the Grasshopper, a fresh perspective can sometimes improve your perspective. Feel free to give us a call… you’ll be glad to hear we offer a pesticide-free zone!