THE PHASE PULSE
Ask almost anyone what their number is and they can tell you quickly.
The salary that would feel comfortable. The figure in an account that would let them stop calculating. The amount at which the low hum of financial worry would finally switch off.
What interests me is the speed of the answer. It means the arithmetic has already been done, privately, by people who have never once said it out loud.
I have had several numbers over the years. I have reached some of them.
Reaching them did not feel the way I expected.
THE LESSON
There is a piece of research I think about often.
Michael Norton, a professor at Harvard Business School, worked on a study of more than four thousand millionaires. They were asked to rate their happiness out of ten, then asked how much more money they would need to reach a ten.
The answers varied enormously. Some said twice as much. Some said six times. A quarter of them said around eleven times more.
What did not vary was the pattern. It made no difference how much they already had. Summarising it afterwards, Norton said that basically everyone says they would need two or three times as much.
The reason is something behavioural economists call a reference point. It means we do not judge amounts against a fixed standard. We judge them against where we are currently standing.
A reference point: the position you are measuring from, which is almost always your own current situation rather than any objective marker.
We do this with everything. A room feels cold depending on where you have just come from. A sound feels loud relative to the quiet before it.
Money works the same way. Which means the number is not a destination sitting still in the distance.
It travels with you at exactly the speed you approach it.
THE INVESTOR MIND
This matters more than it first appears, because a great deal of financial happiness is organised around a number that cannot be reached.
If the goal is the figure, then no portfolio ever arrives. There is always a version of the calculation where you are still short.
But I think something else is going on underneath it, and it took me a long time to see.
The number is usually standing in for a feeling. What is actually wanted is not the amount, it is the security the amount is supposed to deliver. And security is not a quantity, so no quantity ever quite settles it.
If you do not understand what your money is doing, it becomes much harder to know whether it is enough.
So the easiest answer is more. More saved. More earned. More accumulated.
Not necessarily because more is what you need, but because you cannot yet see what the money you already have might become.
That was what changed for me. Not the amount. The seeing.
There are months where a chunk of what I hold goes down together. It happens, because a lot of what I own sits in similar areas, so a single piece of news can move all of it on the same day.
It does not affect me the way it used to.
Not because I am relaxed about money. Because I know what I own, I know why I own it, and I know roughly how long I expect to hold it. So a bad month is not news. It is a thing I already knew would happen at some point along the way.
I have often thought the more interesting question is one the study did not ask.
Not how much more would you need. But how confident are you about where what you already hold is heading, and why.
Perhaps they named a number because a number was the only thing available to point at. If you cannot describe what your money is doing, the figure is all you have left to measure yourself against.
I could not give you my number. But I could tell you why I hold what I hold, what has to be true for it to work, and roughly how long I am prepared to wait. That turns out to do the job I once expected a figure to do.
The number keeps moving. Understanding the movement is what keeps your happiness out of it.
YOUR MONEY MOMENT
Think about whatever your goalpost actually is. Retirement, or ten years from now, or the thing you are quietly working towards.
Do you have a sense of what you are likely to arrive with?
Not to the euro. Nobody has that. But roughly, given what you hold, what you are adding, and how long you have.
Or is it closer to this. Money going in every month, a general trust that it will be enough, and no real picture of what is waiting at the other end.
They feel very different to carry. And what separates them is understanding, not the number.
Catherine x
Phase First.
Phase First is for educational and informational purposes only. Nothing here constitutes financial advice or a recommendation to buy or sell any security. All investing involves risk. I am a Fellow Chartered Accountant, not a regulated financial adviser. You are responsible for your own financial decisions.