I’m a mood that combines playfulness with nostalgia. I think it’s because I’m currently back home and have a job interview today, so I’m both happy and thinking about my past. I’ve been thinking a bit lately about some of the stories and fables I was told as a child.
So today, let’s have some fun with some of the most famous of Aesop’s fables, and see how we can apply the lessons found within to our personal finance situations. After all, these are stories that I (like many of you, I’m sure) have heard since I was young. Let’s go on a trip down memory lane and see what we can learn about money management from good old Aesop.
1) Fable Name: The Ant and the Grasshopper
Short and Sweet Summary: There was once an ant and a grasshopper. (Good start, no?) The grasshopper laughed, frolicked and played the days away, while the ant diligently spent his time during summer and fall gathering up extra food. The grasshopper laughed at all this effort; why gather food when there was such an abundance all around them? When winter came, though, the grasshopper found himself out of food while the ant had plenty, and the grasshopper comes to realize the folly of his short-sighted ways.
(Depending on what version you read and the particular message the author is trying to push, the final fate of the grasshopper and the ant (or ants, in some versions) can vary. In the most traditional versions, the grasshopper dies from starvation. Since this doesn’t make the most child-friendly ending, in many cases he gets food from the ant, usually in exchange for providing some service or at least promising not to be as lazy in the future. There are also plenty of more politicized versions, having the grasshopper suing the ant and taking his hard-earned food (to send up socialist/communist worldviews) or attacking the ant for being so stingy (to attack those who hoard wealth). For our purposes, we can end the story once the grasshopper realizes the error of his ways.)
General Moral: Prepare today for lean times tomorrow. Also, if an ant and a grasshopper both offer you financial advice, go with the ant.
Financial Moral: Pretty much the same as the general moral; be sure to stock up on money (or other supplies, etc.) while you have the opportunity, particularly if you know the lean times will be coming. Replace ‘winter’ with retirement, ‘food’ with money, and ‘ant’ with anyone who didn’t get a trust fund for their 16th birthday, and you have a pretty good plan for saving for your golden years in our ‘fund your own retirement’ economy.
2) Fable Name: The Tortoise and the Hare
Short and Sweet Summary: A tortoise and a hare have a race because the hare was talking smack about the tortoise’s mama (or possibly just called the tortoise slow). During the race, the hare takes an early lead, getting so far ahead that he decides to take a nap (or goes off to play keno, depending on the version of the tale). While the hare is distracted, the tortoise slowly but steadily catches up, and then overtakes him. By the time the hare wakes up (or gets kicked out the of the casino due to his bad credit), there’s no way for him to beat the tortoise. Victory to the slow guy with the shell!
General Moral: Slow and steady wins the race, OR don’t take a nap until you finish the darn race.
Financial Moral: Pretty much the same as the general moral (the one about slow and steady winning in the end, not the napping one). A decent to good financial plan, implemented over the course of a lifetime, will be much more effective at boosting your net worth than a great financial plan you only follow off and on. (Note: you should not take the lesson that betting on a long shot in a race is a good way to improve your financial security; they’re long shots for a reason, and no every gamble will pay off in the end.)
3) Fable Name: The Dog and the Bone (noticing a pattern to these names yet?)
Short and Sweet Summary: A dog goes walking alone with a bone in his mouth. He looks down into a still pool of water, and sees another dog looking back at him, also with a bone in his mouth. Getting greedy as he looks at the other dog’s bone, and thinking that the other dog looks like a bit of a push over, our first dog opens his yap and barks at the second dog. His bone drops into the water, disappearing under the waves, leaving the dog (and his reflection) without any bones at all.
General Moral: If you get greedy, you risk what you already have. Also, mirrors can steal your soul (or at least, confuse you, if you happen to be a dog).
Financial Moral: Let’s quote another source of great wisdom, Warren Buffet: ‘Rule #1: Never lose money. Rule #2: Never forget Rule #1.’ As with bones, so it is with money; it’s much easier to keep what you already have then it is to earn more. If you get greedy and try for excessive gains, you can end up losing what you already have. (Add in the number of scams and other simply fraudulent ways people will try to get your money, and the importance of keeping what you have comes into sharp relief.) Invest smartly and don’t try to shoot for the moon with your returns, and you’ll have a much better shot at growing your wealth and adding to your supply of bones (or cash, if you prefer that type of thing).
4) Fable Name: The Goose that Laid the Golden Eggs (just like that, the pattern is gone)
Short and Sweet Summary: A farmer and his wife (I picture them as Ma and Pa Kent from the Superman comics, but I’m pretty sure that’s not what Aesop intended) discover that they have a goose who lays golden eggs. After a few days of enjoying the bounty this goose puts out, they get impatient, and slaughter the goose to get all the golden eggs at once. Alas, once the goose is dead, they find no golden eggs inside, and realize that they’ve just killed a source of great wealth.
General Moral: Greed and impatience destroy wealth. Also, geese aren’t filled with all the eggs they’ll ever lay (at least, not in fully developed form).
Financial Moral: As usual, the general moral can be pretty easily applied to the personal finance; get greedy and it’ll backfire on you. This is most apparent when looking at your nest egg (an apt term for a waterfowl based fable); if you start with a small, safe withdraw rate when you retire, your nest egg will have the chance to grow, continuing to generate more money (golden eggs) for your spending pleasure. Pull out too much of your money in the first few years, and watch as your nest egg quickly withers away, and you spend your retirement years desperately searching for more money (or a goose that lays golden eggs).
Alright, that’s enough nostalgia for one day; hopefully, there’s plenty of stories mentioned here that spark a few memories of your own childhood, and maybe, just maybe, remind you of a