Wealth insights on a biblical scale
It’s a strange time of year. Joyous for some; miserable for others. The difference between the haves and the have-nots is always starkest during the holidays. am not a religious man. But I keep thinking about a parable told by Christ, which contains some powerful wisdom about the proper use of money.
In ye olden times, a ‘‘talent’’ was a unit of measurement, equivalent to about 36kg of silver. A man entrusted his talents to three servants while he went on a long journey, dividing it up according to their ability. The first received five talents, the second two, and the third, just one.
Upon the man’s return, he found the first and second servants had doubled their talents through savvy investments, and rewarded them handsomely. But the third servant had buried his single talent in the dirt. Furious, the master cast the wretch into the pits of Hell, taking his only talent and giving it to the guy who already had ten.
The moral of the story is that you have to take risks in life, and put your talents (financial or otherwise) to work. This is solid advice.
But there’s a darker message beneath the surface. Notice how the game was rigged from the start. One servant was given 10 times as much money as the other. He had plenty of room to breathe. If he lost a talent or two through bum investments, it didn’t matter. The poor servant with a single talent was desperate to keep his head above water.
Here’s the conclusion of the story, as recounted by St Matthew:
‘‘For to the one who has, more will be given, and he will have an abundance. But from the one who has not, even what he has will be taken away.’’
Two thousand years later, scientists started noticing this phenomenon cropping up in all sorts of unlikely places. The ‘‘Matthew effect’’ is a mathematical property responsible for the arrangement of stars in the sky, the height of tree trunks, and wealth inequality. Everything compounds on itself. Famous researchers get unfairly credited for the work of obscure scientists. Kids who learn to read early have an advantage that persists throughout life. An initial success spirals into more good fortune; bad luck begets more bad luck.
Knowing this, the parable of the talents seems kind of cut-throat. Perhaps it’s only meant to describe the harsh reality of the world, rather than suggest we should be OK with it. Christ certainly wasn’t.
I used to be a great believer in ‘‘making your own luck’’. That you can pull yourself up by your bootstraps. That everyone gets what they deserve. I now know this is not an accurate description of reality. But neither is the opposite view.
Here’s a more nuanced takeaway:
1. Work hard to build up some initial momentum. That means saving and investing early in life, and repaying debt as aggressively as possible.
2. Don’t get complacent. Beware the creep of lifestyle inflation, and try not to let your spending increase as fast as your income.
3. Once you have momentum on your side, use your position to help others. Success of any kind has diminishing returns. An extra million won’t make Bill Gates any happier, which is why he’s using it to save hundreds of lives in the fight against malaria.
The 18th century cleric John Wesley delivered a famous sermon on the proper use of money, which he summarised in this line:
‘‘Having first, gained all you can, and secondly, saved all you can, then give all you can.’’
This strikes me as the perfect balance between pragmatism and compassion. You have to help yourself before you can help others. Once your talents are working for you, see what you can do for the less fortunate. No preaching intended; just something to think about – ’tis the season for giving, after all.
Got a burning money question? Email Budget Buster at richard.meadows @thedeepdish.org, or hit him up on Facebook, where you can also find links to previous Budget Busters.