Climate Change, Your Money, and Your Life

I recently read two great books, one about the financial habits of millionaires, and the other about a way of thinking called Essentialism.  It occurred to me that part of being ready for the impacts of climate change, or your favorite calamity of choice, is being financially prepared.

If you are hit by a disaster– be it a super storm, heat wave, hurricane, or invasion of black U.N. stealth helicopters, which is better?  Being caught off-guard and unprepared, or having enough to get your family through whatever comes?

So today I’m going to summarize these two books and try to tie them into how we can prepare ourselves and our families to survive and thrive in a changing world.  Even if you’re not convinced the climate is changing these books and ideas should still serve you well.

Are there any millionaires living in your neighborhood?

The first book, “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy” by Thomas Stanley and William Danko, was first published in 1996, but it’s still a classic.  The authors went out and studied as many millionaires as they could find to see what makes them tick and how they got to be wealthy.

Their hunt for millionaires led them to several surprises.  Most millionaires live in modest neighborhoods, drive American made cars and wear regular, store bought clothes.  Turns out they got to be millionaires by working hard, saving their money, and living a modest lifestyle.  Not frugal necessarily, but modest, definitely.

From the authors…

“… we discovered something odd.  Many people who live in expensive homes and drive luxury cars do not actually have much wealth.  Then, we discovered something even odder:  Many people who have a great deal of wealth do not even live in upscale neighborhoods.”

They go on to say…

“What is so profound about these discoveries?  Just this: Most people have it all wrong about wealth in America.  Wealth is not the same as income.  If you make a good income each year and spend it all, you are not getting wealthier.  You are just living high.  Wealth is what you accumulate, not what you spend.

They give us the top seven characteristics of millionaires right off the bat, then go into detail about each point.

Most millionaires…

  1. Live well below their means
  2. Allocate their time, energy, and money efficiently, in ways conducive to building wealth
  3. Believe that financial independence is more important than displaying high social status
  4. Have parents that did not provide outpatient economic care
  5. Have adult children who are economically self-sufficient
  6. Are proficient in targeting market opportunities
  7. Chose the right occupation

There are many dull tables of data, which I skipped over after the first couple.  Fortunately, they explain things well in the text.  Their examples are a bit old, but still very relevant for today’s world.  Some principles never go out of style.

They offer some informative analyses of women and money, and of white ethnic sub-groups.  It would have been interesting for them to talk about the attitudes and practices of non-white millionaires, and offer some analysis of the 1%, the billionaires, but that might have diluted their central message.

They give plenty of case examples from their research, including car buying habits.  This was explored in great depth and was pretty amusing.  They have a funny table at the end of the book which prices cars by the cost per pound.  It appears that millionaires are good at getting a good per pound rate for their autos!

Despite the dated examples and the easily skipped tables, this book offers sound advice for an essentialist approach to money that will serve readers well.

What’s an “essentialist approach” you may ask?  This brings us to the second book.

What is “Essentialism”?

The second book is “Essentialism: The disciplined pursuit of less” by Greg McKeown.  In a nutshell, essentialism is focusing your life’s efforts on what really matters.  The author starts by saying that “if you don’t prioritize your life, then someone else will.”   How true!

Throughout the book he compares the “non-essentialist” with the “essentialist” mentality.

The “non-essentialist” tries to be all things to all people (by always saying “yes”), thinks more is always better, and ends up being less satisfying because they are overwhelmed, exhausted and have little control over their own life.

Contrast that with the essentialist mindset.  An essentialist thinks that less is more, because only a very few of the many options before us truly matter.  So the essentialist says “no” more than yes, and in the end, they can focus on a few things and do them well; thus, living a less stressful and more meaningful life.

The book goes through each precept of essentialism one by one, contrasting between non-essential and essential mind-sets.  He uses examples from his own life, and from business and society at large.  The examples are kind of shaky at the start of the book, but get better as you read.  Either that, or I had a better understanding of his philosophy by the end.

There was a really good discussion about sunk-cost bias, where people continue to pump money or effort into a failing project in the hopes of turning things around.  This part alone is worth the price of the book.

In this example, a non-essentialist keeps charging ahead and thinks “If I just keep trying, I can make this work.”  Whereas an essentialist asks “If I weren’t already invested in this project, how much would I invest in it now?” and “What else could I do with this time or money?”

Some of the essentialist mindset seems overly rigid.  For example, an essentialist “uses narrow, explicit criteria like ‘Is this exactly what I’m looking for?’”  The author cites an example of a company that makes and installs custom shelves.  This company has a rigorous screening process to hire new applicants that culminates in a day working on the job.  He describes how one candidate did an outstanding job, but they didn’t hire him because they didn’t like the way he put his tools away at the end of the day.

Essentialism used in this way probably leads to a place where people all think the same, where serendipity, cross-pollination, luck– call it what you will– is stamped out.  That’s a setup for problems down the road, but maybe that’s a topic for another day.


The last section of the book talks about how to make doing the essential effortless.  He talks about creating a “buffer” by extreme preparation.

Navy SEALs and other operators spend 75% of their time training, and only 25% in the field.  The key to their success is endless planning, preparation and repetition.  Similarly, the author uses the example of the race to the South Pole between Roald Amundsen and Robert Scott.

Scott did only what was required, stored just enough food, did the minimum of planning, and hoped for ideal conditions.  By contrast, Amundsen prepared for the worst, stored three times as much food for his men, and planned and researched incessantly.  Amundsen achieved his goal, while Scott and his men perished.

An example from my life, is my preparation for exams in medical school.  Med school was rough, to say the least, until I got a handle on it by extreme preparation and planning.  I got it down to a well-oiled process (click on the crazy flow chart to see how I got through med school!).

Along similar lines, in the same chapter, the book discusses scenario planning as an important skill to manage risk.  This part of the book is especially important for several reasons.

To qualify and quantify risk there are five essential steps that the author outlines:

  1. What are the threats and risks?
  2. What is the worst case scenario?
  3. What are the social impacts?
  4. What are the financial impacts?
  5. How can we invest to increase our strengths or reduce our weaknesses?

The author suggests that the last step is where we build our risk “buffers.”

(click on the image to go to the CDC’s website)

This reminded me of the five steps used in public health assessment of community risks.  The same ones that are used in the CDC’s Building Resilience Against Climate Effects (BRACE) program, which is meant to strengthen U.S. communities against the impacts of climate change.

The examples above are a small sample from this book that is loaded with tons of ideas about how to think about what’s important in your life.  While some of the ideas are a bit much, I trust that you will be an “Essentialist” and use what makes sense for you, while cutting out the rest.

So how do these two books go together?

Although different in their focus, they are really talking about the same thing.

In the near future, in a world where extremes of weather will impact every aspect of our lives, oil that powers everything will become a toxic, stranded asset, and billions of people still pursue the western lifestyle — something’s got to give.

I think we have to know what’s important to us, where we are going in life, and how we might get there.  Being financially prepared is part of that.

Beyond being financial prepared, the mindset of having a modest lifestyle is important in several ways.  One way, is that by consuming less, and saving more, you are making less pollution on this Earth.

More importantly, you are increasing your resiliency, not by accumulation of objects, but by accumulation of wealth.  And, it just plain feels good not to keep up with the proverbial Jones’ by opting-out of the endless cycle of consumer consumption and waste.  As we said at the beginning, wealth is not what you consume, but what you save.  Wealth is power; the power to weather whatever may come your way.

Take for example a bad hurricane striking the Gulf Coast or the east coast, or the big earthquake hitting California, or huge western wildfire.  Do you now, this very minute, have all the insurance coverage you need?  Do you have enough money to cover your family’s living expenses if you have to temporarily relocate?  Do you have enough to get by for a year if the place you work is destroyed?  These may be hypothetical questions to some, but for many people these scenarios are very real.

Accumulating wealth and savings is the best plan for weathering change.  Knowing what’s essential and important in your life, and focussing all of your efforts to those ends are what makes your life meaningful.  In both cases, less is more.  Less consumption, less spending, less of things that don’t matter, and more of things that do matter, your family, your work, your community.

I believe that the next 50 years will make or break the human race.  There are so many forces converging in this time.  It makes it a really exciting time to be alive, but maybe a little scary too.  A fundamental restructuring of western society, and the whole human relationship to the Earth that supports us is coming soon.  How soon?  Could be 10 years, could be a 100, but either way, it’s coming.  So let us begin to shift the way we think, save for a rainy day, and figure out what is truly important to us.

Thanks for reading.  If you have any thoughts about this topic, please leave a comment.

Bonus!  Video interview with Greg McKeown on

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