Thanks for these thoughts, they resonated with me as an ambivalent Mustachian.
The tension between Mustachianism and effective altruism might be relevant to some on this site. You CAN both save aggressively and give to charity, especially at a high income. But you cannot make both your #1 priority: you have to choose. MMM himself seems to have chosen saving first, and giving to charity after financial independence (he advocates on the blog for effective charities, which I admire). This is my strategy as well on the principle of saving yourself before others. But the really committed EA people seem to choose charity first, with perhaps an emergency fund or retirement savings but nowhere near the level of savings that MMM would advise. Perhaps these people are more confident about their future earning power or prioritize themselves less. Or maybe it’s a difference in attitudes to work in that some MMM folk seem desperate to get out of the workplace.
Hm, in thinking about it it seems to me that the tension you describe is moreso a matter of the time value of money than it is about where you choose to allocate your money.
Suppose that you earn $4M over the course of your career, and want to spend $2M on yourself over the course of your life. You can 1) focus on saving your money first and donating it later, or 2) donating it now as you earn it. In both cases the amount you’re spending on yourself versus others are the same, but in the former case you are the one who benefits from the time value of money (earning interest) instead of the charities. (Additionally, perhaps charities can put money to better use now versus later.)
This matter of timing that I describe seems like a question that is separate from the question of how much to spend on yourself versus others. Eg. spending $2M on yourself over a lifetime versus $1M versus $3M.
Perhaps this is also something that EAs and Mustachians disagree on? I’m not sure. My impression is that a large majority of EAs are ok with or even recommend a lifestyle that is at least as spendy as a Mustachian lifestyle, if only for the purpose of: standard of living → happiness → productivity gains → better at making money that could be used altruistically. But I also recall hearing philosophies that are more about: “you can feed ten families in Africa if you eat ramen instead of chicken and rice”.
>Suppose that you earn $4M over the course of your career, and want to spend $2M on yourself over the course of your life.
There’s also a difference between MMM and EAers over how long to work. A Mustachian might earn $1M, retire, and donate any funds they happen to have over what they need. The EA person might work for decades longer, make $4M and donate $3M. So there could be very big differences in total amount donated even if the Mustachian and EA person spend the same amount on themselves.
(Average lifetime income is in the range of $1M, is beside the point, but I couldn’t resist looking it up.)
I think that is true for a typical Mustachian, but at the same time there’s nothing about Mustachianism that says you should do this. The idea is to be frugal and retire early because retiring early allows you to pursue what you are passionate about and stuff. If making more money and donating it to effective causes is what you are passionate about, Mustachianism doesn’t say to avoid it. (That’s my interpretation of it anyway.)
(Average lifetime income is in the range of $1M, is beside the point, but I couldn’t resist looking it up.)
Huh, that seems low, at least for a wealthy western country. Iirc average income in America is around $50k. Over 40 years that is $2M. Adding on interest makes it even more.
Thanks for these thoughts, they resonated with me as an ambivalent Mustachian.
The tension between Mustachianism and effective altruism might be relevant to some on this site. You CAN both save aggressively and give to charity, especially at a high income. But you cannot make both your #1 priority: you have to choose. MMM himself seems to have chosen saving first, and giving to charity after financial independence (he advocates on the blog for effective charities, which I admire). This is my strategy as well on the principle of saving yourself before others. But the really committed EA people seem to choose charity first, with perhaps an emergency fund or retirement savings but nowhere near the level of savings that MMM would advise. Perhaps these people are more confident about their future earning power or prioritize themselves less. Or maybe it’s a difference in attitudes to work in that some MMM folk seem desperate to get out of the workplace.
Thanks for the compliment :)
Hm, in thinking about it it seems to me that the tension you describe is moreso a matter of the time value of money than it is about where you choose to allocate your money.
Suppose that you earn $4M over the course of your career, and want to spend $2M on yourself over the course of your life. You can 1) focus on saving your money first and donating it later, or 2) donating it now as you earn it. In both cases the amount you’re spending on yourself versus others are the same, but in the former case you are the one who benefits from the time value of money (earning interest) instead of the charities. (Additionally, perhaps charities can put money to better use now versus later.)
This matter of timing that I describe seems like a question that is separate from the question of how much to spend on yourself versus others. Eg. spending $2M on yourself over a lifetime versus $1M versus $3M.
Perhaps this is also something that EAs and Mustachians disagree on? I’m not sure. My impression is that a large majority of EAs are ok with or even recommend a lifestyle that is at least as spendy as a Mustachian lifestyle, if only for the purpose of: standard of living → happiness → productivity gains → better at making money that could be used altruistically. But I also recall hearing philosophies that are more about: “you can feed ten families in Africa if you eat ramen instead of chicken and rice”.
>Suppose that you earn $4M over the course of your career, and want to spend $2M on yourself over the course of your life.
There’s also a difference between MMM and EAers over how long to work. A Mustachian might earn $1M, retire, and donate any funds they happen to have over what they need. The EA person might work for decades longer, make $4M and donate $3M. So there could be very big differences in total amount donated even if the Mustachian and EA person spend the same amount on themselves.
(Average lifetime income is in the range of $1M, is beside the point, but I couldn’t resist looking it up.)
I think that is true for a typical Mustachian, but at the same time there’s nothing about Mustachianism that says you should do this. The idea is to be frugal and retire early because retiring early allows you to pursue what you are passionate about and stuff. If making more money and donating it to effective causes is what you are passionate about, Mustachianism doesn’t say to avoid it. (That’s my interpretation of it anyway.)
Huh, that seems low, at least for a wealthy western country. Iirc average income in America is around $50k. Over 40 years that is $2M. Adding on interest makes it even more.