Money provides a security blanket. However, a security blanket, like any blanket,
can smother you and the security money offers can be a double-edged sword.

Money provides a security blanket. However, a security blanket, like any blanket, can smother you. The security money offers can be a double-edged sword.

I discovered the true meaning of financial security many years ago when its absence left me in a mess. However, its lack also provided the incentive to get me moving in a new and life-changing direction.

In the late 1980s, I took a year out and studied for an MBA. This decision led to a severe personal and financial crisis when I graduated straight into the 90/91 recession. I could not get a job, and my finances deteriorated.

I hit a low point, feeling a fraud and a failure because I am supposed to be an expert with money. Now I have no income, no assets and significant debts. I feel worthless, ashamed and humiliated. Conversely, the kick in the teeth provides me with the impetus to review my financial, career and life plan. My fall leads, by a circuitous route, to the healthy place I find myself in today.

A security blanket with two sides

If money has a role as a security blanket, then my story proves the point in two ways. My mistake was to take a massive career gamble without having the financial resources to provide a security blanket.

Looking back, however, I don’t regret the move, in spite of the pain it caused. By stepping over the cliff edge without a financial security blanket, I opened myself up to being vulnerable.

On reflection, I see a certain amount of courage, as well as naivety, in my choice. I occasionally wonder if things might have been different if I had chosen (and planned for) security over vulnerability. The words of Brené Brown are now firmly etched on my heart. ‘Vulnerability is having the courage to show up, even when you can’t control the outcome. It is the birthplace of innovation, creativity and change.’

A double-edged sword?

So, there is a tension between accumulating cash for peace of mind and achieving vulnerability by neglecting it. Many, if not most of us, perceive security as a good thing, and weakness as bad. Perhaps, though, we should ask if excessive protection stifles innovation, growth and change, while vulnerability enhances it.

Yes, consider the role that money plays in your security. However, be aware of the potential harm you could inflict on yourself by neutralising incentives to change and develop.

Notwithstanding the above, most of us will look to accumulate money to mitigate the effects of life’s challenges. This accumulated security fund will probably come in different forms to protect you against various types of adversity.

Time for security

Money’s role as a security blanket is often best formulated in terms of time. You might cover three months of core expenditure if you are confident of your income. If you are less confident, you might opt for a more extended period of core expenditure.

Pensions, of course, provide the ultra-long-term security blanket for old age and possible ill-health.

Insurance and financial assets play an essential role in your security. They can help you to become fully ‘self-insured’ or ‘financially independent’. Your financial security blanket extinguishes your reliance on employers, your business, charities or the State to underwrite your security.

Covering life’s fastballs

We’ve all been in situations where life throws you a fastball. You are sailing along without a care in the world when suddenly, bang. The washing machine springs a leak, the car makes strange noises, or the cat gets injured in a brawl.

Or those well-laid plans go wrong. For instance, every July, Alex and I join a pilgrimage to Lourdes leaving Stansted at 6.30 on Friday morning. Many of us travel from Yorkshire the night before. However, in 2016 Alex goes to the first day of the Open at Troon in Scotland instead. He comes up with a feasible plan to get himself from Troon to Stansted that evening. He books onto the early evening flight from Glasgow – which he misses.

The combination of trains and taxis that eventually get Alex to Stansted at 3.00 on Friday morning cost around twenty times the cost of his missed flight. We are therefore fortunate (or sensible) in that we have readily available cash reserves on which we can draw.

So money plays an essential role in sorting out life’s fastballs. As my mother-in-law said, ‘in a crisis, spend money’, surprising coming from a Scot, even if true.

Security blanket for later life

It is probably in later life that we come to see money’s most active role in providing security. We are living longer, healthier lives. However, a point comes where we realise we can’t, and don’t want, to do as much as we could.

It is at this point that we deploy our accumulated capital in the service of a peaceful and secure life. We may potter around the garden or cruise the world. Alternatively, we may choose to be looked after by professional carers at home or in a home.

However, don’t forget that security in later life needs more than money. Above all, it requires community and friendship and belonging to something bigger than just yourself. It is easy to find and participate in a social group at work. Indeed, it is often one of the key incentives for getting up and going to work. Money won’t help, though, if there is no community to join in retirement.

As you invest in your pension fund, think about later life security in a broader sense than just financial.

Materialism isn’t security

A pension opens the door to everything from food to cars. However, material things do not provide real security or stability. Our obsession with the material is a fallacy. We can usually control material things, so they do our bidding and help us to run our lives. Materialism is, therefore, about control of the outcome. The power of the financial security blanket is in safety and security.

However, the reality of our lives is that nothing is permanent or fixed. Everything we do will have consequences and change is inevitable, most of which we cannot control. Building a significant pension pot for old age may seem sensible, and for many, it will be. However, it can be a worthless treasure trove because the security it buys is, to no small extent, illusory. The trap of long-term financial security is that you find yourself leading a worthless life. You spend your retirement always on the lookout for something greater.

So maybe it is best not to take money’s role as a security blanket too seriously. Rather than save money for security, you could spend money to express your values and intentions. Money is like water. When it sits in a pool, it becomes stagnant and unhealthy; it does nothing. However, money that flows like a river can have an impact on your life and the lives of others. So my question is, do you want to wrap yourself in a blanket or go out and make a difference.

This is the fourth article in a series of articles on the roles that money plays in our lives.

Photo by pawel szvmanski on Unsplash

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