Money Mindsets in the Social Sector

For the first 15 years of my career I told myself a story about money and wealth. That story went something like this:
 
“I don’t care about money. My work in international disaster response makes me a better person than others who worry about wealth. I care about the humanitarian imperative above all other things and therefore don’t have to think about planning for retirement. People who think about this are lame/money grubbing/narrow/self focused/boring. There is no way I can ever retire anyway because it's so expensive these days.”
 
One secret fear cycle script was to compare myself, my career, my savings and wealth level to friends living conventional American private sector lives such as lawyers or in commercial real estate. I felt superior in my life choices and could not imagine life in a conventional private sector setting without the frequent jetting off to disaster zones, and feeling the intensity of a humanitarian response setting. Knowing that I was making myself a part of a meaningful moment in my colleagues’ lives, and the historic change of each crisis, was a captivating cycle. However there was always a nagging feeling in this fear and delusional superiority cycle that I was missing a big piece of the picture. My friends were socking away regular savings towards retirement, participating in long term wealth building while I was paralyzed by fear of this issue. I translated this fear into disdain and inaction.

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I had no idea about how individuals and families build wealth over time.
 
Do any of you Social Sector workers out there recognize this train of thought?

What a wrong-headed way to live and work! Yet I did it for almost two decades.
 
What was really happening was a fear-lack of knowledge-superiority-denial cycle happening in my head. I was afraid of the issue of money and wealth because I had no knowledge of these issues. I felt superior to others who were thinking about wealth because I was working on a compelling humanitarian cause. I denied that these issues were important because of this fear manifested as a superiority delusion.
 
In the last two years I’ve transformed from fear and ignorance of these issues to enthusiasm and inquiry. My steep learning curve has erased the fear, and I now appreciate the fascinating mastery process of personal finance and the way that a few basic habits and techniques can put all of us Social Sector entrepreneurs on the road to financial independence. This gives us the freedom to choose our focus and maximize our impact on the world. 
 
 
The mindset
To break through fear and ignorance in the areas of wealth and finance we Social Sector people have to change our mindset. For me the mindset change came from recognizing that my professional focus, belief in humanitarian principles and life/work package that I’m building requires a foundation of wealth. This wealth is there to take care of the basic needs of me and my family so that I can focus on living the best life and creating good work.  
 
Money is the transfer and storage of value between people and social entities. In our social sector professions we are fully conscious of the donor cycles, funding issue and tracking and reporting on how we spend private and public donations.
 
Why does this diligence cease when it comes to our own lives?
 
We have to solve these issues for ourselves to be able to project a consistent, stable and principle-based effort in the Social Sectors. 
 
What to do about it
The first part of this process is recognizing that there is a problem. This means clearly identifying the issue for yourself. If you had already figured this out, that’s great! If you are more like the ‘old me’ or the average Social Sector professional you have to recognize that you are terrible with money and make common mistakes based on a fear and scarcity-based mindset. Identifying that there is a problem is a way to confront the fear of money and finance while working in social enterprises. 

The next step involves educating yourself. Personal finance, as well as how to apply these concepts in a non-profit sector were completely missing from my education and interest. Make it your priority to fill in these gaps. 

Finally, we must execute. Knowledge alone is meaningless. We must enact the new habits and behaviours in our own lives. 
 
How do you retire in the Social Sector?
Retirement is fully attainable to high performing Social Sector professionals. For a traditional path to retirement at 65 or older, read William J. Bernstein's 2014 book on How Millennials Can Get Rich Slowly. This elaborates a modest savings and basic investment strategy that will build the wealth you need to retire after a standard 40 year working career. 

If you want to use a more radical approach, check out the shockingly simple math behind early retirement. Before you chime in with claims of loving your job and never quitting, these ideas are about building the financial freedom to pursue your mission. Of course we will work forever on the things that we care about, we are social entrepreneurs at heart and love our work. But how would it feel to know that you could safely leave your social sector job at any time if the project shifted or if your interests evolved? Would you behave differently at work in your social sector pursuit if you were financially independent already? Would you speak up more and launch new initiatives more frequently? 

The answer for me is a resounding yes, and that’s why I’ve made financial independence (defined as a paid-off house and investments to cover basic living expenses) a 10 year goal. 

Rich in the Social Sector (financial independence)
What does it mean to be rich? There are many currencies in life. Money is only one of these currencies. Time, freedom, influence over yourself and others, impact, social relationships, family ties are all valuable assets. As social entrepreneurs we get to define this for ourselves. There are inevitable tradeoffs that come with scaling up one or more of these currencies. 

How much money is enough in the Social Sector?
Defining enough means knowing your goals.  Then find the dollar amount per month that you need to reach these goals. Keep your debt low and amass 25 times the amount of your yearly living expenses and you have enough. For me this basic goal is a paid off house and 600K of productive investments. 

If you are reading this site you are making enough to reach retirement and early financial independence. Define your goals and then create a high enough savings rate to reach that goal within 10 years or less. 

Social Sector Titans like to think that they are above finance in their personal lives because their dedication and mission surpasses these pedestrian concerns. This is wrong. We Social Sector professionals need to embrace and master finance to achieve true dedication to the cause. 

Happy Trails!


Read more on Social Sector Titan: 

Overcoming fear of Money as a Social Sector professional

Building the Buffer: Margins for sane living and high quality work in the Social Sectors

Time as our only true Social Sector asset

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