If someone shows off their shiny new US$ 1.2 million Ferrari, contrary to perception, it tells us nothing about that person’s real wealth. What it surely tell us though, is that today that person has US$ 1.2 million less in their bank account!
Why does that matter? Because we think wealth is a sign of success. It might be, but success is not happiness. According to the very interesting book ‘The Budget Deficit‘ by Stephanie Kelton, 40% of Americans can’t pony up even just US$ 400 if faced with an emergency situation – which is just unfortunate and sad. If this is the case for America, what about the developing world?
Okay, let us assume there is enough money for survival. But using that money well? That’s a different story! There are phones in the market today that cost US$ 2000! For just a phone. That number is the same as the annual per capita income of many countries. Unbelievable isn’t it? What would the value of the same US$ 2000 phone be 3 years from now? Most of the features would be totally outdated. Except calling – which is the real reason for buying a phone in the first place. Of course, duh, no one buys a phone for calling anymore. Cameras, gaming, computing power and myriad other reasons exist. Fair enough. But why are people falling over each other (and racking up credit card debt too) to buy 5G phones, when 5G networks aren’t even ready yet where they live?
There is a sanskrit word called vairagyam. It loosely translates to dispassion, detachment, or renunciation. As human beings, we have the ability, no, in fact the power, to discriminate. But we waste it in discriminating against our fellow humans. What if, we could instead discriminate among the things that are worth doing, worth knowing and worth gaining? Choosing experiences over objects. Choosing real relationships over phones. This is the true vairagyam! It is not about renouncing everything. Rather it is about ensuring that no matter what mobile phone we have or do not, or what car we drive or do not, internally we remain at peace.
And here is where ‘valuation’ – primarily a concept in finance and investing – can be applied in real life. If we learn to look objectively at everything around us in the world, and identify whether these really give us lasting happiness, we will not despise anything, but rather value those things. Do we really need that car? Or do we need it only to show off to our neighbours? Honest valuation will bring clarity, which will help us discriminate the necessary from the wasteful.