Personal Finance and the Shawshank Redemption

The Shawshank Redemption is one of my favorite films of all time, and I’m far from alone in that sentiment. It’s been the top rated film of all time on IMDB for years and years and has been endlessly appreciated by both critics and movie fans alike.

In my opinion, the film resonates because it’s about a bunch of flawed but likable characters overcoming a very challenging situation, something we can all relate to. The movie manages to create very deep portraits of the main characters and surprisingly deep portraits of all of the side characters, often giving them a ton of depth and life with just a few seconds of screen time and a few lines.

Because of all of that, the film manages to pack a ton of great life lessons (and financial lessons) into a package that doesn’t come off as preachy; in fact, you often don’t even notice the lessons at all.

The other day, I noticed we had The Shawshank Redemption recorded on our DVR, so I watched the film again. I loved it but I hadn’t seen it in a while. As I was watching, I was sucked right back into the emotional highs and lows of the characters, but in the back of my mind, I couldn’t help but notice how many really useful personal finance lessons were present throughout the film. Here are some of the ones that really stood out to me. (Some of the quotes have been edited very slightly for language.)

Bad Luck Happens; Don’t Let It Knock You Down

Red: The first night’s the toughest, no doubt about it. They march you in naked as the day you were born, skin burning and half blind from that delousing [stuff] they throw on you, and when they put you in that cell… and those bars slam home… that’s when you know it’s for real. A whole life blown away in the blink of an eye. Nothing left but all the time in the world to think about it.

The film centers on Andy Dufresne, a man wrongly convicted of the murder of his wife. He’s sentenced to serve out his life at the titular Shawshank Prison in Maine.

Having to walk into a prison and hear the bars slam shut behind you, particularly if it’s due to a crime that you didn’t commit, is unimaginably tough. It’s more than enough to crush a person – and it does crush a few people early on in the film.

The thing is, the strongest among them pick themselves up off the ground and keep moving forward in life. Sure, their options are now severely limited, but they find a place. They find something to occupy themselves, something to do with their time. Red starts a contraband operation. Andy becomes an accountant and a librarian.

Everyone is knocked down at some point in their lives. Everyone is dealt a bad hand sometimes. The difference between whether you succeed or whether you fail is what you do after you’re knocked down, not before.

No matter how big your mess is, no matter how big your mistakes were, you can still move forward from here. Your net worth might be abysmal, but it can be higher tomorrow than it is today, and if you keep doing that day after day, you will rebound.

Take Advantage of the Opportunities You Have, Not the Ones You Wish You Had

(Andy agreeing to do the books)

Red: The following April Andy did tax returns for half the guards at Shawshank. Year after that he did them all including the warden’s. Year after that they rescheduled the start of the intra-mural season to coincide with tax season. The guards on the opposing teams all remembered to bring their W2s.

Andy was trained to be a banker. In a just world, he would have been plying his skills at a bank somewhere, earning a nice income and perhaps even eventually running his own bank.

Instead, he found himself within the walls of a prison.

What did he do? Did he give up? Nope. Instead, he waited around and looked for opportunities to ply his skills, and when even the smallest opportunity presented itself, he stuck his thumb in the crack and made the most of it.

He went from swabbing tar on the roof of a building to helping a guard with a tax problem to doing taxes for lots of guards to eventually handling the books for the warden himself.

Life presents us with lots of opportunities. Most of them aren’t perfect – they aren’t the ones we dream about or imagine in our minds – but they’re still present, all the time. If you want to succeed, take advantage of those opportunties as often as you can. Stick your thumb right in there.

Make Yourself Valuable to Others

Andy Dufresne: I understand you’re a man who knows how to get things.
Red: I’m known to locate certain things from time to time.

Red’s contraband ring made him quite valuable to others as a source for acquiring items that people might otherwise have difficulty getting their hands on within the walls of a prison. That service was valuable to others, so not only did it help Red earn some profit on the side, it also made him indispensable to many people in the prison. People came to him when they needed help.

What do you offer to others that makes you valuable? Why do people come to you? The better your answer to that question, the more likely you are to succeed in your career, your finances, your business, and your life.

For most people, this question is best answered by looking at your skills. What skills do you have that make you relatively rare or unique in your business or in the professional field you’re in? What makes you stand out? What makes you someone that fills a vital role that people actually need?

If you struggle to answer that question, your career is at risk, period. You need to have a strong answer or two to that question at all times.

If you can easily answer that question, then you likely have at least some degree of job security and likely have the leverage and opportunities to improve your income and move to a better job in the future.

Make yourself valuable to the people around you. If you’re not valuable to them, they’ll find someone else who is.

Have a Big Dream and a Plan

Red: Mr. Stephens visited nearly a dozen banks in the Portland area that morning. All told, he blew town with better than $370,000 of Warden Norton’s money. Severance pay for nineteen years.

Andy spent nineteen years laundering money for the warden. It was a good gig, no doubt, but that was only a part of Andy’s vision.

Another part of the plan – the part that the warden didn’t see – was that the money laundering scheme was also a big part of Andy’s plan to escape. He spent part of his time building up the laundering scheme, but also building an escape hatch that would enable him to someday take the profits out.

Andy built himself a great day-to-day gig, but he planned for something even bigger, and he used that day-to-day gig to help him build that bigger thing.

What’s your bigger picture? What’s your escape hatch if things don’t go right?

Do you have a killer resume that would help you get employed elsewhere? Do you have savings and investments that will help support you if another employment offer doesn’t come along?

Have a big dream for the future. At the same time, make sure you have an “escape hatch” that doesn’t leave you completely stranded if things go wrong in your current situation.

Break Big Plans Into Small Bits

Red: Geology is the study of pressure and time. That’s all it takes, really. Pressure and time. That and the big poster. Like I said, in prison, a man’ll do most anything to keep his mind occupied. It turns out Andy’s favorite hobby was totin’ his wall out into the exercise yard a handful at a time.

The biggest plans can sometime seem impossible. Escaping from a prison with concrete walls several feet thick and many, many feet high might seem like a complete impossibility for some.

Maybe for you, the giant plan might be something like reaching financial independence, or maybe it’s a bit smaller but still enormous like paying off all of your debts.

Whatever that big plan is, it can be solved in much the same way Andy solved his tunneling problem. He chipped away a little bit of rock each day and carried it out into the yard in his pockets, making just a little progress on his plan.

The same approach works for almost every worthwhile financial plan. Just save a little bit of money each day, and you can get that little bit of money by cutting out just a little bit of spending.

It’s not immediate. It takes time. You’re not going to have the solutions you want tomorrow or the day after or the week after that.

It takes pressure and time, just like Red said. It takes pressure – constantly being diligent and taking action toward the goal – and it takes time – lots of years for those little savings to build up into big money thanks to the dual powers of consistent savings and compound interest.

Every Plan Should Have a Contingency Plan

Andy Dufresne: Dear Warden, You were right. Salvation lay within.

As I mentioned earlier, Andy spent many years building a very robust money laundering scheme under the orders of the prison warden. Andy took care of all of the bookkeeping details for this plan, which resulted in hundreds of thousands of dollars flowing into the dirty coffers of the prison.

Undoubtedly, Andy’s plan was successful and it enabled him to win some serious perks within the prison walls. Eventually, however, the warden turned against Andy… and in that moment, he needed his contingency plan.

Andy’s contingency plan was twofold – the tunnel he’d built and an “escape hatch” of sorts from the money laundering scheme that allowed Andy to walk off with most of that money.

Hopefully, you have a big plan for your life that involves building up your career, investing for the future, and eventually enjoying some real freedom to do whatever it is you dream of doing.

But what’s your contingency plan? What will you do if life gets in the way of that big dream?

Do you have an emergency fund? Do you have insurance? Do you have skills that can help you find a new job or even a new career? Do you have a side gig that can keep income rolling into your life no matter what happens?

You can’t cover every possible disaster, but having a big healthy emergency fund, life insurance on the key income earners in your life, and a robust resume can take care of a lot of potential disasters in life, so that even if things don’t run smoothly (and eventually they won’t), you can still enjoy a good outcome – perhaps even better than you expected.

Stand Up and Take a Risk Sometimes

Andy Dufresne: Because if you do trust her, there’s no reason you can’t keep that thirty-five thousand… If you want to keep all that money, give it to your wife. The IRS allows a one-time only gift to your spouse for up to sixty thousand dollars… tax-free… you do need someone to set up the tax-free gift for ya, and it’ll cost you, a lawyer for example… I suppose I could set it up for you. That would save you some money. You get the forms, I’ll prepare them for you, nearly free of charge.

When Andy stood up on that roof and faced that horrible prison guard, he did it because he saw an opportunity buried in a landmine of risk. He knew that if he didn’t take that chance, nothing would change about his situation or the situation of those around him.

Many of us find ourselves in professional positions where it is far less risky to just keep our head down and keep our mouth shut. Maybe it’s that moment in a meeting where the boss is looking for someone to give a presentation or to head up a project. Maybe it’s that moment where you have this great idea for a side gig but it is going to take a lot of time and it’s easier to just not bother. Maybe it’s that moment when your boss is directly hinting at you to take on a bit of extra responsibility.

Do you keep your head down? Or do you step up to that challenge?

The challenging path is… well, it’s not easy. It has risk involved. You might end up flopping on your face. You might end up doing well but then seeing little reward for it.

However, at the same time, the reward can be great. A great line for your resume. A promotion. A glowing performance review. A raise.

It’s always easier to just keep your head down and just keep doing what you’re doing, but it’s very, very hard to get ahead that way. The rewards come to those who stick their head out every once in a while.

Respect and Help Others, No Matter What

Red: And that’s how it came to pass, that on the second-to-last day of the job, the convict crew that tarred the plate factory roof in the spring of ’49 wound up sitting in a row at ten o’clock in the morning, drinking icy cold Bohemia style beer, courtesy of the hardest screw that ever walked a turn at Shawshank State Prison… The [guard] even managed to sound magnanimous. We sat and drank with the sun on our shoulders and felt like free men. […] We were the Lords of all Creation. As for Andy, he spent that break hunkered in the shade, a strange little smile on his face, watching us drink his beer… You could argue he’d done it to curry favor with the guards, or maybe make a few friends among us cons. Me? I think he did it just to feel normal again, if only for a short while.

When Andy took his big risk on the plate factory roof, the reward he asked for wasn’t directly for himself. The reward he requested was for his friends. He did not keep all of the glory and all of the rewards for himself. He spread it out. He gave to his peers, those who were a constant part of his life, and in doing so he tightened his bond with them.

He didn’t do it to make friends. He did it because he knew that the best feeling in the world is to help friends.

Building a strong social network as an adult is hard. It can be very hard to build new relationships when you’re an adult, at least outside of the type of workplace friendships that people often have. Yet, time and time again, it is that handful of lasting strong relationships that we have that bails us out of problems in life.

The secret to building that kind of strong social network, filled with friends who have your back and whose company you enjoy, is to give of yourself rather than just taking. Give without question and without expectation, because that is the foundation of strong relationships.

Yes, you may find later on that some of those people are takers who aren’t there for you when you need them, but some of them absolutely will be there for you and it’s those people that add infinite value to live, not just because of the help they can provide, but because of the joy they bring into your life both when times are good and when times are bad.

Persistence Pays Off

Red: All they found of him was a muddy set of prison clothes, a bar of soap, and an old rock-hammer damn near worn down to the nub. I remember thinking it would take a man six hundred years to tunnel through a wall with it. Old Andy did it in less than twenty.

Almost everything in life that’s worth doing isn’t done in a day, or a week, or a month. The achievements that we’re the most proud of – the ones that really define the course of our life and define us as a person – take years and even decades.

The choice to marry someone and make that marriage work for life. The choice to start saving for retirement or even to work for an early retirement. The choice to launch a new career and stick with it until you rise up the ladder. The choice to take a leap and start building a new business.

Those choices are life-changing and life-affirming, but they require persistence. You don’t wake up one morning and decide to have those things. They take years of effort on a daily basis to achieve.

The highest of peaks are only achieved by those who are persistent, those who work toward their goal every day even if they won’t achieve it for years.

If you want a better life, you need to bring persistence to the table.

Final Thoughts

As I watched the credits roll on The Shawshank Redemption, one thing really clicked home for me. If you really want to change your life for the better, you can find inspiration all over the place. You just have to be ready to make positive changes.

Are you ready?

Trent Hamm

Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.