Updated on 08.10.09


Trent Hamm

Recently, a brilliant little article popped up over at Five Cent Nickel, outlining the idea that one’s take on long-term investment performance is often a matter of perspective.

I go even further: almost every assumption that you base your money decisions – and even your other life decisions – on is a matter of perspective.

Take me. I was born in the country on the banks of the Mississippi River in a quiet region of the Midwest. I graduated in a high school class of 31 people (several of whom now read The Simple Dollar, apparently). I went to a big university (Iowa State U.) where I graduated in a class of several thousand. I’ve worked for businesses. I’ve worked for governments. I’ve worked for myself. I’m married and have children. After living in a city, I now live on the very periphery of a small town and I dream of living in the country once again.

All of these aspects of my life have shaded my perspective time and time again. Let me walk through some examples.

My childhood taught me it was better to be earnest. To put it simply, I tend towards the serious. I often take people at their word, sometimes even when they’re joking.

My childhood also taught me that not having money doesn’t mean you’re stupid or worthless. Many, many people with substantial money seem to act as though people without money are rubes. That’s simply not the case – there are intelligent, well-intentioned, hard-working people at all levels of financial status.

My educational history taught me that there are many different ways to learn. Not everything about an educational experience can be measured, and a school with tons of opportunities can fail a student just as much as a school with few opportunities. It’s up to the student to be successful – a forward-thinking kid can take advantage of any situation.

My educational history also taught me that tests don’t mean much of anything. I was a National Merit Scholar who proceeded to almost flunk out of college at first because I had no idea whatsoever how to study. I spent my childhood just absorbing whatever interested me, which was great for the SAT and high school but terrible for college. I looked great on the SAT, but in a classroom where I didn’t know the material and didn’t care, I floundered big time.

My work career taught me that stability isn’t everything. If you’re in a stable career, you’re often surrounded by complacent people, which makes it difficult to get things done and exciting projects are hard to come by.

My history with investing pushes me towards being conservative. I’ve seen the dot-com bust and the housing bust. Don’t rely on the stock market for anything you’ll need long term. If you need that balance, it shouldn’t be in stocks.

All of the experiences in my life have gelled together to create my perspective on the world. I tend to think that taking someone at their word is usually the right way to go. I tend to overestimate the reliability of jobs – and sometimes overcompensate for that. I tend to underestimate the reliability of the stock market. I tend to not buy into the whole pressurized SAT/ACT/college application experience that high school seems to be. I tend to, if anything, be biased against people who dress in expensive clothes and drive expensive cars.

My life experience has created my perspective on the world. It pushes me subtly towards conservative investing choices. It pushes me towards being a locavore (eating locally grown foods). It pushes me towards being earnest, serious, and forthright with others much of the time. It pushes me towards chasing my dreams instead of seeking the good-paying stable job.

It’s different than your perspective. Your life has taught you different lessons than mine. The things you choose to apply in your life are different than what I choose to apply, and they get different results.

I can’t provide all the answers. No one can. The best I can do is provide my answers and leave the comments open for others to provide theirs. Out of that, perhaps, you can find the direction you need to grow and move onwards.

Quite often, I get emails from people saying “I love The Simple Dollar. I don’t always agree with what you say, but I read it every day and it makes me think.” or something similar. I’d far rather read that than someone saying “Trent, you’re always right.”

Because I’m not even right in my own life much of the time, and I’m certainly not going to be right in your life, either. All I can do is bring my perspective to the table and hope that, when we share ideas, you bring your perspective, too.

Whenever you read something or hear something that you think is wrong, stop and ask yourself this: why is it wrong? The more often you can come up with a real answer for that, the better off you’ll always be in every aspect of your life, financial or otherwise.

Tell me about it. What aspect of your life has given you a perspective different than mine?

Loading Disqus Comments ...
Loading Facebook Comments ...
  1. “If you’re in a stable career, you’re often surrounded by complacent people, which makes it difficult to get things done and exciting projects are hard to come by.”

    This is so true!

    Their jobs may be stable, but it is causing their drive to better themselves to become “unstable”!

  2. Michael says:

    Just for the record, every time I read something here and think it’s wrong, I have a real reason to think that. Whether your background gives you a tendency toward or from a certain error is irrelevant to me. Likewise, when I make a mistake I don’t blame the bias that led to that mistake. I correct it and try to develop a more “correct” perspective.

  3. “My childhood also taught me that not having money doesn’t mean you’re stupid or worthless.”

    Thank you.

  4. Ankit says:

    Gr8 Post! Understanding one’s own values is so important and working accordingly. Having perspective is so important.

  5. Jason says:


    The RSS version of this article has a payday loan ad for a company called paydaymax.

    Just thought you should know.

  6. Jessica says:

    Agreed. Your perspective is oftentimes read as that of a husband and father – just because my perspective is that of a childfree female doesn’t mean you always have all the answers for me. However, it doesn’t make your ideas and advice any less valuable. :)

  7. Ash says:

    Good post. I have had my share of dreams and have strived to achieve them. But when i have had to regroup, realign and restratagize my path towards my goal is when I had a perspective change. It is so true that life experiences is what shapes our outlook.

  8. I don’t believe truth is particularly relativistic. So, I don’t believe the right question is to figure our your perspective is, but instead to figure out how to challenge your perspectives. This is impossible to do this without living life. You can read a million different books and spend the entire day working on your computer but it’s not going to take your perspective far. If you are serious about broadening you perspective, you need to meet people way outside your comfort zone, maybe people who you would fear for your physical safety talking to, or cannot communicate with due to language differences, or maybe people who you don’t even know they exist.

    Probably the single biggest event which broadened my perspective was working in INDIA. I was 30 years old, and had already travelled to maybe about a dozen different (mostly developing) countries, but going to India completely shocked me and changed my thinking about everything. Traveling is a good way to shake up your perspective, but there are millions of other ways. There are neighborhoods not five miles from where I live which are more of a culture shock than places 10,000 miles away.

    So I don’t really care what anybody’s perspective is.
    But what I want to know is what are they doing today to break out of their current perspective and push out of their comfort zone, and I want to see them making progress. Tying everything back to the perspective which you were born into is not very personally challenging; essentially it is justifying your current views on your current station in life, and will just keep you boxed into a small corner.

  9. Thao Le says:

    On stability, I totally 150% agree with you-if not more. I am currently working for the Federal Government, fresh out of university. Your site keeps me motivated to move onto better things that align with myself. I appreciate you and your blog! So cheesy, but true! Cheers!

  10. AnnJo says:

    Trent, you are well on your way to becoming a wise old man. Thank you for sharing that process with us.

  11. “What aspect of your life has given you a perspective different than mine?”

    Well, I would have to say that living close to the city (no further than a suburb) has made it hard for me to imagine living too far away from a large metro area. I love Minneapolis-St. Paul because within the metro there is dang near anything you could want to do. I couldn’t imagine living 100 miles north in “the middle of nowhere” where options are slimmer.

    That’s just my perspective, perhaps it will change as I grow older and have new and different experiences.

  12. J says:

    “Don’t rely on the stock market for anything you’ll need long term. If you need that balance, it shouldn’t be in stocks.”

    I really hope I’m misunderstanding here. Long-term, the stock market is one of the best ways for generating a return. Of course, it’s also volatile and risky — but someone in their 20’s or 30’s has an outlook of 30 or 40 years till retirement. Of course, as you age I agree that the investments should switch to lower-risk vehicles like bonds, cd’s, etc, and when you retire it should all be in very low-risk stuff.

    Should the statement be “Don’t rely on the stock market for anything you’ll need short term”?

  13. SavingFreak says:

    This is a great post. Knowing your perspective and how it both enhances and taints your view of the world is the first step toward truly understanding and helping others.

    Most people aren’t willing to open up unless you have some ability to understand where they are coming from. Even just some minor connection allows a person to feel like they can open up. This is why you see politicians lie about their previous experiences just to make a connection with a crowd.

  14. This sounds sort of familiar with what’s being said in the book I’m reading – 7 habits of highly effective people. Kinda, on the same sort of level at least. I know the book talks about personality vs character and such, but I can’t recall the exact wording and what not. Just strikes me as kind of close. :) As always, there are two sides of every coin and multiple ways to view every story. No one view is wrong, just colored different than the rest.

  15. Robin says:

    Your last point on questioning when you think something is wrong is right on the money. The main problem we have in this world – seen now in the Health care debate, is that no one ever considers that they themselves may be wrong. This is of course the normal state of humans. When this country first started we faced the same problem, but with much wiser leadership. To get the state reps to sign the constitution of the US, Ben Franklin made a short speech. After his speech, they all signed, below is part of that speech….

    “..the older I grow, the more apt I am to doubt my own judgment… that the only difference between our Churches in their opinions of the certainty of their doctrines is, the Church of Rome is infallible and the Church of England is never in the wrong….

    ..few express it so naturally as a certain French lady, who in a dispute with her sister, said “I don’t know how it happens, Sister but I meet with no body but myself, that’s always in the right — Il n’y a que moi qui a toujours raison.”…

    On the whole, Sir, I can not help expressing a wish that every member of the Convention who may still have objections to it, would with me,
    on this occasion doubt a little of his own infallibility,…”
    Ben Franklin…Speech to the Continental Congress

  16. Olivia says:

    I agree that knowing where we came from, if you will, provides insight into our perspective, but it should be more of a starting point than an ending point.

    Undoubtedly our background shapes our financial and life decisions, but hopefully we are all continuing to mold that.

  17. J says:

    To answer your question about what gives a perspective different than yours, though, I grew up all over this country. I was born in the South, lived in California for a while, lived in the Midwest and currently reside in New England.

    What I learned along the way is that life should be continually re-examined to find ways which are better for you. For instance, I’d alter your last statement:

    Whenever you read something or hear something, stop and ask yourself this: why is it right or wrong?

    Focusing just on stuff that’s “wrong” eliminates the introspection that comes from “being like everyone else”. Financially, if I lived like many people in this country, I’d have a car payment for the rest of my life, something like $8K in a credit card balance, lots of toys, home renovations funded through a HELOC and so on. I’d be living paycheck to paycheck, with no real thought given to strategic planning or life goal. And I’d be doing things “right” — according to most people in the US who live like this. Instead, we are following Dave Ramsey’s version of “right” and getting the finances in order so we can be “weird” and “different”.

    Also, I completely disagree with this statement:
    “If you’re in a stable career, you’re often surrounded by complacent people, which makes it difficult to get things done and exciting projects are hard to come by.”

    This is a very sweeping generalization. One person’s exciting project could be building a bridge, working on the design of a new passenger jet or sending a rover to Mars. These types of projects are years in the making and require an enormous amount of capital investment, not to mention planning, testing and development.

    I’m also relatively sure that anyone needs to deal with complacent people and workday drudgery — if you work in a corporation of 50,000 or are your own boss.

    The far more important thing is to like your work and do well at it. If that’s bring a blogger, then great — I’m happy for you. But don’t stereotype people who work in stable careers as being unable to come by exciting projects. Companies like Google, 3M and many others go out of their way to give employees time to work on whatever they want, knowing that self-interested employees generate new products.

  18. C says:

    People commenting here have brought up some very good points. Still how many of them come such small communities, gone away to such large ones and then returned? One’s early values do matter. Some embrace the values, some completely reject them. I used to believe what so-called rich, smart, worldly people said simply because they seemed to know and portray themselves as more aware of everything more than I did. Turns out not to be true. Values and basic truths about money and life in general are more valuable in the long run. I love your articles and understand where you are coming from. (I am from Kanawha and my graduating class was also 30. I live far way now and won’t be returning but I can SO relate!).Keep up the great job you are doing, please

  19. Maureen says:

    I think that one difference in perspective is that you have the security of your wife’s employment to fall back on while you entertain ” chasing my dreams instead of seeking the good-paying stable job.” If you were unsure of your income, as so many are right now, you would certainly not sneer at that good-paying stable job. You would be grateful for it. There’s nothing like being on the brink of homelessness to give you a paradigm shift.

    I agree with post number 13. A job that you might consider boring or tedious or distasteful much just be someone else’s passion. I’m reminded of the bricklayer, who, when asked what he did for a living, replied “I build cathedrals”.

  20. Meg says:

    What Maureen (post #14) said. It’s easy to sneer at people with stable jobs when you can fall back on someone else’s paycheck. It annoys me when bloggers talk about following their dreams and freedom when that freedom is financed by someone else. And not everyone finds the same jobs boring or exciting. I enjoy clerical work because it conserves my energy and imagination for my fiction writing after work. Different strokes and all.

  21. Elderly librarian says:

    Trent I share most of your perspectives even though I am twice your age and I was raised in Manhattan and lived in other large cities. This is probably why I am reading your blog, even if I have “been there, done that”. You can always get new ideas even from someone who shares most of your own outlook.

  22. Moom says:

    I’m surprised about your comments on investing as in my previous reading of this blog I found lots of reccomendations to invest in stock index funds as the main investment recommendation.

  23. Jen says:

    Wow, talk about perspective coloring a person’s viewpoint. I didn’t sense a single “sneer” in this post. I read Trent’s perspective, based on his background. Imagine that… it’s only the title of the post.

    From everything I’ve read at TSD, Trent and his wife have a great relationship, and shared, agreed upon goals. I have that kind of relationship with my husband… it’s called supportive, and it’s a great type of relationship to have with your spouse or significant other. It seems a few here don’t have that, which is sad.

    The statement accusing Trent of “chasing my dreams instead of seeking the good-paying stable job.” might be the most ridiculous comment I’ve ever read here, and there have been A LOT of those! Last time I checked, the TSD is a MAJOR personal finance blog that is wildly successful. Oh yeah, then there’s the fact that Trent has written a book. A published book. Hmmm… sounds like he’s living his dream, not chasing them. Jealous much? I’d call that a pretty successful career, and kudos to him for making it happen through sheer hard work and determination. I’m going to go out on a limb and bet that his wife is 100% proud of him, and not resentful in the least. I know I would be.

  24. I’ve recently gotten away from the “If its such a good idea, how come everybody isn’t doing it?” with respect to money making ideas.

    This is not necessarily always true. If so, maybe just a little true–meaning, maybe there is room for you to make money doing it also.

    Wth all of the “spin-off” success stories out there, if you see a concept you think you could make work for you–why not go for it?

    Of ocurse, do your homework, maybe stick your toe in the water at first rather than diving in head first, but think about trying it. It could always work!

  25. J says:

    @Jen — just to be absolutely clear, I was critiquing the idea that stable jobs mean being surrounded by complacent people and there being no exciting projects available to stable careers. I have a stable job right now, and I’m surrounded by some of the least complacent people and working on projects that are interesting and fun. I could possibly characterize the life of a blogger as a shut-in who writes articles and then watches people rip their work apart, while scraping together ad money to make it another month. Would that be an accurate way of portraying a blogger’s life? I don’t know, but a phrase such as “stability is only one factor in career choice” or “the stability of a career can be an illusion” would be a way of getting at the same point without making a generalization that not only makes an assumption about what people want to do, but then makes a further assumption that all organizations make it hard to get things done.

  26. Takilla says:

    @ J – He said “often.” Now in my mind that means anywhere from (just pulling this out of the air) 30% of the time to 70% of the time. You seem to be assuming it means 99% of the time. I just don’t think you’re understanding his meaning so taking offense makes no sense in this case.

    As far as the perspective thing: what comes to mind for me is basically discovering as I grew up that my mother and father, teachers, doctors etc are people who don’t know everything, and in some cases don’t even know as much as they should to be in their position. IE question everything! As far as perspectives being “right” or “wrong” I believe there is such a thing. Simply put: your perspective is a collection of assumptions and beliefs that may or may not match up with reality. Don’t believe me? Ask yourself if the perspective of Charles Manson is just as valid as anyone else’s.

    Somethings are subjective and some things are objective … perspective is a mix of both if you ask me and therefore, some of it can be just plain wrong.

  27. I grew up in developing countries all my life due to the nature of my parents work. The dichotomy between the rich and poor were so great, I really began to appreciate what I had at an early age.

    If people can get a chance, I recommend living/working overseas in a country dissimilar to the US for a year or two. It’ll open your eyes to many things.

  28. Jenny says:

    I grew up in a poor, multicultural neighborhood in Hawaii in the 50’s. Everyone around me was poor, so I wasn’t aware of just how low my family was on the socioeconomic scale until I started going to a high school that had middle class and affluent kids feeding into it. My self-confidence took a hit when I realized I couldn’t do so many things other kids knew how to do because I had no access to sports, swimming lessons, music, etc. I didn’t even know how to improve my lot. I was so fortunate to get a scholarship and have a chance to attend college. Some teachers apparently knew of my situation and nominated me. At the end of the school year, I was surprised with a generous scholarship check and wonderful letter from the faculty. I didn’t even bother to apply to college because I felt it was totally out of reach. I am now solidly middle class and much, much more worldly. I have not lost my childhood money beliefs, though. Because money was so very tight, I grieve at waste and cannot understand why people waste resources and money. Since I know what it is like to be destitute, I have so much empathy for the poor. I also do all I can to avoid anything that suggests boastfulness or conspicuous consumption.

  29. Allen says:

    Our educational experiences sound familiar. I too would learn about whatever interested me as a kid. Once I learned a bit I would move onto the next shiny subject. Consequently, I had good grades in school, slammed the ACT, and got into the college I wanted.

    When in college I had trouble adjusting because in highschool I only averaged 1.31 minutes of homework per night. (thats right I kept records and made an average) I had trouble focusing on one subject for an extended period of time. Even today I have this huge range of random (mostly useful, I think) knowledge, but I haven’t been able to nail down exaqctly what my forte is. Unfortunatley, I think we live a society which too highly values the specialist and under values the utility player.

Leave a Reply

Your email address will not be published. Required fields are marked *