Great Savings 49 – Ethics And Wealth


The word “ethics” can be defined many ways, but the concept boils down to this: “Doing the right thing even if no one is watching because in our heart of hearts we know we’ll feel better about ourselves over the long run.” So what do ethics have to do with saving money and building wealth? Just about everything.


There's money under the mattress.

If you amass your fortune illegally, you’ll always have to wonder if you’ll get caught. Talk about a poor night’s rest!

Suppose you amass hundreds of thousands or even millions of dollars over the years, but never file a tax return. Or suppose all the money you accumulate is made illegally. Either way, there is a reasonable expectation some or all of it could be seized if the authorities find out. As a result, you always need to watch your back and be on the alert. So, yes, you’ve amassed a fortune, but one with a huge emotional burden attached to it, and one that could be wiped out the moment you let down your guard.


Admittedly, ethical issues surrounding the accumulation of money aren’t always this obvious. Yet obvious or subtle the end result is often the same: Whenever we fail to follow the path we know is right, we leave ourselves at-risk emotionally, legally, financially, or otherwise.


It’s true: Ethics are one of those philosophical notions open to endless discussion and debate. What is right? How do we know right from wrong? Can we establish general rules or is each person and each situation different? While we could delve into these questions it may be more prudent to limit the topic to the ethics of amassing wealth.


A person’s ethical standards surrounding money may say a lot about their background, experience, culture, and even situational conditions like the job they hold or the amount of money in their pocket. Let’s look at some examples and see how the issue of ethics and money play out:


♦ A poor man struggles to feed his starving family. While he abhors the thought of stealing, he sees a bounty of food in his neighbor’s garden and his little ones are begging to be fed.


♦ A small, struggling businessman who offers his services as a carpenter tells a client he won’t charge as high a rate if paid cash. Clearly, he intends to avoid paying sales and income taxes.


Wow, someone lost their wallet!

What would you do if you found a wallet full of cash and credit cards lying in the street? Would you do the “right” thing?

♦ A woman sees an older man drop his wallet on the street. She just got laid off from her job and owes $3000 on her credit cards. The wallet contains $3500 cash and credit cards. She considers returning the wallet minus the cash. Who’s to say she didn’t find it that way? The cash would allow her to to eliminate her debt and still leave some money to get by on while she looks for a new job.


♦ A wealthy woman made her fortune buying real estate at distressed prices from families underwater on their mortgages. She offers the same families a deal to repurchase their homes at a smaller monthly payment. Unfortunately, the payment doesn’t cover the accumulation of interest charges. The deal also calls for a balloon payment for the balance of the loan if unpaid in three years—a condition few of her clients will be able to manage, unless they can dig themselves out of their respective financial holes and qualify for traditional refinancing.


If we stop to think about it, a person can be on either side of a financial transaction and still come up against an ethical choice. Sometimes ethical choices seem relatively easy to manage or benign on one side of the transaction, yet are a big deal on the other.


For the starving man in search of his next meal, the ethics surrounding the act of stealing may feel far less important than the ethical need to provide for his family. Would he look back and regret his actions, either way? And what of the neighbor who saw the man stealing from her garden? If she knew the man was starving would she have a moral obligation to help? Then again, what if she was starving or poor herself and her crop represented her livelihood?


This is Great Savings Tip 49 - Ethics and Wealth exclusively from the carpenter who doesn’t want to pay taxes the issue at hand isn’t one of survival. It’s a matter of choosing how he goes about improving his lot in life. Will he ever worry he’ll be caught and punished for avoiding taxes? Will he lose sleep over it? And how about the homeowner that sees a way to cut the cost of his repairs? Will playing along with the carpenter create any sense of guilt? Should either feel bad when the state can’t balance its budget and other taxpayers are asked to pick up the tab?


Perhaps the old man who lost his wallet will be sad to lose his cash, but relieved he won’t need to cancel his credit cards. On the other hand, what if the money was for paying off a high interest loan and now he’ll be penalized for missing his payment? Or what if the money belonged to a sick friend and the man was sent on an errand to pay off medical bills? And what of the woman? Will she ever feel guilty of robbing an old man down on his luck? Will stealing the money haunt her to the end of her days?


Our real estate magnate earns her money preying off the misfortune of others. Does she need more money? Does she need to earn money this way? Will she ever feel any of the pain of her clients? Should she have to? Yet aren’t her clients also accountable for their actions? How did they get into their individual situations to begin with? Should they feel shame or guilt for failing to live up their contractual obligations? Does society owe them a home even when they spend beyond their means or run into a bad streak of luck?



The ethical issues surrounding money are varied and complex. One person’s view of the world can differ substantially from another’s based on how much they own, how much they owe, or who they might have to answer to. Blanket judgments suggesting all people should “follow the law” or “play by the same rules” are therefore easy to make and harder to justify—at least, when examining the details of a specific case.


Make a series of the right choices.

You can think of building wealth like a series of decisions to buy and spend. It’s like each one is a tiny grain of sand. The question to ask is whether you can look back and say you’re happy about the decisions you made.

For most of us, building wealth is a long-term process that can last up to a lifetime. Within the process are hundreds if not thousands of personal financial choices with a capacity to determine our overall success. And each of these choices may carry with it an implied ethical obligation.


If we go back to the beginning and look at our definition of ethics, what becomes critical is to understand how the things we do make us feel inside, not just now, but over the course of our lives. The notion we have a “heart of hearts” implies there is something within each of us (either innate or learned) that can tell us whether or not we’re making the right choices. When we make the right choices, chances are excellent they won’t come back to bite us. When we make the wrong ones, especially on a consistent basis, the chances are we’ll end up unhappy, guilty, angry, shamed, penalized and/or stressed, even when or if we achieve a degree of financial success.


When we’re poor, ethical standards are probably harder to maintain. We may have every intention of doing the right thing, but our circumstances may severally restrict our choices or override our common sense. Curiously, some of the wealthiest people on the planet obtain a good portion of their fortunes ignoring or bending ethics to suit their needs. Are all rich people therefore unethical? Hardly. Does having greater wealth imply we need to be more conscious of ethics and how the actions we take impact the lives of others? Perhaps. In the end, it’s important to know where we stand as individuals and what actions or decisions leave us feeling better about ourselves and which ones don’t.


Money isn’t everything. We can’t take it with us. Having it is no guarantee our lives will be any happier or better off. For some, the issue of ethics around saving money may seem a fruitless exercise of those already well off enough they don’t have to worry where the next meal comes from. For the rest of us, the issue is achieving the right balance in life to be able to look back on the things we say and do with pride.


Action Item: Choices matter—not only to us, but to our kids or those who love and care about us and look up to us as examples. Think back on some decision you’ve made in life you now regret. For example, maybe you shoplifted as a kid. Ask why it still matters to you, and what you wish you’d done differently. Ask if it’s too late to set the wrong to rights. Think back and reflect on the things that keep you from feeling good about the money you’ve made or saved, or that keep you from getting a good night’s sleep. Now, resolve to live within your ethical guidelines and make better choices going forward. There’s a curious thing about doing the right thing: You’ll never need to look back and spend even a passing moment worrying about it.


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