The Rambam has taught us that we should sequence our financial lives intelligently by investing in a career, saving for a home and then marrying. In the next halachah, the Rambam teaches us how to build on these prerequisites to achieve wealth and stability. He begins this short but powerful halachah as follows:
It is forbidden for a person to renounce ownership or to give away to charity all of his property and become a burden on society.
Here the Rambam condemns one who, out of foolish piety, abandons his wealth such that he now requires the support of others. In fact, even dedicating away all of one’s possessions to the Temple is explicitly outlawed by the Torah, offering a lesson to anyone who would throw away his wealth for a less worthy cause.
Likewise, benefiting one’s heirs should not come at the expense of one’s own financial independence. While parents’ natures will always incline them to assist their children, the Talmud censures a parent who bequeaths his property to his children in his lifetime, an act lacking foresight which turns his children, in effect, into his masters and does not enhance kibbud av va’em (honoring one’s parents).
As the Rambam continues this halachah, he offers what may be the most precise and concise statement of financial planning ever given:
And one should not sell a field and buy a home, nor [sell] a home to buy movable property, or use the proceeds of the sale of his home for trade. However, he may sell movable goods to buy a field. The principle of the matter is that a person should move up in the quality of his assets and trade the transient for the enduring.
In these pithy words, the Rambam teaches the path to financial success, a path increasingly taken backwards, to disastrous results, in today’s get-rich-quick culture.
In the Rambam’s lexicon, a field is a productive asset. So he is saying: Don’t sell your business to buy that luxury home. Don’t sell your home to buy toys like a fancy car or for commodities to sell in your store. Rather, from the income earned through your trade or profession (i.e., from the sale of “movable goods”) you should purchase productive assets (i.e., a vineyard or perhaps a bigger or more profitable business), or a home. The rule: there is a quality continuum when it comes to investment assets, and your goal should be advancing along that continuum (by acquiring a growing business or income-producing land) as against items that will not retain their value over time.
What makes this get-rich-slow advice so insightful is that it does not merely help us understand how to become wealthy, but it fully matches a person’s lifecycle requirements. That is to say, the failure to increase wealth as life progresses risks exposure to financial shocks, like losing one’s source of income, incurring high medical expenses and worst of all – the item with which the Rambam opened this halachah – the indignity of becoming a burden on society (be that one’s family, charitable handouts or governmental aid).
So, for example, losing one’s job is a financial shock, but one that is enormously cushioned by owning one’s home. Owning an income-producing business offers greater still financial security.
Whether in Israel, the U.S. or elsewhere, the financial lifecycle looks the same: A young person has no financial capital, but he has intellectual or labor capital. That is to say, a young person trades his educational training or willingness to work hard for money, and the process of wealth accumulation begins. As time goes on, the person will marry. The wedding gifts usually constitute the first big boost in financial capital the couple will receive aside from what they produce through their own career accomplishments. They can now begin saving and investing for their short-, medium- and long-term goals.
Short-term goals typically include buying a home and building an emergency reserve to support them through any financial shocks along the way (e.g., job losses), as well as paying for expensive holidays like Pesach; medium-term, they need to save for their children’s education, bar mitzvahs, family vacations and weddings; longer-term, they need to plan for the day when they no longer can or wish to work, i.e., retirement, including reserves for not uncommon late-life medical needs, such as home health care or assisted living.
At the end of this cycle, our formerly young couple may have no more intellectual or labor capital to offer, but should have the highest degree of financial capital of their entire lives. People generally need to be wealthy, or at least wealthier, as they age. And financial planning, as the Rambam explains it, addresses this need: first by encouraging the accumulation of income, and second by suggesting we make astute trades, by trading our accumulated capital for assets of ever-increasing quality, such as an income-producing property that our now-elderly couple can live off of as their strength wanes.
The Rambam complements this idea of making astute trades, in the final sentence in the halachah we have been discussing, by adding that we should not make imprudent ones. He writes:
And his intention should not be to enjoy temporary benefit or to benefit a little and lose a lot.
This is not about trading stocks, which is usually a losing proposition, but rather about trading what is of lesser value for what is of greater value.
For example, a young college grad earning $48,000, without student loan debt and unmarried, can sock away, say, half his money in an investment. If our young professional can put away $24,000 for a period of 40 years at, say, a rate of 7% a year, he’ll have something close to $400,000 awaiting him at the other end. After getting that retirement ball rolling and marrying, our couple (whose incomes are rising) may spend the next several years saving up for a home, minus funds they use to max out on workplace retirement plans. Once they save enough for a down payment and buy a house they should aggressively seek to pay off their mortgage, ahead of schedule if possible. A free-and-clear home serves as an “asset buffer” that can help absorb expenditure shocks, if emergencies arise.
Let’s say our young couple buy a home costing $250,000 and hold it for 35 years – they bought this a few years after first seeding their retirement accounts. If it appreciates at a 5% annual rate, the home is now worth almost $1.4 million. Of course, they paid mortgage interest and property taxes along the way; the point is simply that when they get to their 60s, they’ve got assets of several million dollars because they consistently made good trades. They traded present consumption for future consumption, and things of ephemeral value, like the things cash can buy in the present, for real estate and stocks of public companies.
This goes back to our discussion in chapter 2 regarding monitoring our consumption. Buying a coffee or going out to a restaurant is a leniency most people can afford to take. Doing so may be a valuable remedy for an overworked couple or the appropriate way to make a birthday celebration special. But infrequent indulgence becomes extravagance if it turns into a daily habit, preventing the frequent consumer from benefiting in the same way as our young couple who now have long-term holdings. The Rambam, by contrasting the temporary with the lasting, highlights that awareness of our long-term financial goals should be made part of our mundane daily lifestyle decisions.
 Hilchot Deot 5:12.
 Hilchot Arachin VaCharamin 8:13 from Mishnah Arachin 8:4.
 Bava Metzia 75b.