Some consumers pride themselves on never buying retail, but it takes no great intelligence to determine what is the lowest price. If the same widget sells for two different prices, then paying the lower price is indeed the correct method of resource allocation. Yet there is wisdom in knowing when to pay more for something. It comes down to understanding when a genuine tradeoff exists.

Among the trade-offs we encounter in financial decision-making are considerations of now vs. later or risk vs. safety. If you’re driving in an unpopulated, wilderness area, you’re running low on gas and you finally see a gas station whose gas price seems outrageously high to you, the little accountant inside your head may be saying “I’m not going to pay this much for gas.” But he should consult with the little economist in your head who could point out that the high price is a market signal indicating there is no other gas station even close, and you risk getting stuck in the middle of nowhere if you don’t fill up now.

A more mundane now vs. later issue involves buying something– say, shoes –of lesser quality and thus cheaper, which, however, may cause you to pay more in the long-term to buy their replacement or to repair the damage they did to your feet.

As we already saw in chapter 6, purchasers of insurance are often attracted to the lowest premium without due consideration to the reliability of the insurer to actually pay out claims when the insured has experienced a loss.

Another area where people do not always think through the financial implications concerns taxation. Because people generally hate paying taxes, and hatred is emotional, there may be a large element of irrationality in their thinking. Thus people will sometimes go out of their way to avoid the payment of taxes, even if they are thereby distorting their actual preferences.

If you could be equally happy in (high-tax) California vs. (low-tax) Florida, then the latter will surely save you a not insignificant sum of money. But if all of your loved ones are in L.A., and you hate humidity, then the move to Miami might not make a whole lot of sense. Similarly, if you remain in the U.S. because taxes are somewhat higher in Israel, you’re missing out on all of the benefits of living in Eretz Yisrael and assuming all the risks of remaining in the U.S.

In short, instead of focusing on tax minimization, it would be better to look at optimizing after-tax well-being.

Health is another area where we should be less willing to compromise to save money. The Talmud teaches that “a doctor who works for free is worth his wages.”[1]  Waiting an hour amongst an army of sick people to meet with a doctor for a brisk consultation resulting in a standard prescription of antibiotics is an example of a poor trade-off. The biggest problem with this picture is not necessarily the HMO setting. Many people cannot afford out-of-network private care. The problem rather is that any system that disallows the doctor to genuinely hear and understand the patient’s needs is liable to mishap, such as assigning the wrong remedy. It pays to upgrade one’s medical choices at least to the extent necessary to effectuate a genuinely advisory doctor-patient relationship.

Good health involves more than the investment of money, but also a modicum of time and effort. Probably all Jewish children have heard their older relatives kvetch that without your health, you’ve got nothing. Well, the source of this idea is the Talmud,[2] which says of one whose sickness rules over his body that “his life is not a life.” The Rambam calls bodily health one of the ways of God, as sickness and pain detract from a person’s ability to comprehend any part of knowledge of God.[3] A worthwhile life in this world must be comfortable enough to study wisdom and do good deeds in peace.[4]

It’s not just that illness is debilitating, and hence cuts into your productivity; it also keeps you from enjoying what you have. Since wealth is beneficial only when it can be enjoyed, it seems fair to state that investing in one’s health is not just a way of God, but also vitalizes and sustains the process of becoming wealthy.

Ultimately, the difference between the consumerist view of wealth and the Jewish approach is that the Torah knows how to draw a line, while the former is always grasping for more. More money, more objects, more honor and prestige inevitably result in more desires and more stress to satisfy them, which is not compatible with a true enjoyment of life – a concept instilled in every Jew by way of Shabbat and the chaggim, in which work is strictly forbidden and feasting and spiritual contemplation are the order of the day. Regardless of how strong our desire to accumulate might otherwise grow, these sacred times actually dictate that we be happy with our portion, and train our restraint for the weekdays.

The Jew who balances earning with learning, working with growing, is as theJew in his hut on Sukkot, humbly serving his God while serenely enjoying the fruits of his labor.

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[1] Bava Kamma, 85a.

[2] Beitzah 32b.

[3] Hilchot Deot 3:3, 4:1.

[4] Hilchot Teshuvah 9:1.

Since knowing how to make money is worthwhile only to the extent that you know what to do with it, it must be pursued while keeping its goal in mind. King Shlomoh has something to say on the topic:

There is one and there is no second, he has neither son nor brother. But there is no end to all his toil, neither is his eye sated from wealth. And for whom do I toil and deprive myself of good? This is also futile and a bad state of affairs.[1]

The thrust is that money is to be enjoyed, not accumulated; an individual with no dependents or heirs has nothing to work for after satisfying his own needs. This is a jab at one who labors beyond what he needs for himself and his loved ones, thereby limiting his own enjoyment.

Here too, as in the acquisition of wealth, the Rambam advocates moderation in expending wealth. Between the extremes of the miser who would rather starve than spend a penny and the spendthrift who happily wastes everything he has,[2] there is a medium that balances preservation of wealth with enjoyment of it.

What you acquire is not to be taken lightly. The Sages say that the righteous prize their possessions as highly as themselves – or more so – noting Ya’akov Avinu’s crossing the Yabbok River late at night just to retrieve a few small jars he had inadvertently left behind. Tzaddikim are so “materialistic,” as the Talmud explains, because their hands are clean of theft.[3] Conscious of how much effort it took to scrupulously acquire even his cheapest possessions, Ya’akov was willing to put himself in possible danger to avoid losing one of his possessions, rather than just relying on his wealth to buy another one.

The Chafetz Chayyim[4] notes that the Sages forbade all but the extremely wealthy from spending more than one fifth of their possessions on charity. This limit was not instituted to encourage wasting the other four fifths, but to teach a lesson about the importance of spending wisely. If one has to limit one’s spending even for such a worthy purpose, all the more so must one limit it on purchasing nonsense.

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[1] Kohelet 4:8.

[2] Hilchot Deot 1:1.

[3] Chullin 91a.

[4] Ahavat Chesed, part 2, 20:5.

The Rambam, explaining that the proper character traits are those in the middle of the two extremes, applies this rule to measuring the correct amount of effort to put into gathering wealth:

One should not be greedy, desperate for wealth, nor lazy and idle from work, but content, doing a bit of work while occupying oneself in Torah; and he should be happy in that bit that is his portion.[1]

In other words, the key is to balance the two unseemly extremes of overworking and underworking. How exactly this would translate to an individual’s schedule depends on the circumstances. The Rambam incidentally gives as an example a daily schedule involving three hours of work and nine hours of learning Torah, which is a far cry from the modern standard of an eight-hour-plus workday.[2] But we also find attested a standard workday lasting from morning till evening, unless regulated by local custom.[3] Someone who, for whatever reason, needs more money will have to work longer and harder than someone who doesn’t, and so will someone who starts out with less money but has the same needs.

While the work schedule expands or limits one’s Torah learning and rest, another vital consideration is the content of one’s work. In general, people are happier doing work they enjoy even if doing so means earning less or working more. Earning a promotion at work should be viewed in this light. Sometimes the extra money promised elevates the promoted worker to the role of Chief Headache Officer, adding corresponding responsibilities and stress which, even if fairly remunerated, may be beyond what is appropriate for that worker.

But at the same time, one who declines a promotion in order to remain in the same, comfortable spot may wake up to the nightmare of a new overbearing boss hired for the role you rejected. Career decisions thus require much deliberation. The key may be to stay focused on always adding value. If you can do that, chances are good you can always find a market for your services and become your own boss, asserting your own preferences regarding work conditions.

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[1] Hilchot Deot 2:7.

[2] Hilchot Talmud Torah 1:12.

[3] Bava Metzia 7:1.

Most people aspire to wealth. To achieve it, we need to know what it is that we are seeking. The consumerist image of wealth is highly materialistic: an oceanside mansion, with expensive, new cars in the garage, to start with.

We will start with a different image to frame our goals. When the Jewish farmer is gathering from his threshing floor and winepress at the end of the harvest, the richest time of his year, he leaves his house for a hut. He eats his festive meals surrounded by two and a half walls adorned with beautiful decorations. For seven days, his sukkah is his permanent residence, while his house is his temporary residence.

The celebratory atmosphere available to the pious farmer illustrates a degree of prosperity unrealized by many of the wealthy of the West, where consumers are often willing to sacrifice a holiday meal for a chance to spend the day shopping at a discount. Instead of keeping up with the Joneses, a wealth arms race which no one can win, the Torah offers an egalitarian wealth of sufficiency and contentedness. The farmer contents himself in his hut and provides for the needs of anyone who lacks so that all can “rejoice in your festival – you, your son, your daughter, your slave, your maidservant, the Levite, the stranger, the orphan and the widow who are in your gates.”[1]

As Ben Zoma would say:[2]

Who is wealthy? He who is happy with his portion. As it is said,[3] “When you eat of the toil of your hands, you are fortunate and it is good for you.” “You are fortunate” – in this world; “and it is good for you” – in the World to Come.

Unlike the Forbes world’s billionaire’s list, you don’t have to have a specific amount of money to be rich. There are two requirements for admission to the club. First is contentedness with what you have. Contentedness is the opposite of the modern rat race, which honors constant aspiration for more. The second requirement is effort to produce the fruit, which makes you a contributor to God’s world and thus worthy of eternal reward.

These two elements – contentedness and effort – are mediated via rest. The wealthy Jew sits under his own vine and fig tree, with a riveting tractate of Talmud in his hands.

As the Akeidat Yitzchak expresses the idea, having rest upon attainment of a goal is a necessary condition of achieving that goal. The rich person with more money than he will ever be able to use, who nevertheless keeps on working and gives himself no rest, has not actually achieved the goal of being wealthy. A person with little money, who works just enough to live within his means, has achieved it.[4]

The reason for this is simple. “A lover of money will not be sated of money.”[5] One who has one hundred wants two hundred, and when he gets two hundred he will want another two hundred.[6] There is nothing limiting how much money you can potentially acquire, and so there is nothing limiting how much of it you can want: only reason can set a limit. The correct amount of money to aspire for has to be defined in terms of concrete uses for it. In the Rambam’s words:

One should only toil at his work to acquire a thing that he needs for the time at hand, like what is said,[7] “A little is good for the righteous person.”

Hilchot Deot 1:4

(A corollary to this is that you can achieve your goals much more easily the more you reduce them, which makes being “happy with one’s portion” that much easier.)

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[1] Devarim 16:14.

[2] Avot 4:1.

[3] Tehillim 128:2.

[4] Kedoshim, gate 56.

[5] Kohelet 5:9.

[6] Kohelet Rabbah 1:13.

[7] Tehillim 37:16.

“Cast your bread upon the surface of the water, for in the course of time you will find it,” advised King Solomon.[1]

Far from counseling us to produce soggy bread, the wise monarch is talking about an investment, and while he doesn’t specify a rate of return, he is telling us we can indeed expect one. He is counselling us to invest: to invest in others, in ourselves, to try to effect some good through our creative contributions to the world, but – and here’s why the bread goes into the water – to do so in a way that may seem hopeless. If you throw your bread in the water, you know it will never reconstitute as edible bread. If you give food to a hungry stranger, you don’t expect to see him ever again.

Paradoxically, King Solomon is teaching that if you disregard your instinct for calculating return on investment and instead focus on the good that you can do, then days will yet come, and you will receive your recompense.

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[1] Kohelet 11:1.