Just Keep Buying summary

We’re going to be talking about money in this Blink. But our journey doesn’t start on Wall Street or the trading floors of London and Frankfurt. Our first stop is southern Alaska. 

We’re in the world’s largest temperate rainforest. Anglers prize this area for its clear streams, which are filled with large, trout-like fish known as Dolly Varden charr. 

These Pacific streams contain little sustenance – until the early summer. That’s when salmon laden with eggs arrive. Charr love these eggs, and what follows is a months-long feeding frenzy. But then the salmon leave. The streams once again become a food desert. 

For years, biologists couldn’t figure it out. There just weren’t enough calories to support so many charr year round. Yet there they were, month after month – hundreds and thousands of thriving fish. 

So how does it work? The answer is phenotypic plasticity – a species’ ability to adapt its physical form to suit its environment. Dolly Varden charr shrink their digestive organs and slow their metabolism when there’s little food. When the salmon arrive, by contrast, those organs double in size and their metabolism speeds back up.

1. So what’s that got to do with finance? Quite a lot, actually. Adapting your behavior to your environment also holds the key to saving. 

Let’s break that down. Google the question, “How much should I save?” and you’ll get 150,000 hits with very precise answers. You should save 20 percent of your income, one self-proclaimed expert claims. No, another says, you should have three times your income saved by the age of 40. 

All of those answers share an assumption – that everyone has the same ability to save. That’s just not true, though. As economists point out, the biggest determinant of savings is income. In the United States, folks in the bottom 20 percent of earners typically save just 1 percent of what they earn. For the top 20 percent, that rises to 25 percent. The idea that everyone should save X amount flies in the face of empirical evidence, which shows that not everyone can. 

And the thing is, lots of people move up – and down – those income brackets. Life, after all, isn’t static. Often, you’ll earn less when you’re young and more when you’re older. But high earners also quit the rat race to take on more fulfilling work in less well-paid industries. Some jobs force you to live in expensive cities; others don’t. Then there are life’s highs and lows and their financial consequences – marriages and divorces, children, promotions and layoffs, leaking roofs and Christmas bonuses. To find a single, neat rule that covers so much messy reality is a fool’s errand. 

This brings us back to our Dolly Varden charr, which lower and raise their caloric intake according to how much food is available. Their maxim? Eat what you can, when you can. And that’s a great principle for saving, too: save what you can, when you can. In practice, that means saving more when you’re earning more and less when you’re earning less.