Life and money management

What does it mean to you if someone suggests you keep it simple? I have learned and am still learning the importance of this principle for both life itself and for our finances. Just yesterday, we were discussing financial alternatives with a client. It became quickly obvious that if we did not keep our focus on the client’s primary goals and the primary advantages and disadvantages of each option, we would have only confused the person. They would still not be able to make an informed decision on the thing most important to them.

But with the rise of Have It Your Way! choices in every area of life, it has become more difficult to keep anything simple. I can now become confused just choosing between various kinds of ice cream. (Don’t worry though. I am more than willing to risk a mistake in that case! I don’t leave empty handed.)

The great football coach, Vince Lombardi, is still known for his approach with his teams, sometimes starting a practice with the words, This is a football. We often do not have anyone coaching us about our money management however, whether we are in our 20’s or in our 80’s. The following points should be good to practice for all of us.

If you are (or should be) on your own financially, you need to produce something of value to the world. If you provide your own physical labor and skill over time, we call this Labor. You are selling or renting your services. If you have money or other assets such as equipment or land that others will pay to use, we call this Capital. Most of us begin our adult lives with little or no Capital. We must start by supplying Labor to others who know how to use it for good purpose.

Education is the process of developing knowledge, skills and hopefully wisdom in order for us to create more value for society. If we can determine the ways in which we will be most personally satisfied by our contribution to society, and gain the necessary education beforehand or during our work years, we can be effective to the point we never feel like we are working. We just provide the benefits to others for which it seems we were destined.

That is a wonderful state of mind. But unfortunately, too many of us never get to find it. If you are lazy or too stubborn to make the effort to determine what you were made to do, you will have a hard life. If you are not satisfied with your present income and lifestyle, it is your job to determine how to create more value for others.

In a generally free, capitalist society like ours, no one gets to force you into a certain job or pathway. This is why you can read of so many in the US who have begun with little or no Capital but who have become rich by satisfying the needs and wants of others. I would never personally pay much to a star football player, but obviously, many thousands will and do.

Therefore a gifted athlete who works hard at developing his skills can make a fortune at it.

In a socialist country, supposedly smart government people will plan out how many people should be athletes and whether that should include you. In Europe for example, you cannot just decide you will take the ACT and go to college. If your IQ and your prior performance as a student are not up to some bureaucrat’s standard, you will be relegated to a trade or a life of manual labor. Most of us really do not desire this kind of economy.

At this unusual point in US history, there are more jobs advertised than there are qualified people to fill all of them. Wages will rise in response to this. If you are not reasonably happy in a position now, please take inventory to see how you can create the kind and amount of value needed to improve your situation. That might not be easy, but the principle is simple. More simple principles in following weeks.

(Advice is meant to be general in nature. Life is very often unfair.)

September 19th, 2018|Categories: Personal Finances|