Knowledge puffs up, but Love builds up.
1 Corinthians 8:1 (ESV)
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Category: Work and Vocation
Wealth and Knowledge
Many of you might believe wealthy people all have high IQs, or all people with high IQs are really wealthy (or ought to be). What might surprise you is how many regular people just like you are are wealthy.
IQ is not a determining factor in one’s ability to acquire wealth.
In fact, acquiring and maintaining wealth has very little to do with head knowledge, and much more to do with behavior. Disciplined behavior trumps a know-it-all every time.
Smart people regularly do stupid things with money and wealth, often losing everything. Why? Because they fool themselves into believing they are smarter than the market and everyone else, and there is no way they can lose. More often there is no way they will win.
Yes, there are some rare individuals who are smart and disciplined and hit the jackpot, but they are extremely rare, and would be the first to admit they are guessing 80% of the time and working overtime to reduce the impact of the inevitable downside.
Knowledge
The most brilliant person in the world can live their entire life as a pauper. Book smarts and head smarts are not effective for obtaining wealth on their own without action and calculated risk.
Knowledge can puff people up in their own minds and make them overconfident, taking action without calculating the risk, or it can cause analysis paralysis, calculating risk to the nth degree and taking action too late or never at all.
Knowledge is good, and it helps to be smart, but you don’t have to be a genius to become wealthy.
Behavior
Dave Ramsey, creator of Financial Peace University and best-selling author of The Total Money Makeover, talks about personal finances as being 20% head knowledge and 80% behavior. Even if you aren’t a math major, you’d probably agree you could do more with $80 than with $20. Four times as much. Sometimes I just like to show of my math skills.
If there is any truth to this percentage split, then why on earth would we put so much emphasis on what we think we know instead of what we do?
Can anyone become wealthy (legally, you criminals) without saving at least some of their hard earned income?
Oh, of course, win the lottery. Sure, they get a huge amount of money all at once, but it rarely makes them wealthy. A quick online search turned up several articles citing the National Endowment for Financial Education as reporting 70% of windfall recipients end up broke.
70% is a lot closer to 80% than 20% if you catch my drift. If you read the myriad articles about why lottery winners go broke, it’s pretty much all about their behavior.
Consider the following scenarios:
- Bob is a regular guy working hard to earn a decent income. Bob decides at age 20 to save $100 a month for retirement and continues to do so until he reaches age 66, yielding an average 10% annual rate of return.
- Sam is also a regular guy working hard to earn a decent income. Sam, however, has a plan. At 20 years of age Sam starts spending $25 a week or $100 per month on lottery tickets, dreaming of that day when he’ll win the jackpot. Of course, Sam wins sometimes, but breaking even is a long shot at best. The odds are actually stacked against him ever breaking even. Yet he continues to play the lottery until he reaches age 66, and let’s say he hits a long shot and breaks even.
Can you guess which one retires wealthy? Yep, it’s Bob. Every time.
Bob invests a total $56,400 over 47 years and ends up with $1,151,000 in his retirement account at age 66.
If Sam breaks even, he ends up with the $56,400 he spent on lottery tickets and won back.
I like Bob’s way better, even if Sam hits the Jackpot. Bob has built wealth through behavior and discipline and is not likely to lose his wealth. Sam, however, has not developed the discipline or behaviors to use money wisely, and odds are he will lose everything long before he is ready to shuffle off this mortal coil.
Conclusion
Let the smart people take all the chances and risk losing everything while you stay disciplined and retire wealthy.
Wealth and Little
“The greatest wealth is to be content with little.”
– Plato
Wealth and Money
Wealth and Money
When most of us think of someone wealthy we think of Hollywood starts or billionaire CEOs. The reason we think of them first is the illusion of how much money we think we know they have.
I say illusion because many of those we consider wealthy, are wealthy on paper only, meaning that most of their perceived wealth is tied up in real estate, stock valuations, or future royalties.
Some of those we consider wealthy actually ARE financially wealthy, like Bill Gates and Warren Buffet, but many of them are not. Think about how many pro athletes, music stars and movie stars end their careers and lives nearly broke.
So what is the relationship between wealth and money?
Money
Money is currency. Money is whatever we are willing to accept in return for supplying goods and services. Money can be paper or coin as we know it in the modern world, or Money can be livestock, potable water, real estate, stocks in a company, or a service in kind of some sort.
Money changes forms as often as it changes hands.
Acquiring money is not the same as acquiring wealth. Wealth is a much broader and more complex concept than money. Wealth far surpasses money as a concept.
Wealth
When we finally grasp what wealth really is, the entire universe opens up to us. When we separate money from wealth, we open ourselves to areas of wealth we might never have contemplated:
- Wealth of knowledge
- Wealth of relationships
- Wealth of integrity
- Wealth of morality
- Wealth of wisdom
- Wealth of experience
- Wealth of inspiration
We can find wealth in whatever we do and wherever we are. It is up to us to perceive it as wealth.
If we are merely looking for money, a paycheck, then true wealth will always elude us.
True wealth comes when we focus on what we can contribute.
Choosing the Wrong Subject or Problem
“You could have the most brilliant mind, teeming with knowledge and ideas, but if you choose the wrong subject or problem to attack, you can run out of energy and interest.”
– Robert Greene (Mastery)
Wealth and Work: Too far in to Get Out now?
Do you feel like you are Too Far In to get out now?
In the finance world their is a concept called “sunk cost bias,” which refers to the phenomenon where an individual or company has spent so much capital on an investment or product they cannot stop even when failure is the only outcome.
They have gotten too far in (spent too much) and cannot justify the wasted time and cost (investment) if they drop the product. Here is a definition from businessdictionary.com:
Expenses paid for previously that are not affected by current or future decisions and costs that should be ignored when analyzing new investment activities.
Read more: http://www.businessdictionary.com/definition/sunk-cost-bias.html
What does this have to do with our job/work/vocation/career? More than you might think.
Expenses paid for previously that are not affected by current or future decisions
At any point in our career path, we can look back at the work we have done, the various jobs we may have had, the rewards, raises and promotions we hopefully earned along the way, and all the things we helped accomplish.
None of that can be altered by the decisions you make now or in the future. It is what it is. Your decision to stay in a dead end job because you only have 10 years left to full retirement doesn’t change what you accomplished in the past, it doesn’t affect the promotion you either got or didn’t get 4 years ago.
The only value of the past is the experience you can take away from it. Some example questions to ask yourself might be:
- What did you learn about yourself?
- What things did you do better than anyone else?
- What things did you loathe doing?
- What relationships were helpful to you in getting to where you are?
- What skills did you acquire that you can bring to a different job or career?
Our possibilities now and in the future are endless. We need to look forward and stop worrying so much about what we have done so far.
Cost that should be ignored when analyzing new investment activities
One of the biggest problems I had with leaving my previous career was getting over the idea that I had put too much time in to leave now – I would be giving up everything I had worked for so far.
Many colleagues stayed on in jobs they no longer enjoyed simply because they only had 5 or 10 years left to qualify for early retirement.
Then they would stay on 5 more years to max out their retirement benefit. Sadly, a few timed their retirement perfectly to get the max benefit, only to pass away within a few years after retiring.
As stark as that sounds, this happened to more than one colleague I knew personally, and even more whom I knew professionally. I took this lesson to heart when I made my decision to leave.
I could not justify staying in a career simply because I was only so many years away from one benchmark or another. I left just three years shy of a full 20 years in, which would have significantly increased my retirement benefit. But it wasn’t worth it.
I ignored the cost of 17 years in when I analyzed my options for a new career, a new vocation.
If you are facing a crossroad in your current career, analyze your new options, ignoring the cost or time in to date. Set it aside and don’t allow it to skew your analysis for the future.
Moving on
Once we have done the clear analysis, and made a decision to move on or stay with a renewed sense of purpose, we can review our past efforts and glean out the experiences, skills, relationships, etc. that will serve us well going into the future.
These are not tasks we performed or even job titles we had. This is an extraction of the valuable lessons, the interpersonal skills, and the expertise that we can continue to improve on and use to benefit our current and future endeavors.
Leave the titles and position descriptions behind and define your value in your own terms.
Wealth and Work: Co-opted Someone Else’s Calling?
Pursuing Someone Else’s Calling As Our Own
Have you ever wondered why you ended up in the career you are in? Does it feel like you were pushed or pulled in that direction by other people?
If so, you may have co-opted someone else’s calling as your own.
Pushed
Sometimes we are pushed into a career or a particular vocation because our parents, teachers, or friends pushed us in that direction. This push could be along the spectrum of forceful shove to gentle nudge. They may have done it unawares. Sometimes they knew exactly what they were doing.
Most of us can recall at least one story where a child was pressured to become the first doctor, lawyer or priest in the family. Or to follow in their parents’ footsteps, regardless of talent or passion for the family business.
Wolfgang Amadeus Mozart was pressured by his father to compose for years for people who did not appreciate his true talent. Fortunately for all of us, Mozart eventually pushed back and pursued his love for opera. This move destroyed his relationship with his father, but freed him to produce an unprecedented volume of compositions in a very short period of time.
Not all of us experience a strong push in our careers, but most of us have been influenced by our parents, teachers and friends because we love them and trust them. We may have received slightly higher praise for efforts leading toward a favorable career versus a less favorable one. Art is good as a hobby but no way to make a living; math, science and law are much more lucrative, responsible and secure.
Pulled
Others of us may not have been pushed so much as pulled. We identified ourselves with someone so strongly that we followed in their footsteps – we wanted to be just like them.
In this case we adopted their vocation or calling as our own, and while some may experience success in doing so, others pursue a futile fantasy. In either case, we deceive ourselves and deny who we are.
When I think back to my own childhood, I remember the admiration I had for my brother, who in his early teens joined the local Explorer’s club and began volunteering at the local ambulance corps. It seemed so cool, and he enjoyed it so much, that I wanted to do it also. So I joined the Explorer group after him without really thinking it through. Fortunately, it didn’t take too long for me to realize my brother’s calling was not my own, and I eventually wandered down another path. (I have wandered down quite a few other paths since then – in fact my calling could end up being “wanderer”).
Unlike being pushed – where we feel a sense of resisting or pushing back, being pulled can feel like a free fall, or give the sense of being off balance, as if we are about to fall on our face.
Path, Pace & Purpose
The solution here is not to make drastic changes or even blame anyone, but to take a moment to stand still and observe the paths available to you. Which one feels right? Now imagine that path merging with your current path for period of time. You don’t always need to leave the path you are on to journey down another.
Go slow – find your own pace and move forward with grace as you stumble here or there. As you find your balance you can quicken your pace – you are in control – but not so fast you miss where the path turns left or right down paths less and less traveled by. Remain present and observe.
If you feel like you have been pushed into the career you are in at this moment, take some time to reflect back on when you felt pushed, observe the dynamic of what was going on in that moment, and uncover what it was we were being pushed away from as this may provide clues about our true calling.
If you feel more pulled than pushed, ask someone close to you who knows you well to reflect back what they see. When pulled we often need others to help us see what we were running from, which is often another clue about our true calling.
When you have reflected a while, move forward with purpose.
Working, Playing or Both
“The master in the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his information and his recreation, his love and his religion. He hardly knows which is which. He simply pursues his vision of excellence at whatever he does, leaving others to decide whether he is working or playing. To him he is always doing both.”
– as attributed to James Michener
Wealth and Work: Rather be doing something Else?
Rather be doing something else?
Let’s face it – we all encounter this at some point in our work, no matter how fulfilling we may find it at times. When our minds wander to other things we’d rather be doing, it may be due to burnout as I talked about in this previous post.
But other times it may be due to unresolved desire to pursue something else.
I struggled with this for years, working a day job in government finance and accounting, while my creative juices were getting little attention. I would find ways to accommodate my creativity in designing reports, but that wasn’t enough.
I have always been fascinated by music, and played piano since 4th grade and french horn since 5th grade, adding guitar in my teens and buying my first of several electronic keyboards. As new technology emerged around digital recording, I resolved to teach myself how to record, mix and master music on my PC (not a cheap hobby through the 90’s and into the new millenium!).
Later on, I also started a small record label and have released a total 7 records, the most recent one on vinyl – who knew we’d come full circle back to vinyl?
But, I digress – we are talking about wealth and work and the occasional pull we feel to do something else.
This is where hobbies, or avocations, come in (from the Latin avocare – “call away”). When we get the feeling we’d rather be doing something else, we are being “called away” from our vocation or work to think about something else. When this happens it is may be due to some aspect of ourselves that is not receiving the attention it deserves.
Instead of fighting this urge to do something else, it is important to pause for a moment and observe what it is we would rather be doing. What is the call or pull that you are sensing? This is a critical step – it may identify a new and distinct calling on your life, or it might identify a part of you that you have been neglecting.
Once we identify what is pulling at or calling us, it is important to schedule time to give it our full attention, even if it is only for half an hour. It is important to actually schedule it, block out the time for it, and commit to doing it as scheduled.
The importance of scheduling is, once scheduled, the distraction of rather doing something else is diminished or even disappears. This won’t work long term if you neglect to address it as scheduled.
The worst thing you can do is attempt to ignore and push through. You only end up wasting energy fighting yourself, and both you and your work suffer.
Finer Fruits
Most men, even in this comparatively free country, through mere ignorance and mistake, are so occupied with the factitious cares and superfluously coarse labors of life that its finer fruits cannot be plucked by them.
– Henry David Thoreau