The photo this time is my birthday celebrations yesterday. That is a monsy-muffin on top of some caramel ice cream. Pretty tasty!
I'm glad that I waited a bit as I managed to come up with some additional ideas on this topic. A good place to start this conversation is my piece from Jan 1, 2006. Then review my Personal Planning piece from Sept 5, 2006. Those are the ones that explain what I actually do in order to move forward.
How did your year go? Did you increase your personal wealth? Within my own life, 2006 saw a big increase in personal wealth. However, it wasn't in the sorts of places that we normally look.
My definition of wealth includes: nutrition; fitness; finances; friends; personal productivity and Monica.
Traditionally, when we think about wealth we look to an outward appearances of assets. If we go a little deeper then perhaps we consider the size of a person's balance sheet.
I've written about how I like to look at net assets (assets minus liabilities). This is because many people that exhibit traditional wealth are actually caught in a trap due to the combination of personal debts and their lifestyle choices. Ramping up asset acquisition and personal expenditure, slightly quicker than they can "afford". With a tailwind of rapid asset inflation and easy credit, it takes a tremendous amount of discipline to be prudent.
Looking back in my own life, there are a number of financial lessons that I remember from my childhood. The one that stands out above all the rest is my dad's advice to save 10% of everything that I "make". It has been the bedrock of my financial planning and it's made all the difference to me. In university, as a graduate trainee in London, as a venture capital partner in Hong Kong... I've never, ever, ever, spent more than I earned. If I could offer you one tip for financial security then that's the golden rule. If pro triathletes that live on less than $2,000 per month then a professional manager can certainly get by on what she earns.
The buy-out investor's equivalent of this Golden Rule is "never finance operating losses". I'll save the lessons of venture capital for another time.
I subscribe to a free investment letter put out by a guy called John Maudlin -- he writes each Friday and, occassionally, sends along the writings of other people. One of these ones that he passed along (I think) was a definition of wealth that was "the ability to finance a lifestyle".
and, being in a conservative mood I added...
"the ability to finance a lifestyle over time and changing circumstances"
Now that appealed to something in me because it seemed really, really safe. There's something about that safety that calms. Of course, I might have become caught in that trap that affects many of my former collegues in finance and investment... ...ever increasing standards used to delay the time when they will start "living" their lives.
Once you want to have a house on three continents and consider flying commercial an inconvenience... well, if you want all that, indexed, over time and changing circumstances... you can see why some of these guys end up dying at their desks.
Of course, when a person's actions divert from their words over time... they don't really want what they say.
What's all this have to do with wealth? Good question. Well, if money is linked to wealth then did your spending over the last year increase your wealth? Do you spend on the things that make you wealthy?
The modifed definition appealed to me and I wrote an entire article on just that point. However, something was missing so I didn't post it. I'll share a parable, I think that it's from The Alchemist
There is a man sitting by the well in the desert. He's too scared to leave the well for fear that he might die of thirst. Eventually, he dies by the well.
How often do we fail to live for fear of failure?
So what was missing from that definition? Attitude!
Three book recommendations -- A New Earth; The Education of Little Tree; and On Death and Dying. I read these right after finishing those three wealth titles that I included last time.
Each one provides ideas that you can use in decided what matters for your personal plan. A New Earth has an interesting section on the concept of attitude -- the author talks about three forms of attitude: acceptance, enjoyment, enthusiasm. When I think about the people that achieve -- they have a tremendous amount of all three -- probably a sign that they are living in harmony.
So... after spending three months using my Personal Planning template, it struck me that one way to measure true wealth is to consider the probability of enjoying any given moment.
Not the probably of enjoying every given moment -- I'd say that is close to zero for me. Rather... the probably of enjoying the current moment at any given time.
I don't know if that seems like a revelation to you. It certainly did for me. Why? Because I started to look at people, spending, actions, potential commitments... everything... I considered it and asked myself... "what is the likelihood of this choice increasing my true wealth"?
I started to see how certain decisions, made to increase financial wealth, were actually draining true wealth. Of course, I noticed these decisions mainly in others. It's always more easy to see the self-help illustrations in those close to us, rather than ourselves!
So I went back to my Personal Plan and noticed that a few "important" items simply faded away. Some areas of conflict seemed to lose their uneasiness within me. When I define wealth as my current happiness -- I don't want to let people "steal" it from me.
Of course, you would be right to point out that anything that I feel inside is my creation. Still, choosing certain paths makes it more likely that I won't need to achieve satori to have a life with meaning.
Your next question might be who is the "me" that "I" am always referring to? He seems to get in the way a lot...
I got a zen book for my birthday...
Labels: personal planning