Mini-You and Real-You

Fundamental investing is treating your money as a mini version of an earning you. Applying the same “what are you going to do when you grow up” that excessively defines our life planning. Fundamental investing is getting your money a job. 

The same concepts of Financial Yoga for an individual real person apply to the legal person that is a business... and to your money that invests in businesses. Endurance, resilience, and creativity give shape and form to ideas. 

The Balance Sheet of a company provides endurance. The rock on which they do whatever they do. A strong Balance Sheet allows a company to survive. It buys time. To invest in research and development. To properly maintain what they have. 

The Cash Flow Statement indicates resilience. It breaks down how cash is used for operating, investing, and financing activities. Can the company find the liquid cash it needs, as and when it needs it? Is there the money available to do what needs doing? 

The Income Statement is a picture of the bottom-line creativity. Is what the company is doing costing more than what it is producing? Is spending under control? Is the business sustainable? 

Studying the Financial Statements of a business is similar to the financial planning of an individual. Money is more suited to the hard solvency, liquidity, and profitability ratios that weigh, measure, compare, and judge containers for wealth creation. 

The more time and space it is given to grow, the more money as a mini-you can free real-you from those constraints.

19th Century German Ledger

Stilling the Waves

Planning is not something you finish. It is the regular process of reviewing your story. A form of journaling, where you can go back and see what you thought in the past. It is difficult to plan in isolation, because that limits your sources of information and support. It is important to have someone you can speak openly to. Not as a cry for help. Not because you can't do it, are weak, or are incompetent. Because you are human. 

Invest in friends who will challenge you. Find friends who won’t challenge you, but will listen deeply. To build a sense of autonomy and consent. To build a practice and set of tools for dealing with the pulse of life that feels productive, in whatever way you choose to define productivity. So your choices resonate and build on what matters to you. 

The beauty of being human is that that is such a difficult question. The answer evolves and cannot be reduced to numbers. It certainly can’t be reduced to two numbers where you divide one by the other, compare yourself to others, and spit out a chocolate box answer. 

It is not a conversation about more and less. It is not a conversation about categorising people into good enough and not good enough. It is not weighing. It is not measuring. Planning is just practicing being alive. Consciously taking each step. Stilling the waves of anxiety. Focusing on what matters.

Life is Complicated

Life is way more complicated than any story we choose for sense-making. Stories have narrative arcs that resonate. They set the scene, then something happens, then tension builds, then there is a climax, then there is a result, and consequences, and a conclusion. There are heroes, or moments of redemption, or great insights. Within the constraints of pages, picture frames, or flames of the campfire. 

Half the art of presenting is simplifying the point you are trying to convey into three clear things. So when someone is retelling the story later, they know what they were. They know what the presentation was about. They were surprised by something that was clearly articulated and emotionally engaging, and they could remember it because it found a hook into their world. 

In real life, the narrative is hard to see unless we construct it with hindsight. Our stories layer understanding after the action. Planning becomes a tool to reflect. It is a meditation that can help give you focus. Planning allows you to step out of reality, look at reality, and then adjust the story as reality evolves. Building the capacity for change is a fundamental part of good planning. 

Planning is not about knowing the future. It is not about a specific path. It is very dependent on your decisions and ambitions.

Learning to Sit

In Yoga classes you can see students who are incredibly stiff, partly because they are fit and strong. Forget the forward bend, a lot of athletic people will struggle to simply sit at 90 degrees with their legs out straight. Releasing that tension requires unlearning. Kids are very flexible, and over time because of a lack of holistic movement, adults gradually become stiff in very specific ways. When we specialise our use-it-or-lose-it bodies. To learn, you must support your capacity to deal with change. Creating space for honest feedback cycles and reflection. Understanding yourself well enough to know how you best receive feedback. 

When I wasn’t working (for money), I was part of a Men’s Group (surrogate colleagues?) where we provided support to each other. It was difficult because we saw the world very differently, and discussion could descend into unproductive debate. One way we attempted to overcome this was developing “Cards” or tools, where you could say explicitly what you are asking for. Sometimes you want advice (what would you do?). Sometimes you just want to talk (just listen and ask exploratory questions)… we called that the “Vulnerability Card”. When you expose yourself, but you don’t want to be punched. 

There are other times when you want very direct solicited challenge. The scariest card was “Invisible Man”, when you invite others to talk about you behind-your-back in front of you, while remaining silent (and NOT defending yourself).

Deep Bench

You need support in your planning. It is all well and good to have specific goals, but we go through waves and moods, and we are not consistent. We forget why we made decisions. In specific moments, we want other things. This means we all need to know what kind of support we need. 

When you are going through difficulties, what is the kind of person you need to speak to? I am lucky that I have developed a lot of good friendships. I know that in certain situations, there are specific friends I need. Certain "cards" I need to play. Sometimes support, sometimes challenge, sometimes advice, sometimes silence. I know that to develop those friendships, I need to be available when the kind of support I am capable of is what they need. We have different strengths and weaknesses, and the deeper your bench of friendships is, the more support you will be able to provide to each other. The more space you can hold. 

The idea of holding space is that you are not there to provide a solution. You are there to listen. Having someone to hold space is not saying that you are not competent and capable. It simply reinforces the self-awareness that you know who you need to walk with in the situations you are going to face. Building that capacity is important. 

As our story changes, we need mirrors to incorporate new information. We need to realise which behaviours no longer work. Which never worked (on reflection). Which behaviours might work. We need to unlearn, relearn, and change with change.

Know Who You Need

Uncommonly Connected and Compounding

Goals are not picking the best of every possibility in isolation. That is dreaming. You can close your eyes and visit various places instantaneously. You can explore parallel universes where you made different decisions, and outcomes were completely of your choosing. When you open your eyes, you must go from where you are. 

The more realistic goals are tiny. Small nudges from where you are. Shane Parrish suggests, “Ninety percent of success can be boiled down to consistently doing the obvious thing for an uncommonly long period of time without convincing yourself that you are smarter than you are.” 

You can build scripts, and behaviours, and habits, and flexible plans. You can be micro-ambitious with tiny goals that add up. Goals that are connected and compounding. 

Behavioural Finance looks at the idea of biases. Embodied shortcuts that help (or hinder) us in our decision-making. We don’t (and can’t) have full information, but must act anyway. Understanding your biases can help you tweak your micro-goals. Understanding your biases can help you see what you do for uncommonly long periods of time, rather than getting obsessed over things that come and go, and cancel out.

Give it Time

Time and Energy

Freedom is not the absence of constraints. It is a sense of autonomy and consent. The ability to make decisions. The feeling that you are seen, and matter. All decisions are made inside containers and with consequences. How much do you value time? How much do you value being paid a lot? Many of the ways to make lots of money will consume your time and energy on problems that are not your priority. It's not about you. 

You can get to a situation where weekends and holidays are where you get access to your community. Where your job becomes your weight-of-time-and-energy community, and your life. Be honest about what the life you are designing will really look like. Speak to as many people as possible who are doing what it is you think you want to do. Map it out. See what the barriers and trade-offs are for you. Have honest conversations about the advantages and disadvantages of the paths you are considering. 

As you go through life, there are people at similar stages to you who make different choices. Then a few years later, their stage will no longer be similar. Yet we will only see the conspicuous. Tangible success is easy to share. We are not completely open and authentic about each other’s struggles. Partly because we only have so much emotional capacity. We are dealing with our own stuff. Opening up is a “call to arms”, and so the barriers we put up make a lot of sense. Trusting and allowing each other to deal with our personal struggles, and shout only if necessary.

Source and Use 

of Energy

Bears Repeating

The biggest pushbacks I get on the framework I use for developing financial freedom are:

1) Most people in South Africa can’t even find enough money for a living wage 

(half of all South African wage earners earn less than R3,300 and support 3.5 people), and 

2) “I can’t reduce my expenses”

The first point is heartbreaking and a mountain to climb. The second point is often true however big that income is, and despite the first point. “The lifestyle to which someone has become accustomed” is a phrase that disconnects completely from how that lifestyle is paid for. Even when there are masses of people living on less than you, our spending is often determined by the people who live in the bubble we live in. Bubbles have price tags, which either require someone else to foot the bill, or have real consequences for the available earning choices you have. 

The reality is that there is no one set of steps people need to take. There are trade-offs. There are hard choices. There is honesty required. Financial security and investment is a group sport. If those around you are spending freely, it is going to be difficult to build buffers and capital unless you are earning significantly more than them. 

That hard pill to swallow bears repeating. Half of all South African wage earners support about 3.5 people on less than roughly GBP165 or USD230 a month. 

Less than ZAR940 (GBP50 or USD65) per person per month.

Bears Repeating

See the Value

One of the ways to gain control of your spending is to select where you place value. To find value in the plentiful rather than in the scarce. Spending is often a team sport, and changing your habits can be incredibly difficult. 

Like trying to become more vegetarian in a South African meat-eating culture. It is painless to change habits if the tweak feels better. If it is simple to make vegetarian food, and you enjoy how it tastes, it will be a smoother transition to eating less meat. If you feel like you are punishing yourself and being a martyr because everyone else is eating what you want, and you don’t like what is on your plate, it is going to be incredibly difficult. We get a quota of self-discipline, and if you use it all up in one area, it can explode in another. “Everything in moderation, including moderation”. 

Build changes to behaviour realistically, gradually, and sustainably. Planning is not about epiphanies. Break-through-weekends are followed by Monday alarm clocks and deep soaked patterns. To make real change, see the value in things that you did not before. Tweak your drivers and incentives. Deep, slow, conscious re-programming. The self-imposed limits stop feeling like chains because you experience the world differently. 

“Save more later” is an approach where the goal is not to adjust your spending up if your income goes up, or you get an unexpected boost. Where you snap the sense that life is better if you spend more, and spoil yourself because “you are worth it”. Reward yourself with the abundant. Put your money to work.

Changing Habits

Obstacles and Barriers

Formal studies are not solely about skills and knowledge. We live in a world where that is largely available for free. I heard about email and the internet for the first time as a 14-year-old from my Maths teacher who had visited the United States. Information flow was starting to burst. 

She was also the one who told me about Actuarial Science. Even though the world is connecting, money is still made in containers with barriers. The way we build the structure is partly through formal education. I broke some of my barriers (the country we are born in) after school by going overseas for the first time. I went to the United Kingdom for two gap years, working as a teaching assistant on a work-travel visa. 

When I came back, I picked something with barriers. I knew there were people who paid people who passed these exams. Jobs that wanted these qualifications. Limited people with those qualifications. I looked at the shop. I saw what the expensive products were. I looked at the cost to put those on the shelf. I went and did the thing that was most tolerably difficult (challenging barriers) with the highest gap between price and cost. Based on my existing set of scarce skills and knowledge. 

That is not the same for everyone. Which is why it paid well. Scarcity pays. Understanding money is partly about understanding and overcoming your obstacles and barriers.

Map of Internet Connections

Studying the Box

Even if you can stop yourself bending to the social pressure of keeping up with the Joneses and Khumalos, you still need to eat. You cannot not care about money by ignoring it. If you do not learn to control money, it can control you. Even if you live very simply, the money must come from somewhere. We do not yet have concepts like Universal Basic Income, where the foundations are strong enough to allow everyone the security to look up and forward. 

The challenge is, no two paths are the same. Part of financial planning is deep pragmatism. All advice is autobiographical. We can only see from our perspective. Listen to others, but your choices will come from where you are. My “source of wealth” was based on leaning into the cards I was dealt, and accepting how money was made. 

I spent eight years doing formal studies. One degree and three sets of professional exams. Not out the box thinking at all. I studied the box. Studying risk, investments, and planning. Studying how barriers are built. How decisions are made. How people are empowered. How capital is built. What options are available and how they are seized. I am still studying. 

The heart of planning is being able to learn as the situation changes. To come from where you are. To control your response. To build the privilege to choose what you care about.

Whose Milestone?

Part of how we are weighed and measured is how much income we make. The assumption being that salary (the price of our labour) is a useful direct form of comparison. Spending can be directly tied to income in a hand-to-mouth world. 

Spending becomes the conspicuous symbol of whether our life is a success or not. A long shopping list of age-measured milestones. “By this age, I need to have done this”, in order to be regarded as meeting expectations. 

It is often community-based. Financial planning can be a team sport. There is an entry ticket price attached to who you spend time with. If you are part of a community, you are measured by its standards. Even smack-in-the-face-obviously wealthy people may not feel wealthy because it is relative to their expectations, and they may feel like they are failing. You can be the 100th richest person in the world, comparing yourself to the 99 with more. 

Unless you can detach from that craziness, you are always going to be treading water. You are always going to feel like you are not in control.

Managing your own Milestones

Weight of Expectation

Difficult times force us to see. To cancel things that can wait. To put aside petty grievances. To focus. To deal with deep challenges honestly and uncomfortably. The root word for the conscious yogic practice of difficulty (Tapas) means “warmth, heat, or fire”. Some of the earliest mentions coming from the heat required for birth. The warmth of the womb. 

Expectation Management is not just living in a world of negativity and expecting the worst. It is not being a “permabear” (permanently talking about doomsday and how good the old days were). If you detach a little from the result and focus on the process, you can start to give generously. Planning can make you obsessed with cause and effect. I did this, so I expected this, and it didn’t happen. 

Expectation Management helps people do anyway. Then do again. Freed from the weight of expectation. The weight of having to prove themselves and their team. I see too many people grappling with monsters in their head to show that they, and the groups they identify with, are “good enough”. Life becomes this long exam where you are constantly weighed and measured. Mainly by yourself and your expectations. 

Scales and Weights

Comfort in Discomfort

Planning is not just picking one desired path. It is also preparing mentally, emotionally, relationally, and financially for the possibility of multiple paths. Expectation Management means that you are less likely to be caught unaware, even if it is an outcome that was not of your choosing. 

The Stoic school of philosophy and the Yogic idea of Tapas are all about building comfort with your foundations. What is the bare minimum you need, and can you come from a base level of peace? I like being an optimist. I am lucky to be wired to believe that things are going to turn out okay. I don’t need to explore all the worst-case scenarios. There are some who prefer going there. If you expect the worst, you can only be positively surprised. I am wary of the constant cloud that involves even on sunny days. 

There is a middle ground. Making time to think of, and prepare for, things not going according to plan... but moving in a direction of our choosing. Building comfort in simplicity and absence of comfort. Simplifying. Removing. Cleaning. Growth is not always about more, and often we learn what is really most important to us during our darkest challenging times. We need to remember to look after those things when times are good. To always know what the important things are.

Worst Case

Expectation Management

We all have to eat. To eat, we need money. To get money, we need jobs. There are not enough jobs. Once there were not enough people for the work that needed doing, and Governments had to impose hut taxes to force people into the economy. If you tax in cash, you need to be paid in cash to pay your tax. 

If we live hand-to-mouth, then we cannot survive without a source of income. Part of wealth is the capacity to have disruptions, bumps, and gaps in money flowing in. An ability to survive the winter. An ability to plant in the spring. If you treat people as in-the-now productive assets, then their quality of life is chained to the marriage of the supply of work and demand for that work. This filters through to how people build relationships and communities. 

The sad truth is that when you are young, it is about love and purpose. As you get older, it can be about the work that the person does and how they pack the dishwasher. Relationships come loaded with expectations. One of the key drivers of wellbeing is expectation management. The comparison between what you think should be, and what is. It is hard to manage expectations if we are at the limits of our spending.

Ability to Rest

Escape Plan

Building wealth requires a plan. Before that, if you are trapped, you need an escape plan. If you are in a situation where you don’t have the ability to earn, or are stuck where you don’t own enough of what you earn. If what comes in is used to pay interest on previous consumption. 

Building only starts when there is forward momentum. Good debt is where money is borrowed, and given a productive job. The money is not borrowed and consumed, but earns a salary. The money gets paid. There is still risk. The borrower takes on the risk of not being able to pay the salary, because what is produced does not cover the costs. If you commit to salaries, you have to pay even when there is not money. Or close shop. The wage bill comes each month, and you have to meet it. Like if you have borrowed and consumed, and still have to pay interest. It becomes the cost of waking up. 

Building only happens with space. With construction rather than destruction. With a source of income. With control of expenses. If you then want to separate yourself from the anxiety of hand-to-mouth living, the escape plan can morph into a growth plan.

Resource Depletion and Consumption

The Unseen

My oldest brother is very dangerous over short distances. Like Gimli in the Lord of the Rings. My middle brother is more like Legolas, preferring long distances and floating seemingly effortlessly over obstacles surviving on leaf-wrapped Lembas bread. Thousands of years of thoughts hidden in a head we don’t have access to. People have different approaches to life, and we must be aware of that. 

Some knowledge is conspicuous and conscious. Some knowledge is embodied and relational. Our decisions are constructed by contrasts, what is present, and what is absent. What you see is not all there is. 

Debt is the best example of that. There is good debt and bad debt. If you don’t know the difference, you should probably avoid debt altogether. Bad debt is the opposite of capital. Once spent, it produces nothing but still needs to be fed. It takes on a life of its own and sucks on the life of those who are still living. You can pay back significantly more than initially borrowed as you start paying interest on interest. Strangled by debt traps. Even those living conspicuously “successful” lives may be digging deeper holes with each breath. 

The process of stilling the waves of money anxiety, through building a buffer, then building capital (an engine), often starts with dealing with the unseen.

Jonty Dive

Less than a once-off answer, financial planning is like going to gym to build your risk tolerance. Initial conversations are about seeing where you are, and what your goals are. Then you exercise. Lengthening and strengthening your muscles. 

As we get older we tend to (sometimes) pick one sport. Kids do everything, and movement is built into their curriculum. Bar the times they are forced to sit on their hands in classrooms that ominously precede office work. Instead of walking down corridors, kids run. Sprinting even if it is just between the toilet, lounge, kitchen, and bedroom. I used to do “Jonty Dives” by running down the passageway and jumping onto my parent’s bed. Kids are always learning. 

As we get older we tend to be pickier and get swallowed by narrowing responsibilities. Then when things change, we struggle. Even when adults are fit, it is often in a particular way. With children, the variety maintains options. Like the Greek athletes of old where they did all the events. 

Today our athletes specialise. Long-distance runners have short torsos, long legs, and are very light. Swimmers have long torsos. Sports get dominated by particular physiques. In real life, the sport changes. As time moves on, the sport is changing more regularly. 

Plan for change.

Ready to Move

Meaningful Creation

You can meet conspicuously successful people, who have got a lot to say about their ideas, with not much space for conversation and exploration. They hold court. That is not impressive because their (and all of our) ideas are limited. Everyone we engage with presents an opportunity to learn, unless what you are really doing is promoting your own ideas. Evangelising. Civilising. Imposing. 

David Attenborough asks us to take more seriously the power of the wild and biodiversity. Rather than scaling up our ideas and creating vast mono-cultures. The goal is not knowing the solution. It is about trying different things and having capacity to adapt, adjust, and accommodate a dynamic environment that is chaotic, nuanced, and deeply complex. An environment we know we do not have capacity to understand. If we let go of the attempt to scale control, while still engaging with an active feedback loop, the goal shifts to building a practice. 

Risk tolerance is not simply a trade-off. Return is not a reward for taking extra risk. Snap that idea. Risk tolerance is the capacity to listen, unlearn, learn, and create. It is meaningful creation you are rewarded for.

Holding Court

Explorative Questions

Find someone who is capable of deep listening and has the skill to hold a mirror up for you in a compassionate way. Genuine listening is hard. 

I clearly speak a lot. Sometimes too much. I like expressing ideas and listening requires work. I am deeply curious and want to hear what others say, but also end up testing my ideas out loud. Getting the balance right by being quiet, asking explorative rather than critical questions, and being truly interested in what others are saying, is a form of fitness that requires exercises to build into your habits. 

Often in “conversation”, people are not listening, but are waiting for their turn to speak. Waiting or interrupting. Showcasing established opinions. When I realise I am in one of those one-way exchanges (especially if I have the self-awareness to realise it is me who is the problem), I try switch gears to limit my speaking and use more pauses. “Speaking in tweets”. 

I met Allan Gray (the man, not the company) at the tail end of his career. At the risk of name dropping, he did not know me well. He knew who I was, and we had conversations, but we did not often work closely. What was fascinating about him though, is that in almost all of my (and others) interactions with him, he was the one getting information. He had an insatiable appetite for other peoples' opinions, even if he was a famous contrarian, who put others' views aside when he finally made his own decisions.

Explorative Questions