Circle of Security

Getting comfortable with discomfort is necessary to still waves of anxiety. The ability to enjoy the challenge comes from a degree of internal security. While constantly confused, I have a high degree of self-confidence, not that I have the solution but in myself. 

This doesn’t spare me from impostor syndrome or projecting my noisy internal committee as a filter for other people’s comments. Rather, it is a place I can return to. 

Attachment Theory talks of a “Circle of Security”. The infant learns that their primary caregivers are responsive and dependable, which creates a secure base for the child to explore the world. As children venture out, they know there is someone to watch over, delight in, help, and enjoy their curiosity. When things go wrong, there is a safe haven to return to for protection and comfort. Someone to help organise the child’s feelings and get them ready to venture out again. 

This kind of security doesn’t pretend to have answers. It is not “fake it till you make it”. It is, “you have made it, you are enough... so ask questions!”. 

That empowers the ability to experience life as one big trial and error experiment, where what matters most is never at risk. Where no one decision is overwhelming. Where consequences are manageable. Where no single moment defines your life. Instead moments connect to each other, and difficulty can be unwound (with work) and re-ordered.

Mother Tongues

Our understanding grows from the base of our mother tongues, and the context that provides as a foundation. Memory works by having somewhere to put things. Meaning hooks which place, and interpret what we take in. 

Imagine being a baby again where you have no context. Your wide eyes stare, looking for patterns and repetition. Everything is fascinating. Everything you get wrong is a learning experience, if you even know enough to know you got it wrong. Which must be traumatic. 

This is why kids go from emotional extremes of frustratedly losing their temper, to rapturous joy. Living in a world where everything is unexpected and chaotic. We talk about kids learning fast. That is not really my experience. We are just nicer to kids. They take ages to learn. When you speak to a 6- or 10-year-old, we are amazed partly because we want to be amazed. 

Would you be amazed by an adult with that proficiency after a decade of study? We allow children space and time to carry on learning. 

Once we are adults, we start judging more harshly the slightest mistake. Someone who speaks four or five languages might struggle to get promotions because of their English grammar, or ability to paint a vivid picture in their fifth language. 

To develop a habit of lifelong learning, you need to maintain childlike curiosity, but also parentlike kindness. You have to be a good parent to yourself, and hold space for discomfort and celebration.

Somewhere to place Memories

Competently Incompetent

Confidence is attractive because it suggests insight into bewildering complexity. Admitting you are lost doesn’t feel like, or often translate into, a great sales technique. 

I find the strength, and patience, of Arya in Game of Thrones more appealing. Where she goes through the stage of “a girl has no name”, and she learns to find her way when she is blind. 

We can get overly attached to the story we tell ourselves about our lives. The narrative. Life has had a way of humbling me. When things change dramatically, I have to edit my story. I grapple with life trying to control me. 

I do have moments where I feel a sense of freedom through insights. But then the waves come back again, and I go back to grappling. An H-like furrow between my eyes from taking life very seriously. 

Repeatedly coming back to a very basic practice can provide a solid foundation. A dependable place of return, before you have to go back to the madness. 

Truth be told, I love the madness. Free will is 100% dependent on madness. A complicated world means we can be seduced by specialisation, and forget how to be competent at life. To be competent at being incompetent. 

Our bodies, minds, and relationships are use it or lose it, so the systematic practice of yoga means you do a body scan to notice where you are carrying tension. Like climate change, slow significant changes can only become apparent too late, if you don’t consciously build in ways to notice the gradual but compounding consequences of little choices.

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

To be Without

Tapas means “to be without”. Not in a way that does harm. Similar to the idea of Lent, or the ideas put forward by the Stoics. If you can get used to periods of very little, then they lose their ability to create anxiety. You know you can cope. It gives you a firm foundation from which to build. One way to imagine this is as the opposite of a holiday. If you spent two weeks a year, or a day a month very simply. Coming back to normal feels like a treat. In the opposite way, things we really enjoy can lose their edge if they become something we are used to. The Financial Freedom built through the practice of Financial Yoga is not about a path to more in a conspicuous sense. It is partly reducing the power of Financial Waves to induce fear, by conquering some of those fears directly.

Given Time

I am not that interested in the first five years, if that is all that is on offer. I believe in compounding and foundation building. If you are living hand-to-mouth, neither of those factors are relevant. If you are simply being paid for the work you do, and that gets consumed. Money is made in containers. If you help build a container, you want to have a stake in that container. Ownership. The kind that exists beyond you. Real wealth is created over the long term. Through owning the container. Through owning the barriers to entry. Even fifteen years is short. Compounding is just starting to kick in. We judge ourselves over short periods like months, quarters, and years. What is your 100-year plan? What is your 1,000-year plan? What is your plan that has nothing to do with you?

The Cango Caves

Find Shelter

First, find shelter. It is impossible to build if you don’t survive each day. Warmth, sustenance, and protection from the elements aren’t negotiable. To still financial waves, there is groundwork that needs doing first. If you are spending more than you are earning regularly, you are bleeding. Stem the flow. If you are being knocked back to the start irregularly but reliably, you need to find refuge. Living aggressively within your means may feel like a lack of ambition. It is the opposite. There is way more to learn from people with less than us, than from people with more. More is the distraction. We can only see the conspicuous. We can’t see other people’s storms. We can’t see other people’s foundations. Shelter is normally internal and subtle. The ability to breathe slowly, smoothly, and at length. Then with time, and constraint, you can build each day, on the day that came before, for the day that comes tomorrow. With strength, flexibility, and control.

Desert Storm

Fixed, Internal, and Absolute

In Balancing Postures, you find your balance by picking a fixed point to focus on. You still your breath and fix your gaze. Gradually, for longer periods, you can close your eyes as you internalise that point of focus. One of the most powerful techniques for financial stability is picking absolute targets. Most commonly people adjust their spending to their income. That makes sense when you are living in poverty, and you have no choice but to live hand to mouth. Beyond that basic level, living within your means is the most reliable tool within your control, to extend your control. Detaching spending from income. The “lifestyle to which you become accustomed” can be your greatest asset or a moving target that keeps you wobbling, grasping and falling. Once you have secured your base, core strength can give you the flexibility to move with control. Pick a point. Build a base.

Stories that Serve

Compound growth is both powerful and dangerous. I am a believer in both localisation and globalisation. In unlearning and learning. In strong foundations and courageous stretching. Conn Iggulden is a powerful storyteller who bases his tales on as much factual evidence as he can. Then fills in the gaps, collapses characters into each other and creates a story. I think that is how our memory and sense making works. His conqueror series focuses on the rise of Genghis Khan. An interesting part of that is how connected Genghis stays with his people. The life of the leader and the life of the people don’t have multiple layers of abstraction. Genghis still lives in a Ger (a portable round tent). Part of our strength lies in the institutions we build. The Nations, Companies, and Groups that we use. But if they become more powerful than us, we need to reconnect them to the base. Stories shouldn’t be more powerful than the people they serve.

Ger

Where Are You

Every journey starts from where you are. No one else is where you are. One of the first steps in a financial plan is knowing where that is. It is useful to have a flashing dot on a map, to guide you. Financial Statements are that flashing dot. The key ones are a Balance Sheet, Income Statement, and Cash Flow Statement. They don’t have to be as intimidating as they sound. A Balance Sheet is a photo. A picture of your support structure and foundation. Your ability to endure. A list of everything you own, and everything you owe. An Income Statement is a TV series, where each year is a season (some better than others). It is a list of everything coming in, and everything going out. A Cash Flow Statement focusses on resilience. Money in and out in the short term. Giving a sense of your ability to survive the knocks. It looks at cash from operations (doing the thing you do), investing (building your buffer and engine), and financing (borrowing and outside help). Endurance (Balance Sheet) to play the long game. Resilience (Cash Flow) to survive the short game. Creativity (Income Statement) to add meaning and value.

Team Player

The harder you hold onto something, the more likely you are to lose it. I am a Scatterling of Africa. A Soutie. A Vagabond. One who has no fixed home. There were 147 boys in my Matric class. A group of them had been with me for 12 years. Not by choice. Some were very glad to see the back of others they had been trapped with. I was at University for 4 years, and at the three companies I worked at for 4.5 years, 5 years, and a year respectively. I was always a “Team Player”. Throwing myself in wholeheartedly and enthusiastically. But cynicism has grown to replace my romantic side. I am wary of Trusts, Legal People, and groups who we use the language of Ordinary People for. Speaking of Countries, Companies, and Teams as if they are a flesh and blood someone we owe our allegiance to. Teams change. Those groups I was at, no longer exist. The real group we owe our allegiance to is bigger. And smaller. To the real people we meet. The real people who move. To the expansion. To the connection. Time is a one-way door. I can’t move home. It does not exist. Yet I am home. If I loosen my grip.

Class 1 - 1986

Paying Attention

Insurance is a Grudge Purchase. You don’t see the benefits when things are going well. When things go wrong, it is tough to feel good about it being only less bad than you wanted. The first insurance companies were Mutual Societies. People who knew each other getting together in coffee shops to spread the risks of dying in war, or of betting their entire fortune on a single venture across the stormy seas. People who knew each other. Communities spreading the risk. Two of the best forms of insurance are Community and Education. When Winter comes, as it always does, fear is not there because of the confidence in the roots. You don’t begrudge giving support when you feel connected. To past investment. To future springs. To each other. Mudita is the opposite of the better-known emotion of Schadenfreude. Mudita is the sympathetic or vicarious joy that comes from delighting in other people’s well-being. To experience Mudita, we need to “pay the premium” of building relationships. Paying attention. Seeing relevance. Building meaning.

Look Up

Too many of our financial decisions are made based on a multiple, or percentage, of income from labour. Labour Income is a fragile, isolated, building material. The most obvious dangers are death and disability. The more sneaky ones are furlough (a new word for many in 2020) and redundancy. Double Income households hide the fact that unpaid work still needs doing. They also increase the amount lenders are willing to loan, without actually building houses. So the price goes up. Even sneakier is “longevity risk”, the danger of outliving your money once you can’t earn more because of old age. Add to that Financial Emergencies that get funded with debt, so that income ends up paying off past expenses rather than gradually creating wealth. We hide our addiction to hand-to-mouth living behind the shield of “Work Ethic”. The idea that if you don’t contribute, you shouldn’t earn. Fear as an incentive. More robust roots would see people as the best placed local authorities to solve problems. It would empower decision making of communities. It would invest in foundations and buffers independent of personal income generation. Solving the hand-to-mouth problem allows us to breathe, look up, and create. Sustainably.

Rotten Building Material

Survive

We know we have a debt problem. How it unravels without excessive pain is the million-dollar question. The less discussed question is the income obsession. The spending obsession. They are linked. You can mostly only borrow if you can prove you don’t need to borrow. Mortgages are a societal favourite drug. Income is the societal favourite syringe. We don’t have enough housing, so we push up the prices of the few houses we have (pressure cooker) and lend money to those who are playing the salary musical chairs game. Low interest rates. Long borrowing periods. Low deposits. In a world of feast and famine, the whole system is fragile if we don’t have buffers to support our required spending. To support the basics. Our foundation needs to be independent of our earning ability. Our buffers need to be independent of our productivity. People need to be people first, and productive assets second (if at all). You can’t just wave a wand for that to happen. Wealth is built consciously, over time, through a separation of who we are and what we do. We will have moved forward if the question “What do you do for a living” is permanently separated from survival. When we solve problems, rather than creating problems to survive.

Basic Flexibility

One noticeable difference as a Soutie is how get togethers are organised in my UK bubble relative to my SA bubble. Down South… Nice weather? Braai? Everyone magically arrives with meat and drinks. Up North… enter the logistic nightmare of matching up calendars. Add a month to when the event can occur for every additional person invited. Planning too far ahead means full calendars swallow you whole. Inflexibility is contagious. Financial Flexibility is similar. The more fixed, recurring expenses you have, the less you can adapt and adjust to the weather. If you spend too far ahead. More isn’t the core goal of Financial Security. The Foundation should be very aware of the expenses over which you don’t have control. Which are short-term, regular, and insistent. Again, the lack of flexibility to cover the basics when storms hit is contagious. If we don’t all have the basics covered, it becomes difficult to see people.

Building Redundancy

The foundations matter more than the fireworks. A key to Capitalism is the idea that you can make yourself redundant if you are an owner. Ownership is absolutely fundamental and not negotiable. Exponential Growth means what you see now isn’t comparable to the end number if you have skin in the game. Especially if the culture is one of “we hire smart people and leave them alone”. If there is no facetime monitoring, then it doesn’t matter how much of your own sweat went into getting a job done. It matters if the job is done. Plenty of managers gradually find people they trust, and do less of the work themselves. If they are buddies with the people cutting the pie up, and were there when the foundations were being built, they can put their running shoes on and head off to the park while the machine keeps moving. Get a corner office. Work on “strategic thinking”. Make sure the effort you are putting in is foundation building. If you are living hand-to-mouth, it is likely you are building someone else’s redundancy.

Redundant Power Supply

Foundation Building

We don’t have to live hand-to-mouth. Capital can earn money that can finance our needs, and in good times wants. It can provide a buffer for the knocks. Then how we spend our time ceases to be filtered through the question “how can this make money?”. We can free ourselves from a pass-the-parcel economy where a break in the chain causes us to all fall down. We can afford to do care work that doesn’t pay. A challenge with this is “Agency Risk”. There has to be trust and alignment of interest if the managers are not the owners. A lot of risk management focuses on performance. What you can see. What you can see isn’t all there is. Risk control is holistic. If managers get rewarded in good times, but feel no pain in bad, interests aren’t aligned. If (some of the) managers co-invest (for show) but have substantial other assets and safety nets, interests aren’t aligned. The advantage of scale is that standard solutions can spread, and be provided by fewer people. The disadvantage is that things become abstract, confusing, and distant. Without a solid, explicitly-aligned, universal foundation, trust is bound to be superficial and dependent on a fragile illusion being maintained.

Foundation Building

Firm Foundation

Businesses can live hand-to-mouth in the same way as people do. Pay-check to pay-check. They can require things to run smoothly in order to keep going. Like people can live conspicuously fancy lives, but be scurrying behind the scenes to maintain the illusion. Superficially successful companies can be over-reliant on good times. Money from the customers immediately being used to pay staff and suppliers as the show must go on. A person having an Engine or Capital to sustain an income if they can’t work, is similar to a business having Capital Reserves to eat into when times are tough. There are plenty of Investing Rule Number Ones to go around. My favourite is “Never be a forced Seller. Never be a forced Buyer”. But the real first goal is survival. Survival is the force behind decisions we don’t want to make, but make anyway. Having a buffer to get you through periods when that thing you do can’t be done. Whatever your purpose is, whatever meaning you want to create, whatever you want to be… it all comes down to the strength of the foundation. It’s all about the Base.

pic: www.benmolyneux.co.uk

Financial Yoga

“Yoga is stilling the waves of the mind.” My wife recently asked me when I was at my happiest. Two moments sprung to mind. When I was doing my first Yoga Teacher Training, and the period when we got together. A few months before we met, I had done the sums and made peace with a simple life in exchange for release from the Corporate World. Clearly that peace was sexy. It got me the girl. Yoga talks of three levels of relaxation – physical (no niggles), mental (no anxiety), and spiritual (no concern over you vs others). I am at my happiest when I am at my most calm. Not worried about now, but also not worried about a week from now, or a year. My “Financial Yoga” is based on this. A deeply secure foundation, where the uncertainty is upside. A comfort with the base. That doesn’t mean inactivity. Ironically, stilling the waves opens up creativity. That is the heart of the idea of Wu-Wei (Action through Inaction). Start with a buffer to reduce the noise. Build a base. Then from the stillness that comes the creativity that matters will flow.

Yoga (and silliness) in the Mountains

Damage Shows Strength

Survivorship Bias is our tendency to see the people who made it through some selection process, without seeing those that did not (even if the reason was luck). We study the stories of success like people studying that the roulette ball landed on black rather than red. It is too hard to get a good picture of each important fork in the road, and what could have happened. You can’t study what ifs without a solid imagination. I am a bigger believer in focusing on the foundations. Creativity isn’t a path, it is a process. For that process to work, you need endurance and resilience. Creativity isn’t picturing a world you want and building it. It is building the strength, flexibility and control to make your way through a world that is complex, ambiguous, and random. Those foundations include kindness and respect. Not earned by being a story of success. Earned by a commitment to show up. Today, and every day.

The damaged planes were the ones that returned safely

The others didn't survive.