Aluminium Wrap

In an income-addicted, hand-to-mouth, economy your standard of living is connected directly to the price of your labour (your salary). This is precarious if the work disappears or the set of problems that need solving changes. Price is not value. Price discovery is hard. It is a negotiation between the ask and the offer. If lots of people can solve a valuable problem, its price will be low. Aluminium used to be prized as special cutlery for the wealthy. Now we wrap food in it, cook, and discard. Supply and Demand. A good rule of thumb for if an industry is broken is if the price for the same thing keeps going up. That means we are not finding better solutions. Prices should go down. We need to wean ourself off defining ourselves and our lives by our income source. Like the Government Pension Fund of Norway (known as the Oil Fund) which gradually shifted investment from oil to a broad basket of international investments that are independent of the Norwegian Economy.

Inhale and Exhale

Stilling the waves of money anxiety starts with understanding where you are. Like meditation, thoughts will continue to come through your head. It is not a fight. You do not do meditation well or badly. There are no rankings or elimination rounds. When a thought comes into your head, it is the point to acknowledge it. Greet it. Politely let it pass. Then go back to your breathing. Financial Security is also about the inhalation (income) and exhalation (spending), and the relationship between the two. You want to breathe in slowly, and with control, and breathe out slowly, and with control. Spending has fixed parts and variable parts. If you keep a record, you can see some patterns. Even the variable parts have regular highs and lows. You can get a sense of the lung capacity needed. There will still be shocks, when spending is way higher than normal. For that, you need a buffer or support. To build that, always starts in the same place, for everyone. Where they are. Where you are. With a breath, and understanding where you are, is. So you can let it pass.

Building Lung Capacity

Feast and Famine

A key step to stilling the waves of money anxiety is changing your idea of what money is. Shifting from seeing money as something you spend, to seeing it as something you put to work. Stillness starts with breathing space. With a positive gap between what comes in, and what goes out. There is a level below which this is incredibly difficult or impossible, but there are plenty of wise women in townships around South Africa who will teach you humbling lessons about financial planning. Without downplaying the challenge of finding work, or obstacles to developing skills and knowledge, the path to empowered decision-making lies in detaching from cycles of feast and famine. Stating the obvious, you need a source of income above your basic minimum needs. After that, the job your money gets is as important as the job you get.

"Still Life with Water Melons" Penny Siopis (1985)

The Space Between

Earning £100,000 a year can still be filled with anxiety if you are spending £120,000 a year. If you are living on the edge of your capacity to borrow and pay interest. If you are pushing forward and up as hard and as fast as you can. Earning R100,000 a year can be Zen-like if you have the self-discipline of a Langa Gogo, spending R80,000 a year a putting some to work. Those are extremes, but the point is the only comparison necessary is spending and income, and the space between. Not other people. Vrittis, are the thought waves of the mind. Yoga creates a system to control these waves. A path of self-restraint that brings focus to the things that are most important. Creating the ability to move with intention, rather than being moved by what the world throws at us.

Taking Cover

Disability Insurance provides Income Protection. People are Productive Assets. We link our survival to our ability to make money, and if you become disabled, that ability becomes impaired. When I started working after university, my first job was in Disability Product Development. You pay a premium (your share of a pool of money covering all those at risk), and if something awful happens, the associated financial pain of the tragedy is lessened. One type of cover provides a Lump Sum, which then needs to be invested so that it can work on your behalf. Another type pays a portion of your salary till retirement. You can get “Own Occupation” cover which costs slightly more than “Any Occupation” cover, because you may still be able to work, but not do the thing you wanted to do. “Daily Tasks” cover is less job dependent and focuses on whether you can do the physical things you need to do to look after yourself. From that first job, I became determined to not be that dependent on my income. But while I was, I got the thing I was helping sell to others for myself - Disability Insurance. I kept the cover till I had built an Engine to cover myself.

Avoiding Knob Nuts

A few years back, I got some of my money a job at Colgate. I brush my teeth every day, twice a day. I plan to continue doing that. I like businesses that solve problems people recognise. That solve them in a way that the customer is happy. Buying toothpaste is not something I think about a lot. Regular, content, repeat business. I also like companies that laugh in the general direction of Nation States. Multi-national companies that recognise that where you are born is pretty random. That have suppliers, customers, and shareholders all over the world. The great thing about my money working at Colgate is it can’t be made redundant without the other owners and managers hurting too. Some knob nut can’t turn around and decide to let my money go because they had to make a “tough business decision”. My money’s life isn’t turned upside down by some clown with the power over a real person’s life. People need toothpaste. My money makes toothpaste. Can I think about something else?

Putting Capital to Labour

The question “What work do you do?” puts constraints on your earning ability. It is true that we live in a world where most people have to be their own financial catalyst. Where people have to be productive assets. But we also live in a world where you can gradually shed those constraints. Where it is possible for money to make money. For Capital to Labour. You can separate the questions, “What do you do?” and “How do you finance what you do?”. What you do doesn’t have to be filtered through the constraints that are necessary to make money. Money making needs something you can count. Not everything can be counted. Money making cares about supply and demand. Value is personal. Money making requires conspicuously demonstrable value. Value can sit beyond words. Lie beyond numbers. Dance beyond containers. You don’t have to be the Best Actor in your money-making story. “What needs doing?”.

"Weaver" - Vincent van Gogh (1884)

Free Rider

An Engine is Capital that can earn money on your behalf, so that you can focus on value that is hard to monetise. Income is the lazy man’s way of comparing the incomparable. We don’t have the capacity to understand each other’s worlds without concerted effort. We are mostly too busy on our own stuff to try. We don’t appreciate Free Riders and Lazy Eaters. The base assumption is if you aren’t earning coin, you are leeching. It is a terrible assumption. A symptom of our societal obsession with weighing and measuring each other, rather than seeing the person. Not all ideas are good business ideas. Not all business ideas are good ideas. Most of my time is spent on things that don’t make money, because I “front loaded” my earning. I didn’t spend it all, but instead got it a job. It still earns money. That enables me to do unpaid work. To explore. To get lost in the grass. To appear lost, because I don’t have a big pay-check to print on my shirt. I don’t have a boss to justify myself to. I am cool with that. The world mostly isn’t.

Free to Wonder

Drip Feeding

Lots of people are paid substantial incomes but are not financially independent. You can make £100,000 a year a still be as addicted to income as someone earning R100,000 a year. Spending adjusts as fast (if not faster, given increased ability to borrow) as income. It is super tempting to spend your income even before you have earned it (borrow and spend). Living off a Basic Income paid by an Engine requires substantial internal discipline. Unlike a salary which drip feeds you, an Engine is there. It has a paper value. You can fire it by selling it off and spending it. Particularly challenging is the Alternative Worlds presented by friends who have chosen different paths. You can’t see the Engine. It is working. You can see an income you spend, in the lifestyle it affords. Part of shifting to a Buffer & Engine mindset, and weaning ourselves off income-dependence requires an ability to move beyond drip-feeding.

Total Parenteral Nutrition (TPN)

Dum and Dee

People don’t need to be Productive Assets. Yet we know it costs money to live. You can’t opt out of reality. “Asset Liability Matching” (ALM) is a tool used by Actuaries to manage the risk of future obligations. If you know you are going to have to pay a variable amount in the future, it helps if the assets   put aside to pay that amount vary in the same way. The “Lifestyle to which you are accustomed” is lazy man’s ALM. You spend whatever you earn. When the month’s money runs out, you self-isolate till pay day. The only discipline required is to earn more money. The only solution available is income and work. Doing more. But you can also reduce risk by initially building a buffer (Emergency Funds) and then gradually building an Engine (Capital that can earn money by working). This requires new types of discipline. The money is “there” but not there to be spent. Your Lifestyle has to be within self-regulated constraints. Spending chunks of the Engine is firing your money. Our primary liability is the money we have to spend. Matching that to your income will mean you have to be a Productive Asset. Matched to your spending. Detachment is the first step to freedom.

Don't match your Income and Spending

Durban Boy Afrikaans

The CEFR (Common European Framework of Reference) outlines your ability within a language. I am attempting to break free of my monotongue world view. My mother tongue is English. I also speak Durban Boy Afrikaans (i.e. not great, but better with booze). My English wife finds it strange when people in South Africa say they are English. South Africa has 11 official languages, and that is part of our identity. In CEFR, level B2 is “the capacity to achieve most goals and express oneself on a range of topics” (2500 active vocabulary) and C1 (5000) involves “nuance, in terms of appropriacy, sensitivity, and the capacity to deal with the unfamiliar”. It feels like financially speaking, we live in a world stuck on level B2. Within a hand-to-mouth, pass-the-parcel economy, we are fine if (1) there are enough jobs, and (2) we don’t go off-script. We can handle the very familiar. We can do Durban Boy Afrikaans with prepared “going to the shops” dialogues. If we want a deeper connection, we need to build Buffers (Emergency Funds) to handle unexpected expenses, and vanishing income. If we want deeper comprehension, we need Engines (Capital that earns on our behalf) that can sustain our exploration. Beyond our income-dependence lies a world of creativity.

1991 Trev in the Durban Boys' Choir

in front of the Durban City Hall

Financial Yoga

Yoga is a practice of increasing levels of relaxation. It stills the waves of the mind. Financial Yoga is the practice of increasing levels of security and empowerment. It stills the waves of money worries. Yoga starts with releasing niggles of the body. With the physical. Financial Yoga starts with finding an income. The skills and knowledge to earn enough to live. Yoga then focuses on the waves of thoughts (negative & positive) that come and go. On the mental. Financial Yoga finds space between hand and mouth to build a buffer to deal with waves of money emergencies and opportunities. Yoga then raises the level of consciousness to focus on something more than your self. To identify deeper and wider. Financial Yoga aims to release you from being a Productive Asset. You are not your job. Salary is not your worth. Financial Yoga releases you from income dependence. Relaxation and stillness allow a point of focus. Consciously chosen by you, through practice. Develop your daily practice of increasing levels of relaxation.

Finding Space

How do we wean ourselves off structural income dependence? Even most of the wealthy live hand-to-mouth in a fragile way. We don’t look at wealth by stress testing. We look at the surface. We live on the edge. Few people suddenly become all Zen when they reach a level of income or capital where they feel they have “Enough”. The incentives of bigger, better, more, provide more immediate gratification than the incentive of deep soaked security. We stretch. We push. We reach. Income Detachment starts with space between spending and income. It is hard to motivate for Buffer and Capital building. There is no shiny new thing on offer. A Buffer just removes the noise. An Emergency Fund of 3-6 months spending. A productive Engine should generate income over time, but spending more than 2-5% of it is likely to put it under pressure. You can go Cold Turkey and extract yourself from spending-based environments, but we are in this together. Wealth creation is a team sport. It is a long-term venture. Across generations. Embedded in culture and relationships. We have to value the ability to breathe, and gradually build our lung capacity.

Wiggle Room

You are not your job. Your income doesn’t determine your quality of life. Your success is not signaled by how much you consume. We are not cogs to fill specific and managed roles defined by a path we set out on as kids. You can love languages as an adult when you hated Afrikaans as a kid. You can discover a passion for Music late in life. Coding. Investing. Running. Whatever. You can unlearn. You can relearn. You can reflect on who you are, and who you want to be. Free Will exists. It’s just hard. Detaching from your circumstances starts with wiggle room. If you live hand-to-mouth then there is no breathing space for change. We have the most control over our mouths. Our consumption. If you can let go of signaling to others your place in society, you can gain control over your choices. Slowly. Over time. With work. Emergencies often make our choices for us. Build an Emergency Fund. Space between your hand and mouth. 3-6 months of spending requirements. Then look up. Look properly. And make a choice.

Space to Wiggle

At the Centre

My income comes primarily from my Engine. I spend very little time managing that Engine. My investment philosophy has become gradually more aligned with that of my Yoga teachers and Natural Bee Keeping Father-in-Law. When students love their yoga classes, they can get obsessed with the teacher. It’s not the teacher, it’s the yoga. In the same way my Father-in-Law sees his primary role as getting out of the way of the bees. It’s the bees doing the work. The key advantage I have with investing is I don’t manage other people’s money. This means I don’t have to do any of the fake work required by our activity obsession. I can let the management and staff at the companies do the work. I can get out of their way. It’s not about me. When a problem needs solving, our intuition is to do something more. I believe the real solution lies in the opposite direction. Accepting that problems will arise. That noise is learning. Building structures that can adapt, adjust, and accommodate. That can listen to change. That can rest, heal, rise, and shed in their own natural rhythms. Learning to hold space rather than fill it with our determination to be in control. Our determination to do something where we are the centre of the story.

Schroedinger's Cash

Snapping Hand-to-Mouth income dependence requires stepping away from the edge. This is difficult, because the views are best when we push out as far as we can. Savings and Investment come in very different flavours. Two of them are “there, but not there”. That requires taming your inner toddler. A Buffer is an Emergency Fund of 3-6 months’ worth of expenses. Cash that is in your account, but not for normal spending. It is there for smoothing. When unexpected expenses arise, or income disappears unexpectedly. Any spending requires balancing repair work. An Engine is a source of passive income. Powering a stream of income that lessens the burden on your hands. But you can’t spend the Engine. The Engine is working. Spending your Engine is firing it. You can spend some of what the Engine produces. If you spend less than it produces, it will grow. The third type of Savings & Investment is easier. Saving *for* something. You can visualise the reward. Stepping away from the edge requires developing the ability to value what you can’t see.

There, but not there

Income Addicts

You can live off an Income, a Buffer, or an Engine, but they are very different beasts. If you live off an Income, it has to come in. What you get, you spend. So if you don’t work, you don’t get, and you can’t spend. A Buffer has to be very liquid. You have to be able to sell it quickly if it isn’t already cash. That means it can’t be working too hard, or be doing something where the benefits only come in the future. If you are living off a Buffer, the clock starts ticking. It will run out. But, it gives you time to retrain or find more work. An Engine is a long-term vehicle. It provides Endurance if you can live off less than it produces. If you are a good custodian who doesn’t extract all its future potential during the short term. If it is protected by a resilient Buffer, and invested in when there is work available. Unfortunately, the world focuses on humans as productive assets and calls this “Work Ethic”. With no Buffer, and no Engine, there is no space to pause. To breathe. To reflect. When you have no choice but to stop, the cost suddenly becomes real. When the world restarts, we must never again forget the need for Buffers and Engines.

Work (1852 - 1865) - Ford Madox Brown

Core Strength

Stay home doesn’t have a universal meaning. The self-evident truth of the current Global Crisis is that while we are all in the same storm, we don’t have the same life-boats. An excessive focus on the conspicuous, means our foundations and buffers have been found wanting. Our lives revolve around income. Income defines our local. Who we spend our time with. How we spend our time. Who can afford to spend time with us. So that in an emergency, when we retreat to our safe spaces, we aren’t connected to those who don’t have matching core security. We don’t have names, faces and trust to do something as simple as a Cash Transfer to those who don’t have the privilege of a world that continues when the work stops. Most of us don’t even have trusted individuals who have done the work to understand the parallel realities we are separated from in Global Apartheid. There is some existing trust. There are existing relationships.  We need to lean in, imperfectly. Then tear down walls and build bridges when we start again.