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.

Knowing the Game

Knowing what communication game is being played, and how to play it, is fundamental. Like when someone comes home from work and they need to dump. They just need to moan. To whine. To vomit out the bad day. They don’t necessarily need someone to fix the problem. They don’t need to be fed back what has come out. That’s gross. 

Part of communication is often simple observation and attention. We do not always need feedback. Sometimes you need periods where you are just getting stuff done. Feedback-free action. Where you are a little kinder to yourself and just relax into whatever your automatic process is. Trusting yourself. 

In Yoga, you relax into the posture. Sometimes you are stretching hard, but at other times you stop trying and focus completely on deep breathing. Letting your body be where it needs to be without beating yourself up. Do not only have one tool in your toolbox. Planning is both creating a plan, and detaching from that plan. The only thing you can be certain of is that it will not play out in the way you thought. 

Planning is like financial modeling. You can have disdain for the projections and trying to measure everything, because it is so obviously going to be wrong, but sometimes it is still worth doing. Simply as a tool for thinking through problems. We think in stories, and simple things that are wrong still let us nudge towards an understanding of advantages and disadvantages. We can only think in simplifications of reality. Then adjust how we lean into the chaos with different games and tools.

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).

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

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

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

That Map

The starting point of Financial Planning is earlier and separate from the specific way you make (and invest, and spend) money. You plot a course within a map. First, you need that map. 

You must reflect on what you value, what your values are, and how you want to create meaning. On the realities you face, the obstacles, the choices, the resources, and your support. 

Risk tolerance is not simply how brave you are. Those who simplify the decision-making to a trade-off between risk and return are, simply, wrong. Knowing two made-up numbers does not give you the answer. You do not get rewarded more for taking more risk. You get rewarded for adding value within specific constraints, not for being reckless. 

Some people who seem risky are not risky at all. They take calculated risks when they have a level of mastery where for another person, doing the same activity, would be perilous. They have done the work. They understand what they are doing. 

We typically just look (because that is all we can see) at the conspicuous. We do not (and cannot) have the full picture. When evaluating other people and what they are doing, it will (by definition) be impossible to see from their perspective. That is why the best financial plans are about working on understanding yourself, your context, and your behaviours.

Atlantis Projection

Start with Conversation

Financial Planning starts with a conversation about you and your relationship with money. The goal being to help you understand your risk tolerance and what matters to you. If you want to still the waves of money anxiety, you are building your capacity to deal with complexity, randomness, and ambiguity. 

We do not, and cannot, have a complete understanding of cause and effect. We cannot know in advance what the result will be for each path we pick. If we did, we would all just pick the one that took us to our intended destination. The rules are always changing. You cannot just do exactly what has been done in the past and expect the same result. 

A good conversation about financial planning starts with understanding you as a person, how you see money, what your goals are, and what you value. You do not get paid for taking risk. You get paid for adding value in monetizable areas others have signaled is in short supply. 

Risk tolerance is mainly your ability to adapt, adjust, and accommodate. Like physical strength and flexibility, risk tolerance is something you can build through exercise. 

Then you make money, or your money makes money, by solving problems for decision-makers with money.

Lessons Learned

Looking back far enough, there are lots of examples of extreme events (high impact, low probability). Numbers we use for risk analysis make better questions than answers, because they never include the full picture. A great book to read to give you a little bit of humility is the story of Long-Term Capital Management, titled “When Genius Fails”. It is an important book to read for those who think they have cracked the code. Thinking in “distributions” (a range of possibility) rather than simple numbers is vital. Howard Marks implores that we, “always remember the six-foot man who drowned in a river that was five-foot deep on average”. It is not just the average that matters. The statistical term is moments. You have to think in moments. How the range of possibility is made up. That includes thinking about tail risk, and what isn’t in the numbers (yet). In scenario testing, you need to plan for what could happen, not just a single path. In the same way as looking at what did happen is not enough. What could have happened? You need to plan for your plan not covering everything. With hindsight, we think we understand the world. We think the lessons we learn through mistakes mean, “if I had done it this way, this is how it would have played out.” In reality, if you had the chance again, everything would be completely different. 

Lessons from Rivers Crossed

 

Financial Calm

Financial calm does not require you to be loaded. It comes from a level of confidence that you can cope in three dimensions. 

1) With decisions that take you left or right. 

2) With the unexpected bumps of ups and downs. 

3) With the endurance to keep on keeping on. 

Financial calm can come with belief in your plan. Not a crystal ball that sees the future. Instead planned capacity for futures. When you know you are living within your means, then deep soaking calm builds your strength, flexibility, and control. In a way that radiates through how you move. 

Stress releasing from your muscles and joints. Living within your means allows you to expand the length and smoothness of your inhalation and exhalation. Identifying and building the skills and knowledge needed for a source of income. Overcoming the barriers and securing your container. 

Calm is not the size of the ins and outs. 

Calm is the space between the ins and outs.

Up-Down, Left-Right, Forward-Back

Adapt

Investment Analysts build models of businesses to help understand complexity. The point of the model is not to be correct or not. You know in advance that you cannot have an accurate map of the future.

Nature does not subscribe to the simple cause and effect story that we use to try control the world. The point of any of the models in our toolbox is simply to help us make sense of things in a human way. To add a story. To add meaning. Like other tools we have made up – countries, words, money, political parties, ideologies, agreements. They sit on top of reality to process our controlled hallucination.

Personal Financial Plans are similar. They are not fixed in stone. They are not correct or wrong. They are an ongoing conversation. The only thing you can truly plan for is things not going according to plan. A good plan starts with a picture of where you are. Then builds towards capacity to adapt, adjust, and accommodate. As you change. As you live. As you add meaning.

adapt for specific uses

False Gods

Money makes money. This allows wealth to compound (the growth also produces), if not everything that is produced is consumed. If some of the fruit is planted, and given the space to grow. This is both powerful and dangerous. Ideally, you want to fail hard and memorably early on, to knock the delusions of grandeur out of you. You do not want to be that false god who complains that the (clean and comfortable) guest room is not up to the standards to which they are accustomed. Because if you do not regularly suffer some misfortune, chances are life will one day smack you hard and repeatedly in the face. Probably when you are managing other peoples’ money. As Mike Tyson said, “Everyone has a plan until they get punched in the mouth”. You cannot just judge yourself on how your path has played out. You cannot judge others without looking in a mirror and reflecting on your potential unwalked paths. We are communal animals, and every path is an alternative reality. One you could have easily been on. The key is not profit making and ego building. It is reinvestment, and building buffers and capacity for whatever punches are thrown.

Nergal Gate in Ninevah

Fist to Mouth

Creative Destruction dismantles long standing ways of doing things in order to make way for innovation. It scales the idea of “making yourself redundant”. There is a punch you in the face obvious problem with making yourself redundant. It requires trust. Fool me once, shame on you style. When you realise that someone has the ability to cut you loose like a gangrenous limb, after solving their problem, one option is to make yourself irreplaceable. To stop trusting. To create artificial barriers to entry and negotiating power. Little secrets people don’t want known. Stuff they know you know they wouldn’t want in the newspaper. Dirt. The only way to truly want creative destruction is to be an owner. Then, and only then, do you have an incentive for the problem to be solved. Otherwise, the real incentive is to make sure you, personally, are a part of the problem solving. You want the problems to go on. To release the power of creative destruction, we have to detach our identities from problems. To build buffers of cash, and engines of capital, that support us beyond hand to mouth living. That make us celebrate a job no longer being necessary, because it means a problem has been sustainably solved.

Your Own Fate

I find the initial stages of learning confusing. In a physical way that affects my breathing, my tingling skin, and my wide eyes. Education often does more filtering than teaching. Levels sort the good from bad, and move on. Searching for naturals. Searching for the chosen ones. Chosen by fate. Except different skills are needed in the early stages of gaining skills and knowledge. My secret power is I am as stubborn as a donkey. I take the next step. In my Actuarial exams, I was very structured. Early exams took 100 hours each. Later ones 300 hours. I put the hours in. How often do we put 100 hours into something, before deciding we can’t do it? How often do we ask whether the way we learnt is the best way to learn, before deciding we can’t do it? Two mentors stand out for me as teaching me practical methods on “How to learn”. Mr Saayman (my History teacher), taught me as a 12-year-old how to summarise. Pin down the main thing. When I was 20 years old, David O’Brien,(an Actuary who had finished what I was starting) reinforced the idea of spending 8 minutes on a 5 mark question, and no more. Move on. Exams are a process. No individual question is the main thing. Part of learning is accepting confusion as part of the process. Make your own fate.

Make your own fate

Staying Connected

The only thing we can be certain of, is that things won’t go according to plan. We can plan for, not going according to plan. Time matters, if in each moment we are doing something that matters to us. If today matters. If we are connecting the moments. Backwards and Forwards. There is a temptation to weight time differently. To release the past. To discount the future. To focus on now alone. That is not my approach. I love my story. Revisiting my story. It provides context to the habits, loops, scripts, drivers, responses and incentives that create the way I see the world. With attentive feedback and reflection, that rewire the way I will see the world. The way I will interact with others. I value my future. The future of the others who will follow. The connection I will have to their story. What we can plan for, is our ability to endure. Our ability to cope. To adapt, adjust, and accommodate the uncertainty. Plans don’t have to be about control. Plans can start with acceptance and investment in capacity. They can start with a deep breath. Then move forward while staying connected.

Problem Solving

A job for life is a thing of the past. A career for life is not guaranteed either. What hasn’t changed is that we have problems. Solving problems is a useful way of funding things that are fuzzy and beautiful. That can’t be quantified. That can be destroyed by forcing them to make money. Money making boils down to identifying and articulating a solvable problem for people with resources, then having the skills and knowledge to deliver a solution. Finally, you need to have a container around that solution so that you can charge. There needs to be trust that you intend to solve the problem, and confidence that you can. There needs to be demand for you to be involved, and a limit to the options the client has. It then becomes a case of connecting the dots. Coordinating the people and resources to get things done. Jobs and careers can be a source of meaning. There are others. Jobs and careers can simply be a funding mechanism. They can build Capital and release us to focus on other things. Problem-solving remains a useful engine for funding life. But life isn’t a problem to be solved.

Building a Life

Two Ways

Three important concepts when thinking about living a fulfilling life are Commitment, Openness, and Results. There are two ways of looking at each of these ideas that can seem, or be, in opposition.

Commitment can mean showing up with a level of intensity. Being fully present, and willing to bring everything you can offer, every time. It can mean a level of quality. 

Instead of showing up "this time", it can also mean showing up "every time". Less intense, more long term. "There is nothing to writing. All you do is sit down at the typewriter and bleed." Ernest Hemingway. Hemingway didn't wait for inspiration. He didn't wait for quality. He built habits that created the environment in which quality is born. He did the work.

Openness can mean a willingness to try everything. It can mean letting go of reservations and leaning into experiences and ideas. A level of flexibility.

Instead of always being prepared to change paths, it can also mean listening while staying on a chosen path. The grass is always greener, and real growth takes time, patience, and building. You can recognise the challenges on your path, and work on them. Every path has challenges. Starting again has costs. Openness doesn't require action as proof.

Results are the way we count and identify growth. Growth is our scorecard. We need to identify a place we were, a place we are, and a place we are going to. Something with words and numbers we can articulate to paint a picture of change. Results are the cornerstone of plans and goals.

Not everything that counts can be counted. Some work is internal. Alexander the Great was a brilliant strategist, and military genius. A man of results. As his Empire expanded East towards India, he came across famous meditating Yogis. Alexander's fame was for conquering the world. The Yogi's success was "conquering the desire to conquer the world". My friend Francois calls this the "Paradise Principle" - where even the staunchest non-believers live a postponed life for some imagined future. Tolerating the present for a future pay-off when our lives will commence. Not all results are about change. Some are about acceptance and awareness.

Commitment, Openness, and Results take different forms. Choose those forms consciously.

Are you Empire building?

Straight Lines

Nature doesn't do straight lines. Life is incredibly noisy, and we don't know what we don't know. So how can we possibly plan? Plans are often way too specific. Life explodes out on multiple paths as plans crash into reality.

I like the idea of separating the Fixed and the Flexible. The Basic and the Bonus. Nature doesn't do straight lines because they aren't fun. They also aren't resilient. Strength comes from regular small mistakes that adjust to the new learnings. Weakness comes from the apparent strength that "always" copes, then snaps dramatically. But we need those straight lines for our own inner strength. Our grounding. Our roots. Our place of calm to run to when things are overwhelming.

So plan for the Fixed. Plan for the Basic. But, then build a buffer between the underlying certainty and the fun. Take Financial Security as an example. If you can build an Engine that pays you a secure Basic Income... then you have your underlying straight line from with which to play. Financial Security then allows you to play in your new found space of freedom. To create time and opportunity. If you are uncertain about meeting your basic needs, then there is no space for mistakes. With no space for mistakes, there is no space for learning. With no learning, there is no progress.

Freedom and Fulfilment come in the space of play. In the flexible. In the bonuses. Plan, but plan small, plan basic. Then play.