Three Frictions to Wealth Creation

Wealth creation is hard. Not just because it takes time, patience, and discipline... but because life itself seems set up to encourage us to spend rather than save.

Living hand-to-mouth is normal. When income arrives, the natural incentive is to use it to make life more comfortable. My wife likes to tease me about this when she notices (correctly) that I too genuinely like nice things. We met when I had chosen to dramatically cut back. Not because I’ve stopped enjoying the finer things. Restraint is not about becoming a monk; it’s about choosing sustainability, within chosen contraints, over short-term gratification. You can have the nice things, there are just different choices you then have to make.

When I left corporate life, this hit home in a surprising way. Walking into shopping centres made me almost panicky. Without the cushion of a salary, every purchase looked different. My wife has coeliac disease, so when she looks at a menu, she often sees “non-food” where others see choice. I began to feel the same in shops. The shelves no longer offered me freedom, but a reminder of limits. Living off capital is not the same as living off income. Salary feels renewable. Capital feels finite. The shift in mindset is profound. Spending Capital is firing it. Permanently. Spending a salary has options.

And yet, those frictions are not moral failings. They are natural. Just like in business, where barriers to entry and exit, or the need for scarce skills, create value, personal wealth requires overcoming obstacles. If anyone could copy a good idea instantly and for free, there would be no profit in it. The obstacles are what make the rewards possible.

In my view, three main frictions hold people back from building wealth: countries, currencies, and generations.

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Friction One: Countries

It’s tempting to only invest where you spend. It feels safer to back your home team. There have even been long stretches where staying local has paid off.

In the 2000s, investing offshore often felt painful for South Africans. Those who stayed at home were rewarded. But the last decade has told a very different story. Global diversification has been the winner.

The problem is what statisticians call the “small sample problem.” Just because a small group has a certain outcome doesn’t mean they’ve discovered the secret formula. Take the “Blue Zones”... regions where people live unusually long lives. The differences often come down to small populations, not universal truths.

South Africa is just a tiny slice of the global market. Limiting all your money to one geography magnifies risks unnecessarily. It’s not about “South Africa versus the world.” It’s about recognising scale.

I see this often with clients. They’re proud to live, work, and build here, but they don’t want all their savings tied to the fate of one economy. Investing offshore gives them an engine on the outside, a second stream of security. It doesn’t mean they aren’t contributing at home. It means they are building resilience.

Here’s the way I picture it: people must pick one job. You train, study, commit. If you choose IT in the late 1990s, you might ride the dotcom wave, or graduate into the wreckage after the bubble burst. If you spend a decade training as a doctor, only to realise you dislike the work, it’s very difficult to change. Ministers who lose their faith have the same challenge. People commit their lives to a path, and changing direction can be devastating.

Money is different. It can take multiple jobs at once. It can switch industries without retraining. It doesn’t need a job interview. That flexibility is a gift we should use. Money should not be tied to one “career path” in a single country. It should be free to pursue opportunities across the world.

It’s not about abandoning your home team. It’s about not confusing investing with sport. Loyalty is admirable in rugby; dangerous in wealth creation.

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Friction Two: Currencies

Currencies add a second layer of noise.

Every week I meet people convinced the rand is about to surge to R13 to the dollar… or collapse to R25. Both can’t be right. Yet both are said with absolute confidence. The noise is relentless.

I remember it vividly myself. Back in 1999, at Kingsmead, the Barmy Army were singing their way through the exchange rate: “six rand to the pound, seven rand to the pound…” By the time they got to ten, they had to use both hands. Today, it’s around twenty-four. They need their toes, and their child's limbs. The dollar sits stubbornly between seventeen and twenty. The swings are massive.

The temptation is to treat this like a game. Guess right, and you feel clever. Guess wrong, and it stings. But those moves are so wild, it becomes more like betting than investing.

The fundamentals are clearer: strong “hard” currencies tend to hold their value. Emerging markets need to attract capital, which means offering cheaper costs (think the Big Mac Index) and higher yields. It’s not a criticism of South Africa. It’s simply how markets work.

The problem is mistaking short-term noise for signal. Watching currencies daily is like staring at the waves instead of understanding the tide. You’ll get soaked and miss the bigger picture.

This is where the idea of price versus value matters. Currency movements put a price on something. But price isn’t the same as value. A salary isn’t worth. A headline exchange rate doesn’t tell you whether your money is truly working. Obsessing over the number misses the substance.

That’s why I always come back to my mantra: get your money a job. Don’t obsess about whether today’s rate is the best. Focus on making sure your capital is consistently at work in productive assets. Currencies will fluctuate. The discipline of putting money to work matters more.

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Friction Three: Generations

The third friction is the deepest: how we think about money across time.

Too often, we live hand-to-mouth. Every decision is filtered through this month’s income and expenses. That mindset is limiting. It keeps us locked in short cycles of survival, never building the buffers that create freedom.

Sometimes, we even make hardship into a badge of honour. The “Malibu Surfer Problem” comes up in debates about universal basic income: if people are given too much support, won’t they just “check out”? Or we say, “I had it hard, so the next generation should too.”

But why? Do we really need to punish the next generation to build resilience? Surely the point is not to make life easy, but to give them enough breathing space to build skills, pursue passions, and make better choices.

Of course, capital carries its own risks. Rassie Erasmus often reminds the Springboks that no one is bigger than the team. Wealth can fool you into thinking it’s all about you. Capital needs humility and grounding.

Becoming a parent sharpened this for me. Life narrows when kids arrive. It’s no longer about your personal ambitions; you’re on the bus now, and the bus is carrying family. Wealth creation becomes less abstract, more existential. I find myself not only trying to make good decisions, but wanting to change the filter through which my children will one day make theirs.

There’s always a touch of resentment in this... not in a bitter sense, but in the deep human wish for your children to have better options than you had. More choice. Less constraint. A bigger horizon.

I’ve seen this in my own family history. My grandfather was a farmer until the weather wiped him out. Then he built a toy factory, only to lose it in a fire. Finally, he became a financial adviser. Reinvention wasn’t a luxury; it was survival.

Most people work not because it’s inspirational, but because it provides. That’s real. But capital changes the horizon. It allows future generations to choose paths not defined by immediate survival.

Sometimes you do what you want. Sometimes you do what you must. The point of wealth is to increase the proportion of the former.

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Overcoming the Frictions

Unlike us, our money doesn’t need to stick to one job. It can take on multiple roles, across borders, industries, and generations. Where people are constrained, capital is free.

That freedom allows us to be choosy. Not all good ideas are good business ideas. But your money can be directed towards the ones that are.

The practice and mindset are simple, though not easy:

• Get out of debt.

• Get a job.

• Save consistently.

• Build a buffer.

• Start getting your money a job.

Over time, your capital shifts roles. At first, it supports you. Then it begins to match you. Eventually, it surpasses you, to the point where your spending becomes a rounding error, and the engine keeps compounding for the next generation.

That’s how you chip away at the three frictions: countries, currencies, generations. You can’t eliminate them. But you can turn them from barriers into opportunities.

Wealth creation will always involve frictions. The challenge is to put your money in motion. To get it jobs that you can’t do yourself. And in doing so, give yourself and those who follow you choices that survival alone can never provide.

Get your money a job.

Pollocks

Stages, not Hacks

 

The First Stage is a Scrum

Wealth creation is not about hacks. Hacks imply shortcuts, quick fixes, a secret lever that lets you skip the hard parts.

In truth, the only real shortcuts are two very blunt tools. And those blunt tools are the same ones you’d use if you wanted to take a hammer to wealth rather than build it: concentration and leverage.

Concentration means betting everything on one thing. That’s the classic “overnight success” story we all admire. The tech founder who picked the right idea. The entrepreneur who built the outlier. The investor who picked the one stock that ran a hundred-fold.

Leverage means using borrowed money to amplify outcomes. It’s paying someone else’s money a salary in exchange for growth. If your returns are higher than the salary, you win. If they’re not, you lose... and you still owe. Imagine leading an army of a million mercenaries. If they win the battle, you look like a genius. If they lose, they turn on you, because they still want to be paid.

Both concentration and leverage can create spectacular wealth. They can also destroy it. These are not refined chisels. They’re blunt instruments. Anyone can swing them, but few survive the recoil.

The more sustainable path to wealth comes in stages, not hacks. And the first stage is a scrum.

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Stage One: The Scrum

Stage one is the hardest.

At this point, it’s all on you. You are the last line of defence against noise, accidents, and life’s randomness. Death, illness, disability, family responsibilities, redundancy, pandemics, bad luck... all of these can knock you flat.

Worse, they can push you backwards into the shadow world of wealth: the debt trap. That’s when you’re working hard just to pay the salary of the money you already spent.

In the first stage, you have to be pragmatic. Ruthless, even. You look at the menu of options and pick something difficult. Something not everyone can or wants to do. If it were easy, it wouldn’t pay.

This is where many people underestimate the grind. Stage one requires doing hard, unglamorous things, often under pressure, often alone. Your job is to turn labour into surplus. That surplus is fragile. It must be protected and reinvested.

So, what helps you survive the scrum?

• Risk cover: insurance against the catastrophic blows (death, disability, illness) that would reset the game.

• An emergency fund: liquid reserves to absorb shocks without selling your future.

• Social capital: networks, mentors, colleagues. You may feel alone, but you don’t have to be. Borrow wisdom and opportunity where you can.

Stage one is about survival and surplus. Without surplus, there is no engine. And without an engine, there are no later stages.

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Stage Two: When Your Money Has a Job

Stage two begins when your money earns as much, or nearly as much, as you do.

This is the point where compounding becomes visible. Your capital is no longer just savings. It is a worker. A co-earner.

At this stage, you face a choice:

• You can let capital shrink while supporting you in retirement. The aim is to outlive your money.

• Or you can keep working while drawing on your capital’s earnings, letting the engine continue to grow.

Stage two is fragile in its own way. Market volatility can give and take. Inflation can eat away. Overspending can undo years of progress. But for many, stage two is enough. It’s financial independence, even if not absolute. It allows flexibility, optionality, and support in tough times.

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Stage Three: Stewardship

Stage three is rare.

It’s the stage where your spending is comfortably less than what your capital earns, and the capital can still grow.

Here, your framework changes completely. Time is no longer forced through the filter of “what pays.” You can spend your days on things driven by curiosity, care, or legacy. You become a steward of capital rather than just its worker or consumer.

At this stage, your decisions aren’t about survival. They’re about purpose. You are no longer asking “How do I earn?” but rather “What do I enable?”

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Stages, Not Hacks

Too often, we mistake outlier stories for the norm. The billionaire who made one big bet. The trader who caught the cycle. The founder who built the unicorn.

Yes, those stories happen. But they are concentration and leverage. The blunt tools. For every one of those, there are thousands who swung the hammer and shattered everything.

For most of us, wealth creation is slower. It’s about progression through stages. First the scrum. Then the engine. Then, if fortune allows, stewardship.

The key is knowing where you are and what matters most at that stage.

• In stage one, survive and build surplus.

• In stage two, let capital work and protect its job.

• In stage three, steward with wisdom.

There are no hacks. Just stages. And the first stage is a scrum.

Magic Time

Most things worth doing are hard. Wealth creation is no exception. It often feels unfair, painfully slow, and full of noise. When you hear about people who seem to have made it quickly, it looks magical. But the truth is, what feels like magic is usually time, discipline, and persistence working quietly in the background.

The challenge is that most of us don’t notice when the magic is happening. Wealth whispers. Outliers shout. We see the flashy stories of quick wins, not the quiet stories of compounding. And when you’re just starting out, especially in South Africa where inequality is visceral, the distance between where you are and where you want to be can feel overwhelming.

The Myth of 15-5-50

I once gave the “50-15-5” idea a real crack. The theory is simple:

• Save 50% of your income

• Do it for 15 years

• Invest it to earn 5% above inflation

The promise? Financial freedom in less than two decades.

But each of those numbers hides brutal realities.

• 15 years is a very short runway. Most people work 30, 40, even 50 years and still struggle to retire comfortably. To do it in 15, you either need very high earnings or very low expenses. That’s not most people.

• 5% above inflation sounds modest, but it’s aggressive. Equity markets can deliver it, but not consistently. You’ll get flat years, sometimes negative years. Over the long haul, the averages hold up. Over 15 years, luck and timing matter more.

• 50% savings is perhaps the hardest of all. It’s possible if you’re single, with no dependents, but once you add a family, extended family, or community obligations, the maths gets tougher.

The point isn’t that 50-15-5 is impossible. It’s aspirational. It’s a reminder that compounding can create magic if you’re in the game long enough. But it’s not the only path, and trying to sprint can burn you out.

Context Matters

In South Africa, this conversation is layered with complexity. Ours is the most unequal country in the world by Gini coefficient. Unemployment rates are comparable to the Great Depression, but structural. A small tax base supports a large population. Many households are living hand-to-mouth.

At the same time, we benchmark ourselves against wealthier countries. Through sport, social media, and global culture, we’re connected to lifestyles that feel impossibly distant. It’s like being pulled in two directions: face-to-face with poverty at home, while aspiring to compete on a global stage.

In that environment, dreaming about wealth can feel tone-deaf. You’re torn between wanting to lift others up and needing to secure your own future. But here’s the truth: if you never make space to build capital, you remain stuck. South Africa will only thrive if enough individuals build stability, buffers, and engines that free them to contribute more. As Rassie Erasmus once said: “Stop talking k* about South Africa. Make a plan.”

Noise, Neighbours, and False Control

One of the hardest parts of investing is separating what’s in your control from what isn’t.

People think investing is about picking the right stock. Timing the market. Outthinking the crowd. But that’s mostly noise. Returns are influenced by randomness, variance, and luck. Even bad decisions can look smart for a while. Neighbours who take reckless risks can seem like geniuses until the tide turns.

Here’s what you can control:

• How much you spend

• How much you save and invest

• The skills you build and the work you do

• Your exposure to risk (asset allocation, diversification)

• Staying in the game — not blowing yourself up with debt or speculation

And here’s what you can’t:

• Market returns in the short term

• When volatility arrives

• What your neighbours are bragging about

Salary feels safe because it’s smooth and predictable. Investing feels discouraging because it’s noisy and volatile. The trick is building a separate mental model. Money invested is not a salary. It grows unevenly, sometimes invisibly, but it grows.

Stillness helps. If you treat setbacks as random, not personal, you avoid the trap of thinking the world is judging you. Bad things happen. Good things happen. Your job is to be resilient enough to handle the bad and ready enough to capture the good.

The Roadmap to Magic Time

So what does the path actually look like? It’s not one magic formula, but a series of milestones that are worth celebrating along the way.

Stage 1: Net Worth Day (Debt Freedom)
The first big milestone is when Assets – Liabilities = Positive. That’s huge. Getting out of bad debt is step one. Use debt counsellors if needed. Swap credit cards for debit cards. Stop spending money you don’t have.

Stage 2: The Shock Absorber (Buffer)
Save 3–6 months’ worth of expenses. This is your financial shock absorber. At the same time, if you have dependents, get risk cover — life, disability, income protection. It’s a grudge purchase, but it buys peace of mind.

Stage 3: Micro-Wins (Early Capital Building)
Celebrate when your invested capital equals one year of your salary. At that point, your money is starting to “get a job,” even if you’re still the bigger engine.

Stage 4: The Magic Number (Capital x25)
The long-term aspiration is capital worth 20–50x your annual spending. At a 4% withdrawal rate, that makes you financially independent. 2.5% is a more aspirational number, because then you aren't harassing your capital and it can still grow even though it is supporting you. Either way, that’s the freedom point.

Stage 5: The Compounding Kick
The hard work is in the scrum up front. Early progress feels painfully slow. But once your money earns as much as you do, the flywheel spins faster. That’s when the magic feels real, but by then, it’s no longer magic. It’s compounding.

Wealth Whispers

The danger is thinking this happens fast. It doesn’t. The loudest stories are often the outliers: the person who “retired” at 35, the neighbour who doubled their money overnight. But most of those stories don’t end well. When things fall apart, the shouting stops.

The stories worth emulating are quiet. The teacher who invested diligently. The janitor who left millions to charity. The client who worked with an advisor for decades and quietly compounded. These are the ones that don’t make headlines, but they’re real. Wealth whispers.

Actionable Steps

The punchline is simple: get your money a job.

For most people, that means getting help. A good financial planner isn’t just a salesperson. They’re more like a therapist: someone who listens, learns your context, and helps you navigate trade-offs. Your job, your income stability, your dependents, your goals — these all shape the plan.

Here’s where to start:

1. Get out of debt. Celebrate Net Worth Day.

2. Build a buffer. 3–6 months’ expenses.

3. Buy peace of mind. Risk cover: life, disability, income.

4. Find a planner. Someone who can listen and partner with you.

5. Start investing. Pension funds, employer schemes, and your own investments.

6. Adapt as you grow. Individual → family → community.

It’s not about doing everything perfectly. It’s about chipping away, building slowly, and giving time the space to work.

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Conclusion

Magic time isn’t about quick wins or outlier stories. It’s about patience, buffers, and engines. It’s about celebrating small milestones while ignoring the noise. It’s about getting your money a job, and then letting time do what looks magical, but is actually just compounding doing its quiet work.

Wealth whispers. And that’s fine.

Capital and Labour

My first salary felt amazing. After years of being a student, suddenly there was real money in my account. It was more than my mother earned as a teacher after decades of work. That was humbling. It made me realise how strange it is that we often define ourselves by our salaries, when in truth, a salary is just the price of labour.

And price is not the same as value.

Price is set by supply and demand. It does not reflect whether the work you do is good, meaningful, or changes the world. It is just a market signal.

I had studied actuarial science, a pragmatic choice. Early on, I went to see a financial planner. Partly I wanted to test the process, since I was working in risk product development and thought I could probably do it myself. But I also wanted to see how someone else would frame my situation.

The thing that hit me hardest was this: I was the asset.

My income depended entirely on my ability to keep working. If something happened to me, the income stopped. Even scarier than thinking about life cover was the thought of being alive but unable to earn, still here, still needing money, but with the engine broken. 

At that stage, I had no dependants. But the idea that other people could rely on my salary, when I had no buffer and no engine outside of myself, was unsettling. That was the moment I understood the difference between capital and labour. Labour ends when you stop working. Capital keeps going. Without capital, you are the engine, and that is a fragile place to be.

The Hard Scrums of Inequality

South Africa is rugby-mad, and I often think about wealth like a scrum. The forwards decide whether you win the match. The backline only determines by how much. In the same way, building wealth is not about flashy tries or quick wins. It is about grinding, unseen work that sets the platform.

First-generation wealth creation is brutally hard. Many South Africans live hand-to-mouth. For them, “delayed gratification” is not about giving up luxuries, it is about giving up survival comforts. In that context, talk of Buffers and Engines can sound tone-deaf.

But if we never acknowledge this and never try to break the cycle, we remain trapped. Poverty compounds just as surely as wealth does. That is why I think of wealth-building as the work of a half-hearted warrior. You do not need to storm every hill at once. You just need to create a little bit of space, enough to start building.

For me, the Buffer is that first space. It is the small emergency fund that shields you from life’s daily chaos. It does not make you rich, but it creates silence in the noise. The Engine is the goal. It is the asset that generates income separate from your own labour. Building an Engine from nothing is slow and often discouraging, but unless we aim for it, we will never get there.

Buffer vs Engine

A Buffer is your shock absorber.

Life does not move in a straight line. Some months you spend more than you earn, other months less. Without a Buffer, those bumps knock you off track. With one, you can keep rolling.

That is why people talk about an emergency fund of three to six months’ expenses. It is not glamorous money. It pays for replacing a tyre, fixing a broken window, covering a surprise tax bill, or helping a friend in need. A Buffer does not make you wealthy. It just means one bad month does not break you.

An Engine is different. Where a Buffer absorbs shocks, an Engine provides momentum.

Engines generate income separate from your labour. They are the assets that pay you while you sleep: a rental room, dividends from a fund, royalties from creative work. For many people, the “Bank of Mom and Dad” plays this role for a while, helping with fees, housing, or start-up costs. But a true Engine is independent. It keeps paying pocket money even after childhood is long past.

The ultimate Engine would be something systemic, like a Universal Basic Income or Community Wealth Fund that guarantees a baseline for everyone. That is when you know your basics are covered, no matter what goes wrong.

A Buffer gives you confidence that you can survive the bumps.

An Engine gives you confidence that you can build a future.

The Structural Fixes

Of course, the obvious counterargument is that not everyone can save.

And that is true. Especially in South Africa, where a small tax base carries enormous weight, and millions live hand-to-mouth. Talking about Buffers and Engines can feel tone-deaf against that backdrop.

That is why structural fixes matter.

We already have elements of support, like social grants. But grants are means-tested, which is expensive in itself. The irony is that deciding who qualifies costs money. That is the elegance of Universal Basic Income. It skips the gatekeeping. Everyone gets it. Those who do not need it simply pay it back through tax. It appeals to the left because it guarantees support, and it appeals to the right because it shrinks the state’s role in micromanaging people’s lives.

The real question is: can South Africa afford it? My answer is that we cannot afford not to think about it. Affording it means wasting less, fixing potholes, keeping the lights on, building competent administration. I like the way my friend Gareth Morgan puts it: good governance is about being good at crises. We need less politics as theatre, and more politics as administration.

South Africa already has a culture of “making a plan.” We improvise. We hustle. We survive. But we also need to create space for families to build steadily, and for communities to compound progress rather than constantly reset.

Yes, inequality here is in your face. Our Gini coefficient is the worst in the world, but it is also the same as the world’s overall Gini. The difference is that here you cannot pretend it away. It is on the streets, in your neighbourhoods, part of daily life. And maybe that is an advantage. It forces the conversation.

If we can combine the resilience of individuals with the competence of institutions, then Buffers and Engines do not just become a personal dream. They become the architecture for a society where wealth is not inherited by a lucky few, but built by many.

Call to Action: Get Your Money a Job

At the end of the day, the mantra is simple: get your money a job.

But before money can work for you, you often need to stop it working against you. That is why I think of First Aid as the starting point (First Aid). Get out of debt. Stop the bleeding. That may mean hard choices, painful trade-offs, and resetting priorities. It means writing down what matters most and breaking it into small, achievable steps.

From there, it is about micro ambition (Micro Ambition). Tiny goals that add up. It does not sound glamorous, but that is the magic of compounding: small efforts, repeated, snowball into something powerful. Money makes money. That is how the system works.

So the path looks something like this:

1. Stop the bleeding by dealing with debt.
2. Secure income, since your salary is the origin of wealth. Labour is the first Ox in the scrum. It takes sweat and red faces to push forward.
3. Build a Buffer as your shock absorber against life’s bumps.
4. Feed the Engine so assets can work even when you do not.
5. Compound micro ambitions into long-term freedom.

The hard truth is that first-generation wealth creation is invisible. Compounding works in three stages. First nothing seems to happen, then progress appears slowly, and finally it becomes undeniable. The heavy lifting is always at the start.

You can fight money, resent it, or ignore it. But that only leaves you at its mercy. The better option is to learn how it works and put it to work for you. Get your money a job

pic: SA Rugby Mag