From the New York Times:
Note: In the long distant past, a Canadian reader chastised me for including links from the US, which he described as ‘inapplicable in Canada.’ To the contrary: I link only to information that is universally useful to investors. While the stats may be somewhat different in different countries, the lesson is equally applicable anywhere.
The Reverend Marvin Anderson often said that we can have anything we want, as long as we meet three conditions: we know what we want, we believe it is possible, and we’re willing to pay the price.
When I worked as a financial planner, this was one of the most difficult challenges for my clients to master, and yet I knew through both my own and other people’s experience that it is absolutely essential.
Most of us have long wish lists, but they often turn out to be what I call ‘advertising dreams’ — the mental debris we’ve absorbed from the $41 billion in advertising we’re exposed to each year. While the items on this list may make our hit list of ‘wants’, they aren’t things we want badly enough to pay the price for. Or they may be so unattainable we can’t believe in their possibility.
To begin the process of creating your three-fold want list for 2008, ask yourself the following questions:
1) What are the things I love to do?
2) Who are the people I love to spend time with?
3) What environments light me up, energize me and yet bring me peace?
4) What change do I want to embody in the world?
5) How can I incorporate more of these activities, people, environments and attributes into my life today and throughout 2008?
You’ll find that when you begin to incorporate these essentials for rich living into your life, the other questions — what kind of car to drive, where to live — will begin to answer themselves clearly and completely.
Further to yesterday’s post, here is another idea that I found to make a significant difference in the lives of successful people: more is not always better.
In the Brazen Careerist: The New Rules for Success
In fact, this salary guideline is well established in research: the first $40,000 makes a big difference in a person’s level of happiness. Happiness is dependent on being able to meet basic needs for food, shelter, and clothing. ”
I can hear the protests from here, and I can relate. I live in the Vancouver area, where the average home price is over $600,000. But the author tested the theory by living in New York with her husband on less than $40,000. And 20 years of experience with other people’s personal finance challenges affirm her conclusion — happiness depends on having enough to pay the bills, but once you meet that threshold, more money doesn’t make for more happiness.
The truth is that I don’t know if $40,000 is the right number — and I certainly don’t know what the right number is for you. I’ve been cash-starved and unhappy with a family income of $300,000 per year and fulfilled and financially comfortable on an income of less than $30,000.
But the point, I think, is that we trade the only thing that’s truly invaluable in our lives — our time — for money, and money for stuff. While we tend to think of financial freedom as something that arrives when we’ve accumulated a really big pile of money or stuff, it is much more achievable when it comes from finding something we love to do that pays for our food, shelter and other essentials.
Living modestly also allows us to prepare for a comfortable, secure future. It is the people whose expenses exceed $100,000 per year that have to worry about saving millions for retirement. For people who have paid off a modest home and can live on less than $30,000 (which is, by the way, a majority of North Americans) a comfortable retirement is very achievable.
I encourage you to consider the advice of The Brazen Careerist. This year, think about beginning to craft a life that is rich and fulfilling in the day. Find work you enjoy doing, and if possible, limit the hours you work to 30 or less each week. That balance will fulfill you in ways that a mansion full of toys and an investment portfolio never could. (And if you think I’m misguided, ask the people in the mansions full of toys.)
Individual freedom is founded in freedom for all: this New York Times essay on the birth of freedom in America is worth thinking about.
In my experience, New Year’s resolutions don’t hold much water. The commitments that seem so very manageable in theory prove very difficult in the dark, hectic days of January, and soon become just one more reason not to believe in ourselves. So this year, I encourage you to resolve not to resolve — instead, just count the blessings of 2007 and create some room for more in 2008.
How to create that room? Well, that’s a different process for everyone, but in the 20 years that I’ve been a privileged witness to the intimacies of other people’s financial lives, I’ve found that there are some common obstacles to true wealth. In the days to come, I’m going to post some of the ideas I’ve found worth considering — ideas that have enabled the people I’ve worked with to acheive their goals and live their richest life.
People that succeed at achieving their dreams do so, in part, because they’ve learned to reject criticism and other negative feedback.
Ultimately, both financial wellbeing and quality of life depend on our work, whether that ‘work’ is our primary source of income or the mission we feel called to fulfill in our one ‘wild and precious life.’ Enjoying and flourishing at that work requires a healthy amount of self-esteem, optimism and confidence: a sense that we have what is required to move forward and succeed. (Without that sense, we won’t have the courage and faith to reach for our dreams, or the strength to persevere when the inevitable challenges arise on the path.)
Criticism, if accepted, is a poison that damages self-esteem, optimism and confidence. But in Western culture, criticism is so widely accepted it is a profession. Well-meaning people offer criticism every day, and they do so because they think they are being helpful. They believe they know something that the person or organization they criticize does not know, and could benefit from knowing. (Criticizing is, at its heart, a way of elevating ourselves above the person or organization we criticize.)
A world without criticism would be a much more enjoyable world, but the truth is that world doesn’t exist yet. So how do we inoculate ourselves against criticism that would otherwise undermine our success? Here are some ideas that I’ve seen create wondrous results in the lives of ultimately happy and prosperous people.
1. Ultimately, any feedback on our endeavours offered verbally by other people falls into two categories: ‘this is my cup of tea’ or ‘this is not my cup of tea.’ Criticism is an indication of preference, and preference is personal. Though we often assume that other people feel the same way we do, we are equally often wrong.
2. Both positive and negative feedback can be equally misleading: numerous studies have shown that there is little correlation, for example, between the number of people who say they plan to buy something and those who actually do.
3. Even critics that are viewed as experts in a given field are stating their preference. While they may be more dangerous or helpful, due to fact they are taken seriously by other people, they are just as vulnerable to viewing a movie or a book through the lens of a bad day or a good date. (Some seem to be chronically morose, and others chronically happy — both have their fans.)
4. There are two kinds of feedback that can be relied on: your intuitive response to your own accomplishments and the money and time other people are willing to spend on or invest in your offerings.
5. Chronically negative people are ‘vexations to the spirit.’ They are also vexations to ultimate prosperity: just as healthy people avoid junk food and cigarette smoke, successful people limit the amount of time they spend with negative, judgmental, critical people. Instead, they surround themselves with optimists and enthusiasts, and harness that positive energy to transcend challenges and achieve their aims.
Tomorrow, read about ‘the right number’ — the income you need to be happy.
Reading this sermon, by Vancouver’s Canadian Memorial for Peace minister Bruce Sanguin, made me high with hope. (You don’t have to believe in anything but possibility to benefit from the process he maps.)