Editor’s note: Many people believe, somewhat misguidedly, that their future prosperity depends on spreadsheets, calculators and the iron discipline to squeeze the living hell out of your life. I’m not one of those. Yes, I have spreadsheets and I know my day-to-day money; what I find most helpful in the game of wealth is the wisdom that comes with erudition, understanding and experience. This is why I love this post so much: it shares my insights about money I’d love my son to hear. I wrote it three years ago and it received much attention. Since then, The Money Principle has grown and this is why I’m offering it to your attention again.
‘Have you heard about a guy called PewDiePie?’ – I asked my son.
‘Yeah’ – he said. ‘He is a gamer on YouTube but I don’t watch him.’
‘Do you know he made $7 million last year?’
‘Wow, really? Mum, you should really let me play more computer games.’
My son and I still don’t see eye to eye about this whole ‘I’ll play Call of Duty from morning till dusk’ thing.
That I knew about PewDiePie made me his ‘swag mum’ again and we got talking.
My son is interested in money: he wants to understand it, he wants to make it and he’s already got the idea that he may be a bit more inventive about making money than ‘get a degree, get a job, work till pension’ scheme.
Swag or not, my duty as his mum is to guide him in his quest to understand ‘all things money’; and being a personal finance blogger probably puts me in a good position to do that.
I have already told my son about the six important rules of money. Today, I’ve decided to tell him about the money seeds I believe people should sow in their 20s (their spring) so that they reap prosperity in later life.
I thought about the things I wish I knew when I was 20 and made a list. It was long and repetitive.
When I looked again it boiled down to six money seeds.
None of these are about savings, pension and investments. These are my gift to my son and to you all!
Seed 1: Capital comes in many forms
You know you need capital, right? I’ll never disagree with that: your 20s is the time when you are laying down the foundations of your life.
And these foundations are about accumulating capital.
Where I have a problem is that, as we humans often do, when thinking about ‘capital’ you most likely think about money.
Capital comes in many forms; three that matter most are:
- financial capital;
- social capital; and
- cultural capital.
Now, here is the deal: to place yourself in a position to accumulate financial capital fast later in life, you better accumulate cultural capital which will enable you to build substantial social capital.
Put simply, this means that if I were in my 20s again I’ll spend more time at the theatre and art galleries than in the library. Thinking about it, I’d spend more time learning all there is to know about cricket: after all I do live in Britain and most conversations at high management level are about the game.
I didn’t! In my 20s I spend a lot of time in the library, hustled like a pro and kept little of the dough. I’ve read War and Peace in Russian and am in love with the novels of Thomas Mann. My boss still wants to talk about cricket.
Seed 2: You better increase the cloth
Cut your coat according to your cloth, the saying goes.
And I have grown to dislike it with passion I reserve for other areas of life.
You won’t believe the energy, time and frustration that went into trying to live my life according to my means. I only ended up with a very tight, uncomfortable and, frankly, useless coat.
It took me some time to realise that this is all rubbish; that to live an abundant life you should increase your cloth.
I know that money in your 20s is tight and simply surviving without getting in debt is a challenge. Keep your mind on increasing your income, or your cloth, and you’d have planted a powerful money seed to serve your well later in life.
Seed 3: It is about how much you keep not how much you earn
When you want to know where you stand in the game of wealth you are likely to compare earning. The more you earn, the better of you think you are.
This is what I thought. I always earned well; for most of my life I’ve earned more than most. Where did this get me? Four years ago, we had about $160,000 consumer debt.
To get out of the debt hole, I had to understand that how much I earn is irrelevant; how much of that I keep is what really matters.
If I’d planted this money seed in my 20s, I’d be already working for the pleasure of it rather than the pay.
Seed 4: Life is not for money, money is for life
There is too much talk about money. Personal finance is a big business and we are bombarded by media messages about how to borrow more, what to spend it on and the threat of running out of it before we’ve run out of life.
Here is the thing: the link between our money and our lives is usually a negative one. It is a bit like, money is the goal and our lives are the means through which we achieve it.
Every time someone tells you that they want to make millions – and stops at that – they live for money.
In fact it is quite the reverse: living a happy and fulfilled life is the goal and money is the means to achieve it.
Now I have my money nourish my life. And I wish I had this one figured out when I was in my 20s. My life would have been more abundant, less stressful and, I believe, financially healthier.
Seed 5: Dream big
Recently, at a conference in Africa, I heard a political leader warn the audience ‘…to temper their dreams, because dreams can become nightmares’.
This was a transgression bigger, and more dangerous, than corruption and incompetence, I believe. Because our dreams are our future. Yes, sometimes they can turn bad and then we just have to dream another dream.
Dreaming is what gets knocked out of us from an early age; it gets knocked out by our parents (‘stop dreaming and get dressed’), our education systems and our societies.
I still dream and I dream big without fear of disappointment or ridicule.
When I told our financial advisor that we’ll pay off all our debt in three years he laughed; we did it! When I told a colleague that I’ll have a professorship within three years, he laughed; I got it in two and a half. And when part of my dream becomes reality I celebrate because this is so much more than my present.
Seed 6: Impossible is nothing!
I know I’m drifting into branding slogans.
I also believe this to be true: there are very few things that are truly impossible and this is likely temporary.
You can be anybody and you can get anywhere; you just have to:
- decide where (and who) you wish to be;
- work out the conditions to get there; and
- pursue these with the single-minded commitment of a drug addict.
Impossible is nothing and you’ll see that things will start happening