Sunday, 15 May 2011

The Theory of Financial Relativity

I am sure that as we go through life we all learn valuable lessons and so wish we could teach "the young" those lessons in advance. I have five kids, and so I feel that as much as any of you. They will not listen and will learn in their own way.

One of the many lessons of life I have learned so far (and an still learning) is the relative nature of money and finance. I am rather unsure of posting this, as some will see me as a rather strange but wealthy nutter but I hope some will see the wisdom of this.

I stress that I very vividly remember the days, notably when first married, when money was a challenge. I had moved from managing my own small amount of money to managing a family and their finances, and I was the bread winner. Those were the days of a "real job".

In those days I would go to the pub with a few friends for a drink maybe once a week and would dread that it would end up as my round. It was a challenge. My friends were in much the same boat. We coped.

When we went on holiday (caravan in Cornwall) we had to plan it and save for it.

My monthly income was worked out to the penny and I automated all of the payments exactly, including many credit cards. I managed the problem with technology!

But things change. And now I run a company I "have money" as some would say. Now, a pub round or paying the bill in a restaurant is not a problem. I am really glad that some of the day to day issues are gone.

But what I did not realise is how things move on and change over time. How one lives in a "level". I am reminded of the level of my character in WoW and how spells and damage and money move on....

I have things to worry about now that would have driven me to, well, fuck knows what, a decade ago. I had a bill from my favourtive telco this month that was around £35,000 more than I thought. Looks like it is right and just not what I expected for various reasons. I'll cope. But FFS a decade ago that would have killed me. I had not paid the £30K mortgage on my first house back then. So I have worries on a new scale. No more do I have to worry about the cost of a round but I do have things to worry me.

Now, what I have realised is that it is relative and you sort of "move up the ladder" step by step. I am sure there are people that day to day deal with millions in a way that would even now make me lose a lot of sleep or worse.

What we have to do in life is work out if we want to move up that ladder and if so how we do it. There are plenty of people that stay at one level, and are happy there. They have their challenges where they are, but what they risk is less. What shocked me one day was working out that there are people with nothing, begging on the street, who had a lot more than me because of negative equity in my house. The bigger the stakes, the bigger the win and the bigger the possible loss.

So as a life lesson we have to work out what risk we can handle - where we want to be. We all want to be "one rung up", but when do we decide we are safe where we are. When do we stop and say "I am happy here".

One life lesson though, if you are working your way up the ladder, if your friends and relatives ask for money - i.e. people lower down on the ladder want help - it is nice to help - but one day you have to say "no" and be the "bad guy". If not then they keep asking and keep asking for more and more and more. So that *will* happen. The sooner you say "no", the better. "Giving" should be something you want to do and something you feel happy to do and can do - it should not be forced upon you. Give when *you* want to, and can afford to, and don't give in to demands and pressure. Everyone is happier, including you...

Money is relative - use it wisely.

5 comments:

  1. Thank you for posting this ... eerily good timing as I reflecting on moving-up-the-ladder type risk myself at the moment. (And not just whether to buy another FB2700!)

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  2. What a great post Adrian! I know exactly where you are coming from. I have a friend who has struggled her whole life with 3 kids and her financial woes are very real. I always tell people that the only difference between my money worries and theres are the number of zeroes! If you have 2 zeroes coming in and 2 going out it's just the same as 5 or 8 really! The part about giving is so very true as well.

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  3. Hi Adrian, just read your rev rant very deep and meaning full . Hope your ok and not skint lol I did tell you not to buy my mum the Blu Ray DVD player xxxx

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  4. Don't panic Pauline! This is a fairly general comment on things. The issue is not giving people stuff, it is when people demand or expect it - then it escalates out of control.

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  5. Hehe! I was expecting an article involving traveling at a certain speed in different directions and observing from different places, but it turned out to be a good article non-the-less.

    I guess the important thing is to have a good flow of money rather than lots of it. It's always nice to have the same amount of money at the start of one month and the next. It's also nice to be "one month ahead" so that you don't have to dip into the credit too much.

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