Tuesday’s post ended with the observation that I pay myself in time.
So, how much time have you got?
Let’s find out.
Scale It => Relate Your Exposure To Your Balance Sheet
I recommend you look at things a few different ways. Print this out and write your numbers on the page.
Make it real, especially if you’re financially fearful.
- Gross assets / Core Cost of Living = years
- Net assets / Core Cost of Living = years
- Net assets / Net annual cash movement = years
- Net assets / Net annual cash movement (excluding active income) = years
- Cash / Core Cost of Living = years
- Cash / Net annual cash movement = years
- Cash / Net annual cash movement (excluding active income) = years
- Cash / Gross assets = percentage
- Cash / Net assets = percentage
I include bond holdings in cash. I focus on the BOLD, while considering each line.
Armed with the above, you can get a feel for how much time is available to you, based on how you are living today.
It’s easy to get fixated on income/spending and lose track of time. The best investments I made in my 30s involved trading money for time.
We tend to over-value money vs time => you can do great deals for yourself once you prove your worth to your firm.
Related => it doesn’t take much time to greatly increase the quality of your personal life. As a triathlon coach, I’d get my athletes to carve out one weekday morning per week where they’d start work late. This would enable us to make Sunday life-focused and spread their training load.
Discretionary/Luxury Spending – will fall outside your Core Cost of Living. My advice here is “pay yourself first” – slice your investment program off the top of each paycheck before you get a chance to spend it.
Don’t borrow any money (personally) until the first credit crisis after your 30th birthday. Then, borrow modestly to purchase real assets that are being priced down due to a banking crisis.
Across the 40-50 years of your working life, you will not miss luxuries not purchased.
As for overall strategy, there is a great PDF here. As the PDF will explain, don’t get distracted, by those who want to profit from complexity!
Focus on what matters: (1) spending vs new capital saved; (2) learning to think in time, not money; and (3) good enough is good enough (low cost, persistent investment, across long time horizons).
Maybe I should add #4… the best stuff in my life happens between people – shared experiences with those I love.
People, not portfolios.
To get ready for tomorrow…
Ask a confidant… When I talk about money, what do you hear?
With your financial concerns… Am I worrying about the right thing?