Cut the risk and seize the opportunities using the emerging green economy!
The climate change bubble is the next potential bubble in a fine tradition of bubbles (some are strange – I am looking at you Tulip Bubble).
The changing climate is expected to impact property. For instance, coastal homes will go underwater, industries like fossil fuel could lose a lot of value.
Capital Career is key for your career, especially nowadays in our strange replica wax cake economy. The economy may look great like a wax model, but it’s not providing much beyond that.
Globally, we are having a long economic expansion (egghead for growing economy). Job numbers have been great and yet… pay has not grown (in the case of Canada not for 40 years). Higher demand (more jobs) should lead to higher pay (increased salary) or was Adam Smith just high when he wrote that?
The result is that many find it more difficult to save, buy property, retire and give their kids a head start. One solution is to ensure you have the right experience and skills or Career Capital to stand out among the crowd so you can demand higher pay and avoid this trend.
In my last post, I argued that risk management doesn’t just apply to investment portfolios but also your career. Disruption comes in many forms – technological, economic, social, environmental etc. It offers new opportunities like blogging but also presents serious challenges like stagnant wages and jobs replaced with automation
A useful concept to manage your career is Career Capital – manage your career as an asset the way you would manage your financial assets. And like financial assets, you need to manage uncertainty and your emotions to make sure you make the best decisions.
Continue reading “Career Capital, the Keystone of a Resilient, Fun Career”Risk management is a key part of kicking ass with money. Most opportunities have some kind of risk associated with them be it risk failure, lose or other kinds of risk. For instance, accessing water is an essential opportunity in everyone’s life – you need to drink it, you can wash with it, cool down things, etc. It also has risks – it can damage things, make things go mouldy and even kill you. But where would you be if you had no water? So the risks of water as a whole are not completely unavoidable.
Like water, risk is unavoidable in your finances. It runs through things like career choices (how stable/lucrative a job you choose), the size of your emergency fund and even your health choices (health problems can have incredibly negative financial implications).
Continue reading “Don’t Panic over Money! Use Risk Management, Honey!”
Financial Advisors are an important part of urBetterFuture. They provide invaluable services. So how do you find a financial advisor? How do you choose a financial advisor?
One crucial factor is their motivations. They should have your best interests and only your best interests at heart. Unfortunately, this doesn’t always happen in the real world as we saw in the recent 2019 Championship between the Toronto Raptors and Golden State Warriors.
Kevin Durant (Golden Warrior States star) ruptured an Achilles tendon in Game 5 – a severe injury. Durant had been sitting out beforehand to heal a prior injury. The ruptured tendon was a non-contact injury (no strong contact with anyone). He probably should have not been playing in the first place.
So why did he play? Probably out of a sense of duty to his team. The Golden State Warriors were losing the series and Durant was feeling pressure to play. So he agreed to play. Anyway, the team’s medical staff said he was healthy enough to play. So, the risk was minimal, right?
However, the risks were not minimal. The medical team probably also felt pressure to clear Durant for playing because the team was their employer. Would they have provided the same medical advice if they had not been employed by the team?
Kawhi Leonard’s story contrasted Kevin Durant. Leonard sustained an injury while playing for a prior team, the San Antonio Spurs. He abstained from playing for a long period despite encouragement (or pressure) from his team (this lead to controversy). He also got an independent evaluation of his injury. The Spurs traded Leonard to the Toronto Raptors. He then led the Raptors on the Championship run.
The contrast is striking. One player played before he was fully healed. The other resisted pressure to play while healing. One player exclusively took the advice of specialists who had a conflict of interest. The other acquired the advice of a specialist independent from his team. One player sustained a severe injury. The other healed and won a championship.
The worst part was Durant’s sacrifice was in vain – his team lost the series anyway. He got hurt trying to do the right thing. As a result, he possibly damaged his career and will now spend a long time healing. I can’t think of a more apt, sad metaphor about conflict-free financial advice.
Financial Advisors often do not have to represent their client’s interests best interests. Financial Advisors in North America have a “suitability” standard rather than a “fiduciary” or client’s best interest standard. Their advice just has to be suitable. That is hardly reassuring.
Financial Advisors can receive commissions and other compensation for selling certain commissions. This encourages financial advisors to neglect their client’s best interest in favour of their own compensation. This is a classic conflict where the financial advisor’s roles as a salesman and advisor conflict.
So what happens when they have incentives to sell products that are not in the best interest of the client? For example, what if they have to choose between recommending a better performing, low fee index fund versus a higher risk, high commission, high fee exotic mutual fund?
Finally, Financial Advisors’ employers can be a source of conflict. Sometimes the organization’s interest is different than the client’s best interests. For instance, Wallstreet banks encouraged their clients to buy subprime stocks that they were dumping themselves during the 2008 meltdown.
These factors encourage financial advisors to prioritize their own interests over their clients’ interests because… well, lambo bro!
A fee-only advisor can minimize conflicts of interest. Fee-only advisors do not accept third-party incentives and often work on an hourly pay rate. This eliminates conflicts of interest. Furthermore, it’s important to have a financial advisor that educates and advises. An example is Good Investing, where Tim Nash provides investment coaching and accepts no incentives from third-parties. I have worked with him personally and recommend him. Also, this post provides a useful set of questions to find a financial advisor and screen for potential conflicts of interest.
It’s important to look for conflicts of interest throughout your life. Non-traditional “financial advisors” such as politicians, real estate agents and media commentators all impact your financial life. They recommend what to buy, what economic policy to choose and how to vote. And they all can have conflicts of interest. For instance, politicians could promote policies that benefit their contributors instead of the public. A real estate agent could pressure clients into buying an unsuitable house to gain a commission. A media commentator could recommend a brand without disclosing their connection to the brand.
As I have argued in an earlier post, your most important investment is the environment so you need money advice that takes into account the importance of this asset. Unfortunately, a lot of advice undervalues our environment, encouraging short-term benefits for long-term pain. This has been recognized by some such as the EU which is proposing an environmental component to their fiduciary standards.
This cause is often a conflict of interest. Groups like politicians, investment managers, commentators and business executives will encourage myopic environmental destructive activities like the deforestation of the Amazon and burning of coal. It makes them a lot of money short-term but leaves the general public with larger long-term costs. They benefit greatly short-term and everyone else pays the long-term bill.
Rex Murphy is an example of a commentator providing bad conflicted financial advice. His advice is not competent. He criticizes climate change despite not understandings key concepts like the difference between climate and weather. His media credentials are impressive but he has little professional experience or academic credentials related to climate change or science. However, he is a paid speaker for the oil-lobby CAPP and Canadian petroleum companies. So it’s unsurprising he strongly promotes Canada’s Petroleum industry and bashes climate change science.
The problem is he doesn’t disclose this motivation when raging against environmentalists or climate change in his columns and television appearances. He misrepresents climate change science because his short-term gain (nice media career, compensation from the oil industry) is based on your long-term pain (a less inhabitable environment). Basically, he’s trying to trick you into trading urBetterFuture for his better now. That’s why he doesn’t disclose his paid relationship.
Not all financial advisors will screw you over even if they are encouraged. Some financial advisors will act in their client’s best interests regardless of their employer or commission. Conversely, some financial advisors with few conflicts of interest may still not advise in their client’s best interest. As the Wall Stree Physician notes, you can’t completely eliminate conflict of interest. Humans are clever creatures, and if they want to scam, they will always find a way to “game” the system regardless.
It’s ideal to find a financial advisor with no conflicts of interest, but above all your Financial Advisors’ conflicts of interest should be transparent. Then it’s easier to evaluate the suitability of their advice. For example, you will probably have a very different perspective on a recommended investment once you learn your advisor will receive a hefty commission selling it. The fundamental thing is being aware of conflicts of interest.
urBetterFuture will be much brighter if you can identify these conflicts of interest and then weed out the resulting bad advice and advisors. Get rid of them. Otherwise, you won’t be pursuing urBetterFuture. Instead, you’ll be pursuing someone else’s.
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Banner photo courtesy of Rafael Matsunaga, https://creativecommons.org/licenses/by/2.0/
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Courtesy Steve Johnson (https://creativecommons.org/licenses/by/2.0/)
Our global society and environment are in a transition, offering both new opportunities and new risks. Therefore, it’s important to be aware of the pitfalls and minimize them to get the opportunities. One set of risks is the changing environmental features that we used as foundations for infrastructure such as permafrost.
Permafrost is ground with a temperature that remains at or below the freezing point of water 0 °C (32 °F) for two or more years. The Arctic region is experience heating three times as great as anywhere else in the world and the permafrost is thawing in some places at a faster rate than predicted. This is especially concerning as scientists consider thawing permafrost a potential tipping point – permafrost can contain greenhouse gases and will emit greenhouse gases when thawed, further driving climate warning.
On a more immediate level, it also presents a financial risk for the inhabitants of countries with permafrost like Canada, the US and Russia. One scientist studying permafrost describes it as a glue holding together the landscape. If the glue disappears (i.e. permafrost thaws), the landscape collapses. Infrastructure built upon permafrost like roads and buildings then becomes damaged, unstable and may even collapse.
This may seem like a very remote issue to some – even those living in countries with permafrost. I live in Canada far south of the permafrost – so I won’t see any immediate physical impact but I will certainly feel an impact on my wallet because addressing this issue will require the resources of national governments. Governments will probably collect these resources by diverting funds from other services, increasing debt or raising taxes – all impacting its residents’ bottom-line. Residents, in turn, will have to find alternatives to government services and/or pay more taxes which increases there costs.
So, how does one adapt? For someone living on permafrost, that would be assessing the cost of your community adapting its infrastructure and weighing that against other options like moving communities. For someone who doesn’t live near permafrost (like me), it is creating room in the budget for these future climate-related expenses such as reduced government services or increased taxes.
Thawing permafrost is part of a larger set of issues caused by our changing environment. So it’s not only to important to have a plan for permafrost, but the broad set of risks posed by our changing environment. Your better future will thank you for it.
Courtesy of Cristian Borquez (https://creativecommons.org/licenses/by/2.0/ )
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Our market is increasingly be affected by environmental issues and adapting in kind. Ironically, one useful adaptation strategy is to choose to avoid doing things.
A really extreme example of this is the 1999 movie Fight Club and the quandary it so eloquently frames.
My formative young adult years were in the late ’90s to early ’00s so it was an important movie for me. Like a lot of young people, I considered myself an outsider and an anti-conventionalist (which probably had something to do with my pretentiousness at that stage).
The whole anti-consumer, anti-yuppie vibe of the movie really struck a chord with me:
“What you own ends up owning you”
That was Tyler’s line, and it always struck as a paradoxical fundamental truth of reality.
He was making the point that “owning” these things and committing to them, in turn, constrains oneself, as resources must be devoted to maintain ownership. Sure, that high-paying job is pretty sweet, but it will constrain you if you need to work 80 hours a week to maintain it.
Even though Tyler was talking about his companion’s apartment being destroyed, I think Tyler was talking about ownership in a more broad sense – taking responsibility and committing to something. However, for this conversation, let’s focus on the consumerism aspect.
So how does Tyler react to excessive consumerism?
In the movie, Tyler rejects many conventional things people “own” by doing things like living in a derelict house (and dangerous) house, not having a 9-5 job, owning little and shabby property. It’s best summed up when he says:
“It’s only when we’ve lost everything that we are free to do anything ”
In other words, one is only free to do anything if all constraints are removed. It sounds very romantic, but there is a dirty secret when it comes to this idea – most of us don’t want to be completely free.
We need some kind of commitments, ownership and responsibility in life. It brings us important assets, both material and psychological. Without that, where is our stability and opportunity? In theory, some of the freest people in our society would be homeless people, the refugee who fled their country with nothing, etc. But they are often severely hampered because they usually lack the food, shelter and opportunity to pursue activities besides basic survival. Honestly, think back to Tyler’s house – is that a healthy productive environment most people would want to live in?
A good analogy for the pitfall of “ultimate” freedom are those space shuttle ants in the Simpsons “Space Shuttle” episode. Homer is on a space shuttle with an experimental ant farm. He mistakenly breaks their container and the ants scream out “freedom, horrible, horrible freedom” as they find themselves floating out of control and free in the space shuttle.
As hilarious as that scene is, it’s true for ants and us. Imagine if your home, meaning in life were taken away from you and you were thrown into a foreign environment. Probably not what most of us want.
Without reliable material assets like food, shelter and medical care, its difficult to be effective. Without a sense of identity a role to play, its hard to feel a purpose. Yes, freedom is needed, but so are resources and stability.
So, to respond to Tyler’s statement “what you own ends up owning you”… well “we all got to be owned by something”. But maybe the fact that we are owned by something is not the problem – it’s the degree that we are owned by things and that we may have not intentionally made this choice.
The problem is we are not always conscious of this choice – what kind of life do I want to live? What do I want to own (and be owned by)? I think there are elements of society that try trick you into unconsciously constraining yourself with debt and loads of unnecessary things.
So if your better future involves making a conscious choice of what “owns” you, how do you choose it?
How do you define the line you draw between yourself and ownership?
Communities like minimalists, financial independence and ethical investors suggest approaches. They might be worth checking out.
As a guide, I would suggest four principles:
Many think that Tyler’s character is an absurdist satirical response to the absurdist depiction of materialism. And in reality, it probably is. It’s making the point that the opposite of insanity is still insanity. Therefore, it’s up to you to find the moderation that suits your life.
Maybe the sane version of Tyler’s approach is
“It’s only when you cut out the unnecessary commitments in your life that you are most free to pursue what you want”.
In other words, you are truly ready to pursue the important things once you have consciously chosen and accepted what “owns” and constrains you.
Courtesy Jocelyn Kinghorn (https://creativecommons.org/licenses/by-sa/2.0/)
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When one comes across the word “investing”, one usually thinks of money as the goal of investing, but it’s much more than just money*. The most important investment is yourself. Financial investing leads to more money but investing in yourself leads to more time, health, personal energy and yes, money.
Investing in yourself involves valuable resources like time, energy, youth and health. Your “personal” assets are often more valuable but less tangible than money like mental/physical health, social connectedness, a better romantic life, new skills, building a business or most importantly, building that death ray so you can ransom the UN for $1 million.
And the great thing is that anyone at any time can invest in themselves – it accessible to everyone at any age while financial investments involve a minimum amount of money.
However, regardless of whether investing is financial or personal, it is often a challenge. Take budgeting. It’s a critical habit to maintain proper spending and set aside money for investing and saving. It helps you track your expenses, ensure you live within your means and can properly plan for the future. Yet, a lot of people don’t budget.
I think people usually appreciate the importance of budgeting but find it difficult to put in a continual effort (kind of like going to the gym). So how do we maintain the effort to invest in ourselves and budget?
With habits.
Let’s take a financial example – the goal of acquiring $1 million in your bank account. For most people, it’s impossible to earn $1 million quickly. It will take time to earn and save the money – it will also take will power to resist impulsively spending the money in the meantime.
Habits make this kind of task possible – you don’t need to think about it or use willpower – just an automatic behaviour that does what needs to be done regularly and consistently. And over time, like water, you wear down that seemingly impossible unsurmountable mountain of a goal. You get what you repeat…
When people look to accomplish things or improve themselves, they often focus on skills. I think that people focus on goals because they are tangible and flashy. We celebrate goals and accomplishments. We all go crazy and drool over Warren Buffet for his net worth and we lionize Tom Brady for his accomplishments on the field.
However, habits are the motor that moves you towards your goal. Would Warren Buffet had earned his fortune without his voracious reading habit? Would Tom Brady continue to excel on the football field like a Bladerunner replicant without his strict health and sleeping habits?
Goals stick out because they are the end and psychologically stand. However, the destination (goal) is not as critical as the motor (your habit). You can always adjust your destination (goal), but if your motor isn’t moving you (or at least in the direction you intend) you are not going to get to your destination no matter how many times you change or update the destination.
This even applies to goal planning. The most critical aspect of goal planning is the habit, not the actual goals planned. In the end, goals are approximations that are often changed, transmuted or abandoned (especially big goals). However, my habit of reviewing my goals weekly and setting triggers ensures continual action and progress. It’s become a thoughtless automatic process that instigates and directs my actions.
This is especially important for big long-term goals like retirement and climate change adaptation. The progress in big goals is often inconsistent and usually especially small at the start. It’s easy to get discouraged and give up in these situations. A habit helps you keep going.
Habits are not just about new accomplishments and gains, but also maintaining what you have. Graham Stephan recently did an interesting video about the qualities of high net-worth individuals. One very interesting insight he noted is how an unexpectedly large amount of people will earn enough money to be in the top 1% of the US (11%) but very few people stay in the top 1% for 10 years (1.1%). It seems keeping money is equally important as acquiring money which seems to be borne out with the phenomenon bankrupt sports-stars and lottery winners. As a study on lottery-winners notes, large amounts of money do not avoid bankruptcies but merely postpone them. Regardless of the windfall, the money will eventually disappear without good financial habits.
Even if you don’t have money, you have invaluable assets that you need to maintain including health, lifeforce, energy and youth. Habits help you use these resources wisely and maintain them for as long as possible. The same thing applies to personal assets like health. For example, consider this hypothetical example.
Meet couch potato bob. He spends all his time in front of a screen, never works out, eats fast food exclusively and he has the pear-shaped body to prove it. Today is his lucky day. He will receive a wonder pill as part of a clinical trial. It will burn all his fat, strengthen muscles and turn him into a fitness model. This is a one-shot opportunity – once this drug is approved it will be too expensive for Bob to buy so he needs to adopt strict health, diet and exercise habits to maintain his new trim form. If he hasn’t already established these healthy habits before the received the pill, what is the chance he will develop them now and keep his new figure? Not good.
If you want to maintain what you have, you need to intentionally set up habits ahead of time so you do, especially if you are lucky to stumble into a windfall.
Habits are important in maintaining a direction in life and minimizing risks. For example, habits minimize financial risks by providing control, independence and pitfalls.
There are many shady characters and institutions who want to manipulate into overspending yourself into crushing debt – some are even socially acceptable, like pay loan shops. Good habits like budgeting will stop you from overspending and then falling into their debt traps.
Even when financial advice is well-meaning, convention financial advice is sometimes inadequate. For instance, environmental issues are rarely discussed in conventional advice. And yet, the costs of environmental risk are rising significantly. Take advice on buying houses – climate-change-driven flooding is rarely discussed but many homeowners may see significant reductions in their house values in the near future due to increased flooding. In this case, a financial habit of regularly monitoring your property’s flood risk would provide advanced warning of any issues and more time to adapt.
I think a key part of developing habits is having a system. I recommend James Clear’s Atomic Habits. He provides great insight into habits and provides a systematic approach to building good habits and removing bad habits.
I especially like his “two-minute” rule – the idea that when you start a new habit, make it very simple and easy to begin with so it takes less than “two-minutes”. For example, if you want to start running, instead of planning to run 30 minutes every day immediately, plan to put on your running shoes first thing in the morning and then build from there. It will be much easier to maintain the habit when it’s easy.
I would also add that it’s important to avoid moralizing any failures in your habit. I often struggled and blamed myself when a habit failed – if I failed the habit it was because my character was flawed, I didn’t want it enough, etc. instead of reviewing the habit. I think it’s important to accept oneself and if a habit doesn’t work focus on redesigning the habit, not blaming oneself.
From a larger perspective, habits are useful because they work in a chaotic world. Life is rarely straightforward and our plans are often disrupted or waylaid. It’s easy to lose momentum and retreat into self-absorbed reflection when that happens.
Habits provide resilience so that you keep moving forward. As James Clear notes:
“True long-term thinking is goal-less thinking. It’s not about any single accomplishment. It is about the cycle of endless refinement and continuous improvement. Ultimately, it is your commitment to the process that will determine your progress.”
*Don’t get me wrong, financial assets are important to acquire with a thorough systematic review of the potential profit, costs and risks with the proper professional help. This is especially true for some assets that are generally assumed to be good investments such as formal education and real estate.
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Well, anybody under 40 probably just took offence at my title because they don’t know who the A-Team is… and I blame them because they don’t know that awesome 80’s series. For the uninitiated, it was a kick-ass action series in the
Today, still wanted by the government, they survive as soldiers of fortune. If you have a
That was a while ago. I wonder if the characters in A-Team actually saved up enough for retirement or ended up being greeters in Walmart? Obviously they didn’t have government pensions because the government didn’t like them.
Joking aside, an important part of
Acquiring this money can be challenging if you don’t have a private employer pension (which is increasingly the case). Saving and growing your money is a marathon-like goal as it involves effective goal planning, discipline and emotional management (as I mentioned before a key component of pursuing goals is managing and harnessing emotions). It is one of the ultimate products of a life of financial decisions.
The topic of retirement and retirement savings often creates a sense of quiet panic and stress as it is daunting to many people. They seem kind of worrying but far away. And overwhelming. And something we all should probably take action on… but…. end up postponing.
What’s worse is that we often are told it’s something we should start preparing ideally for in the early years of our life when sadly we often lack the foresight, knowledge and maturity to start (I sure did!).
As in many long-term goals, there is a lot of uncertainty. There are risks of market loss or investment mismanagement regardless of whether your retirement savings are being managed by the government, your employer or yourself. Even very big company’s pensions like Sears have been under threat.
Research and surveys suggest that many of us aren’t adequately preparing for retirement. Contributing factors are flat wages and escalating living expenses and a society that is intentionally constructed to weaken our impluse control and coax us into spending ourselves into debt – it’s not surprising that a lot of people aren’t prepared, don’t know how to and are scared.
And finally, I think that most retirement planning ignores an important dimensions of finance – environment risk management.
I started this blog to provide information for people to improve their future and an important part of that aspect is money. However, I also wanted to raise more awarness about how the risk long-term environmental issues (such as plastic pollution, climate change, biodiversity decline) pose for personal finance.
I see little discussion of the environmental risks factors in the personal finance media I consume and I think this is a significant blind spot. For instance, if you own real estate property, it is important to know not just future economic and population trends of your neighbourhood (conventional risks) but also the projected future water use and water supply (environmental risk).
In this vein, I believe that a key part of retirement plan is a climate change risk plan. This may sound novel, but there are a lot of parallels between conventional retirement planning and creating a climate risk plan.
A person ill-prepared for retirement is an apt metaphor for the current climate change quandary we find ourselves in. For decades now, we have been urged to take action, but we have failed to take meaningful action. And all this time the challenge has just grown and become more daunting.
Am I talking about real estate? Am I talking about climate change? Could be either?
In my opinion, minimizing climate risks, maximizing climate adaptation and successfully retiring are very similar challenges, and require a common outlook and mindset. In some cases, minimize climate risks may involve researching new things and adding extra action items. In other cases, it just means doing the traditional retirement tasks becomes even more critical.
A common challenge in both retirement planning and a climate risk plan is deferred gratification and taking action long before the long-term, inexorable threat
Yes, this discussion may be a bit abstract so here is the goal. When you retire either because of choice or health or other reasons, you want to be assured you have enough money to live on.
Some common conventional risks are:
Climate-change risks to retirement could be:
In both these conventional and climate-change risks the key is identifying these risks ahead of time and then creating a plan (e.g. savings more money, moving to a region with less stressed water sources). In some cases, climate-change risks increase the urgency of taking actions that conventional retirement already requires like minimizing and removing debt. Not only does debt drain savings, but it can constrain you in your current situation – for example, if you have a heavy house debt load it may be difficult to move to a different region, change jobs, etc.
The end game is the same when it comes to retirement planning and climate-change risk planning – with careful planning and foresight, you want to avoid difficult unexpected costs that jeopardize your retirement lifestyle.
In fact, as I have argued before, it’s sensible to look at environmental issues from an investor’s perspective. I think this is the next evolution of finances – integrating environmental concerns, out of personal interest, into financial decisions.
What are your concerns about retirement and climate change? Feel free to share in the comments below.
Courtesy Emil .
https://creativecommons.org/licenses/by-sa/2.0/
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This is a third part in my series on my weekend ritual and how I maintain my health, money and time. Here is part 1 and part 2.
Time.
Possibly the grand daddy of all resources – the hardest to get back, the hardest to measure how much you have.
And that’s why the most important part of my weekend ritual is my goals check in.
A lot of my system draws from Michael Hyatt’s Best Year Ever. I found this was a very useful book and highly recommend it (if money is an obstacle, check if it’s available at your local library).
Personally, I have really struggled with goal setting. It took me many years to feel (somewhat) competent at setting goals. This is for a number of reasons.
First of all, its sometimes hard to distinguish which goals to manage. I think this stems from the fact that the definition of goals is pretty vague. Just look at this dictionary definition for instance – the end towards which effort is directed. The end towards which effort is directed?! Aren’t I doing that every second of my life? Examples include:
Truth is there are lots of “goals” in life that you are continually doing, accomplishing and kicking ass at without any management. A lot of them are simple and managing them is about as productive as trying to count every grain of sand on a beach.
Another issue is how often to manage your goals and what level of management or elevation. Inappropriately micromanaging your goals not only lowers the efficiency of your goal management but can also demotivate. For instance, if you have a big goal, which will take a long time, has inconsistent and slow progress (such as starting a blog), checking your progress daily is like watching paint dry or a mountain erode. You can quickly lose interest if you look at your goals with the wrong elevation and wrong frequency.
Finally, just like money, there is the emotional aspect of goals, especially for big important goals. The purpose of “goals” is logical and rational, to efficiently spend your resources and clearly quantify your progress… and yet… they are filled with emotions. This is because we sometimes strongly emotionally invest in goals (“it’s my dream to be a rock star!”), we entangle our identities in our goals (“I’ll become a famous celebrity to get the approval I crave!”) and judge ourselves according to our perceived success (“Man, nobody likes my music, I am a failure”). Therefore, its important to manage the emotional aspects of goals just as much as the logical aspects. Ignore the emotional aspects and they will sabotage and hijack your goals. Harness them properly and they will propel you like wind in your sail (even though anybody who has sailed can tell you, the wind will still sometimes still be uncooperative).
I use a goal check-in process to handle these issues. First, I divide goals I encounter in my life into 3 categories:
As you think up or discover goals, divide these into the 3 groups above. This allows you to manage the goals you need to manage and forget the rest (remember, you don’t need to remind yourself to keep on breathing!).
Second, the weekly goal check-in regulates the time, elevation and frequency of checking goals. A weekly goal check in reminds you of your big goals and tasks without unproductively re-evaluating and changing them every week.
Finally, the weekly goal check-in reminds you of your motivations for the big goals and also highlights the small, but vital progress your are making. It helps remind you why you took on the big goal in the first place and that even if progress is slow, you are still making progress.
First, set up documents to capture your goals:
With these documents in hand, I do my weekly goal check in.
I found it challenging implementing my weekly budget and goals check in. It took some time for me to become proficient. I often tried systems, borrowed different aspects till I finally found something that work for me.
This system may completely, partially, or not work at all for you. The key is to try and keep what works for you, but above all persevere in finding a way to consistently and regularly manage your health, money and time.
Yes, an obvious benefit to having a weekly ritual is more health, money and time. However, equally important is peace of mind – mental capacity to take on the world and focus larger and longer-term things.
Health, money and time issues can quickly overwhelm us and short circuit our higher-brain functions – taking us to a more fearful and limited place, like a scared mouse. A study found that financial worries significantly shrink your cognitive capacity. This study tested both rural farmers in India and mall goers in the US, testing the correlation between financial preoccupation and intelligence – they found that the significant drop in IQ was related to financial preoccupation. Personally, I can relate to this myself as well. At one point when I was a student I was pretty broke and couldn’t even pay my cell phone bills. I couldn’t even bring myself to properly evaluate my financial situation because I was so nervous and frozen.
And I think the same is true for time and health is well. Think back to a time you felt overwhelmed with all the items you needed to take care of. It probably seemed difficult to step back and see a larger perspective. Same thing with health – think back to a time you were really sick – its hard to focus and think.
That’s the beauty of the morning ritual. It can’t work miracles and suddenly turn around a bad financial or health situation, but at least it can get the monkey of your back and in front of you where you can see and deal with it – with that comes some peace of mind, and yes, a little more cognitive space to take on life.
Do you have any weekly productivity rituals? Let me know in the comments below.
I was intending on writing this article after I finished the series on my weekend ritual, but I felt it might be more appropriate to write it now considering this last week. I live in Southwestern Ontario Canada. It is a winter climate with snow and cold temperatures ranging from November to March usually.
Over last two years, the region has had significant flooding issues because of unusually large temperature swings and greater than usual precipitation. This means large amounts of snow, rain, melt water raising rivers and creating localized flooding that damaged people’s homes, businesses and infrastructure.
This is minor though compared to the historic flooding the Midwest is facing. Currently in Nebraska 74 cities, 65 counties and 4 tribal areas have declared a state of emergency. Again, the same issue is driving it – unusually large temperature swings and precipitation.
This relates back to your biggest investment.
What you say? You have no investments – no real estate or stocks or Swiss gold (or sketchy crypto)?
You indeed are an investor and are “full in” on one key market – the earth in its current form. This is your biggest investment.
Don’t confuse this statement with some holier-than-thou sermon about doing some kind of generalized “right thing”. This is about looking after your personal interest, financial, health and otherwise.
We depend daily on the “dividends” or payments from the earth – and its dividends are often unique and essential compared to the traditional markets.
Want to earn money? There are numerous markets such as the real estate market, stocks, bonds and other assets, currencies, etc. They can all provide you with cash.
But how many markets can provide clean air (at a long term sustainable rate and a very low cost)? Potable water? A stable climate that minimizes flooding? A system that maintains the fertilization of plants?
Only one – the earth in its current state.
That’s why you should think of this planet and its current status as your precious nest-egg – more precious than your house, your life-savings or your pension. And you should treat it with the seriousness of handling an investment.
And like any investment, it needs to be properly managed or it can quickly go bust. For example, if we don’t properly manage our greenhouse emissions, we lose our “climate” dividends – stable temperatures and rain – that means many negative impactives including people’s property and resources disappearing.
This investment (Earth) is so essential that you can’t bail on it like a standard investment. You can usually exit other markets and, at worst, lose lots of money or go into debt/bankruptcy. You can’t go without water, arable soil and livable temperatures.
Another complicated aspect of this investment is that you must collectively manage this investment with every other human on this planet which means you are impacted by their decisions. Again, you can’t just bail on this investment just because a bunch of people are making poor decisions like some traders who decided to short the housing market in 2008 when they noticed large-scale risk mismanagement.
So how can you manage this crucial investment?
On one side, you can do your bit by increasing the sustainability of your lifestyle and advocating for others to do so. I enthusiastically encourage this.
On the (overlooked) flip side, you can intentionally control how you invest in the earth, the amount of risk you expose yourself to it and how you manage that risk.
The current floods in Nebraska serve as a poignant, if rather sad, example of this. The swings in temperature and extreme precipitation are putting the farmers in financial peril, even bankruptcy. The management of the earth dividends matters just as much (or more) to the farmers than the current price listed on the commodity market.
Again, if you think “I’m fine, I’m not a farmer” then think about water. In some places in the world (including mine) water is abundant and we take this dividend for granted.
We may become more aware of its value soon – a recent article noted that a local government water fees have more than doubled from 2006 to 2018. Furthermore, it is projected to go up another 48% in the next ten years – double the rate of inflation – around $1310 for a housing using 204 m3 of water a year. And this may not even account for future costs related to a warming climate.
This is a serious amount of money so it’s important to understand water trends in your community so you can evaluate the risk and plan alternatives as necessary (e.g. moving to a different community, investing in water efficient equipment, conserving water, etc.).
To summarize, managing you personal environment risk should go hand-in-hand with conventional personal financial management. You should be concerned about your bank fees, savings and retirement plan, but equally concerned that community has an adequate sustainable water supply in the future an actionable plan to adapt to a changing environment and resources.
