Ouch!

As a result, holidays and newspapers got cancelled and belts had to be tightened. Let’s be honest it wasn’t a big deal but, as an impressionable child, that episode helped instill in me a lifetime fear of poverty and homelessness. My money blueprint got shaped and from that point onwards, I was an accumulator not a big spender.

Then there was the career crisis in my early 30s that prompted me to save 50% of each pay cheque to build a redundancy / retraining fund. That felt horrible at the time but turned out to be the making of my future financial independence.

Fast forward to today and this is a pattern that I often see in my financial coaching. People that are now good with money often had:

• a bad experience with debt early in life; or
• enough exposure to money problems to give them a wake up call.

I was lucky that it was my parents that had the debt scare. As Warren Buffett says: it’s OK to learn from your own mistakes but its better to learn from someone else’s.

I’ve also made plenty of my own mistakes along the way. For example, I fucked up in the 2001-03 bear market, capitulating and selling at the bottom of the crash. That felt awful at the time but the learning points stayed with me forever. As a result, I didn’t sell in the 2008/09 stockmarket crash (I bought aggressively) nor in the mini crash earlier this year.

I recently read How To Get Rich by Felix Denis, who ended up making about $1 billion dollars (much of which he spent on drugs and hookers). But before he got his first breaks in publishing Denis had been broke, lived in a squat and done a short stretch in prison (real prison, not an office job). I’m not recommending drugs and hookers but I am recommending a taste of hardship in your younger years to spur you on to hustle and hard work.

Real (persistent) poverty is horrible and repeats down the generations via broken families. Kids grow up without role models of hard work and perseverance. They see drug use, short-termism, low expectations, limiting beliefs and other forms of self-sabotage. True poverty is not just about having no money, it’s about having no mental model for improvement.

One way to get that mental model for improvement is via fitness. Often the people that really “get it” with financial independence are those that do things that are physically hard (cycling, marathon running or lifting weights). Some of the fittest people will (eventually) tell you that they’re reformed couch potatoes that made changes and then kept improving via The Aggregation of Marginal Gains.

Others get their improvement from doing things that are intellectually hard: things like chess, poker, coding. But, whether physical or intellectual, all these people have internalised the idea that what doesn’t kill you makes you stronger.

How about something that actually brings in some money? Well, another way to get the mental model of improvement from the bottom up is via entry-level jobs.

When I was a teenager, I enjoyed working in the fruit & veg section at my local Tesco supermarket and driving a delivery van. Working in the shoe shop and the pork pie factory were less fun but each taught me valuable lessons. I got used to dealing with idiots, awful bosses and the general public. It would be no fun to be stuck working my whole life in minimum wage jobs but those jobs grounded me and prepared me for the real world.

The dose makes the poison: there is a good amount of hardship that will strengthen you (and it’s probably more than you think). We need to experience enough challenge to overcome our natural tendency towards seeking comfort (but not so much that it overwhelms us).

Everyone should experience Monk Mode at some point. Every soft student used to benefit from a period of bohemian poverty, living in a grotty part of town crammed into a 2 up, 2 down terrace. From our student house in the ‘hood we could see barbed wire, the neighbours fighting and kids setting on fire the car they’d stolen earlier in the evening. Good times, good times. When I see modern student accommodation that looks like a 4 star hotel, I wonder if something has been lost?

A touch of hardship is a blessing in disguise. And the flipside of this is that everything goes too easily, you can become complacent and therefore gradually get weaker. I remember the Koolest Kid in my class age 15 (you’ll be *SHOCKED* to learn it wasn’t me). He was good looking, naturally confident and a hit with the girlz. For a short while, the world was his lobster. But there was no pressure on him to raise his game.

By all accounts he stayed in the local area where I was brought up. I’m not sure what he’s doing now but the last I heard he was drifting through life without noticeable success. Maybe he’s happy? All I know is that everyone knows a person who was the class superstar that later ended up as assistant manager at Carphone Warehouse (or whatever).The problem with everything going smoothly in your life early on is that you cruise along, never forced to get better.

Failure is a great teacher. It’s in our hardest and darkest days that we learn most; more than the days we win easily. The under-appreciated thing about hardship is that it’s often the only way to force growth in areas of your life where you’ve become complacent.

The Existential Problem of The Western World is that, in just a few short generations, the physical struggle got taken out of our lives. This left a vacuum that got filled by consumerism, comfort and convenience; the things that slowly weaken us like proverbial frogs being boiled in the pan. Yes, I know how counter-cultural this message sounds in a world where 20 year old girl opinions are relentlessly pushed by the media. But it’s the truth.

All throughout history religions and philosophies taught that tough times are inevitable, so we better get used to that. Stoicism is the western philosophy that deals best with this. And Buddhism’s 4 Noble Truths includes the idea that all life is suffering that comes from people’s cravings for things to be other than they are.

More recently, Nassim Taleb coined the phrase anti-fragility for the ancient idea that stress / adversity / hardship might actually make something or someone stronger.

There are things that are fragile: things like glasses, plates and sandcastles. These quickly break when they come under pressure or into contact with other things.

There are things that are robust: things like steel girders, armoured vehicles and mountains. You can whack these things with a hammer and they won’t break. But hitting them with a hammer does not improve them.

And then there are things that are anti-fragile: things that improve with stress. Muscles are the classic example: how do you make muscles stronger? By working them to the point of technical failure where you you’ve exhausted them. The muscle fibres tear and re-form in stronger and bigger configurations.

The good news is that people are anti-fragile. What doesn’t kill you makes you stronger. Children are especially anti-fragile and this has big implications for parenting. Children grow in strength, experience and maturity by being exposed to stressors and to risk and being able to make small, survivable mistakes.

An example: I was walking my youngest boy to primary school when he decided to jump up and swing from the branch of a tree by the pavement. I could see that the rotting branch was probably not going to hold his weight. My immediate unconscious reaction was to grab him and lower him down to 100% safety but I saw that the worst that could happen that he would fall a couple of feet so I stayed back and watched things unfold.

Sure enough, the branch gave way and he tumbled to the ground (grass) and looked a bit sheepish. No harm done but a micro-lesson about risk got learned that day. There are some things that can’t be learnt in a classroom.

Safetyism refers to a culture or belief system in which safety has become a sacred value, which means that people become unwilling to make trade-offs demanded by other practical and moral concerns. “Safety” trumps everything else, no matter how unlikely or trivial the potential danger.

When children are raised in a culture of safetyism, which teaches them to stay “emotionally safe” while protecting them from every imaginable danger, it may set up a feedback loop: kids become more fragile and less resilient, which signals to adults that they need more protection, which then makes them even more fragile and less resilient”

The Coddling of The American Mind

To get to financial independence you are going to have to take some risks (in your investing and in your career / business), make some tough choices and live through some setbacks. No one said that getting to financial independence was gonna be easy. Not on this blog anyway.

Someone smart once said that there are 2 phases of a man’s life: the hunt and the feast. The hunt is not supposed to be easy. The hunt is about testing ourselves versus the elements. The feast is the reward and tastes all the better for the struggle.

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