You’re only as strong as your weakest link

Most people think personal finance is about choosing between bank accounts. Or different insurance products. Or collecting reward points and 10% off coupons at their supermarket.

That stuff is mostly irrelevant.

This begs a question: why does most personal finance content bear no relationship to what actually works for building wealth?

What matters is getting a good job or developing a business, building career capital, avoiding lifestyle inflation and stacking cash into productive assets year after year. Your % savings rate is the most important number to track.

But it’s a marathon not a sprint. Sustainability is everything: you need to be able to stick to The Path. It’s going to take years so you will need to survive bumps in the road without “blowing up”.

Long-term execution is simple in theory. In practice, shit happens: health issues, financial issues, accidents, etc. To win, you first have to survive. It is no small matter to get through life without blowing up. Blowing up refers to any catastrophic failure that takes you out of the game.

Traders and investors will understand the phrase “blowing up”. Hedge funds blow up when they are leveraged, the market turns against them and they can’t post additional collateral quickly enough. Their trades then get “stopped out” (involuntarily closed at a loss) by their banks / prime broker / leverage provider.

Imagine if your mortgage provider required you to put up more margin (equity) if house prices fell…if you couldn’t find the extra money, the bank would be entitled to sell your house in order to repay your mortgage…and come after you for any shortfall. That would be your housing trade blowing up.

But when I talk about blowing up, I mean something much broader than that.

Blowing up is anything that knocks you off course in life and in your finances such that it’s hard to come back from. A serious illness or accident can take you out of the game for years. As can a nervous breakdown or serious depression. Or drug or alcohol addiction. Life is tough enough if you marry the right person. If you marry the wrong person, you face the prospect of divorce, alimony, child support and, more importantly several years of wasted energy.

Modern life conspires to make us weak. There is no actual conspiracy: it’s just the way things worked out in a complex system that gives people what they want. The problem is we often want the wrong things.

No exercise + processed food + indoor screen time pretty much guarantee getting weaker. I can’t think of a better way to make everyone weaker than to get them to watch the adverts in between episodes of *insert junk TV show here*…and feed them another tub of ice cream. Anyone for another episode of BBC’s ever-popular Plaguewatch?

Life is in many ways an energy management problem. Good health is not (just) the absence of illness. It is better measured positively by functional strength, flexibility, mobility and agility.

You can also get data on this. One of the things I’m more than happy to spend money on is health. I recently got myself a low cost home blood test which gave me a read out for testosterone, DHEA, SHBG, FSH, LH, oestradiol and other key hormones. What gets measured gets managed.

The trifecta of life success is 1) health 2) relationships and 3) wealth. I put them in that order for a reason. Health comes first as we get reminded as soon as we lose our health. Without health we have nothing. This is why I have books about diet and exercise on my reading list of books to read for financial independence.

One of the reasons I quit my corporate job was because I was aware of the price I was paying in terms of health. I was going into “health overdraft”. You can get away with that for a while but I was having more unexplained health issues and was headed for a blow up. My life was was not in balance and eventually something was going to give.

Where should you focus? As ever, it’s contextual. It depends on you and your circumstances. You can’t focus on everything. But it’s always worth asking ourselves: What is my weakest link at the moment?

This means you have to be an all-rounder. Think of the difference between a fox and a hedgehog. A fox is an all rounder, they can eat lots of different foods, they can live in town or country and they are smart. A hedgehog on the other hand is a specialist: they can do one thing (roll up in a ball) really well.

To play the financial independence game, you need to be a fox. You need to combine a range of skills to earn higher income, avoid lifestyle inflation and invest effectively.

There is a bunch of people that want to read about frugality and downsizing (The Dreamers). There is another bunch that want to read about career success and self-development etc (The Go-Getters). Then there are people that just want to read about investing (The Investors).

These are like 3 different tribes. But here’s the thing: financial independence is achieved in the overlap. It’s like a recipe…you need to combine different ingredients to achieve financial freedom.

If you are a status-conscious high earner, may be your weakest link is your spending? If you are an introvert, maybe your people skills are stopping you getting promoted and earning more. If you are a successful and frugal professional (e.g. doctor, lawyer) sat in cash, then maybe your lack of understanding of investing is your weakest link?

Foxes (generalists) are out of fashion. The modern economy and social media reward deep specialisation (hedgehogs). And yet in the game of life (and financial independence) you are only as strong as your weakest link.

This is why I say you have to do the work to look at yourself and do an honest assessment of where you need to focus. Check your blindspots.

Warning: intelligence can be a trap here. The smarter you are, the better you are at fooling yourself. A successful life takes more than just intellect. Have the humility to question your character.

Below is a non-exhaustive list of things that could be your weak link:

  • Health
  • Relationship with partner
  • Broader support network
  • Risk tolerance
  • Social skills
  • Negotiation skills
  • Time management
  • Grit / ambition / persistence
  • Etc

Invest in yourself. Find books, courses or mentors that help you to tackle your weak points. If you have money but a big gap in one of these areas, then you have not (yet) won the game. Mastery of self is a big deal.

It’s tempting to shy away from the truth that self-awareness and emotional self-discipline are required to avoid self-sabotage via all the various ways that we humans find to blow ourselves up. In this sense, everything can be related back to the trifecta of 1) health 2) relationships and 3) wealth.

Money is important but it’s not everything. I’ve always thought that it’s a bit sad when billionaires keep focusing on money long past the point when it improves the quality of their life. Maybe Richard Branson is a better role model than Warren Buffett?…he’s in good shape physically and looks like he’s having more fun on degen island. Money should just be a tool to help live your best life.

Everything is connected. As the great physicist Richard Feynman put it:

If our small minds, for some convenience, divide this universe, into parts — physics, biology, geology, astronomy, psychology, and so on — remember that nature does not know it.

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  1. Phil S3 · · Reply

    Nice article and very timely as I contemplate my move (imminent – months not years) from accumulation to decumulation….and consider a couple of persistent health niggles, giving up corporate private health and worry ‘do I have enough’……. yes I think I do – I’ve done the maths many many times. I like the fox analogy, be flexible and wily enough to adapt etc.

  2. […] Chaos @ Cutting Through Chaos reminds us that You’re Only as Strong as Your Weakest Link from The Escape […]

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