It’s time for a lesson in family finances .
I was watching one of the recent James Bond flicks with Daniel Craig as 007, Casino Royale (I think he makes a great Bond – you?)
Anyway, something I saw stuck in my mind, and for some reason it popped back to the front today.
There was a scene where some petty dictator was handing his blood money over to a shady financier. This financier specialized in investing the funds of international terrorists, dictators – you know, nice folks. 🙂
Anyway, the dictator said, “I want no risk in the portfolio. No risk, understand?” Of course, the dirty banker agreed.
In that moment it seemed strange to me how a tough-looking guy surrounded by other tough-looking guys lugging machine guns was afraid of a little financial risk. The same risk that us regular folks live with every day.
Anyway, as this came into my mind, I thought about how today, the idea of “no risk” in your family finances has been turned upside down.
It used to be that you could just put your money into government bonds and that was that. But with the US and European governments’ financial conditions in serious question, things are no longer that simple. “No risk” investments are hard to come by these days.
How do you protect your family finances from being pulled down into the financial quagmire that is swirling around all of us?
How can any but the most financially secure among us focus on our family’s happiness when so much darkness and confusion seems to be in our financial future? And are even those who currently believe that their family finances are secure, really secure?
I also thought more about the “financial plan” that this fictional dictator seemed to be following.
And I began to admire it.
In today’s world, it seems like you have to be an expert at everything to achieve anything. And everything is becoming more complex by the minute. For example, how can you choose sound financial investments for your family finances when there are nearly infinite factors that affect the soundness of those investments?
I suggest that you cannot, so you shouldn’t even try. Trying to be an expert at everything will make you successful at nothing.
That fictional dictator was apparently very good at one thing – being a crook. He clearly made a lot of money doing what he was good at. And he was wise enough to know that he couldn’t even begin to be an expert at other things that he wasn’t prepared to focus all of his energies on. Like investing.
Now he could have dealt with his financial knowledge deficiencies by turning his investments over to a “skilled” investment manager. However, I don’t think such persons really exist anymore. There is simply too much uncertainty in the world today. And it’s a huge gamble to take with such hard-earned wealth.
Instead, he tried to take all risk out of his investments. He focused all of his risk (or at least the vast majority) on things that he is really good at, like being a crook. And, unless he had discipline of steel, he wouldn’t want to focus that much intensity on something that he didn’t love, too. So, presumably, he loved robbing his poor little countrymen.
So, where is all of this going?
These are my rules for personal success with your family finances in a world turned upside-down.
I learned everything I needed to know from a James Bond flick.
Rule #1 – Find a way, any way, to make the vast majority of your money from doing something that you truly love.
Otherwise, you’ll never have the stamina to achieve Rule #2.
Rule #2 – Obsessively devour every possible bit of skill within your chosen method of making money.
You will know you have succeeded in this task when you understand implicitly how to be financially successful in your field. You are so good at it your could open your own school.
This sounds hard, and it is. However, when you spend most of your work time focused on mastering just this knowledge, and on little else, it will be easier to achieve than you imagine.
Rule #3 – Minimize the financial risk you take in every other area of your life.
I’m not talking about not spending money. Just be sure to remember that you are truly clueless about investing (just like everyone else these days) and you cannot be trusted gambling with your future security.
Rule #4 – Take all unnecessarily complexity out of your life. And simplify your passions by getting really good at them.
Today’s world is defined by complexity. More complexity, in my opinion, than the human psyche is prepared to handle well. You need to reduce stress in the rest of your life so that your work-related energies can focus on your chosen field of financial focus. Know when to push yourself and when to let go. And build in plenty of time in your day to completely ignore the task of making money.
When it comes to financial management, you can no longer hope to understand the markets. So, unless that is your passion, don’t even try. As long as you pile all of your financial risk taking in areas in which you are highly skilled, you will maximize your likelihood of success and you will minimize your risk and the time it will take to realize family financial success.
Who needs Wharton Business School? You just earned a Family Finances 007 MBA.
Talk to you soon,