Apr 062017
 

A New Way to Measure Your Success

There are varying degrees of success and many different ways to define it. For example, in order to be a successful frequent flyer, you will probably need a lot of connections. 😀 And if you’re trying to lose weight, success is all about mind over platter, and winning that Nobelly Prize. 😄

how much do you value your free time?

Financial success is often evaluated in terms of income or wealth. But I often argue that time is our most precious resource. Unlike money, all our days are numbered. So given this reality, perhaps the best way to evaluate our success is to find out how much we value our free time. 🙂 This can be done with the following steps.

  1. Think of an activity that is neither pleasant nor unpleasant to do for you. It also can’t help you gain skills or make you smarter.
  2. Determine the minimum amount of money you would charge to perform that service for 1 hour for a stranger.

This mental exercise will reveal how much you value your time at an hourly rate. 🙂 For example, services I can provide that I neither like nor dislike include slowly folding laundry and walking around town for no reason.

I would have gladly accepted $20/hour to fold laundry 10 years ago. But things have change now. I would not give up my free time for any amount less than $40/hour today, because I can offer valuable skilled labour. Furthermore, I’m 10 years closer to death so there has to be an added premium on the remaining time I have compared to the past me. Due to simple economics, the fewer days I have to live, the more valuable those days are to me.

In a way, $40/hour is an indicator of my level of success in society. Perhaps a doctor or lawyer would value their free time at $120/hour. This wouldn’t be surprising given their place on the social economic ladder. It is not only a measure of their immense human capital compared to mine, but also their financial status.

How the Value of Time is Tied To Success

As self sustaining adults, the value of our free time should be the lowest at the start of our careers. But over time this value should increase to keep up with our growing human capital. Over time our demand for time is increased, and demand for money is reduced because we can earn money easier and more quickly.

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Feb 132017
 

Some psychologists believe that you are the average of the 5 people you spend the most time with. Whether this is accurate or not, the truth is we are influenced by everyone around us to some degree. This is why it’s important to surround ourselves with positive and highly productive people. Our environment should work for our success, not against it. 🙂

It’s not that we should trivialize or avoid negative people. We can treat everyone with the respect they deserve. But it would be beneficial to us if we make a conscious effort to spend more time with successful people. For example, to reach my goal of becoming independently wealthy I like to surround myself with friends who have the following personality traits.

  • They can see the big picture.
  • They don’t make excuses and know it’s up to themselves to make things better if it’s important enough to them.
  • They have or plan to have lots of resources, ie: wealth.
  • They are optimistic about the future.
  • They are curious about the world.

This is just my personal list I’ve thrown together. But there are many different definitions for what a high quality or successful person is. Of course if you work in the music industry, then you should surround yourself with “creative” people. We should also be aware of our biases. Being surrounded with too many “like minded” friends may trap us in an echo chamber of similar opinions. Doing so could make it difficult for us to expand our knowledge.

Unfortunately we can’t change the cards we’ve been dealt. But we can make the most out of our situations by developing the best environment for us to thrive. Part of this means choosing the right people to surround ourselves with. We can’t control what other people think, but we can manage our social circle, and choose who to hang out with. 🙂

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Random Useless Fact:

Even though the children below are born from different parents, they are actually siblings, genetically speaking.

 

Aug 182016
 

Early Retirement 

For professional skiers the best time to retire is when they start to go downhill. But what about the rest of us? Well for most people the question isn’t at what age we should retire, it’s at what income. 😉 People who want to retire early seem to have a clear and consistent focus to grow their wealth so that it can provide them with enough passive income to sustain their lifestyles forever. This can be done through a number of ways such as reducing living expenses, increasing income, and making high investment returns. 🙂

16-08-early-retirement

I recently read a CNBC article that featured a couple, Carl and Mindy, who retired in their early 40s with a million dollars. And they did it pretty much the same way as most other early retirees.

In 2012 the husband-wife duo with 2 kids already had $570,000 saved up. But they were inspired to retire early so they set a clear goal to build a portfolio of $1 million and no debt. And earlier this year in 2016, they have accomplished their dream. 🙂

The CNBC article suggests that “anyone can do the same — and you don’t have to be an investment banker raking in millions. All it takes is smart decisions along with intelligent saving and investing.

Here are some steps the couple took to reach their financial goals.

  • Track spending – “My wife and I wrote all of our expenses in a book,” says the husband.
  • Live in an affordable location –  The couple resides in a low-cost area in Colorado, and lives on $2,000 a month for the whole family. They mention this would not be possible in San Francisco or Manhattan.
  • Cut bills – “I learned that you don’t need a lot of money,” said the wife. “My quality of life has not changed since we became laser-focused on cutting out our expenses. I don’t need the cable TV. I don’t need a super-expensive phone plan. I don’t miss all this stuff because it didn’t really add to my life,” she said.
  • Invest in appreciating assets – The couple bought a $176,000 fixer upper home that they estimate is now worth over $400,000. They also I bought 2,000 shares at Facebook at $30 a share which is now worth around $120 a share!
  • Consistent savings – They’ve continuously put away $2,000 per month into their investment portfolio.

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Nov 142015
 

Traits of Successful People

I found the following infographic on pinterest recently. It suggests qualities that successful people have compared to those who are unsuccessful. I think it makes some valid points about how our circumstances depend a lot on how we approach life. 🙂

Life-of-Successful-People-andUnsuccessful-People.

Success can often to a subject term. Even within the context of personal finance, becoming successful can mean different things to different people. There are as many definitions to success as there are goals and aspirations. Our objective is to discover what our version of success looks like, and figure out how to get there.

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Oct 292015
 

The One Simple Rule to Win at Life!

People are programmed to pursue physical, psychological, and emotional security and comfort. However, if we give into our natural tendencies to always take the easy route then we won’t have a very meaningful or fulfilling life. That’s why it’s necessary to do what’s emotionally most uncomfortable.

So if we want to be rich and financially successful all we have to do is follow this one simple rule in life:

Always do the most emotionally difficult thing. 😉

This is a very profound notion and is almost counterintuitive to what our minds are designed to do. But doing the thing that’s the most emotionally challenging in any situation will actually lead to a more prosperous and satisfying life. Of course, most people do the opposite of this and try to look for the most convenient and easy way out. They believe this would give them a pleasant means to live. But ironically the pursuit of comfort and convenience often leads to a mediocre, frustrating and unfulfilled life.

15-10-the-most-emotionally-uncomfortable-thing

Here are some examples to demonstrate the point:

  • In business, the emotionally difficult thing for us to do is forge on ahead and take calculated risks to grow our company, even if everyone around us is being negative and unsupportive.
  • It can be emotionally hard for partners to talk about their finances, debt, and spending habits with each other.
  • When investing, it’s emotionally uncomfortable to remain disciplined and stick with a plan based on our long term goals and not be tempted to trade in and out of the markets.
  • If we want to become investment associates at ScotiaMcLeod then the uncomfortable thing to do is to attend the proper education in University and study hard.
  • In terms of saving money on food and living a healthier lifestyle it’s psychologically difficult to cook more at home, and eat out less.
  • In personal finance, it’s emotionally difficult to save at least 20% of our income and store it away in a retirement account for the next 30 or 40 years.

All of these examples are choices that we can make everyday. And those of us who choose to do the most emotionally uncomfortable thing in all these areas will experience business expansion, happier relationships, better investment returns, lucrative career opportunities, a healthier body, and an abundance of wealth in retirement. 😀 Wow. So much win for following just one simple rule.

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