Financial Karma
Having been raised in a Judeo-Christian household, I used to define karma with reference to “sin.” For example, karma is my sins coming back to haunt me.
Over the last year, I’ve learned a wider definition that goes like this... historical and current choices result in the life I have right now. I prefer that definition as it reminds me that I change the future with decisions today. At 43, our family's balance sheet is an expression of my financial karma.
I grew up in Canada, a country where there’s a social contract. The system isn’t perfect but it works for many Canadians. Living in the US, most prefer a model with greater self-reliance. Both systems have their strengths and create different incentives.
The book I referenced last week, makes the point that, historically, people relied on family, rather than government. What are the areas where family support can assist, without screwing up incentives?
Health care
End of life care
Facilitate interaction between family members
Facilitate education by family members
As a young man, being an aggressive saver made me happy. I have no idea why, likely a habit that was built from a very young age. With three kids in my house, my desire to sacrifice today, to enable security tomorrow, remains strong. At a deep level, it feels like the right thing to do.
Boulder is an environment with a lot of financial wealth. The focus in Colorado isn't as consumption-centric, as my previous homes in London and Hong Kong, but my reality is a far more expensive life than what I had created in New Zealand.
Part of my annual review is asking myself the question, "Am I getting value for money within my current life?" Being honest with myself, the answer is "not yet."
A key part of this year's review has been completing a five-year plan to get my family to cash flow breakeven. When I became unemployed at the end of 2008, I gave myself a pass for five years to take stock and see what happened. The four year anniversary of that decision is approaching and I have a good idea where I want to take the family.
Long term, I have been considering the life I want to live in front of my kids. A parent's life choices are powerful lessons on effort, consumption and strategic management.
I see a benefit to the kids of taking my consumption down. Expectations management is something the Kiwis do very well. All my pals in Christchurch understand the relationship between work-results-satisfaction. It is a very grounded society and I enjoyed my time there.
Consider:
What are the most useful elements of financial wealth?
What does my life say about my attitudes towards wealth?
Are my current choices aligned with my family values?
How best to give my kids a chance to be successful: in their own terms, relative to their peers and relative to myself?
I'll end with book recommendation: Wealth in Families by Collier. Another title that is valuable regardless of your net worth - the sections on anchors and family management contain a lot of good questions for parents to consider.
I measure true wealth in freedom.