The Big Four

 

(thanks for the inspiration RL)

Spring is here. Summer is approaching fast. Soon, far too soon it seems, he'll be gone. Off to start his big adventure in America. The next step toward being an independent adult. It's a time of transition for all of us. The carefree weekends together of the past 20 years will be fond memories. The next time we meet he will be a very different person, totally changed from the one who left. I'll be different, too. In these last few months before he goes, are there any things I still have left to teach him? Are there any things I've learned in the past nearly 60 years that could help on his journey?? I tried to give him the best ideas I have. Things I've spent my whole life thinking about. Now, I'm sharing them with you.

The Big Four - four investable resources
The way I see it, we have four resources we can invest. These resources are, for the most part, finite and when they run out it usually leads to very bad outcomes for us. Catastrophic, life-altering bad outcomes.

Time - nobody gets more than 24/7/365. We get however many years we get until we're gone. This can be maximized by carefully using the others.

Money - I see this as a means to an end, not a goal in and of itself. Money is a facilitator and can be traded for the others.

Health - We often trade this one for other resources. When this is depleted, it impacts the others. A lot. 

Emotion - yes, finite. Using too much of this can leave us drained and exhausted and even cause us to overconsume the others.

As written above, these resources affect each other and are deeply connected. Very little happens in the domain of only a single resource. Therefore, it is important to consider the balance of resources we have and how we use them.

The Formula or "Recipe"
Given the four resources we have, the principal question becomes how to optimize them and derive the greatest benefit/value from them. Everything we choose to do in our lives will have a cost associated with it that can be considered as a mix or recipe of the four resources it involves. Different choices, even for similar things, can have very different costs involved. For example, being strict about my diet could maximize my health resource, but might do so by consuming time (meal preparation and study), money (buying premium ingredients) and even emotion (fasting can be very emotional). The jobs we choose, the place we live, the relationship partner (or even choosing to be alone) we have all have various costs associated with them which can be thought of as an equation:

(Time)+(Money)+(Health)+(Emotion) = Resource Cost 

Furthermore, choosing inherently yields not just a cost of resources, but also an opportunity cost. That is, choosing A means not choosing B,C,D, etcetera. For example, marrying a partner excludes us from marrying someone else (usually, anyway). Having a larger residence in the countryside means choosing not to live in a convenient part of the big city.

Needs versus Wants
The resources are spent through a combination of our needs and wants. I define a need as something we simply cannot do without. It is non-negotiable for us. By contrast, a want is something we might prefer to have, but could function without if necessary. We all need a place to live, but we do not need a 2,000 square meter penthouse. We may think we need to date a supermodel, but the cost of all the resources required for that may be egregious. I recommend spending significant time outlining our needs and wants, since they can change frequently. Furthermore, I think it is good to categorize/rank them so as to establish priority between choices in any given category such as education, hobbies, career choice, partner, residence, vacation, entertainment and the like.

For me, moving to Japan started as a want. At 14, I became fascinated with Japan and  began dreaming about living there some day. As plans came together, and subsequently fell apart, my commitment to Japan shifted from a want to a need. I was unable to imagine any version of my life anywhere else. I became obsessed with finding a way. I used my time, money, emotion, even my health in pursuit of this goal and was willing to sacrifice them all. In the end, getting to Japan took ten years, three failed attempts and my own near suicide before I was able to accomplish it. I'm still here more than 35 years later. For me, it was non-negotiable. The cost of resources to fulfill this need was far greater than I ever imagined it would be.  The payoff was also far greater than I ever imagined it could be. Achieving this goal set the foundation for the amazing life I’ve had.

Costs: What we know and what we don't

Costs come in two types, known and unknown. Some costs we can research and calculate relatively easily, particularly money costs and time costs. Health costs and emotional costs can prove far more difficult to estimate. In some cases, the effects of our life choices on health and emotional resources don't become clear for years or even decades. Some people find smoking or drinking to provide emotional comfort and help manage their stress and anxiety. They may choose to accept to use monetary resource even if the costs or tariffs go up (cigarettes and premium alcohol can be quite expensive) . They may even understand that doing so causes negative impacts on their health resource. However, the true cost of this may only become clear once the health problems like lung cancer, liver /kidney failure impact their daily life. My teacher used to say that if cigarettes killed you in five minutes no one would smoke. It's only because it happens slowly over 50 years that people choose to do it.

Yes, even people have a cost (if we choose to look at it that way). Given our finite resources, we must determine not only how we spend them but who we spend them with. Different people impact our resources positively or negatively. They may waste our time or they may help us spend our time and have wonderful memories. The right people in our lives can increase our resources by helping live healthy, happy fulfilling lives and even inspire us to find the right career choices, partners and so on. This suggests that surrounding ourselves with other high quality people is very important. I think it is.

As per my example of Japan, costs can change over time and we must then re-evaluate if we are still willing to pay them. There are many situations in life where, faced with mounting costs, the best decision might be to give up and walk away. We usually have that choice. When a job we initially liked ends up costing too much in time, emotion and health we may choose to quit even if the money was attractive, for example. People are the same way. Sometimes their costs imply becomes too high and the best choice we can make is to walk away while we still have some resources left.

Choices as Investments

It can help to think of our choices as investments rather than costs. In this model, we invest our time, money, emotion and health into choices (including people) with the expectation of future benefit (return). Investing, by definition, is a long-term strategy. Warren Buffett, master investor, suggest that should never invest in something we don't understand, and that we should invest \with the intention of never selling our investment (why sell if it generates good returns?). I think this applies to people as well. Good people are worth our investment of time, energy, money and health to create a happy life together. When we adopt a short-term mentality about this our interactions become transactional and do not tend to yield good long-term relationships. Thus, I recommend choosing our circle of associates very clearly, investing in them for the long-term, and enjoying the benefits of a healthy, nurturing friendship community. 

Two Types of Planning

So how do I plan to maximize the utility of my resources. I like to use two broad planning strategies.

Short to Medium Term = 30/60/90/120
I plan out detailed action plans for the 30/60/90/120 day buckets. This helps me organize my daily/weekly planning as well. With an eye out to 120 days, I start thinking about the lead time of the important things I want to achieve and their critical paths. These milestones help me continue to deliver on my wants and needs in a timely fashion and not end up postponing them indefinitely. It builds my confidence that when I decide to do something, my good planning will ensure I get it done. In project management we often say "Failing to plan means planning to fail". Without good planning, life is just wishful thinking, isn't it?

I started going to community college in Spring of 1987, after a few years of working and saving money after high school. I took an evening class, PSCH 101: "Intro to Psychology" on Wednesday nights. However, I soon realized that if I wanted to get a degree, I needed to go to class during the day since night and weekend classes were too few and far-between. This would mean changing jobs, since my warehouse job was 9-5 on weekdays. I spent the summer going to bartending school and ended up bartending nights until 1991. This allowed my to get my associates degree and ultimately my bachelors degree as well.

Long-term planning: The Bucket List
I was very inspired by the book "Die with Zero" by Bill Perkins. In it, he outlines planning experiences (bucket list) by decade. That means deliberately planning for the experiences we want in each ten-year period. The benefit is that it allows us to be mindful of our changing activity levels during our life and maps activities to when we are most likely to have the right combination of available resources to achieve them. In our 20s, an African safari or climbing Everest may be possible with our available health resources, but maybe not with our available time and monetary resources. It all comes down to good planning. Bill Perkins argues, successfully I think, that we can have the life we want if we plan properly for it. It is unlikely to happen through luck or by accident.

In Conclusion
So there you have it. Honeyman's view of the world and how to win in it. I told him last night that if he doesn't remember anything else I've ever tried to teach him, I want him to remember this. I hope he will. I hope it helps. I hope it helps you, too.  Agree?  Disagree?? Let me know what you think.