Cultivating a Sense of Enoughness is Key to a Secured Financial Future
I slept early, woke up by 2 am, and decided to read chapter 3 of Great by Choice by Jim Collins. It had a great awakening for me that I'll mostly like to apply to my finances and maybe you could do the same. Source The author compared two companies who had the same product, categories, customers, opportunities, and threats. They were a perfect match but just like the story of the South Pole, one did better than the other in the end.
And the explanation for this was how company A maintained a certain pace, which was called a 20 Mile March and was to make sure they drive consistent progress. Even though this company grew slowly when compared to company B, in the end, it was company A that stood the test of time.
Although Company A wanted to drive consistent progress, they knew where to draw the line which was the 20 Mile March. They tried not to go too far and too much, they weren't too aggressive. The leader of Company A, James Brown is said to have maintained a lower and upper bound in the sense that he had a hurdle he was willing to jump over and a ceiling he wasn't willing to jump over. This is translated to mean, "the ambition to achieve and the self-control to hold back".
Now, apart from Jim Collins, I also learned from Morgan Housel, that in our finances, we may not necessarily need to increase our earnings but reduce our Ego. We ought to learn where to stop. This is often a thought pattern we can't get enough of, but knowing the goalpost to stop moving is an important financial skill.
The feeling that you are left behind keeps you wanting to keep up and you might take extreme risks that will be detrimental to your financial health. And the problem is always a social comparison. When you see your neighbor or friend has more, you want to have some of that too, and even though you might have reached a financial ceiling that's sustainable, you find yourself risking everything you have for something you do not have. What always happens is that you could lose it all.
From, Jim Collins's story, company B had always had a thing for reaching for too much, in such a way, it affected their progress, that of the staff, and finally the company, which later got acquired.
With Morgan Housel, he shared different stories of people who had reached a certain financial position that could have been enough but did not know where to draw the line. What happened is that in a bit to gain more and be within a certain income level with their friends or colleague, they took on dramatic risks, that ended not only their careers but ruin their reputations too.
As a matter of fact, combining the lessons in the two books, I learned that in this life, when it comes to our finances, they are things never worth the risk, no matter the potential gain. We should know when it's enough and learn when to stop.
However, having the ability to be contented with what you have doesn't equate to shying away from taking opportunities when they show up, it's mostly coming to terms with the fact that an insatiable need for more might push you to the point of regrets.
Gupta, Rajaratnam, and Madoff all went to prison because of this insatiable need for more. It led them to a point of regret because they had to do things that brought irrevocable ruin to their career.
In a nutshell, having a sense of enough will keep you from making financial blunders that might affect you in the future.
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