Understanding the double coincidence of wantsMay 02, 2020
I recorded a few thoughts while out on my morning run around Noosa this morning, which you can watch in the short video below.
We’re now heading into Australia’s first recession in three decades.
As is the case with every recession, this will be a period of some turmoil which will change attitudes and the way in which some people think about money and financial security.
If you want to be totally financially independent here are 3 things you might want to think upon in order to break away from the usual career treadmill that we’re so often recommended or compelled to follow.
OK, you need to spend less than you earn and invest in the difference…but you know all that stuff already.
How about 3 apparently more radical or left field thoughts?
Ponder the following:
1 – Decide not to work for money; but that money will work for you
Recessions can be tough times for many workers and businesses, and sadly there will be many unseemly stories about wealthy capitalists being bailed out while everyday folks are left to struggle on.
When the media is running such divisive pieces, it’s worthwhile taking a step back to consider some of your fundamental beliefs about money.
Like many youngsters I grew up with a wide range of negative thoughts and beliefs about what wealthy people were ‘like’, how the wealthy could only become so through being greedy, or by taking advantage of others, and so on.
You need to first realise – and then decide – that money itself isn’t a good or bad thing, and nor is wanting more of it to improve the quality of life for you and your family.
Money isn’t the root of all evil, and indeed it gives you choices, and the freedom to live the life of your choosing.
Don’t take my word for it, by the way.
Take some time to look up, research, and understand the phrase ‘the double coincidence of wants‘, and then in turn consider what the function of money actually is.
And then ponder an alternative world without money, which in reality would mean something akin to a barter economy.
Believe me, I’ve been to developing countries without their own currencies where the barter economy still burgeons.
And the blunt truth is that developed economies have thrived thanks to the functions of money and credit, whether or not we like or care to admit it.
Money is only negative if you pursue it at the expense of all else, or if you choose to utilise money for damaging means or purposes.
A deeper understanding of the double coincidence of wants should lead you a simple conclusion: that you need to find more ways to add more value, more consistently, to more people.
Through doing so you can choose to make money work for you, instead of the other way around.
2 – Decide what you do want
Secondly, you need to decide what you actually do want.
How can you do that?
I accept that some people won’t agree with this, but in my view the only way you can truly know what you do want from life is to get out there and see the world and all that it has to offer.
And by that I don’t just mean taking a couple of weeks holiday in Bali, but genuinely open-ended global travel without a schedule, to see where the journey takes you.
When I was in my early thirties I took a 15-month stretch away from everything to travel to more than 30 countries, and subsequently we chose to spend several years living on a small island in south-east Asia.
Today, I’ve decided to live at Noosa with my family, and spend much of the year travelling across Europe or around Asia.
To date we’ve seen about 50 countries, and I’d like to see many more.
But that’s just my journey and experience.
Only you can decide what you really want from life, and how to design the lifestyle that you desire.
Perhaps the only way to understand the answers could be to get out there and see the world and all it has to offer?
3 – Build your own passive income pipeline
In every recession we get painful reminders that employment income is not always stable or reliable.
There’s nothing inherently right or wrong about having a job, of course, but if you want to be genuinely financially independent then ultimately you’ll need to build your own frameworks and robust pipelines of passive income.
You can do so through a combination of starting and building your own businesses, investing in income-producing real estate, and through generating consistent income and wealth in the markets (as we discuss in great detail in our Low Rates High Returns podcast series).
Now, granted, striking out on your own if you’ve become conditioned to being an employee can be scary.
It was scary for me as well!
But I guessed that in my case the alternative was spending 3,000 hours per year stuck in an office like a chook in a chicken coop, while gifting damn near half of the proceeds straight back to the government in taxes.
For me, then, I figured there wasn’t all that much to lose!
In the worst case scenario, I could always go back to what I was doing beforehand as a CA in Sydney.
Incidentally, taking a year out to go travelling is one of the most powerful ways to break free from that reliance on the monthly pay cheque, because you’ll effectively force yourself to discover a different path.
Not to me; it’s simply a matter of a different perspective.
I discussed these ideas a little further in the short video here
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