My family lost several millions of dollars over the last couple of generations, and yet we have managed to weather the economic and political uncertainties and here are a few things I was taught as I was growing up.
When most people think of wealth, they think about hand me down savings and investment pots. In fact, economics will tell you the way to increase your savings is to improve your income or reduce your consumption, or a bit of both.
Most people, in my opinion, obsess too much about reducing their consumption. I think the more effective strategy is in actually improving your income.
Economics would tell you that income or output is driven by land, labor and capital- the three things that we have as a society fought over in the last few centuries. Think of feudalism. Think of slave trade. Think of capitalism.
However, not all land is created equal. Not all labor is created equal, and not all capital is created equal. Families that have weathered the economic and political uncertainties have learned a thing or two, outside the economics textbooks, to keep their wealth going through the generations.
So, here are five lessons that I learned while growing up, and the one thing, I was taught, to avoid like the plague.
1. Invest in Your Education.
I come from a family of academics who really value education. There are so many people out there who would invest in stock, real estate, land and whatnot without doing any analysis, without understanding the future potential that this piece of land holds, that this stock holds that this business holds. What education really gives you is analytical prowess.
I understand that a lot of people, today, don't want to go to universities anymore because they think that whatever they're taught in university is not effective in their work life anymore. While I understand where you are coming from, when you say this, I really want to encourage you to think about this analytically. Will you be going for that higher education to improve your analytical skills? If yes, please go and get that degree, because if you don't, your analytical skills will remain poor. Then you end up making bad choices across the rest of your life.
Education is indeed, the one thing that has helped us remain successful across the generations.
2. Honoring Your Word.
Once your word has left your mouth, you have to honor it unless it's a life or death situation. This used to really annoy me when I was a child. I used to see my dad not getting swayed by emotional children asking for something. What it really has inculcated in me is the sense that your word is your promise. Whether or not you sign a contract or not, doesn't matter- you are as good as your word.
When as a parent, you do that over and over again. You teach your children to have integrity. It means that, when they realize that, they start honoring their own word, they become a safe pair of hands for the rest of the society to shoulder their responsibility, and that builds wealth.
3. Impeccable Work Ethic.
I saw my mum and dad having an impeccable sense of work ethic throughout their working lives and beyond. This has inculcated in me a very strong sense of work ethic. So much so that, I sometimes, struggle to switch off from work even on sick days.
I have worked with people over the years who have had impeccable work ethic and who haven't had any work ethic. Guess who I kept working with over the years? The ones who had work ethic.
The more I grew, the more they grew. The more they grew, the more I grew.
4. Compassion for People.
I could tell you the number of times that the cleaning ladies have shown up to work, even when they were unwell. Because they knew that they would be taken care of, they would be provided with medicines and so on. That is something that I have learned from my family. Take care of people and they'll take care of you.
So, I know in economics they say your control over labor is what matters. But in reality, what I have found is your compassion for people to help them when they need your help and support the most is what matters. You help the people, they'll sort you out during your time of need.
5. Self-Reliance.
In fact, I remember even as a 17 year old, I was self-assured that I will always be okay in life because I can put my skills to use and make money for myself through the rest of my life. This was not because of the promise of a savings or an investment pot. This was really the skills that I had developed till that point in life that I could then use through the rest of my career to make money.
If you want to teach one thing to your children, teach them self-reliance. Because the moment they realize that the buck ends with them, they are the creators of their own destiny that gives to them a tremendous sense of responsibility, ownership, and also a certain amount of exhilaration for the future.
Finally, here's one thing that I was taught never to participate in- status games that force you to keep up with the Joneses.
Now, I'll be honest, I faulted on this one early on in my career. I started buying designer handbags, which I really did not care too much about, but the people around me cared a lot about. I have, since then, stopped making my purchase decisions based on people around me.
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