Falling On Our Faces

Falling On Our Faces

We recorded a show today about educating kids on finance. The three guests were all super instructive. But what was really great, was actually talking about their own financial upbringings. To better understand how we strive towards creating second and third generation financial independence, we have to first delve into our own reasons for being here. We must first understand our own path to financial freedom. Part of that path, undoubtedly, involves falling on our faces.

At least once. If not more than that. It appears that life lessons are not learned by didactic teaching nor by appropriate modeling. Sometimes the only we way learn is by doing.

And often, in the beginning, doing it all wrong.

Investing

No matter how much our parents teach us about investing. No matter how much we read in these wonderful personal finance books. Most of us start our investing careers wrong. And it usually ends up in us falling on our faces.

I remember the first stocks I bought were in some hot shot johnny come lately company whose value eventually went down to zero. When I finally learned about mutual funds, my first forays were into high cost managed funds that came nowhere near earning what the market did.

And then, of course, during the tech bubble, I sold at the lowest point and didn’t re buy until much too late.

We all think that we can time the market. We all think that we can pick the grain of gold out of the barrel of sand. And usually, we are wrong.

Business

There is no place we fall our faces more than in starting new businesses. Everyone thinks they are going to come right out of the gate and create a multi-million dollar business out of nothing. There are so many great ideas, all we have to do is capitalize on one of the. Easy. Right?

Maybe not. We spend even more capital and time than we expected. The great idea gets nowhere without a significant amount of skill and experience with actual execution. Original assumptions are proven wrong, and major pivoting is required.

This is not the way dreamed of it in the beginning. And no one could of told us how hard that it would actually be. We wouldn’t have listened. Some things just have to be learned by doing.

Frugality/Over Optimization

We discover financial independence and see it as a super power. We have found the holy grail that will carry us on to the good life. And then we do what we have done with everything else in our lives. We fall on our faces.

We push too hard, scrimp too much, and eventually burnout. Just like any other difficult thing, managing finances and reaching happiness is a marathon. Not a fifty meter dash.

Overdoing it. Whether saving, optimizing, or side hustling can often lead to fatigue. It is easy to quit before we even truly get started.

Rome wasn’t built in a day. Neither should our financial future. Slow and steady often wins the race. At least when it counts.

Final Thoughts

We can teach our children and friends about financial independence, and lecture till their ears fall off. We can model appropriate behavior. But it only goes so far.

Sometimes falling on our faces is the only way to drive the point home. We have to experience for ourselves before these lessons truly sink in.

Maybe painful, but valuable nonetheless.