I’m going to take a wild guess and say that you’re probably here to untemplate. You don’t like living within socially imposed boundaries. You want to explore, rebel against the norm, and find your own way through the world.
At the same time, you realize that you have limitations. You want a roof over your head, and maybe some food on the table.
Does this sound a little bit like you?
My strong opinion is that money doesn’t have to hold us back. In fact, success with money enables even greater untemplating success in other areas of life! The key is achieving balance between untemplating and Natural Law, or Principles.
These two ideas are not mutually exclusive!
Let’s throw in couple of definitions as a base for the discussion:
- What does it mean to untemplate? Many of you already answered that question in this Ask the Readers segment. Among the answers are threads of shying away from the norm, avoiding doing things prescribed by others, entrepreneurship and other non-traditional career paths, and most importantly–doing what you want to do.
- What is a principle? Webster defines it as a “comprehensive and fundamental law, doctrine, or assumption…” My definition is even simpler: a self-evident truth. It is something that is undeniable and compelling.
What is the significance of principles? Because they are self-evident and natural laws, long-term success is simply not possible if you violate them. That sounds awfully restrictive and boring.
But the good news is that you can live in harmony with principles and still untemplate your life to the fullest. Principles form your foundation, while untemplating is the house you choose to build. After all, even the most wacky modern houses have very predictable foundations.
First, let’s look at examples of financial principles. Once again, these are not tactics or tools. You’ve probably heard many of them before, whether repeated as mantras or hiding in the form of financial advice. You “know” them in your heart, because you understand that they make sense.
The funny thing about principles is that the best way to find and understand them is to discover them for yourself. But here are just a few examples to get you started and show you what I’m talking about:
- Mathematics: This one hides most frequently under the old saying–“don’t spend more than you earn.” You simply can’t beat out basic arithmetic and hope to win at the end of the day.
- Balance: This shows up everywhere in personal finance, because we often struggle with choices that seem to compete with one another. For example, do you save more or insure more if given the option?
- Deferred Gratification: In other words, being able to wait to get things we want in order to do it the “right” way. Most people have a grasp on this one, and also of what it can do when it’s violated–think about the average credit card debt in the U.S. and how we got there.
- Vision: This is a frequently overlooked, but equally important financial principle. It includes everything that has to do with creating an idea of the future in your mind–like setting goals, and creating a financial mission.
- Continued Learning: Someone much wiser than me once said that the day we stop learning is the day we die. Lifelong learning, evolution, and flexibility are all part of a successful financial system.
These are just some of the many principles that exist in our world. Can you begin to see what happens when you violate these principles?
How do we build an Untemplate lifestyle while respecting these “rigid” principles? We build it over them, just like the foundations I spoke about earlier.
Take Baker’s post on Untemplating retirement as an example. He carefully considers if retirement is still an appropriate end goal for today’s workers. To anyone familiar with basic financial “advice,” that sounds like blasphemy. But retirement savings are not a principle. They are a tool based on principles. As long as you…
- understand the mathematics of your decision,
- create a balance between saving for the future and living “in the now,”
- are committed deferring gratification and using cash-only due to smaller savings stockpiles,
- understand why retirement is not a goal for you through your vision,
- and are flexible and ready to learn and adapt if the plan doesn’t work…
…then why not? You’re living in line with basic principles, although the end result may not be the traditional one.
That is simply the application of the five examples of principles I mentioned. But the concept works the same no matter how or where you apply it. If it does not, then whatever you’re considering is probably not a principle.
Try the same exercise with your decision not to attend college, or to lead an entrepreneurial lifestyle. It works! It must work for sustainable success in whatever you’re going after.
Your turn: What other financial principles do you see in your own life? Do they restrict you, or set you free? If you’re living the Untemplate lifestyle, how do principles play a role? I’m excited to hear what you think!
My core financial principle is “don’t spend whatcha ain’t got”. As much as I might want something, it’s not worth it to be paying for it later. If I can’t buy it now, I’ll wait till I can. Then I can enjoy it more fully, because it will be mine to do with as I like.
I also have to take care not to lean too far one way or another. Like Meg, I like to save and have the potential to buy what I want. Then I decide to go shopping and get excited and end up spending too much. So I have to pay attention to my actions and mind-frame, so that I can stay (here’s that word again) balanced.
It’s pretty amazing–I have a related discussion going on at my blog, and ultimately personal finance comes down to a handful of basic ideas (like spend less than you earn and balance). We can package it a million different ways, but the basics don’t change.
I like this! 🙂
I still struggle a bit with the deferred gratification, but in the opposite way than most…. I will save and save and save and not want to spend my savings on whatever I was saving for!! I think, for me, it has to do with the opportunity cost of not having the savings there. It’s fun for me to say, “Oh, I could buy this if I wanted!” and to never even buy it, just the ability to do so means a lot to me.
Lots of PF writers talk about ways to defer gratification, but few (if any?) have ever addressed what happens when you just save too much. (I had to stop writing about money in order to be okay with spending, otherwise I felt too guilty.)
Meg, It’s interesting that you point that out, because I’ve seen a big backlash in the PF community lately against “over-frugality” and saving excessively. Most of the time, it appears as a discussion on the balance between enjoying life and saving for the future (there’s that pesky balance again!).
So it appears that if the pendulum swings too far in any one direction, there are people ready to push it back! 🙂
Principles are only restrictive if you covet something that is not possible within your principles. I could look at my principle of monogamy restricting me from sleeping with dozens of women, but I really don’t have any desire to do that. So my principles don’t restrict me in any way, because it doesn’t keep me from doing what I DO want.
Great point, Edward. I don’t know if the perception is that principles are restrictive, or that they are just boring, but for some reason our generation just doesn’t want to talk about them (or face them!). Hopefully we can all realize that they are a good foundation for life.
I disagree. I see our generation as being very principled… in some areas.
We’ve seen our generation drop everything to help natural disaster victims in New Orleans and Haiti. President Obama was elected largely though the efforts of Gen Y volunteers. Social media, the bastion of Gen Y, is rife with examples of altruism and helping others without a second thought.
But when it comes to money, yeah, our generations seems to be not there and not listening. My theory is that, being young, most of us just can’t imagine actually having the kind of expenses in the future that we saw our parents have.
Good point, although I would counter to say that a dedication to service doesn’t necessarily imply a principled approach to life (although it certainly shows that our generation has a lot of character and good values).
As for money, maybe it’s not principles we lack, but the ability to conceptualize the future. Everything is so immediate; we are living in a “now” society. It’s becoming more and more difficult to contemplate 5-10 year goals, even 1-year goals, because circumstances outside of our control change so quickly.
How can we plan, when we don’t know what the world will look like in 10 years? I would say that generations of the past didn’t have to deal with this phenomenon in the way this generation does. In many ways, we are going to be the “flexible” generation–having to adapt to whatever comes at us.
What do you think?
I would argue that character, service, and altruism are principles.
That’s probably an accurate way of describing how the unknown future is affecting the psyche of the generation. The problem is, rather than needing to be less concerned about money, such uncertainty requires to be more vigilant.
No doubt–preparation for whatever is coming at us is key. I’ve always thought of personal finance as not something we’re in “control” of, but rather something that we do to prepare for the circumstances and situations that are undoubtedly in our future. The readier we are, the better we’ll fare.
Great Post!
My financial principles are pretty simple. To steal a term from the mutual fund industry, I like to say I have a core (emergency fund, roth ira, 401k,) and explore (travel, entertainment, etc…)
Like you mentioned, it’s important that you balance the two.
That’s a really great way to look at money! Reminds me of some budgeting strategies (needs/wants), but I really like the use of the word “explore.” It sounds so much better than “want” and really speaks to how you view that part of your life.
Hey Wojo,
I’m thinking that everybody should give something a go for 5-yrs. Give your job or your goals 5 years to breathe before deciding to give it all up and do something. Don’t fall in the trap of “I want it, and I want it now.”
If in 5 yrs, working hard and trying to succeed at a template lifestyle isn’t doing it for you, then give it a go!
Best,
Sam
Hmmm…I have to say, this is a pretty cool approach. Five years is about the right amount of time to truly get “into” something and figure out if it works for you or not. And if you play your cards right, you can get to try 12-15 different things in your life, all for quite a good period of time.
Principles are key – all I could think about reading your post is “discipline”. Discipline was a key factor for me in getting my financial house in order. There is no doubt that financial success comes on the heals of learning the principles you outline above. These rules are just as powerful as other rules of nature – like gravity! Ha –
Discipline is a great one. For me, exercise was a big help in developing discipline because it gave me a schedule and something to do that wasn’t necessarily pleasant. Without a doubt, it affects every other part of my day.
A great post here Wojciech,
In answering your closing question:
A very important principle I’d think is “see”, it’s hidden in plain sight in your question there.
Actually see what is going on in front of you, what you are doing and where your choices are leading you. I would almost call it a principle by which your five principles are governed. More often then not we take all the steps we know to be right, but because we don’t actually see what our unique situation is we do what has worked for others.
Tailor your actions to what you see. It’s actually much harder than you’d think because what you think you see is often not the same as what is there to be seen.
What do you think?
I think you’re on the right track with that one! In my own life, I would call what you’re describing “self-awareness,” as well as “paradigms.” Both are over-used phrases of the self-help genre, but I think that’s because what they stand for rings true for everyone.
It’s incredibly hard to achieve that kind of self-awareness on a deep level. But as you point out–it leads to amazing insights and helps you shape life for the better.
Another “master” principle…and one a friend of mine started a charity around, is “Do What’s Right.”