How not to become another boiling frog
and make your escape before it's too late
This boiling frog story is for anyone in their 30s or 40s.
Perhaps you’ve heard the story of the boiling frog before but in this NEW version, it gets out of the water – long before it gets too hot.
The essence of this ‘Insight’ is that:
People only accept change when they are faced with necessity
And they only recognise necessity when a crisis is upon them.
This powerful quote comes from Jean Monnet (1888-1979) a political economist and a founding father of the European Union!
And I guess we can all recognise that it’s true because we all adopt a ‘put it off’ behaviour in so many areas of our lives.
Early on in life it’s with our homework – often done under parental pressure late on Sunday nights . . .
Then much later, in adult life, it could be to do with saving for the future (for ourselves or our loved ones)
The thing is that when it comes to shocks to our finances – some are simply unavoidable and unpredictable.
If the breadwinner (or child carer) in a family is struck down by illness, accident or death, the consequences for families can be dire.
Thankfully, because these are rare events, it costs very little to take out insurance – to provide money to those who need it – to cushion the impact. (or rather it does if we insure ourselves whilst we’re relatively young and in good health)
Most money crises arise slowly over time
And, like the ‘boiling frog’, we often don’t notice the changes creeping up on us . . . until it’s too late.
The original story of the boiling frog describes our inability to react to these types of large but slow-moving changes in our environment.
The metaphor, used by Charles Handy in his book ‘The age of unreason’ suggests that a frog, placed in cold water that is slowly heated will not sense any danger.
The suggestion is that the frog will allow itself to be cooked slowly to death.
Interestingly, according to some biologists, this story is false and a frog in such a situation would simply jump out.
So perhaps it’s only us humans who have this problem!
The long term game
Our gradually occurring money crises are like many other behavioural challenges we face.
Issues which affect our long-term health and general well-being also arise from the choices we make on how to spend our time and money.
We can choose to eat, drink and be merry if we like. And we can add in some shopping, gambling, smoking, TV watching and computer gaming too if it takes our fancy.
And we may even be merry for a while – but we all know that happiness doesn’t last long if we do these things to excess.
A tipping point arrives as we start to lose the things we value most in life.
It might be our health, our relationships or the savings we need for a house or to support a loved one in later life.
Suddenly we realise that those wasteful activities – which we thought made us happy – were completely unimportant.
Now I know that saving to build wealth over the long term is challenging and, you might even say, ‘boring’ but that’s because it’s such a long-term game.
The emotional side of our brain (Our ‘chimp’ as Dr Steve Peters calls it in his wonderful book, ‘The Chimp Paradox’) can be impatient. And it likes to offer us quick bursts of pleasure at every opportunity.
So . . . saving into a pension plan (or some other long term savings vehicle) to build a fund we won’t access for 20 or 30 years . . . is not on the Chimp’s agenda.
And being able to wait for results over that time-frame demands extraordinary patience.
Most of us have few options
The truth is that most of us ‘ordinary’ mortals won’t make a fortune as a superstar in business or entertainment… or ‘day trading’ 🙁
… despite what you might be told by some self-appointed sage, standing on a stage… making promises that ‘making big money’ is easy for everyone.
You and I know – that this is simply not true.
So, most of us have very few options in this wealth building game – we can either:
- Start early enough on our savings, making the journey easy and the outcomes good or
- Leave it very late before starting our savings – making the journey a hard one and the likely outcomes bad.
It’s really just simple maths!
See my Cappuccino savings chart for proof of that 😉
The really scary thing about this second route is that we’re likely to take bigger risks with our money…
… as we attempt to catch up with those who headed up the easier road… many years earlier.
And with bigger risks comes the possibility of a complete financial ‘wipe out’
Your choices are illustrated here.
Now try this thought experiment
Imagine what you could have right now (or at least in the next few weeks) . . . if you really wanted it:
1. An amazing exotic holiday?
2. A long weekend away?
3. A new car?
4. A new computer or TV
What would you have?
Well, whatever it is for you (within reason) – and even if you don’t have the cash available right now – you could probably have that thing very soon!
You simply have to organise the credit – or bend your credit card.
So, you might say:
You can have whatever you want!
Now project yourself forward in time – to when you’re around 55 years of age.
And trust me, the statistics don’t lie. More than 98% of 35 year olds reach age 55.
Now ask yourself this question:
What do you want now?
What do you want, at age 55, more than anything else?
The chances are that you’ll want a ‘well-earned rest’
The trouble is – unlike when you were younger – unless you have some funds to call upon – you’re not going to get what you want.
Those financial companies won’t want to lend you hundreds of thousand pounds to take a holiday for the rest of your life.
You simply won’t be able to have it.
Getting to 55 with ‘nothing’ in the kitty for your later years means that you’ll be working for a very long time.
And that might be okay – for some people.
I understand that Yoga teachers can happily carry on into their 80’s although I guess the competition from younger Yoga teachers is hard 🙂
But if you want to have what you’re going to want when you’re 55 – please just do something about it now…
… or at least in the next few weeks and months.
The water is getting hotter every day – even if you’ve not noticed it.
If you’re in your 30s or 40s and want to learn how to get more control of your money, start with this straightforward Insight to learn about the money questions we all share.
And be sure to sign up to the newsletter for more ideas to make more of your money and earn more of it too
Thanks for dropping in,
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