As previously indicated, I was on vacation last week. The R&R was nice as I haven’t been on a week-long vacation (as in traveling, not just time off) from work in close to four years. One of the things the vacation affored me was the time to relax in the pool. I like to swim laps but have to share the pool the other patrons. But as I relax in the closest thing I can get to no gravity I’m able to watch how people interact in the pool, both above and below the water. Perhaps I couldn’t fully unplug, but everyone’s behavior in the pool seemed similar to what we see in their finances. Here’s what I learned:
Staying afloat: In the pool there’s a surprisingly small number of people that are above the level of mediocre in terms of swimming ability. If the pool goes deeper than 5 feet even adults are at their best just barely staying above water. This is not unlike how people are financially, just trying to stay afloat. Rather than look for a better system we’re happy just to keep the nose and mouth above water, flapping our arms around like a seal thinking a great white shark just nipped its fins.
Learn to swim: Most “swimmers” in the pool don’t seem to know how to swim. They just jump in and go. So long as that person stays in water below their mouths or uses a floatation device, this is fine. But whenever they’re asked to do more than that, the results aren’t pretty. Most people finances are in similar shape. We get ourselves into bad situations we never should have financially. If you can’t swim, don’t jump off the diving board. If you don’t understand variable interest, don’t get a loan that has one.
Holding your nose: What is this thing with holding your nose? Anyone over the age of 5 shouldn’t be doing it anymore. We do it because when we go under water we don’t really know how to keep ourselves from letting water into our lungs. We can’t be underwater indefinetly, but those that can do it without holding their noses will have a much better time. Likewise, we can’t spend all our time thinking about finances and dealing with money. But if you can log into your credit card account without closing your eyes to pay the bills you’re probably in better shape than most.
Hold your breath: Like holding your nose, holding your breath is important for going under water. Unlike holding your nose, holding your breath is critical. Holding your breath is necessary for staying under water and the more you do it the better you get. When you dive into your finances the greater amount of time you can spend in them the better. And if you have a free hand to help swim that isn’t holding your nose then all the better.
Tools: Tools make life easier, but they shouldn’t be a crutch. In the pool we have goggles, fins, and floatation devices. In open water you might even have an air tank. But these tools are only useful if you already have the skills necessary to operate without them. If you don’t know the first thing about investments, you shouldn’t be going to an investment advisor. You should be going to the library.
The Deepend: Being in the pool can be fun for a while, but all the real fun happens in the deepend. That’s where the diving boards are, and there’s nothing funner. But there are few things that are riskier in the pool too. A lot can go wrong from takeoff to landing, but the risk is almost always worth it. And as with your money, the greater the risk, the greater the reward. Everyone has to decide for themselves if the risk is worth it.
Summer as a vacation season is drawing to a close (the actual season is only 2/3 over). It’s time to get back to work and back to school. And while those activities are more intellectually stimulating, there’s always something you can learn from vacation.