Tuesday, 26 November 2013

What a childhood memory can teach

Born in Garagoa, a little town in the Andean area in Colombia, I spent most of my childhood in my grandparents' farm. That has been my initial fuel to start telling stories..."  That is how I introduce myself in my blog. Among all the stories I have to tell about my place of origin there is one that has been ringing in my head lately...and it has to do with my grandfather and an issue that is quite problematic nowadays: financial education and financial freedom

So here's the story:

My grandfather was a farmer who never went to school. He married my grandmother without having absolutely anything. They lived in a piece of land owned by my great-granfather which, after a few years, was inherited by my grandfather. That was how people, at that time, would ensure coming generations' financial independence: Inheritance. A will. It was 1940 in a rural area where most of the land was still virgin forests and the process of colonization was just beginning. From what I have heard form my Mom and my Grandma, my grandfather's big dream was to have lots of pasture land where fat cattle could graze calmly. That was his dream. He was determined to get it. And this is how he did it: He delegated all domestic expenses to my grandmother. That means she worked during 75 years from dawn to dusk to provide the family with food, clothing, pocket money, health, savings, etc. She woke up early to milk cows, feed the hens, cook for workers, make cheese, feed the pigs, and most important of all: raise the calves. When these calves were fat enough, my grandfather would sell them and save the money he got from that transaction. My grandmother never saw a cent from those transactions. She would just work harder and harder to make ends meet. She did the same for about 75 years. Never stopped. Never complained. When my grandfather gathered enough money, he bought the first piece of land to a former landlord. And he started to take the calves my grandmother raised to graze in that pasture land. The calves became heavier so they were worth more money. He sold them, kept the money and replaced them with more calves that my Grandmother raised at home. 

This cycle lasted for 75 years and developed many traditions that make most of my childhood memories: baking huge amounts of corn bread, harvest corn, beans, green peas, sugar cane milling seasons, among many other customs that my parents still talk about. This cycle brought so much abundance and financial prosperity that my grandfather started to become a "chieftain". He even got famous as one of the richest farmers in the town. By the time he was 55 years old, he decided not to work anymore. He had achieved his dream of owning pasture lands full of fat cattle and he retired without knowing exactly what retirement meant. He just stopped working and expected everyone around him to take care of him as if he were a king. And everybody did. My uncle took care of the lands and cattle, my grandmother continued working to raise cattle and my mother took care of my grandfather's health until he died. I thought of him as a dictator. A cruel person who didn't care a damn about his family, about his wife who had sacrificed herself to make his fortune grow. There's nothing left now. It was a net worth that got lost in a painful inheritance process that tore away the family too.

My grandfather never went to school. He was totally iliterate. The only thing he could write was his name to sign important documents in the bank and the like. My question has been always the same: how come he did not study to figure out how to make a fortune? How did he become prosperous? How come all the books I read at university did not teach me how to charge properly for my lessons? My grandfather had the vision to have a dream and achieve it no matter if he had difficulties. They were not even limiting conditions. He could overcome them and achieve what he wanted and retire early. Did he have any kind of financial education? No. Did anyone teach him how to save? Unsure.

That question was quite puzzling until 3 weeks ago. Three weeks ago, I watched a video about how to thrive financially by Tony Robbins. This is an inspirational speaker who has caused great impact in many people's lives with his testimony and his speeches. Well, in the video I'm telling you, he explains that in order to finance our dreams we have to put our money in three baskets. I'll call "The vital basics" to the first basket. Here you should invest your money in your basic living expenses: housing, food, transportation, clothing, basic entertainment. From all your income, you should spend less than what you earn in your Vital Basics basket and keep what's left. This difference should be kept in a second basket and re-invested it somehow so that your savings grow. When your savings become profitable, you should re-invest the profits so they grow. The idea here is to multiply your savings so that your money works for you. When you have accumulated enough, then and only then, you are ready to spend your multiplied savings into a dream of yours: the house of your dreams, that trip to Bahamas, that farm with a pool and a cottage, your postgraduate degree, etc. And that's what my grandfather did!! He started to save money from the daily expenses, then saved until he had enough to buy some land, then reinvested the profits of his cattle sales until he accumulated enough to buy the lands he dreamed of. And thanks to my grandmother, he made sure there was a steady income. 

When I realised about this, I got really surprised at how I have been spending my savings I keep from my Vital Basics basket into my "big dreams" like travelling or studying right away, without re-investing my savings so they grow and become profitable by themselves. After 10 years teaching, my main assets in my net worth are my travel journals. When I read them, I still feel the joy of discovery and astonishment of seeing new landscapes and meeting new people. But I spent it all! I didn't keep anything left for my future dreams. When I saved up money to go to England for example, I never thought I was going to feel my dreams were over. I never considered that I had to re-invent myself and find another path in my career. Since I never considered this, I never saved from my savings. That is what my Grandfather didn't do. My question is: how come he knew what to do to e.g. retire early without studying a book and me, after long years at university, having read lots of stuff and after having "seen" the world, I didn't have the vision to afford a change in my career and not even an early retirement? How come is that? How come attending university is not enough anymore to make a decent living?

These are changing times. Thanks to technology, Internet, globalization and therefore mobility, the possibilities to make a living are endless and they go way beyond from attending university. Actually, most of the skills to become financially free are not taught at school (in Tony robbins' words, creating a money making machine that gives you the chance to work because you like it and you want it and not because you need it). Thanks God there are now tons of resources to get some financial education. We need to learn how to manage money, how to make it grow so it works for us and not viceverza. Steady salaries are no longer a guarantee for happiness, joy or freedom. Steady salaries are becoming quite the opposite now: golden cages where people have to sacrifice their free time, their personal life, their dreams just for a steady income. How come is that? My grandfather never had a situation like that. He had very different conditions and different times and he succeeded. I also want to suceed. I want financial freedom in these changing, complex times. What do I have to do to achieve it? That is what I am figuring out now. If I think about financial education twice, I think it would become a really useful subject that needs to be included urgently in Kingergartens, Primary, Secondary schools and Universities. Financial education and emotional education but that last topic would make another full blog entry...




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