Thursday, 3 January 2013

With "carpe diem" as a motto, you won't go far. Short-term thinking inevitably brings about negative consequences. Embrace the virtues of prudence and foresight

The Latin expression "carpe diem," which can be translated as "enjoy the day," has been elevated to a main component of our culture. The most popular interpretation goes as far as recommending people to "live for the day." This advice comes often accompanied by sneering remarks about those who save for the future.

With carpe diem as a motto, you won't go far


The sad story of artists and athletes who make a fortune and end up bankrupt a few years later is told by newspapers with monotonous frequency. The message seems to be that there is no other way or, even worse, that human beings are unable to learn from someone else's disgrace.

Nevertheless, an objective assessment of the problem shows that the great majority of middle-class citizens in any country never go bankrupt. This is not a coincidence, but the proof that self-discipline and common sense are widespread in society.

Short-term thinking inevitably brings about negative consequences


The horrid reports about financial irresponsibility that one sees on television represent conspicuous exceptions to the prudent mentality of millions of working men and women. This is not a new phenomenon and, without much effort, we can find traces of similar events in previous centuries.

The liquidity crisis that took place in London in the year 1826, almost two hundred years ago, was very similar to what we have experienced in the initial decade of the 21st century. Thousands of investors lost their fortune, including many famous personalities, such as the Scottish novelist Walter Scott.

You might know Walter Scott from his historical novels, such as "Ivanhoe" and "Rob Roy," which belonged to the the best-selling books of his time. If Scott had adopted the discipline of living within his income, which was considerable, he might have enjoyed longer and certainly healthier years.

Unfortunately, he overextended himself by investing in ruinous printing and publishing ventures, as well as by purchasing a large extension of land and building a majestic residence. When the businesses in which he had invested went bankrupt in 1826, he still had to face massive personal debts, that he was unable to reimburse.

There are important lessons to be drawn from the study of people who think only short-term


During the next years, he worked frantically, trying to write more books to pay off his debts. His health deteriorated rapidly and, finally, he died in 1832, physically and financially exhausted, when he was only 61 years old. Was it worth it that he had incurred huge personal debts in order to build a mansion? These are some lessons to draw from such stories:

1. Live below your means.

2. Save some money every month, even if it is a small sum.

3. Take insurance to cover critical risks, such as major surgery or invalidity.

4. Conduct your business or profession in a prudent manner.

5. Choose slow but safe growth over wild and risky expansion.

6. Diversify your investments amongst many different assets.

7. Stay away from profligate individuals or businesses. Their tales seldom have a happy end.

Embrace the virtues of prudence and foresight


The virtues of prudence and foresight constitute the backbone of civilized society. Despite the negative stories presented by the media, millions of working men and women possess the habit of planning for the future. In fact, their prudent conduct and the ensuing peace of mind are what render them uniquely able to "enjoy the day."

For more information about rational living and personal development, I refer you to my book about how to be rational  "The 10 Principles of Rational Living"

[Text: http://johnvespasian.blogspot.com]

[Image by Tony Fischer Photography under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]

You don't need all the numbers, you only need the crucial ones. A few parameters is all you need to get a clear picture of where you are. The ability to make fast and correct decisions is crucial for achieving happiness

Experienced managers tend to focus on a few key parameters that tell them how their business is doing. Seasoned investors proceed in a similar way. Since they know the kind of opportunities they are looking for, they are able to discard unsuitable investment proposals after checking a couple of critical figures.

You don't need all the numbers, you only need the crucial ones


No one can take correct decisions without knowing which elements are important. Gathering huge amounts of data will prove useless if complexity cannot be reduced to manageable levels. What you need are simple graphics or tables that show you how you are doing presently and what the trend for the future is.

When it comes to running your own life, could you reduce information to a small number of factors? Is it possible to simplify reality to such an extent? Can a few numbers suffice to express your level of happiness? Can we isolate the crucial components of our existence and make projections for the next decade? Here are some examples:

1. The general condition of your health.

2. Income from your main business or activity.

3. Overall level personal freedom.

4. How many close friends you meet regularly.

5. The size of your bank account and other liquid assets.

6. Level of satisfaction with your home and living environment.

7. How you rate the non-monetary aspects of your principal occupation.

8. Happiness derived from your spouse and other family relationships.

9. Overall perspectives for personal growth.
 

A few parameters is all you need to get a clear picture of where you are

If routine fills most of our days, we should not allow random events to eat up the little free time we have available. Becoming conscious of the status in each area of our life and pushing for improvement requires substantial effort. Reducing situations to fundamental numbers can contribute to remind us where we stand and where we want to go.

More often than not, one or two figures should be enough to identify the issues closest to our heart. Even when we deal with immaterial elements, such as the non-monetary aspects of a business or profession, we should force ourselves to come up with a number.

Let us establish, for instance, where we are today on a scale from zero to ten and where we want to be in a year from now. In a similar way, trainers encourage overweight people to track their slimming progress by means of a simple graphic.

The ability to make fast and correct decisions is crucial for achieving happiness


The sheer exercise of decomposing our life into its main constituents can prove highly beneficial. Turning observations into numerals may, for example, allow latent irritation to be verbalized. The first time that someone takes the time to write all this down frequently results in a couple of surprises.

In fact, if you can figure out the way to do it, the only number that you need to watch is your overall happiness index, where it stands today and how to extend the years you have left in order to raise it to the highest level.


For more information about rational living and personal development, I refer you to my book about how to be rational  "The 10 Principles of Rational Living"

[Text: http://johnvespasian.blogspot.com]

[Image by attawayjl under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]