For a few generations, our society has subscribed to a fairly conventional pathway: get an education, to get a good job, to get a career, to get ahead in life.
But it seems increasingly apparent that this model no longer serves us.
The concept of the “career” has been a novelty of the 20th century — when job tenure was longer, job security was greater, career paths were more clear cut.
In the 21st century, things are very different.
Daniel Priestley refers to it as the age of the Heart. We want different things in life. We want connection, inspiration, freedom. Technology is advancing and facilitating that.
But as a result, we face new risks.
The Chief Economist of the Bank of England warns that Artificial intelligence could cause disruption “on a much greater scale” than anything felt in the previous industrial revolutions.
Aside from the issues that we are running full speed towards, even in current times we are experiencing significant personal financial crises.
In the UK, the average salary is currently £27,271. (Some industries are notoriously less well paid — retail assistants bring in an average £10,296, hairdressers and barbers £10,019, cleaners £7,919, waitresses £7,554 and bar staff £7,404.)
Increasing costs of living are causing staggering personal debt. The average UK household carries £58,776 in debt, and over the next four year that is set to rise to £84,412.
How has this happened?
Financial education was never really part of our formal education. I suspect that this is deliberate — our ignorance, or our complicity, is necessary in order to sustain the economy as we know it.
For the record, I’m not interested in the debate on how “the rich are getting richer”. I think that hides one important issue.
We need to take personal responsibility for — and wake up to — our own personal financial health.
We need to protect ourselves, and relying on our income is no longer enough.
Let’s acknowledge the toll that our financial circumstances are taking on our mental and emotional health.
A study by Willis Towers Watson, a leading risk management consultancy, found that financial circumstances are named the biggest cause of stress by 38% of employees — with almost half (47%) of millennials saying it was their number one source for stress — double that of the previous generation (24% in baby boomers).
Money worries are cited as the leading cause of stress among millennials.
Financial resilience is increasingly an issue — over a third (35%) of employees live pay check to pay check (where nearly all salary is devoted to expenses) and 41% could not meet a short-term expense of £1,600 if the need arose within the next month.
You may be forgiven for thinking that more money would solve the problem.
But it’s not as simple as that.
It’s not about earning more money — because you just end up spending more.
It must be a principle of the universe, because it’s a bit like Parkinson’s law, and the general gas equation — the amount you have expands to take up what is available.
Gas expands to fit space, assignments expand to fit the time available, and your outgoings expand to take up your income.
It’s a vicious cycle of living month to month, hand to mouth, pay check to pay check.
Financial insecurity is so deeply ingrained in us and our whole society that we don’t seem to notice the degree to which it affects us.
Like Stockholm syndrome sufferers, we still believe that having a decent career, climbing up the ladder, earning more money, will save us.
But it’s not about getting more money. It’s about security.
Financial security isn’t to do with the amount of money you are earning — I know many highly salaried people who still complain of having very little financial security.
Financial security is being able to breathe.
It’s being able to sleep peacefully at night.
It means that your expenses are taken care of — maybe even that your future is taken care of.
It is looking beyond the amount of money that you are earning now and may even earn in future, and seeing the broader financial landscape of your life — and stabilising it. Reducing your reliance on a single source of income.
Leveraging or using your income in such a way that you are financially secure, so that you can weather an unexpected storm, so that you don’t just spend every last penny you have.
Financial security gave me breathing space to step back and be smarter about my choices. It gave me freedom to leverage my time, so that I could actually create more income. It meant that I could get unstuck and I could move in my business.
It meant that I could grow.
Living in a loop where you run out of month before you run out of money stifles your energy, your creativity, and your joy.
This isn’t about increasing your income, it starts with understanding your finances, using them intelligently, and making better, more sustainable decisions.
Smart people don’t seek necessarily to get more money — they know there is no need for it. They know there is a specific dollar number, and income plateau, after which more money has no measurable effect on day-to-day contentment.
It’s said to be US$75,000 a year, if you’re interested.
Beyond that, it is just more stuff, more spending, and no gain in happiness.
This is why smart people don’t seek more income, they seek financial security. A buffer. Leveraging time or income, diversifying income, or creating passive or recurring residual income.
Ultimately financial security is about long term sustainability, not short term survival.
If you’re focusing on your income, it’s about time you looked at financial security and make that your goal.
For business owners and entrepreneurs who especially face inconsistent income — financial security is what allows you to make quantum leaps without burning all your fuel.