My dad was a colourful character. Throughout my childhood he embarrassed me endlessly and hauled my mum and I from far-off country to far-off country, but also laid the foundations of the knowledge I would need to generate a worthwhile and respectable income.
When I was a child, dad was a consultant ex-pat who was always either employed or self-employed, and his attitude towards money controlled his lifestyle. His frugal manner when choosing our home (old, tiny and needing a refurb), our car (modest and economically-driven), and his clothes (affordable and underpants-free), as well as his attitude towards most other areas of his life, helped him accumulate wealth far beyond that of his peers who were earning a similar wage.
While I may have disagreed with his methods and cringed at some of his outlandish behaviour, there is no doubt that he strongly influenced my approach to making money. So let’s take a look at some of the most important economic lessons I absorbed from him – as well as one lesson I have done everything I can to discard.
1. Reject conformity – embrace contrarianism!
Dad was never afraid to embrace opposition or eccentricity, and believed that it was the average person on the street who had the strangest ideas. He was incredibly tight-fisted, he frequently wore the same flip-flops and went commando in testicle-revealing shorts, and he was the proud member of a running club whose main aims seemed to be to drink, rebel and generally take part in off-colour behaviour. This was not a man who could be accused of “falling in line”.
While my mum and I struggled with his outlandishness at times, shaking off the need to conform was a valuable lesson for me to learn. Herd conformity in business rarely leads to true wealth, and non-conformity allows you to question and stand against the tide, finding business opportunities where other less contrarian entrepreneurs might fail to do so.
While extreme non-conformism – like some of my dad’s behaviours – can be a risky strategy and restrict you in some ways, it is my experience that applying a contrarian perspective to investment generally yields well.
Dad’s frugal outlook certainly rubbed off on me, too. While his colleagues were using their ample pay to purchase slick cars and expensive houses, dad’s refusal to do so showed me that delaying gratification means saving more cash and helping create a sustainable, recession-proof future.
Questioning the norm is an essential life skill for people like us who want to rise above mediocrity.
2. The importance of great networking
In dad’s typically brash style, he liked to find bulletproof ways of dealing with economic adversity – however minor the financial implications were.
While we were living in Jakarta, once every few months one of the local traffic police would pull dad over for a minor issue, such as failing to indicate, and ask for a “small donation” which would usually be the equivalent of about £3. When traffic police were paid, they would overlook the infringement and continue their day having picked up the equivalent of about half a week’s wages to them, which was basically a handful of change to us.
Unsurprisingly, dad would have none of this. He would argue and stand firm, even when he knew he was wrong, until the officer would crumble and back down. While dad would continue his day without having to pay a bribe, he would usually be put into a stinking, furious temper, and if we were supposed to be enjoying a day out as a family our plans would generally be cancelled due to this mood change.
Eventually, dad found a defiant solution by becoming friends with Tommy Sobango, the head of the Jakarta traffic police. From then on, if we were ever pulled over he would let slip that he met his “pal” Tommy every Monday. We would see the traffic cop’s face plummet as dad suggested that they called their boss to confirm dad’s claim, and then we would be politely ushered on with a tip of the cap and a wave of the hand.
While dad’s motives were characteristically off-kilter, this taught me the significance of networking. Dad went to great lengths to schmooze Tommy, and it was only later that I realised that dad’s association with him offered status and results. In business, building a network of powerful, knowledgeable, well-connected people means that you are offered better routes to wealth and can learn the shrewd tactics that remain inaccessible to lesser-connected people.
3. Keep your finances private
Dad believed that creating wealth was an essential lesson in life, but that doing so should be a quiet pursuit. He thought that the more people knew about your finances, the more likely they were to leverage that information to their advantage, so dad actively avoided opulence and flashy wealth signifiers. Dad loved the idea of turning up looking like he was the poorest man in the room, knowing privately that he was probably the richest!
I have adopted some of this trait too, but once again, not in as extreme a fashion! I don’t like to flaunt wealth, as it doesn’t stay in keeping with my “low cost, high life” values. The trick is to find a balance between careful spending and living the life you want to live. Despite my business partner Rob’s teasing, I have no shame about the fact that at one stage I had almost a dozen investment properties but still lived at home with my parents! Though perhaps I have taken it a bit far at times.
As well as using financial privacy as a general business strategy, you never know who might be paying attention to your extravagant watch, your sports car or your top-of-the-line, knock-’em-dead suit. Some people struggle to control their envy or the fact that they feel threatened by the presence of money, so this is something else I think people should consider before buying their latest status symbol.
…and lastly, AVOID the false economy of constant cost-saving!
Dad’s frugal ways seemed to know no boundaries when I was growing up, and while I remain in favour of keeping costs low, you should compare the costs you are saving with the amount of time spent and the discomfort suffered in doing so.
There were times when dad would spend three hours just to save £3, which suggests that he saw frugality as a principle to obey rather than a strategy to improve his life and future. This is a false economy, and if he had spent that time more productively aiming to generate income rather than solely that meagre £3, he could have used those lost hours to better his finances instead.
I began in the world of business with similar values to this, trying to save every penny I could but after weaning myself off the habit I am now far freer with small amounts of cash than I was back then, and far more protective of my time.
If you would like to learn more about the ways you can live affordably but experience a life of comparative luxury, feel free to look at my book “Low Cost High Life”, which you can find here. Any comments, questions or feedback, comment below!