Agile Personal Development

After tracking your life budget for awhile, there are a number of issues you’ll probably find. Here are some of them, and some ideas on how to work through them.

1) Difficulty Tracking your Time. Even if you use a tool like Toggl, it is difficult to keep up with how you spend your time. This is especially true if you have to catch up on it after you get home from work. If you miss a few days, I recommend you input some typical times for your different life budget categories just to keep things moving along. Keep in mind that the main point isn’t to get everything perfect, just that you understand where you are not spending enough time (or too much).

2) More Detail Needed for Categories. The standard categories may need to be adjusted for your own use. For example, you might want to measure how much time you spend on a specific personal development area, like self-reflection, versus just the general category. It would make more sense to split the Personal Development life budget category into smaller chunks. I recommend not having more than 10-15 categories total, and that you should not have a category with a budget of less than a few hours a week.

3) Duplication of Categories. You’ll find that some activities in life fall into more than one category. For example, mowing the lawn could be considered as house upkeep, as well as exercise. It is fine to “double-count” this time against both categories, but it gets difficult to track this. To handle this situation, I recommend making a note against each activity, and then reviewing at the end of each week (or day if you have time) and make sure you have counted the time against all appropriate categories.

4) Different “Quality” of Time. Sometimes an hour of your time doing a task seems like it should be worth more per hour than your budgeted time. For example, the calculations of how much an hour of exercise is worth is based on a moderate level of exercise (walking, mowing the lawn, etc). If you go out and run a 5K, you are working out at a higher level than moderate. This reduces the number of hours you need to exercise against your budget. However, this gets tricky in practice. I recommend that you modify the hours you spend on higher level exercise to the equivalent hours at a moderate level. This keeps you from having to recalculate your hourly rate for the higher level of exercise, and yet still ensure that you are meeting the required goals for your health. You may also find that due to multi-tasking or other distractions, you need to reduce the actual time spent to better reflect reality.

5) You Spend Your Time Differently Than Expected. After establishing your Life Budget, hopefully you will continually think about how you are spending your time, and whether it aligns with your personal vision and values. However, you may find that it is really hard to change how you spend your time. For example, week after week I continue to spend more time on work than budgeted, but have yet to find a solution to it. I also find that I spend a lot of time on personal development activities, but they don’t always have tangible benefits (like checking something off my life list). You also will find that hours may go by and you can’t even remember what you spent them on. While this may be a difficult feeling to have, I believe that tracking your Life Budget at least helps you to recognize that you are not spending your time as you expect. And knowing is half the battle, as my favorite childhood cartoon burned into my brain….

After getting all liquored up on reading blog posts on how working for yourself is the only way to live, I’m starting to get a hangover. After researching what it takes to start and run a successful business, it seems that the data doesn’t back up the story. Of course, as we say in the corporate world where I work - “don’t let the facts get in the way of a good story”.

Ironically , this week a new book came out on this very topic - Escape from Corporate America, based on a blog of the same name. There are other blogs dealing with similar topics, including the Four Hour Work Week, and Steve Pavlina’s blog. The common theme is that working a “9 to 5″ job for a corporation is bad, working for yourself is good. There are a many reasons typically given for this, such as how working for yourself is less risky than a corporate job, or your experience is limited working for a corporation. While I find it fascinating to read about their adventures, I’ve started to think that the corporate life I have today has a lot of advantages over taking the entrepreneurial plunge.

Here are 10 reasons why you should stick with the corporate gig:

1) Less Risk. The whole idea that self-employment is somehow less risky than a corporate job seems silly to me. Granted, you never know whether your company will merge with another and your job will go away, or your new boss won’t like you and will fire you. You could also work for an Enron or a Bear Sterns and watch everything evaporate quickly. But those types of events are few and far between. Frankly, the byzantine human resources process within most corporations practically ensures you’ll have a job for awhile, even if they want to fire you. You’ll likely know it long before it comes. And for those economic downturns that result in layoffs, doesn’t that impact you even worse when you are on your own? Not to mention the loss of insurance through your company. How much more risky can it get? You also have a steady flow of income in the corporate world, versus wondering where your next paycheck will come from. The probability of your own business venture succeeding is pretty low. According to this article, only two percent of self-employed people remain that way for longer than 10 years. That doesn’t account for whether the 2% is even successful or not, just that they are still working for themselves.

2) Less Hours Worked. Granted, some of the ideas for living a four hour work week are pretty useful no matter what type of a career you have. However, the reality is that self-employment takes a lot more time than a typical corporate job. Not only are you working more each day, but you need to work weekends too. With a corporate job, you are making money just by waking up in the morning and going to work. On your own, if you aren’t developing your business, you’re not getting paid.

3) Lot of Resources to Leverage. Working for a large corporation gives you instant (well, OK, not instant, if may take you awhile to find them in the corporate address book) access to people with a variety of experience. If you are into research and development type activities, you can go after a pot of money to fund your next project (pretty similar to getting a venture capitalist to fund your new idea - except you’ll still have a job tomorrow if the executives don’t buy into your idea). Some companies like 3M even pay you to develop your new ideas. Out on your own, you’ll need to pay for this out of your revenue, while working for a corporation, you get it for free.

4) Multiple Career Opportunities. Most corporations resemble a bunch of small businesses all rolled into one company with a cool mission statement. This is especially true for those that have been through a lot of M&A activity. Get bored working one project or tired of working for your boss? There are plenty more opportunities you could transfer to, without losing your coverage in benefits or your retirement (or having to get rid of your cool shirt with the company logo). Each group within the corporation will have a different culture and energy, just like small businesses.

5) Stable Environment for Testing New Skills / Role. Maybe you want to try something a little different, like moving from software development into that evil world called “management”. Within a corporation there are likely career paths you can try out to see if you like it. Want to go back to being a code jockey and get your not-so-pointy hair back? No problem. Lot better to do it that way than risk your family’s dinner next week on your trying out a new freelance career on a whim. You can also gain new skills with good mentors around you (that you aren’t having to pay with future stock of your company).

6) Added Value. Beyond the salary, there is a lot of added value you get from a corporate job. It is a competitive job market, and will continue to be so for awhile with the big generational shift going on. This means that companies need to provide a lot of incentives for good employees. Healthcare coverage, 401K matching funding, stock options, performance bonuses, free tuition for degrees (how would you like to pay for your MBA on your own while trying to grow a business?), even personal discounts on consumer goods due to the corporate-wide agreements - all of these things add up to a lot of additional value that you would have to pay for out of your own pocket if self-employed.

7) Get Paid for Your Work (and even your Non-Work). One downside of self-employment is not getting paid for the work you do. For example, if you’re a freelance writer, you might put 10 hours into an $500 article. But if your editor doesn’t like the article as written, you may have to put another 10 hours into the same article to fix it, with no additional revenue. In the corporate world, you might think your Powerpoint presentation is ready for Donald Trump’s boardroom, but if your boss disagrees, you are still going to get paid for the work you put into it. You also get paid for sitting around the water cooler catching up on your favorite reality shows. (Don’t worry about your boss finding out, he was the one that asked about the last Survivor episode).

‘8) Opportunity to Work on Really Big, Important, Interesting Projects. Want to be part of the team to send astronauts to Mars? Or maybe develop a cure for cancer? How about designing the next hybrid car or harness a new energy source for a sustainable future? These aren’t the kind of projects you are going to be working on while sitting in your home office in your pajamas. These projects take a lot of funding and teams of skilled people to execute. You’ll need to work for a reputable company with related experience before you have a shot at these projects.

9) Brand Name Recognition. Speaking of reputable companies, having a well known logo on your shirt help you open doors for new business. When you are on your own, it is difficult to establish a reputation while competing with existing companies. It is really hard to convince people to let you work for them when they don’t even know if you’re going to be in business next week. A strong company brand helps that tremendously.

10) Great Experience. Many view the corporate world as a great training ground to start a career. This experience gives you great work history when moving on to smaller business later, or even (dare I say it) starting your own business.

There are definitely downsides of working in the corporate world, many of which are why people try to escape from it. You need to work on your external career and social networks or they will go stale. It is far too easy to get comfortable with not expanding beyond your internal network, since it is probably pretty large and gives you a false sense of diversity. Assuming you would be one of the successful small business owners, working for a corporation definitely limits your salary options. Unless you make it up into the executive level, you’ll eventually plateau off, instead of the “hockey stick” curve of self-employment revenue. Not that the corporate world doesn’t have hockey stick revenue predictions, you just won’t be getting any more money when it happens. It also isn’t easy to temporarily increase your income for something special. Although you could moonlight on the side to save up for that big surprise trip for your spouse, most corporations keep an eye on your outside activity, especially when you are doing something similar to your normal job. Even though you may get great benefits today, you never know what benefits will change in the future. There is no law that says you’ll always get a match to your 401K. Of course, on your own, you’ll be the one doing the matching.

OK, now you’ll have to excuse me while I go read “Escape from Corporate America” and get drunk again on the idea of a 4 hour work week. I’d love to hear comments from either side of the fence on that one, particularly from those of you that have escaped from the corporate world, and now have come back again.

What would you do if you knew that tomorrow (and every day after) you would get a big check to spend on whatever you wanted? I recently got to experience this through playing something called the Prosperity Game. Unfortunately for me, the checks weren’t real, but surprisingly I did learn quite a bit from the experience.

The Prosperity Game is an on-line application for helping you overcome what is called your financial “set point”. Your set point is an amount of money (in the real world) that you tend to have available to spend. This limits your experiences because you never think beyond your means. The idea behind the site is that by getting “simulated” checks each day and specifying what you will spend the money on, you will start to change your set point in real life. Each day the amount of the check increases, allowing you to buy something more expensive each day. I recommend using your Life List as a source of ideas for how to spend this “Prosperity” money.

Here is what I learned from the Prosperity Game experience:

1. There really is a ‘Set Point’ in your life. Although there is a lot of warm and fuzzy talk on the site about “energy” and personal “vibrations”, I found this tool to be helpful in determining your own financial set point. I’ve thought of this concept before, but never in the right context. For example, the amount of money you consider “expensive” changes as you get older. When you’re really young, a dime ($0.10) seems like a lot of money. Then as you get closer to around 8 years old, a dollar begins to be important. By the time you get to be a teenager, you’ll think hard about spending $10. While in college, $100 seems like an impossible amount to spend (unless you went to a fancy college where you spent $100 a week on top shelf liquor). After you get out of school, buying something for $1000 takes a lot of agonizing. By the time you’ve been working for awhile, and have bought a car ($10,000s), and a house ($100,000s), you have a different perspective on money. But there is still a certain level of spending for things that makes you cringe. You might not be sure what it is, but going through the Prosperity Game will help you find it. Afterwards, you may realize that there are things you *should* be buying now, but you aren’t because of this ’set point’.
2. There are distinct transitions of types of things to buy as money increases. At first, you start off with $100 a day. I could easily think of things to buy in this range. They were items that I’m right on the edge of buying now, but for some reason (my set point), I won’t usually buy them. This includes buying new “toys” like a new video game, hiking equipment, a year’s subscription to a magazine, new clothes for work, etc. As the checks increased to $5000 a day, I transitioned from buying “stuff” to buying more time to spend on fun things. For example, I decided to hire a yard service to mow my lawn for a year, freeing up my time. Soon after that, I started spending my checks on travel, buying new experiences. I started paying for vacations to the major locations I want to visit. As the value of the checks continued to increase to over $10K each day, I started to really travel extravagantly, buying first class tickets, staying in presidential suites, etc. This was great for awhile, but eventually I started thinking about how silly it was to be paying for all this travel. How could I possibly do this much travel when I don’t have enough vacation time?!? That was when I made the last transition - reducing time at work (and eventually to not working at all). Wow, that was some freedom. Knowing the check would come the next day, it was almost boring after awhile (note that I said *almost* boring - having unlimited money is still pretty cool). I could travel the world, not having to worry about working. I could visit friends and family for as long as I wanted to (or that they would let me). This was a big revelation to me, and gave me even more incentive to complete my life goal of achieving financial independence.
3. It is hard to know what things cost above your ‘Set Point’. Once I transitioned into the $5K a day range, I had a really hard time coming up with ideas of what to buy. I actually had to spend time every day researching the cost of different gadgets, or trips to far away lands. This was an eye opener for me. I found that my personal ’set point’ is somewhere in the $500-$1000 range. I really have little concept of what kind of things cost above that, like in the $4,000 to $12,000 range.
4. It is really useful to know how much money it will cost for everything on your Life List. There were many items on my life list that I want to do, but the amount of money required is prohibitive at this point. Putting a dollar value on each one of these goals was helpful in the ‘real world’. Previously, I had assumed that all my life goals would require the same amount of resources. After going through this exercise, I realized that I will need to set up a plan to save enough money to accomplish many of my life goals.
5. Not all important things in life can be bought. While it was great to be able to put some estimated costs onto my life list goals, I realized that many of them could not be purchased, even with all the money coming in. While some goals (e.g. spending more time with family and friends) could be better achieved if I had unlimited travel time and money, others weren’t really resource related (e.g. continually running faster than my 5K personal best time). These types of goals require a commitment of mental resources and time, not financial resources.

Overall, I encourage you to try out this method for finding your financial set point. You’ll find it changes how you see the world, good personal “vibrations and energy” or not. Leave me a comment about your experience. Or alternatively, let me know if you’ve experienced this (having unlimited money) for real. I’ve got some great ideas on how we can spend your money.