5 Financial Lessons From Who Moved My Cheese
In year of Rat, let us look at some story that we can learn financial lesson from rat on dealing with change and become better financially.
This is the book that has read by many, i.e. “Who Moved My Cheese?” by Dr. Spencer Johnson.
In this story, there is a huge maze where 4 organisms were living in it. We have two rats named Sniff and Scurry, as well as two little person name Hem and Haw. They feed themselves with the Cheese stored at Cheese Station-C daily. The cheese there is what they treasure and is all they have. Magically, the cheese will often be replenished daily so that they will not run out of cheese forever.
Until, magically and ironically, one day they realize there Is no more cheese in Cheese Station-C. They were shocked, panicked, helpless, despaired, in short, emotions surged when that moment came.
Things have changed so abruptly, their world have become so different. What are they to do without the cheese that they treasure so much? How could they continue to live without their cheese?
Initially, they decided that this probably was just a delay and they waited for the cheese to ‘reappear’. After some waiting, when it was obvious that the cheese was gone for good, Sniff and Scurry accepted that it was gone, and it would be pointless to sit there and do nothing. So, they went off to ‘look for new cheese’.
Unlike the rats, the little people couldn’t muster the courage to get off. “What if the cheese came back?”, “What if we can’t find any new cheese?” These ‘What-ifs’ gets them to stick to where they were, “Cheeseless” Station – C.
The wait went on and on, until Haw decided to explore a little bit outside the place they stay and discover some tiny bits of cheese. This cheese was unlike the one they used to taste before. He brought it back to their place, and tried to share it with Hem, who refused to because the new cheese didn’t look like the one he used to have. He wanted what he had, and only the same kind of cheese.
That got Haw into thinking, if he could find shreds of new cheese out there, wouldn’t it be more new cheese at other place in the maze? He couldn’t convince Hem to give up his belief to wait for the old cheese to come back, and he also could not stay there and do nothing. Hence, he started his adventure to discover new cheese.
Eventually, he found Cheese Station – N, which is full of new cheese, he have moved from Cheese Station – C to Cheese Station – N and was able to enjoy his life like before, if not better.
Life is like a Maze
This story has a lot of good lesson for us to learn from. Imagine the Maze as life, sometimes we get lost in it, it will takes a sharp turn at some corner, it may lead you back to where you are at times, but if you know how to navigate through it and do not give up, you will eventually move from Cheese Station C to Cheese Station N.
But the more compelling question is why do we have to move?
Well, how about this reason, “They will keep moving the cheese”.
Financial Lesson #1: Change Always Happen
The Cheese in the story is like our job, relationship, and the attachment we have to our money! These are things that we hold dearly onto, these are the thing that we could not live without. True enough, none of these things that we treasure will stay here forever, they get moved! That is why, people will lose their job, lose their customer, people we love will pass away, divorce happens, relationship sours, we lose our money to accidents, scams, irrational decision, and ill-informed decisions.
When our cheese disappeared, one of our natural response would be feeling furious about it. “How could this happen?”, “This is not Fair!”, “This is thieving!”, “Why am I so Bad Luck?”. We naturally point our fingers at many other reason and people, but rarely our initial response is to look at ourselves in the mirror. It takes time for us to embrace that change has taken place, and to accept the fact.
Financial Lesson #2: You Need To Move On
While it is fine to be emotional when we first find out about the change, we got to find the courage to move on eventually.
It is common to see people say that they would rather keep their savings in the bank because the last time they try to invest it, it didn’t go according to plan. You can hold on to your savings, but it won’t grow. Quite on the contrary, inflation will silently and secretly help you to shrink it smaller year over year.
Life is so dynamic and full of possibilities that sometimes we may also find ourselves losing the thing we hold dearly on to. But we got to continue to take a step forward.
If we choose to be like Hem, things’ around us will not change. In order for our reality to change, we must first think, and act like Scurry, Sniff, and Haw.
Financial Lesson #3: Be Open to Change & Adapt to It
Human race and mankind did not have what we have without the process of evolution and adapting to the ever changing environment.
Likewise, we need to be on our toe about our surrounding. Jobs can be taken away, replaced by robots, machines, and software. In order for us to have a good journey in adapting to the change, we need to continuously learn and sharpen our skills, knowledge and be curious about things.
With low interest rate environment around the world, it is no longer the wise thing to keep all our savings in fixed deposits, especially if that money is for our long-term goal such as retirement, and education planning.
There are also many new investment instruments many of which were not previously available to retail investors. In the past, perhaps the most we can have access to is to invest in Unit Trusts, Stocks listed on Bursa, but we have got more choice and flavor now. For instance, we can invest into new, private company via equity crowdfunding platform like PitchIn, Ata Plus; we can invest into a portfolio of diversified ETFs via digital management platform such as Wahed, StashAway, MyTheo. How should these new options fit into your investment planning? You cannot ignore all these or blindly invest into any of it just because they are the new kid on the block.
Financial Lesson #4: Protecting Our Cheese
In our real life, cheese can be anything we value the most.
It can be our loved ones, our wealth, our health, our house, our car, our job, or your belief. Anything that define your life, what you stand for is your cheese. Our cheese is not going to be with us forever, we should not take it for granted. We need to have gratitude for what we have, and treasure it. Learning to protect it is also extremely important. This prevents having our ‘cheese’ be lost, or taken away from us due to some unexpected events.
There’s no denial that there can be an infinite list of ‘unexpected events’ in this world. While we do not have power to prevent it from happening, or order a smooth sailing life, we can control ourselves. We can control whether we want to anticipate change or just go with the flow.
Financial Lesson #5: Anticipate Change
Don’t be afraid to pursue your goal just because life is not static. Instead, with this knowledge about ever happening of change, use it to plan how we will live.
If we do not anticipate something will happen, and it happened, we will be caught off-guard. We will have to deal with the emotional distortion as well as the aftermath of the brick life throw at us. It will be tougher this way.
When we anticipate that change will happen, we take nothing for granted. We acknowledge that:
- We may be retrenched;
- The bonus we expect may not happen;
- People we love may pass-away sooner than we hoped;
- We may get a divorce;
- Critical illness may strike,
- Our car may break-down or stolen;
- Our income may suffer a huge drop somewhere later;
- Currency exchange rate may go from RM 3 for 1 USD to RM 4.5 for 1 USD;
- This list can go on and on depending on your imagination and creativity.
With these anticipations, we will be more careful with our spending behavior, it will give us the motivation to examine the blind-spot and any weak-point in our system.
Financial Planning and Change
In financial planning, one of the most powerful value we help people achieve is through scenario planning. Scenario planning is where we anticipate when certain change or event happen, what is the impact to the person. For example, If a critical illness happens, how long can the family continue the current lifestyle after paying for treatment. If business is not well and income dropped by 50%, what will be the impact to the family, etc.
Life is like a maze, is a big maze, and it is ever changing and shifting. If we do not take some concerted effort to be prepared to deal with change, change will define us. When we are inside the maze, our vision will be limited to what is in front of us. If we have someone who can take an eagle-eye view of the maze, there will be tremendous benefits for us.
With scenario planning and anticipation on change, we will save more of our income to build up our reservoir. This is because in order to deal with change we got to have savings. Savings are like fire that can help us get through a long freezing winter, without it, we will find it tough to survive that.
Let’s make that your first real financial lesson.