The ultimate safety net

The ultimate safety netPhoto from Flickr (CC).

Everybody wants to have a safety net, right? That’s why we try to save some money for the rainy days. But are things like money, property, stocks or the likes real safety nets? I mean, what’s the ultimate safety net after all?

This subject is important to me because I value freedom. Fortunately, I’m pretty much free to do whatever I want currently. That’s because I have a steady income and enough resources to support my life needs and I don’t have a job that forces me to be confined to an office during arbitrary hours of my day.

As much as I like it this way, truth is that it could all change suddenly. The business might get into trouble, as much as the market can change and turn things in the wrong direction. What could be done, then? 

If I have a financial cushion, I can maintain my freedom, at least for a while, even during troubled times. The thicker the cushion, the longer I can sustain my freedom. But let’s face it, there’s only so much time you can buy if you’re not making money for some reason.

And that’s not even the worst case scenario. The whole financial cushion might vanish unexpectedly for a variety of reasons. This happened so many times in history, with so many people, that we shouldn’t even have to remember that. Take the 2008 financial crisis for instance, just to mention one event that destroyed so many personal savings.

I believe it’s important to have some financial reserve for the rainy days. But I don’t thing we should rely exclusively on that. In fact, I believe this shouldn’t be our safety net at all. It’s just a very important short term protection mechanism. But there are times when it’s just not enough.

In times of war, for instance, money can erode fast and can’t necessarily buy you a way out of the madness. So, again, what should we rely on?

Thinking about that, I came to the conclusion that skills and relationships, together, act as the best safety net available.  The more you develop these, the safer you are in the long term, no matter what happens around you.

Say, for instance, that you’ve created a company and managed to make it very successful. What does it happen if you loose everything? You might be devastated for a while, but eventually you’ll realize that you can do it all over again. And it’ll probably be easier than before.

That’s because you’ve developed skills and relationships. They will help you to get out of the problem and build a solution. And you’ll know people that can help you along the way. Even in times of war, if you have skills and you know some people around, your chances of escaping increase significantly.

Now compare that with a couch potato that has a lot of money in the bank, few skills and few relationships. In difficult times, if he loses everything, how does he get out of the trouble? Without skills and without friends, things are tough.

I’m lucky, cause I’m Brazilian. In Brazil we don’t have war but we’ve been in crisis since forever. Oh, actually, we’ve had some better moments lately, but how long will they last? 

I’ve seen this country go through so many financial crisis that I’ve lost track of them. They’re just routine. This is good in a way: people paying attention can learn from that. They learn not to trust the government, banks, companies or whatever. They learn to trust on themselves and their relationships. 

Let me share an example of the madness I’ve seen in Brazil. In 1990 a new president came and decided it was time to kill inflation once and for all. How? Freeze all of the accounts for one and a half year. People are allowed to withdraw up to 1,500 monetary units once and that’s it. Want the rest? Wait one and a half year.

Want to kill the inflation? Easy, kill the economy itself and inflation won’t be a problem anymore. It worked. Inflation was over along with so many companies, jobs and lives. Many people killed themselves after realizing they couldn’t find a way out of that mess.

This story is rather drastic. It happened just over twenty years ago and it shows how incompetent Brazilian governments can be. But, they’re not alone. Ten years later, Argentina followed Brazil’s steps and did the same with disastrous consequences. The country still didn’t recover from that. And, of course, I don’t have to mention the general stupidity of developed nations so well exemplified by the 2008 financial crisis (and others before), which was so catastrophic that makes Brazilian and Argentinian governments look smart actually.

Stories like that happen suddenly. Sometimes there are warnings. Other times it can’t be foreseen at all, like in the case of natural disasters. So, what can we do? I think we should always be prepared.

Firstly because we’ll probably be better off during bad times. But also because it’s much more interesting to live a life where we’re always learning and improving our skills. And, of course, making friends and nurturing relationships is a lot of fun and quite rewarding. 

And you, what do you thing? Is there a better safety net?