Recently, I was reading a great article at The 99 Percent entitled The 40-30-30 Rule: Why Risk Is Worth It. I originally intended to include it in my weekly roundup, but as I thought about the 40-30-30 idea, I found that the connections to careers, personal finance, and life were profound.
What is the 40-30-30 rule? Simply put, it's an argument that when you prepare for anything in life, only 40% of the preparation is physical – the rest is mental. Thirty percent of preparation is technical skill and experience, and the second thirty percent is the willingness to take risks.
This "rule" comes up again and again in all different areas of life. Here are several examples from my own life where I've seen it.
When I'm playing a game I've played a lot of times before, I have an intuition as to what move to make next, built from years and years of experience (the 30% that comes from technical skill and experience). However, I also find that it's very easy to just keep using the same strategy over and over again because I've somehow come to the conclusion that it's the best one. So, if I combine that technical skill and experience with a risky new strategy I've devised (the other 30%), I might lose – but I might also devise a way of playing that's even better.
With investing, I have a good understanding of my own risk tolerance, an understanding built up over a long period of time (the 30% that comes from experience). Howver, I also know that if I don't push against my risk tolerance a bit and look at new investment opportunities from time to time (the other 30%, risk), I'll likely miss out on great opportunities.
I also see it in my career, both now and when I worked for a large organization. I would often have a well-worn daily routine that worked and got the things done that I needed to get done (the 30% that comes from experience), but if I really want to excel, I sometimes have to step outside the box a little (the risk-based 30%).
The 40/30/30 rule really does provide a great framework for success, no matter what you do.
Do something worthwhile (the first 40%) means that you're willing to get up off the couch and do something. Maybe it's getting ahead in a career. Maybe it's getting into a new hobby. Maybe it's simply getting a grip on your investments. 40% of the journey is simply trying.
Keep at it (the next 30%) is simply encouragement to not let a new initiative slide, because the more you work at it, the easier it becomes. Even more important, the more you work at it, the more the basic skills that make up the task begin to become natural to you.
Take risks (the final 30%) simply means to not do things the same way every single time. When you've become skilled at something, it's easy to become wedded to the same routine. Never stop looking at what you do and trying out alternate paths. Not only does this grow your skills (making your basic routine even better), it also helps you to uncover new ways of doing things.
Great… so how do you do this? How can you apply the 40/30/30 rule in your life? The best first step is to figure out the area of your life where you want to improve. Do you want to get out of debt? Do you want to improve your skill at a musical instrument? Do you want to get a promotion at work? Do you want to become a writer?
Once you've figured out what you want to do, research it a bit. Figure out what things you'll need to do to accomplish that goal.
After that, start practicing and building skills. The best way to do that is to start doing the thing you want to master every single day. For me, a thirty day project works well for this. I just commit to doing a certain thing every single day for thirty days (if that's possible). At the end of it, I've usually vastly improved at whatever skill or attribute I was trying to develop.
Quite often, thirty days is enough to establish a positive new routine in your life, so keep it up. Keep doing that thing every day until it becomes truly normal and seemingly effortless.
Then, take a risk. Change what you're doing a bit. Make it more difficult, or at least different. Explore something new. If you're taking a walk every day, increase your walking pace a bit and use a stopwatch to slowly trim your time around the block. If you're trying to break through at work, volunteer for a task that you might have avoided before, like giving a presentation. If you're playing a game, try a completely different strategy and see how it works. If you're investing, dig into some new investments that you haven't looked at before and consider putting some money into them after you've studied them.
What you'll find is that your already-built skill will help carry you through this new challenge and that the rewards of this new risk are great. You end up in better shape, with a better career, with a better gaming experience, and with better investments – or with improvement in anything you'd like to take on in life.
Just Posted: Our in-depth review of the Canon EOS 7D. With a new 18 MP sensor, a 100% viewfinder, weather-sealed body, a new 19 point AF system and Dual Digic 4 imaging processors the EOS 7D is clearly aiming for the top spot in the semi-pro/enthusiast bracket of the market. What does the competition have to say about that? How does the camera fare in our studio tests? Read our in-depth review and find out.
When faced with a purchase, many people fall into the trap of only considering that they want it and can afford it—but that doesn't mean they should buy it. Cut down on impulse purchases by using the Stranger Test.
Photo by JMRosenfeld.
The Stranger Test is an excellent way to frame the financial significance of the purchase. How does it work? A reader from Five Cent Nickel explains:
When considering a purchase, picture a stranger offering you [the cash value of the purchase] or the item in question. Which is of greater value you? Which would you choose?
If a stranger were to come up and offer you $3 to not buy that cup of coffee you might reply "Thanks, but I'd really like this cup of coffee." But if your response over a bigger purchase like a new HDTV set or a computer would be "Hmmm $800 would be a pretty nice credit card payment..." it's probably best to put your funds to use fixing more immediate problems.
What tricks do you use to help yourself be more frugal? Sound off with your favorite ones in the comments below.
When faced with a purchase, many people fall into the trap of only considering that they want it and can afford it—but that doesn't mean they should buy it. Cut down on impulse purchases by using the Stranger Test.
Photo by JMRosenfeld.
The Stranger Test is an excellent way to frame the financial significance of the purchase. How does it work? A reader from Five Cent Nickel explains:
When considering a purchase, picture a stranger offering you [the cash value of the purchase] or the item in question. Which is of greater value you? Which would you choose?
If a stranger were to come up and offer you $3 to not buy that cup of coffee you might reply "Thanks, but I'd really like this cup of coffee." But if your response over a bigger purchase like a new HDTV set or a computer would be "Hmmm $800 would be a pretty nice credit card payment..." it's probably best to put your funds to use fixing more immediate problems.
What tricks do you use to help yourself be more frugal? Sound off with your favorite ones in the comments below.
Do you dabble in stock photography? Maybe, say, a little microstock photography? Full RSS feed, from Strobist.com. Videos are not viewable in emailed posts. Click the post title to see any embedded video and/or to view or post comments. This month's feeds are sponsored by:
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Caitin and Cyrus's engagement session started us off in Berkeley before heading to the Marin Headlands and then finally my favorite little parking lot in the North Beach neighborhood of San Francisco. What began as just a couple hours of shooting quickly turned into about five because we just kept finding good places and good light to shoot in. Even though it was a cold night, it was a great one and we're excited about doing it all over again at their wedding later this Fall. And thanks to our friend Stephen Dohring for coming along with us.
Erin's photo:
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