FOOL ON THE HILL

The Creation-Consumption Equilibrium

A myriad events over the past few years has taught a powerful (and painful) lesson: You're on your own. And that's as it should be. You'll be much better off -- and more fulfilled -- if you're the prime mover in your money-cosm. However, reality dictates that you can't do everything on your own. That's why you must search for the creation-consumption equilibrium.

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By Robert Brokamp (TMF Bro)
June 6, 2002

It's no secret that we at The Motley Fool think you should be the maestro of your money. (However, it's not as well known that when the main page of The Motley Fool's Japan site is put through an online translator, you discover that the Fool is "the buffoonery teacher," and Fool.com is where "Shakespeare's rear king comes out.")

Why be the conductor of your cash? Because you know yourself better than anyone else does, you will keep expenses to a minimum, and -- unless you have multiple personalities -- there aren't any conflicts of interest between you and yourself. If you want a job done right (ethically and cost-effectively), you have to do it yourself.

Those reasons have been confirmed in several articles that have popped up in publications such as Time and Business 2.0 featuring the following theme (and, in some cases, headline): You're on your own. The premise is that recent events have left us high and dry. Who can we rely on after the collapses of Enron and Andersen, the decline of traditional pension plans, layoffs at the drop of a profit, an insecure Social Security program, and fumbling security agencies? The answer: no one.

No one, that is, except yourself. The movement of do-it-yourself money management is often portrayed as a choice, as if there were viable alternatives. But even if you rely on others for help -- or even give others control over your resources -- you still have to choose the right people, and keep an eye on them. There are times when people need good financial advice -- there's nothing wrong with that. But no matter whom you hire or what organization you rely on to secure your future, the only person who has to live with the result is you.

There is a limit to what you can do on your own. By virtue of living in a temporal, technological, specialized, globalized, and tax-ified world, you rely on other people and institutions for many of life's necessities and niceties. However, as a creature endowed with free will and easy credit, you have a whole lotta latitude in choosing the balance between interdependence and independence; between passivity and activity; between getting charged and taking charge.

I call it the "creation-consumption equilibrium." It's that happy harmony of doing some things for yourself, and having some things done for you. For most people, the right balance is more of the latter and less of the former. Not only is this better for your net worth, but it also does grand things for your self worth.

Without wading too deep into the smarmy waters of "self-esteem," "self-actualization," and "self-delusion," there is value in creating something, whether it's your own financial plan, your own pasta sauce, or your own entertaintainment for your kids. Producing something -- coming up with an idea, developing the plan, solving the problems -- is the source of true joie de vivre and achievement. No one ever won a medal for being in the audience. No one wants to look back on his life and only be able to say, "I sure hired a lot of people."

What were your best experiences, your proudest moments? They probably involved something you did, and perhaps some form of creation. (It may have been some form of procreation, but let's keep this article PG.) I enjoy all the Star Wars movies -- except the lame love scenes -- but watching them will never mean more to me than the dance my wife and I choreographed for our wedding, or the times back in my teaching days when I deviated from the traditional lesson plan -- and it worked.

I'm not saying you have to write a bestseller or solve world halitosis. Your creation may lie in your musical talents, a super-comfy house, or fun with spoons. For me, my masterpieces-in-progress are my marriage and kids, a few good articles, and my collection of photocopy art (known affectionately as "phart").

But all of us should be crafting a pi�ce de r�sistance of our personal finances. Compose a retirement plan... before it's too late. Find a way to get your money to your priorities before it's spent on frivolities. Formulate a way to do things you want to do and make money from it.

How and what you do it is up to you; that's the fun part. To help you with your creation, we'll be here to offer ideas for your consumption.

According to the scale in Robert Brokamp's bathroom, it seems that too much consumption has led to waistline creation. The Motley Fool is investors writing for investors.