Judging system effectiveness. Similar results can require very different systems depending on context.

All right, welcome to tonight's episode, it's a Sunday, it's been a beautiful day here, beautiful spring sunshine, I managed to have quite a bit of time in the garden did some brush cutting took out the hedges, which was a wise move, because if I didn't, I can see that they were going to get out of control.

Like I got, I got at least one of our hedges, let me rephrase that one of our hedges is done.

I've still got two more, one of which is not too bad.

But the third one, it's it's not been done for a while it's not been done for at least I'm thinking six months.

So there's a lot of work there to try and get that back.

So that needs to be taken out before we get rain.

It's been pretty dry here.

And certainly some memories of, of spring 2019 led into the major bushfires in 2020 are coming back.

And it's like, Oh, hello, uh, we, uh, we heading towards another dry spell.

And my wife and I were discussing whether we put in a new tank, like a large tank, or we get a well, and I was like, Look, we probably should put in a well, because it's all good, well, having a larger tank, but if it doesn't rain, that will not do us any good.

So we are having those discussions.

But what I want to talk about in this episode is how seemingly similar desired results can require very different systems depending on the context.

And this was triggered by as I was in a in a group for doctors called business for doctors, and they were asking about trusts and setting up a trust, they're quoted $5,500.

15 $100 a year to run, I presume, is some kind of self managed super fund, or that's the Australian version of a 401k If you're watching in the States, and the recommendation was to read Barefoot Investor, now, Barefoot Investor is pretty famous over here in Australia.

And He has a variation on essentially the envelope model for money that you get paid all of your money and then you move it into different buckets.

And that gets everything paid for make sure that whatever you're left with, you can spend safely.

Now we have tried this in my family.

And it led to pretty much chaos, like just too many accounts.

Not enough money, just like a giant mess.

And the reason is that families tend to be very consuming, they tend to know if you have kids, if you do then maybe you're doing a better job than me.

But for some time, I've been quite weak at the requests for this and that and this and that, let alone the regular investment into their extracurricular activities, their sport, their music, events, to go to excursions, camps, all of that stuff.

And often it's been easier even just to get lunches done by going to the canteen or the tuckshop, whatever it is, and just pay the money and it gets done.

And there is an advantage to that, for sure.

So that's that's one thing, but it just didn't work for us particularly well.

And so my wife found a different method method from that.

And she was like, I want to go with this method.

And it's by a guy called Graham home is called infinity wealth, and basically dump all of your money into one account.

And then you take out a limited budget that is your spin for the week.

Now this is our first week of this and so far, we're in a bit of trouble.

We're like wow, wow, that that spins suddenly not looking very large at all and and it's bringing up a debate me about abundance and scarcity.

And I'm doing some more training around that, that one of the fundamental decisions that I have to make is around abundance and scarcity is there enough in the world.

And I for whatever reason, I was out in the garden, and I realized that nature basically harvest the sun's energy at a very effective rate and trees grow and plants grow when literally everything on this planet virtually comes from that single energy source.

And it's like wow, okay, yeah, these plants are almost like little mini systems that are driven by the sun and they grow and they thrive and to the degree that they there's not a lot of requirement for thought or external management, like the trees just know what to do.

The plants just know what to do.

But human beings are a little bit more complicated.

And the Barefoot Investor system the multiple accounts that it was like, Man, this this just made it made it too easy to move money around and hide from myself, for my wife to hide from herself and suddenly, instead of sticking to a budget or even knowing what our budget was, money would just go around and go around and get spent and we would get a little hits like there's no doubt that money in terms of buying my kids a milkshake after school or something.

There was a little dopamine hit there was like, Yeah, I feel good.

I'm doing a good thing doing being good parents.

But it's awfully easy to overspend.

And suddenly, instead of being 10% under and and having that excess cash to build up 10% over, which leads to debts and indebtedness and ongoing struggle, and eventually just an overwhelming financial mess.

And to me, the game is not about how do I how do I overspend? So I feel better in the more in the moment, but rather, how do I become more valuable? How do I provide provide more value to the world and this is the thought pattern of abundance.

That by, by, by having an understanding that when I buy something, I'm not taking from a limited pie, that money can then circulate again.

And and this this is the crazy, like if you get 10 people in a in a circle, and they just pass that dollar 1212121.

And there's an exchange as exchanges exchange, and the dollar goes round and round around, it can just keep going around.

And it's really interesting versus a scarcity mindset where someone grabs the dollar.

And now it's like, Oh, I'm going to hold on to that dollar.

And now no one, no one has anything.

And it's really interesting, it seems like money thrives best when it's when it's moving.

It's a currency, it's a it's got a flow to it.

So these are some of the ideas.

But coming back to this essential systems problem.

Over in my businesses, I do use a variation on this envelope system, it's called profit first.

And this was brought through by Michael McKee, Elvis, and He was basically like, you know what the problem with businesses is just like my family, they will spend everything.

And his insight was well, before you get to spend everything, let's take the profit out first, hence, profit first.

And really, it's it's a very interesting system.

But the reason it works is that there is a much higher level of control and diligence and importance placed on the businesses than there is in the family, the family tends to have relationships.

And as I said, this dopamine hit when I spend money on my kids that in a business, if I do that, then it goes broke.

Like it's like, and the family eventually will go broke as well, the only ones who seem to be getting away with this.

So the government's thinking just print more money, but that does have effects, that is likely to be driving a heavy rate of inflation in the third world, because they're often dependent on the US dollar.

And the US dollar is getting printed and printed and printed.

And so inflation starts to grow.

Not so much in the States, although it does seem to be there.

But rather, in the third world, they definitely feel it's getting more expensive there.

So in one aspect, my businesses, I use the envelope myth, because I'm very, I have control.

I'm like one person in control making decisions, versus my family, multiple people, including my kids don't actually, you know, they don't bring any money and they're not working, but they're very good at seducing me to give them money and to give them whatever they want.

They're masters at this unbelievable sale it like why how did you do that? Like someone's sometimes it's just like she had nagging.

I'm like, Ah, give me a given.

Okay, but sometimes it's beautiful.

Like, I'm just like, Yeah, I'd love to do that for you.

So they're very good at selling, and they understand this.

But there is a greater context of what are we trying to achieve with the whole budget for our family? What am I trying to achieve for my family.

And when it's framed in that results? It's like, well, I can spend 27 years paying off my principal place of residence, which over here in Australia, if you're not familiar, is not tax deductible.

There is no tax advantageous experience to paying off the home mortgage.

And if that could be done quicker.

If that could be done in 15 years or 10 years or even five years, then the banks won't be overly happy about this, but the family my family will be better.

And if the banks actually could get past their thinking they would realize that they will do better in the longer term from having me be a better investor.

That yes, paying off one home loan slowly is one way to get money out of me.

But also if I'm a better investor, and I know how to pay that down properly, then I can make further investments and use their services again, and again that speed Money that velocity of money works.

So coming back down to summarize, so we've got these two systems very similar one, Barefoot Investor, one prophet, first both use the envelope system, but one works in the right context, it works in a business context.

Because there is controlled by by me or the CEO or whoever controls the money in the business, it's it is managed very carefully, typically, otherwise, you have an Enron or business goes under.

In the family, we've got a lot more competing factors for the money.

And when what works in the business doesn't work in the family.

And so we're trying this out, this is early days.

But right now, Emma and I, my wife and I are acutely aware of just how much our budget is for the week, we're like, Whoa, hang on that there is one account where all the money goes.

And then another account, second account, which is the budget for the week, and it's like, ouch, ouch, ouch, okay.

This is a good thing.

This is a good thing, because without that constraint, there would just be overspending.

I have no doubt that we will be overspending.

So the lesson from this is that when you are thinking systematically, when you are thinking about the results that you want to create, you must also consider the context that the systems are existing in.

And that context may change and influence the type of processes that you use to create that result.

In summary, the results may be very similar, but because the contexts are different, the systems might look extremely different.

Alright, I hope you got a lot of value out of tonight, that your mind is opening up to these ideas about systems and results and what's the best way to build them to guarantee the results that you want.

If you're interested in learning more about this conversation about the power of systems and their ability to create the results that you want for your life? Head over to systemio.dev.

I look forward to seeing you on tomorrow's episode as we continue this journey into the power of systems to create results.

See you then.