Urban Tactics Krav Maga

This is the second of three sections expanding on the original piece titled, Self-defence is Not Just Physical.

In the modern world, being financially stable can be harder than ever, especially when the vast majority of people are living paycheque to paycheque. One of the biggest mistakes the average person makes is not thinking long term, but rather choosing instant gratification; getting something now and having nothing for later. A common belief is that our school systems do not spend enough (or any) time on financial literacy. Basic education should include simple things like how to put together a rudimentary budget, how to prepare your taxes, or how basic investing works.

While we often blame the rich for getting richer as the poor get poorer, one of the reason this trend continues is that either “the rich” understand how to make their money work for them, understand the financial system and how to protect their money, or they have the resources to hire the people who do.

For most of us though, it’s really a matter of understanding we are starting with less. So unless you happen to have the next “big idea” it’s going to be a long term thing. Work hard when you are younger and invest smart, then maybe you can retire in your 40’s or 50’s.

While I am no expert, I can certainly tell you the things that I have learned (mostly from screwing up and being broke). What I can say for certain is that part of personal self-defence is the ability to be ready, financially, to deal with the inevitable financial blows that life will throw at you. Even if that means you had solid enough financials to have a line of credit on hand in case of emergencies. Though having money in the bank is ideal, having financial buffers will save you from the deep hole that is financial ruin. So be smart, and include financial planning in your self-defence plans.

Don’t Spend Past Your Budget

As a martial arts instructor teaching a style that is not overly popular in my region, living on a tight budget is something I have become used to. However, as the world is increasingly difficult to survive in with less money, managing what little you have is key.

A question I often ask myself is, “how do people who make 4, 5 or 6 thousand dollars a month, after taxes, still manage to be broke (or at least say they are)?” It’s probably because they seek instant gratification and buy everything they can rather than preparing for the future. They seek experience and the “now” over anticipating the future. While that’s fine sometimes, do it too much and you may be on the path to financial disaster.

Of course, the less money you have the harder it can be to stick to your budget, because you may have to make important decisions on what to buy or which bills to pay (especially in with complications like Covid-19).

It’s at these times in life when budgeting comes in handy, or rather it would have had you done it. One of the hardest things for people to do, especially when they don’t have much money in the first place, is to include in their budget a “rainy day fund” and retirement savings. They may not seem important now, but they are! (I’ll come back to this.)

A basic budget should include necessities such as housing, food, and, in most cases, transportation. Anything beyond that, at least according “Maslow’s Hierarchy of Needs,” may in fact be a luxury. If you have the money to spend more, then have at it. But if you don’t, think, do you really need the newest iPhone?

Ok, so enough talk. In the absence of credit, a budget is simply the act of planning your finances so that money coming in can cover the costs of money going out. If you have no credit, or options similar to this, then a budget is a MUST. If you do not create and follow one, then you may find your self not eating.

Lets look at something simple.

Mike has $3,000 after taxes every three months.

• Rent = $1,200
• Food = $500
• Transportation = $800

After the basics are covered Mike has $500 extra a month. Most people would spend that on eating out or “toys.” A smart planner would take some of that and put it away, even if it’s only a little. Lets say he puts $100 a month away into retirement savings and $100 into a emergency fund, that now leaves $300 for entertainment and toys.

What if Mike works hard and earns a raise? He now has $3,200 every three months. If Mike was already financially stable, why not put the extra money directly into savings or investments. If he was doing fine without it, then he will have a $200 boost in savings without noticing a change in his lifestyle.

While most people these days do not like to operate in a frugal mindset, in the long run planning investments and emergency funds into your budget is crucial; so that in the hard times you are not destitute. So be smart, start early and reap the later benefits of a well planned budget.

Invest Early and Consistently

Assuming you manage to put something away for investments and retirement, the earlier you do it, the better. Have you heard of something called “compound interest?” Essentially it’s interest on the interest. This is the key to long term savings and building your early retirement.

If I put $100 into my retirement savings, and it averages a 3% return annually, then after one year it’s $1236 (depending on the frequency interest is compounded). The next year I put in another $1200, which would also receive the 3%, but so would the original $1236, resulting in $2509 rather than just $2,472. Which basically means that first $36 in interest, which you didn’t invest from your pocket originally, is continuing to grow for you. The earlier you do this the more the interest stacks, and the longer you have the more you earn.

If you started saving for retirement in your 20s vs your 30s the difference in the end number can be quite staggering. The amount of money you would need to put in during your 30s, to get the same results you would have gotten if you started modestly in your 20s, is quite a lot more than you think (the math is out there). I say again; Start early, even if its only $50 per month.

The best way to start early is of course as a parent. Start saving for your child’s future, (and not just for school) in a trust and your child will have an amazing head start. of course don’t just give it to them when they turn 18, make them wait and ensure they have learned financial literacy and good spending habits early.

Another important consideration in favour of investing early, and consistently rather than lump sum, is the ability to average out your costs of purchases across lows and highs in the market. The idea of “buying low and selling high” really isn’t what you think. Even the worlds greatest investor Warren Buffet, doesn’t try to time the movements of the market; he does his research and plays the long game.

Even when the market crashes it can be an excellent time to buy, if you are planning for the long term, that is, if you are buying more conservative “blue chip” funds, rather than trying to play the actual stock market. Which is not advisable, unless you have lots of disposable income and really know what your are doing. For the record, most people I know who play the regular market with only a few thousand dollars (which they can’t really afford to lose) typically lose. So play the long game and be smart about it.

Remember, even if you had invested in Apple, Microsoft, or Amazon early on, only to sell a year later and make some money, it is nowhere near the amount you would have made if you had held on. Of course, there is also no way of knowing which companies will be the next big ones, so if you aren’t sure I suggest leaving it up to the experts.

Nowadays, due to online banking, you can manage your money on your own. That being said, buying the professionally managed funds, in the long run in most cases, is going to give you a higher return than simply guessing and playing the lows and highs. Why? Compound interest and people who know better than you.

So start early, be consistent, and don’t just gamble, play the long game.

Diversify

Unless you happen to get lucky with the next big stock, and cash out just in time for you to see the crash, it’s best to diversify. In reality, even the best investors can’t time the market and may lose billions in one big market swing or crash. Those who come out on top tend to do so because they play the long game and have diversified portfolios, they still have money working for them, somewhere, when a crash outright destroys others.

Diversifying basically means “do not put all your eggs in one basket.” Even if you are playing conservatively and sticking to large professionally managed funds, you should have your money spread out between a variety of categories. Though what percentage is split how is totally up to you. Maybe you have 50% of your money in funds tied to your country, 30% to precious metals, and the remaining 20% in highly volatile, high-risk-high-reward, stocks. Maybe you have a different break down, really it’s up to you and your money managers to decide based on your own comfort and goals. Diversifying will almost always give you more protection if one area does poorly, and can help you with that dollar-cost averaging in the long run, making you come out on top even if times are tough.

Remember, the Dotcom bubble of the ’90s, or the more recent Crypto currency bubble? People lost everything because they put everything into a single venture and lost it all. Consider that if you are hearing about it on the news chances are the people who made the real money are already out and you are just a sucker.

Of course, if you want to put 20% of your money into such risky endeavors, no one is stopping you. You may make a killing, but it is all about when to sell, and most people sell too late. But, if the rest of your money is tied up in safer funds, then at least that 20% loss wasn’t everything.

Be smart, diversify, and (you guessed it) play the long game.

Conclusion

I should remind you at this point that finances are not my expertise, and I, admittedly, I do not have much money. These ideas are based on the lessons I have learned the hard way. Wisdom that only now have I realized I should have known and acted on years ago. But, if you don’t have a lot of money the banks rarely give you the best advisors; you usually only have conversations with sales people at the lower level. If no one in your family or circle of those who you look up has a good grasp on financial literacy, you may find yourself drowning in debt.

The earlier you learn these skills the better. Remember, most “get rich schemes”are just that, schemes. They fail for almost everyone and result in large financial loses. So try not to get swept up in the hype.

Protect yourself and your finances through smart financial self-defence. This includes knowing enough to know when someone is feeding you bullshit. For if you simply give your money to someone to manage outright, and you don’t know enough to check, you could actually find yourself losing it all to the next big Ponzie scheme (read up on Bernie Madoff).

Become financially literate, learn enough to play the long game, and start early. If you do, you will be in better shape than the majority of the population.

Remember, self-defence is not just physical. What other skills might you need to properly defend yourself in the modern world?

Once upon a time, learning to defend yourself was a simple matter of fending off wolves and stopping physical violence from others. OK, not so simple, but still much more black and white than the kind of things we need to defend ourselves from in the 21st century. Where it was once only about the physical, now we need to consider many other factors.

Don’t get me wrong, physical self-defence is still very important, as it is so fundamental (and I have, after all, dedicated my life to teaching others to defend themselves from physical violence). Even though the physical aspect is what would be considered more my area of expertise, I am aware of, and often talk about, other aspects of life that require a kind of self-defence strategy (in addition to the knowledge and skill to deal with them).

I will be discussing three areas of interest that I think people often need help in understanding so that they can properly defend themselves. I will expand on each of these topics in subsequent posts.

These are;

• Digital Self-defence
• Financial Self-defence
• Mental Health Self-defence

Digital Self-defence

Everything that was once pen and paper, to be found only in specific buildings now forgotten, called libraries, is now stored digitally on computers or in the cloud, accessible to anyone with enough skill or patience to trick the systems.

While we often think it’s mainly about having a strong password, many people still use Password01 or 123456 (terrible ideas!). Digital security is so much more complicated than that.

Do you know what a “phishing” scam is? They are very common, yet many people still fall prey to them. In fact, the famous “Hillary Clinton email hack” was traced to someone falling to such a scam (and should have known better); as case in which phishing changed the course of political history for all to see.

Or how about a “porting” scam, in which scammers transfer your phone number to another carrier so they can reset all of your passwords. So much for 2-step authentication.

It can be easy to fall prey to these if technology is not your thing. Best case scenario, you simply have to change a few passwords. Worse case scenario, you have your entire savings cleared out in seconds.

So have you done everything you need to do to preemptively protect your digital self?

Financial Self-defence

Did I mention you can have your savings wiped out if you fall prey to digital scams? That is to say, if you in fact have any savings in the first place.

More and more, especially in the younger generations, people are struggling to defend themselves financially. Either because they can’t manage to save any money or they are not sure what to do with what they have.

Investing can be scary, and preparing for your retirement is something that can be put off for a long time because you feel like you have forever until that day. However, the earlier you learn financial self-defence, and thus the earlier you save and invest, the better of you will be.

Yes, financial literacy is extremely lacking, and it is increasingly harder to manage things yourselves without, ironically, forking out loads of cash to pay an expert. The thing is, the more financially literate you are as soon as possible, the easier choices will be in the future. That is, unless you happen to start during a black swan event, like what’s been going on in the market recently. Then its just bad luck.

Either way, how financially prepared are you to deal with the inevitable ups and downs you will face throughout your life?

Mental Self-defence

This is a topic which I have discussed before, and for many it may in fact be the hardest thing to deal with. How you address it will also depend on where in the world you are when you read this; it may or may not be considered a culturally acceptable topic, or there may not be support readily available for mental health.
Additionally, mental health, realistically, is relatively new topic in its own right, and as a result there are many aspects we are still trying to figure out, which means finding meaningful and closer-to-correct answers can be difficult.

“Difficult” becoming “seemingly impossible” if you are in the middle of a specific mental health crisis. On this I will argue, like all self-defence, that, if you are able to, you are the one most responsible for regulating and rebuilding your mental health; even when you have strong support networks. If you don’t have a support network, then know that you are not alone in the world.

This topic is very sensitive and it is often connected to experiences related to physical self-defence. Or it may be connected to other considerations, such as genetics, family history, or particular non-violent events in your life. Either way, it is a complicated subject and requires a certain level of understanding and knowledge to truly delve into.

Yet day-to-day mental health and happiness may be more important than physical self-defence, assuming you are in a safe country. If you are somewhere that physical self-defence is still a big part of your daily life, then often your mind may be too preoccupied to even realize that you are suffering a mental health problem.

Just know, as with physical self-defence, there are training options for both preventative measures and coping mechanisms to deal with such issues.

Conclusions

One thing to remember, in this world that is increasingly more and more complicated, is the importance of understanding that everything is interconnected. Only focusing on one area of your self-defence really is only looking at one part of the picture. It can be hard to understand it all, but if you are oblivious to the workings of your life, your emotions, and the world around you, then it will be even more difficult to overcome hardships when you are blindsided by events that you could have done something to stop, had you been aware.

Remember, no matter what type of self-defence you are practicing, at the end of the day the only person who can really protect you, is you. Waiting for others to step up may often just mean disappointment, which means further conflict, both internally and externally, which means you may not feel like you have any power at all, which is the farthest thing from the truth.

So what are you going to do to improve your ability to defend yourself, physically, digitally, financially, or mentally?