Financial enlightenment's pinnacle: Transitioning from information to wealth accumulation
John Cleese, the beloved British actor known for his roles in Monty Python and the Holy Grail, is 85 years old and continues to entertain and educate. In a recent series of posts on Substack, Cleese delved into the realms of knowledge and understanding, proposing a four-tiered model to improve comprehension in life and money.
Cleese begins with the foundational level of Raw Knowledge. This is the information we typically learn in school and books, often lacking in practical application. An example given by Cleese is that of a professor who knew everything about swimming from books but never actually swam, leading to his unfortunate demise.
The second level is Application. Here, knowledge is put into practice. Michael Phelps recently taught a group of Ravens football players to swim, starting them in shallow water with floating devices.
At the third level, we encounter Critical Thinking. This is about guarding against overconfidence, recognizing when correlation may be mistaken for causation, and questioning the veracity of facts. Critical thinking also involves pattern recognition and borrowing from other fields to fill in gaps unclaimed by areas of specialization. Cleese suggests that critical thinking is essential in personal finance, considering life's uncertainties like marriage, children, and changing expenses over time.
The fourth and final level, according to Cleese, is Mastery. However, he did not mention if there is a level beyond Critical Thinking.
Wisdom, according to Cleese, is knowledge informed by application, tested by critical thinking, and infused with purpose. It is still, quiet, steady, grounded, seasoned, unhurried, measured, patient, balanced, centered, and whole. Wisdom listens and asks more than it talks and tells. It controls what can be controlled while being at peace with what cannot. Financial wisdom is planning for the unknown while enjoying the known, understanding wealth as a hard-won feeling, and pursuing a balanced life.
Cleese also formulates four levels of knowledge transmission to improve understanding in life and money:
- Unconscious incompetence (not knowing that you don't know) - For instance, a beginner unaware of financial basics.
- Conscious incompetence (knowing that you don't know) - Realizing one needs to learn budgeting.
- Conscious competence (knowing that you know but requiring effort) - Actively managing finances with deliberate effort.
- Unconscious competence (knowing that you know without effort) - Intuitively making good financial decisions through experience.
By understanding these levels and applying critical thinking, we can navigate life's challenges and make informed decisions, much like John Cleese's character in Monty Python, who used wit and wisdom to guide us through the absurdities of life.
