Hello Class. Welcome back to Fire University. As many of you know I am a big fan of the Game of Thrones TV series and in today’s class we will discuss the financial and business lessons that can be learned from the show. Let’s start with the financial lessons.
Winter is coming
In the show the Stark family is famous for saying “Winter is coming” and I take that to mean that winter both literally and figuratively is coming, whether we are ready or not. In life we experience good and bad financial times. During the good times it is easy to forget about planning for the bad times and just have fun. Examples of this are not budgeting for car maintenance or home repairs. Logically we all know that it is a part of life for things to break or need repairs but often times we fail to plan or save for them. Many of you are aware of my advocacy for having a large financial emergency fund. I advocate for four months of total expenses as well as a separate account for future home repairs, car purchases, and just the unexpected things life throws at us. Many people will say that I am being to cautious but I’d rather be safe than sorry. In the game of thrones we see in the recent episode that Sanza say’s they didn’t budget for having to feed hundreds of extra troops let alone two dragons. Then she says “What do dragons eat anyways” to which Dany replies “anything they want.” I love that exchange but it is also a good example that not planning and preparing for the winter could mean certain death. During the harvest time food is plentiful but the leaders of Winterfell know that they must budget and allocate some of the excess for winter rations.
A Lanister always pays their debt
As you all know I despise debt. I believe that debt creates bondage but do acknowledge that debt leveraged wisely can yield large returns. Some debt is okay if it is used to purchase cash flowing assets or to buy a home that locks in a low interest rate on an appreciating asset, now I know some are saying but a house barely keeps us with inflation and that it has overhead maintenance cost to keep up and that you could get a much better return in the market. I agree with most of those statements but studies show that home ownership is one of the leading indicators of wealth accumulation and it locks in your monthly housing cost. The point of this is that if you have debt, pay it off and do it as quickly as possible. Your credit score is a reflection of your credit worthiness and measured by your ability to pay back loans as well as your income versus the amount of debt you have. In the Game of Thrones show we see that a person or family’s reputation is vital to their survival as it can make access to both capital and alliances with other houses.
Choose your partner or spouse carefully
One of the best gifts we were given was our ability to choose who we love and who we spend our time with. We should take this decision seriously because choosing the right or wrong person has the ability to not only make us happy or sad but also the power to greatly affect our wealth. In the time of GOT most people made marital choices based on their standing in society and what would best serve their family fortune. However in today’s times, we have the luxury to choose based purely off love. While love is arguably the most important part, it is also important to make sure our partner has the same views and desires when it comes to handling finances.
Now it’s time for the business lessons.
It is better to be loved than feared
Throughout the TV series we saw many rulers gain power through force and attempt to lead by fear. While this may work for a while, it is only a matter of time before the followers will either rebel or switch their allegiance to someone else. We saw Daenerys rise to power and build a following based off of her compassion for those that were enslaved. The former slaves followed her because they believed in her vision of the future. Later in the show we saw the people gravitate towards John who was a fair and honorable leader. In today’s business world a new leadership style called “servant leadership” has emerged and is gaining widespread popularity as well as yielding great results. The basis of it is that the leader is there to serve the employees, it is the bosses job to provide the resources necessary for the employees to succeed in their current roles and prepare them to advance in their careers. This is a stark contrast to the former style of autocratic leadership, in which managers made the decisions and forced the employees to comply.
One of the first things we learn in business school is how to perform a SWOT analysis. The word SWOT is an acronym for Strengths, Weaknesses, opportunities, Threats. This is a strategic way of thinking, that helps to design long term goals and strategies. Warren Buffet often talks about the businesses he invest in have a moat around them, by this he means they have a strategic advantage over their competitors. This may be in the form of technology, distribution systems, or being first to market. In GOT we saw many examples of this, from the Night King being able to raise the dead, to the moat of fire around Winterfell, to Daenerys fire breathing dragons. Each of these gave them an advantage that they could exercise over their competitors. In business, whether for your company, department, or for yourself it is best to define your strengths and work to make them as strong as possible, while finding others that are strong at your weaknesses. When you have time perform a SWOT analysis on yourself and use the results to know where to focus your time and attention.
FIRE University is not a licensed or registered financial planner or accountant, please speak to a professional before making any investment decisions.