🥊 Mentorship Minute: Your Future Network is Your Net Worth

You are not your past.  You are the summation of your future potential.  For the sake of this article and lets call that your future value. You can determine your present value if you know your future value and assume a rate of compounding.  Converting between the present and future value is something you can try in a spreadsheet program.  Most people talk about time value analysis when making investment decisions.  Everyone is in the business of deploying capital, and the same principles of optimizing that allocation applies to relationship building and skill-building. In a previous episode, we discussed cost-benefit analysis within the context of opportunity cost.  You experience cost-benefit analysis every day, but I want to break this down in a way that covers the nuances, so no misunderstanding occurs. Let's say you have two options, option A and option B.  You can only choose one option, so what do you pick?   One of the best ways to do this is to select the option with the highest net present value (NPV). To calculate the NPV, we need to compare options to see what the incremental difference between picking one over the other is. Incremental value is just the difference between the two options.  As a side note, this analysis works when choosing the least bad decision, but I digress. The opportunity cost of choosing option A is the incremental difference forfeited from leaving option B on the table.  Since option B also has an NPV, we can see how this simple decision between A and B has a massive impact on the future value of this one decision.  We make 100 decisions like this in a day. When it comes to your life and the decisions you made up to this point, your current value is your present value. You are where you find yourself in life because of the choices you have made up to this point in life, but that does not define your present value. Let me ask you this.  What is your future value?  If you know your future profit and make some assumptions about the rate of compounding, you can determine your present value.  The key here is knowing that your current value is a function of your future self and not your past. If you still don't' believe me, let me ask you this.   What is the present value of creating meaningful relationships with people in your niche over the next 50 years?  Everyone says your net worth is the size of your network.  I am arguing your net worth is the size of your future network. You must convince yourself of the power of compounding and how converting the present value back and forth with future value works.  If you want to play around with these equations, check out the present value and future value conversions with a spreadsheet program like Excel. Why do I hammer on this topic so hard? I believe it contains a vast amount of empowerment.  We are the only person that has control over how we respond to the stimulus in our life and is the fundamental principle of being proactive. The more we are aware of our ability to be proactive, the better decisions we can make.   Ultimately we raise our future value by improving our decision making in the present. If I were dead, the message I would want you to remember is that the only math that matters is knowing how to calculate present value. When you understand time value and the different parameters that impact time value conversion between future and present, you will be on a path towards abundance that few ever achieve.  Your wealth of skills, relationships, and finance with be unrecognizable. My homework I assign to you today is to challenge yourself to learn how the present value calculation works. Ben McNeill 💚https://profitablepython.fm👽 --- Send in a voice message: https://podcasters.spotify.com/pod/show/profitablepythonfm/message