Recently I have had quotes on the brain. This has brought you a post on an Ancient Roman philosopher . Now this post will reference a medieval farmers saying. The saying is Make hay while the sun shines.
I recently used this saying in a comment on a mini retirement post by high income parents. The question was around whether you should take a year or two off of work mid career. The idea was to not miss out on your kids Childhood. Alternately it was about avoiding burnout. Whichever the case I raised the question that timing might be difficult and referenced Make Hay while the sun shines. It was an apropo quote but the meaning and origins go much deeper.
The Origins of Make Hay while the Sun Shines.
Hay has for centuries been used to feed livestock, especially in the winter. Essentially dried grass it is a cheap source of food that tends to be sustainable. The problem is, hay crops can be destroyed with late fall weather, including rain and snow storms, that occur during harvest. In addition in times past it was not a trivial matter to harvest hay. As such the farmers did their best to forecast periods of good weather. They took advantage of these to harvest, as you never knew when those conditions would occur again.
The Deeper meaning of Make Hay while the Sun Shines.
Frankly the statement Make Hay when the sun shines became a bit of a cliche in the 1600s as it’s meaning was expanded beyond, well, hay. But each cliche has a bit of truth. In this case life has periods of better weather, performance, low volatility, or whatever you may have. When you are in them positive outcomes come easier. As such when the sun shines, or things are good, it is important you make hay, or work to get ahead.
The Grass Hopper and the Ant, Making Hay
This relates very well to my favorite fairy tale as a kid, the grasshopper and the ant. The idea being you can either be like the ant and save through the summer for the winter. Then you lead a comfortable life year round. Of you can be like the grasshopper and party all summer long. You then will likely starve in the winter. Make hay while the summer sun shines, or waste it by partying and starve when new food no longer grows.
Personal Finance and Make hay while the sun shines
But what does this all mean for personal finance and particularly our situation. Well we have a number of areas in our life where the sun is currently shining. The first are our investments. Unless you’ve been living under a rock you know the market has been on a tear for years. You also know that the gravy train will at some point come to an end. If you paid attention to the proverb you have been dumping money into the market since the first sign of the recovery in 2010. At this point you are doing very well and even a correction in the market will not return you to whence you came. If you however kept your assets in cash these last 7 years you have seriously missed out.
Self Employed and Making Hay
Investments are a great example, but in our personal life this is not the example that keeps popping up. One case that keeps reoccurring is my wife’s consulting. Full disclosure, my wife is consulting for a single customer. She is essentially a freelance online training course creator. But, in her case she also got the gig because she is considered a subject matter expert in the training subject. This is both good and bad. Good in that it’s a very particular subject which means she does not have a lot of competition. Also good because the subject takes years to learn so it pays fairly well. Bad because it is unlikely another company would need this training developed on this topics. Which means when her customers budget runs out in the next down year she will have no more work. This is a very real threat as each year budgets turnover.
Make Every Business Opportunity Count
Now, let us be clear about our situation. My wife now works for the sense of accomplishment. We do not need the money, so we do not need to ensure the business is sustainable. But, my wife really enjoys it and every extra dollar we make beyond taxes pushes straight to retirement. Also, right now her customer has a near term glut of development needs. The requirements are more than my wife could publish with the artificial hour limit she has set to ensure she still spends time with our kids. So what to do?
Well in her case she has not increased the artificial hour limit as it is important to her. But, in the context of making hay while the sun shines she has done everything she can to work every hour of her chosen time allotment. She is making hay, or training documents, while the sun shines.
Recessions and Making Hay
Another example, I strongly believe we are headed for a recession in the next few years. No, I am not changing my investment plan for obvious reasons. However I am taking note of what happens at my current company when particularly bad recessions hit. In each of the last major recessions they instituted a temporary ten percent pay cut. No job loses, but a pay cut. In addition the companies stock tanked.
What would a Recession mean for the FTF Household?
Well if I extrapolate this history I will be hit very hard if we have a bad recession. A ten percent pay cut would be bad enough. Even worse 20% of my income is company stock based. An instant 30 percent pay cut would be painful. It would be manageable but it’s not something in which I relish the thought.
However just like my wife’s customer and the stock market my company is currently riding high. Our stock is up 50% and so are budgets. So how do I make hay while the sun shines in this case? Easy, I push for a pay raise now to make more of my income locked in at a higher rate. Less dependency on the company stock and a higher point from which the 10% cut would be applied. Combine the two and it will help me weather future storms better. Because things are better off now is the time to ask as well. Approval is far more likely when things are going well.
Ensure the Sun Shining will Last long Enough to Harvest the Hay
Sometimes the good times roll. Other times the economy is in the tank and financially things are tough. Take advantage while that sun shines, the good economy, and make hay. One final word of warning comes out of this proverb. As I mentioned before it took days to harvest the hay centuries ago. As such they needed clear skies for days while things were harvested. The message of course is be sure you have enough good days in a row to benefit from your actions. In my case I could pursue an alternate path to de-risk my performance based pay by changing companies. But the first one in is usually the first one laid off. As such while it would be very likely switching companies would decrease my chances of a pay cut, it would also increase my chances of a layoff. At this time in the economy that may not be my best move. I.e. I only have enough clear skies, or sun shining, to make a few more short term moves. Asking and obtaining a pay raise is one of those short term moves. I am making hay while the sun shines, but ensuring I have enough sun left to obtain my goals.
Are you executing any plans to make hay while the sun shines? What are they?