This is the first post of a series called “financial excursions” where we will explore how to understand the world better while learning about money and your life. In my view, “financial excursions” are the best way to teach your kids about money. This summer we took our kids for a trip to see one of the largest dams with hydroelectric plant in Switzerland.
We marveled at the large wall, enjoyed the views from its top, learned about its functions and of course I grabbed the opportunity to explain how building a dam is similar to capturing your income streams and save money and therefore time for later usage in life.
Let’s explore our discoveries together.
Lac Mauvoisin
This summer, we went to see the Mauvoisin dam. In Switzerland we are very proud to have the bulk of our electricity production generated by hydropower (59.9%), nuclear power comes in second (33.5%) and conventional thermal power plants (2.3%, non-renewable) conclude the electricity mix.
Switzerland has currently 638 hydroelectric power plants. The largest dam in Switzerland is the 285 metre-high Grande-Dixence dam (canton of Valais), the second largest is the Mauvoisin dam standing at 250 metres (820 ft) tall, it’s the eight-tallest in the world.
The impounded water behind the Mauvoisin dam forms the 5 kilometres (3 miles) long lake with a capacity of 211.5 million m3 and captures the water from an area as large as 167 square kilometres.
The impressive statistics about this dam include of course its capacity to produce energy. Water released from the Mauvoisin dam into several hydroelectric power stations lower in the valley are boosting the Swiss energy grid with 943 million KWh annually!
The dam was also chosen as perfect location of the world-record highest [successful] basketball shot. In 2016 the 28-year-old Australian Derek Herron launched a basketball from the top of the dam, where it fell 180 metres directly into a net placed on the ground below.
Water And Gravity
My last post about waterfalls covered the topic how to build an abundant waterfall of income streams where we have learned how to diversify “getting paid”.
Fact is: The average millionaire has seven flows of income!
It’s good to have the income flows, but what do you do once the “water” comes flowing your way? If you don’t do anything particular, “water” will follow gravity and disappear in the endless oceans where it originally came from again.
Looking at the wild mountain range the kids could see how the mountains are still nicely covered in snow – even in summer. From there, the sun melts the snow into water and as it comes down, energy is set free. This energy, released from water flowing downwards, has been harnessed by humans for millennia. Over two thousand years ago, people in Greece used flowing water already to turn wheels of their mills to ground wheat into flour. Today, we convert this kinetic energy into electricity.
This sounds all magnificent. However, there’s one big problem here: As the water keeps flowing, you must keep using and consuming the energy right on the spot. Hence, how about if you would like to delay consumption? How to prevent money simply from flowing through your life I asked my kids standing on that magnificent dam?
If you are planning for a year, sow rice; if you are planning for a decade, plant trees; if you are planning for a lifetime, educate people.
Chinese saying
Build Your Dam
Of course, standing on one, the kids understood quickly: The best way to stop the water from simply flowing through is to build a dam. Financially spoken, this translates to controlling your spending and taming your tendencies towards increasing your spending as you earn more:
Avoid lifestyle inflation.
Forget about keeping up with the Joneses.
Re-direct a certain amount of your nicely flowing income into a “reservoir” for your future use.
In order to save, you need to build your financial dam in life.
A container or vehicle with a huge wall that can capture your ever-flowing income streams and keep the savings “safe”.
I explained my kids how useful it will be to have all this water saved up once winter is coming. You can then simply open the valve at and get fresh energy as and when you need it.
Simplified spoken it’s the same with money:
Fill your “containers” with money now so you can tap into your savings once you need it.
We shall cover in other posts what to do with your savings as keeping it simply in “money” itself is not the best choice anymore due to inflation though.
I further explained to the kids that the people running this hydro plant can not capture all the water as otherwise it would cause a drought downstream.
The amount of water they let pass represents the “enough” in your life.
How much money is enough, so your life is worth living?
Capture as Many Income Streams as Possible
Once your dam is built, try to collect the proceeds of more income streams into your reservoir. The more sources contribute to your collection, the easier and faster it will be to fill it up eventually.
At Mauvoisin the engineers have built tunnel systems and more deviations to capture the maximum amount of water possible in the area.
At this point you may ask your kids if they feel it usually takes too long to fill up their bathtub at home.
Wouldn’t it be easier to have a warm bath at home if water comes in from more than just one tap?
The more you put in, the faster it gets full.
The more you save, the easier your goal is reached.
Explain it would be the same with money and ultimately buying your time back in life.
Maximize Your Potential
The Mauvoisin system – like others as well in Switzerland – has an extra feature that not many know of and which I truly like.
Somewhat more downstream, there are other, smaller, reservoirs again to re-capture some water. These intermediary lakes are once again reservoirs where even more electricity can be produced as water lets gravity do its job.
Financially spoken this means nothing else than:
Spend your money or time wisely.
Maximise their usage.
Having such intermediary lakes can also be viewed as “budgets”.
Let me explain:
Energy consumption is not the same throughout the day, more of it is consumed during daytime and less is being used at night. In Switzerland we also have a significant energy output from nuclear power plants. As less energy is used at night, why not re-use the anyway produced nuclear power to pump additional water from intermediary lakes back up into the main reservoir?
Why is this like a budget?
Let’s say you plan $40 monthly for a haircut. What if you cut your hair yourself? Then you’ll not be needing the $40 that you’ve prepared already and can put it back into your main reservoir. Read more here what could happen if you start doing something along this idea.
Create Power On Demand
A hydropower plant system is like a battery.
You can capture, save, and release energy with it.
Whenever you need some, you simply open the tap and produce instant energy.
In this last step, combine the lessons above and think of water in terms of money and of money in terms of time.
Time is money.
And money can become time again.
The main take-away my kids as well as you should get from this first “financial excursion” is that it’s worth your while spending/ investing some of your time NOW to create your own battery for YOUR life!
The better your system is built, the easier and more fun your life will get.
Trust this post can help you and your loved ones store some money, energy and ultimately time – the most prescious of them all – so you can live more!
If you have kids, consider taking them on this first “financial excursion”.
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Now, have fun doing “financial excursions” with your own kids and please share the idea with your friends and other parents!
Stay curious and have fun exploring,
Matt