Personal finance is a comprehensive approach to managing money, including budgeting, banking, insurance, mortgages, investments, and retirement, tax, and estate plans. It involves goal setting, cash flow management, saving, and protecting. Goal setting aids in the financial decision-making process, while cash flow management helps individuals track their income and expenses.
The importance of personal finance stems from four critical stages of managing lifestyle security: making money, saving money, building wealth, and protecting. A solid understanding of personal finance helps individuals build a strong financial security.
Personal finance involves planning and managing individual or household finances to achieve financial goals, such as reducing debt, reducing reliance on credit cards, saving for retirement, and building wealth. Cash flow management is crucial, as it helps individuals follow through on their financial priorities.
Money management is another essential aspect of personal finance, as it allows individuals to monitor where their money is being spent. Setting goals and calculating the time value of money are also important aspects of personal financial growth.
Personal circumstances that influence financial thinking include family structure, health, career choice, and age. Family structure and health affect income, while financial literacy promotes financial independence and responsible decision-making.
In conclusion, personal finance is an essential aspect of financial management practices, encompassing budget planning, spending, and saving. By understanding and optimizing every aspect of personal finances, individuals can build a strong financial security and achieve their financial goals.
📹 Personal Finance Basics In 8 Minutes With Ramit Sethi
Ramit Sethi, Personal finance guru & author, shares some AMAZING personal finance tips & education to help you get out of debt, …
Why is goal setting an important aspect for personal financial growth?
Goal-setting is a crucial tool for personal finance, providing guidance, accountability, and tracking progress. The SMART Goal method is used to identify relevant goals for each individual’s financial situation. College students often set goals to increase their savings, as they may not have enough income to cover unexpected costs, are in transition, or are working towards major life events. To achieve these goals, students should consider financial benchmarks and reflect on their financial situation.
These benchmarks can provide clarity on the types of goals they may want to set, helping them stay focused and motivated in their financial journey. By setting realistic financial goals, college students can make their financial dreams a reality.
What are the most important parts of personal finance?
The Four Pillars of Personal Finance are a fundamental framework that helps individuals determine their financial state and net worth. These four components are assets, debts, income, and expenses. When these components are in balance, your financial circumstances are strong. However, when liabilities are off the charts, your finances may need some CPR to set them right. To take your personal financial inventory, measure and compare your assets and liabilities.
The difference between the two represents your net worth. For example, if you own a home worth $200, 000 and a car worth $10, 000, your net worth is $145, 000. To understand your overall financial health, tally up your assets and liabilities.
What is financial aspect of personal development?
Financial wellness is a state of well-being where individuals effectively manage their economic life, having enough income to pursue their interests, pay bills and debts, and have extra money for emergencies. However, financial freedom is often overlooked in personal development, as many people believe that money is irrelevant to personal growth. Financial wellness involves managing income, spending, savings, investments, and protection, but it is often hindered by a lack of financial intelligence and inability to support a family.
What are the five 5 areas of personal finance?
The field of personal finance is concerned with the management of income, expenditure, savings, investments, and risk management. Income represents the primary source of cash inflow utilized to sustain oneself and one’s family. Additional areas of consideration include salaries, bonuses, hourly wages, pensions, and dividends. These areas are of paramount importance for financial planning and overall financial stability.
What are the 4 pillars of personal finance?
The four personal finance pillars provide a structured approach to managing finances, encompassing income, expenditures, assets, and debts. These pillars are compatible with all lifestyles, income levels, spending limits, credit card debts, and total wealth. It is crucial to manage money effectively to avoid debt, as there is no “good debt”. Maintaining a budget and spending less than the budget is essential, as there is no “good debt”. The four pillars ensure a solid foundation for money, and proper functioning of these pillars is essential for maintaining a solid financial foundation.
What are the 5 basics of personal finance?
The fundamental principles of personal finance encompass a range of essential skills, including budgeting, saving, investing, debt management, and an understanding of credit. Budgeting entails the monitoring of income and expenditure, the formulation of financial objectives, and the implementation of well-informed purchasing decisions. It is of the utmost importance to save money for unforeseen circumstances, future aspirations, and retirement.
What are the 5 P’s of finance?
The author emphasizes the importance of implementing financial fundamentals for small to mid-size business owners to maximize profitability and cash flow. The “Five Ps” of business success include Product, Pricing, People, Process, and Planning. These elements are crucial for a strategic plan that prioritizes factors for company growth and positive cash flow. A company’s product, whether a product or a service, is the manifestation of its vision and should be evaluated based on target market, product positioning, product capacity, KPIs, competition, and costs.
What should you consider when setting financial goals?
To achieve financial security, set specific, measurable, action-oriented, and realistic financial goals. Determine the short-term, mid-term, or long-term goals and create a timeline. Determine the necessary money to reach the goal, and consider various ways to achieve it, such as saving, cutting expenses, earning extra money, or finding additional resources. Write down the best combination of these methods.
Set incremental goals, prioritizing and achieving them gradually. This will help build confidence in decision-making and motivate you to achieve more challenging targets that require more time and discipline. Without goals, your financial journey may be meandering.
What is one of the most important parts of setting up financial goals?
Budgeting is a crucial financial goal that helps build momentum in all areas of your finances. It involves creating and sticking to a plan for income and expenses, allowing you to make progress and feel confident in taking steps towards your goals. If you’re already budgeting, you’re in good shape. If you’re not, you can start for free with EveryDollar.
Building an emergency fund is another important step to take. It allows you to be prepared for any financial problems that may arise, such as car trouble, medical expenses, or toilet issues. With an emergency fund, you can rest assured that you won’t have to resort to debt to cover these expenses.
What are the 4 C’s of financial management?
FundWell emphasizes the importance of financial wellness for small businesses, focusing on four key financial indicators: cash flow, credit, customers, and collateral. The company offers comprehensive support in understanding loan eligibility, matching customers to lenders, and providing financial wellness planning, advice, and tips to ensure the best funding options for the business. Donna Tucker, a Chapter 2 bookstore owner in North Carolina, praised Fundwell for their willingness to help her navigate difficult situations and their excellent financial health tips.
Financial wellness is crucial for businesses as it can lead to overpaying on interest rates, damaging personal credit scores, depleting personal savings, and missing out on new revenue and growth opportunities. To assess your business’s financial health, visit FundWell. com/scorecard/ to check your online loan eligibility and learn about your current financial health. By paying attention to your financial wellness, businesses can avoid overpaying on interest rates, damaging personal credit scores, and missing out on new revenue opportunities.
What are the three pillars of personal finance?
Building a strong financial foundation involves a comprehensive approach that includes investments, insurance, and estate planning. Investments are the cornerstone of wealth building and achieving long-term financial goals. They involve allocating money in ways that can generate returns that outpace inflation. Whether saving for retirement, major purchases, or financial independence, investments play a crucial role in growing wealth. Managing investments requires an informed understanding of various asset classes, investment products, and financial concepts such as inflation, interest rates, and diversification.
Shares, bonds, and real estate are the three essential pillars that contribute to a robust financial framework. These pillars work together to safeguard one’s present and secure future. Understanding these pillars is essential for a better understanding of your overall financial situation.
📹 Personal finance: How to save, spend, and think rationally about money | Big Think
In this video, social innovator and activist Vicki Robin, psychologist Daniel Kahneman, Harvard Business School professor …
Great article. I just sold a property in Portland and I’m thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $450k gains within months, I’m really just confused at this point.
What hit me (in November 2020) was the Plaid Shirt Guy talking about how happiness comes mainly from doing things with others, so spending money on shared experiences adds to your happiness more than buying things to enjoy alone. No wonder 2020 has been such a tough year, when the activities he mentions are mostly off the table due to Covid-19! He does also mention that giving to charity or to other people brings happiness too—and there is plenty of scope for that this year.
Freeing your mind from consumerism is so important. We’re literally trained from young to always want more, to never be satisfied to compare ourselves to our neighbors and what they have. I was always a natural saver, but struggled a bit in not comparing myself to others. It’s still something I work on, but over time have gotten better. It definitely helped that I realized the image others put forward, the majority of the time is financed by debt! That’s not something I’m interested in at all. I hope more people learn this concept and actively practice it. I’ll definitely talk about it on my website as well.
I will say I’ve been an adult for about 20 years of my life. You find out life is expensive and it really takes about 20 years to acquire just about everything you need. I try to hit the sweet spot. Have struggled with debt a couple times . There’s just so much that happens that you have to pay for. I don’t like wasteful spenders but I don’t like the cheap skates either that would rather borrow stuff from you than buy their own stuff. You figure out what you need and you can become pretty content but you will have to spend more than you’re going to want to in the first part of your life. Also living in a city in an apartment is a whole different ball game than living in your own house in the suburbs with kids and multiple vehicles. Houses and vehicles WILL keep you poor for a long time.
I was near dirt broke 2.5 years ago… but decided to change a few things with how I approach money. Now I have enough saved (invested) to get me through 12-18 months if I had to without changing my lifestyle. It was tough. But the only downside was I took a job that has been really mentally taxing. But man its nice to not have those money worries any more… My best advice is to reduce the monthly fixed costs. ie bills, rent etc… spend as little as possible on BS things like clothes etc, stop eating out – cook 95% of your meals (but still treat yourself sometimes), and track everything on a spreadsheet.
I feel that teaching your kids about money at appropriate age is very important. I am from India and my parents never taught me the value of money. I regret for not knowing to save since college, I thought as soon as I work I’ll earn enough… But no this is life we have profits and losses.. If I only knew about saving then it wouldn’t even be a burden now . Can’t even tell this to my parents now cause they are old and if I happen to tell them they will be upset…
All this sounds good, but the number one thing is how to EARN money. In the US we need money to pay for basic things like health care and housing and I think more people struggle with that than struggle with being “unhappy” or whatever while having too much money. Saving is good, but it doesn’t matter if you’re not making enough to cover basic needs in the first place. A big medical emergency can wipe out savings instantly, sometimes even if you have insurance.
I was 10 and this was the late 90s, so GIJoe action figures were still a thing in India. I asked my father to purchase me one if I was able to score high grades in my exams. He told me that he will buy me one after the fact anyway but I should always remember to do something because I want to do it, not because there is an incentive at the end of it. When that incentive is removed you will not do things because nothing else is there that motivates you. Never thought that lesson would be so helpful in the longer run. FYI: I never got paid an allowance for household chores.
I was the worst student at school, and my girlfriend was the worst student at her school. We are both on low wages but always work OT, we work extra hours at night in a supermarket.But in our mid 30s our forever house is payed off and own 4 other houses and have a net worth of $2m so far. The best way to get wealthy is to work hard, save hard and invest hard. We both aim to be semi retired before aged 40. If a couple with poor academic ability can be wealthy, so can everyone else.
I will always be grateful to my parents for teaching me about money when I was younger. My sister and I used to have a 20$ allowance for the two-weeks long vacations my parents had during summer. With that money we could buy whatever we wanted! But no more, no less than that! On that first year, within one week, my sister and I spent our whole 20$ on candies and cheap toys. But then there was something we REALLY wanted, but didn’t have the money for it. We cried to our parents to have it but they just told us that it was part of the deal: 20$ no more, no less, and just too bad if we spent it all. The year after, we got 20$ again to spend however we wanted… During those two weeks, my sister and I spent NOTHING! We suddenly understood that money would be necessary if we wanted to buy things we really needed so we kept it just in case that would happen! Because of this exercice from my parents, we learned the importance of having money for things we wanted, saving money we didn’t use and knowing to spend on what was really important to us!
This was a wonderful and very much needed piece! Young people must understand that saving is not enough. It’s a good start, but given the way the economy is going, you have to do better. Investing that saved money is a must and diversifying your investments so you have multiple streams is key. Of course, well informed on the right ones or better still, get a pro to handle it for you (that way, you save time and minimise risks). Made my first million this way earlier this year through something as casual as forex. Good luck!
4 layers of financial freedom: 1. Free your mind 2. Get out of debt 3. Save money as emergency fund 4. Invest your surplus savings In my opinion, I think that we shouldn’t overly pursue money which costs our physical and mental health. We must be able to earn more money by maintaining work-life balance. That’s a precondition for happy life. Yes, money can buy happiness if we buy the things that we really want and it can suits with our value and meaning of life. 🙂
People have been programmed in such a way that their happiness is connected to spending. Through Advertising when they show you pictures of ‘happy people’ eating junk food, using iphones, headphones, wireless earphones, drinking sodas, wearing newshoes (Nikes, adidas and the pumas). You have to unplug
If you’re starting out on a personal finance journey, I’d definitely recommend reading two books: 1. The Richest Man in Babylon – teaches you very simple concepts that you can apply. 2. Your Money Or Your Life (written by Vicki Robin (the lady in the article)) – Gives you a different perspective of what the “cost” of work and the things you buy amount to. A bit technical, but eye-opening.
Life is weird, beautiful experience when you step back and look at it. Grateful to be here with you all, working with a financial advisor could truly set you up in life. I’m delighted to contact a financial advisor earlier this year because while others were busy whining about the downturn I was busy cashing out from my investment, finally making over $370k for the first quarter of the year.
Four layers of financial independence Layer 1 – Free your mind You are a sovereign being Layer 2 – Get out of debt Later 3 – 6 months of emergency fund savings Layer 4 – Invest your surplus savings, it would eventually become an income. Knowing that money is your life energy you track everything you buy You win a few and you lose a few have your emotion under control
Once you have a comfortable level of money saved, invested, etc., remember – in order for that money to have meaning you have to turn it into something. A object you would get pleasure from, an experience you would enjoy and learn from, or a gift to someone or charity donation. Otherwise money is just numbers on a quarterly statement. (And you will NOT be the first person to take it with you.)
You need to buy home appliances and insure them at a young age so when the time comes to move out of your parents home and you start off to rent a place of your own you already have these items. Meaning you don’t have to take on debt but only rent to pay. Then you can start saving up for whatever because you didn’t take on debt to buy things. The 2nd option is to work any job, study online and then work for bigger Companies.
1. Compound interest. 2.Frame things broadly. 3. Money can buy happiness when is used propertly. 4. If the debt is big think BIG as well. 5. Never forget who you are if you want to define your reality. 6. If your feeling is miserble your saving will be likewise. 7. If you are a giver then money is going to be received. 8. Most of the people know about this topic but it is better to live ignoring this coz money is not enough after all. To finish this point of view. God is the one who provide and the man is the one who looks after his spending.
2/3rds of bankruptcies are due to medical issues (often lifestyle/relationship/job related). Other reasons for bankruptcy include divorce, job loss, unexpected costs for accidents/disasters/theft and then bad use of credit. Rational advice would not be to focus on the smallest part of the problem and ignore the biggest factors. Better advice to kids would be to not marry horrible people, not work for horrible people, don’t associate with horrible people. When you are in deep debt cutting back on lattes is no foil to a wife that impulse buys a $5,000 piece of jewelry (apparently because she is worth it).
LEVELS OF Financial Independence 1. Free mind- own sovereignity 2. Debt free 3. 6 months savings in liquid 4. Monitor your DEBIT, never credit, spending habits 6. Pay attention on purchases that make you happy 7. Experiences rather than stuff makes people happier 8. Limit the influence of money in your family. Chores @home are not to be paid. Its a team responsability. New Road Map: True hapiness and purpose of life is a sweet spot where enough is enough for you.
One problem: the USA economy crashes when people spend less on totally unnecessary stuff. It’s consumer based and now it’s based on people living beyond their means by buying stuff with money they don’t currently have. So, a big crash is coming when too many people can’t pay their debt and we’re doomed.
I read ‘Your Money Or Your Life’ and it completely blew my mind, changed the way I think about money forever. I went from scraping by as a salaried worker with no savings or concept of passive income, to seeing the things I could create as capital that can make life better instead of trading time for money. Essential read.
That point about mistakes is so great and just applies to so much more of life than even just finances. Also I was very happy to learn about financial freedom as a sort of reaction against a consumerist society — I feel Marie Kondo’s book about Tidying Up, which I read recently, aligns with this very well. Great content overall!
One thing I do to save money is using my credit card dividing what I buy in 12 parcels. Save for food and other basics, I can only use my credit card, nothing else, and if I want to buy something new, I have to wait for months until I pay enough parcels to free space to make more debt. What often happens is that after months waiting, I realize I don’t want to buy that thing anymore, or that I found a much cheaper version, or used one that cost much less. This forces me to search for cheaper prices, so I can fit it in my budget sooner. I force myself into a scarcity mentality even when I have money in my account. But it’s not good to save too much money, inflation will eat it away, so I have no quarrels in doing some spending from time to time.
Funny how people who have money like to tell those who have none how to save money. Most people who don’t have money saved are those who don’t have a decent income to start with. The first thing would be to get them a way to get an income big enough to do more then survive and then they might start to think about saving some of it. I understand that many of them will never understand how to do it but it might just be the way we teach them and not just their lack of willingness. I said it before, no one should get a high school diploma without passing a basic economic formation on how to manage a family budget.
I have issues with finance… so I motivated myself to change my $30k salary to $250k a year… took me 5 years of hard work, but now my issues are solved… but not by listening to this hipster advice. I say, what are your enjoyable spending habits and living costs? Cool… now earn double and don’t give a fook about anything, literally.
With inflation currently at about 10%, my primary concern is how to grow my reserve of $240k which has been sitting duck since forever with zero to no gains, sure I’m all in on the long term game, but with my savings are lying waste to inflation and my portfolio losing gains everyday, I need a remedy asap.
Hey I’m a beginner and I understand the market crash is the perfect time to make money, but how are some investors able to double there profit within a short period of time, a particular investor made up to $350,000 from trading about $100,000 within a couple of months, do they stand a better chance than others?
TLDW; Most people are scared of money. Rich People make just as many errors as you do, but they have so much money so *shrugs*. Money doesn’t buy happiness, because it’s complicated. Buy experiences, not things. Give your kids allowances to learn. overall, pretty useless article with no real world experiences or practices. Could’ve gotten this info from a random old dude named Ted down at the local pub.
Personally, I always had problems spending my parent’s money. I remember when we went Christmas shopping, my heart would break seen expenses above $100. When I got my first job at age 18 I was all about saving money, after 9yrs of saving I had $80,000 in my account, but I had been hating myself for years. I eventually figured out that investing in the classic real estate/stocks was the way to accumulate wealth in assets, still mad I let all that money get eaten by inflation.
Wealth is not income, its savings. If you make $100,000 and spend $100,000 you are broke despite making 6 figures. If you make $40,000 and save $20,000 you are much better off. Make a budget, you’ll be shocked how much money you spend on eating out and booze alone. Cut subscriptions. Cut extra luxuries. Stop shopping on the weekends for no reason. Get what you need and stop.
money wasn’t really a talk for me growing up. my parents passively taught me it. about 6 i was helping rip the insulation out of the walls. i can’t remember exactly what my role was. it wasn’t much though. at the end me and my siblings got a handful of change each for doing a good job. we were sent to the corner store to pick out something for ourselves. i didn’t know much about numbers and stuff then. with help i found out the change i had was enough to buy so many candies or a soda. that was my first lesson in managing spending it went that way my entire childhood. my mom would give me money on a irregular basis. to spend on whatever i wanted. i would look over stuff and decide whether to spend it now or save it to put with more. most interesting find was arcades. that i could spend $5 in a matter of minutes on a single game, or reset instead of continue and spend a massive amount of time playing the same game
The phrase in life should have only ever been ‘money doesn’t guarantee you happiness’ and not ‘money won’t buy you happiness’. A mindset that focuses on being content with less, that ignores the brainwashing of selling ‘stuff’ we don’t need to us and one that chooses experiences and health over that ‘stuff’ will bring far more happiness and for longer! 🙏🏼
Nowadays it’s impossible to buy a house without getting into debt (unless you inherit one or enough money to buy one). But I think as long as you can afford the rate and didn’t buy totally overpriced then this is not the same level of debt as if you get frequent credits to buy stuff like a TV or a new car etc.
Alright here’s the information you’ve been looking for to become wealthy: If you do everything that’s in this article to include saving all your money, investing, getting out of debt . . . you’re still not going to be wealthy during your lifetime.(I know it sucks) In order to become wealthy you MUST build a business. There is no other way UNLESS you as the first investor become selfless and give your investments to your kids(after 60+ years), teach them how to handle money, and tell them to only use the dividends from the investments and not withdraw money. If you fail at teaching them, or you don’t transfer the stocks, then your efforts will truly have gone to waste as the government will take your money and your kids they will burn through it. As you can see not many are good at being selfless and or informed which is why so many people are still poor and broke.
Everything Vicki Robin shared was absolute brilliance! Especially with regards to really getting what the concept of enough means. I’m going to listen to this again & again. What a phenomenal collaboration & great effort on behalf of all parties involved in the production of this! Thank you!!! 👏🏽👏🏽👏🏽
I have told my children no matter how much money you make ( take home ) put 10 % away for a rainy day. Then live with in your means with the other 90% or less if you can. Purchase pre owned vehicles that run well and put another 30% of what you purchased it for into initial repairs then drive it until the wheels fall off it.
Unfortunately the cursed system that we have allowed ourselves to become enmeshed in requires one to be in debt..debt creates money..I owe no one And have no credit card. No debt..expensive bicycles, guitars and fly rods..20 year old explorer. (V8)..easily satisfied..lots of books. Have talent. Don’t Care. Don’t support the lie..you’re only as strong as your philosophy. Happiness is no tooth ache,no back ache..yuck it up. Life isn’t that long..don’t want.. Get rid of stupid friends..
Never use credit nor loans. I used to think my grandfather an old fool. After a bankruptcy because of a fire, I started living a cash only way of life, except for a mortgage. I can not believe the difference! There is more leg work involved in paying everything cash, but it is so worth it!. I will never use the financial crutches of credit and loans again. If I can not pay something cash, I simply do not get it. I do not even have a bank account. All extra money is invested in gold, platinum, copper, and some silver. This will yield returns much higher than any banking investment plans. I just keep the investment metals in chests in a hidden area. If I need to purchase something online, I simply get a disposable debit card or gift card and make my purchase. I will never have any sort of bank nor credit account again. My mortgage is paid in full in four and a half years. Then, there will be absolutely no debt in my life at all.
Here’s how to think about money. A handful of psychopaths control all the means of production. Everyone else is held hostage and forced to sell their labour for a wage. In addition, we have normalized this culture for generations. Now children grow up thinking “How can I make money to pay the bills?” rather than “How can I live my life in a way that benefits my family and my community?”
I think to save, spend to bought a product necessaraly needed a SWOT analys like : 1. Strength: strength is the meaning to bought a something product needed advance product development like a food, education and other.. 2. Weakness: seen for something product is the time phase Will be survive advance beside of how many money to bought product.. 3. Opportunity : opportunity is necessary too .. opportunity Will be chance To know produce market needed Become to save n spend our money .. 4 . Threat : threat chance seen a something product Will be buy .. chance to seen opportunity to save money .. like a capitalism.. it’s create a product n development, produce a product n bought something product all over is the capitalism .. but bought a freedom is not sell i think is the difference things instead .. thankyou .
This really only applies to certain people, middle class and up, and it’s unfortunate to see this article after perusal the Big Think article, “We’re wired for Conformity.” Capitalism and people hoarding wealth and resources is the bigger problem. People need to be paid more, money can buy happiness. Money can buy health care, education, healthy food, time, etc.
Burdened by ignorance reads true to me. We are trained to be irrational about money, sex, and violence. We are taught to live in debt to pay for wants, not needs. Many families are more likely to talk about sex than managing money. We are puritanical about porn, but see dozens gruesome murders and rapes each night on popular TV shows without protests. Our thoughts and emotions are so dominated by the material side of the “American Dream” many of us are unhappy our entire life no matter our material success. Now we have Christmas coming up and logic is about to fly away as many will go in debt cause we know we will be judged by the dollar amount of our gifts.
money died in 1971, wealth inequality increased since then and continues with the current K shaped recovery, can we please, talk about wealth, in terms of cash, assets, health and wellbeing, facilitated by currencies, stores of wealth, wealth protection, etc… show me the money! seriously, where is it? how is money backed by debt, a rational thing to be talking about today?
Money is a tool, not a God; keep that in mind and you can’t go far wrong. Personally, my needs change. As a student I could survive on almost nothing, as an old guy, something for the teeth implsnts might be most welcome. But I suppose, at the end of the day, I could survive on false teeth. What matters, is not how much money you have, God, I’ve met so many unhappy guys with tons of money, but how much money you need.
Using a debit card is dangerous. We use credit cards like cash and pay the bill at the end of the month. This insulates our bank from exposure to theft in the marketplace. Also places like Lowe’s and Target give 5% discounts on all purchases. Credit cards protect your money and offer purchase protection and discounts. It’s poor education to not teach people how to use credit cards to their benefit and to just say “credit cards bad.” If I need new living room furniture, I get zero percent interest spaced out for 24 months. If inflation is 2% I actually save 2 to 3% on my purchase because the dollar is less valuable. Setup auto pay in my bank and the deal is done. Then when I need a house loan I get low rates saving me 100’s of dollars a month. And my starter house became my first rental house. The instructions here are not really about wealth, they are about minimal survival… there’s nothing bold here.
I do not agree with using your debit card to keep track of the expenses. You can do exactly same thing with the credit card and get free money in the form of cash back and points. I do think using your debit card for purchases is stupid. Because that’s free money right there. Ofcourse you need to strictly follow the policy of closing every and all balance on the credit card right after the purchase.
8:50 And this is why you shouldn’t listen to psychologists… People spend money on themselves because they’re the only ones willing to do so, the exception being families where parents spend money on their children. That spending doesn’t have to be motivated by happiness because the goal of life is not happiness! The goal of life is survival, preferably with a healthy, comfortable standard of living and personal spending is intended to achieve this. Once the above goal is achieved, people can then choose what to do with their discretionary spending. Charity (giving to others) does indeed make you feel good, but it’s also a temporary feeling. You need to keep doing it to maintain the contentment you feel from helping others. Similarly, spending money on experiences, while worthwhile and rewarding, is also temporary. One advantage of spending on durable, material items is they’re reusable and long lasting, so you get a lot of usage from them which itself allows you to have many memorable and worthwhile experiences.This is why you should do all three. TLDR: Give some of your money away to worthy causes, spend some of it experiencing life to the full, but also buy stuff that makes your life easier and more enjoyable and ignore the advice of psychologists who have no idea what they’re talking about.
Most millennials who have understand the money will refrain from buying things that makes no use in the future. Buy only when necessity arrives and avoid spending money on FAD things that won’t even last for 3 months of use or style. Becomming a minimalist; frees your mind, avoids taking up enourmous debt because of the discipline on not over spending, having emergency funds is the priority, and lastly if theirs a surplus money you can either invest in yourself(adding knowldge to be monetized in the future) or in the market.
Spent money wisely and debt is good if you spent it on cars chicks and booze well then your screwed. Me. Spent debt to make money not lose it buy apartments and houses rent them out and make some money. Me. If dont risk anything what is the point of living. Me. I’m planning to retire at 25 in 2025 see ya then.
The article’s thumbnail reminds me of a close family member. This person will drive across town to save five cents on a gallon of gas. This person will also pay cash to avoid the 25 cents credit card transaction fee, totally disregarding the $2 ATM fee, the time and hassle to personally withdraw cash at the bank branch, or the risks of carrying cash in the first place.
Somewhere down the line the concept of money got blurred I reckon. This coin in my pocket allows me to live my life without worrying about hunting and growing my food, heating my home etc etc. This money has freed me from laborious hard work and an early life. Fact is. Nobody really works hard. The odd exceptions sure. But seriously, if you’re that concerned set aside any amount of money. Eventually that money in your savings will grow bigger than that one paycheque. When that happened for me I felt the burden lift slowly.
1) We have to distinguish between unsecured debt, and secured debt, i.e. credit cards are bad but a mortgage is good. 2) We need to be able to save vastly more than we repay on our unsecured debt, but they can co-exist. I don’t believe you need to have zero debt at all times and sink all your savings and disposable income into your debt before you can start allocating monthly savings aside 3) I think it is ok to use credit in an emergency because you cannot access your savings within 30 days. In this way credit cars can be IMMENSELY useful as a tool for LIQUIDITY, not as new debt.
All good advices. I disagree with using only debit card except for those with poor financial discipline. Time and again I am amazed how much adults with no grasp of compound interest, and time value of money. That alone has to be the most important financial knowledge to financial independence. Debts, like revolving debt of credit card, and collateralized debt like mortgage, can be very useful if you use them responsibly. Lastly, this article has 220k views while most of the questionable get rich quick articles here has millions of views. Most want to get there fast, with the least of efforts.
I learned how to budget and save from my mom. Little bites. She just gave me her strategies — most of which was delay an impulse purchase. If it’s still available a week later, buy it if you want. If not, you didn’t need it anyway or you can wait for another. Even my husband is amazed at my ability to save 💰.
Learned something new….I”m a Numerate person. Also……I took Economics(2years) and Home-economics(1year) in Highschool. Don’t they do this in the USA? You know teach how to budget, teach about proper diet, how to read ingredient labels. Washing labels for clothes……..etc.? Calculate prices by volume or weight. that a 3 for 2 deal isnt cheap if you only need 1. Because if you can’t eat it on time you’ll just have 3x the trash.
I’m sorry, but you cannot save your way to independence and financial freedom. Imagine for a moment if everyone did that, decided to remove their money from the economy and save it somewhere. What would happen to overall incomes? Aren’t other people’s salaries dependent on other people’s spending? Production is the pathway to freedom and independence. But no one talks about that, because it seems to be so glaringly difficult for an average person to actually make something that someone else would want to buy from them. But that’s where the discussion belongs, I feel.
1. What was Vicki Robin’s 2016 session about? a. Cooking b. Relationships with money * c. Exercise d. Art 2. How many people were in the room during Vicki Robin’s session on money? a. 20 b. 50 * c. 100 d. 200 3. What was the general feeling of the people in the room about money? a. Excitement b. Joy c. Fear * d. Calmness 4. What did Vicki Robin find infuriating about people’s relationship with money? a. The amount of money people had. b. The fact that people had debt. * c. The fact that people didn’t have enough money. d. The fact that people didn’t talk about money. 5. Who was in fear about money in the room according to Vicki Robin? a. Only people in debt. b. Only young people. c. Both rich and in debt people * d. Only older people. 6. What is a major weakness of human decision making? a. Narrow framing * b. Broad framing c. Emotional control d. None of the above 7. What is the first layer of financial independence? a. Getting out of debt b. Saving six months of money in liquid assets c. Understanding that you’re a sovereign being and the economy is secondary * d. Investing in stocks 8. How can you get out of debt? a. Keep spending more b. Stop going into debt * c. Use credit cards more often d. Buy more tchotchkes 9. What is the third layer of financial independence? a. Understanding compound interest b. Saving six months of money in liquid assets c. Getting out of debt d. Surplus savings can be invested in such a way that it throws off an income * 10. What is the fourth layer of financial independence?
Things are a bit strange right now. Inflation is making the US dollar weaker for buying things, but it’s getting stronger against other stuff. So, stuff like stocks, houses, crypto, and precious metals aren’t doing so great because folks are putting their money into dollars for safety. I’m worried about my $320,000 savings losing value fast. Where should I put my money to keep it safe?
“Knowing money is your life energy.” No. Don’t know that. It’s a bad thing to know. Money = options. Your life energy can exist entirely independently of those options. It can even exist without any options, although that can definitely dampen it. But our life energy isn’t tied to our income. We live in a hyper-capitalist society so we’re taught to think that money = life. It doesn’t. The ultimate currency in life isn’t money, it’s time. You can run out of dollars and cents and still live and have energy and meaning. You run out of hours and minutes? Well, that’s a wrap folks. Both money and time are important. One is far more important. Don’t confuse them.
They talk about “narrow framing” and if people thought bigger, they would make better decisions. My biggest fear when I was 6 years old was Earth being eaten by a being that just plucks planets out of solar systems like blueberries off a bush. What do I do when I think like this and just don’t care about money at all?
Why would you need your “6 months saving” to accessible in 24-48 hours? Assuming that this would be used to pay bills over 6 jobless months, you don’t need it right away. You need it to be in a low-risk location so it doesn’t devalue right before it’s needed, but there is no reason it can be somewhere that is can be earning interest, dividends or reliable growth.
If you don’t care about this, no one else will care. You are the last leg. You are the last chance for your financial health. Micro manage, because no one else will. You don’t need a financial manager or advisor. Even a pro athlete, making millions, doesn’t need a financial advisor. A common human life is 80 years, 30,000 days, 700,800 minutes. You don’t even get a subdivision of “millions” until you count by seconds (42,048,000 seconds). How quick does a second of time last? You have roughly get 42 million seconds on this Earth. Don’t overplay the desire to build wealth.
“…knowing that money is your life energy…” Ah. No. It isn’t. And thinking like that is why folks can’t do your step one, by the way. Oh, and you know the expression, “Money doesn’t make you happy”? That’s actually true. If you’re fully bought-into on capitalism there’s no way your brain can understand that statement, but it’s true nonetheless. There are millions of people with obscene wealthy who are very unhappy, and many many times more people who are in abject poverty, and yet are reasonably happy. (Less now than 50 years ago thanks to more and more of the world fully buying into the concept of capitalism, but still a ton of people in that category.) Okay, I wrote that just before that guy pops up and tells us the money-can’t-buy-you-happiness thing… but with a caveat of the ilk: actually it can if you’re careful. Again, I call BS on that. Saying that we get happiness from buying stuff from others – yes, that is true (for everyone who’s not a psychopath I guess.) The concept of being happy with “enough,” is important. Wise. Overall you had some interesting thoughts here. Thanks for presenting this.
I legit can’t stand this, feels like your getting a lecture from people that don’t understand the problem … “Portfolio”, “Economical freedom”, “Passive Income”, “Savings” … as though all that was so simple that a 4 year old can do, what if a person is stuck in a situation that economicly keeps them in debt, so they dont have any chance at savings, “Portfolios” or “Econimic freedom”, their just stuck barely surviving from pay check to paycheck, and their supposed to blindly listen to this BS and what … carry on … this provides absolutely no help …
BS. Money provides happiness. I’m living in a block, 3rd floor without elevator, with 2 kids and a dog. In the current system I will never be able to afford a house, even the cheapest. As a matter of fact it’s an abstraction to me where do those house owners get their millions from. Anyway, a house with a garden would improve my comfort of living 1000 times. Not only to us, but to our kids and to our dog. You’re all rich and hence repeat that BS that money doesn’t give you happiness. It gives you everything. Happiness, time, health, love (more time can be spent with your kids) and so on and so forth.
I hate borrowing money unless it’s to my advantage. I got a really low car loan rate and financed my suv 100% while the cash for the car was making me more via investing. I paid cash to buy my retirement home. I pay off credit cards monthly. I save for home improvement projects and future car buying (I don’t see interest rate going to be 1.5%).
Considering that most Americans live pay check to paycheck…acquiring debt to survive is inevitable. Whether it’s credit card debt, payday loans or whatever. And if they’re acquiring debt to maintain survival, feed their families, etc…saving money isn’t feasible or possible. Not to mention student loan debt, car loan debt, etc, etc The elephant in the room is the living wage is piss poor, inflation is thru the roof, and the value of the USD is as low as ever in history. Until those issues are resolved…most Americans will never be able to achieve financial freedom.
How to be sovereign again in this society post brain injury and put on disability. 🙌🏼❤️🙏☀️. Anyone of else can be injured/disabled at any moment. In different studies, just under half of our homeless are our brain injured. Seems our current system is parasitic on people and planet 🌎 We are rising from the inside out. Energy exchange will become more conscious and healthy out of necessity.
Not a fan of this! I was hoping for more from this. Only part I felt was good advice was about teaching the kids. The rest felt like everyone has excess and just buys too much stuff and it’s the primary driver and it’s their own fault for poorly managing their money. There’s so much good advice rules of thumb that could have been brought to light here. Interest rates are low this talk of saving a using compound interest is archaic in modern times. Should be giving some constructive data in how to build good credit quickly. How to build an effective and realistic budget. Utilizing tool and benefits of investments to maximize gains and growing wealth. Power or Roth IRAs. I expected more from Big Think.
I have noticed a lot of wealthy people who jet set about the world point to tips like not wasting money as the key to financially well being. That is good advice for ordinary people making $300,000 a year with a $150,000 entertainment budget. More rational advice for ordinary people who make $30,000 a year would be to A) put yourself on a path to making more money because after tax you will just scrape by and the first tragedy that comes by (and there will be many) will send you into unrecoverable debt and/or B) move to a country with more financial equality. My thoughts are that if a handful of billionaires hadn’t plundered half the wealth of the planet (and accelerate their stealing every year) that we could have had comfortable lives like the people of Finland and my retirement dreams would be bigger than buying a van to live in.