Personal Finance Has Nothing to Do With Money.
At first glance, it seems that personal finance is primarily associated with money: enrichment, investment optimization, and so on. This definitely applies to all of this, but in a broader sense it has nothing to do with money. It’s more about using it to optimize your values and priorities.
Learn to manage your money so it doesn’t control you
My father used to say, “The problem is not money; there is a drawback. ” And it’s true: money doesn’t bring happiness, but lack of it can hurt. And the level of pain varies depending on your situation.
Growing up, my parents struggled to make ends meet for at least a few years. They wanted to move to a better neighborhood with better schools, but that didn’t happen. Others are even worse. InScarcity, Why Too Little Means So Much, authors and researchers Sendhil Mullainathan and Eldar Shafir describe study after study that shows that lack of money affects our determination, well-being, and even our politeness. The authors write:
Scarcity is not just a physical limitation. This is also a way of thinking. When scarcity grabs our attention, it changes the way we think. By staying in the spotlight, it affects what we notice, how we weigh our choices, how we think about, what we decide, and how we behave.
Whether you like it or not, money is power. Most of us are under his control, and that’s where personal finance comes in. Personal finance is about learning how to manage money so you can use it to your advantage. It’s about taking control. Ironically, the goal of personal finance is to ensure that you don’t have to worry about money at all.
Money itself is not a goal
It is easy to assume that managing money is chasing after it. Obviously, having more money always helps, but if money is the ultimate goal, you are doing it wrong. And for a long time I did it wrong.
After studying, I wanted to travel. My goal was to get out of debt and afford to travel to Europe. It was a specific concrete goal and it motivated me to pay off my student loan. However, after traveling, I started earning a little more, but I really had no other financial goal. In a sense, I was going with the flow; my goal was simply to save money. This goal was vague and boring because it was to accumulate pieces of paper. There is no point in saving money if they have no purpose . It seemed pointless in my situation, so in the end I stopped saving as much and started spending mindlessly. I guess that ‘s okay , but if I thought about it a bit, I could save money on something that really mattered to me.
It took me a while to understand that money is a tool, not an ideal. Personal finance is not a savings tool. It is about using this tool to live the life you want. Luke Lands of Consumerism Commentary put it this way :
Money is only worth what you can do with it … So when I hear that someone’s goal is to make ten million dollars, it’s an empty goal. This goal is nothing more than having bits and bytes in a specific configuration on a specific server in a database record associated with your identity. I agree that it will be difficult to organize the bytes this way, but look further. What would you like to do with this money? … Link your goals to the reasons why you are saving money, not to the money itself.
The last sentence pretty much summarizes how people think about personal finance versus what they really are. I also love the way writer Colin Wright puts it in Big Picturing :
There is absolutely nothing wrong with money, and there is nothing wrong with striving for it even more, if it helps you become more yourself and allows you to do more of the things that make you feel alive. It is also important to have enough so that you can keep a roof over your head and food on the table: I am certainly not suggesting that the desire for any money is a waste of time, especially when it allows us to maintain social life. the basics.
Just make sure you know why you are stalking him. That you see the big picture and let it guide your steps.
In short, money is not the focus. It’s not about kicking your ass at the job you hate, to get some paperwork and then retire one day and finally relax. It’s about using money to achieve more in life. It could even mean that you are saving enough money to quit a job you hate and do something you really enjoy.
It’s more about reason than math.
Of course, there are some basic financial rules that relate to personal finance. Rules such as:
- Spend less than you earn
- Pay off your debt
- Invest so your money can grow
This is important, but it is not the essence of personal finance. Personal finances are mostly personal . And sometimes it even means breaking those basic principles and doing what works for you. More than math and rules, personal finance is about behavior: your habits, thinking, and actions.
I would even say that the focus should be on behavior rather than rules. You can read about the best methods of paying off debt all day long, but if you are not in the right mind, you probably are not going to do it. This is why the snowball method is most effective for paying off debt, although the stack method makes more mathematical sense.
People tend to brush off money management because they “don’t care about money.” Ironically, this is why they have to take care of managing this. If you don’t like thinking about money, the best way to make sure you don’t have to think about money is to create a system for managing your money properly . Yes, personal finance is about money. However, it’s really about learning to control it so you can get on with your life, whether it’s traveling, ensuring the lifestyle you want, or paying bills without worry.