Often, people quick dive into budgeting and investing when trying to handle their finances. While these activities are the essence of effective personal finance, the backbone is having the right mindset about personal finance. I live by these three principles – money is not the root of evil, I will control my money, and personal finance is personal to me. These principles helped me carry out my financial activities and stay happy.
Many people wake up and tell themselves that today will be different from the other days. Today is the day they will take charge of their personal finance. So hurriedly, they take out pen, paper or open an excel file to start budgeting. Some even start contacting financial advisors. Without firm conviction on their beliefs on money and handling money, they soon get tired, disillusioned and revert back to their old habits. They end up feeling disappointed because they had a goal, but they didn’t achieve it. And setting up to achieve a goal and not being able to achieve the goal is torturous.
What happened? I’ll tell you what happened. They worked on the how without establishing their principles and mindsets. They looked at what techniques must be used without understanding what is their inherent belief about money. As with most successful projects, you need to work on your beliefs and convictions first, and then set to work to achieve. Your beliefs translate into actions, therefore it is important to have the right mindsets.
Here are the three principles one should understand, and hopefully adapt, in order to be happily successful with their personal finance. I emphasize on happy because at the end of the day, you wouldn’t want to be miserable after all the savings and investment activities that you’ve done.
Money is not the root of evil. The love of money is the root of evil.
There are a number of people who say that money is the root of evil. They believe that if they want to have more money, they are being selfish. They also think that they should not work to have more money since they might become evil in doing so. Well, I wouldn’t blame them. After all, there are many relationships that have soured because of money matters.
You should control your money. Don’t let money control you.
The first step is establishing that the love of money is the root of evil, not money itself. Once you have acknowledged this, it is easier for you to control your money.
Money is not your master, you are the master of money. Money is a tool that helps you live your life. And you should live your life, and not let money run your life. Learn to use your money, just like how you use you pen, paper, pots, etc. It helps you achieve something, but it is not the goal in itself.
Your end goal should not be earning more money. The end goal is earning enough money to support you and your loved ones and to help you reach your dreams, whatever your dreams may be. I say this again, learn to control your money.
Don’t lose your family and friends over your quest to earn more money. And don’t lose your health over it. At the end of the day, money enables you, but you should remember that there are things money can’t buy. Money is just a tool. Put money in its place.
Personal finance means it must be specific to you, and you alone.
Finally, you should know that there is no one size fits all. One may be comfortable living austerely, but you might need a bit of financial allowance to live a little more comfortably. You have to know yourself and know what you want and need. Yes, it is ok to pursue things you want, reasonably, of course. Be comfortable in planning for your gratification.
When making your budget and plan, be sure to acknowledge your strengths and opportunity areas. You can always grow and become better, but growing better does not have to mean growing faster. Grow at your own reasonable pace. If you need to start slow, then start slow. If you can’t save $100 now, start with $10, and make a plan to increase it once you’re more used to it. The important thing is to start.
Also, while having a financial advisor is good, I wouldn’t recommend that you work with one immediately. There are some financial advisers that want to push sales to you, so they are not really 100% concerned only about your welfare. It’s just human nature to have vested interest. But once you are clear about yourself, your principles, your goals and ambitions, then you can engage a financial advisor knowing that you will be working with him as how it should be. He is your advisor. He gives you information on what is available but you make the final decision. If you are comfortable to make decisions and own them, then it’s a good time to work with a financial advisor.
Remember, you need to put the ‘person’ in personal, and the ‘I’ in finance. That’s the time you’ll have a satisfactory personal finance strategy.
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- Be the master of money.