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Personal Finance is easy

Personal Finance is easy

Personal Finance is easy. It would be fair to say that the entirety of the FI/RE blogosphere’s collective wisdom could easily be printed on a t-shirt.

  1. Earn more than you spend
  2. … and invest the difference wisely for the long term.
  3. Piss poor planning is not an emergency… but be prepared for when life happens.
  4. Saving up for something is deferred spending, which is not the same as saving.
  5. All your stuff must be stored, maintained, and eventually replaced. All of which costs.
  6. If you can’t afford to pay cash for something, then you can’t afford it…
  7. … unless the investment returns generated will more than pay for the financing costs.
  8. The power of compounding. Start now.
  9. Tax-advantaged investment accounts exist for a reason, use them.
  10. We all have the same number of hours in a day, invest in yourself to maximise their value.
  11. Capital growth makes you rich, but cash flow pays for the groceries.
  12. Wealth is measured in time, not money.

The truth is Personal Finance is easy

Everyone already knows what to do, they just fail to consistently execute.

When consistently applied, these same timeless lessons would have resulted in financial success for anyone, anywhere, at any point in history.

Once the basic structures and behaviours are in place Personal Finance becomes a largely “set and forget” endeavour. Sounds simple, right?

It is.

Positively boring in fact.

So why is achieving Financial Independence so hard?

It isn’t.

Financial Independence is the term used to describe the point at which a person gains control over how they choose to invest their time.

Think about that for a second. Now indulge me in some deductive reasoning.

The very fact you are reading this suggests you are educated and have sufficient financial means to be able to access the internet.

Given the somewhat boring subject matter this blog covers, and the niche audience that content appeals to, it is fair to conclude you are likely an adult.

Therefore if truth be told you already enjoy much of the freedoms that Financial Independence supposedly will grant.

Financial Independent is not magic

Financial Independence won’t care for your elderly relatives, or babysit your children for you.

Nor will Financial Independence won’t magically cure health concerns.

At best it provides the means to outsource some of those activities, however it will not make the majority of existing problems go away.

What does your future look like?

Picture your life 10 years after you have gained financial independence. You have already done your victory lap (nobody cared) and you have completed that big travelling adventure you had always dreamed about. What are you productively doing with your waking hours?

Hopefully you didn’t draw a blank, if you did then the pursuit of early retirement may not be for you!

Now ask yourself how many of those everyday things you were doing in your imagination could you not actually be doing today were you to prioritise and allocate resources accordingly?

Setting aside the cruising around in a Ferrari and coaching the Swedish bikini team fantasies for a second, I would be amazed if there was much in your list that you couldn’t already be enjoying in some form today.

Swedish Bikini Team

Swedish Bikini Team. Image credit: Andreas

You are only as trapped as you choose to be

You could change jobs.

You could invest in yourself by going back to school and learning a more lucrative skill.

You could make a lifestyle adjustment, moving somewhere with a lower cost of living in order to relieve some of the financial pressure.

Financial Independence may remove the financial imperative behind some of your prioritisation decisions, but as an adult you already enjoy the luxury of choice and make your own prioritisation decisions.

Next Steps

Featured on Camp F.I.R.E. Finance

  • Personal Finance is easy. Validate your own approach against the steps provided above.
  • Figure out what makes you happy, and start doing it. You can’t bottle time!
  • If you liked this post then please share it with your friends.
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{ 2 comments… add one }
  • The Rhino 23 March 2018, 17:28

    I think personal finance falls into that relatively small category that is ‘simple’ but not ‘easy’, a bit like getting fit or eating well.
    Most ‘simple’ things are ‘easy’ and most ‘complicated’ things are ‘not-easy’.
    Thats way this small category generates such enormous confusion and heartache.

    • Slow Dad 23 March 2018, 17:49

      An intriguing notion, thanks Rhino.

      You are correct, Personal Finance is similar to losing weight or getting fit. There isn’t really much to it, the proven path to success are both well known and straight forward. In all three cases if those approaches are consistently applied the desired outcome is highly likely to eventuate.

      The problem is “operator error“, the execution of those behaviours is not applied consistently. Perhaps this is a result of boredom, apathy, frustration, distraction, or whatever. That doesn’t make Personal Finance any harder however, it just means the biggest obstacle to achieving any of those three goals is ourselves!

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