My Money Manifesto
At the core of my financial philosophy is simplicity.
Simple is easy. Simple is efficient. Simple is consistent.
You want the core tenants of your financial wealth building to be simple in nature and easy to automate and build into daily habits. The less you have to think about the monetary consequences in regards to each of your decisions, the easier your path towards financial independence.
Basic Tenants of Personal Finance
These are my basic tenants of personal finance and what I have incorporated into my everyday living to strive towards my goals. As I repeatedly stress, your foundation has to be strong and defined as clearly and specifically as possible.
1. Define YOUR Money Goals as SPECIFICALLY as possible
2. Avoid Fiscally Irresponsible Influences like the Plague
3. Always Spend Less Than You Earn, Invest the Surplus, Avoid Debt
(If you read nothing else on personal finance, the rule above will take you to financial freedom alone.)
4. Remember You Are ALREADY Wealthier Than the Large Majority of the World
5. Consistency is Boring. Consistency is Freedom. Consistency is Power. Be Consistent.
In The Trenches
1) The more concise and specific your financial goals are, the more you can hold yourself accountable. WRITE out your monetary goals and what you want to accomplish in a 6-month, 1-year, 5-year period, and so forth. If your goals are vague, so is your process.
Clearly define your vision, so you can clearly define your process.
2) Some people, or potential lovers, are completely detrimental to your financial goals. You have to find the balance, or find a way to explain to certain people who feel the need to constantly go out or spend money on a extremely consistent basis, your goals and learn to say no. Even worse, if you were to get married and divorced, that could potentially decimate half of your net worth.
Avoid the people and activities that consistently act as a drain on your wallet without adding any quality to your life. Only you can determine that distinction for yourself.
3) This rule is pretty simple. If you only follow this rule, then you will place yourself in a good position to succeed by default.
4) Keep in mind that the majority of us reading and interacting with this blog have access to clean water, access to transportation of some manner, access to the internet, the ability to communicate in a language that is a major world influence…these are all blessings that MANY people in the world do not have. Most of the readers of this blog have their basic necessities taken care of, including myself.
Recognize the gravity of this.
As we all pursue more wealth and financial independence, it is important to acknowledge how lucky we already are to be in a position to take the steps towards building wealth. There are plenty of people who would kill just to be in the starting position you’re in right now.
5) Be consistent. Take the time to do your research and come up with a foundational game plan to carry out your wealth building. Add, subtract, and branch out over time as you learn more through your own research. However, it is so vital that you are consistent with your investment philosophy.
Consistency may not be exciting, but it sure as hell will make you money over the long term. And, any smart investor will always be investing for the long term (20, 30, 40 + years).
On Why I Take These Steps
There was a great story that circulated and went viral online (and underwent multiple editions as with anything that goes viral).
A professor fills a jar with golfs balls and asks his class if the jar is full.
After hearing a room of yays, he proceeds to fill the jar with pebbles and asks once more if the jar is full.
After another round of yes, he fills the jar again with sand.
The professor brings out 2 cups of coffee after asking once more if the jar is full. The students start to understand at this point, and the room has scattered amounts of laughter.
You have to define your own priorities in life. If you focus strictly on the sand, the small things in life, you won’t have time to focus on your big picture priorities. Your family, your friends, your loved ones.
Money is powerful, but it is a powerful resource at the end of the day, and it is a means to an end.
A means to pursue everything in life you’d like. And, no matter how much you chase money, you should always make time to have a cup of coffee with a friend.
When you have the time, always take the long way home.
Get interested in the smallest details of life. Find excitement in the process of your business, the texture of your coffee cup on a brisk morning, the warmth of sunlight after being indoors for too long. Fill your life with love of details.
Money, contrary to this blog, is not the most important resource in your life. Time is. Be careful who and what you give your time to. There is no refund.
You can buy your freedom or you can choose to be entrapped in the system of consumption. There is no wrong answer, you just have to be clear about the choice you’re making.
Seek and listen to advice from those who either have made it to where you want to go, or are in the process of achieving their goals themselves. Everyone in this world is a talker, but you can see who is a do-er relatively quickly.
Blood of the covenant is thicker than water of the womb. Show loyalty to those who show loyalty to you. Real relationships are hard to come by.
Debt is dark cloud and an anchor at the same time. Avoid debt, unless it is good debt. Even then, plan your good debt wisely.
Travel slowly and travel in depth. Take the extra time to go down those side alleys and talk to the locals, get to know their language from their tongues, to see their homes from their point of views. Your perspective is not the only one to exist.
You, and I, are a speck of dust on a speck of dust, suspended in a sunbeam. Make peace with that, be immersed in that, and live the fullest and deepest life you can, whatever that means to you.
Once again, simple is best. Invest your surplus savings into index funds. You can allocate your proportions of stocks and bonds based on your risk tolerance. However, every good investor is in the game for the long run and this should be kept in mind when developing your personal investment philosophy.
There is no risk-free investment, remove your emotions, and make investments based on your timeline and risk tolerance.
Don’t choose and pay an active money manager. Over the long run (a short ten year period), the S&P 500 will outperform any individual money manager. They may out-perform an index fund over 1, 2, even 3 year period. But, over the long run, the S&P 500 index fund will outperform any individual.
No one can time the market. You will not time the market. If Warren Buffet can’t time the market, do not fool yourself into thinking one or two good bets grants you that power.
Always, always, always do your own research. Trust, and develop, in your ability to gather information and draw conclusions.
Read. Network. Take people out to coffee. Give knowledge back to the community. There is plenty of money to go around. Even now, you are receiving information from people that elevates your financial knowledge.
Nothing is out of reach. Research your goals, build a timeline, execute. The world is your oyster, truly. Welcome to your life.