Personal finance is personal. Read that again. For most folks, it’s hard for them to believe that there isn’t one perfect path out there, and that they will get everything they want if they find and follow it.
Hear me now. The only universal, iron-clad rules that applies to everyone is that you must live below your means in order to have money to invest. This rule is an immutable as the sun rising in the east and setting in the west. Everything else is details.
- When to start saving?
- How much to save and for how long?
- Short term goals? Medium term goals? Long-term goals?
- Pay down down debt or invest? One before the other, or both simultaneously?
- Spend the dollar today or spend the dollar tomorrow?
Every other decision about your personal finance is a detail that you can adjust to fit your personal circumstances.
Your Priorities are Your Choice
You get to the identify your dreams and prioritize them as you see fit. Concert tickets before down payments? Charitable donations before travel? Clothes before adopting a pet? It’s your money, so you get to decide which expenditures are most important to you. Your dreams for how you want to live your life will guide how you spend your money as you move through the world. Read that last sentence again and continue doing so until you’ve embedded it into your subconscious. Once again, for the people at the back: You are the person who gets to decide which expenditures are most important to you.
The vast majority of us do not have enough money to buy everything we want as soon as we want it. Using credit to do so is unwise.
Why is credit bad, Blue Lobster?
Well, dear One, it is bad because credit isn’t free. When a credit card bill isn’t paid off in full when the balance is due, you pay interest. Interest payments to the bank do not benefit you…unless you hold shares in the bank. Still, even if you’re a shareholder in the bank, dividend yields are less than half the interest you pay on your outstanding balance. Moral of this little side-story: don’t pay interest and buy bank shares.
Back to Priorities & Choices
You get to set the timelines for your dreams. Some dreams can be made real sooner than others. These would be classified as short-term goals, and they can be achieved within 12 months or less. Long-term goals would cover the dreams that will take more than 5 years to achieve. Anything taking more than than a year but less than 5 would be a medium-term goal. Your dreams aren’t going to be the same as mine, so your timelines will also be different.
Next, you get to create the budget for your dream. This is where you put pen to paper and determine how you’re going to pay for it. Salary? Side-hustle money? Dividends and capital gains? Royalty payments? Inheritance? Insurance settlement? Lottery win? So many options! Admittedly, some are less dependable than others but I want you to consider all of your options.
You also get to determine how much research you’ll do to achieve your dreams. This might mean talking to others who’ve already done what you’ve done and asking lots of questions. It might mean taking a few courses, or watching some videos on line, or borrowing some books from the library. If your dream is important to you, then you’ll do what it takes to make it come true.
Never Forget – You’re the Dream-Weaver!
And as the dream-weaver in your life, you get to decide when you’ve fulfilled your dreams or when they’ve changed. Yes… sometimes, dreams change. When I was in high school, I was going to buy myself a Jaguar sedan for my 40th birthday. Let’s just say that this particular dream changed – and not because I didn’t have the money to do so by my 40th. As I matured and thought about what I really wanted for my life, the Jaguar XF would not have gotten me closer to what I really wanted. If what you want no longer accommodates yesterday’s dreams, then feel free to eliminate them from your priority list.
In short, you get to decide when you’ll stop grinding towards your dreams. Life isn’t about working 24/7 until you die, particularly if you’re doing so to fulfill dreams that you no longer hold dear. Only your money should be sent out to work that hard, so that you, the dream-weaver, can take the time to relax and to enjoy and to laugh and to just be…
So, Dream-Weaver, ask yourself when you will stop grinding for more?
The Grind
Go back to what I first said at the start of this post. Personal finance is personal. If you want to continue grinding for more, then there’s no reason for you to stop. Again, it’s your life, your time, your choice.
By the same token, if you want to stop, then do so.
However, if you feel like you can’t stop, then ask yourself why. There’s no one right answer for everyone but you owed it to yourself to understand your choice and your actions. There will come a point where your investment portfolio will support all of your dreams. (This assumes that you invest the difference between what you earned and what you spent, while you are living below your means.) At that point, you can ease off the gas pedal and enjoy the fruit of your efforts. This is a fancy way of saying that you can live out the dream-life that you so painstakingly built for yourself.
If at that point, you still want to grind as hard as you did when you first started, then you owed it to yourself to understand why. Knowledge is power; self-knowledge is no less so.