Personal Finance

Personal Finance Has Nothing To Do With Money

Man thinking and holding a piece of paper in his hand

If you look at it superficially, personal finance is everything to do with money: how to get richer, where best to invest, and so on.

All of this, of course, is part of personal finance. But personal finance has nothing to do with money. Rather miss placed priorities and value regarding money.

Learn to manage your money

Money is not the problem, the problem is the lack of it. Of course, money can’t buy happiness, but it’s not easy to be strapped for cash, and it can in turn cause a great deal of stress. Obviouls the level of stress will vary depending on the situation.

Poverty is not just a physical limitation. It is also a way of thinking. When poverty takes over, we begin to think differently. When we think about money all the time, we begin to notice other things, to evaluate our own choices differently, to anticipate events differently, to make decisions differently, and to behave differently.

Whether we like it or not, money has power. Most of us are highly dependent on it, and that’s where personal finance comes in. Personal finance is all about knowing how to manage money and understanding how to report cash income without a 1099 form to take advantage of it. It’s about being able to take control of your money. Ironically, the main goal of personal finance is to stop thinking about money altogether.

Money is not an end in itself, but a means

It’s easy to confuse managing money with chasing it. Sure, it’s good to have more than enough money. But, if money is your ultimate goal, you’re managing your personal finances wrong. 

There’s no point in saving money if you don’t know what you need it for. This sense of meaninglessness will culminate in you eventually stopping saving and starting to spend mindlessly. We all need to spend our money, but making wise decisions is whats important. You could save up for a car, or a deposit on a house, but unless you consciously put that money aside, it’s all too easy to spend it frivolously.

Although maintaining personal finances is not about saving as much as possible. Personal finances is about living the life you want.

The value of money is only in what you can do with it. If someone’s goal is to have a stash of ten million dollars, that is an empty goal. What would you like to do with that money? Set goals for yourself based on the reasons you need to save money, not saving money for money’s sake.

In short, money should not be the main goal. You shouldn’t sit around in a job you hate so you can save up bits of paper so you can retire one day and finally relax. You should use your money in a way that allows you to have more of what you love in your life. That means you need to save up a little so you can plan for emergencies, but make sure you put some aside for the fun parts of life.

Personal finance is more about thinking than maths

Of course, there are basic rules of finance:

  • Spend less than you earn
  • Pay off loans
  • Invest money so that it generates income

Rules are important, but they don’t tell the whole story of personal finance. After all, personal finances are personal. And that means that sometimes you can and should break the rules and do what’s right for you. More than maths and rules, personal finance is about behaviour: your habits, thinking, and actions.

I could even argue that you should focus more on your behavior than on the rules. You can read about the best ways to pay off your credit, but if you’re not serious about it, you probably never will.

People often don’t manage their finances because they supposedly don’t care about money. But, oddly enough, that’s the reason they should be doing it. If you don’t like to think about money, the best way to do it is to make sure you set up a system to manage it properly. Yes, dealing with personal finances means dealing with money. You have to learn to control them so you can focus on the aspects of life that interest you.

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