Updated: July 24, 2020
I often say that personal finance is personal. I believe that it is deeply personal, just like our fears and worries, our hopes and dreams.
A basic example: what works for me when it comes to saving money may not work for others. In this case, I prefer paying myself first to save money; but I know someone who instead likes to save a fixed amount every week for their savings.
The strategies are different, but the result is the same. We both get to build and grow our savings.
Another example is when it comes to investing. Some people would ask me where I invest, particularly what stocks I own and which mutual funds I have. They’re hoping to also invest where I invest.
However, my investments are always connected to a personal financial goal. And those goals may not be the same as yours. So copying my portfolio isn’t really a good idea.
I might be investing to grow enough money to buy a helicopter. If that’s what you also want, then go ahead and copy my investment strategy. If not, then it would be better to develop your own strategy that’s customized to your personal goals.
Time and money
Time and money are deeply connected when it comes to personal finance.
You spend time in exchange for money. To earn income, actively or passively, you will need to spend a certain amount of time first. You study in school, you learn a skill, you work a job, you plan a business, and so forth.
On the other hand, you spend money in exchange for time. You buy vegetables at the grocery because it takes much more time to grow them yourself. You ride a bus because walking to your destination will take hours. The list goes on.
These may seem trivial or obvious. However, what I want you to understand is that because personal finance is personal, then how you spend your time, and how you spend your money is also personal.
This means there’s no right or wrong way to spend your time and money. Well, at least there is no explicitly right or wrong way to spend them.
You can spend your weekend binging on your favorite TV series, or you can spend it attending a seminar. You can spend your money shopping for clothes, or you can use it to buy a book about business.
All these are valid ways to spend your time and money. And whichever you choose to do is a personal decision that nobody can hold against you.
Personal goals dictate what’s right
I said that there is no explicitly right or wrong decision when it comes to spending your time and money. But when you take into account your personal goals, then a particular choice can become the better choice, the right choice.
This is the reason why I always encourage people to define their goals first, especially when it comes to investing.
You need to figure out what you truly want — the most important things that matter to you. Because by knowing these, you can then rightly devote your time and money towards fulfilling them.
For example, if you’re hoping to start a pastry shop business someday, then attending a baking class instead of watching television during the weekend is the “right” way to spend your time.
If wearing the latest designs matters more to you than expanding your knowledge about entrepreneurship, then shopping for clothes becomes the “right” choice over purchasing a business book.
What do you really want out of life?
It is an intensely personal question that you need to answer. Because that will dictate where you should devote your time, your energy, and your money.
One of the things that matters a lot to me is being able to travel. I love the sense of wonder when I’m out somewhere looking at new sights and experiencing new cultures.
Thus, buying an SUV, which allows me to do long road trips, was the “right” decision for me over buying my own house. And the reason why I don’t have any plans of buying one in the near future.
Moreover, having a financially secure future is also important to me. I don’t want to burden anyone with my financial needs or become dependent on anyone when I grow old.
That’s why I invest regularly and spend a good part of my week growing my existing businesses, and starting new ones every now and then. This is the strategy I chose to secure my financial future.
And over the years, I’ve noticed that some of the things I want, and the things that matter the most to me can change.
It took some time, but I’ve eventually learned to accept this fact, and even allowed myself the uncomfortable luxury to change my mind.
Personal finance is personal. How you spend your time and money is personal.
But strive to align your choices with your personal goals. Because if you ever hope to live a fulfilling life, then it matters how you choose to spend them.