At its core succeeding at personal finance and achieving financial independence isn’t rocket surgery. All you have to do is spend less, save more and invest wisely. If you happen to need more information about one or more of these three pillars of personal finance, all you have to do is ask, and the Internet doth provide. In plenty. There are frugal challenges, and how to do no-spend months. There are forums and subreddits. There are blog posts about backdoor roths and 401ks and sometimes these posts fornicate like rabbits and produce posts about mega backdoor roths. Rainforests sigh in relief that the world is digital because an entire forest would have had to lay down and die to produce enough paper to hold all the information we have about debt repayment, asset allocations, tax efficient asset placement, the Trinity Study and using credit card rewards to subsidize travel. One doesn’t need one’s lazy butt to move an inch out of that comfy warm spot on one’s couch to set up accounts, automate investments and pick three index funds.
And yet so many of us still struggle and grapple and wrestle with our money (or lack thereof). We have the eye of newt, the wart, the cauldron and we’re pretty sure we’ve got that evil cackle nailed. Still, somehow, we just can’t get the Moolah Growantus spell to work quite right. It could be that what is missing is some good old fashioned human sacrifice to please the gods (and god knows you’ve been dying for an excuse to stuff that pimply adolescent brat from next door into the oven). Or maybe the spell isn’t working because you aren’t obeying the Commandments of Personal Finance.
Cue thunder. Enter stage right dude in robes with a Gandalf-worthy beard bearing a tablet of stone (because a Pinterest graphic just doesn’t have the same level of sexy as an engraved stone tablet). I give to you the 5 commandments of personal finance.
To Thine Own Self Be True
There is more than one way to skin the personal finance cat. There are advocates for building wealth via passive investing in index funds and there are those that passionately champion landlording. There are those that believe that you should pay off your mortgage as soon as humanly possible, and those that believe that doing so in the world of low interest rates is the mark of a diseased mind. Should you buy or should you rent? How is one to choose the best path to financial success?
By remembering that it is called personal finance for a reason.
No matter how much back of the napkin math you do that shows beyond a shadow of reasonable doubt that investing your money is better than paying down your mortgage, if your mortgage is what keeps you up at night, you’re going to have to deal with that first. There may be piles of money to be raked in by landlording, but if the idea of dealing with cranky tenants whining about broken faucets makes you want to fish your eyeballs out of your head with an ice cream scoop you’re going to have to stick to index funds. Some people can be extremely frugal badasses. Others (like me) are made of less stern stuff. You have to find a personal finance path that works for you.
You can’t live someone else’s financial life no matter how fantastic their blog makes their lives sound. What may be a fabulous look on someone else could make you look like a frump. If you attempt to ape someone else without taking your own oh-so-lovable quirks into account it is going to be like wearing gorgeous heels to a party that hurt so much that you can’t dance. The journey to financial independence is long. You have to be able to dance along the way. So, take a long hard look at yourself in the mirror and then to thine own self be true.
Know Thy Strengths and Leverage Them
Conversely, Know Thy Limitations and Work Around Them.
They say that doing things that are hard to do builds character, and I am sure that they are right. By all means build that character. When you stop a minute for a breather and to wipe the sweat out of your eyes, might I suggest something else to try? Do what comes easily to you. It beats the hell out of repeatedly falling off the wagon with a great big thump.
You have a financial superpower. Maybe even two. You just don’t know it yet. Maybe, like me, you have never ever had an iota of interest in cars and just want something reliable that will take you from point A to point B. Maybe you are a kick-ass cook and have always wanted to explore various world cuisines. Maybe you’re an immigrant, and you know for a fact that entire families can live very happy lives in very few square feet of space, and no, every kid does not in fact need their own bedroom. My I-don’t-give-a-rats-arse-about-cars superpower combined with my I-am-an-immigrant superpower means that I own a fully paid off second hand car and that I was extremely skeptical when told that I needed something bigger when I popped out a kid. Every single other person in our social circle bought either an SUV or a minivan when they had kids. Having that superpower means that when folks tease me about my lack of bluetooth integration or central locking or parking assistance or butt warmer, it doesn’t bother me because I am genuinely not the least bit interested in any of these things. I don’t have to battle the green-eyed monster. I use up none of my precious willpower to curb my spending in the area of transportation. This means that I have more willpower left over for the areas where I do struggle and need to work on getting my spending down.
The value of this commandment compounds if you are in a partnership and bring different superpowers to the table. Maybe your partner, like mine, is allergic to spending more than 15 minutes at a store like Target. Use that superpower. If I need something from Target, I’ll make a list and deploy Mr. BITA. If I go, I might be tempted to browse and pick up something I don’t need. If he goes we are assured that all he will be focussed on is a speedy exit. I know my limitations and I work around them by leveraging his superpowers.
The point is that there is something from your past, or some quirk of your personality, or some skill that you have that puts you at a financial advantage. Find out what that is, put your underwear on over your pants, don your cape and use it to kick some serious financial ass.
Get Thy Partner On Board, Or Thou Art Screwed
If you have a partner and you share finances, you and your partner are going to need to be on the same page if you expect to succeed in your endeavor to sock away a pile of cash and eventually sail off into the sunset.
If you are an ant, but your partner is a grasshopper, reading all the personal finance blogs in this universe isn’t going to make for a happy financial ending. It doesn’t need to be a perfect understanding. You both don’t have to agree on the proper job for every single dollar that passes through your hands. You both don’t have to agree on every single spending decision. Maybe one of you likes to eat out more often than the other would like. Maybe one of you thinks that the idea of giving up cable is an abomination unto the Lord. It doesn’t have to be a perfect understanding, but an understanding there must be. You need to be on the same page. You need to be in the same ballpark, playing the same game, on the same team, going for gold together. On any given day one of you may be the superstar, but both of you need to agree that this is a team sport and you are in it for the long haul together.
Keep Thy Mind Not Idle, Unless Thou Wantest to Fritter All Thy Moneys Away
Make no mistake, the idle mind is indeed the pal of the devil himself. Make all the financial plans you want. If you are bored you are doomed to failure.
A bored mind will come up with ways to spend money, not to save it. Worse still, a bored mind will spend money on things that don’t actually make your life better or fill that gaping void. Amazon used to be my void filler. I would spend my time binge watching a TV show, then feel guilty about having wasted all that precious time, then spend time browsing and shopping on Amazon because that was easier than thinking about how little I was accomplishing.
Find a hobby. Volunteer. Hike. Read. The low bar here is to not be idle. The high bar is to actually find something that makes you feel productive and fulfilled. A gold star if you can make this thing actually generate a revenue stream. The more accomplished you feel, the more satisfied you will be be. The more satisfied you are, the less likely you are to raid the piggy bank.
Plan Thy Life and then Plan Thy Finances
Listen up, because this is the most important commandment of all. Financial independence is not a panacea for all the problems of your life. It is merely a tool. A powerful one, no doubt, but a tool nonetheless. You need to be the one wielding the tool, not being a tool yourself.
If you are young and your FIRE date is a decade or more out into the future, fashion for yourself a life worth living now. FIRE will enable you to do more in the future, but don’t put your life on hold until you get there. Don’t confuse this with a rousing cry to #yolo and to spend like an idiot. This is a reminder to enjoy your life. Depending on what floats your boat that may or may not require you to spend a little more. The important thing is this: if you live a miserable life for a decade, you will continue to be a miserable person with $2 million in the bank, because being miserable is all you know. You won’t suddenly have the skills to go out and make friends and foster relationships. You won’t suddenly be less afraid to leave the familiar and travel far and wide. Wonderful adventures will not suddenly befall you.
Dive in. Get a little dirty. Get a little bruised. Build a life that is truly worth living, and then build up your finances to support that life.