The personal finance community–myself included–loves to focus on the finance side of things. But focusing on the finances is only half of the equation.
Today we’re going take it a step further and put the “personal” in personal finance.
Some “Personal” Q&a
I think everyone should know how to budget, what their investment goals are, or what their net worth targets should be. These are valuable questions with important answers. And these ideas will apply to 99% of you reading this post.
But the personal finance community already has those questions covered. The top-level experts have their answers. Books have been written, as have thousands (I guarantee it) of blog posts.
We’ve got stock picks and bond funds a-plenty. There are savings plans and FIRE advice galore. Do you want the best cashback credit cards? We’ve got twenty. But who cares? No big deal. I want more!
I want to go where the people are. Not just where the dollars are. And I’m not afraid to shamelessly riff off of Little Mermaid to get there.
To me, “getting personal” means going beyond the wallet and purse. We need to delve into the psyche. I want to understand how these decisions we make affect our life beyond our finances.
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What Makes You Happy?
It’s a billion-dollar question. Literally, I’d bet there are millions of people forking over thousands of dollars in pursuit of an answer.
If you aren’t seeking out the secret sauce of happiness yourself, you probably know someone who is. What’s happiness, how do we ensure we have some, and why can it seem so fleeting?
I certainly don’t think I’ve found the answer, but there are some ideas that stick out more than others.
For example, let’s look at the Fulfillment Curve. In short, the Fulfillment Curve states that happiness can be attained through spending money but only up to a point. After that inflection, you will reduce your happiness by spending more money.
The quick example I think of is Average Joe and his sports car collection (or fill in your favorite collectible item). Joe’s ecstatic when he buys his dream car. He drives it every day.
Then he buys a classic model and has to split his time between the two vehicles. Joe rounds out his collection with some European muscle, and now finds himself with three sets of paperwork, three maintenance schedules, and three different mechanics…
Pretty soon, Joe is spending equal time maintaining each vehicle as he is driving each vehicle. This isn’t quite what he signed up for. He paid the sticker cost upfront, but the bills–upkeep cost and time spent–keep rolling in.
Before you buy your version of Joe’s sports car, consider what really makes you happy. Perhaps you do just want to accumulate stuff to each their own. But the Fulfillment Curve is worth considering first.
How Much Time Do You Have?
This question applies to large and small scenarios. How much time do you have right now, per day or week? But also, how much time do you have left in life? How much time do you spend with your parents, your children, and your favorite dog Toto?
A lot of personal finance focuses on maximizing the rat race. Earn more money, save more money, and invest more money. I certainly spend time writing about these exact ideas.
When these types of articles are written, there’s an underlying assumption that you already balance time and money in your own life. We’ll help you with the money part, and you figure out how to fit it all into your busy life. But I think that’s a poor assumption from us writers. It’s not an easy balance to strike!
Is a 20% longer workweek worth 20% more pay? Is a 100% longer week worth doubling your pay? For some, the answer is yes, and for others, no.
The differentiator isn’t money, though (at least not always). It’s time. Personally, I’m not willing to go from 50-hour weeks to 75-hour weeks for a 50% (i.e. proportional) increase in pay.
Because my free time would be decreasing, it would go from “I can usually keep up with my blog” to “I barely have enough time to prepare my own meals.” I don’t want to live that way. Hustle culture can go pound sand.
Where Do You Want To Be?
This is both a literal question and a figurative question.
In this age of economic diversification, you can probably figure out a way to maintain a healthy financial situation while living anywhere in the world.
The skills that you have in your current life can travel with you. San Francisco needs librarians. Paris needs helicopter pilots. And there’s a revamped Transit van out there that’s begging for occupancy from a traveling blogger. Maybe that’s me?!
Of course, there are financial implications at work. Not all cities are affordable in the same ways. But the inquiry, “Where in this universe will I continue my existence?” is surely more of a personal question than a financial question, no?
One of the reasons why the FIRE movement is so exciting is that many financially independent people choose to uproot themselves completely. The term “geographic arbitrage” is used to describe people who earn their money in a high-cost area but then live their life in a low-cost area.
$750,000 might be a small retirement nest egg in NYC. But it would provide a lavish life in Buenos Aires or Bratislava. These two international cities have costs of living that are 34% and 48%, respectively, of New York’s.
As I mentioned before, you should also consider where you want to be on the sliding scale of society.
Some people want to fight tooth and claw to the top of the corporate ladder. Others just want their honest day’s 9-to-5 so they can enjoy the rest of life without having nightmares about Microsoft Excel. Damn you VLOOKUP! Again–to each their own. There’s no wrong answer (at least in my book).
But there are misguided pursuits. What I mean is: some answers will be right for you, and other answers will be wrong for you. What works for someone else might be your kryptonite.
I like Warren Buffett. He’s a smart guy. And he has a lifetime of cool lessons distilled down into nicely packaged quotes. Just check out any personal finance Twitter account.
But one of Buffett’s idiosyncrasies is that he spends five to six hours per day reading newspapers and corporate reports. If you want to start up and run one of the top holding companies in the world, perhaps you should spend a third of your waking hours reading income statements. Warren loves his VLOOKUP dreams.
But the rest of us might conclude, “Being rich like Buffett has its perks, but that life is not where I want to be.”
I’m not suggesting that you undersell yourself. Potential is a gift, and living up to your potential is a reward in itself. But our “go, go, go” culture tends to suggest that wasted potential is a sin. It’s not. Do what makes you happy. Go where you want to be.
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Make your money, save your money, and think about the future. The tenets of personal finance are important and will lead to improvement. But don’t forget about yourself, the person.
Money is just a means to an end. That end should be fulfillment. It should be happiness. It should mean you have time to hike that mountain, eat that steak (or veggie burger!), or take that trip. After all, is there a resource as fleeting as time? The present ticks and tocks and disappears…until it’s past.
I hope these ideas brought you someplace interesting. I’m going to continue my financial education journey, and I hope you do too. But I won’t forget where this journey is supposed to end up. Maybe I’ll see you in Bratislava?