An alternative perspective on personal finances
Get Rich / / December 20, 2019
A few days ago I reviewed a lot of books on personal finance and surprised their similarity. And it so happens that I have a very large chunk of his life engaged in corporate finance, therefore, I could not resist, so as not to express an alternative opinion.
I understand that I may hurt someone's "sacred cows", so please do not be angry, and bear in mind that this is just my point of view. And I'm grateful to you for your comments.
Article limits the size of my literary flight of fancy, but I have tried to highlight the main points that are worth paying attention to when planning personal finances.
Accounting expenses - tool financially insolvent individuals
Which, incidentally, is time-consuming. In all the books about personal finance is recommended to keep records of their expenses. Now for this is the huge number of various programs, mobile applications and web services. What is the goal in this process? It declares that it will help to better understand their costs, find hidden sources of extra money to invest. But somehow I think that most of the costs accounting is conducted in order to understand,
on what can be saved in "if something happens", as well as simply for its own sake - for the sake of accounting accounting, without any purpose.I also believe that it is a tool for those who are not financially successful. Imagine that you They earn millions of dollars. Does it make sense to keep records in this case costs? Does it matter how much you drink per day, "Coca-Cola" and where to dine? It will be a waste of your time greatly increase in price that is better spent on building your financial strength.
A second disadvantage of such a permanent reference of the account is the loss of a large amount of time. Every day, a similar account of you much time - 5—10-20 minutes. For the year accumulates a very decent amount of hours. Now, if everyone just as much time thinking about how to increase your income, it seems to me that the result would not have to wait long.
Yet accounting costs - it's a great tool if you use it wisely and periodically, rather than continuously. A person who operates a hired worker, the income structure, the time and expense is very stable. If you throw a major purchase and unforeseen circumstances (accident, illness, vacation ...), then the costs will be approximately the same from month to month. Therefore, the accounting of expenses can be made, for example, every six months, to better understand their current situation. A free time in the remaining five months be better spent on something more useful.
And most importantly, remember: if you spend all at zero, there is no accounting will not help you - it is necessary or to increase the financial capacity, or to exercise self-discipline.
Balance sheet accounting - the best alternative operational
Each of us knows about his income is much higher than on the costs. It is a fact. Sources of income less and are better controlled. Why not use it to build their personal the financial system?
Make it really is very simple.
Imagine that you have three places to store money: bank, cash (under the bed), the investment fund. And all the money that you earn, fall into one of these places. Then, to understand your financial condition, you only need to keep track of the balance of these "places".
Here is a simple example:
01.05.2014 | 01.06.2014 | 01.07.2014 | 01.08.2014 | |
Bank | 2 000 | 2 200 | 2 400 | 2 600 |
---|---|---|---|---|
Investment fund | 2 000 | 2 100 | 2 300 | 2 500 |
Cash (under the pillow) | 2 000 | 2 500 | 2 000 | 2 200 |
Total $ | 6 000 | 6 800 | 6 700 | 7 300 |
»
According to this table, you can even schedule a nice build and calculate percentages.
In this formulation of the problem, taking into account a balance, your financial goal is to count "Total" from month to month grew, and grew faster than inflation. If someone is interested, I can tell you how to count their inflation, the real, not the nonsense that we are floating the statistical state bodies.
Option to balance taking into account the extremely simple to implement, does not require as much time as taking into account the costs and the effect of it is the same. Besides, it should be done once a month rather than every day.
Budgeting - Great financial management
Budgeting - a popular theme in the large companies. Thanks to it came into use a popular expression "master budget". But this tool is not just for businesses. It can be successfully applied anyone.
Suppose you earn $ 2000. You make an agreement with yourself that $ 500 per month will be set aside for a rainy day in a jar (it is in bank, and not the bank), and $ 1500 - this is your monthly budget for expenses, which you can spend on your discretion.
That is, you do not have to keep track of how you have spent $ 1500, but should definitely keep this amount.
This is a very simple tool. Yes, and in fact anyone who is now living from paycheck to paycheck, uses it. The only problem is that nothing is delayed.
Of course, such an approach requires a certain self-discipline, because you know that somewhere there is another $ 500, which entice. But nobody promised it would be easy.
Ignore investment pressure
All books and articles assert that you should invest. That is the only way to achieve financial independence. This is the right advice, the only thing that it is best not to overdo it and approached very cautiously.
If honest look, that around full of all sorts of "stromnyh" investment proposals: PAMM, MMM, of HYIP, trust management... Many of these tools are not regulated by any law, and do not tell me what it says on websites forex brokers.
Therefore, if at the moment you have no idea of the investment, then you should not be sad and to throw on first-encountered proposal. Also, you should clearly be aware of the risks and the amount that you can lose.
To make things better understand, I highly recommend you read the book Nasim Taleb "Antihrupkost"There are so many good examples not only from the world of finance.
I also want to note that the very process of investing can take a lot of time. After all, you will have to acquire new knowledge, to spend their time and attention on the object of investment... So if you just save up money in the bank, then that's okay too. Believe me, a good investment come to you, so you should not put all the money in the MMM-2015.
Enjoy working with your finances
Tensely assumed to pore over the money - it is certainly nice, but better not. If any investment or any approach forces you to step over themselves, or do what you do not like, then give up this nonsense.
You should have fun. And if it will have to sacrifice a couple of percent per annum, then go for it. Maybe this advice is a bit contrary to the idea of profit maximization, but believe me, it's worth it. Your nerves, stress and bad mood are more than a few percent.
Also in the article, I deliberately sidestep all the questions with the assets, cash flows and valuation, as it is a very big topic and I do not want to clutter up the article. I'll tell you once again next time.
Thank you for your feedback and comments.