Today I thought I could share my top 5 finance principles I've learned over the years. I've had to learn many the hard way, but some I'm lucky enough to have learned from those with more experience than myself. Ultimately I want to purpose my actions with money to align with godly goals with diligence and faith, being good steward of what I have been given. Keeping a heart like that and this bit of wisdom will pay off big.
1. The times have changed.
American education has not traditionally taught money skills because personal finance may have never been as much a personal issue as it is today. In the industrial age of times past, people were generally financially secure so long as they were faithful to their industry. Uncle Sam and the corporations for the most part took care of us when we retired.
Today, we are in an information age, where the nature of industry is change itself, and we cannot rely on our employer or government to manage our financial security. The large middle class of the previous century has actually shrunk and today, there is a greater distance between the wealthy and the wanting, because of the ways people have—or have not—realized this principle. We need to take charge of our own financial security.
2. A dollar is a dollar.
(From the MintLife blog)
I often hear people say things like, "This morning I found $20 in my car. Let's all get Cold Stone!" Unexpected cash has such a tendency to burn big holes in our pockets! It's very likely, though, that those dollars had a purpose at some point. Just because some money got lost, doesn't mean it has to all become ice cream money. Put it to use and put it into savings or use it to pay down your credit card. You'll really reward yourself when your credit card is paid off! I'm not saying you shouldn't reward yourself along the way to a great savings account or a paid-off debt, just resist hastily spending gift money or extra cash.
3. Save steadily.
"Steady plodding brings prosperity; hasty speculation brings poverty." ~ Proverbs 21:5
This is a big lesson for investing. Investing is not as complicated as I think a lot of people imagine it to be. It's really just taking on managable financial risks over a period of time for a profit. Over a period of time. There is no way to make a lot of quick money without taking on unnecessary risk.
4. Procrastination is expensive.
One of my great professors had a personal saying: "In life, there is no extra credit." In school, some teachers offer a second chances for students who didn't take a certain assignment seriously. In real life, you can't take back any experience! Put off making a saving or investing decision, and you can miss out on years of compound interest. Procrastination is expensive. Start now!
5. Be creative.
(from Robert Kiyosaki)
Sticking to a budget is not easy to do, and diligence with one should be applauded. But have you said, "I can't afford it" for too long? Kiyosaki suggests saying, "How can I afford it?" This question puts us back in the driver's seat and forces us to think creatively about your financial goals. Some goals like setting up an emergency fund, making an important home renovation or starting a business deserve some creativity. People have stretched dollars, made creative cutbacks and investments, and otherwise changed their lifestyles to accommodate their goals. In and of itself, money doesn't make anything happen. You make it happen!
Updated May 22, 2020.