Principles - SimpleStartMoney

One of the most important things I have done in life is establish a set of core principles to guide decision making and provide a framework for dealing with the unknown. This short primer contains the personal finance principles which have been most impactful on my life.

Don't Give Money Power Over You!

Money is a tool, nothing more, nothing less. You get to think critically. You get to figure out what you want in life. You get to make a plan and put in the work required to be successful. Money will help, but it cannot think for you. Writer and philosopher Ayn Rand once said, “Money is tool. It will take you wherever you wish, but it will not replace you as the driver.”

Think Long-Term

Everything important in this life takes a long time. We can’t just coast through life and hope for the best. Force yourself to think about what you want your life to look like in 1, 5, and 10 years. What do you want to be doing? What do you want to experience? How much money to you want to have? Write down the answers to these questions and start taking actions now which will benefit you in the future.

It is Not How Much You Make, But How Much You Keep

If you make a million dollars and spend it all you have achieved nothing. Don’t get caught up thinking about wealth in terms of income alone. The most correct measurement of wealth is net worth. Net worth is the different between your assets, things you own, and your liabilities, debt you owe.

Think For Yourself!

Don’t blindly trust financial advice from someone who has a financial interest in the advice. Always do your own research, come to your own conclusions, and never blindly trust the experts. Spend a little extra time seeking out multiple sources of credible information and opinions including from sources or people with whom you disagree.

Value Progress Over Perfection

It is far more important to make progress toward our goals than it is to focus on mistakes or imperfections. Nothing is perfect on the first attempt. Focus on progress over perfection and improve over time. Keep moving forward through hardship, failure and success.

Set Goals and Review Them Often

Goals are required to achieving anything important in this life. Start small. Make a list of things you want to accomplish, purchases you want to make and experiences you want to have. Estimate how much these will cost and by when you want to achieve them. Start prioritizing your spending to align with your list. It’s that simple, you now have goals and a strategy for achieving them. Follow this process quarterly for best results.

Automate Your Success

15 years ago I read the book The Automatic Millionaire by David Bach and immediately set up a recurring transfer from my direct deposit account to a savings account. Throughout the years I’ve added additional automated transfers to retirement and college savings accounts. These transfers ensure we take advantage of gains from a strong economy and always have enough to cover whatever life throws at us.

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