As I work on my latest eBook project, I’m trying to understand what personal finance is all about for young professionals. Is personal finance about owning more stuff? Is it about saving money for a rainy day? Is it about paying off debt? In trying to figure this out, I realized that it’s much easier to determine what personal finance is not about for our generation.
Let’s look at what personal finance is not about:
Becoming a financial expert.
None of us want to become financial experts. Yet it feels like you need to be an expert on finance just to save a few bucks and invest your money. I honestly think that you don’t need any understanding at all of finance if you want to save money. You might need to do some research before investing in the stock market and taking risks. When it comes to saving money in a basic savings account, you just need to know how to spend less than you earn.
Becoming more motivated to save money.
It’s easy to pass off lack of motivation as an excuse for not saving money. It’s not about motivation and education. Mastering your money involves basic activities like automating your savings through automatic deductions from your paycheck and not allowing yourself access to your money. You don’t need to be more motivated about saving money. I believe in, “set it and forget it.” A few months ago I shared with you guys the power of automated savings and how I saved over $4,000 without even thinking about.
Understanding complex financial terms.
I studied finance in school and let me tell you that this won’t guarantee you a lifetime of saving up millions of dollars. Just because you understand something it doesn’t mean that you’ll act on it. Going into credit card debt and buying a home without any research aren’t rational decisions that we make. Well informed people smoke cigarettes, drink and drive, and get into debt. You don’t need to fully understand something to get ahead. Just start by saving $10 off your cell phone bill or $20 by bringing lunch to work next week and you’ll be ahead of the majority of people out there.
Saving every penny.
You don’t want to be the George Costanza of your group. You don’t want to be known as the cheap one. Luckily for you I want to share with you that personal finance is definitely NOT about saving every penny. Money management involves finding ways to optimize your current spending and to cut the money you spend on crap, so that you can put your money towards the stuff that you actually enjoy.
What is personal finance NOT about for you?