Personal finances are a tricky thing because every person has their own set of conditions and abilities they need to work from. Also, the idea of success and happiness will not be the same for everyone. You might even imagine the lifestyle of the rich and famous, but wouldn’t actually want to live under the limelight and with no individual freedom to do what you want.

But, there are things that should be done by everyone and that will help you build an objectively better life for yourself.

Generally, this is a two-pronged solution. On the one side, you should slowly build yourself up to where you want to be in the future. On the other, you need to know where that point is, and try to see if your expectations are reasonable, or even something you want to do.

While you should look at what other people are doing when trying to find ideas and solutions, don’t compare to others, especially not online. You have your own life, and personal finances are nothing but a tool to make that life happier.

He is Rich that Has Few Wants

This doesn’t mean that you should emulate Diogenes of Sinope and deny all of the advantages of the modern world. But, you shouldn’t focus too much on the value of the material.

Only at that moment, you will be able to see realistically how much things are worth, and how much they are worth to you in particular. That will make everything you want to have cheaper, and give you more space for negotiations.

Good personal finances are a balance between frugality and luxury. You want to spend your hard-earned money on the things that will give you the most pleasure, and that means letting go of the stuff that is less than optimal.

Don’t Aim to Please the Village

When it comes to your personal finances, the biggest risk you will encounter is ‘the Village’. And, with the internet, that village is more or less global.

There might be some people out there with good ideas, but they will often mention why something was a good deal or a good idea for them. Successful people know that it doesn’t come easily and that there aren’t that many rules.

Don’t do things just because someone says that is what you want. That includes your parents, friends, and even romantic partners.

In the end, they will never be satisfied with your results, especially if you aren’t satisfied either. The Village is greedy and wants everything, and apart from your friends and family, it will give very little in return.

Bad Debt and Good Debt

Step one is always clearing your accounts from bad debt. In many cases, this is the best investment you can make and will make the most dividends. But, a lot of people miss it because it is not the money you will gain, but the money you won’t lose.

The money you spent on your mortgage, or for your car payments, that can be considered good debt. Anything below a 3.5% APR or ideally under 3% should be paid out as you agreed and left alone.

But credit cards should be paid as soon as possible, going from the biggest interest rate going downwards.

Buffer Fund

Less than 1/3 of all Americans have more than $1000 in their savings. And, ideally, you should have three to six months of your income set aside in a place you can reach quickly.

This will prevent any unforeseen circumstances from plunging you back into credit card debt and a downward spiral.

Blue Chip Goes Next

Once you are cleared from bad debt and set aside some money for emergencies, which can often take a few years even, you should start investing in your Roth-IRA and Blue Chip. This is one of the best and safest deals you can get, and it is meant as your long-term investment.

Try to make your portfolio as diverse as possible and reinvest everything you get from there until you retire.

Ideally, you will want to have up to five annual incomes in these investments before you jump to other things, and they should always make the bulk of your equity.

Time for a Side Hustle

Unlike your Blue Chip investment, this is not a completely passive income. It is more like a personal side business that you think you should invest in.

It shouldn’t be something completely foreign. In that case, you would have better chances with Betsafe CA that gives 15.58% chances to win, while the average for a successful business is only 14.5%.

But, similar to gambling, you can vastly improve your odds by learning to play the game better. If you are investing in something you know and where your comparative advantage can go a long way.

Speculations are a Luxury

In the exact same way as gambling, which is at this point an acceptable way to spend money mathematically, you can invest in a hunch. Once you can basically already retire and further base investments wouldn’t change your life, you can try to make a lot of money on generally slim chances.

And, you shouldn’t fret at that point if you are winning or losing. If you lose a hundred times it is nothing for you. But if you win big you can afford some suboptimal luxuries that might not be rational but are nice to have.

That is the point where you won at life.


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