Money 101: Why You Should Manage It Carefully

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Productivity 222: Tweaking The Settings

Money is a measurement of defining worldly success

  • Though it isn’t a measure of true success that can come from relationships, achievements or fame, money is used to “store” value and influence
  • Without money, it’s impossible to do pretty much anything!

Mathematically, you cannot out-earn bad spending habits

  • Without a well-defined purpose, you’re guaranteed to always be short on money
    • Saving is a matter of priorities, not of income
      • A penny saved is actually more than a penny earned because of income taxation
    • Managing money wisely feels a bit like getting a pay raise
    • This purpose can only come from being self-aware, happy and having some degree of productivity
  • Compound interest is an extremely powerful force
    • You will gain much more from investing today and parking it for 40 years than investing the same amounts regularly for 20 years
    • On the other hand, making the minimum payment on a credit card can mean you’re paying as much as 5 to 20 times the original debt by the time you pay it off

Your feelings and mental wellness depend on proper money management

  • Money decisions in day-to-day life are driven by feelings and passions, not logic and systems
    • One of the most common causes of divorce is from poor money management
  • Without proper money planning
    • Management based on crisis and current feelings
      • It’s a lot easier to look only at the present when the future isn’t planned
      • Time poverty and fatigue from a lack of “big picture” budget planning
      • Impulse buys from saying “I owe it to myself”
      • Loneliness will lead to needless spending to “just go out somewhere”
      • Rigidity when trying to adapt to pressure
    • Unexpected events hit very hard
    • Cannot invest into great ideas or lucrative endeavors
    • Unrealistic expectations about anything personally related to money
    • Overly reliant on others
  • With proper money management
    • Proactive management towards the future based on goals and dreams
      • Money fights will be gone from marriage
      • No guilt, shame or fear from purchasing staple items
      • Feelings of being empowered and in control
    • Unexpected events don’t become a devastating experience
    • You will be able to take advantage of opportunities as they arise
    • A general sense of awareness involving all matters relating to money
    • Freedom and independence from others

Though the love of money is the root of all evil, money itself is amoral

  • Money is power to acquire things or get things done
    • Your time and energy are valuable, and managing money gives you more energy and the freedom to free up more time
  • Values and philosophical principles are represented by where the money goes
    • Mismanaging small amounts means larger amounts will be mismanaged
    • The more money someone has, the more accurately it shows their heart’s state
    • People skills are directly correlated to management of money
  • Buying things is never as rewarding as buying experiences
  • Giving should be the final end to your money goals
    • The mistaken belief about money is that it needs to be held onto tightly
      • Input with money needs outflow with money
      • When you give, it should be on something that isn’t benefiting you
      • Psychology proves people are happier from spending more on others than themselves
    • The greatest happiness from money comes from using it to help someone else
      • Any person at any stage of life has the resources to give to those in a greater state of need
      • Without desiring to give to others, extra money will only create more fear of losing it
    • Giving has a spiritual element to it, since it is required to be unselfish
  • A lot of happiness will naturally come from saving for a goal you’re trying to attain

To summarize everything else you’ll read about money, all wealth building secrets can be summarized by the following rules

  • Have a healthy distaste for debt
  • Spend less than you earn
  • Curb reckless spending
  • Never spend on what you don’t understand and do your research on everything
  • Fully understand the difference between “want” and “need”
  • Make your money work for you when you’re not working
  • Give to others much more than satisfying yourself
  • Find legal ways to avoid paying taxes
  • Spread around the risks that you take on
  • Being savvy with money is about patience, perseverance and focus
Next: Money 102: A Hard Liability