The budgeting process is not just a personal finance exercise. It’s also a self-discovery and goal prioritization journey. I think this is one of the reasons why it can seem daunting and why it’s annoying (who wants to know how much one spent on wine last month?). However, budgeting is critical to building financial success….
Category: Money
Daily money disciplines, practices, and thoughts
Never pay full price! Ways to do it and an example
Never pay full price… …unless necessary. It’s that simple. Never pay full price unless there’s no way around it. This concept is a fundamental principle and a beneficial personal finance habit. The seemingly small percentage of the full price accumulates over time and can become a significant sum to help push you forward towards your…
How much cash should I have on hand? A 4-step framework!
Takeaway: There’s no one-size-fits-all dollar amount of cash you should have on hand. There is a 4-step framework with key considerations to help guide you to a comfortable, personal answer. In addition to cash, there are other minimally volatile assets to consider for holding liquidity. Cash earns minimal interest, but it has a place in…
The ultimate, but simple, guide to spending your money
Takeaway: Frameworks help us make decisions and take action. We use it in all parts of our lives. We can apply frameworks to our finances. A Personal Finance Reddit community user created a thoughtful and straightforward framework. The framework and concepts are discussed below. The ultimate money flowchart We rely on frameworks, habits, and guardrails…
What are bubbles? Protect yourself. There’s one brewing.
Takeaway: Bubbles form when the underlying asset’s prices increase significantly above its intrinsic value, usually due to irrational factors. Diversifying your portfolio and doing deep research when making bets are ways to protect against bubbles. Housing bubbles have preceded recessions historically. There may be a housing bubble forming today. Stay cautious. What are bubbles? In…
Be mindful of lifestyle creep!
Takeaway Lifestyle creep happens when you spend more as your discretionary income increases It can become problematic if it is uncontrolled and knocks you off your financial path There are ways to minimize lifestyle creep, including sticking to a budget, being mindful of spending, and automating saving and investing. What is lifestyle creep? When we…
How to think of personal debt?
Key Takeaways Debt is a just a tool, and tools are meant to be more beneficial than burdensome to its users Debt can be an excellent tool for building wealth and value if it’s used for the right purposes Monetary debt is money borrowed from someone (e.g., a bank) with certain conditions and needs to…
Treasury Inflation-Protected Securities to Deal with Inflation
Key Takeaways: Treasury Inflation-Protected Securities (TIPS) protect against inflation Principal amount increase and decrease with inflation Because the interest rate does not change, interest payment rises as principal increases due to inflation Inflation results in increases in both principal and interest payments, providing investors some protection What are TIPS? Treasury Inflation-Protected Securities (TIPS) are US…
Inflation is Here. What to do?
Per the dictionary, inflation is “a rise in the general level of prices resulting in the loss of value of the currency.” In other words, inflation decreases the real value of our financial holding. Extreme inflation is destructive. To quickly illustrate the impact, let’s say gas was $4 per gallon on average a year ago,…
Credit Score 101
Takeaways: Your credit score is a public report card of your financial habits, as provided by credit bureaus. The higher the score, the better your financial habits. After achieving a threshold (~800+), you are eligible for the best credit products (e.g., lowest mortgage rates, best credit cards, etc.) There must be enough credit history to…