Personal Finance Philosophy

Personal finance philosophy makes a person wealthy in net worth and it is all about being intentional with money. Personal finance is not always about money and it is more about the relationship with money and life goals. Looking at personal finance philosophy from all angles is quite important and personal finance philosophy is a person’s viewpoints, opinions and goals related to money. It is a fact that personal finance is personal and everyone has their own philosophy around money. This is a vital point that should not be overlooked and personal finance philosophy is often weighted to making more money.

Personal finance philosophy of some people is focused on work life balance and different people require different personal finance goals. Value based spending is the first and foremost philosophy of personal finance in 2023.  

Value Based Spending

It is a well known fact that value based spending is highly intentional and there are two areas where money is spent: necessities like food, shelter, clothing and expensive things like travel and experiences.

Part of What We Earn is Ours to Keep and Pay Ourselves First

Part of What We Earn is Ours to Keep and Pay Ourselves First comes from the all time personal finance bestseller The Richest Man in Babylon. When we pay ourselves first, the money is invested first thing each month and we learn to live on the rest.

Automation

Automation is directly related to paying ourselves first and it is helpful in achieving personal finance goals. The unique selling proposition of automation is that it solves challenges associated with paying ourselves first. We should be disciplined when we first set it up and when our income increases with automation.

No Consumer Debt

One of the major personal finance philosophies is to avoid consumer debt and it is worse than zero net worth.

Using Leverage Wisely

Although leverage can amplify wealth, it can also get people into trouble if cash flow is very tight. Leverage means using a percentage of what an asset is worth to purchase it and it comes with its own risks. It is recommended to use leverage wisely, understand the risks and have sufficient cashflow.

Personal finance philosophy is associated with money mindset, life goals and risk tolerance. Wise personal finance philosophies help investors to optimize and generate wealth to pass on to future generations that they are really proud of. It has been pointed out that financial optimization is not always the best move for everyone. Recognizing lifestyle creep is an important personal finance philosophy and it is helpful in building long term wealth. Albert Einstein, the luminary scientist, has referred to compound interest as the eighth wonder of the world. Although compounding starts off slow, it becomes an unstoppable force, once it gets going. Dollar cost averaging over several years produces amazing results and compounding is dependent on money contributed to investments.

Tracking Our Money

Tracking our money is an important personal finance philosophy and it makes a big difference in personal finances. Unwanted spendings can be avoided with tracking money and becoming intentional with our money is important.

Keeping an Emergency Fund

Keeping an emergency fund belongs to the most important personal finance philosophy in 2023. The emergency fund is the pile of money sitting for the unexpected and having an emergency fund helps investors sleep better at night knowing money is there.