Personal Finance and Be Money smart! – Part I: Get the fundamentals right

Key takeaways:

• Money is essential to everyone, so get to know money well;
• Personal finance is a long-term project, so start today;
• Get the financial fundamentals right;
• Time, again, is your best friend on the road of building your wealth.

Before we start this series of blog posts, let me make one thing clear: My contents are based on years of coaching experience, my own learning, and personal investment experience. If you need financial advises, then please seek assistance from professional financial advisors. Check the Money Smart site by the Australian Government for further information. The feature image of this series of blog is from Unsplash.

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In any coaching cases, there are three pillars that always come together and we can’t treat any one of them separately. They are: career development (work), health conditions (including an individual’s mind-body status), and finance ($). If you lose health, then your career and wealth won’t matter that much to you. If you are stuck in your career, then I don’t think your finance would improve and your health may take a toll. If you have trouble tracking your spending and managing your debts, then I don’t believe you would be able to focus on work and care much about your health.

Personal finance is often a key area that people seek help from coaches. Personal finance is a life-long project, so you need to get the fundamentals right. To summarise the fundamentals, they are:

1. Spend less than what you earn: do you need a designer-brand hand bag, or you just want one but can live without one? While the purpose of making money is actually to enjoy the joy of spending money, you should spend your money smartly. Never out-spend your money.
2. Manage your debts well: rich people borrow money to make more money, but poor people borrow money and spend it. Most people borrow money and there is nothing wrong with this, but be aware of your debts. The golden rule of wealth management is to pay off your debts as soon as possible.
3. Don’t spend your future money: don’t spend more than you earn on a monthly basis. Although you may have one credit card or two, you are actually spending your ‘future money’ via your credit cards, if your spend more than you can pay off per month. This is the biggest no-no in personal finance!
4. Invest and know the risks of investments: saving can never make you a millionaire but investing can. To make more money, you need to invest your seed money and be aware of the risk of investments.
5. Time is your best friend for wealth building: this is how Warren Buffett builds his wealth and finance empire. He simply lets ‘time’ do its job and waits for seed money to grow by investing wisely! Time, again is your best friend in wealth building.

In the following posts, I will drill down these topics one by one, and show you how your personal finance could benefit by understanding these fundamentals.

Dr. C. Richard Wu @ REEAConsulting.com

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