One of my goals for the next two years is to write a book about personal finance. I want it to be a practical volume filled with great tips, while also exploring the personal side of money issues. The real trick is that I want it to be a short book — no quizzes, no jargon, no padding, and that’s not something that appeals to most publishers.
Here are the lessons I wish I had learned when I was younger that I will include the book:
- Money is time. Those who have read Your Money or Your Life will be familiar with this concept, the trade-off between work and rands. Whenever you buy something, you are not just spending money on it, you are literally spending time. Money is a representation of hours worked, and when you buy frivolous things, you are squandering hours of your life.
- Possessions are a prison. This is a concept that I have only recently begun to understand. I have been on a de-cluttering kick lately. Slowly, and in stages, I have been donating much of what I own. This was painful at first, but has become more liberating with time.
- Don’t let advertising brainwash you. I have written before about the reason why marketing exists. The reason for television was for marketers to get their adverts to you so that you can leave your house and buy their products. I decry the Great Marketing Machine and its drive to hook us on status and fashion.
- Money buys freedom. Money cannot buy happiness, but it can buy freedom. Money can give you more options. This concept is closely tied to “possessions are a prison”.
- Don’t sell your soul for a salary. Money should not be your primary motive for choosing a career. Consider job fulfillment, educational opportunities, and personal values. Try to find work you love.
- Own. I admit that this advice might seem to contradict the previous notion that possessions are a prison. “Income-consuming assets can imprison us, I echo the good part of Robert Kiyosaki’s advice. “Income-producing assets set us free.” Don’t buy Stuff, instead, invest your money in things like mutual funds and real estate, things that make money and not consume it.
- Spend less than you earn. What can I say about this? It’s the fundamental law of wealth.
- Save 50% of your salary. This is the most ambitious advice in my “next book,” but I like it. Don’t go into debt, work hard and make other sacrifices, so you can buy or start your own business and control your financial destiny.
- Control your money. Eliminate debt, minimise expenses, and create a financial plan.
- Develop a producer mindset: When you are in consumption mode most of the time, you are not generating revenue or building wealth. In order to create true freedom, we need to move away from consumption and start producing, or at least start producing more than we consume.
- Spend your money on experiences, not on things: We buy things to make us happy, and we succeed. But only for a while. New things are exciting to us at first, but then we adapt to them and over time the novelty of that new thing wears off and gets boring. So rather than buying the latest iPhone or a new BMW, you will get more happiness spending money on experiences like going to art exhibits, doing outdoor activities, learning a new skill, or traveling. Our experiences are a bigger part of ourselves than our material goods. You can really like your material stuff. You can even think that part of your identity is connected to those things, but nonetheless they remain separate from you. In contrast, your experiences really are part of you. We are the sum total of our experiences.
This past week’s blog posts was not meant for those who are already debt-free. It was meant for people who are in the early stages of their personal finance journey. If you are struggling to make ends meet, if you are living paycheck-to-paycheck, then this theme: Debt is the New Slavery is perfect. I also think it’s a great choice for recent high school, college and university graduates.
Change your relationship with money, change your belief system towards money and you will set yourself free from mental debt slavery.
Finally, Start now, set the slave free!