The final two points in the Golden Rules for Personal Finance are essential, and are all about understanding yourself, your motivations and what holds you back.
Behaviour is the Biggest Factor in your Success
Long-time listeners and readers will know how obsessed I’ve become with learning more about the field of behavioural finance. Put simply, this is the study of how we make financial decisions, and then seeking to find ways of optimising these decisions.
It’s easy for me to stand here and say “you should do this or that,” and that “when markets fall, you should hold your nerve.” But we’re all real people, with an infinite variety of influences on the way we feel about and act around money. When you’ve earned the money in your ISA which is reducing in value due to the stock market falling, it’s difficult to be detached about it – impossible even.
And yet we are not slaves to our impulses. Some might say that elevates us above the other animals – we can choose to master ourselves, to a greater or lesser extent, though never completely. And so we must learn about behaviour and seek to put in place frameworks where possible to optimise it.
And I think optimising behaviour can be summed up in just one short phrase. And as I come to this, it won’t surprise anyone who has listened to my show or read my blogs for any length of time. Say it with me…
Be Intentional
I’m seriously thinking of getting this tattooed on my arm. Intentional is the word that has come to summarise pretty much everything I preach here on MeaningfulMoney. Being intentional means living on purpose; making choices about your life and executing on them.
Being intentional means not living by default, where things sort of happen to you and you just roll with them, and at worst blame them for the state you find yourself in. Being intentional means redeeming every second of every day to bend it to your will.
I don’t mean overworking – I’ve learned some lessons about that myself recently – but making sure that where possible we grab every opportunity to better ourselves. Being intentional chimes with the Stoic philosophy of becoming the best versions of ourselves, whether that’s financially or in any other way. A pursuit of excellence. Sounds like hard work, doesn’t it?!
Well, sometimes it will be and others not, but it is constant. Surely one of the worst things in life must be regret. Wishing you’d done something, lived a certain way, been true to yourself, but it being too late to do anything about it. Regret is backward-looking, and being intentional is forward-looking.
Even if you are in your 50s and are only now waking up to the importance of good financial management, that’s better than waking up in your 60s, or later. But if you are in your 60s and want to make some financial changes, do it – it is NEVER TOO LATE! Be intentional from now on.
So whatever life stage you are in, let’s all agree to be more intentional. Perfection in this regard is a myth, but we can all do better, and I don’t know about you, but I’m so glad that I’m not alone in the journey – I’m very glad you’re with me for the ride.
There you have it – Seven Golden Rules of Personal Finance, and to some extent for life generally:
- Cashflow is everything
- Protect your income
- Understand risk
- Seek opportunity – it is everywhere
- Don’t throw money away
- Behave your way to success
- Be intentional
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