Personal Finance Truth

Locked Wallet

There are several great posts on Life Truth. But almost all article’s gist can be summed up in two sentences “Everyone is going to die, in no specific order.” and “Time is going to pass, whether it’s a good time or bad.”. Out of curiosity I tried to search Personal Finance Truth and found a beautiful article on lifehacker outlining personal finance truth in most simple words, it is “Spend less than you Earn and Invest the difference.”. I know there is nothing new discovery in this truth, but if you look closely there are three big money aspects hidden in that simple sentence. Income, Savings and Investment.

Generating sustainable income is difficult and having sustainable increase year-on-year is tougher, I hear it loud and clear, but believe me that’s the easiest part of the three money aspects. Everyone knows what Savings is. In our daily life, we get carried away on several impulse buys, or in better words “incidental expenses”, which hurts our savings. I can understand unplanned necessary expenses, but that’s what emergency fund is for. Unplanned expenses should not impact our savings much when we have planned for it in advance via emergency fund. We seldom focus on savings when our equation of Savings is Income left after Expenses. That reminds me a famous quote from Finance Genius Warren Buffet,

“Do not save what is left after spending, but spend what is left after saving.”

It’s high time to change our savings equation.

I presume, now we agree Savings is as (if not more) important as Income. But, what we do with our savings is even more important than savings itself. That’s where Investment comes in picture. If we keep our money idle by choosing default choice of Savings account then believe me the guy (or gal) who lost on promotion with our competition is going to surpass us in terms of money in the bank though he (or she) may not earn more than us. So, having good investment strategy is very important.

I consider Investment the most important out of three money aspects. Please leave your views on comments sections, if you think otherwise.

I would like to leave you with one quirky quote from Warren Buffet.

“It’s nice to have a lot of money, but you know, you don’t want to keep it around forever. I prefer buying things. Otherwise, it’s a little like saving sex for your old age.”


Image Credit: Financial Post.

Also published on Medium.