Now that I’m 40, I feel both qualified to drop some wisdom on the world. To start, here are my 10 Principles of Personal Finance.
 
1: Marry someone who shares your financial philosophy:
If you don’t, you may be setting up for a life of endless conflict, not to mention the possibility of divorce, as money is the #1 issue couples fight over.
 
What is a “financial philosophy”? Here are some questions to discuss with your partner:
* Do you want to live in a single city or follow the best job opportunities? My wife and I moved from Dallas to NYC to Shanghai to Atlanta to Denver for job offers.
* How important is keeping up with fashion or your neighbors?
* Do you prefer to spend money or things or experiences?
* Are two incomes important to you?
* Who will educate your kids? (Homeschooling kids opens up all kinds of opportunities for us, though they will eventually attend Montessori school, which isn’t cheap.)
* Do you plan to retire early or not at all? Don’t leave it up to chance!
* How aggressive are you willing to be with your investments? * Would you tolerate a 30% drop in your savings because of a market crash? Would you invest your life savings in your business?
* Are you willing to live a minimalist lifestyle for your career and savings — or do you want to settle down?
 
2: If something brings you joy, and you have the cash to pay for it, disregard the rest of the rules and get it:
 
Life is too short to worry about whether something is “worth it.”
Note the two qualifiers: don’t spend money until you’ve tried something and know that it brings you joy. Furthermore, don’t spend money that you don’t have by getting into debt. With that in mind, when you identify something that makes you happy, don’t feel guilty about spending money on it. The goal of savings and financial responsibility is to enjoy your wealth, not die on a pile of cash.
 
3: When you are young, focus your energy on growing income. As you get older, focus on growing your assets and minimizing spending:
 
When young, don’t hesitate to invest your savings in yourself. While it’s essential to start investing early, it’s more important to invest in your wealth-creating ability. Learning most skills is cheap and can pay huge dividends — especially when you are young and your time is cheap. As you get older, your time will become more expensive, but your income and savings will grow. Now it’s time to protect your savings and focus on making your money work for you.
 
4. Don’t expect others to be smarter with your money than you:
 
Many people will tell you what to do with your money. They may your financial advisor, mutual funds salesmen, your parents, your coworker with a hot stock tip, your neighbor’s startup idea, and many more. Just because someone made a lot of money taking other people’s money doesn’t mean that they will make a return on your money. Fund managers drive fancy sports cars with money from the fees they collect, not necessarily because they are good investors. The most brilliant business idea in the world is useless without someone able to execute on it.
 
Always do your own research before investing in something, and don’t trust professional money managers. Research shows that most mutual funds fail to beat index funds after expenses.
 
5: Focus on “fixed” expenses over variable expenses:
 
The majority of your expenses are fixed: rent/mortgage, auto, insurance, childcare, and education. It’s easier and smarter to make a wise choice with long-term commitments than battling your willpower every day to skip your coffee, going out to eat, or whatever toy is on your mind.
 
Buy the cheapest home and car you’re willing to tolerate, not the most you can afford. Go to an in-state school, shop around for insurance options, etc. “Set and forget” your “fixed” monthly expenses, and you won’t need to stress about your day to day buying decisions.
 
6. Give your time generously when young, give your money generously when old:
 
When you are young, your productivity is low, and your time is cheap. Volunteering your time can be a valuable investment in your career. Offer a local business to set up a free website, write marketing copy, assist at a photoshoot, fix someone’s computer, help clean the hangar at a GA airport. You don’t have a lot of money to invest, but you can use your time to build your network and build valuable skills.
 
As you get older, you will become more productive, and your time will be worth more. Now is the time to build your savings and make your money work for you rather than work for your money. While a diversified market portfolio is important, as you get older and wiser, look for opportunities to invest in promising businesses. Most of your investments will fail, but a few might pay off.
 
7. Don’t confuse spending with achievement:
 
Have you ever bought a gym membership hoping to get in shape? What about an online course to learn a new skill? How about some sports equipment hoping to get into a sport? Or some new tools to start a new business? How often did you achieve a goal?
 
It’s common to spend money, hoping to achieve some value, but then fail to follow through and reach the initial goal. Sometimes just spending money on a thing makes us feel accomplished, like buying a gym membership and thinking that we’ve done something towards getting in shape.
 
Spending money towards a goal should never be your first step. If you want to learn something, start with some free resources – YouTube videos or a library book. Rent or borrow equipment for a new sport. Help out with someone else’s business before starting your own.
 
Many times you will decide that your goal is not right for you. You may find that the thing you wanted is not exactly the thing you need. You will also avoid the trap of thinking that you started a thing just because you spent money on it. Once you’ve taken a meaningful start towards your goal and have a firm idea of how spending money will make you more productive in achieving it, you can feel confident in spending money on it.
 
8. Make spending money on something your last recourse:
 
Sometimes it’s better to throw money at a problem than try to suffer through it. Paying a plumber to fix your leak, or a babysitter for a night out, or preventative maintenance on your car can be smarter than trying to tough it out.
 
In other cases, people throw money at a problem before exhausting their other options. If you need a new tool, can you borrow it from a friend or neighbor? Can you live without a car and use Uber and Turo to get around? Should you buy a house if you don’t plan to live in a city long-term? Have you tried fixing it before you buy a replacement?
 
Yesterday, I went to a car dealer for a tire pressure sensor issue. The dealer told me I had a nail in my tire and told me to replace all four tires for over $800. I turned around and went to Discount Tire. They repaired my tire for free.
 
I can’t count how many computers I’ve gotten for free because of some minor issues. I can almost always repair or upgrade them and sell or use them.
 
When I need something new, I will check out the local classified listings and see if I can get it used. I can usually find it for a fraction of what it costs new.
 
9. Go to bed early:
 
What does going to bed have to do with personal finance? Survey 100 millionaires, and you will find something in common. They tend to have their most productive period early in the morning. Whatever your job is, once you start working with your other people, it’s hard to develop a deep focus on the task at hand. You need a block of uninterrupted time when your mental ability is at your maximum, and early morning is the best time for it. Whether you are a door to door salesman or an auto mechanic, early morning is the time to develop a plan to work the day’s problems without distractions.
 
I try to use my mornings to go for an hour-long run or bike ride every weekday. I’m not sitting at my computer, but that time alone allows me to think about the day’s problems, set priorities, and develop a plan. After I get back immediately, I’m launched into endless meetings, but I already know what I must get done.
Getting proper sleep is, of course, required to be productive in the morning. Besides this, it’s a way of taking control of your life. People who feel powerless during their day stay up late to try some sense of self-ownership back, but it only ruins their productivity for the day ahead. Google 報復性熬夜 to understand the psychology of this phenomenon.
 
10. Develop an abundance mindset:
 
Successful people share many traits, but I think one key attribute is the abundance mindset. The abundance mindset sees the universe as full of opportunity — for friendship, love, and financial success. By contrast, the scarcity mindset sees everything as a fixed pie and leads to hoarding, envy, and stagnation in every aspect of life.
Learning to identify opportunities and getting the ability and confidence to act on them is a skill, though some of us come by it easier than others. It starts the same way: with the philosophy that the world is full of opportunity if only we can learn to recognize and take advantage of it.
 
Resources are scarce. Opportunities are not. People hoard resources because they see the world as fixed, and by extension, they see their nature as fixed. Believing that you are incapable of change is a self-fulfilling prophecy.
 
The abundance vs. scarcity mentality applies in many aspects of life: time preference is the preference to enjoy goods sooner rather than later. People with a scarcity mentality have a high time preference and struggle to save their salary for the future. People who save for their future have a low time preference because they can imagine the life of abundance that will result from forgoing current consumption.