I write about a huge variety of topics on this blog and I’m quite sure that not all of them are interesting to every reader. Some of you love the frugality material, others like the investment advice, still others are big fans of personal development tips, and so on.
As much as I write, though, there are a few fundamental principles that flow through everything that really sum up the things that I talk about on this site. These aren’t individual investment tips or nice ways to save a few dollars, but some fundamental principles that you can tie to any situation.
Like many of my ideas, this one came about from a conversation I had with a graduating high school senior who doesn’t really know where he’s going in life. I told him what I knew about things, and these are basically the seven points I told him.
Know how much your time is worth. If something is only going to save you a dollar, you’re only doing it because it saves a dollar, and it burns an hour of time, don’t waste your time doing it. Figure out a rough estimate of what your time is worth, and before you set into a task, decide whether or not it’s worth that time investment. Time is money, but not knowing how much money can really hurt you.
Over any period longer than a month, bring in more than you put out. This should be the gospel truth for any normal month. On occasion, there may be exceptions – I expect there to be exceptions in the coming few months for me as we move into a house – but if an average month shows you spending more than you’re bringing in, you’re going to be in very deep trouble before long.
Do things that you enjoy – money will follow. This is advice that I give to every young person that I meet. Follow what you really enjoy and keep doing it and exploring it. Money will follow you if you do that, no matter what, because passion and effort attract money.
There is no free lunch. Everything that makes money requires some sort of time and effort investment from you. If it seems that you’re getting something absolutely free, you’re not – don’t ever fool yourself. Even public services aren’t free – you pay taxes, don’t you?
The simpler the investment, the better it is. If there’s a ton of maintenance or research work involved in an investment, or there are tons of caveats and rules and fees, for most people the investment simply isn’t worth the effort unless the gains are huge. You’re far better off putting money in an index fund or even into a high-interest savings account most of the time.
Don’t buy what you can get for free. Look around you and see what things you’ve already paid for – or are available without a financial cost. Quite often, just a bit of footwork and thinking can provide tons fo free things. For example, if you enjoy reading, use the library – you’re already paying for it with your taxes, right?
Putting effort into learning new skills and organizing yourself usually pays huge dividends. Without learning how to organize my time and my stuff better, I could have never started this website. Personal productivity and personal development do eventually lead to cash in your pocket.