Tag Archives: priorities

2 Things I learned from Ray Dalio’s Book

While often seen on TV and financial journals, Ray Dalio is somewhat of an unheard of figure outside of the financial world. He started broke, developed his skills, knowledge and habits, and today is the billionaire funder of the largest Hedge fund in the world.

In his new book, Principles, Dalio focuses on the principles or set of beliefs that have been the baseline of his success in both life and business. Throughout the chapters he illustrates just how crucial principles are, not matter the principles, to how you perform in each area of your life.

From his book I have taken 2 main points:

1. The things we do know are much smaller than the things we don’t know

While everyone would say they believe this idea in theory, when it comes to the actions we take, many of us, including myself, will puff up our egos higher than is actually the case.

Dailo states that people who have more knowledge, success and experience on a topic, should carry more weight in our decision-making.

2. Set up systems, or processes that help make decisions and see around emotions

While emotions are a natural and good part of life and human interactions, when it comes to making the best decisions, especially the business decisions, logic should be the ultimate decision maker.

Two of the greatest roadblocks to making quality decisions are the ego and the blind-spot barriers, which are both covered by the entrepreneur’s planet in their post:¬†https://wordpress.com/read/blogs/150799291/posts/16

Ultimately being committed to integrity, open-mindedness, and self-improvement, are the largest factors that have contributed to Ray Dalio’s success and the principles he teaches.

 

3 Different Ways to Look at Your Money

Often part of the natural inclination towards money is to view it as something that just pays the bills. While this perspective is certainly valuable in certain context, I want to share 3 different ways you can look at money that will change the way you see your financial life.

The 30,000 feet approach

When you look at any area of your life, health, emotions, mental health, relationships, spiritual journey, your money, etc… it’s easy to view them up close. But when we step back and view the specific situation through the perspective of our whole life, we can see how much it really matters or doesn’t matter.

Ask yourself, “Does spending $120 on a box of extra wineglasses fit into the overall priorities of my life?” If it does great, but more often than not, the priorities don’t align.

The time perspective

When you look at your finances through this lens, you imagine how your decision will look at the end of your life. For example I am thinking of buying a new vehicle that looks and feels cooler. However this expanse will postpone some of my retirement savings.

When looking at it though the time perspective you imagine how you’ll view this decision 40 years down the road. Ask yourself, “When I’m 80, how will I view this decision?” Often our decisions are based on short-term thinking, so this view can really help us realize the consequences behind our actions.

The business perspective

Imagine your financial life is a business. If your name is John Smith, your finances are managed by John Smith, CFO(Chief Financial Officer) of John Smith Corporation. As CFO you are responsible in allocating capital (money) towards the respective goals of the business.

If your job was to manage money for yourself (which it is) would you be happy with the job you’re doing? Or would you fire yourself?

Base your actions on whether they provide appropriate return on investment (ROI) for John Smith Corporation. While the goal of John Smith Corporation isn’t necessarily to maximize profit, your decisions should be aligned with your priorities in order to fit your values. Sometimes this could mean going on vacation, but other times it could mean increasing retirement contributions.

These perspectives are meant to help improve your decision-making processes with your money. They certainly have helped me in my financial journey. In what other ways can we view our finances?

 

3 Fun Things To Do With Your Money

Give it

If you’re a Christian this can be represented by tithing. However for non-christians generosity can still play a big role. Consider giving to charities, friends, organizations, causes and people in need.

With technology there are now so many ways to connect and give to others. Giving can change the way you see the world around you, make you more compassionate, and just make you feel better about yourself in general.

Enjoy it

Enjoying money can be fun! I remember spending money to go out to eat at a nice restaurant. It felt like such a reward to myself for the work I had done. Enjoying money, specifically money you’ve earned, can feel very, very good.

Stop and thing the ways in which you could enjoy your life and your money today. Prioritize the fun with your long-term goals about investing, giving and leaving a legacy. Often people struggle with spending too much money on things that don’t actually provide enjoyment. That is just stupid.

If you’re buying something or going somewhere to impress someone else you are committing two mistakes: 1) You’re spending money you could be investing or giving (which in and of itself isn’t a crime) and 2) you’re spending money on something that doesn’t really matter to you. Leaving a little money for your future should always be at the back of your mind. Which leads us to the third thing…

Grow it

Not a lot of people in society enjoy investing. The truth is, not many people have really gotten into investing, which hurts them more than they know. When I opened my Roth IRA, I put $5,500 in it. Even in the first half year it grew to almost $6,000, a $500 increase. I was pumped.

Realistically though, investing in a well balanced, thought-through planned investment portfolio isn’t always going to go straight up. Sometimes, even often, the balance is going to go down a little. That’s part of investing.

But as your balance grows steadily over time, you will begin to see why so many people are hooked on investing.

Conclusion:

Prioritizing these three things is both a challenge and a beautiful dilemma. It can feel like a blessing to have resources (money) to mange for your future and for your family’s future. That’s why it’s so important to think about these three things.

7 Things That People Never Spend Enough Money On

1. Paper

That’s a strange thing to lead the list with. However paper represents a mentality in the U.S., and especially in other countries, that puts people in a scarcity mentality. I’ve been personally at fault of doing this. Often I’ll try to save paper by writing on the other side or cramming everything on to one page.

This is particularly true when I am in school. I’ll take notes by putting everything close together. Any learning and memorization expert will tell you that leaving space on the paper gives your brain room to process and compartmentalize concepts and facts in your brain.

You need to be comfortable using up more paper, even if that means spending a minuscule amount more.

2. Seminars

Honestly this type of personal improvement hasn’t been something I’ve looked into in the past. However in recent months and years I’ve begun to see how others have used these as networking, learning, and inspirational events.

3. Health

I hope most people value health over money. The natural outcome of this value priority is that you should be spending the money you need to to keep your health at its prime. Don’t forget about health.

4. Others

Pouring money into others, whether through time and experiences, or generous gifts of items and money, is both a heart-warmer, and a perspective-changer. As soon as you begin to look outside yourself to help others, life becomes a ton more meaningful.

5. Car Maintenance

Changing the oil, replacing break pads, and doing general maintenance on your vehicles is a responsible thing for adults to do. It feels like you’re throwing money away, but in the long-term it can save you money in emergencies, breaks, and issues.

6. High Quality Items

Often it is wise to skip the name-brand items and go with cheaper things. This is especially true with things that don’t matter as much like cereal brands or food in general. However if you find an item is cheaper than another, this doesn’t mean instantly that it’s a deal. It’s possible that down the road you’ll spend money on replacing that cheaper item.

7. Books

Call me old fashioned, but I find books are particularly useful in learning. I have personally read hundreds (yes hundreds) of nonfiction books in my free time. While spending $1,000 on books (both e-books and physical books) can seem like a big waste of money when the library is just down the street, I see books as an investment.

When you see nonfiction books as resources and insightful gems of knowledge, it becomes natural to look at the cost-benefit of each book as a more than worthwhile investment.

I personally find physical books to be easier on my eyes and simply to read than e-books.

Conclusion:

Seeing every purchase as an investment can be a fun game to get your mind racing on ways to save and spend money wisely.