Your Job as a Personal Finance Literature Reader

by David Ning on 26 May 2010 7 comments
Photo: blackred

Once upon a time, there was a businessman named Richard. He was very smart, and built a thriving business from scratch. Everyone was jealous of him, but he wasn't happy. As the business grew, so did his expenses and ultimately his lifestyle. He was living large, and though he can afford it, the high income / high expense lifestyle made him very aware of the fact that he could lose it all. As a result, he was obsessed with his companies' every decision, and his actions not only stressed him out, but his family and subordinates too.

His company's janitor, Poris, almost seemed to be living in a completely different world. He was married, and makes about 5% of Richard's income. Obviously, he couldn't afford nearly the same lifestyle as Richard. As a result, he was very frugal but he was stressed too. Poris is stressed about making ends meet, stressed about whether he'd get laid off and stressed about whether he could ever afford an actual retirement.

Usually when you read these stories, the author will ask you to point out the one with the better life. But the reality is that we don't want to be either of them. When we look from the outside, it's easy to spot that neither of them has a life we should envy. You make a bundle and you could be stressed. You made nothing and you could be stressed. You spend a bunch and you could be stressed, but you are frugal and it could still be stressful. Just nitpicking about one aspect of money matters tell you nothing.

One of my neighbors has a $200,000 2-door Bentley sports car. Does it make him rich, and can we automatically conclude that he's a shopaholic? Another neighbor has two very old Hondas. It's so old that the paint is starting to rust. Does it mean that the family is having a hard time making ends meet, or does it show that they are just frugal?

Due to the length of our articles, we usually write about one side of personal finance. Sometimes, we talk about and why it helps. Other times, we talk about making money with rental properties and REITs. By reading them one at a time, it is easy to forget that personal finance is all about balance. At the end of the day, the key is to make more money than you spend.

We write about all the tips, tricks, and habits because they either help you save or make more money. We (at least I) won't tell you whether it's right or wrong. After all, someone who is making $1 million dollars a year may think that all those latte factor articles are a big waste of time, while the same article may make so much sense for the family with a household income of $30,000 a year. If you read personal finance articles regularly, it is your job to know your own situation and figure out what's best for you.

Making your own coffee will guarantee you at least a couple bucks a pop, but you still have to figure out whether it makes economic sense for you. I personally don't watch too much TV because I can use that time to run my business and make quite a bit of money. If you take my advice and cut your cable but end up surfing the web for three hours a day, you are just changing the chair you sit on. If you feel miserable after you stop watching the NBA finals, it might actually hurt your finances. Every time you try to change your habit, it is critical to mind the big picture.

Personal finance literature is general, but it is your job to make it personal.

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Guest's picture
GeorgeP

Great story, and yet so common; nevertheless, I've seen very poor people who were happier than their very rich neighbors. My parents used to have separate envelopes for the gas money, electricity money, and so on - this has allowed them to raise a kid who can't remember their good habits...

Guest's picture

David, I think you make some great points here. All to often we end up expecting some sort of magic tip that will solve all of our problems. More often than not, it turns out that there is no such silver bullet. This definitely holds true for personal finances. Writers, can provide as many tips and tricks, but unless filter the tips and act on them, they will do very little to improve your situation.

Guest's picture
Jason McNeal

Awesome post! I always find that the money articles have no context but I can understand that it may not be possible to lay everything out on every 500 word post.

Guest's picture
björn brink

hey, now becomes the better in Sweden
socbidrag, contributions may be some corruption for example and not
eg unemployment insurance fund
journalists?
medical equipment scandal took 70s billion SEK
general laziness authorities especially police
we will pay for this
minimum wage
3000 kr young
take the job full neklet U.S. standard

Bjorn Brink
king

Guest's picture
Joe M

Great post! I have been thinking about this a lot lately and it is so true. Making your own laundry soap may help you get your finances in order. If your finances are already in order, it may not be material.

Sometimes when I read PF blog posts and comments I get the feel that all purchases must be justified and that any non-essential expenditure is "bad." Definitely helpful to get your house in order but a hard way to live forever. Remember to take time to enjoy the fruits of your labor.

Julie Rains's picture

I didn't quite get the "job" at first but love the concept -- applying different ideas to one's own situation. Everyone has a slightly different situation (current and anticipated) and motivation so it's nearly impossible to give ideas that will make sense for all. Helping people to consider different approaches and make informed decisions is the best we can do.

Guest's picture

That's a great point about changing the chair you're sitting on. It's pointless to stop TV and replace it with surfing the web. We must replace bad behaviors or bad habits with something productive, not just another "less bad" habit!