6 Key Personal Finance Lessons

It seems as though a new year brings new hope for many people. This is truly a great thing, as rejuvenation, renewed energy, and a strong sense of direction can go a long way toward improving the quality of our lives. This includes the realm of personal finance, as it fits within our lives.

While setting goals for a new year, and getting ready to charge ahead, it’s often important to take some time to reflect on what we have learned. After all, it’s better to move forward with a more informed perspective that captures what we have learned from past experiences, isn’t it?

Along those lines, I have been thinking about my perspectives gained 2010, specifically as they relate to personal finance. Much of this I had crystallized a few months back, and shared on Yakezie. That said, this seems like a good time to take stock and think about these insights that can help 2011 be an even better year.

Here are 6 lessons that relate to personal finance that I have learned or had reinforced:

  1. Expect the unexpected. Life doesn’t always move forward in a linear fashion. No matter how much we try to avoid them, most of us will have some ups and downs.  The “ups” can be fantastic, and the “downs” can be frustrating.  Many of us almost expect the positives, and the negatives don’t align with expectations and can ruin our “plans”.  To alleviate that, factor in the reality that the unexpected will happen. I have learned that it’s good to frame expectations that way, and realize that things will come out of left field and impact us. That way, you are prepared, even as you optimistically strive for the very best.
  2. Think savings first, lifestyle second. This is an extension of the need to discern wants vs. needs. It’s of course important to enjoy life to its fullest every day, and it can be done within your means.  If you do it oustide your means, you’re adding stress that will show up either now or later when the proverbial bill is due. It’s so much better and peaceful to live within your means and save appropriately. Life can be rich either way.
  3. Even before savings, think of earnings. You can cut as many coupons as you want, but it’s better to focus first on actually making the money that you ultimately want to save.  If a company had steady revenue but was not working toward growth prospects or protecting it’s earnings, this would be reflected in it’s stock price. Who would want to invest in such a stock? Let’s remember that we need to have positive cash flow before we can think of saving it.
  4. Diversify your income potential. In the days of yesteryear, some people would stay with one company for 30 years and get a small pension and a nice parting gift, such as the classic “gold watch”. These days, for the most part, our future is self-directed.  You will buy your own gold watch, so to speak. To that end, hitching your wagon to one employer or source of income is shortsighted. Rather, keep your skills fresh and current, and continually build and maintain your network. Additionally, think like an entrepreneur and better yet, become one – even if on the side.
  5. Enthusiastically pursue your goals. We all have our goals and dreams. To my way of thinking, as long as you’re not negatively impacting anyone else’s life, and are also being responsible, allow yourself to get fired up, have fun, and go for it!
  6. Be a giver. Reward those that have been loyal to you. There are probably more people than each of us might suspect, at first glance, that have really done some nice things for us.  Let’s remember this. In addition, it’s important to selflessly give to others without strings attached. It feels great to help others, and it can be done without possessing great means, while responsibly being done within our means. Even though you don’t expect anything directly back, you will be rewarded in some way, whether immediately or somewhere down the line. 

These happen to be mine, but what about yours?

What lessons have you learned or had reinforced within the last year, that you can put to great use going forward?


  1. says

    Excellent personal finance lessons! I agree with all of them!
    I would only argue that if one saves and lives below his means, he is actually not living life to its fullest – because saving means “sacrificing”, or cutting down, to say so, the wants of today for the sake of the greater wants of tomorrow.

    In the spirit of No. 6, I am about to buy something for my parents, and a co-worker we have been working on projects together in the past few years.

    Great tips, I am glad my mind was already aligned with them.

    • Squirrelers says

      Get Happy Life – thanks for the feedback! Great to see that you’re already aligned with these, and that you’re making a purchase for your parents in the spirit of lesson #6. Parents deserve respect and thanks for all they have done, even it was a labor of love.

  2. says

    I have two set of goals – short term which tend to be more realistic and long term which might sound lofty! But I try to tailor my short term goals with the aim of achieving my long term goals.

    Absolutely agree on all the 6 points you mention.

    • Squirrelers says

      MoneyCone – yep, tailoring short-term goals with the aim of achieving long-term goals makes sense to me. When in alignment, they can be very powerful and important.

  3. says

    I think I would have to agree with you here, mostly on #1, 4, and 6.
    Expecting the unexpected is never fun, but when the unexpected happens, you’ll breathe a sigh of relief. being ready for it removes the stress
    A separate income source from a primary job will help to build savings or pay off debt, or can just keep you from having all of your eggs in 1 basket. Crucial for the future.
    I have found that when I give, I often see the results come back to me in other ways! The cycle of giving life, and it just makes you want to give more.

    • Squirrelers says

      Jeff – I see it the same way with giving. The payback is indirect, but it’s there. I really think it’s even better when you’re not even directly expecting it to come back.

  4. says

    2010 was a good year for us. I gained some perspectives as well. Starting a blog and joining Yakezie really broaden my horizon. I learned from many point of views and it was eye opening. I agree with diversifying your income, can’t depend on one employer anymore these days.

  5. says

    I particularly liked the enthusiastically pursuing your goals. I always have been goal oriented, however now I am enjoying pursuing my goals. Lately, I am giving my time to people who really need it, it is rewarding beyond words.

    • Squirrelers says

      krantcents – awesome that you find giving those who need it “rewarding beyond words”. I am trying to find ways to do more of this.

  6. says

    Great lessons Squirrelers. For me, personally, I would like to add – there are things more important than money. This might not be a personal finance lesson, more like a personal lesson, but sometimes the things we do/don’t do because of financial reasons will make us regret for the rest of our life. So sometimes money is not worth it.

    • Squirrelers says

      Suba – Absolutely there’s more to life than money. Totally agree that money is not worth it sometimes….many times, I would say.

  7. says

    Great lessons. I totally agree with “savings first, lifestyle second.” But sometimes you need to give into lifestyle even if it means that you won’t be saving enough for one month. Because some memories cannot be substituted or replaced by a dollar sign.

    • Squirrelers says

      Aloysa – Yep, great point on how some memories can’t be substituted or replaced by money. My best example offhand is a nearly 3-week overseas I took which cost more than I had any business spending over 10 years ago, but I would never trade for just about anything. Great investment.

    • Squirrelers says

      Jacob – thanks! Change happens, whether we want it to or not. This is one that has been a struggle for me admittedly, and is not totally a fit with my inborn nature. That said, I realize that change is inevitable so we should try to embrace it.

    • Squirrelers says

      Sam – to me, it comes down to the thought that in order to have money to save, one must actually be making money. The more you make, the more you save. If you don’t make any money, you’ll burn through savings. I second your wish for us to all do well with our online efforts!

  8. says

    I agree, great points.

    I would like to add that I’m in the same camp as Aloysa, some memory/experience opportunities are time sensitive and won’t be available once you pass a certain age. For example, I wouldn’t want to go clubbing anymore, but it was a great time as a college kid that I enjoyed. It doesn’t have to be all consuming, just a small taste of the experience will get you at least 80% of what you need to know (a college age student would need to at least go twice to two different locations).

    • Squirrelers says

      Money Reasons – true, a small taste of an experience can get you much of what you’re looking for. Life is to be enjoyed, and really fun experiences should not be missed just to save a few bucks. I wholeheartedly agree with that.

  9. says

    This is a fantastic post. I probably think it is so great because it echos so many of my own personal beliefs. I used to focus solely on the ‘saving’ part of the equation. Through blogging and a few other things, I have realized that focusing on income can make a huge difference. I better stop here because I think I feel a post coming on… :)

    • Squirrelers says

      Everyday Tips – if you do put together such a post, I’d be interested in reading it and getting your take on how this realization came to you. For me, it’s been within the last year – and I am surprised it took me this long to think in these terms.

  10. says

    These are all really great lessons. I like the one about enthusiasm. We could all use a little more of that. Saving, earning, diversifying, giving, these are all things I could improve on. Expecting the unexpected, I got that one down.

    • Squirrelers says

      Lindy Mint – thanks! Glad you liked the lessons. For me, the expecting the unexpected has been an eye opener as I by nature don’t like change….or at least having my comfort zone changed. Alas, things always change, and can do so in an unexpected manner. Best to be able to react and adjust well!

  11. says

    Good observations on saving vs. earning. Can’t have a good game plan with just defense, at some point you’ve got to score with good offense. Time is our one finite resource, it pays to invest it well.

  12. says

    I just posted a similar list on my blog. I also had giving on mine as well. My other categories, were learning, self improvement, saving, experience, and maintenance. My broad goals never change like “see 1 new place this year” but the actual experience is different year to year.

    I really liked this post. I’d be curious what you think of my buckets. I’m just at the beginning of “diversify your income stream” It’s definitely something I want to do more of moving forward.

    • Squirrelers says

      First Gen – I really like your buckets. The ones that jump out at me in particular are learning and self-improvement. As a big believer in both, I applaud those goals and think they’re really good. Both can be applied to personal finance and to life in general. Seeing one new place during the year is one that is cool, and especially with kids. For me, being able to see different places through my childhood – at least in the US (47 states out of 50 now) really shaped my perspective and allowed me to avoid getting stuck in the local town viewpoint too much.

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