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:
- 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.
- 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.
- 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.
- 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.
- 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!
- 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?