cliophate.wtf

Twelve (mostly) truths on money

Back in December 2021, I went deep into a financial rabbit hole. When I returned, I hadn't found any rabbits, but I came packing a few money truths. I share them below. They are in no particular order. (And yes, this is an old post I am recycling.)

But before, a note on why I even read (past tense) these books:

I know the theory, especially the big stuff. The stuff your grandparents keep spitting at you. Things like "live below your means", "save x per cent of your income and invest it", and "don't buy things you don't need".

Nothing new here. But... I'm human, and I'm anything but rational (no one is, see below). I resemble my dog more than I want to admit: Whenever I see a shiny new thing, my brain goes into squirrel mode and shouts, "Oh, want! Must have! Now! My survival depends on this! Where's my credit card?".

I guess this is what it means to be human. So, these rules do not show you how intelligent I am – quite the opposite, actually. I am stupid, and I need to remind myself not to be a financial idiot by looking at them regularly.

And now, back to your regular programming. The actual rules:

  • Money doesn't buy happiness, but it surely helps to have enough (what can be considered "enough" is strictly personal).
  • People often mistake what they want. They think they want to buy possessions when they want to buy freedom.
  • Money is a tool, and it's neither good nor bad. Wanting to have more money is also neither good nor bad.
  • The pie is growing/infinite. Someone else doesn't have to lose for you to win.
  • Time is the single most powerful force in investing.
  • Humans can't be rational (no, you aren't either). We should at least be reasonable.
  • It doesn't matter how wealthy you are. Everyone should always live below their means. (This is the truth, numero uno.)
  • Investing (into bonds/ETFs, etc.) is a sure way to grow money, but a slow one.
  • There is such a thing as getting rich quickly (quickly still taking a few years), but there is no such thing as getting rich easily.
  • Most debt is bad, but not all debt is bad. Credit card debt is bad. Financing a car you could buy in cash because you want to deduct it from your taxes could be considered "good" debt.
  • Becoming rich is a process, not an event. (And you have to go through the process. This is why lottery winners lose their money as fast as they win it.)
  • Everyone has different needs. Write yours down, and don't play someone else's game. (Don't mistake their game for yours.)

These are nowhere close to all the things I learned during my reading. But it's what remained with me the most.

Sources

In case you care, here are the books I got these truths from:

Money