Why personal finance is like managing your health
Stay with me as I try to explain this analogy that’s been percolating in my head as I’ve been researching more and more about personal finance. Managing money is like managing our personal health. (I wrote last week about how it was never too late to start eating healthy and getting finances & investments in order.)
Healthy Diet
The more I read about budgeting and saving, the more I see it as similar to eating a healthy diet. Crash diets don’t work–and most likely, neither will a get rich quick scheme or drastic spending cuts. Consistency and doing a little by little over time works better than deprivation followed by a future binge. (This goes hand in hand with the 1% rule that is described in Atomic Habits which I’m currently reading.)
A tip I’ve heard from a financial advisor was when you go to buy something (especially if buying on credit or using Buy Now, Pay Later!) would you be willing to pay 3x what that price is.
Exercise
Even if you ate vegetables all day, without movement and exercise your muscles would atrophy. Similarly, without doing some investing, money will not grow as quickly. Now, this doesn’t mean we all have to do the cross fit of money (which I would liken to something like crypto day trading). If you don’t know what you’re doing, you’ll end up pulling a muscle which just sets you back. and injured if you don’t know what you’re doing. You can do things akin to investing in a FDIC backed high interest savings account (= walking) or investing in stock market ETFs (=running).
Check ups
Every once in a while a visit to a doctor, therapist, dentist, masseuse, etc. can make sure our health is in check and we are on the right track. Things like doing an assessment like looking at bank statements, balances, (or mint.com if that’s what you use) or reaching out for financial advice (whether it’s a fiduciary financial advisor, trusted family member, benefits information through work, or a free podcast like Suze Orman).
(Side note for financial advisors out there: is this like being a doctor/lawyer in the family where everyone comes to you for free advice all the time?)
For a long time, I mostly was focused on a healthy money diet and didn’t really think that much about the rest. And while that’s definitely a great start, I’m still continuing to figure out how I can build on that without taking on too much risk. To be continued!...
Money & Crypto
I find this graph really troubling. To be considered in 1% in US, you have to have $2.2M…that’s bonkers. That is so much money.
Cost of living relative to purchasing power in cities across the world (Visual Capitalist)
The title of this article “Start-Up Equity Is a Great Retirement Plan, if You Can Pull It Off“ irks me so much. (NYT) The article gets into how getting compensated in start-up equity, while has a lot of upside, is more like “winning a lottery ticket.” I agree with the article’s points, but it’s so misleading how they frame it in the title. As an employee, the equity part of comp package should not be counted on. 1) Many start ups fail so you’re not even sure if your shares will turn into anything meaningful. 2) Even if it does go well, as an employee you’re usually so far down the equity stack below rounds of investors who will get paid out before you do. Lots of factors to overcome
Another NYT clickbait article title that I take issue with—”Crypto lost. Wall Street won.” This Is such a shortsighted claim! 1) Crypto has been around for less than 15 years. How can you know predict how it’s going to evolve this early? 2) I don’t like this “them” vs “us” mentality—crypto vs. Wall Street. It’s not like it’s going to be one or the other. IMO, these financial products and technologies will blend over time.
Things (ie. fees) to watch out for if rolling over 401(k) into an IRA (Note: This is not the same as rolling over from 401(k) to 401(k). (NYT)
Crypto firms finding out that engineers they had hired were from North Korea. “The FBI, Treasury and State departments issued a rare public advisory in May about thousands of "highly skilled" IT personnel who provide Pyongyang with "a critical stream of revenue" that helps bankroll the regime's "highest economic and security priorities." (CNN) (Thank you Matthew!)
SEC rejects Greyscale again as they try to create bitcoin spot-rate ETF (The Block)
I’m not surprised that Elon Musk is backing out of his Twitter deal (WSJ)
Lots of consolidation and buying of crypto firms during the down market (WSJ)
Trucking spot rates down slightly as longer term contracts come into place amist high shipping costs (WSJ)
Etc.
Which countries are in space? This graph really highlights how much SpaceX has impacted US space dominance.
Protestors in Sri Lanka storm presidential palace and the economic crisis brewing there
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Disclaimer: All opinions are my own. The content on this site and on the podcast does not constitute financial, legal, accounting, tax, or investment advice.
