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Introduction to Personal Finance - #1
The concept of Time in Finance
Warren Buffet opined “No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.” It’s on this basis we start the newsletter for the year 2023.
The Concept of Time:
There is a high possibility that you have a new year resolution and one of your goals for the year is to increase your earnings either by starting a side business, pushing for a promotion at work, or changing jobs. Others may go ahead and include their spending pattern, saving, and investment goals in their plans. All these are super important but there is a key element that you must pay attention to – TIME.
Of all the things Warren Buffet is popular for, time is the least spoken of. As someone rightly said, “it takes 10 years for an overnight success”. If you want to achieve your financial goals for 2023, you will have to start small and light. You won’t get to save 10 times your usual savings by the end of January. Your stock performance won’t grow rapidly in 31 days. I hope in all your goal-setting and execution, you will allow time to play its part.
Consistency and discipline are the greatest attributes of compound interest. If you keep at it, you will become better at it. They are both siblings to time. It’s better to be consistent with little than to be in a one-off rush. I know sometimes it’s difficult to be consistent in these things.
This is why you must create a structure that works. Let me tell you 5 things that have helped me on this journey.
1. Automate my Savings, Investment, and Certain Expenses: If you don’t tell your money where to go, you won’t be able to account for it. By all means, automate some of your outflows this period. The sudden withdrawal might be painful but it’s for your good. Also, have and automate your emergency fund.
2. Take Personal Development Seriously: There are two ways people excel at personal development. They either learn by studying or through observation. It is said that personal development pays the best interest. Be active in your learning.
3. Take Action: You lose 100% of the shots you don’t take. Time is a rewarder. Buffet began his investment journey at age 11. You should start yours today.
4. Keep a Finance Journal: In that journal, detail all the major changes in your income, expense, savings, investment, and financial education.
5. Learn to say No: Another way to be consistent is learning to say no. No to unwanted expenses.
Relax: You won’t add an inch to your height by being anxious. Learn to relax and watch your investment and savings grow. The best time to plant a tree is 20 years ago. The next best time is now. Also, it won’t matter what you have if you don’t learn to manage it.
How do you intend to be consistent this year? Kindly share in the comments section. I look forward to your feedback.
Your Finance Coach,