SIMPLE Personal Finances
Originally published August 26, 2016
“Savings is important, but what about insurance?”
“Investing for the future it a great idea, but how do I escape my paycheck-to-paycheck lifestyle now?”
“I know my credit rating is important, but what about getting out of debt?”
These are common questions I have heard over the years, and questions many of you may have asked yourself. The questions and their answers are not insignificant in their impact on our personal finances and in our lives.
However, such questions may indicate that we are trying to create an incomplete perspective of the reality of personal finance. By asking an “either/or” question, we may be revealing our belief that one aspect of personal finances is more important than another, or that one is indispensable while others are disposable.
So I’ve come up with an acronym to help us remember five important pieces of the personal finance puzzle. I’d be surprised if I’m the first to use this acronym, but I have not seen it used in this comprehensive, personal finance nature.
Personal finance should be SIMPLE: Spend, Invest, Manage, Plan, Limit and Eliminate
Spend (Spend money according to a spending plan and health behaviors)
Invest (Invest in yourself through education/training, and in your future through retirement accounts)
Manage (Manage your credit and your credit rating wisely)
Plan (Plan for expected and unexpected expenses through savings)
Limit (Limit your liability and risk through appropriate insurance products)
Eliminate (Eliminate the burden of debt as soon as possible)
In the spirit of the acronym, this will suffice for today. I’ll add details about each part of the acronym in the coming weeks.
In the meantime, keep it SIMPLE, and you will experience generally better personal finance health.
All the best,