Some years I make resolutions, and some years I don’t. Some years I like having goals that guide my behavior, and other years I feel like January 1st sneaks up on me and I stumble into the new year without enough preparation to feel good about setting goals and holding myself accountable. This year is a goals year, and my goal is to talk more about the “missing link” in stock investing for new traders: personal finance.
> What is personal finance? Personal finance is how you manage your money. It’s understanding your sources of income (salaries, investments, side hustles), your expenses (food, shelter, funko pops), and using that data to budget for the coming months and years. It’s about understanding your own personal balance sheet and income statement. In video game terms, personal finance is an “early-game” skill that can unlock the “mid-game” activity of investing.
> Why is personal finance important? Unless you have the luck to be born into a wealthy family, your ability to manage your personal finances will have an enormous impact on the quality of your life through nearly all stages of your personal development. Earning some XP grinding the “personal finance” skill can help you become more efficient with the money you earn, spot new opportunities to improve your financial security, and protect yourself from making (and repeating) costly mistakes.
> There’s no magical trick: The path to leveling up your personal finance skill is one that you will walk for the rest of your life. There’s no shortcut. No stupid little trick to magically turn wasteful spending into profitable investment. Personally, my biggest level-ups came through shifts in perspective. If you haven’t done a thorough cash flow audit of yourself in a couple of years, I challenge you to track every single peso you make and spend this January. Seeing all the money spent on streaming services that you don’t use might make you think. Spotting a recurring charge that you stopped using 9 months ago (but have still been paying for) will open your eyes. But it’s not like you just do it once and you’re good. I have to do this every year to keep myself honest. I once found that I’d been paying for Spotify for a year. I pay for (and use exclusively) Apple Music, and I don’t even have the Spotify app downloaded on my phone. I never used it.
> What I will talk about: This is more of a “theme” for me than it is a goal since I’m not entirely sure how I’m going to do this. I want to talk about doing a spending audit, building an emergency fund, debt management, insurance, future planning, and tying that all together with investing as one of the final steps in the process. I’m not sure how exactly I’ll get there, but I’d love your feedback on this personal finance journey as we go along.
> But aren’t you a stock market guy? Yep, but the market isn’t how the rich get rich. I don’t operate a brokerage so I don’t have the hard data to say, but I’d be willing to bet a significant amount of money that 95% of investors who trade multi-million peso accounts made that money somewhere else, and put it in the market to grow. They didn’t use the market to turn thousands into millions. The rich got rich making money some other way, and the rich use the market to grow what they’ve made and try to protect that money from the ravages of inflation. Given the huge number of new investors that we have coming into the market, I feel I should give some time to helping those newbies (and the ones who aren’t even at that stage yet) the information that is more relevant to them. The last thing I want is to paint a picture of the market as a lottery ticket that a person can use to go all-in on some risky bet with their last P9,500 in the hopes of maybe improving their lot in life.
MB bottom-line: With things as uncertain as they are, the time is right for us as a community to dig in and do some of that work that we’ve been putting off for so long. I’m going to do this as a step-by-step process, starting from the beginning. I’m just a 40-something guy with a background in law, so it’s not like I have an MBA or any certification as a financial advisor. Whatever tips I’m offering are just those that have worked for me to get my financial house in order and configure my life to be just a little bit more efficient at converting my work (income) into a good life. Stay tuned!
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