Get Started Handling Your Money

Couple days ago I went hiking with a friend at Ranch San Antonio, which is a gorgeous place for hiking, jogging, or running. It was wonderful hike, despite the blazing sun. And my friend, I will call her M.

During the hike, we chatted about many topics. The topic of money came up. M had seen me reading A Random Walk Down Wall Street before, so she asked me about stocks and investing.

However, instead of talking about stocks and investing, I suggested her to first understand her own situation before even thinking about investing in the market.

I believe a solid base is important. Therefore, one should start by figuring out their existing assets and liabilities (networth) and monthly income and expense (cash flow). Without first figuring out such information of yourself, it is reckless to begin investing.

M said that she has an idea that she spent a certain amount on average. Though I say, having an idea is not enough. Hard, cold numbers are the most honest proof of your financial situation. Numbers don’t lie, unless you tweak it of course.

M said that she will get anxious trying to handling money like so. Though I say, it is precisely that you do not want to get anxious about money that you should handle money like so. Plus, if you are not dealing with your personal finance because of anxiety, you are simply running away and not being honest with yourself.

I tried to be considerate and understand how, amazingly, hard it is for people to do differently. I suggested she should give it a shot. Perhaps start tracking the money flowing in and out and in her accounts. You have to start SOMEWHERE. If you haven’t, you are better off doing something than nothing to get started handling your money. You can learn in the process.

I am not sure how much she retained, but I hope she got something out of it at least.

Originally posted 2008-07-09 22:46:06. Republished by Blog Post Promoter

2 Responses

  1. Dario says:

    My best guess is that M will completely ignore your suggestion. Most people can hear only what they want to hear. You did not give the answer she wanted. I bet she went on and ask someone else. Is not a matter of being pessimistic of having little faith in human nature, is simply an opinion based on experience. Investing is not for everyone but is even less for people that start their venture with “I’m anxious…” that is the beginning of the end. Just think about the implications of having your mind tied by the emotion anxiety… and you will notice that usually it never leaves room in your head for rationality.

  2. Kin says:

    Yo Dario! Yes, exactly what you said. It is not pessimism because what she said is a reflection of her mindset, which is yet dominated by emotion. As such, there is low chance to take action base on a clear mind. We cannot force people to change, but I try to do what I can.

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