This week’s book learning is part 1 of a 5 part series on Personal Finance and Investing inspired by 3 books- The Investors Manifesto by William J Bernstein, I Will Teach You to Be Rich by Ramit Sethi, and The Millionaire Teacher by Andrew Hallam.
Today, we dive into personal finance 101.
Step 1: Stop discussing minutiae. We can talk about the effect of carbohydrates and trans fats on our health all day. What we REALLY need to know to stay healthy is to eat less and exercise more.
It’s the same with money – spend less than you make, live simple, spend consciously, and invest.
Step 2: Work with % guidelines for your budget. Below is a guideline split (primarily from Ramit Sethi) –
50% Fixed costs – rent, utilities, debts, transport, food, and health
15% Investments – this will be covered in parts 2, 3 and 4 of the series
10% Savings for future expenses – wedding, vacations, gifts, etc.
25% Guilt free spending – i.e. conscious spending (Pro tip: spend on experiences, not things)
Step 3: Be smart with your credit cards. If you live in countries which look into credit history before giving you loans, use your credit cards for your spending to save much more in the form of better interest rates on big loans. Never let your credit card balance go on overdraft though. Aside from hefty fees, it also damages your credit history.
So, if you are responsible with credit payments, ignore investment gurus who ask you to cut up your credit cards.
(Pro tip: Never pay yearly credit card fees. These can easily be taken off with a call to your credit card company)
Sketch by EB
I began reading up on personal finance and investing out of a personal need to understand the subject. It’s one of those subjects that requires a heavy one time investment to understand it and I’m glad I took the time. This series is the resulting thesis that I have developed. I hope you find it useful to get you thinking…
A Learning a Day 
