How I Manage My Money - 12 Money Rules to Build Wealth
Content from the book 'Psychology of Money'.
Attitudes about Money
- Everyone has a different attitudes about money. Don't judge others about it.
- There is a factor of luck in making money. Don't try to model your life after a specific person - you will not have their luck. Look at broader patterns instead.
- Say "This is enough". This is difficult because its caused by comparison.
- Understand Compounding
- Save as much you can. "Saving = Income - Ego"
- Focus on not screwing up(rather than focus on making big gains). SIP is better than trading.
- Use money to buy freedom. Money gives us flexibility and more options.
- Getting wealthy is different from staying wealthy. Making money needs you to take risks, being optimistic, etc. Keeping money needs the opposite.
- Don't aim to be flashy. Aim to be respected. Eg. Conspicuous Consumption
Protect your Money
- Have buffers. Even if your investments fail, it shouldn't destroy you(financially or emotionally).
- Avoid extreme financial commitments for your future self. Eg. Big loans. Or "Live fast, die young" attitude. End of History Illusion
- Be reasonable rather than rational. Factor in the role of emotions in your plans.