Rules of Personal Finance (as told by various bloggers)

I have spent the last 2 years pouring through various Personal Finance blogs. Some I adore and keep going back to and others that I visit once only. Certain thoughts are echoed in every blog with varied degrees of eloquence and intensity and I agree with them, broadly speaking. I got to thinking about how I am translating them into my life and what more I could be doing.

Spend less than you earn.
*sigh*If only you could retire rich from living paycheque to paycheque. There is something quite unsettling about not being able to deal with slight changes to everyday life. For instance, last year, my gas and electricity provider was smoking that good stuff confused and charged me about three times what my bill should have been for four months in a row. Had I spent all that I earned, those would have been very sad times.

Save the difference.
I'm working on a mental transition. I am ceasing to regard saving as deprivation of some sort. Instead, I am looking at it as investing in my future. I am looking at why my mind thinks I am being mean to self when I put that money in the stock market, rather than spending it on that adorable Fendi tote. I can't say it is easy – that would be a bold-faced lie. For me, I keep thinking, "What if I die before I get the chance to enjoy my money? Wouldn't all the saving have been in vain then?" you don’t have to tell me, I know I am morbid

Earn more, save more.
Knowing myself, the lifestyle change that comes with salary increases will be tough to resist. I don't naturally think in terms of "I have £££ more, therefore I should save £££". I'll be real, my brain thinks "Oooh, I have £££ more spending money" and what I usually do is I spend it with no remorse. I guess automatic deductions from salary are the way to avoid this. That and very expensive therapy pretending I didn't get a pay increase.

Have an emergency plan.
I daydream a lot. I had a humanities teacher who tried to spin it as positive visualization but what I do is of the "Wentworth Miller will meet me somehow someday and swoop me off my feet, right after I win the lottery, set up that awesome iNGO and win a Pulitzer" variety. My overactive imagination also gives me shocks every now and then – I think about what would happen if I were to lose everything I own, or if a I had an emergency that prevented me from working for a prolonged period of time and I wonder if I could cope. At this point, for that scale of an emergency, the answer would be no. I would have to assess whether the situation was serious enough to warrant dipping into investments. If it was, I would do so in a heartbeat and not beat myself up too much about it. For lesser emergencies, such as a lost job / car accident / small medical emergency, I have adequate buffers and support systems in place. I have blogged before about what my emergency plan is. It isn't the conventional emergency fund, but it works for me right now.

Play the stock market.
Sure I can amass wealth without playing the stock market – but it's hard and I am highly unlikely to succeed. In order to accumulate wealth, one needs to beat inflation. Inflation will destroy your buying power. What my money might have been worth in 1996, when I put it away, is a far cry from what it'll fetch me in 2016 and there isn't much I can do about it. That is, besides taking a gamble to see if it can increase by more than inflation.

It's clear there is more I could be doing to get ahead in this Personal Finance quest. I'm still working on changing the money associations my mind makes. Once that is sorted, everything else should come a lot easier.