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When looking at personal finance, a lot of it seems to be revolving around money–from getting the right kind of investments and optimizing them to how you can get rich. For sure, personal finance is certainly about those things, however there is a much larger picture behind the scenes of all this. Surprisingly, it has absolutely nothing to do with money. In fact, personal finance at its core is learning to optimize your values and place priorities on the things you want.
You may have heard the saying before “Money isn’t the problem; the lack of it is.” And it’s absolutely true. Money alone isn’t the key to our own happiness, but having a lack of it certainly brings us pain and unhappiness.
Even in situations where people lack money can affect their entire being. Of course, financial constraints do affect people’s living situation, but it affects our minds as well. In the book, Scarcity, Why Having Too Little Means So Much, the authors shared valuable pieces about scarcity.
“Scarcity is not just a physical constraint. It is also a mindset. When scarcity captures our attention, it changes how we think. By staying top of mind, it affects what we notice, how we weigh our choices, how we deliberate, what we decide and how we behave.”
Money is a powerful tool and a lot of us choose to be controlled by it. Personal finance steps in to turn that around so that we can better manage our money. Personal finance, in the end, is actually allowing us to take control to the point that we don’t have to worry about money at all.
The whole point of personal finance honestly isn’t about the money. If it truly is about the money at the end, it’s not a good mindset to have. You’re basically chasing money with no clear objective.
Money is simply a tool and isn’t an ideology for us. Personal finance isn’t the act of accumulating tools but to use the tools to bring you to the life you want. To put it simply, personal finance should tell you the answer to what you are going to do once you save up that money. Good personal finance is to have goals set in place whether it’s buying a new car, traveling, or being debt free. Make sure you are setting goals so you are using your tools to use against it. If you need help, there are a number of resources here, provided by Wisebread.
In the end, personal finance as I hope I’ve explained enough isn’t about the money or the math, but actually the mind. From the beginning personal finance has specific rules like spending less than what you bring home, paying off your debts and invest with your money.
These are all important aspects but they also form part of a mindset to have. You have to spend less so you will have to change your spending habits and look at what is worth buying. Personal finance has those rules, but again it’s also pretty personal and it actually focuses more on the mindset we adopt but also the habits we develop and our own actions.