There are hundreds, if not thousands of personal finance tactics that can be executed that will leave you better off financially than before you started.
Downsizing your home, bike commuting, cooking your own meals, cutting the cord, using an MVNO vs a smartphone, etc. – all positive tactics.
There are just as many tactics to get you in trouble as there are to help you – payday loans, credit card debt, massive student loans, buying a house that is too big, leasing a pricey car, dining out every night, replacing your wardrobe every six months, etc. – nasty stuff.
It’s fairly easy to separate the good from the bad (much less easy to stick to just the good).
But tactics are just tactics. They are something we do. They may provide short or even long-term financial benefits. But they aren’t who we are.
What trumps tactics?
Values. Virtues. And purpose.
Those who truly are the most successful in life and finance lead a purposeful life, driven by a select group of core personal values. THIS is what leads to long-term happiness, wealth, and wisdom.
And who wouldn’t want those things?
Here are 5 personal core values that if you look closely enough, are usually in abundance for those who are happy, wealthy, and wise:
1. They De-Value Stuff
How many times have you lusted over something shiny and new, bought it, and lost interest almost immediately?
And then version 2.0 or 5.0 comes out, and you start the craving -> buying -> disinterest cycle all over again?
Then there’s the ensuing guilt and shame when you come to the realization that you fooled yourself again.
Everyone has been has fallen victim to this. But those who seem to be happiest have made significant progress in recognizing it for what it’s worth and in devaluing their current possessions and future possessions.
Perhaps the thing they end up buying will enhance their life in some way, but they have developed a big picture perspective that lets them take a step back and rationally think about the short and long-term costs needed to obtain it.
And never do they rely on a material possession for their happiness. Except a bicycle now and then… ;-)
2. They have a Hatred of Debt
Nobody enjoys debt (although some may be addicted to it).
Many are indifferent to it.
A good number don’t like it.
But, it is the rare few that have developed a healthy hatred for it that tend to be the happiest (and definitely the wealthiest).
When used effectively – i.e. put towards an education that produces immediate subsequent dividends or used to finance a very modest first home or income producing rental properties – debt can be a net positive tool.
But most debt is not. Payday loan debt. Credit card debt. New car payment debt. High mortgage rate debt. Rent-to-own (debt in disguise). Personal loans. All bad stuff. Those who have developed a healthy hatred for debt attack it with a vengeance. And if the hatred pre-dated the debt, it most likely does not exist at all.
They realize that the power of compound interest is one of the best things they can have on your side to improve their financial situation. Debt is the exact opposite. It is the power of compound interest working against you.
3. They have a Healthy Respect for their Future Self
If your future 20-year from now self could travel back in time to talk to you today, what would you hope the slightly grayer/balder/wrinklier version of you would say?
“Hey – thanks a lot for leaving me with zero savings so that I have to now take on two jobs to pay off my debt and have any shot of retiring one day! Jerk!!!”
“Hey – thanks a lot for leaving me with enough savings that, with compound interest, made it so I don’t have a financial worry in the world. I was even able to retire early. I’m rich, [email protected]$%#!!!”
Of course, this hypothetical doesn’t have to be limited to money. It could just as easily apply to:
and just about anything else in life that leads to happiness.
But it’s not just withholding from the present to make for a brighter future. There needs to be a healthy balance between the present and the future. And no, that does not mean a blank check for spending.
4. They have an Ambition for Personal Growth
What good is a life without personal growth?
All the personal wealth in the world carries no value if it is not used in a way that allows us to explore, enjoy, learn, re-invent, and grow.
This doesn’t mean that you have to be in a constant state of unhappiness or unease with yourself. That would make you… well… miserable.
You are what you are, but you don’t have to always stay there, if that makes sense. A curiosity to explore and push your personal limits and boundaries is healthy for the soul – and the happiest and wisest among us have learned this virtue over the years.
And those who tend to push themselves also seem to have opportunity and money follow them, don’t they?
5. Appreciation & Gratitude
For the little things. Never gets old does it? There are plenty of things that are better than money that can be appreciated on a daily basis.
Set aside time to appreciate them.
Landmark points in life are rare. Exciting when they come along, no doubt. But rare.
And there’s a whole lot of life in between. Find the enjoyment within it, and you’ll become far wiser than your years. And much happier.
Happiness, Wealth, & Wisdom Discussion:
- What values/virtues do you believe lead to happiness, wealth, and wisdom – and why?
GE, absolutely awesome post. One of the top few financial articles I’ve read all year. Knowledge and intelligence are critically important parts of the equation, but *wisdom* is the most essential of all – and that’s what you’re writing about here. Thank you!
Great article is excellent as all the points are dead on!! Especially number 5: appreciation and gratitude. This last point really puts things in perspective for the individual as it is often gratitude for things we have in life and for those around us who support us that require careful reflection. For those who do not have these two traits quite often they hit a glass ceiling made from selfish behaviors that stymie there forward movement in life.
Liked the article very much!
Thanks for this! I really have to remind myself of number three. It’s so tempting to “go all out” while I’m young, but I know I’ll regret it if it means an indebted future!
Lyndsay, I think the great thing about this article (and this blog in general) is that it shows that you can “go all out” and still save money.
If you have apreciation and gratitude and have ambitions that de-vaue stuff your able to save money and “go all out” in life. With these factors in place you become a person who goes all out on experiences rather than material things.