Money

There is no “right” way to spend, invest and give money. Here are some of the rules that work for me:

Spending

• • • Stay out of debt (spend less than you earn and live within your means)
    • Cash is king
      
      • Have emergency cash (with you and more at home)
      • Have at least 6 months of expenses in a savings account
    • Before you buy anything:
      • • Use what you have => Borrow => Swap => Make => Buy used => Buy new
        • Things create worries. Less stuff = fewer worries (materialism is irrelevant)
        • Spend consciously! Ask yourself:
          • Do I need it? Will I use it?
          • Is it removing a negative in my life? Will it bring me happiness? 
          • Can I afford it? Is it worth it?
          • How will I get rid of it one day?
        • Buy the best you can and keep it for as long as possible (if you buy cheap, you buy twice)
        • You can afford anything, but you can’t afford everything. What do you love spending money on? What if you multiplied your spending on that?
          • Some things I consider worth spending money on:
            • Health and fitness (vision, dental, mattress, office chair, nutrition, sports, etc.)
            • Education (courses, great books (my Library), etc.)
            • Experiences
            • Relationships
            • Making the world a better place (check out Effective Altruism)
            • Things you use for hours every day (laptop, keyboard, etc.)
            • Things that increase your income (work tools, software, etc.)
    • Swap/sell/donate what you don’t use and don’t need
    • Proper maintenance makes your things last longer and costs less than buying new things
    • Insure only against the largest possible losses (disability, home, life (if you have dependents), etc.)

Investing

• • The best investment is into yourself (education, health, etc.)
  • Only invest in things that you understand (do due diligence before you wire your money)
  • Diversify
  • Take advantage of compounding (low fees are important)
  • Set most of your investments on “autopilot” (so contributions happen every month, dividends are reinvested automatically, etc.)
  • There is no free lunch (higher return comes with higher risk)

Giving

• • Give at least 10 % of your income
  • Give effectively and maximise your impact (the best charities can have orders of magnitude larger impact than the worst charities – similarly to for-profit businesses and investments)

Last updated 2023/06