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Eureka: The pseudo-science of money management
by Joseph Gatt
2018-05-24 06:28:00
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Every book I read on money management goes along the lines of “you spend some, you save some, you give some and you invest some.” And along the lines of “keep a detailed budget of your expenditures, account for every dollar you spend, budget and save as much as you can. But here are my two cents on money management, not the kind you won't find in any book.


The main question is what kind of lifestyle do you want to live. Do you want to survive, do you want solidarity, do you want altruism or do you want narcissism. Let me go through these four lifestyle.

Survival: there's nothing wrong with working on a survival budget. You spend just enough to eat, clothe yourself and pay the housing bills. You choose to live in a place as tiny as possible, clothe on a budget and eat on a budget. The more you live on survival mode, minimalist mode that is, the more you learn how to save money and where the good deals are for food, clothes and how to save to pay the bills. Of course some can live in survival mode to obsession, but the idea is you eat cheap food, watch your electricity, gas and water consumption, are careful with your clothes so you don't constantly have to buy new ones, live as close as you can to your job to avoid having to pay transportation fees, and rent the cheapest room you can find near your workplace. Rather than vacation, go to expensive restaurants or buy luxuries, you spend time watching free movies and documentaries, read all the free books you can find, and don't bother with any expense. That way you'll have a lot of money saved, say, for later in life, when your income can go up, you can move to a larger house, go on a couple of vacations and have enough money to afford healthcare bills.

Solidarity: You invite friends for lunch and pick up the tab, you organize parties, you give to the needy, donate to causes, help friends and family. There's nothing wrong with such budgeting if you can afford to do so. Be mindful that those you share your money with won't always be thankful, nor can you “buy” people by taking them to an expesive lunch. “Thank you” is what you might get, but you won't be able to tell them what to do.

Altruism mode: Now I know some folks who like to spoil people. They'll take them to expensive night clubs, spoil girls with expensive gifts, spoil their families with expensive gifts. They'll also go on expensive vacations and take people with them, buy people all kinds of luxuries even when such people don't deserve the luxuries. Survival is when you save a large portion of your income. Solidarity is when you give portions of your income. Altruism is when you give large portions of your income. I personally never accept expensive gifts, and tend to return anything other than that book or bottle of perfume. Because I know people who received expensive gifts, and had people come back asking them to return the expensive gift.

Narcissitic mode: Now you spend without pulse control, buy anything you desire, give and donate to causes so people can notice you, and hope people can constantly notice you. Narcissistic mode is when you spend a large portion of your income, give a large portion of your income and save very little of your income.

What's the best giving and investment strategy?

Now you have income, and wonder what you should give or what you should invest. Here are my two cents on those, that is my personal opinion. Give to people or causes you really care about. Give with love, to give love, without expecting to receive love in return. If you love your father or mother, you can give them cash or gifts, same goes for the family members you love, same goes for that partner you love or for those friends you love. Don't give to receive love, give to give love.

As for charitable causes, give to the causes you love. If you love animals give to animal causes. If you'd love people to be cured from illnesses give to causes that engage in curing illnesses. If you love it when people come out of poverty give to causes that raise people out of poverty. The list can be endless.

As for investments there are two types of investments. Business investments and financial investments. People who have a lot of money tend to invest in real estate, retail or production units. My two cents is you should invest in areas you have great confidence you are an expert in. If you want to invest in real estate, retail or production units, you want to know everything that is to know about those areas. You want to start very small, learn, and grow as you learn. You don't want to go crazy with investments.

As for financial investments, my two cents and strategy is to invest in causes you love, and see your investment as a donation. If the investment matures, good for you. If you lose the investment, at least you invested in a good cause. You want to keep investments in your “donations” category rather than”investment for money returns” category. Love the United States and want the country to prosper? Donate by buying US treasury bonds! If you lose the money, too bad. If the bond matures, you have your money back. Love the State of Israel or France or Jamaica? Invest in their treasury bonds! Love Disneyland? Buy Disneyland stocks and hope the company grows. If the stock grows, you just helped the company grow. If it falls, you made your small donation. You love it when young kids have big dreams? Donate to their dreams and see what happens. Again, you don't want to go crazy with donations. Most say, if you can afford to, you should never donate more than 10% of your anual income.

I insist these are my two cents and everyone has their views on financial management. It's your money, you decide what to do with it. I wish you a life of success and prosperity.

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