How to reduce risk by spreading capital into different investments? More »
Some people live below their means, work hard, save bulks of their income and pursue financial independence aggressively. Is this the right path? More »
Guideline for constructing a market portfolio. More »
If time be of all things the most precious, wasting time must be the greatest prodigality.
— Benjamin Franklin
We suppose this post might disappoint those who are looking for a budgeting software review or an angry post about which product is best, but we need to state what we really believe: your choice of budgeting software will not significantly affect the quality of your household budget and it is probably better not to spend a lot of time selecting the perfect budgeting software for you.
Children are like wet cement. Whatever falls on them makes an impression.
— Haim Ginott
A few years ago, we were vacationing for two weeks. At the end of the first day, we were thoroughly enjoying ourselves. The weather was great, the coastline was beautiful and meals were delicious. However, there was one big problem.
Your life is the sum result of all the choices you make, both consciously and unconsciously. If you can control the process of choosing, you can take control of all aspects of your life. You can find the freedom that comes from being in charge of yourself.
— Robert Bennett
Every single day of our lives, we are faced with a barrage of spending decisions. Sometimes it can be almost overwhelming. Are we in control of our spending? Or is our spending in control of us? Even those of us who do not feel like we are “out of control” nonetheless often feel like our spending decisions are not always explainable. Why do we say “yes” to certain purchases one month and then “no” to the same purchases the next month? Why do our choices on some occasions seem almost arbitrary?
High achievement always takes place in the framework of high expectations.
— Charles Kettering
In the first part of this series on budgeting, we discussed the importance of starting the budget process by looking at the big picture. Now let us try to bring those lofty ideals down to earth. When we asked ourselves significant questions about life (listed in the previous article), we found that some of the things that were important to us were the follwing.
Understanding the mental accounting helps with spending, budgeting and investing decisions. Mental accounting means that people mentally divide their assets and income into buckets. Depending on the mental account, vastly different decisions are made regarding the money. Even though money should be exchangeable. Scientists mainly seem to be interested in trying to predict and explain behavior, so they do not necessarily label mental accounting as a negative thing. There can indeed be some positive aspects to mental accounting. However, when a mental accounting decision has a negative impact on current or future net worth and there appears to be no rational motive for it, it is a mental accounting error.
A lot of people know what to do, but only a few actually do that they know. Knowledge can only be valuable due action. You must take action. But, when the action becomes really important?
A profitable internet business model needs a huge target market. The larger the market, the higher the upside.
How to attract impulse purchases? What motivates impulse buying? Consumers made even large purchases on impulse. Three sales arguments are related to such impulse decisions. Valuable information for both, the conscious consumer and the eager salesman.
The most powerful force in the universe is compound interest.
— Albert Einstein
Why you should let time and capital work for you together as a mantra.
Reality is hard. Everybody wants something from you and you have to be cautious especially with your financials. Knowing your enemy, you will automatically select the right information in communication and think about the right questions (due the selective perception effect in your reticular activating system).
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