Having a diploma in business management, it sometimes surprises me that some of my colleagues and friends are actually struggling with their finances despite them earning more than what an average young adult makes. There’s nothing wrong with enjoying life now, but it also helps if one is saving for later. I’m all for enjoying and rewarding oneself from time to time, but I’m also an advocate for financial literacy. I always tell my friends and even my family of the concept of delayed gratification – it is the act of resisting a temptation of an instant pleasure in the hope of obtaining a more valuable reward in the future. If you look at the Internet, you may find thousands of concepts about and personal finance and financial literacy, but there is one powerful video by Suze Orman that talks about the Five Laws of Money.
The first law – Truth creates money, lies destroy it
Fairly straightforward, the first law states that being true to one’s financial position will lead one to a better financial standing. Being in denial of one’s financial situation will create more problems in the future. A former colleague of mine, who is fond of traveling, had spent thousands of pesos for her Wester Europe trip back in 2015. Unfortunately, she didn’t save enough for the travel; instead, she loaned the pocket money from her bank. It took her three years to finally pay off the loan as well as her credit card debt. When one is truthful to his or her money, one is also led to do the right decisions about it.
The second law – Look what you have, not what you had
This specific one is applicable to investments made in the past. Investors tend to dwell in the past and so they get stuck to that moment and find it difficult to move on. A wise investor will always learn from the past mistakes and will use these learnings to make sound and strategic decisions which will benefit them in the future.
The third law – You have to do what is right for you, before you do what is right for your money
This one states that one should prioritize one’s freedom and security above all other benefits of money. She says that one should make decisions that will make him or her feel good and less stressed before one should prioritize money. This can be done by securing one’s emergency fund first before investing in riskier assets.
The fourth law – You must first invest in the known before the unknown
This one is my favorite since I am more of a risk-averse investor. I always make sure that I am 101% prepared at any life unexpected plot twists that come my way. I currently have two life insurance policies and I’m planning to get another one to cover for medical expenses should I get very sick in the future. I also have enough savings to cover for at least a year of my expenses. I always prioritize security and peace of mind above all.
The fifth law – Remember that money has no power of its own
The fifth and final law is a reminder that money cannot do anything on its own. We are the ones who control our money – whether we decide to grow it by investing it or whether we decide to spend it on material things. In the end, it is us who control it and it shouldn’t be the other way around. People sometimes forget that and this video is a good reminder that we are in control of our own financial situation. Whether we decide to prioritize our security in the future or whether we decide to enjoy the now, it is totally up to us.
The Koreander 