To say that one size fits all with personal finance is like saying one size fits all in a clothing store. We each have our unique style, taste, and clothing budget. When we come home with our new found clothing treasures we all organize and plan them differently and no two closets will ever look the same, so why would our finances be the same? If I’ve learned one thing talking to people about personal finance it’s that there isn’t a cookie cutter formula for everyone. Each budget, expense, and income statement will be slightly different because each one of us are different.
Each and every person has a completely different wardrobe. This means different clothes, different styles, some folded, some hung, some laying wrinkled in on the floor (it’s okay, I don’t judge). So how do we convert our wardrobe to finances?
Budgeting on Emotion
Some of us shop at Wal-Mart, some at Macy’s and others are even apt to do their shopping at Good-will. Where we shop for our clothes can sometimes be more important than what clothes we actually shop for. I think it’s pretty safe to say that most spending is emotionally driven, we want to feel good about what we’re doing. Oddly enough some of us feel good saving money while others feel good spending as much as possible. Your budget will directly indicate what makes you feel good, because we typically spend our money on things that do just that.
Investing in Style
Some people are comfortable flaunting their stuff and exposing themselves in public, while others are much more conservative, don’t take risks and stick to jeans and a t-shirt.
Investing is no different. Some of use roll the dice, love the thrill of penny stocks and don’t care about average rates of return for the next 30 years. Carpe Diem some say! On the other hand, there are those of us who can’t stand to think but put their money in anything besides treasury bonds, CD’s, and money market accounts. Who would risk their hard earned money on something as silly as penny stocks? Taking such risks wouldn’t allow these folks to sleep at night.
Organizing your Wardrobe
Are your clothes wrinkled on the floor, or are they neatly placed in exactly the same place every day. Do you know exactly what you’ll be wearing for the next week or do you just wake up and throw on the first thing you see?
The way you structure your wardrobe is a bit like how you structure your finances. Some people file their finances away neatly, have all their tax returns ready to go for the upcoming April and already plugged into their personal finance software.
Both fashion and personal finance aren’t exact sciences. They take experience in finding the right fit for you in order to feel comfortable in your own skin, and much like fashion, your personal finance style may change over time as well.
What’s your personal finance style, risky or conservative?
Does your personal finance style match your investing style, or is it opposite?