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My Single Best Piece of Personal Finance Advice

Achieve Balance.

Very zen huh? By balance, I don’t mean a fat bank account balance. I mean balance in everything you do, personal finance and beyond. I bet you expected me to tell you to save 20% and put it in a target retirement or an index fund, or cut out your daily candy bar or coffee, or some other common repeated piece of personal finance advice; but honestly those tips are merely outward actions of an underlying philosophy and it would behoove everyone to understand the philosophy, not just remember the actions. Remembering and understanding the philosophy will yield greater rewards than trying to remember all the actions because the philosophy will guide you in every situation, whether you’ve dealt with it before or not.

My personal finance philosophy is to achieve balance. By this I mean that you shouldn’t totally sacrifice any one aspect of your life in order to achieve something else. A great example is in retirement savings, if you can afford to max out your 401k for the year without severely impacting your life, by all means do it. If you have to eat ramen and never enjoy life in order to max out your 401k, don’t do it because it’s not worth it. Don’t entirely leverage the future for the present and don’t entirely leverage the present for the future, put equal emphasis on both and you’ll do just fine.

Another example has to do with investing. It’s very exciting to put all of your investing dollars into the hottest new technology or biotech startup, but that’s a mistake. You want to get a nice diversified mix of stocks from different industries, different market caps, etc. so that you aren’t overextended in any one particular area. Balance is again key here.

Lastly, balance the focus of your time as well, don’t spend all of your time thinking about money, thinking about your accounts, your retirement, your investments, etc. Balance your own time between your hobbies, your relationships, your work, and other aspects of your life.