I came across the Prairie Homestead blog not so long ago and read a post about money principles. I thought it was a really good post that touched on simple but core principles of how to think about money. I borrowed her principles and modified them slightly to fit my view on money:
1. AVOID UNNECESSARY DEBT LIKE THE PLAGUE
A part from a mortgage (possibly student debt in Sweden where the interest is really low) do not borrow any other money! Car loans and consumer debt should be avoided at all cost! Concering mortgages: just because you are eligable for a high loan doen’t mean you should buy a home at that price. Instead think of what is the smallest area that you can live comfortably in and not just getting a larger home just because you can get a loan for it.
2. BUILD AN EMERGENCY FUND
The emergency fund is money that you have readily available in a savings account for when things go sideways (which they do from time to time because life happens). The amount should be approximately 3-6 months expenses. This should be done before paying off your mortgage or investing in your money making machine (although if you have other debt that should be dealt with first becase that is an emergency!).
3. SQUASH THE COMPARISONS
Stop comparing your life to everything around you (Facebook, blogs, Pinterest, Instagram, advertising, peers and so on…). Figuring out what you want is the most important thing not comparing yourself to others. We don’t see the whole story though social media and buying more things to keep up with the Jonses will only make you broke and not happy.
4. EMBRACE HUMBLE BEGINNINGS
You don’t have to have it all at once. Instead build your dream one piece at a time and live within your means.
5. BE MINDFUL OF MONEY
Figure out what actually adds value to your life. Living frugally isn’t about deprivation, quite the opposite. It is about spending your money on the things that you value.
You can have anything you want, you just can’t have everything you want
6. ADOPT AN ABUNDANCE MINDSET
This is a very important principle. Most people have a scarcity mindset where what they have is “never enough”. This leads to dissatisfaction and a lack of gratitude for what you have which in turn impacts everything around you. I have been working hard to incorporate more gratitue and an abundance attitude into my life for the past year which makes for a much more enjoyable life.