On Heuristics and Specifics

One of the things I like about having a personal finance blog is that I get a lot of different perspectives from people that leave comments or send me email.

Let's take the generic advice to save 10% of your income each month and build up this big emergency fund, and then invest.

This is of course widely applicable, but there are always tweaks based on our specific circumstances.

For example, regular employees won't really need to do much more than what I wrote above.

But free-lance/self-employed people will need to at least tweak that percentage. It won't be a fixed percentage anymore; most likely they'll have to set a specific monthly budget, and save the rest of the "extra" money - however small or large that may be. The emergency fund would still be around 3-6 months worth of expenses, but probably trend towards 6 months - if not more. Mostly because the chances of next month's income being short is very real (a problem not normally faced by regular employees).

Another common thought is that the earlier you start investing, the better. This is of course generally true, but in specific instances it is not practical. For example, people theoretically start earning money at their christening as some relatives or godparents do give cash. You could save the money (or rather, your parents), but without a TIN most of the usual investments (Unit Investment Trust Funds, Mutual Funds, direct stock investments) are out of reach. Although you still could invest in time deposits or certificate of deposits.

Another idiom that you might hear is that you get what you pay for. So if you are serious about getting your finances in order, better consult and pay a pro. Or at least, pay for "real" knowledge - books, seminars, etc.

We can't really assail the quality of those sources - assuming you did your due diligence already, and looked up those people/groups first before forking over money.

And in reality you do need to pay for specific knowledge or experience. But typically those are the kind that makes you money, not necessarily for the ones that save you money.

And at least in personal finance, you can get the necessary knowledge without paying. Although the quickest way is to pay for them, you can do just fine studiously looking up information and applying them.

So what's the point? Only that there isn't just one "right way". That makes it nice - especially for those of us that may have gotten stressed that we aren't comfortably close to the usual expert advice.

But it also makes diligence and awareness that much more important. We can't really coast with generic, pre-set courses of action. We'll have to really sit down, take a good look at where we are, and make thoughtful plans. Which unfortunately is harder than is sounds.

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