GMR 128: Time Tested Principles for Your Finances
In the past three months, we’ve experienced historical events; from COVID 19 impacting everyone across the globe, to recent riots breaking out all over the United States and beyond. There is much uncertainty in our world today. That’s why it’s necessary to rely on time-tested financial principles when making decisions that impact your today and your tomorrows. In this episode of GMR, we discuss these financial principles that have stood the test of time so you can use them to ensure your family’s financial future.
Show Notes
Financial principles are similar to having a set of values and beliefs that you and your family live by. For example; as a family, you might value eating dinner together. The benefits of this are numerous.
We all have these kinds of values that we incorporate into our lives. Financial principles operate in a similar manner. They provide a predictable positive outcome (a benefit) if we abide by them, and warn of consequences if we violate or ignore them.
Financial Principles
Saving and Investing - consistently, conservatively, and wisely -why we don’t try to time the market, but instead, we live on a plan, based on a core set of principles.
Borrowing - Wise or unwise (assets or liabilities).
Spending wisely - provide adequately for your family and priorities needs and wants. Or, spend impulsively and be in danger of not being able to provide for future needs.
It’s important to live based on your principles, not based on your circumstances. This is why we’ve introduced four principles for purposeful living.
4 Principles of Purposeful Living
1. Spend on Purpose “spend on purpose...so that you know where you are.”
2. Save Before You Spend “Save before you spend...so you experience stability today and in the future.”
3. Increase Your Financial Margin “Increase your financial margin...to pursue your true life’s purpose.”
4. Invest Wisely “Invest wisely...to increase your impact.”
Less than 3 months ago we were talking about making financial plans during uncertain times. Three months before that we did 4 episodes on investing having no idea what the future would unfold.
92 - Four Places to Invest
93 - Is The News a Good Place to Get Investment Advice
96 - Rules of Investing
97 - Rules of Investing Part 2
Today we’re going to highlight some of the truths that have been proven by the last 90 days of Covid-19, that prove the value of the principles in those episodes.
S&P 500
Feb 19th - 3,386
March 23rd - 2,237
June 8th - 3,232
1 Year Ago it was 2,873
In one year, it went up over 10%, and that includes a short period where it dropped almost 30%. That’s how volatile the market can be.
“Far more money has been lost by investors trying to anticipate corrections than lost in the corrections themselves.”
If you can’t ignore the noise and stay the course you’re going to find yourself in trouble. This situation with Corona is a perfect example.
If you had pulled your money out of the market, when would you have put it back in?
If you had extra cash, then you could take advantage of the down market, but don’t try to time the market with your investments.
If you can’t handle the ups and downs, then maybe you need to not have as much in the market.
Resources
Debt tools and other free resources - https://leosabo.com/resources
Online Budget Course - https://courses.leosabo.com/
David’s website - www.stewardshippastors.com