The Case For Approaching Your Personal Finance Brain as a Finance Professional – Not An Accountant

It’s All About Mindset

As I talk to multiple people at work and in my neighborhood and read various blogs it constantly occurs to me that everyone seems to pride themselves on backward looking personal finance insights. I find all of this to be short sited and also a constant struggle I have with my team at work – to truly better your personal finances I encourage you to be a finance professional and not only an accountant with your personal finances.

The Accountant Mindset

Accountants are primarily backward looking – “here are our results, here is how we account for all of these transactions, etc.”. Absolutely a lot of value to these insights on how you made money yesterday.

The Finance Professional

Finance professionals are focused on how you are going to make money tomorrow, and the year after, and the year after as that is ultimately what drives value. See my post on Valuation 101 here which describes this well: xxxxxxxxcccccxxxxc cc

Why is This Mindset View Important?

The dot com bubble, the housing crisis, the bull market in the 90s, the bull make in the 2010s, and all major economic booms and busts if we look in the rear view mirror (the accountant point of view) easily show what went wrong.

To make money tomorrow you have to make decisions today that advance your finances tomorrow.

A couple of examples to prove the point and provoke thought:

1. The Big Short Guy bought heavily into Stocks the day after Trump was elected. He has made hand over fist given the stock market boom. He read the tea leaves and acted just like he did during the financial crisis.

1. Indians are going to take over and soon: Half of Indians are under 25, Indians are all going online, and on average Make less than $5K a year

1. Wage Stagnation Isn’t Going Anywhere and even the Fed can’t seem to turn it around because they are part of the problem.

1. The online Gig economy is heavily pressured… $2/hour good enough for you? And a second article That says the same thing!
2. Everyone is Giving Up on Emerging Markets at the same time – if you have a long term investment horizon is now the time to shift a little more into Emerging Markets?

Awake Yet?

The internet and the ability to staff anywhere and have cheap labor are putting the world’s economies all on steroids….smaller tasks are easily getting to people who will willingly go after $2/hour jobs. The more complicated work is staying where it’s at for now.

Your wage if you are in the U.S. on a global scale is about as awesome and as powerful as any wage in the world.

Don’t believe me? Use this CNN calculator to compare yourself with the rest of the world: CNN calculator. The below are some screen shots for a wage of $45,000 which is the average in the U.S.

Ok – So the Point Is?

Well you need to start answering questions like this yourself as everyone will draw different conclusions and make money in their own way if they act on it. Some questions I would have you reflect on:

• How are you going to sustain and build wealth in the future? Will you make as much in 10 years from now?
• The world is willing to hustle for $2/hour but are you?
• What company is going to make money off all the macro economic shifts in wages and productivity?

Reflect and Act

As we discussed in controlling Your Finance Brain xxxxxxxxxxxxxxx – you need to reflect and act. Make sure you aren’t assuming yesterday will be the same as tomorrow! Be a finance professional when it comes to your finances – not purely an accountant!

So What is The Finance Brain doing?

I am focused on the following:

1. Crushing my job. I get in early so I can get the work done I need to (I get more done in the morning!) and leave at a normal time to hang out with my wife, kids, and dog.
2. Financial investments that drive income are where I continue in my journey…. I last outlined my portfolio here: Passive Income Portfolio Starting with $25
3. I started this blog… we’ll see where this takes me…. not looking promising at the moment but I am going to keep pushing forward
4. Doing all the other stuff I lost out on this blog on cost cutting, retirement, etc