Shannon Christman

Personal finance isn’t about money. Well, it is about money in the sense that it’s not about music or biology or hockey, but it’s not only about money. Having strong personal finance skills usually does mean that you will have more money than your peers, but the benefits of honing your personal finance skills go far beyond increasing the number behind the dollar sign in your net worth.

So what is personal finance about? A lot of things. The reasons for getting a grip on personal finance are as numerous as the people who care about their money, but some benefits are basic to everyone (or nearly everyone).

Personal finance is about conservation. I don’t hear the word “conservation” as often as I used to, but the idea is timeless. Though “conservation” is most often used in connection in with natural environmental resources, those with strong personal finance skills realize that nature doesn’t have a monopoly on limited resources. We all have a certain amount of money to spend or save, and deciding the best way to use our money — conserving it to enjoy and spend at the appropriate time — is what personal finance is all about.

Personal finance is about personal and social responsibility. When we were children, our parents and guardians paid for everything we needed. As we gradually matured and became independent, most of us learned to take responsibility for ourselves. Those who manage their money well are less likely to remain dependent (or return to dependence) on their families or the government for financial support. Taking care of your finances is a mark of personal and social responsibility.

Personal finance is about challenging yourself. Many people describe saving and investing as games, opportunities to see how much they can save or earn in a set period of time. When you are given a limited income and an unlimited number of possibilities for spending that income, it is a challenge to spend wisely and save as much as possible. Setting high but attainable savings or net worth goals and working to reach them allows many people to discover that they are capable of doing much more than they ever expected.

Personal finance is about self-discipline. It takes discipline to set priorities and limit spending in a culture that offers endless choices. Whether you learn self-discipline by getting and keeping your finances in order or by focusing on other areas of life (education, dieting, exercise, etc.), this learned character trait is useful for all areas of life.

Personal finance is about following your dreams. The natural tendency of most people is to spend, rather than to save; few people save without having a reason to do so. Whether you are saving to retire early, to see the world, to help people in need, or to own your own home, managing your personal finances allows you to pursue your dreams. Those who buy everything that catches their eyes often lose the freedom to buy or do the things that matter most to them, but with strong money management skills, even those with modest incomes can afford to do many of the things others only dream about.

Many people believe personal finance is about security, and having a financial cushion for difficult times does provide some security. However, it seems impossible to be certain that the amount you saved will ever be enough to get you through an unknown future, and many of the richest people in the world would tell you that they don’t feel secure. Even those with far more accumulated wealth than most of us can be wiped out by health problems, natural disasters, and other unexpected setbacks. Personal finance isn’t really about security, but those who practice self-discipline, conservation, and responsibility, as well as those who challenge themselves to save so they can pursue their dreams, can feel relatively secure that their personal finance skills will help them through tough times.

Image courtesy of Claudecf