{"id":185805,"date":"2015-03-16T04:00:08","date_gmt":"2015-03-16T11:00:08","guid":{"rendered":"http:\/\/getrichslowly.org\/blog\/?p=185805"},"modified":"2023-10-02T15:16:45","modified_gmt":"2023-10-02T21:16:45","slug":"personal-finance-and-the-long-game","status":"publish","type":"post","link":"https:\/\/www.getrichslowly.org\/personal-finance-and-the-long-game\/","title":{"rendered":"Personal finance and the long game"},"content":{"rendered":"

When you think about it, personal finance is about playing the long game. Sure, it’s about other things as well. It’s about paying off debt. It’s about spending less than you earn<\/a>. But when you think about it overall, it’s about making choices that are harder in the short term for the good of the long term. Here’s what I mean\u2026.<\/p>\n

<\/span>Saving for retirement<\/span><\/h2>\n
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Saving for retirement, for example, means having less money to spend today. Having less to spend today can help avoid lifestyle inflation<\/a>, which is generally regarded as a good thing.<\/p>\n

However, there are plenty of responsible things that could be done in the short term with that money. For example, you could pay off debt or give to a charitable cause that is meaningful to you. You could stash that cash in an emergency fund or eat organic foods and hire a personal trainer.<\/p>\n

None of those are necessarily bad choices. But you decide that taking responsibility for caring for yourself in the event that you are no longer able to work full time is more important, so you play the long game.<\/p>\n

<\/span>Saving in liquid vehicles<\/span><\/h2>\n

Keeping an emergency fund in a “high-yield” online savings account<\/a> or even a few certificates of deposit (CDs) doesn’t provide nearly as good of a return as many other types of investments. (Notice the sarcastic quote marks around “high-yield,” and even CD rates aren’t much better at the moment.) However, investments that typically provide higher returns are also riskier; that is, they don’t always provide higher returns.<\/p>\n

In addition, keeping your funds in other types of investments may mean they are not easily accessible if you need them quickly. By maintaining a reasonable balance in liquid vehicles, you decide that losing out on some dividends or interest is a smarter choice than paying interest to a credit card company when emergency strikes, so you play the long game.<\/p>\n

<\/span>Being insured<\/span><\/h2>\n

Insuring yourself also means having less money to spend today. And sometimes it seems that there is no end to the types of insurance we “need.” I have the following:<\/p>\n