Financial Philosophies

I thought it would be useful to explain a bit about my financial background and what my philosophies about money are.

I grew up in a middle class family and my parents were quite careful with money, which I think has shaped the way that I think about money today. We had everything that we needed, but not everything we wanted - money was rarely wasted on extravagances. We rarely ate out, never had the latest clothes or technologies, but still lived a very comfortable lifestyle. My parents always put a decent proportion of their income into retirement savings and now they are approaching retirement age with a very nice nest egg and a prosperous retirement ahead.

When I left school I left home to go to university, and spent the next 6 years as a fairly poor student - my parents helped me out a bit financially, but the majority of my studies were financed by a student loan. Now that I'm earning a reasonable wage, I don't feel my lifestyle has changed a huge amount. Yes, I can afford a few more toys and luxuries, but on the whole I think living for so long without a significant amount of money has made me realise the value of financial security and the stupidity of mindlessly wasting money.

My basic philosophies about money will be very familiar to those who read or write PF blogs:

• Spend less than you earn
• Divert a significant proportion of you income into income-generating investments
• Never take on debt for a non-appreciating asset
• Pay off credit cards in full each month
  
• Try to spend your money in a way that maximises your quality of life, not in ways that leads you to accumulating useless junk
• Don't try to keep up with the Joneses
• Be frugal, not cheap
• Always think of the big picture

I'll detail some of the specifics of how I organise my finances in the next post.