All of us have money moments that we missed. Maybe it’s your older brother who bought that house in the rough neighborhood, right before it got developed, tripling his investment. Maybe it’s your techie uncle who couldn’t shut up about this company called Apple back in 1999. Whoever you are, you know people who could read the financial writing on the walls, and you know people who couldn’t. But most people don’t make it big on a single opportunity. Most chances at making money happen much more frequently, and at lower stakes.
Money making opportunities, sometimes called “windfalls”, are exciting events. Think of it like a game of poker, one where you’ve made it to the last few rounds. Your eyes are focused, your pulse is up, your mind is sharp and nothing can break your attention. Because you’re involved in the outcome, you manage to pull off the win. These opportunities are the exception to the rule. In your real life, you might gain or lose money all the time, without giving it much thought. For people who want to master personal finance, these are the opportunities you’ve got to focus on.
Everyday money making opportunities are most often the chances that you don’t lose money. Remember the old saying, “A penny saved is a penny earned.” While it might not be as sexy, preventing yourself from spending is more important than earning money, as it is a step in making your personal finance system a lot more efficient. Think of it like changing the oil in your car. This makes the car get more miles driven per gallon of gas. An alternate way would be to build a better, more fuel-efficient engine. The better method for savings, by far, is to save through behavior change, rather than spend for a better equipped vehicle. The same is true for your financial life.
Many people lose and waste money without realizing it at all. They might do so frequently, all while stressing themselves out at work and laboring for more hours, trying to make up the difference and more besides. For people who don’t naturally love their work, it only makes sense to make a salary stretch as far as possible, so that the time spent working is not in vain. This requires that close attention be paid to the way that money is spent in your everyday life. Once you’ve looked closely, you might be surprised at what you see.
When people take a close look at their finances for the first time, there are often surprising things they did not anticipate. Take the middle class homeowners in the UK who all learned within the last years that they were paying for insurance they didn’t want. A PPI deadline has been drawn in the sand so that these people can get their money back, after signing up for insurance they didn’t want in confusing loan contracts. The better thing, from their perspective, would have been to catch this mistake as it was being made, saving hundreds or thousands of pounds. Without this constant attention, your personal finances can’t be efficient and focused.