40 Financial Lessons in 40 Years (Part 2)

As promised, here is Part 2 of 40 Financial Lessons in 40 Years. These financial lessons are more focused on the personal finance rather than investing. If you want to read the financial lessons that I learned in the past 40 years that is geared towards investing, please read Part 1 here.

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21. Track Your Spending

I find tracking your spending more important than budgeting. I add up my spending once a year and evaluate it, and consider whether or not to try to maintain, decrease, or increase the spending in that category for the following year. I am often quite surprised at the amount of spending for certain things when you add it up over the year.

Knowing your spending also helps you with your financial independence goals. I don’t do anything fancy, I just write my spending down in my day planner and add it up at the end of the year with a calculator like the geriatric millennial that I am.

22. Track Your Net Worth Regularly

The financial lessons start with the basics of tracking. I started tracking my net worth in high school and have been continuing it ever since in a note book. That’s over 25 years!

It’s motivating to see your numbers go up (and of course the numbers go down too but in general it should increase as you continue to save and invest), and how close you might be to your next financial goal.

Wealthica (a free net worth and investment portfolio tracker) has a neat feature that was inspired by Million Dollar Journey’s motivating net worth updates, called a Balance Sheet Report. With it you can look back in time at your balance sheet and compare how far you’ve come over the years.

23. Match your Spending with your Values

Jason Butler from the Evidence Based Investor talks about matching your spending with your values. Humans generally want to avoid pain and want to gain acceptance, some want to gain acceptance more than others. There are different types of people who have extrinsic motivations and those who have more intrinsic motivations.

Those with extrinsic motivations value fame, money, image (think driving nice cars, carrying fancy handbags, sporting Rolex watches), whereas those with more intrinsic motivation don’t value approval from others as much and tend to lead a life that focuses on health and self-acceptance.

He recommends pretending you are alone (and the only one in the world) but have met all your basic needs such as food, shelter, accommodation, and to ask yourself if you would still drive the same car, if you would still wear the same clothes, and if you would use the same beauty products?

In the book Balance, by Andrew Hallam, he also talks about the same exercise called the Desert island Litmus Test, to pretend you are alone and think about how no one would see your purchase.

Would you still want it?

24. Practice Conscious Spending

I read the book the Latte Factor by David Bach many years ago. A lot of personal finance bloggers harp on it, saying that it’s not the little things that add up to deplete your wealth, but it’s the big ticket items, such as a car, or your mortgage.

However, I still think seemingly small expenses do add up over time and it is up to you whether or not you think the money was well spent.

For example, a coffee at Starbucks is $5, if you buy one every day from Monday to Friday (give or take), that adds up to at least over $1200 a year. I definitely treat myself to coffee at Starbucks when I need a pick me up, but it’s not a daily occurrence. It’s a treat and I am consciously deciding to get one (for example, on double points days), rather than just picking one up on autopilot.

I’d much rather spend the $1200 on something else, but don’t get me wrong, I really do appreciate the Starbucks coffee I get once in a while.

25. Don’t Keep Up with the Joneses

As tempting as it may be to inflate your lifestyle to keep up with the Joneses, it may set you back in your wealth accumulation. Keeping up with the Joneses means spending your money trying to buy material goods to look as if you are keeping with a certain social class.

If your friend or neighbour has a Louis Vuitton purse you may want to buy one too. If your friend or neighbour bought a new car, you may be tempted to get one too.

My friend who came to visit recently from abroad was surprised that I still had my car after all these years (it’s almost 10 years old) and that I wasn’t tempted to upgrade or buy a new car.

26. Keep an Inner Scorecard

Similarly to not keeping up with the Joneses, keeping an inner score card is a great way to build stealth wealth.

I was very lucky to meet my inner scorecard husband who happily works on his fitness, reads books, and leads a simple life. He doesn’t need fancy cars, watches, or clothing to feel good about himself.

You define your own success and you don’t need others to define your success for you.

Not caring about what others think and having your own self-confidence be obtained intrinsically is important for happiness and building wealth.

27. Find a Partner Who Matches Your Money Values

Warren Buffett has said that the most important decision in you make in your life is not about your career or finances, but it is who you marry.

I feel very fortunate that I am with someone who has similar money values. Our third ‘date’ was at McDonald’s. I’m surprised he didn’t pull out a coupon.

We are both frugal but don’t have qualms to spend money on something of quality if it’s something we will use regularly and that we value.

The only complaint he has is sometimes is I occasionally buy fruit that probably need to be eaten that day. He often suggests that I should be spending the money on more fresh fruit. Or he often suggests that I waste too much time going here and there to save money on groceries.

If you end up with someone who does not share your money values, financial infidelity may ensue if there is not open communication about your different financial viewpoints. Financial infidelity and divorce end up being very expensive financial lessons.

28. Know Your Annual Expenses

As mentioned earlier, track your expenses. At the end of the year add this all up to see how much your annual expenses are.

Knowing your annual expenses helps you get closer to Financial Independence because you will know how much passive income you need to cover your annual expenses.

The Crossover Point, coined by the OG financial independence trailblazers, Your Money or Your Life authors (Vicki Robin and Joe Dominguez) is when the monthly income from your investment capital is equivalent to the monthly expenses you have.

Source: Medium

29. Have an Emergency Fund

Life will give you lemons, life will give you financial lemons. Your car will need to be fixed, something in your home will need replacing. Sometimes both of these will even happen at the same time, thanks to Murphy’s Law.

These events are already stressful enough, but not having the funds to cover it makes it more stressful.

Having an emergency fund (I like to think of emergency funds covering expenses rather than income) can help offset this. Here’s how much to fund your emergency fund with.

30. Don’t Buy Too Big of a Home

The single biggest expense in your life time is your home. When you lock yourself in to a big mortgage, it also takes away your financial freedom. Don’t buy too big of a home.

It’s not just the mortgage you have to think about keeping under 32% of your income, you have to think about utilities, home insurance, property taxes, and even closing costs when you buy your home.

Cashflow is important and increasing interest rates on mortgages strongly affect cash flow in a negative manner.

31. Time Freedom Is the Ultimate Goal


When we are young, we have seemingly infinite time, lots of energy but no money. When we reach middle age, we lack time (I blame this on kids and I guess work) but we have more money and we still have energy. When we get older we gain time again, we have money, but our energy is lower.

Time freedom is the ultimate goal. Financial freedom helps with the time freedom. Time freedom will give you more energy (and time) to work on your health during your middle age years which may in turn increase your energy levels when you get older too.

32. Sometimes Psychology Trumps Math

Doing the math makes a lot of sense but we are humans and not robots. Sometimes making decisions for your personal finances involve non-logical decisions.

Hence the cliche “personal finance is personal”… what works for one doesn’t work for another.

The math shows that being fully invested in the market is more advantageous…but psychologically for me, having money to invest when the circuit breakers were going off in March 2020 worked like chicken soup for my investing soul.

33. A Lot Can Happen Financially in 10 Years

Bill Gates said “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

A lot can happen financially in the 10 years. A decade comes with a lot of change.

I dated a guy when I was 30 who asked me if I was the same person at 30 as I was at 20. What he said stuck with me, and I do agree that a lot happens in 10 years. Life has gone warp speed in the past few years since having kids (I feel like I have aged 15 years in the short span of 5 years).

So plan accordingly. Plant the seed to build your financial future in 10 years. We don’t know what the market will be like then but we can only control what is within our control (which are the habits of investing regularly in low cost index funds).

34. Credit Cards are a Tool If Used Well

Although credit cards get a bad reputation, if they are used well (meaning paid off every month fully) they can be a great tool especially with the credit card bonuses available.

With credit card sign ups and points accumulation (in addition to a Travelzoo voucher that was offered during the tough tourism times of Covid), we were able to go to the Maldives for 7 nights from Canada as a family of four (two young children) for $4350 CAD.

This is a bucket list destination for me and I still think about this amazing trip in the form of memory dividends at least every few weeks, even though it happened almost a year ago.

Maldives Trip Cost from Canada

35. Learn and Read About Personal Finance

I think the first personal finance book I read was The Wealthy Barber by David Chilton.

Here is a list of must read personal finance books for Canadians.

Some of these books are life changing, altering the course of your future because they inspire you to make changes in your own financial life, to make you realize your hopes and dreams are easier to achieve than you previously thought.

Another great book I have already mentioned is Balance by Andrew Hallem of the Millionaire Teacher fame. It has a very wise approach to investing and happiness in life.

In this book he talks about Ikigai and financial independence and how retirement in the traditional sense might be overrated, and instead, working part-time can help longevity because of increased socialization, decreased loneliness, and increased purpose.

36. Create Memory Dividends

As mentioned above, memory dividends just keep paying as time goes on. Spending money on experiences gives me much more satisfaction than spending money on material goods.

These memory dividends pay you in the form of brief moments of happiness and gratitude for what you have experienced so far in life.

So far, the years in the form of memories are defined as “that year that I went to Nepal” or the year that I hiked Mount Kilimanjaro.

Life is punctuated with travel experiences and trips, exploration, and adventure.

When there was Covid lock down, life just blurred into the same monotonous daily grind and many of us have trouble (including me) remembering specific memories during that time.

Another thing that robs you of memory dividends other than years of a pandemic, is dementia and preventing some of that from happening involves taking care of your health for your future self.

37. Life is Unpredictable

Life is also unpredictable. Even when you are young and healthy, health scares can happen to you.

A few years ago, I was hospitalized for a few nights because I almost had a stroke. A clot was forming in the layers of my neck artery from a tear due to a near fall. My voice became hoarse because the vocal cords were affected.

Had I delayed treatment I would have probably had a stroke which may have affected my ability to function day to day. Thankfully my voice returned (the neurologist said it would likely be hoarse forever).

You can read more about it here. Critical illness insurance might be worth it for you if you have dependents who depend on your income.

Some days, I do think that I should feel more grateful about the ability to wash dishes, clean the house, and function because I almost lost that ability to help support my family in that way.

38. Your Health and Wealth Both Compound

Seeing how your wealth compounds is easier to visualize than seeing your healthy habits (or lack of healthy habits) compound. These daily decisions (whether you decide to exercise that day, what you decide to eat for breakfast) compound over time and affect your health years to decades down the road, until it’s too late to reverse.

Your lifestyle might not seem significant right now, but it will be later on when it catches up to you. I know it’s easier said than done though, changing your habits and lifestyle is difficult but being aware that health and wealth both compound can be helpful to motivate you to have a lifestyle change.

High blood pressure, heart disease, diabetes… these chronic diseases crop up because of our chronic lifestyle decades ago.

I have to work on this, putting the night time snacks away is difficult!

39. Health is More Important Than Wealth

In the pursuit of wealth we often forget about our health. Health is something that we all take for granted, even when we get it back after a health scare, we tend to take it for granted.

Without health, wealth means nothing. If you don’t have the health you won’t be able to enjoy your wealth due to disability and illness.

After all, we only have one body.

So don’t delay, take care of your physical and mental health, I know it’s easier said than done but all it takes is a little promise to yourself and you’ll be off setting good habits in no time.

For me, I think the sweet spot of ability to travel and enjoy my wealth will probably be between ages 50 to 70 to 75 (but again, who knows what life has in store… we may know someone who had cancer age age 50 or someone who developed dementia in their 60’s).

After that, travel will be more difficult (heck, travel credit card medical insurance for seniors is more difficult to obtain too) because of health.

These is probably one of the most important financial lessons to remember: Without health, wealth means nothing.

40. Live Your Life Without Regret

Finally, and most importantly of the financial lessons, live your life without regret.

You may have heard about the Top Five Regrets of the Dying, penned by a palliative care nurse in Australia named Bronnie Ware. She worked in palliative care for 8 years and shared the thoughts of those she took care of.

The 5 regrets of the dying are:

  • I wish I’d had the courage to live a life true to myself, not the life others expected of me.
  • I wish I hadn’t worked so hard.
  • I wish I’d had the courage to express my feelings.
  • I wish I had stayed in touch with my friends.
  • I wish that I had let myself be happier.

Relationships are the most important at the end of life, not money or status.

The financial lessons in this is that you don’t really need money to have good relationships but you do need courage.

Courage to repair relationships (if it is a relationship you think is important to repair), courage to fulfill your dreams and not just simply your responsibilities, and courage to live a happier life by being able to express yourself are all examples of living your life without regret.

I recently have a trip planned to travel with my mom to visit a destination she’s always wanted to go to. I haven’t been away from the kids at all yet, but thinking about my mom being in her 70s and becoming more frail in future years got me thinking that time is passing and not waiting.

Hope you enjoyed part 2 of 40 financial lessons in 40 years.

Cheers to the next 10 years of financial lessons! Maybe I’ll be focusing on how to retire happy at that time.

Do you have any financial lessons to add to this list?

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