One of my favourite books is The Art of War by Sun Tzu. He was a Chinese general, military strategist, writer and philosopher who lived in the Eastern Zhou period of ancient China.
The book imparts lessons on how to beat your opponents on the military battlefield.
Sure, not many of us are fighting wars, but the lessons are easily applied to life and finances too.
KNOW YOURSELF
One of the main lessons is, to win the battle you must intimately know your terrain. Know your surroundings.
In The Art of War this meant knowing where every pothole, blind spot, hill, tree, ditch and bush were. Knowing the weather patterns of the area. Sun Tzu realised that knowing this is half the battle, and that most battles are won before even entering battle. Just with some knowledge and well preparedness.
The same can definitely be said with personal finance.
I am a firm believer in using your strengths. If you recognise you lack investing knowledge or don’t know how to evaluate buying a house, then the worst thing you can do is start investing big or buy a house. You could lose big money that you weren’t prepared to lose.
Recognise your weakness and learn. Then you can make your move.
In The Art of War, acting on your weakness would result in death. In general life it could just cost you a large sum of money.
KNOW YOUR TERRAIN
The path to financial independence can be a very long journey with several detours and trip ups. If you can see these ahead of time, you may save a lot of time and money.
If you go in thinking you will receive 15% returns from your investments, or that the markets will never drop, then you do not know your terrain and are not well prepared for the long journey.
If you go in thinking that kids aren’t expensive and won’t slow down your financial goals, then you will end up discouraged because you lead yourself down a path of false illusions. Leaving yourself unprepared for the journey. Just because children turn the landscape from flat to uphill, it doesn’t mean you can’t reach your destination. It just means an adjustment of expectations and a change to your path. May be a slightly slower journey, but just as rewarding.
If you go in thinking that you are the best investor and can easily beat the market, then chances are you will end up worse off than the slow and steady travellers.
FINAL THOUGHTS
It’s important not to go into your financial journey without a plan. This includes knowledge of your strengths, weaknesses, and blind spots.
A solid financial plan will help to predict some, but not all, traps and falls. Saving you a lot of time and money over the long term.
If you don’t have a plan at all then you will struggle to reach your destination.
If you have a plan but are unrealistic about your expectations or it is poorly prepared, then you will either give up when it isn’t working or you will reach your path very inefficiently and slowly in a wild zig zag path.
Plan well, travel well. You may even manage to find a few shortcuts.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here