Take the Politics Out of Money: Start With Personal Responsibility.
Political arguments about money usually begin at the top.
What should government do?
How should businesses behave?
Should taxes be higher or lower?
Who should pay for what?
Those can be legitimate questions. But they can also distract us from a much more immediate question:
What am I responsible for?
That is where first-principles thinking becomes useful.
Remove the Politics
Milton Friedman spent much of his career debating economic systems, incentives, government, markets, and individual choice.
You do not have to agree with Friedman politically to recognize an important principle underneath many of those arguments:
Resources are limited. Choices have consequences. Someone ultimately has to make the decision.
That principle applies just as much to a household as it does to an economy.
Your income is limited.
Your time is limited.
Your savings are limited.
Every dollar can only be used once.
That means financial planning eventually becomes less about politics, predictions, or opinions and more about responsibility.
Start With What You Can Control
First-principles thinking strips a problem down to what is actually true.
You may not control tax policy.
You may not control interest rates.
You may not control inflation.
You certainly do not control the stock market.
However, you have considerably more influence over your own decisions.
How much are you spending?
How much are you saving?
How much debt are you carrying?
How dependent are you on one source of income?
How much financial flexibility have you created?
What risks have you accepted?
Those questions bring the financial conversation back to the person.
Responsibility Does Not Mean Doing Everything Yourself
Personal responsibility is sometimes misunderstood as independence.
It should not be.
A responsible person does not need to know everything. A responsible person needs a process for making decisions.
That is why PlanAssist begins with three simple principles:
Have a Plan. Know where you are trying to go before making individual financial decisions.
Be Diversified. Do not allow one investment, one income source, one strategy, or one assumption to determine your financial future.
Seek Counsel. Recognize when a decision benefits from another perspective.
Responsibility is not refusing help.
Sometimes seeking counsel is the responsible decision.
Ask Three Questions
Rather than beginning with markets, products, or predictions, we can bring financial decisions back to three recurring questions:
Is my lifestyle aligned with my income?
Is my income resilient and diversified?
Am I making progress on both?
These questions are intentionally personal.
They cannot be answered by Washington.
They cannot be answered by Wall Street.
They cannot be answered by an investment product.
They require us to look at our own financial lives.
Then Organize the Money
Once we understand the problem, we can organize financial resources around three different jobs.
Liquidity provides money for current needs and the unexpected.
Safety provides greater stability for money that may be needed before taking substantial market risk makes sense.
Growth gives long-term capital the opportunity to compound and support future purchasing power.
None of these is inherently better than the others.
The question is whether each dollar is positioned appropriately for the job it needs to perform.
That is another form of responsibility.
First Principles Change the Conversation
Financial information is everywhere.
Political opinions are everywhere.
Market predictions are everywhere.
The harder task is separating what matters from what does not.
First principles help us do that.
Instead of asking:
What is everyone else doing?
We can ask:
What problem am I actually trying to solve?
Instead of asking:
What will the market do next?
We can ask:
What does this money need to accomplish?
Instead of asking:
Who is responsible for fixing this?
We can begin with:
What am I responsible for doing next?
That may be one of the most useful financial principles of all.
Regardless of the economic system, political environment, interest-rate cycle, or market forecast, the responsibility for our financial decisions ultimately comes back to us.
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