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The first thing to learn about personal finance — and money in general — is not how to manage them, but how to see them. Your beliefs about money dictate how you spend and how much you can make at the end of the day.Out of everything personal finances I learned, I created the top five personal finance principles that work for almost everyone and that briefly summarize how I look at money.—A | A RICH LIFE IS NOT JUST ABOUT MONEYDue to financial scarcity during my childhood, I decided to become rich one day in my life no matter what it took. However, the only concept of “being rich” I got at that time were the things I heard from my parents and the articles I read in magazines.Thus, I developed an incomplete belief about money — and life generally — that the sole goal in life is the chasing of more money. But the more I learned (from both accomplishments and failures), the more I found that living a Rich Life isn’t just about making and having more money.People can have a lot but still feel miserable. At the same time, people can perform at their best to generate more income when they have the right mindset and a better motivation other than just money.For me, living a Rich Life means having clarity towards my goals, the courage to work hard, the ability to perform at my full potential, and the freedom to choose the life I want to live. And this brings us to the next principle.—B | DEFINE YOUR LIFESTYLE & OPPORTUNITY COSTThe very first step in creating a personal finance system that works for you (not me, your parents, or anyone else) is to be clear about what you want and where you want to go. Instead of planning your life based on how much you make define the lifestyle you want to live, find out how much you will need to fund it and then reverse engineer the process.I know that it’s much more challenging to actually do than to say. However, it’s not practically impossible. I first learned about this from the book The 4-Hour Work Week by Tim Ferriss on lifestyle design.Delaying gratification is crucial to success in many areas but I’m not a big fan of forcing yourself to do something you hate or starving yourself for years, just for the sake of future financial gains. I think both can be achieved at the same time with two simple things:Actively creating and buying assets that generate passive income or income with minimal investment of time and energy.Understanding opportunity costs which basically means you can’t have everything at the same time. For example: if you want to become a digital nomad don’t get a 30-year mortgage loan.—C | SPEND LESS THAN YOU MAKEKnowing what lifestyle you want to live and what contributes to your own version of a Rich Life is half of the process. The essential principle in personal finance is this:Spend less than you make.This principle is obvious and has been repeated again and again by many financial experts. However, very few people are doing it because society encourages us to spend more. The math just doesn’t work out when you spend more than you make and many people get into debt because of this.Saving serves many purposes, one of which is to invest for future gains. In my own opinion, the three most important reasons to have extra disposable income are:Emergencies. Many things happen which are out of our control. Having an emergency fund provides a financial cushion to keep us afloat in case we lose our job, have an accident that disables us, or in case we want to offer help to our friends and family members.Breaking the paycheck to paycheck cycle. 78% of the population lives paycheck to paycheck, waiting for the salary to come in to pay the bills each month. Having extra cash to settle the bills before the next paycheck is a huge relief because you get to make better decisions in a less stressful environment.Funding your personal venture. The number one reason people put off the dream of owning their own business is the lack of start-up capital. Some get into debt to fund their own business and operate under the stress of having to pay it back. Having a small amount of start-up capital enables you to become more flexible in taking risks.—D | START INVESTING EARLYWhat do you do with the extra income after deducting your expenses? Invest it. And the earlier you do this the better your future will be.The best time to invest was yesterday, and the second best time to invest is today.I’m not just talking about investments like stocks, bonds, and other investment vehicles, I mean more than that. I see investment in three different categories:Self-improvement. Start by investing in your health, skills, and personal growth. You can lose all the money you make but not the wisdom, knowledge, and skills you gained. And these are the intrinsic values that provide you with security, not your employers or investment portfolio.Business. The creative industry is a business itself. You’re creating values out of nothing but your ideas and hard work. Now, learn to sell them. A business is an excellent asset that increases your total income and cash flow. At the same time, you have more control over it than any investment you make that is managed by others.Passive investment vehicles. These are the traditional investment vehicles like stocks and bonds. They help preserve the value of your money, generate small, passive income (for the short-term), and compound to a large sum of money over the long run. Unless you’re a trained professional investor, you want to diversify your money here and keep them in the market for long-term.—E | MANAGE THE PRESENTWhen we talk about personal finance, we’re thinking and planning for our future. We think about how to make more money in the future, what to do now to ensure our financial well-being in the future, and how to preserve wealth for decades to come.Planning for the future is great. However, most of us can’t differentiate between planning for the future and managing the future. One mistake most people make here is that they don’t move on to execute after the planning and instead, start trying to manage the future.They think about how much they’ll make five years later, what they want to do with all the money they have 10 years later, how good their life will be in the future — without pulling themselves back to current reality to manage their money.The difference between planning for the future and managing the future is this: The latter is impossible.The worst advice I have read from personal finance books is that to become rich, you have to live like a rich person now. This single piece of advice almost ruined my life. Instead, to become financially free in the future, think and act like a rich person, but do not spend like one.(Not all rich people are good at managing money, so be careful when you’re following someone else.)—Source: The Complete Guide to Personal Finance for Creatives & Entrepreneurs

I will share an important exercise today and I promise this will change your life 360 degrees and give a new perspective of reality if you honestly act on it from this very moment you read it. I did it myself and it benefits me with a far-reaching effect.360 degrees - (It is used as a metaphor and not literally geometrical meaning. You can consider 180 degrees if you want, what it means is turning your life upside down and better than before. But, even if it is 360 degrees and you are re-aligned with your path, you are stronger and wise than before to decide wisely, because each time you go through a season, you don’t just go through it, you “grow” through it)This is not rocket science. It’s just plain and simple logic, some steps to act on with a clear vision and mindset. I want everyone to read this very very carefully and implement it right now.Disclaimer: This may be a bit long answer and you can skip right away if improvement is not your forte.Now,There are three exercises to carry out,Exercise 1 | Part 1: Visualizing your Life.Exercise 2 | Part 2: Momentum - Designing your best life.Exercise 3 | Part 3: Inculcating discipline in your daily routine.That’s it. No big deal. Now, Let’s get to the details of how to do it.Part 1: Visualize & Calculate where you are in life right now and where you want to be.In the month of December-2018, I decided to visualize my life and I wrote this:The horizontal line in the upper first part is the x-axis where the numbers represent my age with a gap of ten years between them. 0 being the birth and 100 being the death (just for consideration). Also, for some of them (age 25,30,40 & 50), I have written the year above it that will be in proportion to my age.Down below the axis, I have made a list from the year 1993 (my birth year) until the year 2043 (I have written only till the age of 50 only not to extend any further for now. You may expand and consider beyond if you prefer) and in front of the year, I have written my age pertaining to every year. (ex: in 2003 I was 10 years old, in 2013 - 20, and so on.)The next thing I have done is I have marked 2018, 2020, 2022 & 2023 ( I have only considered the near future here) with a star, which defines it as an important year, a milestone for me where I intend to accomplish certain things in life. Your goals can be anything you want, personal, financial, educational, research, startup, business. Anything that you want to achieve. So, that’s my self imposed deadline.What’s the point of this exercise? It will help you to realize certain key aspects of your life which we all tend to overlook in this busy journey of life. It will help you realize all the vital people, decisions and goals in your life.The Past:Now, the first part is to visualize my life before the current year i.e. 2018 in this case and what this exercise does is it makes me realize I have completed a quarter to 100 and flashbacks my entire 25 years in front of me. Right from my childhood, school days, college, from my achievements to the mistakes I did, to the things I regret I didn’t do, to the things that made me happy, like literally everything. It helps me realize how far I have come.The Future:The second part is to visualize beyond the current year i.e. again 2018 in this case. The life ahead, the years ahead, what it will bring, what choices do I have to make, what goals do I have to set, what actions do I have to take to achieve those goals. Now, of course, nothing is guaranteed and either ways life will pass just like that but the truth is life doesn’t happen just like that, we need a life strategy, we need to examine, analyze and plan our life structurally if we want something fruitful to happen out of it.Calculate where you are now and where you want to be.As Socrates said,“An unexamined life is not worth living.” — Socrates.Part 2: Momentum - “How to design your best life.”I took a webinar by Jay Shetty called: Momentum - “How to design your best life.”Jay Shetty - (An urban monk as they call him) - He is an award-winning knowledgable vlogger and motivational speaker from the United Kingdom with his roots in India. I do recommend to check out his worthy talks on his website and other social media sites too. ( I am not promoting anyone here, it’s just an honest act to share something wise.)Coming back to the Webinar,It includes five key elements or simply 5 Keys:Life auditLife editLife debitLife creditLife accredit.Now, the task here is, You have to analyze and write down each of these key elements with respect to your entire life.And this is what I did (Mind it though, you can use your own method to analyse the components):Key 1: LIFE AUDITThis key is all about understanding the problem or challenge that you are trying to solve. Let’s explore the key areas of your life:PersonalWork/FinanceFamily/FriendsHealthSpiritualityNow, the thing you have to do is honestly rate yourself in each category on a scale of 1 to 10 where you think you are right now.The second thing you need to do is, rate where you want to (realistically) be at the end of the year in that category.Then, calculate the difference between where you are now and where you want to be and then start acting towards it right away.Key 2: LIFE EDITWhich area did you identify as having the biggest gap? This category willbecome your Life Edit - the area that you're going to focus on. Write downwhat it will feel and look like when you achieve your goal in that area.Key 3: LIFE DEBITWhat do you need to debit, subtract or deduct from your life to make the Life Edit possible?Create a list of 3 things you need to remove from your life. Again this is your own personalized list that you think is hindering your progress.Key 4: LIFE CREDITWrite down three things you need to add or introduce to your life.Key 5: LIFE ACCREDITWrite a list of 3 things you are grateful for. Be specific!Mind it, I only wrote the things that I think are important for me to conquer in the current scenario. You may write according to your position, goals, and choices in life.Apart from this, I have also made a detailed blueprint of my life goals on a whiteboard and hung it up in my room so that I could see it daily after I wake up & when I am around to keep myself motivated, act as a reminder, to re-analyze or re-structure and be focused.Part 3: Daily Habits.The sole reason for this part is the Power of Habit, Discipline, and attitude.I have set certain daily goals and habits that I practice rigorously no matter what weather, what time. I dedicate some amount of time for the mastery:Read 50 pages daily of good self-improvement, psychology, philosophy, investment, finances, physics, astronomy or any knowledgeable book you think will add something valuable to your mind and personality. There is a ton of gold out there, Search, buy and read it. It will improve and develop the domain of your mindset and knowledge.Wake up early around 5-6 am. It works according to my schedule. You may try your hands on what suits you. It just gives me an edge to start when others are sleeping.Workout for 1–2 hours daily. I’ve started doing intense weight-lifting & cardio in the gym. This helps me improve my health, get & be in shape and also helps me keep calm & it increases my focus.Set a digital hour according to your schedule to consume all that social media you want to.Set dedicated digital hours to improve my technical skills like coding, designing, editing, development.Watch one TED Talk daily. This will introduce you to many new dimensions of knowledge, vocabulary, the structure of society, technology, psychology and many other factors depending on the talk.Inculcate optimism. Cut down cynicism. Period.Practice gratitude daily.Trying to get better at meditation.Tip: Do these exercises every 3 to 6 months or whenever you feel the need to reflect on your life. It will help to again re-evaluate, re-structure & create a magical difference in your life.Above all this, I stick to my schedule. Don't let life pass you by, take action.“While we are postponing, life speeds by.” — SenecaIt means that time waits for no one. If you make a habit of putting things off, you will find you have run out of time to get things done.These little steps of daily habits apart from daily chores keeps me in check that I am on the right track.“Unless you try to do something beyond what you have already mastered, you will never grow.” — Ralph Waldo EmersonI will be glad if this proves to be beneficial & adds something meaningful to someone’s life.

It took me a while to come up with an analogy for this one, but here goes:Let's pretend that you are an economics student looking to purchase a car and you decide to analyze the purchase decision using only "economic" metrics. What things might you consider?Do you have a job? If you do, and you lose your job, how hard would it be to find a new one? Is unemployment high in your town? How much do cars cost in your town? How many other people are looking for cars? Are cars cheaper in other towns? Will there be cars in stock for all the other people who want cars? What interest rate are you likely to get if you need to get a loan? Will you consider importing the car from another country? If so, what currency will I pay the buyer in and what is the exchange rate?After all these questions, you still don't know which car to pick! So, you call your friend who is a Finance student at the same university. Your friend helps you answer the following questions to help with your decision. How much of a car can you afford? What is your debt situation? Will you lease or buy? Should you buy the car now, or wait a year? How fast will it lose it's value? Will purchasing this car interfere with your ability to pay your student loan when it comes due? If you take money out of your savings to buy the car, what amount of interest you would otherwise have earned on your savings?You now figure that you have enough information, and you have selected your car. Now it's time to get a loan! But the story's not over yet....The Finance student decides to loan you the money to purchase the car, even though he has checked your credit report and realized that you probably won't pay him back. But that's OK, because he has made loans to other economics students as well, (who also might not pay him back). But that's OK, because the Finance student grouped those loans together, called them a "AAA Bond" and sold them to his friend in Iceland....A few years later your car has lost most of its value and you and your fellow economics students default on your loans. The guy in Iceland as lost all his money, your friend in Finance is now rich, and the global recession of 2007 has begun.Anyway, I digress....Finance and Economics are fairly broad subjects so I'll discuss in depth below. To answer your questions specifically, if you want to know how society generates wealth, that's an economics question. If you what to get the most out of your saving/investment decisions, that's Finance.Here are a few types of finance that you might study at University.1) Investment Finance: This is the process of managing an investment portfolio. Portfolios are constructed based on risk and return by the purchase of Stocks, Bonds and other derivatives. People in investment finance often work for banks, hedge funds, or investments firms. You could even work on the trading floor or a stock exchange.2) Corporate Finance: (This is what I do for a living) In corporate finance, "Financial Analysts (like me)" work on teams that do "Forecasts" as well as work on what we call "Planning and Analysis" projects."Forecasts" are usually done on 1 , 3, 5 and 10 year time horizons and lay out a set of internal financial statements for use in developing the "strategy" (internal) and "guidance" (external). Guidance may or not be reported to the "Street" (Wall Street). Analysts are then responsible for "reconciling" the forecast against the "actuals." Actuals are financial statements that contain information from the past (ie, quarters in which "the books" have been closed.)"Planning and Analysis" is usually defined as the act of analyzing a particular business decision (such as a new product launch) with the goal of maximizing the value of the company's investment decisions. Most companies use a decision based on a projects "Net Present Value" (NPV), though there are many other methods of determining the "value" that a business decision will deliver.3) Personal Finance: This is the act of developing personalized plans for individuals or families looking to plan for future events such as retiring or buying a house. People who work in this field are often called "personal financial planners" or personal bankers. People working in personal finance often purchase products created by people in Investment Finance. The goal of this type of finance is to maximize the return on investment for the amount of risk the individual is willing to take.4) International Finance: This is where the line between Economics and Finance begins to blur. International Finance is deals with exchange rates and Interest rates of different countries. People working in this field usually work to develops methods to reduce a companies exposure to different types of risk. They do this by creating a "Hedge" usually a form a derivative like a "Swap" http://en.wikipedia.org/wiki/Interest_rate_swap or other form of contract with either another company of a financial institution.Economics is generally divided into two different sub sections. Macro-Economics and Micro-Economics.1) Macro-Economics: This is the study of the activities that affect the economy as a whole. This includes the study of unemployment, inflation, growth, and monetary and fiscal policy. http://en.wikipedia.org/wiki/Economics2) Micro-Economics: This is the study of how firms and households allocate their resources. Micro-economics takes a deep look at supply and demand, and how this is used to determine the prices of goods and services.In summary, economics tends to be more theoretical and finance is generally more specific, but I think that you do need to know economics to succeed in finance, but you don't necessarily need to know finance to have an understanding of economics.