Applying Dalio’s Ideas to Personal Finance – BusinessMirror

I was able to watch a condensed animated presentation of Bridgewater Associates Founder Raymond Thomas Dalio’s book, “Principles,” narrated by him. The visuals were refreshing and the content was engaging and excellent it got me thinking, “What lessons here can be applied to personal finance?”

He puts utmost importance to reality. He encourages people to think for ourselves about what is true for us. In the field of personal finance, this translates to our own personal goals. We should be true to ourselves what it is that we really need and what makes us fulfilled. All too often, we get sidetracked by what we see in others that we lose sight of what really matters to us. This could mean never-ending expenses on material things without ever feeling contented with what you have. The lockdown period two years ago provided us the opportunity to think about what really matters to us and we could use these important things as our compass when navigating in our financial journey.

Another topic he discussed is his belief that having truths as essential foundation yields good outcomes. This builds on the first idea above wherein we decide what is true or what matters for us. Now, we are dealing with the facts around us. In personal finance, this means knowing objective information about our financial situation. There is no use having to mask our actual financial situations as this will only put our financial plans in vain. Having a firm foundation for your financial situation means having accurate information with regard to cash flow, balance sheet and life risks. Being able to objectively address and manage these three will provide the excellent footing one needs to step on before taking further steps in pursuing their financial goals.

Dalios’s presentation also touched on the idea of time moving forward and that we should approach it in the best way we see fit and his analogy for this is a river that ebbs and flows. In personal finance, we are usually in the paradigm that plans are rigid and that our journey is a rigid straight path to our goal. We need to remember that our financial situations are dynamic through time and that we need to be able to make necessary adjustments in our financial plans when the situation prompts us to do so. This can be done by periodic review of our financial plans to incorporate life and career changes if there is any.

In my opinion, the most important point that he had discussed in the animated video is the formula that pain, when coupled with reflection, translates to progress. He has cited his near bankruptcy as the turning point not only of his career but of his …….


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