Building Personal Equity - Your Personal Finance

Working with high school and college students, those who have a hard time relating to the topic of personal finance, I would normally bring up the topic of “building personal equity” first, and then lead into the topic of personal finance. 

I would tell them that personal finance has a more personal aspect to it than the financial aspect, stressing that we “should be” the driver of our own finances and goals. In order to be in control of our personal financial life, we then would need to first address our own personal development and life goals. Hence, the topic of building personal equity is the best start of this kind of conversion.

We need to ask ourselves, what is the personal equity we have for ourselves in the marketplace today? How have we invested and build values in ourselves that makes us overall more valuable? For example, our education level, knowledge, skills, experiences, etc., all make up our personal worth and equity. The more we invest in ourselves, the more equity we can build for ourselves.

There is a reason why one person gets hired for a particular desirable job and others didn’t make the cut, and why one person is able to yield better finance and investments than others  – most likely because they have more knowledge, experience and resources. It’s usually not an accident that certain people are more productive and better off financially.  It is highly related to the personal equity they have built and will continue to build and invest in themselves. 

So to get personal about our finances, here are some important basic questions to consider. 

1. What equity are we building for ourselves and our future?  
2. How much are we paying (investing in) ourselves first before we think about spending (needs vs wants)? 
3. How are we spending our time and money wisely? 
4. What are our responsibilities, goals, etc.? and how are we prioritizing them in our future planning?  

Notice that a lot of the financial decisions we make are also more personal than financial.  Our “personal” decisions in life will dictate how our future “financial” outcome could be. Like what we are taught in school, input = output....

Start today, don’t be intimidated by the topic of personal finance. Personal finance is a lot simpler to understand if we can relate to it better by knowing where to start.