Humility

WE GET TO MAKE LIFE’S financial journey just once, so we should do everything in our power to ensure the trip is successful. But how? As you might expect, we at HumbleDollar strongly suggest approaching the journey with a healthy dose of humility.

Think of it this way: We may have just one past, but we’re confronted with all kinds of possible futures—and we should try to ensure we’ll be okay financially, no matter which future we get. This has six key implications:

• We should constantly ask whether we’re pursuing the goals that are most important to us and whether we’re spending our dollars on things that bring us heaps of happiness. Why? We don’t always know instinctively what we want.
• We should make sure we have easy access to cash, while also minimizing debt, so our financial life isn’t too precarious and we can cope better with financial emergencies.
• We should avoid big investment bets and instead spread our money broadly, owning a globally diversified mix of stocks and bonds. The cheapest and easiest way to do that: total market index funds.
• We can’t be sure what sort of returns the financial markets will generate, so we should compensate by saving as much as we reasonably can. We also can’t be sure we’ll be able to save as much in the future as we can now. That’s another reason to save voraciously today, knowing we can always save less later, if we find we’re ahead of where we need to be.
• We should insure against major financial risks. We’d likely have no problem paying for a cracked windscreen, but we’d probably face a major financial reckoning if we injured somebody in a car accident. We need our auto policy to cover the latter, not the former.
• We should make sure those who depend on us financially would be okay if anything happens to us—and that they wouldn’t have too much difficulty taking over our financial affairs.

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