Let's say you come into $10,000, you get a bonus, you receive a windfall. How do you make sure that you are doing the smartest thing with my money and you don't set yourself up for failure?

Chapter one is the acknowledgement phase where if you come into a little bit of money and you haven't maybe grown up with that or it's more money than you've ever seen, That's usually the case for most of us. If we suddenly get $10,000 or $50,000 or like for some people, $100,000. Even if you earn $100,000, you never see that amount of money just like in your bank account in one go. And so it feels overwhelming.

Imagine, you live on the other side of a big bridge. You're driving on the bridge every now and you are thinking, what if I just go sideways and just the car goes off? You are not depressed. It's an intrusive thought. And the same thing happens when you suddenly have a bit of money in your bank account, like a large sum that you probably have not seen before or obviously very rarely see. How do you not accidentally just spend it all?

Look, it's not like you're going to suddenly go to the casino and drop it all on red or black and have a fever dream and wake up and the money's gone. That's a very, very unlikely scenario. A lot of steps have to happen for us to end up there. And sometimes the smartest thing to do is to take that money, put it in a separate account. You can open up a new account within your bank that you use. It's probably wiser to even use a second bank account if you've got one with a different bank so you don't see the money and just put it away until you decide what you need to do. Cause if it's out of sight, it's out of mind.

So you just need to trust yourself.

And now the next part, chapter two, is the decision matrix. We all have different backgrounds. And oftentimes like you'll hear that personal finance is personal. That's why it's called personal finance. You might have a different risk tolerance than others.

Some of us might have student loan debt. Some of us might have a mortgage.

Some of us might already be investing, but don't have an emergency fund. And so all these different versions of us, it's kind of difficult to be like, well, if you get $10,000, you should absolutely put it into the market, or you should absolutely build an emergency fund, or you should absolutely pay off all your debt. So how do you figure out what to do?

First of all, if you have $5,000, $10,000, $20,000, $100,000, step one is you're gonna move that money to a separate bank account. Step two is I'm gonna ask you a question. Do you have high interest debt? So this is debt that is 5 % or more. Some people say 7 % or more, but I like to say between five to seven. And if you're not sure, just five to seven, if it's more than that, this is high interest debt. If the answer to that is yes, then it's very simple. We start paying down that debt because a high interest rate debt is going to compound in the exact same way that your investments can compound.

Do I pay down my debts or do I invest in the market? The share might return 7 % pre-tax, which is great. But your debt is accumulating at 5%. And paying that down, especially high interest debt, helps a lot more because that's a guaranteed reduction. You've earned 5 % back because you're not accumulating it in interest. We're now going to pay it down that debt. But if you don't have high interest debt. You have a mortgage, but that's 4%. Student loan debt, but it's only 3%. Well, then the answer is you don't have to pay that down. So you get to answer. No, I don't have high interest debt.

The next question is do you have an emergency fund? An emergency fund is three to six months of living expenses, not your salary. Three months if you are in a stable employee job like you're a doctor or you're a teacher or you are in a career where you kind of know if you're in a stable job. Do people keep getting laid off around you or would it be difficult for you to find work if you move to a different city or a different country? If the answer is no, then that's fantastic. You have a very reliable job. And so if you think you could find another job within three months time, then you are just saving three months of our emergency expenses.

So this is three months of your living expenses in terms of your mortgage or rent, food, electricity bills, just like the things to keep the lights on. This doesn't have to be exactly $20,000. This is three months of your living expenses.

The next question for you is - do you have an emergency fund of three to six months?

And if you do, fantastic. The next question for you is do you want to invest? Because remember this is really important. Not everyone wants to. Do I invest? Do I pay off debt?

Do I build an emergency fund? Like what on earth do I do?

And the answer is very simple when you have that matrix. Maybe you put $10,000 down on the debt that you have, and then you put the rest of the money into the market because you have an emergency fund. Maybe you don't even have an emergency fund. You put $5,000 away as the start of an emergency fund. Then you put the rest into paying off your debt.

The best thing about personal finance is that you don't have to do the exact perfect thing that makes you Warren Buffett reincarnated. You just have to do something and use the best possible information you have available and trust yourself.