Famous personal finance quotes explained

You may have heard many personal finance quotes that encapsulate wisdom and insights about money management but you may not necessarily how to put in practice in your daily life. 

We will explain in this blog (based in our own knowledge) some tips to make the most out of this popular wisdom. 

Table of Contents

Our preferred famous personal finance quotes:

"Don't put all your eggs in the same basket"

This well known personal finance quote is about portfolio diversification. You shouldn’t invest all your money in a single stock, asset class, or investment type. 

Diversifying your portfolio helps mitigate the impact of poor performance in one area, as losses in one investment may be offset by gains in another. Hence your investment should be decorrelated one to each other. 

This strategy is intended to protect against the potential negative impact of a single, significant event (like COVID in 2020). 

"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for." - Robert Kiyosaki

This is one of our preferred personal finance quotes as many low-income people believe that investing does not concern them. It is true that saving 10% out of 2000€ salary is more challenging than a 5000€ one. But at the end is the same goal.  

You should apply the 50/30/20 rule: 50% of your income dedicated for ‘needs’, 30% for ‘wants’ and 20% for savings. 

Once one is able to save, next step is to invest your money. Nobody has become rich but only saving. Money needs to grow, and much better if it is while you sleep (passive income).  

Another key point from this quote is about not increasing your expenses at the same speed of your income. 

You should learn to live below your means. It is hard to do it, as once people get an income leap, their first reaction will be thinking how to spend this money (moving to a bigger home, buying a new car, etc). 

Final lesson learnt from this quote is about securing wealth transfer. We do not like to think about death, but we should. Specially if we have a partner or kids. 

If you are more than 50, it could be wise to ‘simulate your death’ and estimate how much money will remain after heavy government taxes. As you get old, it could be a good idea to prioritize inheritance investment products to minimize taxes. 

Securing wealth transfer across generations implies more than just leaving a huge fortune to your family. It is about transfering a good financial education to your kids as this is not part of any school program and it can have a significant impact in their lives. 

"The best investment you can make is in yourself." - Warren Buffett

Investing in the stock markets or real estate is a good idea, but without a basic financial education it may not turn into good investments. 

You should first invest learning basic principles and acquiring the required knowledge on the asset you want to invest. 
As example, If you choose to invest in cryptocurrencies, you need to understand the principles of blockchain, De-Fi, etc.  

It is not just about financial literacy but as well about continuous learning, skill development, health and well-being, relationships, personal growth. 

Investing in yourself means as well ‘paying yourself first’. The first thing to do, once you receive your paycheck, should be to invest the money you planned to. Else, you will be tempted to spend it (most-likely in unnecessary things) and ending up without investing for your future. 

Finally, ask yourself: How much will you be worth if you lose all your money? 


"It is better to cut a finger than an arm"

When we decide to invest in an asset, is because we believe it will being us money in the future based on certain hypothesis. If it does not, then it is better to sell it as soon as you realize that you were wrong. 

It is a difficult decision to sell an asset losing money (like cutting a finger), but if you do not do it early enough, it may just get worse (losing your arm).  

Tricky part will be to know ‘early enough’ to make this decision. We recommend to write down your initial hypothesis when buying an asset so you can evaluate them later on. 

For example: If you decide to buy a studio apartment for rental, your hypothesis could be: ‘I expect to rent the apartment at least 11 months during the year because it is located close to a university so I can get 5% RoI‘ 

Say after 2 years, you realize that it was only rented 9 months because students stay only for few months as the university is not doing great. 

Then there is an important change in your original business case. You are now getting only 3% return a year (less income, higher tenant replacement cost) and nothing indicates that situation will improve. 

Your options are to keep trying hoping situation will change, or to sell (losing capital). In this example it may be wise to sell or you will end up 5 years later with a poor investment. You may not only lose more capital but the opportunity lost if you would have invested in something else. 

"Every time you borrow money, you're robbing your future self." - Nathan W. Morris

There is ‘bad debt’ and ‘good debt’. Bad debt is when the capital received will be allocated to buy consumption product or services (like buying a car, mobile phone, etc). Some will even consider buying a home as bad debt. 

Good debt is when the money will be used to invest and will eventually bring more money to you. Example: a rental apartment, a new business, etc. In case you buy your home with a loan, and if you resell it making a capital gain, then it was a good debt. 

Bad debt, will require you to pay it back with, most of the time, a significant interest rate. It can easily turn into a never-ending circle. You get more debt, to pay past debt. It implies that you will be working mainly to pay interests to a bank. A real nightmare! 

Our advice will be saving in advanced for personal purchases to avoid bad debt. Put money aside every month, till you can buy the product in cash. 

"Don't buy a falling knife"

Normally in stock markets people trend to buy a value that has dropped significantly because they believe is cheap (falling knife). The problem is that trying to catch it while it is falling could be risky and you can cut your hands. 

Volatility is normal in the stock market. However, when a value drops significatively compare to the overall market, it means that something wrong is going on with this specific company and not due to general market conditions.  

A value that drops -50%, can drop -50% again. Normally bad news follows more bad news. Sometimes this happens due to missed financial targets (revenue, benefits, etc.), or an scandal on the news, etc. 

Our advice will be to avoid speculation. It could be better to buy companies that are growing at steady pace and continue raising over time.  

"Fearful when other are greedy, and Greedy when others fearful" Warren Buffett

This is a way many has made big money in the market. It should not be confused with buying an specific company that has dropped significantly (as previous quote). This applies mainly when a ‘black swan’ occurs. 

Black Swans is when something totally unpredictable happens, causing a generalized market drop. The best recent example is COVID pandemie. These events makes possible buying asset under its value with a good discount. 

Our recommendation to avoid buying a ‘falling knife’:  Ask yourself ‘is the price drop due to the company itself or due to black swan event’? 

“Time is more valuable than money. You can get more money, but you cannot get more time.” —Jim Rohn

How to have more free time if you have to work 9 to 5, Monday to Friday? Even worse, if you do not like your job.  One way to get out of the ‘rat trap’ is becoming financially independent

If you have enough capital invested, allowing you to pay your bills, then you have more freedom to decide how to spend your time.  

Imagine a life where you can spend more time on what you value the most (family, hobbies, volunteer, or your dream work).  

There is a similar quote: ‘You walk different when you have money’ (Tony Robbins). It allows you to work because you want to and not because you have to. Money gives you the freedom to do make the most out of your time. 

Wealth give you options and allow you taking calculated risks to pursue your passions and goals.

"A rich man is nothing but a poor man with money" W. C. Fields

Being rich does not mean being wealthy. The best example are lottery winners. Most of them are not able to preserve wealth as they spend all their money as quickly as they got it led by impulsive and extravagant spending.

Being wealthy implies knowing how to manage your capital. This means following basic personal finance rules as spending less of what you earn. 

Final thoughts about personal finance quotes

Personal finance is like any other skill, the more you practice the best you get. We hope that after reading this short blog about wise popular finance quotes we had inspire you to improve your relationship with money. 

The idea is neither to become greedy, nor cheap but to help you mastering your personal finances skills as a mean to improve your quality of life. 

We all should have healthy finances. This means:  Not paying neverending credit card debt, not going to work every day in a miserable job, not sleeping well at night because you cannot get till the next paycheck. 

You may be working for money now, but you need to have your money working for you. Your future self and your family will value the time you spend now improving your financial literacy. So keep being hungry for more knowledge.

If you found this blog useful, please share it with friends and follow us in LinkedIn to receive more content like this. You can leave your comments below or contact us in case of any further question.

Bon chance!  


Please remember that we are neither financial nor tax advisors. We are just sharing our best understanding based in our own experience. This blog is for educational purposes only. Do not make investment decisions solely based on what you read in this blog. What works for us, may not for you. Do your own research and look for professional service if required. Read our full disclaimer in the ‘about’ page.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.