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    Personal Finance

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    bey lu

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    Personal Finance

    Uploaded by

    bey lu
    9 views3 pages

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    9 views3 pages

    Personal Finance

    Uploaded by

    bey lu

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Personal Finance

    If you have to spend every dollar you earn each month, then you don't
    have any margin of safety to protect against unexpected expenses.
    Conversely, if you can manage to live on 90 percent of your income,
    then the 10 percent you save provides a nice buffer in case of
    emergency.

    And if you can manage to live on 50 percent of your income, then you
    can handle a great amount of financial stress. Imagine a medical
    emergency that requires $25,000 in cash. With a large buffer of cash,
    you can withstand such an unpleasant surprise. A big bank account can
    handle a lot of turbulence with inflows and outflows. Meanwhile, one
    small bank account can be sent into bankruptcy from one big shock. The
    bigger the buffer, the more chaos you can handle.

    Expenses bite into your financial margin of safety. Savings expand it.

    Jay Leno, the famous comedian, is a perfect example of this strategy.


    Leno worked two jobs at the beginning of his career, but lived off the
    income from one of them. “When I was younger, I would always save
    the money I made working at the car dealership and I would spend the
    money I made as a comedian,” he says. “When I started to get a bit
    famous, the money I was making as a comedian was way more than the
    money I was making at the car dealership, so I would bank that and
    spend the car dealership money.”

    Leno continued this habit even after he was making millions of dollars
    per year hosting The Tonight Show. “When I got ‘The Tonight Show,' I
    always made sure I did 150 [comedy show] gigs a year so I never had to
    touch the principal,” Leno says. “I've never touched a dime of my
    ‘Tonight Show' money. Ever.” 

    Wildlife Protection

    There are millions of squirrels in the world today. If a viral outbreak


    killed 100,000 squirrels, the species would continue just fine. But if a
    similar virus killed 100,000 lions, the species would be extinct. There is
    not enough slack in the ecosystem to handle such a catastrophe.
    Endangered species are in a precarious position because they have no
    margin of safety.

    Mobility and Stretching

    Each muscle in the body has a “stress-strain curve” which describes how
    far a muscle can stretch before reaching the point of failure. Injury often
    occurs near the extreme end of this curve. The closer you get to the
    limits of your range of motion, the more strain your muscles endure.
    Practicing stretching and mobility exercises can help expand your range
    of motion and widen your stress-strain curve. This helps to keep your
    normal movements in the middle of the curve and away from the
    extremes where injury is more likely to occur. In other words, it is not
    necessary to be as flexible as a yoga teacher, but it's nice to have a good
    margin of safety in your mobility to prevent injury.

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