There are two types of strategies in personal finances: aggressive and defensive. It’s important to know which type of strategy do you feel comfortable with. Like with almost everything in life, in finance you need to make decisions and once you make a decision you must be comfortable with it, stick with it and never regret about it. This is why it is very important to know when you prefer the aggressive strategy or the defensive strategy. Now let’s look closer at the difference between these two strategies to find out which one you can play and when.
The Aggressive Strategy
With this strategy your focus is on generating more money, more revenue and more earnings and you don’t care too much about how much money you are spending to achieve your goal. This is the strategy of successful entrepreneurs, these people are okay with taking some risks and probably lose a lot of money but they are also very confident that they can exponentially increase their revenues. So they don’t waste much time worrying about saving a couple of dollars when they know almost for sure that they can double their income in a short period of time.
The Defensive Strategy
With this strategy your focus is on saving money, reduce inefficient expenses, and eliminate unnecessary expenditures. This should be the strategy of employees with a steady job where they get a minimal raise once a year if they are lucky. When you can’t find a way to increase your income the best thing you can do is to eliminate unnecessary expenses to save money while you wait for an opportunity to change your strategy to aggressive.
As mentioned in the last paragraph you don’t need to choose one strategy and stick with it forever. Like in sports, games and war you need to know when to play defensive and when to play offensive. If you have a lot of money like venture capitalists then you can have the advantage of playing offensive more often but if you are a regular human being then you should be more careful when to play aggressive because you have less trials to fail.
The Grey Zone and Time Management
Again, like almost anything in life, there are black and white things but 99% of things are in grayscale. Your strategy can be some combination of the two strategies, aggressive and defensive, but in different times of the day. For example, you can have a steady job and then work on your own projects when you go back home. Here your time and skills play a very important role. Time and personal skills are the two more important and valuable things that you have, especially when you don’t have much money, which is the third more important thing. Due this fact, if you are not playing aggressive you should always be investing your time into improving your personal skills.
You must always be thinking how to increase your income. While you can’t find a way to increase your income you should play defensive and wait and look for the opportunity to switch to an aggressive strategy. While playing defensive it’s important to invest your time into improving your personal skills.
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