I am an energy engineer who also has an avid interest in personal finance. I know, these two topics may seem like they couldn't be further apart. What can I say? I'm a man of varied tastes!
Honestly, energy and personal finance aren't as different as one would imagine. Both depend on a set of three fundamental rules:
- Budget
- Everyone knows why budgeting one's personal finances are important; money drives life in the western world. Without cash, it would be near impossible to pay rent, pay back student loans, pay back mortgage loans, or even obtain gasoline/diesel for a personal vehicle.
- Energy budgeting takes place in every home in the United States and likely most of the western world without realizing it. How many of you are conscious of your monthly heating/cooling, gasoline/diesel, and electric bills? I'd say nearly all. You may not know what you are paying to the dollar, but chances are you are spending more time than you'd like yelling at your friends or kids to close the front door because "you don't feel like paying to heat the whole neighborhood!"
- Know Your Income
- In terms of personal finance, everyone has some form of income. Whether it is one's parents or a 9-5 job, money comes from somewhere.
- In terms of energy, everyone also has some form of income. And believe it or not, you do have control over which type of energy you are demanding. I'll touch on this more in a later post, but I'd like you to keep this in mind for now.
- Diversify
- Diversification of money is required in order to minimize risk and volatility while keeping your money relatively liquid with a solid rate of growth.
- Diversification of energy is required in order to minimize risk and volatility while keeping energy in high supply at a low price -- think about the price of gasoline jumping from $4.39 per gallon to $1.85 per gallon over the course of five months due to a political regime change and foreign affairs (http://www.newyorkgasprices.com/retail_price_chart.aspx).
I'm not going to focus this blog on attempting to relate energy and personal finance, I will probably end up talking about one or the other in each subsequent blog post. If you guys have any comments or suggestions, feel free to reply to any related blog post and I will be certain to respond in a timely manner.
All the best,
Liam
