Definitely single player. First you learn all of the rules and learn how to play. Then you take advantage of the rules as you become experienced.During my morning walk I was thinking about personal finance theory and implicit assumptions for the basics. We all know the basics of personal finance, a la "save 20% of your income", retire at 25x expenses, etc. What struck me is that, especially with regards to retirement, there are some implicit assumptions that are not well articulated.
For example, does the 25x expense rule hold more true if someone owns a home versus rents? If so in this case, the 25x expenses rule has an implicit assumption that the retiree owns a home.
What really got me thinking is the application of game theory to personal finance for younger people. While we typically encourage saving 20% as a good rule of thumb, is thinking of personal finance as a single player a fallacy? Given the competitiveness of the housing market, rising wages and expenses, etc, it seems that personal finance should also take into account "the competition." Is this captured in standard personal finance theory?
BL: What are some implicit assumptions of basic personal finance? And is basic personal finance considered a single player game when it really shouldn't be?
Once you become an advanced player, you know how to manipulate the rules!
Statistics: Posted by retireIn2020 — Mon Jun 10, 2024 2:26 am — Replies 30 — Views 1487