Do You Have a Personal Research and Development Budget?

“If a man empties his purse into his head, no one can take it from him. An investment in knowledge always pays the highest return."

Benjamin Franklin

Every successful business dedicates a certain amount of resources to trying new things. Research and Development (R&D) is what business leaders around the world count on to determine what the company should work on next. Large companies spend millions (sometimes billions) of dollars in speculative research every year, experimenting with new techniques and processes in order to enhance their capabilities.

R&D exists because it works - companies that make research and development a priority often discover new products to offer their customers or process improvements that meaningfully contribute to the bottom line.

If it works for them, it can work for you.

Making R&D a Personal Priority

What would it look like if you set aside 10-20% of your monthly income as a personal R&D budget? Using the techniques discussed in I Will Teach You to Be Rich and Your Money or Your Life , it’s remarkably easy to automatically divert a certain amount of your monthly income into an account earmarked for self-directed R&D. That money can then be used - guilt-free - in any way related to improving your skills and capabilities: purchasing books, taking courses, acquiring equipment, or attending conferences.

Personal finance gurus might disagree with me here, but I think having a robust personal R&D budget is more important than maximizing savings. I’m all for having a well-funded emergency account and saving a minimum of 10-20% of what you earn each month, but savings can only get you so far. Investments in improving your personal skills and capabilities can simultaneously enrich your life and open doors to additional income sources. New skills create new opportunities, and new opportunities often translate into more income. Your ability to save is limited; your ability to earn is not.

How to Fund Your Personal R&D Budget

Here’s a simple planning exercise that will help you establish your own personal R&D budget: what would have to be true if you were already dedicating at least 10% of your monthly income to research and experimentation, assuming your current income stays the same?

Any money-saving tip you find on good personal finance blogs can be used to fund your personal R&D account. Here are some ideas to get you started:

  • Keep your monthly living costs (rent/mortgage) as low as possible - renegotiate current arrangements if you can.
  • Renegotiate your car insurance and credit card interest rates.
  • Kill your TV / Netflix account and bank the savings.
  • Make your own coffee / tea instead of going to Starbucks.
  • Master low-cost / high-quality cooking. (Kelsey and I went vegetarian several years ago because it’s both healthier and less expensive.)
  • Work out at home instead of paying an expensive gym membership.

All it takes is a little creativity and budgeting, and you’ll be well on your way to funding your self-directed research and development laboratory.


What are you doing to fund your personal R&D budget, and how are you planning to invest your funds?


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