The Fundamental Law of Personal Finance

Young woman with a white bicycle cycling in Barcelona.

People have this habit of overcomplicating stuff.

When it comes to our money, we do it like crazy because money triggers all kinds of emotions, especially fear.

There are ten million personal finance books out there and one hundred million blog posts (even on this blog we are writing regularly about saving smart and building wealth).

I’m not really saying that you should ignore the ten million books and one hundred million blog posts. Some of them will add tremendous value, especially about specific things like taxes or buying a home.

My one point today though is this. There is one fundamental law of personal finance that comes before all the others that all the others are built on.

It accounts for 99% of the value of personal finance and is in fact more important than the wisdom of those ten million books and one hundred million blog posts combined.

And the beauty is, it is very simple. Not easy mind you, but simple.

And here it is folks… The Fundamental Law of Personal Finance:

Spend less than you earn.

 

Phil Pearlman is the Marketing Director at Bank of the Ozarks.