The Most Basic Personal Finance Truth

The Most Basic Personal Finance Truth

When it comes to smart personal finance and building wealth, there’s really only one basic rule you have to remember: spend less than you earn and invest the difference. It’s old advice to a lot of people, but bears repeating.Photo by Anil Mohabir.

The most fundamental rule of personal finance is to spend less than you earn. If you invest the difference, you can make the surplus grow. That’s it; everything else is in the details.

J.D. Roth says at the Get Rich Slowly blog that writers tend to focus on finding “new and unique” money tips, avoiding the basics for fear of boring readers with the same old solution. But old advice to some people is new to others.

While “spend less than you earn” may seem overly simple — and not very exciting or always easy to implement, it’s still the most basic rule to learn and a goal to strive for.

Have you mastered the art of living well within your means? Share your tips for frugal living in the comments.

Why I Hate “New, Unique” Money Tips [Get Rich Slowly]


  • One important step, which will help people transition into “spend less than you earn” is “don’t spend what you haven’t earnt yet”
    I’ve got too many friends who tell me they are saving for something or investing in something, but in the same breath tell me they have a multi-thousand dollar credit card balance they are planning to pay later.

  • There are two ways to have more money (for a rainy day, a house deposit, etc);

    1. Spend less than you earn (as mentioned in the article)

    2. Earn more than you spend. There are plenty of places you can pick up casual work if you want to earn more (and since you’re working all the time, you’re less likely to spend it as quick!).

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