Happy Friday everyone!
Today, I want to talk about the most important rule in personal finance.
There are tons of “rules” and methods when it comes to personal finance. In fact, many people continue to disagree on how to treat different aspects of personal finance – student loan debt, credit card debt, mortgage payments, etc. But the one universal rule that every personal finance writer/blogger/enthusiast agrees on is perfectly stated in five little words:
Spend less than you earn.
Common sense, right? It sounds so simple. Yet we, as a nation, are in an incredible amount of debt! In 2010, the total amount of consumer debt in the US was nearly $2.4 trillion (source)!! Why is that?
My theory is that we, as consumers, confuse the idea of available credit with the reality of how much money we actually have. So we spend and spend and spend until we realize that we actually have to pay for all of these things! And if you bought that Prada bag with your credit card, you’re going to be paying even more than the original price!! So, how does one get out of debt and out of this cycle? Follow this rule!
On one Friday of every month, I will be posting several tips on how you can implement this rule into your life. Now, there are two parts to this rule – 1) spend less and 2) earn more. Not only will I discuss ways to decrease your spending, I will also suggest ways that you can increase your income! This monthly series will be known as Frugal Fridays (I’m hoping to eventually put up a Frugal Friday post once a week, but I’ll start with once a month for now)! Let me know if you guys have any questions or suggestions on topics that I should cover for this series!