After reading about the urgent important approach to financial planning quite a few people who had spent very little time and effort on their personal finances told me that while the approach looked good, it was a bit advanced for them. They wanted to know the basics, the ABC's of personal finance. It got me thinking about the first rule of personal finance. It is ridiculously simple, but I have never articulated this before. The first rule of is the basis for all the the theory and practice behind all of personal finance.
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| The first rule of personal finance |
If one doesn't spend less than what is earned then in your personal lives their cannot be any other discussion on our finances. For all discussions around personal finance to be meaningful, the underlying assumption is that one has saved i.e. spent less than what has been earned.
Mastery over the first rule will build a very solid foundation for our personal finances.
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