This is not a new but a basic and most comprehensive golden rule of your personal finance. Expenditure should be less than you earning and then invest the difference. To me that’s really exciting. That could mean that you hate budgeting or you want your fancy car or you like eating out every meal. Anything that we’re going to talk about in this course you can break that rule as long as you’re spending less than you make. And I’m sure you’re saying we’ll of course spend less than you are and that’s kind of like saying you know to lose weight you should eat less and exercise more. But the problem is it’s not obvious to most people.
Debt is not only normal it’s accepted
If you’re spending more than you earn you are never going to get ahead. At the end of the month do you have money to pay your bills and a little bit more or are you stretched to the end of the month. You don’t know if you’re going to have enough and are occasionally putting expenses on the credit card because you don’t have enough. Most people not only spend what they earn. They spend much more than they earn. They are building up balances on their credit cards and student loans and car payments and mortgages.
If you make a habit of spending more than you earn you are guaranteeing you will not have a successful financial future. It is said that personal finance calculation involves only 10% math and 90% mentality. I firmly believe that it means that even though we understand the concepts you know eat less to lose weight or spend less to save more money actually doing it is the hard part. We want to provide you concrete steps to get your budget in order.
Spend less than you earn – golden rule of personal finance
Spend less than you earn and secure your financial future by learning the trick. You will understand what it means to have freedom from debt and jobs. Job-related stress and even car trouble say you broke down on the side of the road and you’re out of money this month. That’s a tremendous amount of stress trying to come up with the money to say fix your flat tire. Whereas if you have a little change in your life you are able to spend less than you earn. You have a little cushion in your bank account. Unexpected emergencies like that are common and not a stressful experience. Now you may be saying there is no room in the budget. I can’t make cuts anywhere.
Effect on your personal life
We are going to talk about the difference between fixed and variable expenses. A fixed expense is anything required just to maintain life sustenance. It’s a roof over your head it’s food in your mouth it’s transportation to get you to and from work. Then there are variable expenses that can kind of get intermingled and make it difficult to navigate the waters having financial margin in your life. When you are spend less than you earn means that money disagreements between you and your spouse are probably less frequent. You have a healthy relationship you are in a position to give. You can give generously to friends and family or charitable organizations. We have learned that by giving up if you material possessions we instead gain a less stressful relationship life and a more sustainable future. And we want to share with you how exactly we do that.
Try to clear to all your debt as soon as possible
Debts create mental stress on your mind. Some people believe that debts are very helpful. Undoubtedly it is helpful but never try to get loan when you can avoid it. Even if you have loan or debt then try to clear when you become capable to repay. Loans and debts not only put pressure on your mentality but also on your pocket. The interest will keep increasing and this can put pressure on your pocket. So whenever you have debt or credit, then clear them as soon as possible. The interest you are paying will suddenly and automatically become your savings.