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2 Basic Personal Finance Fundamentals That Don’t Change

I like keeping up with basic personal finance fundamentals, learning about them, keeping up with trends, applying them and talking about them.

There are various levels within this subject matter, and as I have seen the trends change over time given the introduction of new products and services, the basic personal finance fundamentals have not changed and arguably will never in the future.

I also follow several “experts” in the personal finance field such as Dave Ramsey and Suze Orman, and have noticed no change in the underlying fundamentals of what they teach and preach.

It is overwhelming for me to observe the number of individuals that reach out to these professionals for help, and how the core of the responses mostly boils down to two basic concepts:

2 Basic Personal Finance Fundamentals

1) Save more and spend less, or spend less than you make

What’s the difference anyway?

2) Develop personal discipline to save steadily and consistently over time

These two are IT and it frankly doesn’t get much simpler than that.  Sure there are ways to expedite building wealth, strategically cutting corners and developing advanced “money smarts”, but I consider all these icing on the cake.  Change starts from within, and the discipline, or commitment to saving is most core or fundamental to changing our financial situation.

Some may say basic personal finance is common sense, and I would agree that it is. Yet so many experts are making a very good living reiterating the same message in different variations.

Many blogs online are doing very well discussing personal finance. Maybe it is not common sense after all? I do know however that these basic personal finance fundamentals were true yesterday, are today and will be tomorrow.

The subject of personal finance is not rocket science in my opinion.  Yet we have a hundreds of personal finance blogs because millions have no control or poor control over this important aspect of their lives.

Readers: Am I out of line in my rationale?  How has your view of basic personal finance changed over the years?  What contributed to that change? How would you further simplify the fundamental message behind personal finance to someone new to the topic?

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30 Responses to “2 Basic Personal Finance Fundamentals That Don’t Change”

  1. Theodore says:

    Yea Sunil
    what a fabulous post
    Develop personal discipline to save steadily and consistently over time. I really like that. Thanks.

  2. Hey Sunil,

    Totally agree with you – In many situations (even outside of personal finance) people tend to look for detailed reasons why something they are doing is failing, yet they don’t go back to the fundamentals of what they are doing and check to see if it is working!


    • Sunil says:

      it’s interesting you say that because it doesn’t get much simpler than the basics. personal finance is such common sense if you ask me, yet many fail at it repeatedly.

      your title caught my eye. I am launching my first iPhone app. any tips for me on how to market it to make it as successful as I can ?

  3. My father’s motto (and his before him) is “If you have enough money for 2, buy 1” and I guess it’s become my motto too. I only ever had a little debt in my student days, and I can’t imagine the stress people must feel when they are thousands in debt. Thankfully I’m not one of them :-)

    • Sunil says:

      congratulations for putting yourself in such a positive position. I too cannot imagine how people live (what they must be going through) with excessive and more importantly unnecessary debt

  4. Kris says:

    Great advice, simple and clear. Although for many people its a lot easier said than done.

  5. Kevin says:

    I TOTALLY agree with the whole article.I know I wasn’t the only one who thought this, so, it’s great that someone pointed that out.

    PS Keep up the great work! I’m passing your blogs on…

  6. Tim N says:

    Hi Sunil,

    Me and my wife have been down the road of owing thousands on various cards and loans and thankfully, now, after being disciplined and channelling spare money to the right places, we only have our mortgage and couple of very tiny credit card amounts left. We are now managing to save a few hundred pounds a month to build up our nest egg! So, I agree entirely with what you say. It is very similar to the problem people have with losing weight…..If they could get their head around the fact that as long as you eat healthily and expend more calories than you consume….You WILL lose weight…period. Yet there are ‘consultants’ out there making millions explaining that very simple fact!!

    Another great common sense post Sunil…..Keep it up :-)


    • Sunil says:

      wow Tim – congratulations to you. I think the readership can really benefit from your story. can you, on a high level, give a synopsis of how you and your wife were able to turn things around for the better?

      excellent – again, congratulations

  7. Definitely very true. I wish more people understood these two principles early on in life and we’d have many more people not worried about retirement.

  8. Thank you for the excellent post.

    Living within your means is the most powerful way to keep expenses on leash and to save. A simple life free from debt is much better than a life with a debt burden. It can affect health and personal and professional life.

    Spending money on needs than on wants is the path to take to reach the financial independence goal.

  9. Sunil,

    Those are the two finance laws I live by. If you keep your spending less than what you’re making you won’t go into debt.

    And your second point helps encourage having an emergency fund in case something comes up. Saving, whether it be for the long or short term, is a must. If a huge expenditure comes up, you need to have something to fall back on.

    • Sunil says:

      very true, and as mentioned above it severely impacts one’s psychology, health and well being. how is the project you were contemplating coming along? I am still interested :)

  10. i would say… all finance revolves around time value of money.

    it either works against you ( debt )

    or works for you ( save, invest, compound, retire)

    with robust IRR’S, thats how you get into the 1% club

    • Sunil says:

      can you explain the following further “with robust IRR’S, thats how you get into the 1% club” ? ? ? would love to dissect it some more

      • ive been earning probably greater than 100% on my investments. that compounding is what got me into the 1% club. there is the 1% income club that means anyone whose agi is >350k or 1% networth club which means networth north of 8.5M.

        started a blog because i want to espouse the view of higher returns. everyone just puts it in the market hoping for 10% returns. i say active invest in alternative investments to yield 20 -30%. money works harder for you.

        • Sunil says:

          congratulations on becoming part of the 1%.

          many would say that actively managing investments (trading) takes time and a lot of effort. there is plenty one must learn before they can get comfortable actively trading their sacred money. with full time jobs and life’s demands, what advice can you give those people?

  11. I think you pretty much nailed it, simplifying personal finance down about much as you possibly can. Pretty much everything else, from investing to earning side income can be put as one of those two principles (or methods to support the goals you have there). Always good to keep the basic principles in mind.

    • Sunil says:

      you are right, with as much noise as there is out there, the basic fundamentals are (or should be) more than enough for most people

  12. Thanks for giving great emphasis on the geist of the matter. The aim is really simple but it is quite difficult to apply. Perhaps what complicates it is because the most effective approach differ with different personalities.

    • Sunil says:

      you make a good point in that different things work for different people, but the 2 fundamentals we have narrowed into in this post are quite basic in that regardless or preferences, one should be able to get ahead following these alone. much easier to navigate through all the noise that way. what do you think?

  13. Justin @ Thr Family Finances says:

    Good post and so true. People are all the time trying to make personal finance more complicated than it needs to be. So many people try and find “new” things, but it really comes down to the same things. It is neat, though, to hear all the different spins on th advice though.

  14. Hi Sunil,

    This post is simple to understand yet very powerful when it is carried out.

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