Career & Finance

The Ten Commandments Of Personal Finance


Handling personal finance without guidelines is like wandering in a desert without a map. You need to learn the science of earning, saving, investing and spending.  These Ten Commandments of Personal Finance provide simple, common-sense guidelines about how to handle income, save and lead a happier, healthier, less stressful financial life. Controlling spending, investing wisely and thinking about your financial future are generally not difficult if you develop a plan and follow it.

I. Thou Shalt Plan and Then Act

Planning involves setting financial goals and then creating a budget that will let you reach those goals over time.  Acting refers to following that budget. If you’re part of a couple, the planning and acting parts should involve you and your spouse or partner.

II. Thou Shalt Save and Invest Wisely

It’s important to “pay yourself first” to make sure money is set aside for emergencies and unexpected expenses. Learning the value of compound interest helps you understand how savings can grow well beyond the amount you originally set aside. Understanding how to invest and which types of investments to make at each stage of your life is critical.

III. Thou Shalt Not Overspend

This sounds simple enough – don’t spend more than you earn. The problem is most people have to borrow from time to time – buying a house is one good example. Learning when to buy a house or to continue renting is sometimes the better financial move.

IV. Thou Shalt Pay Bills on Time

One of the fastest ways to ruin your credit score is to constantly pay bills late – or even worse, miss payments. When you buy something or use a service that requires payments, make those payments on time – always.

V. Thou Shalt Limit Debt

The best way to limit debt is to not have any. Only take out loans when you are unable to save the money up front.

VI. Thou Shalt Teach Thy Children About Money

Besides just being part of good parenting, taking time to teach your children about the value of money and how to save, invest and spend wisely can pay off down the road. That is, unless you relish the idea of your adult children living in your basement and depending on you for support, food and housing because you failed to teach them how to spend wisely.

VII. Thou Shalt Buy Insurance

Insurance of all kinds – health, auto, homeowners and life – is a hedge against financial catastrophe. You cannot afford to gamble on a major financial loss that could bankrupt you and cause economic ruin. At the same time, it’s important to study your options carefully. Not all insurance is the same and the effort you take to educate yourself can pay off in the end.

VIII. Thou Shalt Plan for Retirement

Investing is only one part of planning for retirement. Look around for t other retirement saving and investment options.

IX. Thou Shalt Have a Will

To protect the assets in your estate and ensure that your wishes are followed when you die, be sure you make a will or trust. Other critical documents include a living will and healthcare power of attorney. While not all these documents directly affect you, all of them can save your heirs considerable time and expense when you fall ill and when your estate is settled.

X. Thou Shalt Donate

This is about the goodwill you create and the charitable works you support in your community. Not all donations are financial. You can also donate your time, energy and skill – deducting mileage and other expenses while building up a sense of accomplishment and satisfaction that has no price.