4 Personal Finance Rules We All Know (But Rarely Follow)

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Money terrifies me. It really does. I don’t like it, and I don’t understand it, and I fear what I don’t know. (Seriously, when I work on budgeting, I often ask my husband to hold my hand.)

But I also know I need to face that fear and take control of my finances in order to live the life I want. So I’m working on it. And it’s a painfully slow process, but I’m trying.

I took a webinar yesterday on personal finance, and afterward, was feeling great about where we’re at. I felt so good, in fact, I decided to go through our spending report (which I do monthly) to identify small money leaks before they become floods (Day 9 of No Sidebar’s 30 Days to a Simpler Life course, which I highly recommend).

Now, I knew we had gone a little overboard this month with some anticipated extra spending and minor emergencies, things like work on our basement, ER bills from our two-month sick spell, a family wedding, etc. Would you like to guess how much we went over our monthly budget?

In the last 30 days we have spent $2,000 outside of our regular budget. You read that correctly: $2,000! We’re not rich people by any stretch of the imagination, and that for us is a lot of money.

I should clarify: most of that spending fell in the “anticipated extras and minor emergencies” category, but there was a fair amount of trivial stuff, too. Coffee-shop stops and a Target run. That’s where my money went last month—instead of building our wealth, saving for our family’s future, we bought coffee and crap we didn’t need. I’m so disappointed in myself.

But everyone slips from time to time, which is why we have an emergency fund. Fortunately, we’re going to be just fine, but this seems like a good time to remind ourselves of some personal finance rules we all know but rarely follow:

1. Pay cash.

I’m 99.9% sure this never would have happened if I had paid for these purchases with cash. Because the sacrifice of the transactions register differently in our minds, we spend, on average, 12–15% more when we use credit cards than we do with cash, so making the switch should be a no brainer.

We’ve also been practicing the skill since childhood. The lucky ones among us were given a cash allowance, which we’d spend until it ran out, and then we’d be done until we earned more. After years of practice, we should be pros.

But finances get complicated as we get older: we’re encouraged to open credit lines to boost our credit scores, and we take on debts that aren’t always easy to pay with cash, things like student, car, and home loans. My hope, though, is that using cash is like riding a bike: easy to pick up after a while, if inconvenient.

2. Make a budget or spending plan.

If you can’t control your spending today, it will control you tomorrow. It’s as simple as that. Make a budget or a plan for how you want to use your hard-earned cash. Allocate it while you can.

Joshua Becker of Becoming Minimalist has a really interesting suggestion for monthly money management: a spending plan as opposed to a budget. Because, let’s face it, life isn’t the same from month to month. I’m really intrigued by this idea. Has anyone tried it?

3. Pay yourself first.

I’ve never successfully done this, but paying yourself first—setting aside money for savings before it gets eaten up by discretionary spending—is a great way to build wealth while reigning in a tendency toward unnecessary spending. If you don’t have it, you can’t spend it, but wait: you do have it. It’s just already been used for something more. And if an emergency arises, you’re covered!

4. Stop digging.

This is obvious, and we all know it, but if you’re in debt, or you want to increase your savings/decrease your spending, stop overspending! We all have our hangups; ours is emotional spending and a penchant for convenience, but now is the time to resist. Like any habit, it simply takes practice. Our society will tell you, and the commercial interests of the big-banking industry will tell you, that you can have whatever you want when you want it. But if you’re like me, you likely can’t, or shouldn’t.

I never want to be in the same position I was yesterday, so starting today, we’re following these rules. Stay tuned to see how it goes.

There was good news yesterday: I was fortunate enough to have a piece published on No Sidebar, “4 Ways Having a Baby Made Me a Better Minimalist.” I have so much respect for the community being built there, and I’m honored to be a part of it.


What personal finance tips and tricks, simple or complex, help you stay on track with your financial goals?