The Three Golden Rules of Sound Finances
There are three golden rules of sound finances. Following these rules will ensure that you will be able to maintain a healthy financial status for life. They are not exactly easy to do but there is absolutely no question that they can be done.
Image Source: flickr.com/photos/Imagesofmoney
Income Minus Savings Equals Expense
You read it right. Savings comes first before anything else if you want to have something to look forward to in the future. This simply boils down to the simple mathematics that you need to set aside a specific amount for savings and whatever amount remains will be distributed to pay for needs and some wants if there is still some to spare.
We will never run out of things to pay for. This is the very reason why the formula is not the other way around. If we put our expenses first, chances are there will be nothing left to save.
Money Outflow Should Never Be More Than Money Inflow
This need not even be made into a rule. It is based on common sense that we do not spend more than we earn. However, there are some things that we feel cannot wait and that is where we should tread carefully.
If having to resort to credit will result to more benefits without risking financial ruin, then that could be an exception. Paying the mortgage to own a home makes perfect sense more than renting for the same amount. This is especially so if you foresee yourself and your family staying in one place for a long time. Prudent investments team up with savings to provide a fairly comfortable life to people in the future.
Never Waste Even in Times of Great Abundance
Abundance in life is a good thing. It is the privilege of having more than enough for one’s self which makes it possible to put resources to better use or even in helping others. Wastage is a sacrilege to this privilege.
Financial status in life may change at the wink of eye when people are not careful. That is why it is very important to always save a certain amount for the rainy day. When facing severe financial challenges, it is best not to lose control and find the best solution available.
My Say
I am no stranger to hard times. I’ve been through a lot and in all possible natures including finances. The one thing I’ve learned about going through all of them is the fact that we cannot solve a financial problem by creating another such as taking out credit to pay for another amount borrowed. The road to sound finances may be rocky but we can do it by avoiding obvious risks and learning our lessons well along the way as guided by the golden rules of sound finances.
Algene
Money does not make the world go round but iis really important. It can make or break us kaya we have to learn how to save for the rainy season. Always live within the means 🙂
papaleng
Ah, I lived by these money principles. Thanks to my Chinese friends. we can also quote an old Tagalog adage that reads” Magkasya ka sa iyong kumot”.
mommy Peachy
Thank you so much for these tips, I need to be reminded once in a while..
Gil Camporazo
I agree with the first golden rule formula. However, I may modify it. Instead of savings, I would give it to the Lord in the form of tithing and the rest for the expenses.
aemcgregor
Great tips… For me, living within your means is the key.
Adin B
Like my husband would say, Let us make sure not to spend more than what we earn. Tough times these days and it sure pays to be smart with money. Great article!
Chubskulit Rose
I agree with what you say about the savings. I have a list of expenses that comes out every month and included in the list is the money that goes to our retirement and the kids savings.
Shela
I like your reminders and this would help us and everybody about aiming a sound financial status
ishee
It’s hard for me too, to budget the salary I have. Savings + expense + thing to buy.
Garf
My golden rule for sound finances is don’t spend more than you make.
nadine
Everything above is so true. now it makes me think if I should pursue my plans because I’ve been planning to buy a new phone now for three months. Huuu ~ it’s so hard and I envy those who can control themselves but still have fun 🙁