Rule 37: Spend Less Than You Earn

The amount of people that disregard this rule blows my mind. It is the golden rule of personal finance. You have to live within your means. I’m not saying to not spend your money; I’m saying you need to control what you are spending money on.

This Rule doesn’t contradict Rule 33 about small economies not making you rich, by the way. You should live within your means but live well enough to be happy. If you don’t earn enough to have champagne every week, then knock it off. Spend your money on things that make you happy, but if you need champagne everyday to be happy, you need to go back a read this entire course again, because you screwed up somewhere. Cut out the bullshit that you’re spending money on that doesn’t.

This is about being conscious and in control. You need to know what your income is and what your expenses are. In the next course, we’ll talk about how to curb spending and how to credit cards from letting you down. Credit card companies are not your friends; they are a helpful, but evil little tool.

I know it can be tough to live within your means, but if you are constantly in debt, if you’re giving all your money away…all the prosperity that is rightfully yours is going to the bank. You’ve given all your time and labor away and you have nothing to show for it.

I want you to know what you make every week…not what you earn per day you work. I want you to know what the number is for every day in the week. So if you get $20/hour for 8 hours for 5 days a week, I’m not looking for $800. Instead, divide $800 over 7 days. That’s $114.28 for every day you’re alive. Do you spend more than $114 everyday between housing, food utilities, transportation, etc? I want you to monitor what you spend, what it costs you to live, where you waste money, where you save money, and where you spend money wisely. As long as more is coming in than is going out, you’re getting the basics right. If more is going out than coming in, you need to take swift and effective action to address the situation.