Why is there so much written about personal finance? This is a question I sometimes wonder about. You constantly see a new stream of personal finance articles coming out of every magazine, news source, blog and even entertainment reports. This isn’t all disappearing into the ether either. People are reading them. People seek them out. People are always looking for more information. That seems to answer this question, but does it really?
Yes, people look for it, so others produce it. Basic supply and demand. But the principles of personal finance are pretty simple. Most of the articles written contain no new information. They simply rehash stuff we already should know. So why can companies keep putting out so many articles about the exact same thing and people never stop reading it? So maybe the better question isn’t why is there so much written about personal finance, maybe the question should be why do we want to read so much about personal finance? Even when it’s the same information just repackaged.
Well, here’s the answer. It’s because we didn’t learn it the first time. The principles of personal finance are pretty simple. Improve your skills, make more money, spend less than you earn, then save/invest the difference. For the most part most adults know that this is what we need to do. How to do each of these steps is skill in its own right, but not nearly as complicated as the number of personal finance articles available would indicate.
So, we know what we need to do and we have an idea of what we need to do. So, why do we need more articles about it? I’ll use an example from a completely different field. Why do we have so many weight loss programs? We know that if we simply eat right and move a little we’d all be in great shape. We know this, but we don’t want to believe it. We like our processed food and added sugar. Science has shown over and over that all we have to do is eat a healthy diet. The kind of diet that humans have been eating for thousands of years. Instead of eating healthy, though, we continue to eat junk food. We keep looking for ways to lose weight without having to give up our junk food. We don’t try and solve the actual problem, we try and keep our vices and patch the symptoms.
It’s the same with money. We like our toys. We like our stuff right now. We aren’t willing to wait until we save up. We also aren’t willing to give up on things that we couldn’t otherwise afford. So we spend our money. We buy the big screen TV that we don’t need and can’t afford. We buy the big houses and become house poor. Then we look for other ways to solve our financial problems. Just like when we try and lose weight we don’t attack the actual problem, just the symptoms. When it comes to personal finance we don’t try and control our spending and maximize our income. We spend all we want then complain when we can’t afford what we want.
So why is there so much written about personal finance? It’s because we’re constantly looking for a magical solution that isn’t there. The magic healthy pill doesn’t exist. The magic money machine doesn’t exist. So we see a lot of things written. The truth and crazy ideas. We don’t want to hear the truth, but we still sometimes read it nodding our heads. We ignore the advice though because it might mean giving up our expensive habits. Then we read the crazy ideas, try them then fail. We blame the crazy idea not ourselves, even though we know better. So we go back and read more.
Though there are probably an infinite number of ways to make and spend money, the basic formula for everyone is the same. Whether you’re rich, poor or somewhere in between if you want to have a balanced and happy life you need to keep your finances in check.
What does that mean? It means make money doing what you can, invest in yourself to increase your skill set, control your spending to spend less than you make, save and invest the rest. That’s all you have to do. The rules for personal finance and even financial independence haven’t changed in hundreds of years. The details change constantly, but the basic rules haven’t. And it’s not the details that all the new articles are about. They’re about the basic rules.
How can you apply this to your own life? First accept that if you want to improve you’re going to have to make changes. Some of those changes will be difficult. Some of those changes will take a little while to get used to. Then follow the rules. Make money, increase your skills so that you can make more, control your spending, then save and invest the extra money.
Don’t worry about what other people think. Don’t try and live up to someone else’s ideas about what you should do. Think for yourself. Set your own goals and work towards them. If you need a better understanding of the basic rules you can read one of my favorite books on the subject. It came out about 90 years ago, and was put together from writings that had been around years before. It’s called The Richest Man in Babylon by George Clason. The book is a series of stories set in ancient Babylon that describe the core rules of personal finance. It’s entertaining, easy to read and full of useful information.
The bottom line? Do what you know you’re supposed to do. You already know how to be rich. You just have to do it. You just have to accept that you don’t need to have everything that other people have. Most of that stuff you probably don’t really want after the glitter wears off anyway. Instead focus on what is important. Live within your means and make room for the truly important things. Ignore the rest. And in the end you will be rich. Maybe even retire early.