My 5 Most Important Money Lessons

Over my 33+ years on the planet, I’ve spent more time than I’d care to admit thinking about money. I’ve thought about earning more of it. I’ve thought about investing it. I’ve definitely thought about spending it.

And after all those hours, I realize money isn’t really that hard. In fact, all people really need to do is follow a few basic rules and they’re already 90% of the way to becoming wealthy. Yes, I realize these things are hard, but it’s not the concepts that are hard. Implementing them is the tricky part.

These five financial rules are as simple as they get. And yet, they’re still incredibly powerful.

Spend less than you earn

I’ve read stories about probably thousands of early retirees over the years, and there’s really only one thing they all have in common. They were really good savers.

Some made their money by investing in a broad portfolio of stocks. Some loaded up on one company, riding it to riches. Some started their own company. Others did it through real estate. And so on.

A high savings rate and the desire to take on risk is the only thing separating an early retiree or financially independent person from the rest of us.

Big wins

Much has been said about the Latte Factor, which personifies an important personal finance lesson. Little costs really have a way of adding up over time.

But they don’t matter nearly as much as the big stuff. Bank fees are a great example. Yeah, it stinks paying $5 or $10 in bank fees. If you can avoid this, it’s probably a good idea. But there are far bigger things to be concerned about.

Take your mortgage as an example. If you pay 2.75% instead of 2.5% on a $300,000 loan, that’s an additional $750 a year.

$750 buys a lot of bank fees.

Focusing on these big wins is far more important than the little things.

Pay down debt

Even though interest rates are lower than they’ve ever been, I still maintain paying down debt is a great investment for many people.

Not only does paying down debt offer a guaranteed return (unlike stocks, which can be extremely volatile), but it also offers a psychological boost. There’s nothing that beats the feeling of paying off your student loan or burning your mortgage.

There’s one other benefit to paying off debt too, and that’s increased cash flow. When you don’t have hundreds of dollars leaving your account each month, you can really supercharge your other savings goals.

Low expectations

What separates people like us from the proverbial Joneses, those neighbors who need to have the latest and greatest thing?

I think it’s low expectations.

Folks who care about getting ahead haven’t just valued security over possessions. They’ve also successfully lowered their expectations. Instead of desiring everything, they only lust for a few things, making due with what they already own.

By having this attitude, folks who are happy with what they have don’t need to spend money. So they don’t, further adding to an already inflated savings rate. Good things happen, and the next thing you know, they’re financially independent.


Every good financial plan needs to be simple. Without an easy to execute plan, things go sideways. And when things go sideways, goals don’t happen.

Some finance nerds might want to pore over spreadsheets and income statements all night, but most of us would rather go golfing instead. So when investing, stick your cash in a simple ETF portfolio and leave the details to the folks on Reddit. Or when coming up with a savings plan, simply pay yourself first and let the rest of the details work themselves out. And so on.

Choosing a simple plan will increase your likelihood of following through, which is the ultimate goal.

That’s about it

Finance doesn’t have to be complicated. Just remember these five important lessons and you’re already 80% of the way towards getting your finances in order. All that’s left is to execute.

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