A few years ago, I had lunch with an individual who was considering hiring me to give a multi-hour seminar at a business convention on personal finance. This person knew me from the local community, and he felt that I might be the right person.
Out of the blue, he asked me to give him a five-minute version of what I would present to the group during the lunch. I thought for a minute, pulled a pen out of my pocket, and asked him for five business cards. I summarized everything I know about personal finance in a pocket-friendly presentation in those next five minutes.
Here’s what I wrote (with some extensive explanations): 1. Spend less than you earn
In the end, this is the fundamental rule of personal finance: spend less than you earn. It’s the one point that comes up time and time again in almost every personal finance book. Why? Because it’s true.
There are two avenues to achieving this goal: spending less and earning more. By working on either (or both) of these areas, you can increase the gap between those two numbers — and that gap is your ticket to freedom. The harder you work on either spending less or earning more, the bigger that gap will become and the quicker that train to your dreams will arrive at the station. 2. Earn more money
So how does one earn more? Many people will argue that there is no universal way for people to earn more money, and they’re right: some people are born entrepreneurs, others function much better in an office environment. Some people are endlessly creative; others are masters at completing long lists of tasks.
Once you dig past that, though, there are some common things that anyone can do to earn more money regardless of their financial state. Get educated
This doesn’t mean dropping out and going back to school. It merely means to keep learning new things. If something interests you, read a book about it. Take evening classes to get certification in a certain area or get a masters’ degree. No matter what you’re doing, there’s some way you can learn more and improve yourself. Find more income streams
Always be on the lookout for ways to have money rolling into your pocket from a lot of different places. Maybe you’re a good writer and can sell a short story or an online ebook. Maybe you’ve got a little piece of land somewhere that you can lease to a farmer or a developer. Maybe you spend your free time managing a flower bed in the park — why not put a little wooden freewill donation box out there for people to drop a coin in? Maybe you have some extra cash lying around with which you can buy a long-term Treasury note that will keep issuing you a check every six months. Having more income streams merely means that losing one of them (like your job) is less devastating in your life, and it also means your overall income, for now, will go up. Start a side business
Instead of burning a few hours in front of the TV each evening, how about investing at least part of that time into starting a side business? You can try starting a blog with a few ads on it, or maybe you’re good with woodworking and can make deck furniture. Maybe you’re good at baking bread and can take loaves to the farmer’s market, or maybe you deeply enjoy gardening and can sell vegetables. There are lots of possibilities out there for starting a business that will supplement your current income and perhaps eventually grow into your main income. Move towards your passions
Whenever the opportunity presents itself, gravitate towards the things that really excite you because passion is what will make you successful. For me, my passion is writing; for others, it could be anything — maybe it’s leading a team, or perhaps it’s writing beautiful computer code. Whatever really excites you and makes you want to do more and more and more and better and better and better, that’s what you need to move towards at all times. Don’t burn bridges
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source Everything you need to know about personal finance: Pocket-sized edition
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