Simple Math

David’s Penny Thought: “If you always spend less then you earn, you will never run out of money”.

And there you have it: all the financial advise anyone could ever need, courtesy of my brilliant friend David (that was awe, not sarcasm). More than a mere idea, it kinda has the ring of a law, doesn't it? Similar to “Newton's Third Law of Thermo-Dynamics”, we might call this “David’s First Law of Money-Dynamics”.

And, because it is now a law, there really is no way around it. Sure, there may be some bazillionaires who “leverage” debt and credit as a way of adding even more zillions to their coffers. But, for most of us, such money-gambles rarely turn out well. And why should we risk it, when David offers a fail-proof alternative?

I know, I know. Just because it's a simple, doesn't mean it's easy. You'll need to consistently bring in more than you spend, or the whole thing falls apart. If that's not the case for you right now, you'll either have to spend less or earn more. There's no way around that. So, establish that first. (Oh and btw, you don’t have to earn tons more then you spend, either. Even if you make $10 more than you spend, the scales are tipped the right way!). Next, you build an emergency fund (stuff happens), next you get out of debt and stay out of debt. And then....you start saving: $100 a paycheck, $50 or $5 it doesn't matter. Just put what you can in a high yield savings account or a broad-market index fund. Time (be patient, keep trudging, never give up) and compound interest will do the rest. David said so...he's brilliant, I promise!

This is a great source of information on living below your means to achieve “FI” (Financial Independence): choosefi.com