Basic Principles of Managing Your Personal Finances

Corey —  October 28, 2012

Everyone who is human has struggled financially at some point. It may not be to the same degree as others, but the statement still holds. Everyone makes mistakes and everyone is always learning new things. While many people will try to convince others that they have it all figured out, it is a lot of deception.

When lies are unveiled and the truth is not hidden from sight, we all begin to realize that personal finance is complicated. Not only do unexpected expenses pop up out of nowhere, but we also face difficult financial times that are beyond our control. This recent recession is evident of that idea. While managing your personal finance is often difficult and challenging, forcing you to make decisions without certainty of success, there some basic principles to managing your personal finances.

1. Spend Less Than You Earn

The one way that you can alleviate much of the stress associated with finances is by reducing your spending. In fact, the less you spend the better. Start with spending less than you earn. Not just some months, but all months. This will prevent you from financing your current situation on hopes of future pay raises and will keep you in the black. If there is one thing that I have learned over the past few years, it’s that life is much better in the black than in the red.

2. Create an Emergency Fund

The second thing that I have learned is that expenses pop up. Some people may have no other choice than to use payday loans, but you should do everything you can to give yourself a cushion. If you have a little extra money coming in each month, do yourself a favor and save that money in an emergency fund. Establish a certain amount and promise yourself that you will only touch it in an emergency. Some emergencies may be unexpected unemployment, car repairs, etc.

3. Invest Aggressively

Investing regularly is one of the only ways to build wealth. Unless you plan to live off of the minimal payments you get from social security, you will need investments in order to retire. While it may be hard to eliminate the lifestyle inflation, it will be worth it in the long-term if you can prioritize your savings and investing now.

4. Help Others

One of the core tenets of this personal finance blog is to do everything you can to help others. Our wealth that we build is a privilege. We need to use this wealth to help others who are less fortunate than ourselves. If we ignore this aspect, we run the risk of losing sight of what is important and becoming obsessed with money. While money is nice to have, it’s a means for something greater – it is not the end result.

While these are some of the basic principles of managing your personal finances, these are only the beginning. They help us with the basic framework, from which we can overcome some of the greater challenges that come our way.



Corey is currently pursuing a Master of Arts degree in religion. While he enjoys learning and writing about Christianity, another one of his new passions is writing about personal finances in order to help others make wise decisions with their money.

One response to Basic Principles of Managing Your Personal Finances

  1. Corey, all shared Basic Principles of Managing Personal Finances are good but I am not agree with “Invest Aggressively”. Long term investment plan is needed but the way you shared is not good.