Finance Basics

Datapoints logoThe basics of personal finance are pretty straightforward, but it’s easy for us to think that because we’re in a specific season of life, like graduate school, they don’t all apply. Here is a basic list of finance fundamentals as discovered through extensive research for books like The Millionaire Next Door:

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Those are pretty basic fundamentals – the only one I would quibble with is following financial markets, which many experts say is a waste of time. The reality is that following the market is probably an indicator of overall financial diligence. It’s correlation not causation.

It is easy to think that while we’re in a very tight season of life, as grad school is, that basics like spending less then we earn and savings aren’t possible.

While I would be the first to agree that it is very difficult, I would set it as a practice to live on a budget (spend what you earn) and save, even if it is a very small (almost token) amount. The point is that these practices will carry over into our future when our financial picture changes.

I’m continually challenged that to be “faithful with the little things” isn’t primarily a promise of future blessing, it is a promise that I will be changed. I continually screw it up, but let’s try again today.

Little things make big things happen.” – John Wooden


Jar of money

When I meet with students and young couples, the number one thing we work on is putting together a super quick, easy, zero based budget.

Despite my love of finance, I’m more of a ‘Free Spirit’ than a ‘Nerd‘, so budgeting has always been a challenge for me. This year, practicing the discipline of doing a zero based budget every single time our family has  income is going to be my most important financial priority.

I’ve long believed Dave Ramsey is the most PRACTICAL financial teacher in the world. He doesn’t just teach you financial principles, he actually lays out a plan that everyone can follow to get there. You might disagree with his plan (Baby Steps), but the reality is that most financial teachers won’t actually put their principles in simple black and white instructions, and most of us don’t actually have a written financial plan we are truly following.

If you are going make a new years resolution to do a better job budgeting this year, here is a PDF outlining Ramsey’s basics for budgeting and answering the most common questions.

DOWNLOAD:  DAVE RAMSEY guide-to-budgeting