The Seven Pillars of Financial Success, Pillar 1: Spend Less than You Earn

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

The Bible discusses the keys to personal finance success quite plainly. If you read the book of Proverbs in particular, you'll see that the path to financial success isn't that difficult or extensive. In fact, the wisdom to be prosperous can be found in a few simple steps.

Over the next few weeks, I'll be sharing what I consider to be the seven pillars of financial success from the Bible.  I picked up on the number seven from Proverbs 9:1 where it says:

Wisdom has built her house; she has hewn out its seven pillars.

Today we'll be discussing Pillar #1: Spend less than you earn.

In Proverbs 21:20, the Bible says:

In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.

Let me paraphrase and expand this passage:

Wise people have plenty left over because they don't spend all they make. On the other hand, fools spend all they get (and maybe even more).

As I've said numerous times, the core principles for personal finance success are fairly easy to understand -- you need to spend less than you earn for a long time and you'll more than likely be wealthy. Notice what's VITAL in this success? It's spending less than you earn. Without this one, simple step, you're dead in the water financially -- you're going nowhere. With it, you have extra amounts left over that you can save and invest -- and thus grow your net worth. This is why spending less than you earn is the one, main key to financial success (and thus my best piece of financial advice).

If you spend more than you earn, you're going backwards financially -- whether you're making $40,000 a year and spending $41,000 or making $4,000,000 a year and spending $4,100,000. No matter what your income is, if you spend it all and then some, your finances are doomed (yes, I've collected lists of many "rich" people that have spent all that they've earned despite making a boatload of money). So having more income isn't the main issue. It's important, that's for sure, but spending less than you earn is crucial. That's why it's Pillar #1 on the road to financial success.

Do you agree or disagree?

Come back next week as I discuss Pillar #2!

Comments

[Learn Financial Education]

I like very much this post. It tackled the biblical truth about how to handle your wealth. I will be waiting more posts in the future.

[Mary Kate]

I think you are 100% correct. You need to start with spending less than you earn.

[Rex]

The reason the globe is in the financial predicament we are in is people and nations all spending more than we earn. The first step should be spend less than you earn. If you do not get spending under control, pillars 2 - 7 will not matter.

-Rex

[js2721]

Great site...'Pay yourself first' is my basis...whether its $10, $100, $1000 income...the first thing I do is put it away...then spend what must be spent...

'The Richest Man in Babylon' has great tenents of gaining wealth...including 'Make of thy house a profitable investment'....I rent out the bedrooms upstairs to decent people...they ahve their own kitchen and bath...we share a commonentrance doorway and I pay the utilites but it works well and is legal...Sam Pittsburgh

[Squirrelers]

Absolutely. I find it hard to believe that someone could disagree with that, in most situations.

Now, if someone is a full-time student, then that is an investment in the future that will more than pay off. The Net Present Value of a high quality education can be positive - just have to wait for the long term cash flows.

But yes, as a rule of thumb, spend less than you earn. That's the foundation to healthy personal finances, and without it not much is possible long-term.

[BD]

I've found out that the most important pillar is actually "Be able to make a Living Wage". You have to make a living wage before you can "spend less than you earn", unless you don't mind sleeping in a cave (which yes, some people do).

If you don't have any earning power, it's IMPOSSIBLE to spend less than you earn, because no matter what you do or how many jobs you try to take on or get, they pay so poorly that you don't earn enough to pay the most basic of life's necessities (Shelter, Food, Electricity). That's my problem (which I'm working on fixing).

[tlltaco]

Amen!!

[Lakita (PFJourney)]

Can't wait to read about all 7 pillars!

[Elizabeth]

@BD

I totally agree. Good luck in your search for finding a "livable wage". Afterward, then you can begin to apply the first principle.

[Stephan]

like tlltaco said, amen! Any other PF tips are useless if you spend more than you make. create a budget, get a second job, cut expenses, do whatever you have to do so that you can save money each month instead of gaining debt each month.

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[Joe]

Great first pillar! Unless living on less than you make is deeply ingrained into one's psyche, people (or nations) will default to spending more than they make. First things first!