These books all tell you the same thing. Oh, they may have a different twist or two; something you’ve never thought about or they may use a new word they’ve made up and copyrighted. But one thing’s for certain, the principles of financial success haven’t changed much in thousands of years.

That doesn’t necessarily bode well for the financial gurus selling those books! But we can’t deny the fact that “there is nothing new under the sun” especially where it concerns personal finance. The main difference in each of these personal finance books is the approach each one takes and the motivations they provide. That is literally the biggest difference in virtually any generic personal finance book you read – the approach and the method of motivation.

The principles of financial success

• Spend less than you earn
• Learn to earn more
• Pay off high interest debt
• Build an emergency fund ^[2]
• Max out your retirement savings
• Reduce your taxes legally
• Invest ^[3] your money sensibly
• Live wisely

Spend less than you earn

This principle is listed in virtually EVERY personal finance book and the reason? It’s the basic foundation of financial success. Compare how much you make to how much you spend and hopefully there’s a gap. If there isn’t, you’ll have to either increase your income ^[4] or decrease your spending … or both.

Learn to earn more

It’s hard to get ahead by just spending less. You’ll need to earn more money eventually and there are dozens of ways to earn more money ^[4] if you’re willing to give it a try. And new ways to make money ^[5] pop up all the time.

How’s this for a way to make extra money ^[4]? My daughter has a friend who rented a meeting room at a local hotel, brought in a DJ, and then charged his friends ^[6] $15 each to come to the party. Over 260 people showed up. The DJ cost $300 and the room was $150. You do the math, but to my way of thinking, this is a smart young man who sees a need, fills it, and profits.

Pay off high interest debt

The Internet is full of fantastic examples of people who paid massive amounts of debt in relatively short periods of time. It all depends on your personal motivation level and your willingness to use self-discipline. I personally paid off more than $120,000 in debt in just 52 months ^[7] (a little over 4 years). My wife and I were INTENSE fanatics about getting that debt paid! How intense are you?

Build an emergency fund

Again, look to the Internet. Like me, tons of other writers have extolled the virtues and the peace of mind that grows when you have a safety cushion called Emergency Fund. How much you keep in it is up to you, but I personally recommend no less than 6 month’s living expenses. Notice I said living expenses – food, shelter, transportation, insurance – and that’s it. No private school, no dining out, no new clothes, no gifts ^[8], nothing but what is absolutely necessary to keep you afloat. You’d be surprised at how little you can live on when you HAVE to.

 Max out your retirement savings

Once you’ve gotten your debt paid off and have a cushiony safety net, the next step is to max out your retirement savings. If you meet the qualifications (most people do), head over to Scottrade ^[3] or better yet, optionsXpress ^[9] (it’s cheaper) and set up a Roth IRA. You don’t get any tax savings now with a Roth, but your earnings are tax free once you reach 59 1/2 years old.

Reduce your taxes legally

Have you ever read about those incredibly rich people at the turn of the century? People like John Rockefeller, J.P. Morgan, Andrew Carnegie, and the Vanderbilts had an advantage you and I don’t have – there wasn’t an income tax back then and even when it DID become enacted in 1913, only those with incomes over $450,000 (inflation adjusted) had to pay … one percent. The highest rate was 6 percent on incomes over $11 million plus!

Why bring this up? The more you can reduce your taxes (legally), the more money you get to keep. Make sure you watch out for audit triggers ^[10] and report ALL your income ^[11].

This year use Turbo Tax – the #1, best selling tax software! ^[12]

Make sure you don’t overlook any deductions (especially sales tax deductions ^[13]) and look out for the top 57 Avoidable Tax Mistakes ^[14]!

Invest your money sensibly

The best way I’ve found to invest ^[3] is to regularly put cash into a savings account ^[15], then when you have $1,500 to $2,500 saved up, move it to your online brokerage account and invest ^[3] it (read How a Second Grader Beats Wall Street ^[16]). How does a second grader beat the Wall Street moguls – by investing in broad based exchange traded funds ^[17] that put money in stocks, bonds, and even commodities based on your own tolerance for risk and volatility ^[18].

Of course, if you’re uncomfortable making your own investment decisions, make sure to use WiserAdviser ^[19] to find a financial advisor. WiserAdvisor has hundreds of advisors in their network ^[20] and YOU get to pick which one matches your needs best. There’s no cost to use the search system, no obligation if you do, is confidential, and since WiserAdvisor WiserAdvisor isn’t a financial services company and doesn’t offer any financial advice, there’s no conflict of interest.

Click HERE to find a financial advisor ideally suited to your needs and preferences. Its FREE! ^[19]

Live wisely

Living wisely means living frugally – but not living like a miser. While it’s true that you don’t “save yourself to wealth”, it makes no sense to wantonly waste money on things you don’t need or on things that won’t hold their value or will break shortly after purchase.

Living wisely means using banks like PerkStreet ^[21] for the debit card rewards, writing a will for your heirs, living your life on a budget ^[22], and maintaining the proper amount of life insurance ^[23], car insurance ^[24], and homeowners insurance. It means maintaining your credit report and understanding your credit score ^[25] and what impacts it.

Living wisely means managing your money in a way that allows you to bless others, and take care of yourself and your family.

Principles are timeless

Principles never change. If you want to avoid reading all the books in the picture above, just remember to:

• Spend less than you earn
• Figure ways to earn more
• Pay off your high interest debt
• Build an emergency fund ^[2] with 3-6 months of living expenses at a minimum
• Contribute as much as possible to your retirement savings
• Reduce your taxes legally
• Invest ^[3] your money sensibly, either on your own or with an advisor
• Live wisely and frugally

About the author

Ron has written 1080 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal ^[26] in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a partner in a national building materials company.

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