Remember those “For Dummies” books? The ones where you could learn the basics of any subject from an expert.
I’m not sure we are allowed to call them that anymore, but there was a plethora of these publications a few decades ago.
Charles Schwab wrote a short foreword for the Personal Finance For Dummies entry and he packed much of what you need to know about personal finance and investing in this brief paragraph:
For most of us, especially those who haven’t accumulated much in the way of assets, the first priority is spending less than we earn. Saving is not easily practiced. In our consumption-oriented society, setting aside money for the future requires extraordinary personal discipline. Most of the voices we hear are contending for our resources. Spend—that’s the message we hear at every turn. But when you save money before frittering it away, the money can build into impressive amounts because of the power of compounding. Saving is the bedrock of personal finance. Start now. Stay with it. Enjoy the journey.1
Spend less so you can save more.
Of course, this is easier said than done, and easier at some stages of life than others.
For example, mid-life is the time when you may make more, but you may also spend the most due to family commitments.
The key is to build saving habits throughout a lifetime, so that wherever you land on that age spectrum, the discipline is already in place.
While spending too much enslaves your future, saving and investing liberate it. The earlier you learn this lesson in life, the better.
Being foolish is easy. Being a sage takes discipline and habits.
Everyone makes financial mistakes. Sages don’t get stuck there. They begin again.
Never stop starting.
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Source:
1. Personal Finance for Dummies, p. xxix.