Personal Finance Boils Down To Just Two Things…

Once you’ve read up on personal finance, you’ll find that there are a lot of perspectives on almost every issue. What I’ve found is that one should read the advice of others, but don’t subscribe blindly to it. If you read A Random Walk Down Wall Street and then read Jim Cramer’s Real Money, you’re going to be completely unclear as to what the best route to invest is – individual stocks or index funds. The truth? They both have good cases for them and there are situations for each where they’re clearly on top. There is no personal finance guru that is “right” about everything, usually because there is no absolute right.

Take the current stock market. The best thing anyone can do about the direction things are headed is guess. If you believe strongly in “buy and hold” and you hold on right now, this could turn out to be another 1929 and you could still be in the hole thirty years later. Or the housing market could be much better than it seems and August will turn out to be a bump in the road and the people who held on will look like geniuses. Should you sell? Should you hold? Should you buy? There is no absolute right answer, and anyone that says they know for sure is full of it. I certainly don’t know. I can say that my observations on the housing market right now lead me to think that the market is going down from here, but I don’t know that. No one knows that.

So what can a busy person do? The best thing you can do as an individual investor is to read a lot of investing philosophies and ideas and make up your own mind which one is right. That’s why I review personal finance and investing blogs and books in all shades, from Robert Kiyosaki’s speculative real estate investing to Jim Cramer’s individual stock picking to John Bogle’s index funds to Dave Ramsey’s absolute elimination of debt.

What have I found? The only right answer is frugality. Spending less than you make is the only absolute right thing to do. If anyone tells you that there is more that you must do, it’s simply not true. Anyone that tells you to buy or sell any sort of investment is making a guess of some sort – it might be an educated one or it might not.

Want more than just saving money? Learn. Study the material available to you. There are a lot of books out there with different ideas and a lot of blogs out there with different thoughts. I try very hard to tackle as many perspectives as possible on The Simple Dollar, for example, and because of that I sometimes am accused of putting out false information, simply because I’ll write about an unpopular tactic. I don’t really care – to me, the interesting part is learning how to get ahead financially and understanding every choice a person might make.

Do you want to be rich? Spend less than you earn. Learn. Do those two and you will become rich. Everything else can be debated until the sun goes down. Welcome to the conversation.

Trent Hamm

Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.