We recently celebrated our 10 year anniversary on the blog and since the humble beginnings in 2013, I’ve had the chance to write hundreds of articles. One of the benefits of having been a blogger for so long is that I can look back with the benefit of hindsight and see if I was right, wrong or just living in a different stage of life. One post that I’ve always really been proud of is my post on the Cardinal Rules of Personal Finance. This was one of the first articles I wrote – way back in May of 2013. Let’s revisit to see my thoughts on changing, adding or removing any of these cardinal rules!

Personal finance is hard. It takes motivation, perseverance and a good head on your shoulders. Personal finance is tricky because there is just so much information out there, enough to fill several books on your bookshelf. Fortunately, I’ve boiled personal finance down into the following 3 ‘Cardinal Rules’. Give them a read and see if you can apply them to your own life!

2023 Update – I would maybe modify this a bit to say that the basics of Personal Finance are easy…it’s just the process of actually being diligent and disciplined to stick with it – that’s the tough part!

1. Income = Expenses + Savings

The basic premise of this fundamental equation is that your expenses + your savings should not exceed your income. Depending on your pay schedule, you should be aware of you income (after taxes). Take that number and in-grain it into your mind. Focus on that income amount do not let your expenses and/or savings exceed that amount. Your income is your monthly ceiling.

2023 Update – Since starting my first job in 2012, I’ve been fortunate enough to have gotten several raises and promotions and I’ve making a decent amount more than I was making in 2013. Of course inflation has played a role here – things are more expensive now than back then (like I don’t think Subway still has their $5 footlong anymore?) and this government website tells me that $100 back in 2013 costs $133 now. But thankfully since 2013 I’ve gotten more than a 33% raise! However, I’m telling you, lifestyle creep is no joke. It seems that our regular spending quickly swallows up every raise I get it. Despite making the most money I’ve ever made, this cardinal rule is the most difficult it’s ever been to follow! I could make excuses like Mrs. Money is more part-time now so she can focus on her business and we’ve got 2 kiddos and raising kids isn’t cheap!

If I were to change this, I would simply put a little * by it to account for times in life that you take a step back to hopefully take 2 steps forward. This rule is important and relevant, but it assumes consistent forward progress. 10 years after writing this I’ve had lots of good and bad financial blessings and setbacks. I’ve realized that this might not be a perfect equation, and there needs to be some room for the months things don’t work out perfectly. Like in times of taking a step back to hopefully take 2 steps forward (i.e. starting a business, buying a house, taking on debt for an advanced degree), you should have negative savings as hopefully you (and I) have been saving for this step back. Yeah, that feels more like it – I think generally speaking this rule still holds but there will be times that you won’t always even this out and you may have to dip into savings or even debt to continue making progress in the long-term!

2. Being the Master over your Money and not vice-versa

You must learn to be the master of your own money. You are in control, you earn it and you decide how it’s spent. Start to view yourself as the boss of your own life. You work hard and make the money come in. Don’t let your money fly out the window and it be month end and you have no idea where it went.

2023 Update – Still fully agree with this statement and believe it to be valuable advice for this slightly less Young…MoneyFinance. I’ve learned this rule over and over again and as mentioned in the last update – money seems to go out just as fast as it comes in. It’s arguably more difficult now in my stage of life to remain the master over my money but still a worthwhile endeavor!

3. A Little Everyday

Incremental growth is the act of learning to value small acts that eventually add up. This is the mindset that keeps you focused on the big picture, and starting to realize how making incremental changes can really pay out in the long run. Cutting out on little purchases each day can make a big difference come months end.

2023 Update – Oh sweet 2013 YoungMoneyFinance with less money and less expenses to worry about. Oh how I wish cutting out on that latte would make a big different come months end. But, I still firmly hold to this rule and try to focus on small but steady growth month over month, year over year. I’ve come a long way financially speaking since 2013 and am thankful for our progress. You may not get a W(in) everyday and may have some L(osses) here and there but overall I try to have more Ws than Ls and focus on trying to have forward progress each month!

TLDR

I still love these 3 Cardinal Rules of Personal Finance and wouldn’t remove any of them. I would probably change Rule 1 – Income = Savings + Expenses doesn’t seem to be as 100% realistic for the real world, although I would argue still a good measure to strive for. If I were to add, I might add something around ‘Ensuring Your Money is Working Hard for You’, or something like ‘Keep Your Investments Simple’. Those topics have had profound impacts on my investing and savings but I’m not sure I would add them to my top 3 – and there’s something about a top 3 list! 10 years later these 3 rules are still relevant and I’m thankful for having followed them as closely as I can!