Hearing the word investing can be paralyzing. Every decision—what to buy, when to buy, how much to buy, when to sell—feels like it has existential consequences.
To get comfortable with investing, however, requires ignoring those questions and starting with a different topic altogether: money.
Investing is only a subset of the financial universe, and money is what makes it all work. So before anyone invests, they have to know how to handle money. Otherwise, it’s like dropping a novice baseball player into the major leagues. Things might work out, but the odds aren’t great.
The good news for any money newbies is that the basics really aren’t all that difficult. And writers with far more talent than your typical financial columnist have been revealing monetary secrets for literally centuries. Authors from Balzac to Austen to Hemingway. It can even be entertaining.
It’s perhaps best summarized by Wilkins Micawber, from Dicken’ David Copperfield, who said—and we’re paraphrasing here—“If you make $2,000 a week and spend $1,900, you’ll be happy. But if you spend $2,100, get ready for misery.”
No one wants to be miserable. So don’t spend more than you make. That happens to be rule number one, two and three of personal money management. It might not be easy in this day and age, but it’s a good principle to keep in mind.
What’s more, rules about how much to save or invest; how much debt to take on; what to spend on a car, house, school, or even on a vacation all come after rules one, two, and three: Don’t overspend.
We’ll talk more about money — and how not to be miserable — in this video. But first, a quiz:
How much does the average person under 35 have saved?
For the answer and much more: watch.
