10 Commandments of Personal Finance

We propose ten simple rules that will allow you to achieve a better financial situation. We have called them the 10 commandments of personal finance, but if it sounds too pompous, think of them as tips and advice to make you a little richer and more relaxed about money problems. In a sense, this article is the antonym of the 7 deadly sins.

Why Write 10 Money Management Commandments?

I was looking for a way to put in a summary article on the most important ideas for good personal finance management. To many people, this will sound like common sense advice. But, if they were really widespread ideas among the people, many personal economic dramas would be avoided. There would be far fewer people getting into bad debt, and also far fewer cases of people losing all of their savings.


So if this post can help improve the financial situation of a single person, it will have been worth writing it.

The 10 commandments of personal finance, part one

#1. You will not contract any consumer credit

Resorting to credit is almost always a mistake. Do not take out a loan to buy furniture, appliances, travel, or even a car. If you can’t afford what you want to buy, you shouldn’t buy it. Save up, or buy something cheaper.


It can only be interesting to apply for a loan in two cases.

  • First of all, if you need to pay for training, for example, a university degree, a master’s degree, or an MBA. But another condition has to be met. You have to know for sure that after completing the training your income will increase significantly. And that will be because it will allow you to access better jobs.
  • The other possibility is when you are thinking of buying a house. Depending on the evolution of the market, interest rates, taxation, and other factors, it may be more interesting to buy than to rent.
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In other words, the first of the 10 commandments is ” you will not go into debt in vain .”

#2. You will spend less than what you enter

There are no miracles, and the only way you have to save and get a little richer is by spending less than you earn. It is much easier to cut spending items than it is to find new sources of income, at least in the first place. If with your current standard of living you do not save, you cannot afford to live like this. So either you are looking to earn more, or you cut expenses.


And the first step to spending less is to make a complete list of where you spend your money, analyze your consumption pattern, and cut out all the expenditures.


#3. You will not settle

If you want to change your social status, you will have to take risks and seek new paths. You can’t afford to get stuck. Doing nothing is not only the most dangerous thing, but it is also very boring. If you confirm, you will end up like so many sad and sour people who are torn between nostalgia and fear.


This means that you will invest in yourself, you will get paid according to what you are worth and if you are not paid what you deserve, you will look for a better job.

#4. You will do it yourself

Sometimes money gives us comfort, and we hire services or buy products that we could perfectly have made on our own. Do you have to go to the restaurant or can you prepare an unforgettable dinner yourself? Do you have to hire a carpenter or can you fix this wooden furniture yourself? Of course, you cannot do everything, nor would you know how to do it. But as soon as you can, one of the 10 financial commandments is to do it yourself.

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#5. You will not invest if you do not understand

The modern world is very complex, and more and more financial products of increasing complexity are being created. Sometimes they are so difficult to understand that the banks themselves forget what they are, creating bubbles that end up bursting like all these structured products based on subprime mortgages in the United States.


If you have some savings, it won’t take long for a financial advisor to suggest that you invest in such an index or that derivative product. Do not be captivated by the attraction of the mystery generated by the complexity: if you do not understand it perfectly (operation, risks), do not put a single euro.

The 10 commandments of personal finance: part two

#6. You will not believe in safe investments

Money is never safe. It is neither under your mattress (they can rob you or the State decide to devalue), nor in the bank, nor invested in brick, nor invested in gold, ever. Therefore do not believe those who promise to invest in something safe. And if on top of that they promise you a combination of security and profitability, distrust twice. In finance, there is a very reliable general rule: the more profitability they offer you, the greater risk it has.


Indirectly, the sixth of our 10 commandments should lead you to never play the lottery, an investment whose potential return is incredibly high precisely because the probability of winning tends to be zero.

#7. You will not put all the eggs in the same basket

If it has cost you to save, why do you want to risk losing everything? We have seen before that your money is not safe anywhere. Therefore you have to diversify your savings. Work with several banks, invest in different products, and divide your portfolio between low-risk investments and riskier bets. But don’t put all your eggs in the same basket.


#8. You will reflect and compare before buying

If you want to buy only things that you need at the best price, you cannot be influenced by the marketing techniques that seek to make you make an emotional and impulsive purchase. Take your time, think a bit, and compare. Even when you are in the supermarket you have to. Over time it will become a habit and you will buy less and better.

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#9. Consuming more will not make you happier

We live in a consumerist system. Our economies are based on a growth system: companies have to sell more and more at the same time that states have to collect more and more taxes. The engine of this growth is the purchase by the consumer, and that is why we are subjected to messages that encourage us to buy all the time. To achieve this, most of the time they want us to believe that by using we are happier.


But the truth is that objects are merely useful, and if we let our happiness depend on consumption, we risk never being satisfied. That is why it is so important to learn to be happy regardless of what we can buy.


#10. You will take advantage of your time

We have talked about spending, entering, and buying to save, but at the end of the day, achieving financial freedom, and being a little richer is just a means to have the peace of mind of someone who does not have to live worried at all times for the money.


If the goal is to be happy, then no time can be wasted on useless things. I am referring to those hours wasted in front of the television that could have been moments to share with the family, or of reflection to make important decisions. I speak of television as I could speak of the Internet, the two chronophagous media of our time.


Make every minute make sense. Use it to have fun, think, invest, love, rest, or whatever seems important to you, but try not to waste it on those activities that you later regret having practiced.


Those are the 10 commandments of personal finance, at least the ones that I consider the most appropriate. I propose to you only as a recommendation. You are the owner of your life and only you know what is good for you or not.