I’m pretty sure financial blogger J.D. Roth just hit it out of the park with his most recent article, published in the Huffington Post a couple days ago. His name might sound familiar because he’s the founder of GetRichSlowly.com, and is what some might call an expert on the subject of personal finance. His latest article lays down the basics of personal finance in such painfully obvious terms that it’s almost like hearing it–or reading–it for the first time. Roth discusses the the three essential skills that it requires for one to become wealthy, and expands on each one. Roth’s article is worth reading and passing along:
“A couple of weeks ago, Robert Brokamp explained how living below your means is like saving for retirement twice. On the surface, his advice was pretty conventional: The more you save today, the more you’ll have tomorrow. This is similar to a point I’ve been repeating for the past five years.
Smart personal finance can be reduced to one simple equation:
[WEALTH] = [WHAT YOU EARN] – [WHAT YOU SPEND]
If you spend more than you earn, you have a negative cash flow. You’re losing wealth and in danger of going into debt. (Or, if you’re already in debt, you’re digging the hole deeper.) If you spend less than you earn, you have a positive cash flow, which will let you climb out of debt and build wealth.”
Click here to see how Roth breaks down earning, spending, and saving into brutally honest and completely helpful terms.
Anybody who knows me know that I am always stressing to people how important it is to understand the meanings of words, to understand concepts. That is one reason I love this article so much–Roth defines words which we consider to be the basic building blocks of personal finance, but that people might never before have actually bothered to look up. It is really eye-opening to truly grasp the meaning of a word, and the action behind it. This is one article I truly hope nobody misses!