The financial difficulties that many people are currently facing during the corona virus pandemic have reminded me of three fundamental principles of personal finance. This sage advice has stood the test of time, and those who have practiced these principles can attest to their effectiveness.

Rule #1: Spend less than you earn.

Rule #2: Have an emergency fund with enough cash to pay for six

months of living expenses.

Rule #3: Avoid the use of consumer debt.

Why do people not follow these three simple rules? For some people it is not an option. Through no fault of their own, they have encountered circumstances in life that make it impossible for them to follow this guidance.

On the other hand, many people seeking immediate gratification instead of preparing for the future have chosen to spend their money on non-essentials. Also, with easy access to credit, they buy things they cannot afford with little regard for what could happen down the road. Larry Burkett called this “presuming upon the future.”

If Americans had practiced the three basic rules, think how much personal financial suffering could have been avoided in the last three months. Think how much less money the federal government would have needed to hand out.

I realize I am preaching to the choir. The overwhelming majority of Master’s clients have not violated rules 1, 2, & 3, but I am thinking of the next generations. Let’s be diligent to pass these principles on to our children and grandchildren. We don’t want them to adopt the thinking and values of the society around them, and we can use our current circumstances as an example of why they should apply these principles.

Are you thinking of anyone close to you who could benefit from Personal Finance 101?