The 10 Commandments Of Personal Finance


During the time of Moses, God gave him the 10 Commandments for his people to follow. If the people followed these commandments, then peace will reign.

In the world of personal finance, we also need commandments that will give financial peace to us and our future generations.  Breaking these commandments often lead us to more harm than good.

By doing our best to follow these commandments, we are almost certain to have the financial peace we are looking for. Breaking any of them guarantees that we suffer the consequences. Here they are:

Thou shalt spend less than you make.  Whenever you generate income, make sure you check your expenses. You may want to think twice before letting go of your money. It is best to spend less than what you earn to avoid ending up in debt.

Thou shalt pay yourself first.  When you receive your salary, always remember to pay your major provider, you.   A minimum of 20 percent of your income is good. But if you can pay yourself higher, the better for you.

Thou shalt avoid keeping up with the Joneses. A lot of people fall into the trap of competing with others with regard to purchasing things.  They want to look good on the outside even if their pockets are already hurting.  Just ignore what you see and focus on yourself and your need.

Thou shalt cut your excess credit cards. Credit card is a good financial instrument, as it eliminates the risk of bringing too much cash with you. In short, credit cards offer convenience but not without a price. A wrong usage due to temptation can wreck your financial plan. Terminate your other unused cards so that you will not be charged annual fees.

Thou shalt pay off your debts. No matter how much your debt is, it makes sense to pay them off as this will free you from slavery.  If you are continuously in debt, you are, in effect, working for the lender. As the bible says, “The borrower is slave to the lender.”

Thou shalt avoid scams.  Scams come and go but people never learn. Scammers have been improving on their skills in tricking people to part with their money. When you are offered an investment opportunity, watch out for the following signals: high pressure selling, the words “guaranteed high return” and lack of valid documents. Then stay away from the offer no matter how tempting it is to invest.

Thou shalt protect against risk.  Wealth building is not complete without risk management. We all want to preserve our investments by diversifying so that the exposure to risk is minimized. Another way to protect against risk is by having a life insurance. When we do not have insurance, we risk losing everything if an untoward incident happens. Insurance will provide the money should the risk becomes real.

Thou shalt educate the next generation. As we are successful in making our own personal financial plan, it is our responsibility to teach our children who will be the recipient of our assets. Any individual would not want the assets he generated through hard work to go to waste.

Thou shalt plan for old age. The only person who can help you when you reach the autumn of your life is no one else but the younger you. When you start working, you should be thinking of retirement already because, whether you like it or not, retirement day will come as you cannot stop time from moving forward.  Time is money so start saving and investing early.

Thou shalt have action. Information without action is merely entertainment.  Applied power is actually applied knowledge. Without execution of the information obtained, a person will only be in the same financial situation no matter how hard he works or does his routine.


Edmund Lao is registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 62nd RFP program this June 2017.

To inquire, e-mail or text <name><e-mail><RFP> at 0917-9689774.


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