Generic Personal Finance Advice: What’s It Worth?

Many personal finance experts offer similar advice, and I pulled some of it together. Although generic, many of these tips have value. Let’s examine them one by one, and I’ll let you know what my husband and I personally do.

  • Have 3-6 months expenses saved in an easily accessible emergency fund: Emergency funds can be a contentious topic among personal finance experts. The idea that tens of thousands of dollars are sitting somewhere earning only paltry returns rubs some people the wrong way. I happen to be a fan of having an emergency fund in place. That said, I have been known to dip into it for a real estate investment. Luckily, my husband and I have the ability to build it back up quickly. And we have other assets we could tap if absolutely necessary. Still, you can’t start meaningfully growing your wealth if one or two unexpected expenses or a job loss can derail you completely.

  • Cut expenses and increase your income: “The latte factor” is a highly debated topic as well. Does cutting a $3/day coffee habit really mean you can generate wealth more quickly? Maybe, maybe not, however, you should take a long, hard look at your expenses. If there’s any fluff or anything unnecessary, it should be cut unless these purchases give you immense joy and contributes to your quality of life. My husband and I recently took this to the extreme and eliminated our house payment by house hacking. The flip side of cutting expenses is growing your income, which is not talked about enough in my opinion. You can ask for a raise or promotion at your job. You can start a side hustle. You can go back to school. I chose to get into sales. There’s only so much you can cut, but there’s really no limit to how much you can earn.

  • Keep living expenses low even as income increases: Lifestyle creep occurs when you increase your lifestyle along with your income. What is the point of making more money if you never actually have any more money? It is so important to know when enough is enough. You don’t need to upgrade your house or your car with every promotion. And the best personal finance advice is to keep your lifestyle as unchanged as possible, even when pay increases. I have been known to allow lifestyle creep to happen, and have taken very deliberate steps to unwind some of it by switching from a BMW to a Honda and by moving to a lower cost area.

  • Eliminate and avoid consumer debt: The interest paid on credit card debt is extremely high, around 15-20%. That means anyone paying this debt is using today’s dollars to pay for yesterday’s purchases and then some. This piece of generic advice is on point: if you have consumer debt, pay it off. If you don’t, don’t accumulate any. Pay your credit card(s) off every month. We definitely follow this one.

  • Pay yourself first and automate your savings: Setting up a recurring transfer that moves money from your checking account to a savings or investment account every payday is an excellent way to save and invest more. When you pay yourself first, then your bills, then your discretionary expenses, you will become wealthy over time. Automating your savings means you may never even notice you’re saving at all. My husband does by transferring $1,000 per month into our joint brokerage account. We both contribute to 401(k)’s, which is one way of paying your retirement account first since that money comes out of your paycheck before it gets to your checking account.

  • Spend less than you make: This is potentially the most generic advice you could receive about your personal finances, but it all boils down to this: spend less than you make. With 0% down offers, credit cards, and car payments it’s very easy to spend more money than you have coming in, which leads us to…

  • Budget: It’s almost impossible to know how much money you have coming in or going out unless you track it. I’m partial to a 50/30/20 budget to start: 50% for needs, 30% for wants, and 20% for savings. Over time, you should be able to increase your savings rate, especially if you follow the advice listed here: pay yourself first, increase your income, cut unnecessary expenses, and don’t let your lifestyle increase much over time. We track our income and expenses every month and look for trends over time. We don’t technically have a budget we follow every month, but if something in our spending goes out of whack, we know pretty quickly and can course correct.

  • Drive an older car: This is some of the most generic advice out there: drive an old, used car. The sentiment here is that cars depreciate over time. Furthermore, most people have car payments. If buying an older used car is the only way to avoid having a car payment and thus free up cash flow for investing, then that’s what you should do. It’s also important to buy a reliable car, and not enough people are talking about that. I happened to pay cash for a basically new Honda Accord. It hasn’t depreciated much, and I don’t have a payment. My husband drives a Toyota that he bought new and paid off very quickly. I don’t see a problem with having two newer, reliable cars and no car payments.

  • Invest in low-cost index funds: It’s well known at this point that actively managed funds and portfolios underperform the market. There’s a correlation between number of trades and low returns. In general, the more people try to pick stocks and buy low and sell high, the worse they do. Low-cost index funds are the best way to return what the market returns, and that’s fine with me personally. That said, we don’t only invest in low-cost index funds. We own real estate as well.


In short, some of the most boring and well-known financial advice out there is still worth following. It’s hard to argue with those who insist you should avoid consumer debt, increase your income, decrease your expenses, and pay yourself first. It’s hard to argue with the math behind budgeting, buying a used car and driving it forever, and only owning low-cost index funds, but I don’t personally follow these tips.

It’s important to listen to experts, educate yourself, and do what works for you. Find whatever path works for you to increase your net worth and meet other financial goals.

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