Over the next two weeks, I’ll be writing a series based on the Money Crashers 11 Principles to guide you to personal financial fitness and success. I created these 11 financial principles to live by when I first created the Money Crashers blog. However, I never formally explained each one and my philosophy for each principle. I figured that now is as good of a time as any to do a series on my 11 principles and why I believe they are essential to follow if you want to win with money.

The 1st Principle: Always Spend Less Money Than You Make

This principle is the most simple one of the 11, but it is also the most important. Unfortunately, we also struggle with this principle the most. One hundred years ago it was very hard to spend more money than you made, because credit was unbelievably hard to get, and it was considered shameful to borrow from someone else. Today, borrowing is a way of life. You are actually considered not normal if you don’t borrow money. Paying cash for a car, real estate, or even furniture is considered to be not normal. Consumer debt has risen astronomically over the past few decades, and it has contributed to weakened marriages, rising bankruptcies, and more foreclosures. So many people speak of how it being easier to receive credit has made our lives better and given us more opportunities. I think that’s a load of crap. All it has done is given people the appearance that they are able to live a better lifestyle, but the added pressure paying numerous bills, living paycheck to paycheck, and fluctuating interest rates has most likely diminished the quality of life of many people.

When it comes down to it, what makes you happy? Does having more stuff and better stuff make you happier as a person? Being able to finance anything gives you the ability to have more and better stuff, but it does not make you happy. What makes us happy is maintaining healthy relationships with family and friends, being physically healthy, and working with a purpose in life. The size of your house, the brand of your car, and the technology of your television do not define who you are. Your personality, morals, and passions define who you are.

This may sound like I am getting overly philosophical about a personal financial principle, but spending less than you make affects all aspects of your life. If you can sit down tonight and say to yourself, “I am going to take more personal responsibility with my finances”, you will immediately begin to see a change in the way you live, your attitude towards life, and the way you treat your loved ones. The problem is that we want to blame everyone else about why we are struggling with money when all we have to do is look at ourselves in the mirror to find the problem. I am using “we” because I constantly struggle with being personally responsible about my money. I don’t claim to have it all together when it comes to handling money, but I have learned from many of my mistakes, and I spending less money than I make each month must be the first priority before I can fulfill any of my other financial goals.

Here are the first steps to take in order to start spending less than you make:

1. Start a Budget. Read this article about an envelope budget system that has helped us keep our spending in check
2. If you are still making less than you spend after putting together a budget, then come up with alternative ways to make extra income. The sixth Money Crasher principle is finding creative ways to boost your income, so come back to read that post if you fall into this category

Change Your Habits. This will include cutting out the little indulgences you are used to throughout your week. It will require sacrifice. This is the hardest step, but you can do it! If you are motivated enough to become wealthy, you must delay pleasure now in order to embrace it later on in life.

Spending less money than you make is the first principle, and the most important principle. You cannot work on principle #2 until you get this one nailed down. If you have extra money at the end of the month, only then can you begin paying off your debts, build an emergency fund, invest for retirement, upgrade your clunker car, or save for a down payment on a house. Are you ready to take responsibility of your finances? Let today be the day that you start taking control of your money and tell it how to behave.