5 Pillars of Personal Finance

In his book The 7 Habits of Highly Effective People, Steven Covey talks of 3 ways that people govern their lives.  Some, he says, live a life centered around themselves.  Everything they do is done only with how it affects them in mind, and they become selfish.  These kinds of egocentric people aren’t effective because dealing with them has little benefit for others.  As a result, others aren’t drawn to them, and they don’t ultimately get opportunities that they could have otherwise.


A second group lives their lives centered around everyone else.  This sounds better on the surface, but is equally ineffective.  These people spend their whole lives chasing the moving target of pleasing others.  While they may be widely admired for their selflessness, these people often become doormats who struggle to achieve for themselves due to their overriding efforts to make everyone else happy.


Thirdly, he presents those who live a principle-centered life.  He talks of people who live their lives set by unchanging and clear values.  These ideals, unlike their own tastes or the views of other people, will remain the same the rest of life as they are today.  Those who live lives based on principles live consistently and develop character that isn’t based on circumstances, temporary situations, or feelings.  They can bring deep meaning to their whole lives because they’re governed by something deeper than most.


Our finances and how we handle them are a direct microcosm of these life approaches.  I believe some people handle their money like the first group, simply seeking to satisfy their own desires in the here and now.  I see many others who are constantly pulled in every direction based on what the crowd is doing.


But the most successful people financially are the ones who handle their money based on principles.  If you want to be successful with money: to leave an inheritance for your children and their children, to create value on this planet, and to be compensated for it, you need a strong foundation of values that govern your financial decisions.  These values can’t be rooted in your current tastes and feelings, but must be timeless truths that you hold to in every season of life.


My hope for you as you explore this site is to help you manage your money in a principle-centered way.  I want you to live intentionally because you only have so much time on this earth, and there’s no sense in wasting it.  I have outlined below my 5 Pillars of Personal Finance.  I call them pillars because, for me, they govern all my financial decisions.  They uphold my financial house, and they are non-negotiable.


Regardless of the situation I find myself in, I follow these 5 statements in my financial behavior.  I believe that if you will adopt and hold to these 5 pillars of personal finance, you will one day look back across your life and see that you’ve become someone of great character, strength, and success.



It’s so stressful to live right on the edge of what we’re able to handle.  Of course, there are seasons where we are busier than others and we spend more than in others.  The problem is we’ve become obsessed with doing everything we can possibly do at all times in our culture.


Our kids play every sport, we join every group, we try to watch every show, we buy everything as soon as we want it, and before we know it we have filled our lives, and our homes, to the brim.  We look at our schedules only to find that we are too busy, we spend all the money we make, and in doing so we eliminate the extra space, or margin, from our lives.  We need margin to advance.


Having space between you and total chaos is essential to a healthy and productive life.  It is in margin you are free to dream.  More peace of mind and creative thinking comes when you have space.  Financially, I much prefer having margin to having all the latest and greatest items.


I have committed in my mind that it is better to have money in the bank than a shiny wireless device in my hands, a brand new car in the garage every couple years, or an overseas vacation every 6 months.  When I have margin, I’m not constantly under pressure.  When I have margin, I’m in control.  When I have margin, it sets me up to make decisions for the long-term rather than the hurried here and now.


This simple non-negotiable of your finances will set you up to follow the next 4 we will discuss, and it will help you to make different decisions to advance.


If you look at most of the people around you, they aren’t living with any margin.  In fact, they probably owe more than they’re currently worth in order to have the things they have.  It may feel like you’re the only one doing something different, but with 76% of Americans living paycheck to paycheck and very few people ready for retirement, I think I’d rather be different than the crowd, wouldn’t you?



You need to stop listening to the people who try to tell you your credit score is a measure of financial maturity.  It is actually just a score of how good you are at giving your money to someone else on time.


Your consumer debt is robbing your income before it even makes it to you, and this is slowing the process of wealth building in your life.  It is far better for me to own everything that is mine outright and for the money I earn to make me wealthy rather than someone else.  “But I got a great interest rate, it’s practically free money!”  When I hear this statement and others like it, I tend to think, “Yeah, it is so sweet of the bank to let you hold onto their car for them while you send them your money.”


The financial world has gotten really good at using the word “financing” as a synonym for debt, and using it in such a way that communicates it as necessary.  Debt is not necessary to have financial success. In fact, the fastest way to success is to eliminate it and never go back.


Your most powerful wealth-building entity is the money you make.  Stop sending it to someone else because you just had to have that purchase right away.  If you want more details about why I’m so convinced of this, read this post on DEBT.  Adopting a mindset of owning rather than owing begins with your normal everyday purchases.  However, as you continue to live with margin and advance in your plan for your money, you will transition to owning assets.


Then you’ll see the full fruit of this pillar as you become the one who is being paid interest instead of paying it to someone else.




You will be handling finances until the end of your life.  As such, I think we can all agree that personal finance is a marathon, not a sprint.  You need to approach your money management as a life-long endeavor, and plan your pace accordingly.


There is no such thing as get-rich quick.  Sure, there are a few people out of the 7 billion of us who have won a Powerball jackpot, made a killing flipping houses using “other people’s money” (are those radio commercials in your city too?), or who hit it big trading penny stocks.  But those are very much the outliers.


For the 99.9% of us future millionaires who will build wealth over decades, you need to have a plan, and you must be willing to work that plan for the long haul.


Don’t take shortcuts.  Don’t be enticed to get off track by a risky new investment opportunity before you are in a strong position to invest.  Don’t buy a house that you’ve fallen in love with before you’re out of consumer debt.  Don’t go out of order.  A great opportunity at the wrong time is simply a great opportunity for someone else.


Consistency over time is a sign of character and maturity.  Anyone can follow a new regimen for a short while, but those who stay focused and consistent for the long haul are the ones who win.


I’m not advocating moving slowly.  Set your pace as fast as you are able to go.  But don’t be the person who gets all-in passionate for about a month then goes 6 months without a budget while overspending and falling behind.  Avoid the on again, off-again cycle, and commit to the process.




I believe money is good for three things: spending, investing, and giving away.  Most people only concern themselves with spending.  Some have thought ahead enough to really get intentional with putting their money to work in the world of investing, but even fewer have realized the importance of building generosity into their lives.  You need all three practices in order to have a successful AND fulfilling financial life.


It may seem counterintuitive at first, since you’re probably here wanting to grow your net worth, to hear me say you advance by giving your money away.  Mathematically that doesn’t make a whole lot of sense.  However, we’re dealing with more than simple numbers.


Your money is not sealed off in its own place separate from other things in your life.  It’s connected to everything you do.  That means that your relationships with others, your optimism for the world you live in, and your character all factor into your financial well-being, and vice versa.  I think those who are generous with their money get to see benefits that others don’t.


 In everything I did, I showed you that by this kind of hard work we must help the weak, remembering the words the Lord Jesus himself said: ‘It is more blessed to give than to receive.’ ”  Acts 20:35 (NIV)


Being a Christian, my worldview comes from the ancient and time-tested words of the Bible.  Even if you are not a Christian, I believe its principles hold true in this life for you to practice as well.


Throughout the Bible there is a common theme that each of us should use part of what we have to give to others.  If you have ever given an awesome gift to someone you love, supported a cause you had a ton of passion for, or purchased a basic need for someone lacking it, you know the last statement of this verse to be true, “It is more blessed to give than to receive.”


Now, it isn’t un-blessed to receive.  Receiving is quite fun and has a ton of benefit, but I’ve never given a single dollar away that I wished I could’ve had back to spend on myself.


Those in this life who are generous get to see their resources tangibly help others.  They get to experience the joy of knowing that someone else’s existence, even if only temporarily, was lifted because of their choice to give.  You see, it’s about more than the math.  Giving is just as much for the giver as it is the recipient.  If you will build it in as a regular part of your financial plan, you will only benefit and grow from it.


One person gives freely, yet gains even more;
    another withholds unduly, but comes to poverty. Proverbs 11:24 (NIV)


There is another benefit to consider as well.  Generous people often turn out to be more successful than those who aren’t.  How can this be?  I love this ancient wisdom from Proverbs because it highlights that there’s more going on than just money changing hands.


When you give, you change.  You become a more enjoyable person, a more peaceable person, a more understanding person, and ultimately someone who’s desirable to deal with in business.  Someone who is stingy and very callous toward others doesn’t draw a lot of relationship to them.  But we know in a world becoming more connected by the day that your relationships are a key factor in determining your ability to make money.


A generous person is one that serves others, and in doing so becomes one that others want to be around.  This causes new opportunities to come your way that might not have otherwise.  By not just hoarding all your money but seeking to serve others, you add value to people by being generous, and it’s amazing how often the world finds ways to compensate you for that.


This is not the motivation for being generous.  We give simply because it’s our joy to help others, expecting nothing in return.  But it is a truth that there are more benefits to our lives than just the moment we choose to be generous.




If you lost your job right now, how long would you be able to live without feeling a change?  If an amazing position opened up on the other side of the country, would you be able to make the jump?  Are you in a position to chase down a dream idea of a business you’ve wanted to start?  Do you feel like you are able to spend the time with your family that you want?


I ask these questions because I have a feeling for many of you the answers to them aren’t what you want them to be.


So many of us are living dependent on each paycheck, strapped by debt, and in a position where we have to keep plugging away at our current job just to keep things afloat.  This final pillar of personal finance is the one that motivates me the most: I want to have choices.


If a new opportunity comes up, or if my current life situation is taking me away from the things that matter most to me, I want the ability to make a change without worrying if I have the money to do it.

Many of you may feel stuck.  You may not see how you can increase your income, reduce your debt, have a dream retirement, or leave an inheritance to your family one day.  You may only be able to see your next week of work, but that can all change right here with a simple adoption of this principle, that you DEMAND the freedom to choose over being forced to act in order to survive.  Once you make this jump in your mind, you can throw yourself whole heartedly into the blueprint to build your financial house.


Being financially strong is about being in a position of control.  Money issues no longer just happen to you.  I want to be in a position where I can seize opportunities as they appear, and it’s not just about work related prospects.


My wife and I are heart-broken when we hear about orphan children.  When the time is right for our family to grow, we want to be able to adopt a child and to fund adoption(s) for other families.  What’s the number one deterrent that keeps most families from doing this?  Cost.  We refuse to run our home in a way that doesn’t afford us the opportunity in the future to see amazing things like this happen.


If I meet a single mother who is struggling to pay her bills, why should I expect the government to help her out?  I want to be in a position to call the utility company and pay her light bill anonymously for a year.  If I come across a piece of property that’s a real bargain for potential investment, I don’t want to sit by and watch it fall into someone else’s hands.  I want to be in a strong position to be able to move immediately.




You can have a life that is built on solid principles, and it’s my hope as you interact with the material on this site that you begin to realize that it’s totally up to you.  Allow your mindset to be changed from a place of being the one things happen to, to being the one who happens to things.


Adopt these pillars of personal finance into your being, and hold firmly to them.  Implement a plan and follow it, take control every month with your budget, and go out there and win.  No one is watching to make sure you do it, but no one is holding you back either.  Financial success is yours for the taking, so go take it.

Do you have different pillars for your personal finance than mine?  Let me know what they are in the comments below!


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2 comments on “5 Pillars of Personal Finance

Hey there, I found you through the M$M comment section. Great article and really nice site!


Thanks so much for checking it out. I had a blast working with Bobby on that post, glad it’s getting a positive response!


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