Well, I think there are several levels to the personal finance subject. I also think that most people dive in to the deepest levels (technical investment topics) without getting the basic philosopy stuff down first.

In my opinion, the best "life philosophy" about personal finances I've ever heard is by Jim Rohn. I like his tapes, though I realize that others don't care for his style. His personal financial strategy is really simple:

1. Live on 70% of your income. That means you should pay all of your bills and expenses out of 70% of your income. This is easy to do immediately after school, since most people enjoy a big bump in pay right after graduation. Trust me, it will be *MUCH* more difficult to get down to 70% even as little as one year later.

2. Of the remaining 30%, allocate it as follows:

The first third goes to savings. After you have accumulated 6-9 (or even 12) months worth of living expenses (the other 70%), then you can go and read up on how best to invest the rest of it. First, get yourself a big healthy chunk of CASH (money market fund is great) for a rainy day (like losing your job, or whatever). Since you are living off of 70% of your income, it will take you 7 months to save up a single month's worth of expenses (not including the return on the savings). That's OK. Saving is a long-term strategy.

The second 10%, according to Rohn, should be viewed as *capital*. That means that it is to be saved and used to participate in the capitalist system as the capital of an enterprise. It doesn't matter what the enterprise is. The point is that this portion of the money should be viewed as energy to create more money. Elsewhere I have heard it said that poor people see money as means to immediate gratification, middle-class people see money as means to delayed gratification (saving for things), where the wealthy see money as a means to make money -- that means as *capital*. A relatively small amount of capital can get you going on all kinds of things, from your own business to investment real estate. Rohn's point is that the money should be set aside specifically to be used as capital.

The final 10% should be used to give back to the community. This is pretty controversial with a lot of people, but I think it makes a ton of sense. Now, maybe 10% isn't the right number, but the idea of *investing* back into the community in some way is a fine idea, in my opinion. Rohn says this is also something that is easiest to start early, and I agree. We're not necessarily talking about giving to a church, though many people do that. It doesn't matter. The point is that one begins to see their life as part of a greater community and that their success matters more than their own self interest. This is a whole other topic...

If you can take the 30% of your *gross* out of your *net*, then that's even better. Any kind of tax-deferred funds like 401k's or IRAs are such a great deal that I believe everyone should participate up to the annual maximum amount, if possible, but that doesn't take the place of the 3 catagories, above. On the other hand, if you've already got the first 10% totally squared away, I suppose a 401k or some other tax-deferred mechanism is a great way to keep going on the first 10% catagory.

I agree 100% that it is critical to have some CASH saved away. I think it is more important than eliminating debt or starting a 401k. Those things are really close seconds, IMHO.

I think a person could do a lot worse than checking out Jim Rohn, especially if they are just "starting out".

FWIW,

Jim