Financial Prudence

Financial prudence is deeply rooted in common sense. Sadly, like most things in the modern world, it appears complex and apparently not easily understandable by common people. Let's get the commonsensical element in place, first.

At a very basic level, Financial Prudence (S for savings) is the difference between your income (I) and your expenses (E). Arithmetically, you can represent S as:

S = I - E

First, comes income, and only then comes expenses.

If