What Is a Money Principle? And How It Differs From a Money Rule

A money principle is a position on what money is for in your life that you have examined and chosen, such as “I use money to create options, not to signal status.” A money rule is an instruction someone else gave you, such as “don’t talk about money.” The difference is the why. A rule says what to do, and a principle says why you would do it, so it keeps working when a situation turns up that the rule never covered.

This note explains how to tell the two apart and where your current money beliefs probably came from.

Rules and principles are different tools

A rule is turn-by-turn directions someone else wrote for a route they knew. A principle is knowing where you are headed. Directions are useful until the road is closed, and then they have nothing to say. Someone who knows the destination can find another way there.

The same sentence can be either, depending on how you arrived at it. “Always save for a rainy day” is a rule when you follow it because you were told to. It becomes a principle when you can say why: “I want a cushion so that one bad month does not become a bad year.” The words barely change. What changes is that the second version comes with its own reasoning, so you can tell when it applies and when it does not.

A principle does not need to be sophisticated. “I want to understand every financial structure I am inside before I commit to it” is a complete principle. It is plain and specific, and it belongs to whoever wrote it.

Where your current money beliefs probably came from

Nobody hands you a map for this. Money habits tend to be absorbed rather than taught: from what the adults around you argued about or avoided, from a first boss, from a friend, from what a bank or a magazine treated as normal. They arrive quietly and rarely announce that they belong to someone else.

There is a history underneath, and it is recent. Sex discrimination in the provision of goods and services was made unlawful in South Australia from 1976, in New South Wales from 1977 and in Victoria from 1978. It did not become unlawful across the whole of Australia until the Sex Discrimination Act 1984 commenced, on 1 August 1984, and that Act names loans, credit and finance among the services it covers. Rules of thumb handed down from the decades before may have been shaped by that system, so it is fair to ask whether they suit you.

The story of how bank accounts and credit opened up is in when could women open a bank account in Australia, and the older legal background is in what was coverture.

One Australian study tests a narrow point. Using data from the 2016 HILDA Survey, Alison Preston and Jennifer Wright found that education and age together explained 5.4 per cent of the gap between women’s and men’s financial literacy, a share too small to be statistically significant. The other 94.6 per cent was unexplained. The paper tests education and age only, so it does not say what fills the rest. It does show that education and age do not account for the gap, which is an explanation people often reach for first. The wider question of why women were not taught is in why women were never taught about money.

Who wrote the rule, and for whom

Every rule had an author, and the author was writing for their own circumstances. “Don’t talk about money” may have made sense in a household where talking about it led to a fight. “Better safe than sorry” may have made sense for someone who had lived through a bad year. Neither was written with you in mind. Either might still suit you.

Familiarity is not the test. A rule you have followed for twenty years can feel like your own conviction. The test is whether you have examined it and chosen it. Examining a rule does not mean throwing it out. A rule you inherited can come through your own reasoning and arrive at the same place, and at that point it is a principle, because you know why you hold it.

Where a principle sits among the parts of financial literacy

The OECD defines financial literacy as “a combination of financial awareness, knowledge, skills, attitudes and behaviours necessary to make sound financial decisions and ultimately achieve individual financial well-being” (OECD/INFE 2023 International Survey of Adult Financial Literacy, December 2023). Most money education covers the knowledge part. A principle belongs with attitudes: what you believe money is for, which shapes what you do with what you know. That placement is Her Long Game’s framing, not the OECD’s.

It is not a claim that women hold the wrong attitudes. The same OECD report found that across the 39 participating countries and economies, gender differences in financial literacy were largely differences in knowledge, while differences in attitudes or behaviour were, in the report’s words, “very small”. Australia did not take part in that survey.

Why this comes before any spreadsheet or account

A number on its own gives you nothing to do. A super balance, a borrowing limit and a pay rise are all facts, and without a position on what you want money to do for you, none of them points anywhere. A principle gives a fact somewhere to land. “I want to know what I am agreeing to before I agree” gives you a question to bring to any explanation you are handed.

The mechanics that sit underneath, such as compounding, super and career breaks, and fees, are in the money principles no one taught you. Once you have a position, a calm way to make money decisions is one way to run a choice past it. If a term in any of these is unfamiliar, the money dictionary defines it in plain English.

How to recognise your own principles

Start with what you already do, not with what you would like to believe. You have operating positions right now, and most of them have never been said aloud: “I feel uncomfortable holding debt.” “I prefer certainty over risk.” “Long-term investing is not for someone like me.” Each of those is a position. Write them down exactly as they sit in your head, without tidying them up.

Then ask one question of each: did I arrive at this, or was it handed to me? Either answer is fine. An inherited position carries someone else’s logic, so it is worth checking whether it still holds when you measure it against your own life instead of theirs.

Notice the positions that come with a direction built in. Some lean careful: spend carefully, be conservative, don’t stretch. Some lean the other way: you only live once, you can’t take it with you. Neither kind is wrong on its face. Ask whose life it was written for.

Then notice what is absent. If you have no position at all on something, such as what you want money to make possible over the long run, that blank is worth naming too. A blank is a fine place to start.

What a written principle gives you

It gives you something to check a decision against, so you are not deciding from scratch each time. “I do not move money because an offer says it expires tonight” gives you a ready answer to one kind of pressure. “I use money to create options” gives you a question to ask of a purchase, a job offer or a plan. It also gives you a way to read other people’s money opinions: you can see where they differ from yours without concluding that one of you is wrong.

None of this is a promise about outcomes. A principle does not make a decision for you and it does not make a decision easy. It makes the reasoning visible, which is what lets you revise it later on purpose.