Posted on April 28th, 2009 4 comments
Okay, our topic today might more correctly be named ‘Yurman’s First Law of Nanoeconomics’ or ‘Yurman’s Proposition re Personal Finance’ or ‘Yurman’s Identity’, but none of those sing, and the last is just plain confusing. So with full deference to greater minds, I’m taking license and going with the original title.
Yurman’s First Law exposes an underlying predictability in an otherwise unpredictable and unavoidable component of personal finance: cash flow.
If you assimilate only one theorem, this one will serve you well. It was first proposed in the mid 70s by my dear friend, artist, artisan, ascetic, musician and thinker, Bruce Yurman. Through the years since, it’s proven itself to me often enough that I felt it deserved to be formalized, with credit to Bruce for his insight.
Now more than ever, the last thing any of us needs is another financial surprise. Yurman’s First Law exposes an underlying predictability in an otherwise unpredictable and unavoidable component of personal finance: cash flow.
Yurman’s First Law of Economics states simply that expenses equal income [-$ = +$].
Bruce’s example was his transportation — a VW bus which must surely have been the prototype for all those that followed. He observed that, for any given sum of cash which might find its way into his hands, a repair to his bus costing an exactly equal amount would become immediately necessary: Earn $60 for playing a wedding = brakes fail on the way home = brake job @ $60; Sell a piece of handmade jewelry @ $150 = second gear stops engaging = transmission work @ $150, and so on.
This law is so reliable that, once familiar with it, one begins to see it occurs naturally in a wide range of scenarios. Here’s a more contemporary example: $100 for freelance coding = swine flu pandemic = antiviral meds @ $100.
I hope you find Yurman’s First Law of Economics as useful in projecting personal cash flow as I have, and that you benefit in these challenging times from the heightened state of awareness. §§§