The number one rule is to live below your means, consistently. Do that for a lifetime, and you are pretty much guaranteed to wind up well-off. Even if you don't have a stellar income.

The principles here are that you pick an appropriate lifestyle, you only buy on credit when having the purchased makes or saves you money, and you avoid the tax of buying brand new. An appropriate lifestyle might mean taking a bagged lunch to work, saving you over a thousand dollars a year. Appropriate things to buy on credit include a house or education. The former because it saves you rent, and the latter because you are likely to make more. By contrast taking out a loan to buy a new car, couch, or TV doesn't make sense. And if you buy a car when it is 3 years old, you get much the same car at half the price.

Assuming that you are doing this - that you therefore don't have a constant credit card hangover and do have money to invest etc - the principles are simple. There are many types of investment. They can generally be sorted along a spectrum of risk and return - assume that you avoid obvious gambling and wishful thinking, the potential risk is directly correlated with the potential rewards. The longer the time you are investing over, the more appropriate it is to invest in high-risk areas (eg stocks) where inevitable setbacks are outweighed by better long-term returns. If you are investing for a specific more short-term event, say your kid's college, then you should go for lower risk investments like municipal bonds.

And don't worry about being good at it. The oft-quoted, but still true, fact is that if you put random stocks on a dart board, throw your darts, then buy the ones you hit - you will beat the majority of professional funds out there. And they are likely to beat you if you try to actively manage the money. (This is somewhat less true given how much money now sits in indexed funds with their very predictable behaviour.) Do something half-way reasonable, spread your investments around a bit, and be willing to accept that any given 5 year period may suck, and the odds are incredible that you will turn out OK.

And an insider tip about how finance works. Companies like Merrill Lynch spend a lot of energy making up sophisticated terminology which they can teach clients, leaving the clients with the feeling that they are now "sophisticated investors", so that the newly confident clients will start doing stupid stuff - like buying garbage investments that Merrill Lynch needs to sell, and like trading a lot, giving Merrill Lynch a cut each time. So when people start throwing a lot of big words at you that you don't understand, don't get impressed. The odds are that if you don't understand it upon asking for a quick explanation, you didn't need to as a private investor. This is not to say that there are not sophisticated investment tactics that are important. There are, but they are more relevant to, say, a CFO who needs to invest now so as to guarantee having $10 million on hand to pay off a bond in 5 years.

Two book recommendations. [link|http://www.amazon.com/exec/obidos/ASIN/1563523302/103-7567434-6575837|The Millionaire Next Door] and [link|http://www.amazon.com/exec/obidos/ASIN/0316353809/103-7567434-6575837|How to buy Stocks]. The first underscores my lifestyle comment. The second should give you all of the vocabulary and understanding of principles that you need to understand the stock market.

Cheers,
Ben