The 6 Golden Rules of Money

Follow these rules to secure a healthy financial trajectory

Photo by Mark Duffel on Unsplash

There are a few golden rules you should always live by financially:

1. Live below your means

Never spend more than you earn.

It doesn’t get simpler than this; follow this rule, and you will always have something in your bank account.

2. Invest (unlike the rest)

Invest at least 10% or more of your income, and don’t touch it.

Leave it alone.

The longer you leave your money alone, the larger it grows (and the harder it works) due to compound interest.

Most people don’t invest, so many greet their retirement years with insufficient money in their bank accounts.

But screw only planning for your retirement years; investing helps you have money now, too!

Start investing now, and if you’re close to your retirement years, start investing today.

It’s never too late.

3. Avoid lifestyle inflation

It’s easy to increase your expenses as your income increases.

What’s not easy is decreasing your expenses or keeping them the same as your income increases.

You don’t have anything to prove to anyone, so don’t go buying dumb shit that you don’t need because everyone else is doing it or encouraging you to.

So many broke people have told me to go out and buy a new car to replace my almost two-decade-old car.

I didn’t listen to them.

They’re still broke, and I’m increasing my wealth.

You don’t have to wear and use name-brand clothes, shoes, bags, and accessories.

You don’t have to upgrade your phone and tech gadgets yearly.

You don’t have to live in the priciest home.

You don’t have to spend your money as most people do.

You can use your money intentionally and focus on purchasing the items that bring you the most convenience and joy.

For example, I like to spend on food and travel.

Those are my primary categories.

What are yours?

4. Multiple income sources

Continuously diversify your income, so if you lose one income stream, another one still brings the moola in.

Make yourself economically bullet-proof by having multiple income streams and implementing number 5.

5. Maintain an emergency fund.

Sh*t happens.

Maintain an emergency fund instead of worrying about what may or may not happen.

It doesn’t mean something terrible is going to happen.

Usually, nothing terrible happens; inconveniences happen (e.g., your car needs “random” repairs).

Source: Gif

Avoid going into debt over inconveniences by maintaining an emergency fund.

Your emergency fund should, at minimum, hold at least three months’ worth of expenses.

If your monthly expenses equate to $3,000, your bare minimum emergency fund should total $9,000.

Stretch Time

I’m going to stretch you. The minimum required emergency fund you should have is three months' worth of expenses, but ideally, I encourage you to have 12 months of emergency expenses.

You can keep this money in multiple accounts that are not easily accessible if you have an inclination to spend.

The goal is to only pull this money out for emergencies.

A wedding, a last-minute vacation, consistent eating out, and a night out on the town do NOT qualify as emergencies.

Sorry chip.

6. Self-Educate Relentlessly

My parents had my siblings and I read personal finance books at the dinner table. And I continue reading them to this day.

There is so much information about personal finance that I don’t know, and the learning journey will never end.

Stay hungry for knowledge so you can better your financial outcomes.

If you continually educate yourself about money, you will inevitably make more intelligent decisions with your money.

It’s impossible to fail when you have the proper knowledge at your fingertips.

Don’t know how to invest? Read a book, listen to a podcast, attend a free seminar, do some research, and learn for yourself. If you can watch videos on social media, you can watch videos about personal finance. If you can watch television, you can watch a documentary about money.

Not knowing how to manage money or lacking understanding about money is not a legitimate excuse to fail and suck at the personal finance game.

If you suck at money, that’s on you.

It’s not your parents’ fault.

It’s not the school system’s fault.

It’s not the government’s fault.

It’s on you.

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Thank you for reading | destinyh.com

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.