The 16 Rules of Money

Money is a tricky topic that can make us feel like we’re not good enough, or too old to learn how. But the truth is that it’s never too late to start managing your finances better. Even if you don’t want to live on your own accord (and I’m not here telling you that), there are plenty of ways you can get smarter about money without leaving home!

Rule 1: Don’t carry a credit card balance

The first rule of money is: Don’t carry a credit card balance. Credit cards are not free money. They’re loans, and you pay interest on them just like you would a mortgage or student loan.

Your annual percentage rate (APR) varies depending on your creditworthiness and the type of card you choose to use, but it can be as high as 20% in some cases! This means that if you spend $1,000 per month with one issuer for 10 months (the minimum repayment period), your total interest paid will be around $200 — not chump change.

Rule 2: Pay your bills on time

Pay your bills on time. A late payment can cost you a lot of money, so it’s important to pay as much as possible each month and avoid late fees or interest charges in the process. You may also want to pay more than the minimum payment if possible since that helps build up good credit history for future use (and lowers your rate).

If you do find yourself in this situation and are unable (or unwilling) to make your payments on time, don’t worry—you can still protect yourself from bigger problems by contacting the company immediately and asking them for help paying off debt with some type of installment plan instead.

Rule 3: Know your net worth

Knowing your net worth is important. It helps you understand your financial position and manage your finances, plan for retirement and emergencies, as well as make informed decisions about investing.

It can be difficult to know exactly where you stand in terms of assets and liabilities, but the best way to figure out if you have a healthy amount of money saved up is by taking a snapshot at each time period (monthly or quarterly) over an extended period of time—usually six months or more depending on how often you pay bills and what kind of income stream you have coming in each month.

Rule 4: Have an emergency fund

Your emergency fund is a savings account that you can draw on in the case of an unexpected expense. If you have one, it’s likely that you have a savings account somewhere else. But what if that place doesn’t have enough money? Or what if your bank account was hacked and all of your money was stolen?

To keep yourself safe from these types of problems, create an emergency fund before everything else. You should aim for at least three months’ worth of expenses in this account — though some experts say six months is even better! The most important thing about this rule is that once it has been established and locked down (and ideally funded), no one will be able to touch that money unless they know how much it truly costs without any ulterior motives or reasons why they should take advantage of such generosity by asking for more than what was originally agreed upon creation.

Rule 5: Save at least 20 percent of your income

Saving at least 20 percent of your income is important for many reasons. First, it makes you feel good about yourself and your financial situation. Second, you can save more money if you are saving more than 20 percent of your income. Thirdly and perhaps most importantly, the more you make each month (the number before “0” in the first column), the easier it is to save more because those extra dollars will have less pressure on them—they’ll be able to go straight into savings without having to worry about bills or other obligations that come with an increase in income.

Rule 6: Max out your 401(k) or similar employer-sponsored retirement plan

If you’re still working, any contributions to your 401(k) or similar employer-sponsored retirement plan are tax-deferred. That means they’ll be deducted from your paycheck and the amount deducted is not subject to taxes until you withdraw it in retirement.

If you’re not yet saving for retirement, but want some extra money put away for when the time comes, consider contributing up to $18,500 annually ($24,500 if over 50). This can help ensure that once you retire and start drawing on your savings (or selling stocks), there will be enough left over for other expenses like healthcare and transportation costs.

If possible avoid dipping into this money early on; rather wait until later in life when things get more expensive before accessing it as needed—this way if anything happens such as illness or job loss early on then all funds aren’t immediately needed so much anymore!

Rule 7: Figure out how to make extra money

-Figure out what you are good at, and then look for opportunities to make money on the side. If your day job is writing articles for an app, but you also enjoy playing video games and making YouTube videos consider taking some time each week to create content that relates to both of those passions. You could even start a Patreon page where fans can donate funds so they can enjoy these videos as well!

-Set aside time each week or month (or whatever schedule works best) just for working on side hustles—even if it’s just 15 minutes per day! It doesn’t have to be all-consuming; just set aside some time during which nothing else matters except making yourself useful in some way that brings in income.

-Don’t quit your day job unless absolutely necessary; having a steady income helps keep us sane throughout life’s ups and downs (and whether we’re talking about work stressors like layoffs or financial ones such as student loan debt).

Rule 8: Cut your expenses

– The first step to saving money is to identify what you can do without and then eliminate those things from your budget.

For example, if you can live without a car, then move closer to work or find alternative transportation options (i.e., ride share). If it’s not possible for you to cut down on spending altogether, focus on reducing the amount spent on a few key areas of expenditure each month—like gas and food—and save up for something else, like an emergency fund or retirement savings plan (if applicable).

-How much should I cut? There’s no one-size-fits-all answer here; it depends on what kind of lifestyle changes need to be made in order for people trying out this method at home who have never been financially responsible before!

Some people might start off saving 10% of their paycheck every month while others may choose 20%; however, both approaches can provide success by gradually cutting back on unnecessary spending habits over time until eventually reaching zero percent usage.* How often should I cut? In general, though there are some guidelines that tend not only help but also guide decision-making during this process:

Rule 9: Get life insurance if you have dependents

Life insurance is a form of protection against the risk of death. It’s purchased to protect your family financially in case you die or become incapacitated, so they can continue to pay for things like mortgage payments and other debts. If you have dependents (children or parents), then it makes sense that your life insurance should include them too—especially if they’re young enough that they might need help with basic living expenses such as food and clothing.

If there are any other people who rely on your income during their lifetime, then having proper coverage will ensure their livelihoods are taken care of after yours has been cut short by illness or accident.*

Rule 10: Write a will if you have dependents or assets of value

This rule is a no-brainer. If you die without a will, your assets may be distributed to your closest living relative in accordance with their relationship with you and not according to state law. However, having an estate plan can mean the difference between leaving your possessions to whom they rightfully belong and having them distributed by default in the order that they’re listed on your last will and testament (or codicil).

A will is also helpful because it ensures that friends and relatives don’t have access to all of your property unless they follow through with certain stipulations contained within this legal document. For example: if one person was named as executor over another person’s property upon death but hasn’t fulfilled their duties as specified by this position yet—say losing track of important paperwork—then someone else could potentially come along later who might want access without violating any terms set forth by whoever originally wrote out those lines before passing away themselves!

Rule 11: Have a long-term financial plan for all major expenses and debt payoff

One of the most important things you can do to prepare yourself financially is to create a financial plan. This will help you understand how much money you need each month in order to achieve your goals, including retirement, buying a house, and paying off debt. The goal of this exercise is not just knowing when it’s time to start investing but also knowing what kind of investments make sense for your needs at that time.

You may want to start with paying off any credit cards/loans that have been charged off as soon as possible so they don’t continue eating up more than half of your paycheck every month (this means no more than $5k).

Once those debts are gone then consider moving on from there based on where each one falls within our guidelines above: If student loans currently stand at $40K then move forward with those first due diligence steps before digging deeper into saving for retirement later down the line – especially considering how much interest would accrue over 20 years!

Rule 12: Have a short-term financial plan for periodic expenses and variable income (e.g. monthly, quarterly, annually)

The next step is to create a short-term financial plan for your periodic expenses and variable income (e.g., monthly, quarterly, annually). This can be done with a spreadsheet or other software that tracks your monthly income and expenses.

If you have irregular income—for example, if it’s coming in at different times of the year—then plan for those fluctuations by making sure that you have enough money set aside so that you won’t have an unexpected shortfall when needed.

The same goes for irregular expenses; if you suddenly lose your job or get married/divorced/widowed unexpectedly, know how much money would be required for those events so that there aren’t any surprises later on down the road!

Rule 13: Plan a vacation fund to avoid going into credit card debt over holiday travel expenses

If you don’t have the discipline to be financially responsible and save, then at least plan ahead. If you do this, then when the need arises for your vacation time or other expenses related to travel (e.g., airfare, rental car), use an emergency fund instead of using your credit card for those purchases. This will keep you from falling into debt and having to pay off all of those charges at once—and with interest!

Rule 14: Have a big-purchase fund so you can pay cash for large items instead of financing them (e.g., cars, appliances)

One of the best ways to protect yourself from financial disaster is to have a big-purchase fund. You may not be able to save up enough money in all areas of your life, but you can at least put aside some cash here and there so that if something comes up that requires more than what you normally would pay for it, you’ll be able to get by with something less expensive until payday rolls around again.

Let’s say your monthly grocery bill is $1,000 per month (this is an example only; of course, it depends on how much food you need). Instead of buying all those groceries on credit and paying interest charges each month, put aside $100 every few weeks or so as part of this emergency fund so they don’t pile up while they’re waiting for their time frame to come around again later down the line! This way when something comes along unexpectedly—like needing something urgently because someone gets sick—you’ll still have enough cash ready just waiting patiently in its jar next door knowing full well where exactly everything needs going once we’ve finished eating dinner tonight.”

Rule 15: Plan for future health care costs and/or long-term care costs in retirement (don’t rely on Medicare alone)

You should also plan for future healthcare costs and/or long-term care costs in retirement (don’t rely on Medicare alone). If you’re going to be retired, it’s important to know how much money you’ll need to pay for health care and how many years of life expectancy your spouse has left.

It’s important that both spouses are included in these plans because they will have different financial situations, making it difficult for one person to cover all the expenses without becoming financially dependent on another person.

Rule 16: Know your partner’s credit score and finances before getting married or moving in together

You should know your partner’s credit score and finances before getting married or moving in together. If you live with a spouse, both of you are responsible for paying off any debts that one person incurs. The same is true if you’re not married: your debt should be split equally between the two of you, regardless of who incurred it first.

If one person has more money than the other and makes larger purchases on their own (for instance, buying furniture), then they’ll need to make sure that they can afford those items in order to keep up with their partner’s spending habits—and vice versa!


We hope you enjoyed reading these 16 rules of money. Hopefully, they’ve been helpful in your quest to get the most out of your financial life! As we’ve emphasized, there are no hard-and-fast rules that guarantee success or failure—just a series of individual choices that can help or hinder your efforts. The key is not to worry too much about what others think and just make sure that you’re taking good care of yourself first.


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