Stop living pay-check to pay-check
There are many things that our schools don’t teach, how to raise your children, how to be an ethical person, and how to manage your finance.
Money is a funny thing. It is like the ring in the movie Lord of the Rings. Whoever puts on the ring changes her character.
Some people do anything for money; some say money is evil, but they won’t refuse if you give them a million dollars.
In reality, money is neither good nor evil. It can’t buy you happiness, but it can alleviate some pain.
Money is not everything, but without money, you can’t do many things.
65% of Americans are living paycheck to paycheck. Are you one of them?
I am not a money guru or a financial advisor. But I have raised two kids, remain debt-free, and have a safety net in case the sky falls, so I know a thing or two about money.
Here are some rules that can help you to set a solid foundation…
Rule 1 — Spend less than you earn
That is the golden rule for personal finance.
Follow this rule, and the rest will fall in place. Violate this rule, and you will remain poor, no matter how much you make.
Rule 2 — Paid yourself first with 10% of your income
Set up a system where you don’t see the first 10% of your paycheck. It will automatically deposit into a place where you can’t touch or easily withdraw.
Rule 3 — Setup an emergency fund
Shit happens, car breaks down, house leaks, kids get sick, you get the picture.
Save at least 3 months of living expenses for emergencies. You will be amazed at how much peace you have when you have a safety net when things go wrong.
Rule 4 — Avoid debt like a plague
Don’t believe craps like “using other people’s money is wise” or “enjoy today, why wait until tomorrow”.
Delay gratification builds character, and learning to distinguish between needs and wants helps you to avoid the trap of “buying unnecessary things with money that you don’t have to impress people that don’t care about you.”
Avoid car loans by buying a reliable used car.
Avoid student loans by working while you study or evaluate other education alternatives.
Cut off your credit card and use cash only. Pulling your hard-earned money from your wallet makes you think twice before buying anything.
Rule 5 — Invest in Index Funds (my opinion, and you should do your research)
Warren Buffet advised his wife to put 90% of her money into index funds when he died. If this advice is good for his wife, it is good enough for me.
Rule 6 — Start today
Money management is all about compounding. If you overspend $10 a day, your income will soon pay the interest on the money you borrowed. Conversely, if you save and invest $10 a day, you will become a millionaire without having to buy a lottery ticket. The choice is up to you.