🐧 18 money rules I live my life by

Money rules help simplify my day-to-day choices.

‍Today in 10 minutes or less, you’ll learn:

• 🤔 Why create money rules at all?
• ⭐️ 18 money rules I use to guide my life
• 🧑‍💻 Money rules from a Harvard-trained economist
• 🧠 Exercise: Craft your own money rules (+ Example)

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⭐️ 18 money rules I live my life by

I think every person should create rules of thumb on spending, saving, and investing.

Here’s why:

• Simplifies choices. In a busy modern life, this helps with guiding daily decisions.
• Rule of thumb, not absolute. These rules are meant to be signposts, not a stern schoolteacher. You’ll always encounter exceptions.
• Unique to you. Writing your own rules helps you take responsibility for your own life. You can (and should) design these rules to reflect your personal values.

Here are my own rules:

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⚖️ 18 money rules I follow

1. Prioritize time spent on fulfillment, instead of optimizing the numbers
2. Start with a long-term financial goal. Then work backwards to your annual milestones
3. Marry the right person
4. Run a monthly money review as a couple
5. No limit on spending for your personal growth and health
6. Be able to pay in full for larger expenses (eg honeymoon) before spending
7. Buy the best and keep it for as long as possible
8. Always have a 6-month emergency fund
9. Max out your tax-advantaged account contributions
10. Take advantage of employer matching (free money)
11. Save/invest 30%+ of your gross annual income
12. Don't try to time the market or pick the right stock
13. Pay careful attention to high fees
14. Wait 48 hours before making a big investment decision
15. Focus on long-term investment periods (in years)
16. Pay your credit card in full each month
17. Avoid taking on high-interest debt or leverage
18. Earn enough to work with only people I respect and like

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🧑‍💻 Money rules from top personal finance writers

Here’s a few money rules I curated from other writers and enjoyed.

Harvard-trained economist Laurence Kotlikoff wrote unconventional rules for education:

‍Don’t borrow for college. It’s far too risky and expensive. I don’t say this lightly. I’m a college professor. But you can get a fine education without mortgaging your future and potentially dashing your career plans.

It simply involves pursuing scholarships and applying to less expensive, if generally less prestigious, institutions.

If your parents are borrowing for your tuition, discuss who will repay. And consider whether they’re blowing your inheritance or sacrificing their welfare by “helping” you attend an unaffordable college.

Morgan Housel, author of bestseller Psychology of Money, shared a few thought-provoking rules on mindset:

Money makes it easy to mistake optimism (good) with gullibility (dangerous) and overconfidence (disastrous).

The formula for how to do well with money is simple. The behaviors you battle while implementing that formula are hard.

“Save more money and be more patient” is too simple for most people to take seriously, but it’s the best solution to most financial problems.

Steve Cronin, founder of DeadSimpleSaving.com, a personal finance community for expats, suggests keeping your time spent managing finances to a minimum:

Once you put all your finances into a spreadsheet, it should only take four hours a year to manage it all and to invest monthly or quarterly.

Ramit Sethi, author of New York Times bestseller I Will Teach You to Be Rich, says:

‘Unlimited spending’ in one category.

“One of my personal money rules is unlimited spending on health, on books and on friends’ fundraisers,” Sethi says. “Those are important to me.” […]

Sethi says he always books business class for flights longer than four hours, as another example.

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🧠 Exercise: Craft your money rules (10 minutes)

Now it’s your turn. Time to pull out your Money Rules Canvas (see below), Notion doc, or journal.

You can use these guiding questions for reflection, then design your money rules accordingly:

1. What are your core values? Life goals? (if you don’t know your values, here is the exercise I used to do with clients)
2. How does money help you express these values? Move faster towards your goals?
3. What rule of thumb would help you ensure you are planning, spending, saving, and investing money in accordance with your values and goals?

Here’s a few guidelines:

1. Keep it simple. The true test is if you can recall how to apply the money rule in a few minutes on a random Sunday.
2. Test against reality. Imagine real financial decisions you had to make in the past month. Would your rule have helped you make the decision faster? Or make a better decision?
3. Don’t be too rigid. Your rules are guiding principles, not a damn dictatorship. It’s OK to have exceptions. For example, my #5. I love credit cards with airport lounge access, but I don’t care as much driving the fanciest car.

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👉️ Get the Money Rules Canvas Template. If you’d like to use this brainstorming whiteboard, then click here to copy the Canva Template.

💁‍♂️ Example response

Here’s how I would response to these questions:

1. What are your core values? Life goals? (if you don’t know your values, here is the exercise I’ve done with coaching clients)
2. Core values = relationships, adventure, curiosity, freedom, courage
3. Life goals = financial independence, creating life-long memories with loved ones,
4. How does money help you express these values? Move faster towards your goals?
5. Money helps me express my value of “relationships” and goal of creating life-long memories with loved ones — through funding trips to novel destinations with close friends. Even 10 years after a trip, my friends and I still fondly reminisce about the experiences and stories we shared.
6. What rule of thumb would help you ensure you are planning, spending, saving, and investing money in accordance with your values and goals?
7. “Prioritize time spent on fulfillment, instead of optimizing the numbers.” Even though I’m spending instead of saving money to fund these trips, I’d rather not stress about optimizing for the dollars I can save with each flight and accommodation. Instead, I’m focusing on ways I can create an even more memorable experience (sometimes through spending).

Now it’s your turn.

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🗣️Show and tell us your money rules

It feels good to see these rules written down on paper, doesn’t it?

I’d love to hear your favorite money rules.

👉️ Reply to this email and I’ll feature three of your responses in the next newsletter!

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