Nothing new
Living paycheck to paycheck is not a good idea and covid19 has highlighted that very, very well. If you are ready to change things, then it is time to get started. There are only four rules when it comes to money, none of which are new or even a secret although lots of people would have you think otherwise. Therefore, this article is not groundbreaking or new and you may have come across some of the ideas before.
It took me a while to realise that basic personal finance is not sexy (I kept trying to make it sexy). Personal finance is boring, but the results are inspiring.
The topic of money been discussed ever since there has been trade and money. Some of the of books whose ideas I like that discusses personal finance/money are the:
“The Richest Man in Babylon” by George S. Clason 1926
“Rich Dad Poor Dad” by Robert Kiyosaki 1997
“The Only money guide You’ll ever need” by Scott Pape 2016
While I do not necessarily agree with everything written in those books, they are an excellent read and all present similar concepts. So now onto the rules.
The Rules of Money
These rules are in order and will only be briefly outlined; how to implement the rules is another story (perhaps a future article). A bit like how to lose weight. The rule for weight loss is diet and exercise, it is not that hard to figure out. Actually, doing it is a bit harder. Therefore, all I will be presenting below are the rules on money.
Rule #1 – You and your partner must be on the same page.
You cannot be headed in opposite directions and both expect to arrive at the same destination. This applies to almost everything in life, including money. You cannot out earn your partners spending, there is always something new to buy. You both need focus on your goals and stick to the plan. If you can’t do this rule then the others don’t mater. It is both the hardest and simplest at the same time.
Rule #2 – You need to live on less than you earn.
Yes, this means a budget, a written budget not one just in your head, boring I know. But the exercise of creating, reviewing and agreeing to a budget with your partner cannot be understated. A budget shows you where your money is going before it is spent, which is an immensely powerful tool. Instead of looking at your account and wondering where the money went. You get to follow every dollar that you earn and make sure it is working for you.
Rule #3 – Definitely no consumer debt, ideally no debt.
No credit card, no after pay, no car loan, no store loan, and so on. Debt does one thing, it keeps you poor, and makes the lender rich. So, if you have any debt, focus, on getting it out of your life fast. The faster it is gone the better, this includes the mortgage when you get to that point.
Rule #4 – Do not become Scrooge.
If you have made it this far, then you have no debt, are living on less than you earn, and you know where you are going with your money because you have a plan. Part of the plan may include an allocation of some money to buy the things you want. So, do not become one of those people that never has any money for anything. Money tends to do one thing, which is to magnify the person you already are. This means that if you are a giving person, you will become even more generous.
In Conclusion
These rules take time and you need to put in the effort. They are not new, or a way to get rich quick. Rather a tried and true method to ensure that you achieve your maximum potential when it comes to creating a secure financial future for you and your family.
One last bonus guideline; do not compare yourself to what other people have, they could be in debt up to their eyeballs. Be happy with what you have and the journey you are on, you will get there.
© Copyright Jeff Hahne 2020
This has been publish in on line magazine LivingNow – Issue #007