19 Money Rules Everyone Should Learn by 30
Being financially literate is one of the
best decisions you can ever make.
School doesn’t teach us anything about managing
our money intelligently or dealing with taxes.
We have students and graduates who are drowning in debt,
and parents who have mortgages and lifestyles to pay for.
It feels like the system is designed to keep people
in a cycle that benefits only the elite few.
Money is important, no matter how people try to demonize it.
Money is a tool that you can use to live a better life
and experience the world deeply.
It gives you experiences that most people miss in life.
Getting money is the first step; managing your money intelligently
is the second and most important step to financial freedom.
Here are the 19 money rules you need to know:
1. Pay yourself first.
As soon as you get paid, put money into savings,
invest in skills that pay off, and your look.
Automating this is even better.
Every 3–6 months, invest in yourself.
2. Keep a 6-month emergency fund.
Life is unpredictable; you don’t know what may happen tomorrow.
You may lose your job, have an accident,
or have an issue related to your business.
It is always wise to have a backup plan.
Creating an emergency fund that can feed you for 6 months
is the best start.
If you have multiple streams of income,
you can go as low as 3 months.
If starting out on your own, you could need as much as 12 months.
3. Budget using the 50/30/20 rule.
Not having a budget plan is the fastest way to go broke.
Keep it simple and straightforward.
50% for needs
30% for wants
20% towards saving/investing
This is the bare minimum!
4. Divide your bonus into thirds:
1/3 for fun
1/3 for retirement
1/3 for debt paydown (add to retirement if only low-interest debt)
Don’t just spend your money randomly.
5. Put all, or a large percentage, of your raises into saving and investing.
This helps avoid lifestyle inflation
and moves up your retirement date.
Consult your financial advisor about the stocks
that have a strong future.
Don’t be greedy and see investing as a way to become rich.
It is to build and maintain your wealth.
Wealth takes time, remember that.
6. Avoid high-interest debt.
If you have it, use the avalanche or snowball method
to pay it off (google them).
Get rid of all your debt.
7. Always take an employer 401k match.
Many employers will match a percentage of your paycheck.
This money is getting an immediate 100% return.
If you turn this down, it’s the same as turning down a raise.
8. Your home payment (mortgage, interest, insurance) should cost less than 25% of your monthly income.
Live below your means and avoid showing off.
We have a lot of rich people on Instagram
who are actually broke in real life.
They spend all their money trying to look rich,
which is not worth it at all.
The peace that comes from knowing that you are financially stable
is better than the fleeting attention of social media.
9. When buying a car, use the 20/4/10 Rule if you have to.
20% down
4-year loan
< 10% of your monthly income
I still prefer to buy older vehicles with cash,
but each to their own.
10. You should save at least 15% of your income for retirement.
Take your retirement seriously because it really matters.
11. Your age subtracted from 100 represents the percentage of stocks you should have in your portfolio.
This is not necessary or for everyone, but knowing it is important.
Some are now using the number 120.
12. The stock market has a long-term average return of 10%.
To calculate your returns,
it’s common to use 6–8% to capture the effect of inflation.
You stay relaxed regardless of the fluctuation.
13. The rule of 72 tells you how long it will take your investment to double.
Example: The stock market returns 10%,
so 72/10 = 7.2 years to double your money.
14. The 4-percent rule says you can safely withdraw 4% of your starting investment balance each year (adjust for inflation in subsequent years) and not run out of money.
Be smart, not every decision should be
made by your financial advisor.
15. Your Net Worth should be equal to your age x Pre-Tax Income / 10.
Example: if you are 35 years old and $100,000 in annual income,
then your net worth should be $350,000 (35 x 100000 / 10).
16. Have at least five times your gross salary in term life insurance.
Your health matters and you must prioritize it.
17. Before spending money, wait 24 hours and ask: do I still want it?
If you do, go ahead and buy it.
This will save you from a lot of impulse purchases.
We buy a lot of things because of social engineering
and our surroundings.
Most of the time, we don’t need it.
18. Value time over money and experience over things.
Experience beats fancy things every time.
Spend your money traveling, going on adventures,
and learning new skills.
It will enrich your life.
At the end, what matters is how you lived, not what you bought.
