7 Financial Planning Rules to Live By

7 financial planning rules to live by

At its core, money is a game, and just like any game, there are financial planning rules to live by if you want to win and have financial peace of mind. That said, unforeseen obstacles will try to trip you up along the way.

But no matter how the game goes, your best chances of winning will be to live by the time-tested rules that govern the game… the rules of financial planning which will keep you on track regardless of market fluctuations, pandemics, inflation, and economic downturns.

Rule #1 You Must Have a Budget

“A budget is telling your money where to go instead of wondering where it went.”
–John C. Maxwell

“Do not save what is left over after spending but spend what is left after saving.”
–Warren Buffett

If your expenses exceed your income, you’ll constantly be in debt. Getting your finances in order will be an impossible task and you’ll always be stressed out.

Create a budget and decide how much you’ll allocate to needs, wants, savings, and paying off debt. Stick to this budget, monitor it daily, if not weekly, and try your best not to deviate from it.

Rule #2 Save at Least 10% of Your Net Income

When getting started with a savings plan, the percentage is not as important as creating the habit.

Some people may be so deep in debt that even saving ten percent is difficult initially. If that’s the case, aim for five percent or at the very least, try to save ten dollars a month, or even five dollars a month. It’s the action that counts at first, not the amount.

When you have even a small amount of money set aside, you’ll shift your mindset just enough to go from a lack mentality to one of abundance. Getting ahead financially is nearly impossible when you have a lack mentality.

As you get better at saving, trim your expenses wherever you can and allocate the extra money between your debt repayment and savings.

Rule #3 Prioritize Paying Off Debt

Being in debt can be a soul-sucking experience. Trust me, I know firsthand what that’s like. The credit card companies are NOT your friends. They’ll delightfully send you the credit cards upfront, but the moment you have a hardship, they become your worst nightmare.

The late payment fees, the interest rates, the calls from the rude debt collectors, the never-ending bills in the mail will all heap overwhelming pressure on you that never lets up. It’s a grueling and burdensome experience I want no one to have to go through.

The best way to avoid this will be to pay your credit card bills in full and on time EVERY. SINGLE. MONTH.

If you have more debt than you can pay off in a month, create a debt repayment plan and stick to it. It’ll take time, but know that if you’re committed to getting debt-free, you’ll come out of it slowly but surely.

If you don’t tackle this problem head on, the credit card companies will harass you for a very long time and you may even end up filing for bankruptcy.

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Rule #4 Don’t Be Impulsive

When you have money to invest, do NOT risk it all. Avoid following unsubstantiated ‘tips’ on the market. Just because your smart friend or family member is high on an investment doesn’t mean you should be too.

Do your due diligence. Educate yourself with a ton of research. Always proceed with caution. Diversify your portfolio and aim for gradual growth rather than fast cash, which often means riskier investments. Trust me on this.

Rule #5 Be a Saver Not a Spender

Avoid over indulging in desires for material stuff like new cars, expensive clothes, shoes, and handbags, even houses you really can’t afford. Trying to keep up with the in-crowd is an almost sure-fire way to financial ruin, especially if your income doesn’t support it. There’s no point in buying what you don’t need, with money you don’t have, just to impress others.

Spend wisely and avoid impulsive purchases. This is how you become a Saver instead of a Spender. This is how you create financial peace-of-mind. This is how you build wealth. Your future self will thank you for it.

Rule #6 Increase Your Income Each Year

Always seek to improve your knowledge, skills, and expertise so you can bring more value to the marketplace. Almost every financial problem is solvable when you have enough income. Sufficient income positively affects all aspects of financial and retirement planning, which goes a long way toward cultivating peace of mind.

Whether you’re trying to eliminate debt or catch up on retirement savings, earning more will accelerate your progress. So, do the best you can to boost your income each year. If for no other reason than to keep up with inflation.

Rule #7 Find Safe Ways to Grow Your Money

You accomplish this by investing in assets such as stocks, your business, or real estate property, for instance. The key is to put your money to work for you.

Be cautious though. But also don’t be overly risk-averse or you’ll miss out on lucrative opportunities. As stated above, do your homework before investing and seek to improve your financial literacy before you make important financial moves.

Armed with sufficient knowledge, you’ll be able to make more informed decisions that serve you well in the future.

The seven financial planning rules in this article will keep you financially secure and also help you build wealth. But more importantly, they’ll put you in control of your money and financial future, creating financial peace of mind.

Pick one thing to work on and get started today. Decide to implement these 7 financial planning rules to live by. They will help you take charge of your finances.

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Check out my book for more great financial planning tips for women:

How Every Woman Can Retire Without Worry

How Every Woman Can Retire Without Worry

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