Five Rules That Will Set You Apart from Most People

Rule 1: Quit wasting money on new cars, which can cost as much as $500 to $700 or more monthly. That amount invested consistently will earn you over five million dollars by retirement. Save money to pay cash for a late-model used car. Choose a fordable house instead of one that costs you all your extra cash. Try to keep your housing cost below 25% of your salary. Make a list before shopping for groceries and avoid impulse buying. Buy only things you need and avoid buying junk to sell later in a garage sale.

Rule 2: Be careful when picking a suitable mate to marry: Selecting the right person to marry is a lifetime commitment, so you need to be careful not to make a mistake. Marrying the right person results in satisfaction, happiness, and contentment in your life. The right person will be supportive through the good and the bad and can also help you become a better person.

Here are some tips on how to choose and marry the right person:

• Look for someone who you enjoy spending time with.
• Look for someone compatible with your convictions and beliefs.
• Look for someone who supports you emotionally.
• Look for someone who has similar goals, especially financially.
• Look for someone concerned about you and your needs.
• Look for someone who listens to what you say but also expresses their views.
• Look for someone who has the same moral values as you.
• Look for someone who tries to understand you.

Rule 3: Avoid deadly habits that are costly, and cause poor health: alcohol, tobacco, and drugs.

• Alcohol use harms good health. It can cause strokes, alcoholic hepatitis, liver cirrhosis, cancer, and other severe health conditions. Alcohol-impaired drivers in the United States result in 29 deaths each day from automobile crashes.
• Tobacco is the leading cause of otherwise preventable death, taking up to ten years off an average life span. It is the leading cause of lung cancer, respiratory disorders, stroke, heart disease, and other severe illnesses. According to the CDC, cigarette smoking in the United States causes more than 480,000 deaths yearly, and over sixteen million live with diseases related to cigarette smoking.
• Drugs can be deadly. Over a hundred thousand die each year in the United States from an overdose of fentanyl. Nine point two Million misuse pain relievers (Opioids). According to the CDC, 128 die in the United States daily from Opioids. Over a million people in the United States use heroin.

Rule 4: Learn how to save money through budgeting and planning. Use Elizabeth Warren’s 50/30/20 Rule of Thumb for Budgeting, which allocates your budget into three categories according to needs, wants, and financial goals. It is not necessarily a strict rule but more of a guideline. The percentages are flexible and can be adjusted to meet your personal needs; needs include Groceries, utilities, and daily obligations — 50%. Wants to include vacations, dining out, clothes, services, etc. —- 30%. Financial goals include saving money for buying a house, cars, paying down debts, contributions, and retirement. Contributions include tithing to the church or other charitable giving —- 20%. Your responsibility is to track how much you are spending in each category. The object of this rule of budgeting is to make you aware of how much you are spending in contrast to how much you are saving. This way, you can focus more on the most important things and less on things that matter little. Below is an example of how the budget works based on a $5,000 per-month income:

• Needs: 50% of $5,000 = $2,500
• Wants: 30% of $5,000 = $1,500
• Goals: 20% of $5,000 = $1,000

As I mentioned earlier, the 50/30/20 rule is flexible. You may need to include an adjustment, more or less, in each category to meet your needs, but the most important is to track your spending and ensure you are hitting your goals.

Rule 5: Learn how to invest your money wisely:

Only a few disciplines are involved in investing wisely. Your goal should be to reach the point where your passive income gives you financial freedom. Financial freedom differs from person to person, depending on their preferred lifestyle. Generally, there are five basic rules for investing wisely:

First: Understand your investment, its potential for making money, and how it benefits others. Also, know how much liability or stability is connected to it. Use common sense when buying stocks, and don’t buy just because it is presently a hot item in the marketplace. Be sure to understand the terminology connected to stocks before you buy. For example, how do preferred stocks differ from common stocks and corporate bonds? It is extremely important to be informed of the dangers of the stock market before investing. Develop investing skills rather than depending on luck.

Second: Wisely Investing Money includes Protecting Yourself by Managing the Risks. The point is to reduce the risks by investing with knowledge concerning your investment. That means you are not trusting in luck or past history. If you are careful and knowledgeable, you could gain years or a lifetime of investment. It has happened to others. There are many risk factors in the market: Liquidity risk, Market risk, fraud risk, and inflation risk, to name a few. A diversified portfolio is one way to reduce risks of all kinds. Also, there is a need to have a cash flow cushion backup in case of job loss and many other unforetold events. It also provides cash to buy cheap when the bottom falls out in the stock market.

Third: Wisely Investing Money Means Beginning Early to Take Advantage of the Power of Compound Interest. For example, if a high school or college graduate invests the same amount as an average smoker in the United States does over a lifetime, it would amount to over six million dollars at retirement. Starting young and investing as little as $100 each paycheck could amount to over four million dollars by retirement. When you choose compound interest investment at a young age, you are set to let your money work for you. This is how many become wealthy.

Fourth: Wisely Investing Money Means Minimizing Tax Obligation. This does not mean cheating on income taxes, which you should never do; it means managing your investments to avoid paying too much in taxes. When you save on taxes, that frees up more money to work for you. One of the best ways to manage your taxes is a Roth IRA, a tax-deferred plan that allows your money to continue working for you until retirement.           

Fifth: Wisely Investing Money Means Controlling Your Expenses. Wisely managing your money is essential to achieving financial freedom and security. Below are some tips to help you wisely manage your money:

• Create a budget: A is essential for managing your finances. Set a budget that helps you track your income as well as expenses. List all your income and expenses, including groceries, rent, utilities, transportation, and entertainment. Next, allocate a certain amount to pay for each category. Most importantly, be sure that you do not vary.
• Pay off debt: Debt can be a detriment to wisely managing your finances. The best place to start is by paying off high-interest debt like personal loans and credit cards, which can have interest rates as high as 29%. After that, loans like mortgages, student loans, or other types of loans can be the focus. Before this can work, all new credit must be avoided.
• Reduce your expenses: Avoid impulse buying and purchasing things you don’t need that wind up in a garage sale. This is an effective way to manage your money wisely. You can reduce unnecessary expenses like buying expensive clothes or eating out often. Try never to pay the total price by shopping sales, using coupons, and avoiding buying name brands.

• Save for emergencies: We can expect some emergencies at any time. So, it is necessary to build an emergency fund. A good rule of thumb is to have at least a six-month financial cushion of living expenses available in a specific account for that purpose. 
• Invest in your future retirement: It is only through Investing wisely and using solid investment practices to grow your wealth over the long term.  For example, and not a recommendation, the S&P 500 has earned an average of 11% to 17% since 1957. Although you can’t always base your investment on past success, long-term success is very convincing. Being well-diversified is safer than having your eggs in one basket.

Discipline, patience, and determination are necessary to manage your money wisely, which is a long-term process. By following the tips above with commitment, you can achieve financial freedom and security.