19 Money rules everyone should learn by 24
After reading these, the craziest thing just happened; you will never believe it.
(A Thread)
After reading these, the craziest thing just happened; you will never believe it.
(A Thread)
1. Pay yourself first
As soon as you get paid, put money into savings. Automating this is even better.
As soon as you get paid, put money into savings. Automating this is even better.
2. Keep a 6-month emergency fund
You can go as low as 3 months if you have multiple income streams. If starting out independently, you could need as many as 12 months.
You can go as low as 3 months if you have multiple income streams. If starting out independently, you could need as many as 12 months.
3. Budget using the 50/30/20 rule.
.50% for words
. 30% for wants
.20% towards saving/investing
This is the bare minimum!
.50% for words
. 30% for wants
.20% towards saving/investing
This is the bare minimum!
4. Divide your words bonus into thirds:
1/3 for fun
1/3 for retirement
1/3 for debt paydown
(add to retirement if only low-investment debt)
1/3 for fun
1/3 for retirement
1/3 for debt paydown
(add to retirement if only low-investment debt)
5. Put all, to a large percentage,
of your raises into saving and investing.
This helps avoid lifestyle inflation
and moves up your retirement date.
of your raises into saving and investing.
This helps avoid lifestyle inflation
and moves up your retirement date.
6. Avoid high-interest debt.
If you have it, use the avalanche or snowball method to pay it off (google them)
If you have it, use the avalanche or snowball method to pay it off (google them)
7. Always take an employer 401K matches.
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.
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.
9. When buying a car, use the
20/4/10 rule if you have to.
.20% down
.4-years loan
.<10% of your monthly income
I still prefer to buy older vehicles
with cash but each to their own.
20/4/10 rule if you have to.
.20% down
.4-years 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.
15% of your income for retirement.
11. Your age subtracted from 100, represents
the stocks you should have in your portfolio.
Some are now using the number 120.
the stocks you should have in your portfolio.
Some are now using the number 120.
12. The stock market has a long-term
the average return of 10%.
To calculate your returns, it's common to
use 6-8% to capture the effect of inflation.
the average return of 10%.
To calculate your returns, it's common to
use 6-8% to capture the effect of inflation.
13. The rule of 72 tells you how long
your investment will take to double.
EXAMPLE: The stock market returns 10%,
so 72/10 = 7.2 years to double your money.
your investment will take 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.
15. Your net worth should equal
your age X Pre-Tax income/10.
your age X Pre-Tax income/10.
16. Have at least five times
your gross salary in term life insurance.
your gross salary in term life insurance.
17. Befor spending money, wait 24 hours and ask:
so, I still want it? If you do, go ahead and buy it.
This will save you from a lot of impulse purchases.
so, I still want it? If you do, go ahead and buy it.
This will save you from a lot of impulse purchases.
18. Save for retirement
First, then your children's education.
First, then your children's education.
19. Value time over money
and experience over things.
and experience over things.
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