Seven Money Rules for Life

In the book 7 Money Rules for Life®: How to Take Control of Your Financial Future, author Mary Hunt lists the seven money rules for life as follows:

1. Spend less than you earn.

2. As you receive income, transfer 10 percent of it into long-term savings.

3. Give away some of your money out of a heart of gratitude, with no strings attached or expectation of anything in return.

4. Anticipate irregular expenses then prepare accordingly.

5. Tell your money where to go, then make sure it gets there.

6. Manage your credit rating to achieve a high level of creditworthiness.

7. Borrow only what you can repay.

Overall, this is a GREAT "introduction to personal finance" book. It's perfect for someone who needs educated from the ground up. For example, it would make a great graduation gift.

Here's my take on her seven steps:

1. Of course. Spend less than you earn is my best piece of financial advice.

2. You all know I'm a big fan of savings, so we're 2 for 2 so far.

3. I love giving as well and we talk about it frequently here on FMF. She goes into detail giving thought on where to give, how much to give, and so on.

4. Personally, I thought #4 was a bit out of place -- it should be part of #5.

5. For the person just starting out, a budget is a necessity. Plus there needs to be some sort of tracking system like Quicken, Mint, a personal spreadsheet or an "old school" ledger. I have used Quicken for 15 years or so and love it.

6. IMO #6 also isn't so important that it should be listed by itself.

7. I'd rephrase this as either "minimize debt" or "eliminate debt."

If I was to list my money rules for life, I'd pull them from these posts:

• How to Get Rich in Three Easy Steps


• A Simple Formula for Becoming Wealthy


• The Richest Man in Babylon: Seven Cures for a Lean Purse


• The Ten Worst Money Mistakes Anyone Can Make

Hey, maybe I should write my own "7 money steps" book (though I'm not sure I'd need seven -- I could probably do it in 5 steps or less.)

One thing I'm surprised she didn't mention is earning money. What about growing your career, developing a business, or earning extra on the side? Shouldn't these tips be part of any complete book on making the most of your money?

Comments

[Jonathan]

I'm not a huge fan of Rule #2 as it stands. In my opinion, blanket rules like "save 10% of your income" are too simplistic to rely on for long-term savings. For someone just learning to be smart with money, it would be a shame for them to just check off the 10%-savings box and feel like they're well on their way. In my opinion, being in healthy financial shape involves reshaping your relationship with money and with material goods so that your mindset is "don't spend, unless you've thought it through" rather than "spend if you've met your rule". By having a saver mindset rather than a spender mindset, we are able to put away nearly 50% of our income without ever feeling like we're scrimping, and by investing the money we save, we've been able to increase our income so that our savings and income continue to grow at an accelerating pace.

[I Am 1 Percent]

I agree..choosing the right college major, working hard on the job, and getting promoted are the best financial moves that I've made in my life.

[Old Limey]

One lesson that has been overlooked is this.
Parents and grandparents should set a great example in the use of money where their children and grandchildren are concerned. Good habits are developed very early in life when young children are very impressionable.

I was born in 1934, in those days a common phrase was "Children are to be seen but not heard" and I quickly learned how to behave in the presence of all family elders. I kept pretty quiet as custom required but I heard and understood a lot more than adults give children credit for. I also observed firsthand how my whole extended family lived and how they were frugal and wasted very little of anything. Children are like pieces of clay, they need to be molded into good shape by a caring family, and hopefully grow up to be prudent and responsible adults that can take care of themselves when they become adults.

[MC]

I just have one rule: Plan ahead.

That takes care of everything: getting into a career & building it as you go, saving for the future by spending less than you earn, manage your credit rating, and borrowing only when prudent & necessary.

[Carol]

10 percent is for retirement. Don't forget to budget for emergencies, as well as vacation, your next car, and home improvement/ repair or for a downpayment for a home. For those who doubt that homeownership is a waste, I'm two payments away from paying off my mortgage. Knowing that I have no mortgage at retirement (within two years) is a huge load off my shoulders. I did it in 25 years. I would highly recommend the same strategy. Don't buy a house larger than what you need either.

[Old Limey]

@Carol
Congratulations - I know the feeling. There's nothing quite like getting that monkey of DEBT off your back. We celebrated when the Title to our home arrived in the mail from the lender with that wonderful stamp on it that says, "PAID IN FULL". It's nice when you are thoroughly content and happy in your home and that you know there's nobody that can ever take it away from you as long as you pay your property taxes.

[Steve Mertz]

I agree that it sounds like a good investing 101 book. But to FMF's point-you gotta have the money to invest and now more than ever choosing the right career and advancing your skills; is more important than ever.