Not many of us like to follow a set of rules, but for each component of our life we need to set some personal rules, or standards that can apply to our everyday obligations. If we don’t it’s like we are flying blind and that area of our life can quickly turn chaotic.
For example to have optimal health some good rules to follow are:
- Lift Things and Move Around…
- Avoid Excess Stress…
- Don’t Put Toxic Things in Your Body…
- Nourish Your Body With Whole Foods…
If we establish similar rules to guide us with our finances we’ll have a better chance of achieving our goals. Some examples of good financial rules are:
- Contribute the max to your retirement accounts
- Contribute the max to college funds
- Pay off your credit card balance each month
- Avoid excessive fees
- Have lots of insurance
- Invest in assets that generate income
- Keep a minimum balance in emergency savings account
- Set & adhere to a monthly budget for categories like dining out, entertainment, travel…
If we expand on one of the rules above we can see how it can guide our daily lives. Let’s say we set a rule to have a minimum of $10,000 in our emergency savings account. The behaviors that stoke the standard are important. You can expand the rule to say that we will not dine out or go shopping until we hit the standard.
The challenge is that most of us we don’t like rules and we covet the freedom to do and say what we want. However, if we don’t have any rules our financial lives can turn to chaos and set ourselves up for failure.