I seriously wish I would have started my adult life knowing the financial rules that would make my money game strong, but I didn’t. In my early twenties I started picking up a little debt and those decisions put me on the path to financial hardships I didn’t have to experience had I known more about maximizing my money.
Even with the lack of financial information I refused to let that be an excuse not to find out the secret to good money management and wealth accumulation.
My husband and I are an average middle class American family who have learned to make the most out of our money. We are debt free, have a positive net worth and now coach families like ours on how to take control of their money.
Today I want to share How These 4 Financial Rules Can Make Your Money Game Strong.
1 – Don’t Rob God, Tithe 10%
I’m a Christian and believe everything the Bible has to say. That doesn’t mean I follow everything perfectly to a tee. It does mean that what I read in the Bible I believe to be fact and then I do my best to conform to it. One thing I adamantly believe in are the supernatural blessing attached to tithing. I believe them because I’ve experienced them. Likewise, I believe the warnings associated with not tithing because I have experienced those as well.
When I was not tithing my finances were out of control. My husband and I couldn’t get ahead and thought if we tithed we’d put ourselves even further behind. Well not tithing wasn’t helping so one day when we we’d received a pre-foreclosure notice my husband realized his efforts could not turn things around for us. Instead he decided to trust what the Bible said about the rewards of tithing and made a commitment to do it regardless of the outcome.
A week later we received a refund check from our mortgage company that helped us get whole.
Ain’t that something?
From then on we’ve been faithful to tithing 10% of our income no matter what. We teach that principle to our children and even tell them our testimony from time to time to reinforce the supernatural protecting that comes with obedience in that area.
When we stopped robbing God, we began to see progress and financial breakthroughs all along the way to getting out of debt and accumulating wealth. Seeing the supernatural protection made Gods words more real to us and gave us those boosts we needed during touch times.
2 – Build An Emergency Fund
An emergency fund is intended for unexpected emergencies. Having a fully funded one creates a financial buffer between your monthly paycheck and financial emergencies.
There’s nothing like having a $1,000 or higher emergency and you’re not able to put your hands on that money. We started our kids off with a $1,000 emergency fund goal and then they stopped to save for their first car. After saving for their first car, they went back to fully fund their Emergency Fund. A fully funded account consists of 3-6 months of expenses. So whatever expenses my kids have they need to save that amount in an emergency fund.
What are emergencies?
For us it’s anything unexpected. Here are some emergencies we’ve had.
- Car repairs (so many!)
- Stove went out
- Fridge went out
- Hot water heater went out
- Heating and AC went out
- Trash compacter replacement
- Hotel Stay when water pipe broke
- Washer broke.
- Dryer broke.
Having an emergency fund in place seems to put a huge barrier between expensive emergencies and money. When we were broke things seemed to always come up. Appliances would break. We’d need constant repairs. You name it.
Ever since we got our emergency fund fully funded the emergency started decreasing until they kind of disappeared. I can’t remember the last time we’ve even had to touch our emergency fund.
Having it in place gives peace of mind in the case of an issue and also puts you in a financial prepared mindset where you’re not attracting issues, because you’re not worrying about not being able to pay for them.
3 – Invest 15% or More
I wish I had people in place to explain this principle to me before I started making money. To invest 15% or more of your income you truly have to have a “live on less than what you make”, mentality. You have to literally make up your mind that you will not spend every dime you have to live while you’re able to work, but you will sent aside 15% or more to ensure you live well when yo no longer earn an income.
It’s so much easier to implement this habit the earlier you start. For my teens, they save 15% off everything the earn from their jobs. That means they are hopefully forming the habit and will stick with it when they are on their own.
Investing 15% or more in a combination of Roth IRA, mutual funds, stocks, etc. early in life gives your money time to grow exponentially.
I started seriously investing at 39 years old and the growth will put me on track to retire comfortably. However, if I’d understood the power of compound interest, investing 15% or more consistently earlier on in life and didn’t have debt to pay off in my 30’s I would have started early.
My kids can learn from their father and I’s choices and make better choices sooner in life.
Side note: If you’re 30 years old or older and feel like it’s too late to start investing for retirement now, it’s not. Start today! Depending on your income you still have time to retire a millionaire if you get invested into some good mutual funds with a diverse portfolio. You can start by opening a free account with Fidelity
4 – Don’t take on debt. Pay Cash!
Debt makes you slave to the lender whether you know it or not. As long as you owe someone something they have the greater leverage. If I owe on my house and I stop paying, after a while it will be taken from me. That’s the case with any default loan.
The day my husband and I paid off all of our consumer debt (credit cards, car loans, etc.) I felt so free financially. Debt especially on depreciating and interest bearing assets keep you from building wealth especially if you’re broke or living paycheck to paycheck.
Saving up and paying cash for everything is an amazing feeling. It’s a feeling that can’t be described until you experience it for yourself. This is especially true for high value purchases like cars, vacations and property.
The ability to withdraw $10,000 to pay for a car cash, set aside $12,000 for a 15-day vacation or save $40,000 to buy land is an indescribable feeling.
Owning things you don’t have payments on is amazing and is a mindset not taught enough in our society.