[fusion_highlight background=”yes” background_style=”marker_style” color=”var(–awb-color2)” hue=”” saturation=”” lightness=”” alpha=”” rounded=”no” text_color=”var(–awb-color6)” gradient_font=”no” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ class=”” id=””]10 Essential Money Rules[/fusion_highlight]
Money is a fundamental and integral part of our lives. The better we are at managing our money, the better able we are to reach our goals, the less we have to stress over and the more time and energy we can spend on the things that are most important to us.
It’s easy to feel out-of-control when it comes to money. Not all of us were blessed with a strong financial foundation growing up, and many of us are still struggling to figure out our finances today – if you’re reading this, then it’s easy to assume that you fall into one or both of those groups. The good news is that you can start taking control of your finances right now, today, by following some basic money rules. No matter your income or financial situation, these money rules will help get you from where you currently are to where you want to be.
Here are ten basic but life-changing money rules that you can start implementing right now.
1) Know your why
If you don’t know why you’re doing something, there’s a better than average chance that you’re going to do that thing poorly. If you want to reach your financial goals you need to know your why. Despite what many may think, more money isn’t really the objective – it’s the freedom that more money can provide that we are actually chasing.
Our why is what gives us purpose. Purpose, in turn, is what drives us and compels us to action. You can think of your “why” as the internal motivation that keeps you going when external motivators fail.
Money itself is only a tool. Making your goals about money – whether it’s to have more or owe less – is shortsighted because in truth, what we actually want has nothing to do with money itself. What we truly want is what money can provide: the freedom to quit a job we hate; more time to spend with our family and friends; the ability to live in a better school district so that our children are given more options in life than we were; security as we age so we’re not reliant on others; [your why here].
Your financial goals should always be based on your values. When your goals are based on your values, the answer to why you are [building an emergency fund/investing $300 a month/cutting out cable/taking your lunch to work everyday] becomes much more apparent.
Ask yourself: What is my longterm vision for myself and/or my family? What is my greatest life goal? What is it that I want my money to do – what do I want it to let me do? What kind of legacy do I want to leave behind?
2) Separate your wants from your needs
The distance between our needs and our wants is often vast and wide. It would make managing our money a lot easier if needing to eat was fundamentally the same thing as going out to eat but clearly one is a necessity and the other is only a preference. We need to eat but we don’t need to eat at a restaurant. We need transportation but we don’t need to drive a brand new car.
If we can truly separate our wants from our needs then we can consistently make smarter financial decisions.
You don’t have to live like a monk or eschew all creature comforts in order to be financially secure or reach financial freedom. You do, however, need to honestly assess your purchases and spending habits against your values and priorities. You can’t be trying to work toward your goals while also working against your goals and expect to make any net positive progress.
Do what you can to narrow the gap between what you need, what is in alignment with your values and priorities, and what you spend your money on. The closer these are to one another, the more likely you are to reach your financial goals.
Ask yourself – is this purchase moving me closer to or further from my goals?
3) Track your spending
Like it or not, creating a budget and tracking your spending are two surefire ways to improve your finances. At a minimum, you should be tracking where your money comes from and where it goes on a daily basis.
Staying engaged with your finances helps keep you accountable to yourself. You can bury your head in the sand or you can take responsibility for your financial situation and begin to tackle it head-on. Nothing in your life will improve while you’re looking the other way.
Monitor your outflows so that you have a clear and honest picture of both how you’re spending your money and what you’re spending it on. If those aren’t in alignment with your values and your goals, you’ll need to do some work to start changing your spending habits.