I get the honor of teaching the financial class to our ladies in the transitional house so I came up with my top 10 rules for money. Haha. These are very simple and are basically what we try to teach our kids. I thought I would share and see if you all think I missed anything important.
Becca’s Top 10 Money Rules!
1. SET A BUDGET – and follow it
a. Allocate at least 10% of your income to giving – God will bless you
b. Allocate at least 10% of your income to saving until you have 3-6 months necessary expenses savings
i. Only spend emergency savings on EMERGENCIES!
c. Allocate at least 20% of your income toward financial priorities
d. Give yourself some lifestyle spending – I call it fun money
e. Keep housing below 30% of your income
2. Do not spend more than you make (if you follow your budget this won’t happen)
a. Seriously consider all cash (get rid of your credit cards and pay off any loans as soon as possible, debit is the way to go)
3. Do not buy something if you don’t have the money for it (mortgage is only exception)
4. Set specific, but bite sized, money goals
5. Get a money buddy – this is your spouse if you are married
6. Start saving/investing now (compound interest)
7. Keep savings in a different account and maybe different bank
8. Create a Financial Calendar – set reminders to check your credit at each of the bureaus or to pay your taxes, etc.
9. Track Your Net Worth – this helps you see if you are making progress toward your financial goals
10. Take a daily money minute to check your recent transactions and watch for errors/id theft
Paulette N Looks good – you could be the next Dave Ramsey! 😊
Rebecca Diltz Nate Moehring Well he helps people get out of debt. I’m trying to help these ladies have money at all. And he influenced me too!
Donald B Have your savings directly deposited from your paycheck. If you dont see it ever in your checking account, you are less likely to think you have that money available. I try for the separate bank option to further make it inconvenient to withdraw from it.
I would use a debit card for cash withdrawals only. Dont pay with debit. I use a variation where I pay with credit card but pay it off each month. This is probably more for a mid to advanced strategy. The credit card provides better protection from theft. If stolen and money is taken out of your account, you ate out of the money until resolved. If it is a bad charge, the credit card company has a hold on that charge. Your option is probably best for your audience.
Rebecca Diltz Nate Moehring My girls don’t even have checking accounts at the moment, but we are going to fix that.
Our personal bank debit has the same protections and fraud ins as a credit card, I suppose there may be some banks that aren’t as good. I’m actually going to be having them pull cash for some of their expenses and use Dave’s envelope system. Should be minimizing transactions.
Donald B I disagree with the debt for mortgage only. I can see car or education being possible too, but not desirable and should be as minimized viciously.
Rebecca Diltz Nate Moehring It is possible to save for a car and work your way through school. I disagree with our culture of borrowing for everything. You end up paying much more than purchase value. If a car is a necessity, get the cheapest one you can that runs and pay it off asap.
Donald B Rebecca Diltz Nate Moehring yup. Minimized viciously….but acknowledges that you might have to incur some debt.
Rebecca Diltz Nate Moehring P.S. If you have your 3-6 months savings funded, you should be able to buy a car with cash and then put savings back in the budget.
Donald B Yup, but sometimes you haven’t gotten everything done yet.
Donald B Do not budget tax refunds. Put that towards savings, expediting financial goals, building budget buffer, etc. It can vary enough that you should NOT plan on it.
Rebecca Diltz Nate Moehring I’m pretty sure we’re talking about a different set of people here. 😉 Dave wants you to have a plan for unexpected income so you know where it will go before it comes along.
Donald B Ok. My thought was if you are planning for 4k in a tax credit and tax law changes so it is 2k, you are now 2k over budget.
Rebecca Diltz Nate Moehring I agree with you, don’t budget, have a plan. Probably should go toward whatever your next goal is.
Donald B think rule I use is 1 month for every 10k gross you earn instead of 3-6 months. But I can see that as a good minimum.
Rebecca Diltz Nate Moehring Once you have basic emergency fund (food, clothing, gas, and house), you should start using the rest to invest. Savings has disgusting interest rates and your money is more valuable getting better returns as long as you have enough buffer to feel secure. Don’t keep more than you need in savings.
Donald B Not saying to keep it in savings necessarily but in a form that you are ok with liquidating if needed. The reason for the rule was that the estimated employment time to find a new job at the same level was 1 month per 10k earned.
Ralph H When it comes to shopping or buying something – ask yourself – do I really need this or do I really want this.
If the answer is need – is there money in the budget for it ? OK
If the answer is want, don’t buy it.
Donald B Ralph, a variation on this I have seen is wait 1 week on any purchase. Then evaluate if you really need it.
Donald B Fyi, thank you for the post and thank you for sharing your approach to others needing help.
Rebecca Diltz Nate Moehring Wanted to make sure I wasn’t missing anything big. Some stuff is personal preference. A lot is common sense and self control. Thanks for your feedback. 😉
Donald B Money management is something not taught in high school and financial institutions are often interested in making money off of people, bot helping them be more restrained in buying their products. There are few places to actually learn tips and tricks to manage money well or even know where to start.
Christine P Joey, does any of this sound familiar to you? It’s a good set of rules to follow, I don’t know if we taught them very well.
Stanley W Awesome formula Sister… I follow the exact principle except for rule #7… It seems easier to keep track of a budget with savings and checking in the same bank…unless you know something I don’t… but I’ll have to take your word for it.
Rebecca Diltz Nate Moehring Stanley, online banking helps this a lot. My savings gets better returns than it would at my checking bank.
Stanley W Thank you too Donald for sharing the valuable information.
Stephanie E Good list! You could also use this book:
The Index Card: Why Personal Finance Doesn’t Have to Be Complicated