The money rules I follow, and the ones I work through with clients.
These are adapted from a small book of parables from the 1920s, The Richest Man in Babylon by George S. Clason. The stories are old, but the habits hold up. They are written in order on purpose. Each rule makes the next one easier, so start at the top and do not skip ahead.
1Pay yourself first
Before the bills and before the fun, move 10% of every paycheck into savings that you do not touch. Treat it like a bill you owe to yourself. If 10% feels like too much today, start with what you can and raise it each time your income goes up.
2Track what you spend, and spend less than you make
Spending quietly grows to match income. A budget fixes that, but only if you check it against what really happened. My wife and I keep one simple spreadsheet. Each month we write down what we spent in a handful of categories, what went into savings, and what came in. The last column is the one that matters: did income cover everything? If not, we look at the notes column and find out why.
A month in the sheet looks like this. The numbers below are made up.
| Example month | Amount |
|---|---|
| Housing, property tax and insurance | $1,700 |
| Utilities and phone | $350 |
| Groceries | $800 |
| Eating out | $250 |
| Car insurance and gas | $450 |
| Health | $300 |
| Kids and pets | $450 |
| Travel and fun | $300 |
| Everything else | $400 |
| Total spent | $5,000 |
| Saved and invested (10% of income) | $600 |
| Income | $6,000 |
| Left over (income minus spent minus saved) | $400 |
Add a notes column for one-time costs such as a car repair, a trip, or a medical bill. Over a few months those notes explain most of the surprises.
3Make your savings earn
Savings that sit still earn very little. A simple way to split your 10% is 5% into a high-yield savings account and 5% into a diversified, low-cost investing account. The savings account is for safety and quick access. The investing account is for the long run, and its value will go up and down.
Compare a few providers before you decide, and look at the fees and how easy it is to move your money out.
4Guard what you build
Build a cushion equal to about six months of your regular expenses, so that a job loss, a medical bill, or a car repair does not push you back into debt. It takes time, and that is fine. Many people send the whole 10% to the cushion until it is built, then switch to the split in rule 3. Keep the cushion in an account you can reach quickly, and do not count it as money to spend.
5Take advice from people who do this for a living
Be careful where your money advice comes from. A coworker's hot tip, a video, or a social media post is not a plan. Ask a tax question of a CPA. Ask about investments from a fee-only fiduciary, meaning someone legally required to put your interests first and paid by you, not by the product. Ask a plumber about plumbing. Free advice costs the most when you follow it with your savings.
6Own your home when you are ready
The goal behind this rule is to reach the point where you do not owe anyone for the roof over your head. Owning is not cheap. There is property tax, insurance, repairs, and a down payment, and a mortgage is still a debt. Buy when the first five rules are in place, not before.
7Plan for later and for the people who depend on you
This is estate planning: a will, named beneficiaries on your accounts, and powers of attorney so someone you trust can act if you cannot. Life insurance is one tool, and many families with dependents look at term life insurance, which is simple and affordable. An estate planning attorney in your state is the right person to set this up.
8Set clear goals and keep learning
"I want more money" is a wish. "I will have $2,000 saved by June 1" is a goal. Write it down with a number and a date, start with a small one, and finish it before you pick the next. Then keep getting better at what you do and what you know. The more skilled you become, the more you can earn.
9Take measured risks
I tell my kids that no risk means no reward. A measured risk is one where you understand the downside, and you only put in what you can afford to lose. If losing it would change your life, it is not a measured risk.
10If you have debt, use a 10 / 70 / 20 plan
Out of every dollar you earn, 10% is yours to keep, 70% covers your living costs, and 20% goes to your debts, split fairly among the people you owe. For every $1,000 you earn, that is $100 saved, $700 for living, and $200 toward debt. Tell your creditors what you are doing and ask for patience. Most will work with someone who is paying a little every month. The plan only works if you really live on the 70%.
11Be careful lending to friends and family
I have learned this one the hard way. Lending to people you care about can cost you the money and the relationship. Only lend what you could afford to give away, and expect to be repaid slowly or not at all. If you want to help, consider a smaller gift instead of a loan.
12Work hard and take pride in it
Nobody is going to hand you a good life, and you do not need to wait for one to be handed over. Do your work well, show up, and be proud of what you build. Skill and effort open doors that luck does not.
13Enjoy it
We earn money so we can live well, not so we can hoard it. Spend some of it on the things and people that matter to you, on purpose and within your plan. The goal is balance.
How I use these rules with clients
When I work with someone through coaching or daily money management, we start from these rules. In the first few weeks we look at where you are on each one, pick the next one to work on, and build it into the monthly routine: the tracking sheet, the savings transfers, the debt plan, and the bills. You do not have to do all thirteen at once.