10 Dirt Simple Rules of Money Management


Many people are scared of money management, being worried that it is too complex, so they do nothing.  They also don’t want to take the time to develop budgets, set up investing accounts, or read finance books.  Hey, I’m with you.  I mean, who wants to read a prospectus or learn about zero coupon bonds when the sun is out and spring is in the air.

Still, if you do nothing, things are probably not going to work out well.  If you set out for a long hike in the desert without a canteen, you are probably going to die of dehydration.  Likewise, if you go through your life just hoping that things will work out; that you’ll somehow be able to manage your debts and not be drowned by credit cards and student loans; that at retirement time you’ll somehow find yourself on a beach with a multi-million dollar bank account, you’re fooling yourself.  This is especially true now that pension plans are going away, meaning you don’t have your employer making the good decisions for you and all you need to do is show up for work for forty years.  Believe it or not, 401ks are actually a better deal, but you need to not torpedo your own future.

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So where is the easy button?  What can you do that doesn’t take a lot of thought or effort, yet will still help you get on track for a good financial life and a safe and secure retirement?  For those of this financaphobics out there, here are simple rules for money management that will lead you to  the beach:

1.  You pay twice as much for something if you borrow money to buy it.  Don’t borrow for things that won’t pay back at least two-fold.

2.  Before you buy something to “save you money,” figure out how long it will take to recoup your cost.

3.  Have a store of cash for a rainy day.  It will rain at some point.

4.  Put away 15% of your paycheck for retirement as the first thing you do.  Automate all you can.

5.  If you need it in five years or less, save in cash.  If it is ten years or more, invest.  If you’re in between, invest but only if you have a back-up plan.

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6.  Put money away until you can buy a new roof and a good used car for cash, then invest it in diversified mutual funds until you need the money.  Automate as much as possible.

7.  Always be building up assets (stocks, bonds, real estate) and use the income from these assets instead of paying money from your salary as much as possible.

8.  Once money becomes an asset, it stays an asset unless an emergency happens.  This is especially true with money in retirement accounts.  Never borrow against a 401K or take money out unless you are retired or facing homelessness.

9. Don’t buy anything that costs more than $100 without thinking about it for at least a day.  For every thousand dollars, add another day. 

10.  Don’t buy new cars unless you have a new worth of at least million dollars.  Otherwise, buy quality used cars that you can afford with cash. 

Your investing questions are wanted. Please send to vtsioriginal@yahoo.com or leave in a comment.

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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.


  1. You hit on the key several times – automate, automate, automate. If personal finance isn’t someone’s “thing”, the least they should do is take the time to set up some automated saving and investing. They will be so glad they did. Great post!

    • Thanks for the comment. Definitely inertia will work in people’s favor if they just set up automated withdrawals for investing and then forget about it.

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