While life is primarily about things far more important than wealth-building, financial freedom does provide mentionable liberties, like the opportunity to give to those in need, the means to see earth’s great natural wonders, the chance to travel and experience diverse cultures, the blessing of working voluntarily, the knowledge to teach financial principles to others, and the joy of leaving a meaningful legacy to heirs. Since financial literacy is not consistently taught in America’s schools, it is generally acquired in adulthood, long after our peak learning capacity has come and gone. Practice the following simple Money Rules that may help improve your wealth-building habits:
50/30/20 Budgeting Rule
- 50% of take-home pay covers essential expenses
- 15% is saved for retirement
- 5% is saved for short-term needs
- 30% is flexible spending
10% Debt Rule
- Maximum 10% of gross income is for debt payment
3-Day Large Purchase Rule
- Wait 3 days before big purchases
- Can help reduce impulse buying
30-Day Luxury Purchase Rule
- Wait 30 days before luxury buys
- Many discretionary purchases lose their appeal over time
20/4/10 Car Purchase Rule
- 20% Down, 4 year loan, 10% payment (keep total transportation costs (loan, insurance, gas) under 10% of gross monthly income))
9 Month Emergency Savings Rule
- Emergency fund equals 9 months’ total household spending
15% Savings Rule
- Invest 15% of gross income for retirement (or more) as early as feasible
Retirement Savings Rule of 25x
- Retirement savings equals 25 times total annual spending
4% Withdrawal Rule
- Seek to limit withdrawals from retirement savings to 4% of total value
Think about it, and may God bless your wealth-building efforts!
Shaun
“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it” ~Proverbs 13:11
“A good man leaves an inheritance to his children’s children” ~Proverbs 13:22
Disclosure(s)
Old Forge Wealth Management, LLC is a state-registered investment adviser. Registration does not imply a certain level of skill or training. This material is provided for informational and educational purposes only and should not be construed as personalized investment, tax, or financial advice. The strategies and guidelines referenced are general in nature, may not be suitable for all individuals, and are not guarantees of future results. All investing involves risk, including the potential loss of principal. Advisory services are only offered to clients or prospective clients where Old Forge Wealth Management, LLC and its representatives are properly licensed or exempt from licensure. Financial decisions should be made based on your individual circumstances and in consultation with appropriate professionals.