In this article, we talk about 10 money rules that everyone should learn by age 25 and implement in their life.
1- Pay Yourself First
As soon as you get paid, put money into savings. Automating this is even better.
2- Keep a 6-Month Emergency Fund
If you have multiple streams of income, you can go as low as 3 months.
If starting out on your own, you could need as much as 12 months.
3- Budget using 50/30/20 Rule
- 50% for needs
- 30% for wants
- 20% towards saving/investing
This is the bare minimum
4- Divide Your Bonus into Thirds:
- 1/3 for fun
- 1/3 for retirement
- 1/3 for debt paydown (add to retirement if only low-interest debt)
5- Put all or a Large Percentage of Your Raises into Saving and Investing
This helps avoid lifestyle inflation and moves up your retirement date.
6- Avoid High-interest Debt
If you have it, use the avalanche or snowball method to pay it off (google them).
7- Always Take an Employer 401k Match
Many employers will match a percentage of your paycheck. This money is getting an immediate 100% return. If you turn this down, it's the same as turning down a raise.
8- Your Home Payment
Mortgage, interest, insurance should cost less than 25% of your monthly income
9- When Buying a Car, Use the 20/4/10 Rule if You Have To
- 20% down
- 4-year loan
- <10% of your monthly income
I still prefer to buy older vehicles with cash, but each to their own.
10- You Should Save at Least 15%
You should save at least 15% of your income for retirement.
