And battle these uncertain times with a quarter-inch smile.
Illustration by eniolaodetunde.com
Money can enslave you if you don’t understand it. Money has the power to set you free, too, and give you choices if you let it.
Having worked in financial services for most of my life, I’ve realized money can be complicated. Making decisions about money can easily turn out terrible for you if you don’t have a set of your own rules that you follow.
Here are my rules for money that I use to make financial decisions (not financial advice). You can use these rules to inspire your own money rules that help you make smarter decisions, and work less, so you can enjoy life more.
Give every dollar a job
You will destroy yourself financially if you save your money. Inflation and money printing eat away the value of money you keep in your savings account. This is why it’s a good idea to give every dollar a job.
Giving each dollar a job allows your money to work for you, not against you.
Lazy money sitting around doing nothing can be bad for you financially.
The hidden tax of having your money devalued — especially during a global recession — by governments printing money out of thin air to bail out companies, banks, and their citizens will hit you hard if your money is sitting around being unproductive. I allocate some money to do nothing as a safety blanket, but beyond that, every dollar is put to work.
How do you put money to work? You invest your money.
Pay yourself first
My rule is that every deposit into my bank account must pay me first before it’s spent elsewhere.
The temptation is to spend first and invest what is leftover. This will leave you buying more than you need, resulting in you having to work harder and for longer to reach your financial goals.
What you pay yourself when you get paid matters. 50% is a drastic number to pay yourself if you’re serious about getting to financial freedom faster.
Avoid the temptation to flaunt your money
Every dollar you flaunt is another day you have to do work you may not enjoy.
Let’s face it — not all work you do, you love. Some work you do is to earn a living and nothing more. Sure you can get paid to do work you love, but at some point you’re going to do work you dislike too. A large part of the work I do I love, but some of that work sucks. I hate doing admin and keeping up with emails, yet it’s part of running a business.
I gave up the BMW dream many years ago. I fell for the dream of flaunting money only to fall into a deep dark hole. It was tempting because social media taught me to brag and be like everybody else.
It was a game I could never win, though. There is always someone with a better house, car or holiday than you. Rather than flaunt your money, let your money show people the good it can do. Let your money be a reflection of what you’ve learned, and help other people to go on that same journey.
No one cares how much money you have deep down. All they want to know is this: What’s in it for them? Answer that question and money will take on a whole different meaning.
Have a backup plan when the world goes upside down
The financial good times we’ve lived for so many years can delude us. Every so often, the world gets turned upside down.
A mystery health crisis can surprise us.
Record unemployment rates can occur.
Acts of terror no one could predict can happen.
Protests can erupt.
When these uncertain times strike, your backup plan saves you and those you love. Being prepared for uncertain times helps you to go to the next level when other people need help. You can’t be helpful to others anywhere near as much when you desperately need to help yourself financially.
Use money to solve problems
There are plenty of millionaires and rich people. Many of them only create problems rather than solve them.
You no longer become a slave to money when you use it to solve problems. Your money can go a long way with a little bit of creativity and imagination. The more you seek out problems to solve, the more money you will attract into your life.
Solving problems gives you fulfillment and it helps you derive a different form of value from your money.
Set your risk appetite in advance
If you don’t decide in advance what risks you’re willing to take with your money, you will lose, some, if not all of it.
The number one way people lose money is by taking on too much risk. And many people accidentally gamble their money instead of investing it, because they don’t understand the risk of what they’re investing in.
Setting your risk appetite in advance helps you sleep at night when your money is working hard for you. This process is different for everybody and looks like this:
How much money do you want in cash? How much money do you want to invest in stocks that can suffer during a recession? How much money do you want in real estate which takes longer to convert to cash and is subject to moving property prices?
How much money do you want in assets like bonds that are less risky but can have smaller returns? How much money do you want to have in safe-haven assets like gold that is popular during times of fear when there are protests, looting, stealing and violence on the streets?
Think about risk and set it in advance so you don’t get surprised by global events and lose everything you’ve worked for or panic sell.
Know the 8 fundamentals of the investment world
Study this list until your eyes bleed. These are the workplaces you can send your money to, so each dollar can go to work for you.
- Real estate investing
- Gold and silver
- Digital currencies
- Leveraged assets (assets bought with debt)
Learn about these asset classes and understand what the pros and cons are of each.
Invest the profits in your growth
Once you’ve put your dollars to work, you can grow your money further by growing your mindset.
How you think about money matters just as much as how much money you have.
If you think money is evil, then no amount of money will help you, or others. If you think you’ll always be poor, then you will be.
You grow your mind through challenging your beliefs about money through books, online courses, and education from people who are smarter than you. The history of the world can also teach you a lot about money and what causes financial markets and businesses to collapse.
You probably need less money than you think
It’s easy to fall for the lie that you need millions of dollars to be happy. When you learn to live with less, you don’t need to dedicate so much time to making money. The difference between a 6 bedroom mansion and a 3 bedroom townhouse is not as substantial as you might think.
Both homes keep you warm, protect you from the rain, keep you safe, and allow you to be around those you love. The feeling of extra bedrooms and modern finishes wears off, generally after a month. Be okay with less stuff and you’ll have more of yourself to give to those you love.
Take some money and throw it down the drain
A rule I have about money is to throw some of it away. I throw money at these:
- Homeless shelters
- Food Banks
- Strangers who need a break
Many rich people spend their entire life trying to make more money and hold on to what they’ve earned.
When you learn to throw away some of your money, it takes on a different meaning. Your reason for earning money slowly changes.
Money from the heart is beautiful
The best type of money is the money you earn with your heart. It’s earned when you put your heart and soul into something and genuinely care for people you’ve never met. For me, this work takes the form of writing.
Two days a week I channel all of my built-up emotion into writing that a few people might find helpful. I put all of my heart into it. The income that comes from this line of work will change your life.
When you care, people feel it, and it moves them to take action; you attract people into your life that you could have never imagined connecting with; your circle of friends, mentors, and allies grows and you feel socially fulfilled.
Make part of your income using your heart.
Working hard for money all the time is exhausting. Life is meant to be enjoyed, not overworked for the rest of your days on this planet.
Having rules about money helps you structure your finances to work for you rather than against you.
You can have all the money in the world — but is that what you really want? My experience has been quite profound. I went from rich to poor and realized that I’d become a selfish, arrogant asshole who wouldn’t give two dollars even if I had millions. I had to experience the other side of life without money to understand how money fits in.
Create rules for your money so you can stop being a slave to it and finally start living more of your life the way you want — with lots of breaks, sabbaticals, experiments, time away, career breaks, and time to watch your family grow.
Money can be so much more when you have rules for what it means to you and how it will be utilized in your life.