Money rules!
No, this isn’t a rave about how awesome money is. (Did I fool you with the title?) This is where I spell out my rules about money and its role in my life.
Everything needs to have its place in your life properly defined. We label the people we know — friend, acquaintance, best friend, significant other, spouse, brother, parent, boss, coworker — and allot appropriate importance and privilege to each according to their role. And we do the same for our car, television, power tools, pets, etc. So why do so few people define these limits for their money?
I might loan my car to my best friend, but I wouldn’t loan it to my neighbor. I would never drive a BMW on a construction site for fear of getting nails in the tires. I might miss the Super Bowl if my father was dying in the hospital, but not for much else. Isn’t it time to define similar limits to how I use my funds? And you too?
Rule #1: Don’t create debt
Borrowing money, whether it’s an auto loan or a credit card purchase, leashes me and my freedom to someone else. The more I owe, the less freedom I have to change jobs, take a vacation, or move somewhere new.
Rule #2: Buy quality
A cheap, flat-pack, pressed cardboard bookshelf will be wobbly before long and it will need to be replaced in a year or two, whereas a solid wood bookshelf might last the rest of my life, and will be attractive too. Cheap clothes with shrink, and won’t fit right, whereas nice clothes fit properly and last longer. The same goes for all purchases. Cheap things need to be replaced. And although they serve their purpose, they don’t make you happy, so you’ll end up wanting something better soon enough anyhow. Just get the good one right at the start.
Rule #3: Don’t buy crap
How much money does the average person simply throw away on trinkets and baubles and utter nonsense, only to create more clutter and chaos in their home? And absolutely no collections! I won’t be wasting my money on porcelain figurines, collector plates, or other nonsense that takes up space and adds stress without providing pleasure. And definitely no singing fish, no garden gnomes, no stuffed animals, no handheld electronic games, and no cute little frog-shaped glass figurines on the back of the toilet.
Rule #4: Loan as if it’s a gift
Making loans to other people is a good way to ruin your relationship with them. Yes, we always intend to pay back a loan, but when we ask for the loan we’re rarely thinking about how we’ll pay it back — the focus is on getting it in the first place. Loans often drag on for a long time, and many never get repaid. When making a loan, always silently consider it a gift. Then it will be a pleasant surprise when it is paid back.
Rule #5: Only two credit cards
I only need two credit cards: one department store card that qualifies me for discounts and provides free gift wrapping services, and one that gives me free airline miles for all my other purchases. These cards need to be paid in full at the end of every month.
Rule #6: Online account management
I will only use financial services that provide online access. The internet provides instant access to account information and the ability to make fast (often immediate) payments. At this point, any bank, creditor, or investment service that does not provide online service is either too disorganized, or else has something to hide.
Rule #7: Don’t fall for the upsell
Pay for the item you want, don’t get sucked into the accessories. I never buy the extended warranty plans. I buy the cell phone, but I skip the personalized case and goofy belt clip. I’ll buy the shoes, but I don’t need the protective leather spray. I’ll buy the camera, but I don’t want your lens wipes.
Rule #8: Invest in the future
Nobody else is going to take care of my future, so I have to do it myself. That means savings, investments, retirement plans, and anything else I can do to create a more secure future for myself.
Rule #9: Time is money
Wasting time is wasting money. If I can save $60 by fixing my clogged drain myself, but it will eat up most of my day off, it’s better to pay a professional so that I can spend my day doing what I had planned to do. This is especially true when the activity would require me to miss work. If it costs extra to have it done on the weekend, but won’t cost me a day’s pay, it’s worth the extra cost.
Rule #10: People aren’t impressed by money
People should be impressed by my personality, not my extravagance. Throwing money around is only a cover for insecurity. I will not overspend on Christmas, birthday, anniversary, or Valentine’s Day gifts. I will not buy things for show. And absolutely no bling! Money buys things, not people.
So there you have it: ten rules to define the role of money in my life. What about you? What are your thoughts? What boundaries have you set for money in your own life? Leave some comments and let me know.
