The 9 Rules Of Money You Need To Implement Now
RULE 1: FULL REPLACEMENT PROTECTION
Unforeseen events can happen at any time.
- Full replacement value of your assets, income, and life is essential for wealth conservation in the event of a claim.
- A properly designed protection plan is a higher priority before savings and investments are fully developed.
RULE 2: SAVE AT LEAST 15% OF YOUR EARNED INCOME
Failure to save at least 15% of your income leaves you vulnerable to wealth eroding factors such as:
- Market fluctuations
- Law changes
- Law suits
- Technological change
- Unexpected life events
- Fees and consumer financing
- Increased standard of living
- Planned obsolescence (wear and tear, style changes, etc.)
RULE 3: BUILD LIQUIDITY
- Accumulate at least 6 months' worth of your income
- This enables you to operate on a cash basis and minimize loan interest and principal payments
- Liquidity can be a powerful tool when presented with unforeseen events, opportunities, and rising interest rates
RULE 4: AVOID COMPOUNDING TAXABLE INTEREST
Compounding interest creates compounding taxation which significantly erodes wealth
RULE 5: CONTRIBUTIONS TO RETIREMENT ACCOUNTS
- First contribute up to the employer match portion if you have that available through work
- Contribute no more than half your gross annual savings rate
- You must consider where future tax brackets might be when you retire - This is why various types of income in retirement make sense
RULE 6: BE A LENDER
- These financial assets are income-oriented with some guarantees and lower risk.
- You are lending money to the government, developers, and private investors.
RULE 7: BE AN OWNER
- You become a shareholder or asset owner
- Participate in the potential profitability of companies and appreciation of their value
RULE 8: OWN HARD ASSETS
- These financial assets provide opportunities for income and growth while providing tax benefits.
- You are an owner of these assets and businesses
- You may control these assets, enjoy their use, gain tax benefits, receive income streams, and build capital appreciation
RULE 9: MAINTAINING, BALANCING AND MONITORING YOUR ECONOMIC MODEL
You’ll need to periodically re-balance your model to adjust for the changing circumstances in your life and the economic world around you.
- Make each dollar work efficiently
- Create peace of mind
- Increase protection against unknown risks
- Provide greater retirement income
- Provided greater legacy to heirs
- Give yourself greater control of your financial destiny
- Simplify your financial life and decision-making