The rewards for “getting it” have never been so immense, and the penalties for financial ignorance have never been so stiff.
—Niall Ferguson
Money mastery is not hard. It’s the lies we believe about what money can do for us and the dumb decisions we make out of ignorance that cause so much misery. Once the misery sets in, then personal finance and money management can take on high levels of difficulty, to the point we are overwhelmed.
I hate to think what life would be like if there were no rules. From morning to night, every day of our lives, we live by some kind of rules.
Most families have rules of the house—expectations of conduct and decorum that are expected of all those residing therein, with age-appropriate consequences for failure to follow the rules.
If you’ve ever built or remodeled a home, you know something about rules in local building codes, which I will admit that to a layperson can appear to be a total waste of time and money. Still, those rules make for much better, safer, and more pleasant living conditions when all is said and done.
Like guideposts that mark the sides of the road, rules keep us from wandering off into danger. They offer assurance that we’re on the right path.
Meet the 7 Rules
Over the years, I have taken the lessons I’ve learned, the mistakes I’ve made, the principles in Scripture, and wisdom from experts, counselors, and teachers whom I respect and boiled it all down to these simple rules that changed my life.
Rule 1: Spend Less Than You Earn
Rule 2: Save for the Future
Rule 3: Give Some Away
Rule 4: Anticipate Your Irregular Expenses
Rule 5: Tell Your Money Where to Go
Rule 6: Manage Your Credit
Rule 7: Borrow Only What You Know You Can Repay
The 7 Rules are not seasonal, nor are they based on emotion. They work for people who have lots of money as well as those who are struggling to survive on a single income or are between jobs.
The 7 Rules are for every income, every age, every stage of life. They apply to an unemployment check, an allowance, a paycheck, a dividend check, a bonus check, a trust account, an inheritance, and even a vast estate.
The 7 Rules apply to individuals and families who are deeply in debt, just as they do for those who are debt free. The rules do not change, because they are based on timeless truth and unchanging principles. They’re like anchors that keep us from drifting off course or running aground even in the midst of a storm when visibility is all but lost.
Here’s the best part: the 7 Rules are simple. So simple, in fact, they can fit on the back of a business card. Given 15 minutes you could even memorize them. In fact, I recommend you do.
Why You Should Care
About once a month or so I travel to speak to groups of people about money, something I love to do. Just before I step to the podium, I look out at the audience. I can almost hear what they’re thinking: Great, she’s going to talk about money. Why should we care? That question revs my engine and puts me into my zone. I hope you’re asking the same question, right now. Here are four reasons:
Clean Sweep
I’m a sucker for home improvement TV shows, especially the ones that focus on organization and de-cluttering. That’s where I learned this important tip on organization: don’t try to organize your clutter. Instead, move everything out to create a clean, clear, open space. Then go through everything you removed, sorting and evaluating what you want to keep. Next, bring things back into the room in an orderly manner.
In your mind’s eye, picture your financial life as a big room that is filled with every aspect of your current financial situation: bills, debts, income, taxes, mortgage, savings, student loans, unemployment, retirement concerns—everything that you identify as part of your money life.
Using the “clean sweep” approach, empty that room. Haul everything out onto the lawn or somewhere far from your mind’s view. Don’t stop to ponder over stuff, just round it up and move it out.
Mentally, give that space a good “cleaning” or whatever it takes for you to be able to take a deep breath, sit back, and enjoy the absence of financial noise.
It is against the backdrop of this fresh, clean slate that I want to offer you the 7 simple money rules in theory so you can grasp how they work and fit together, without interference from what may be going on with your finances at the moment.
We are going to do this one chapter, one rule at a time. I will explain the rule then tell you why the rule is integral to your life. I will include clear instructions, suggestions, and frequently asked questions for how to apply the rules to your life starting with your current financial situation. Think of this as an orderly way to move items back into the “cleaned room” of your personal finances. I can’t promise an overnight transformation. But by facing the truth and applying the rules, change can begin right away.