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Financial Rules

To become wealthy in your 30s, follow these financial rules in your 20s: 1. Increase your earnings, decrease spending, and invest everything left over. Make sure to have an emergency fund. 2. Pay yourself first by investing at least 20% of your pay before spending what's left. Automate good financial decisions like savings and investments transfers to prevent mistakes. 3. Follow the "50-30-20 rule" by allocating 50% to investments, 30% to needs, and 20% to wants to become a millionaire. Minimize the big expenses of transportation, housing, and food.

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Thanseem Abdul Hameed
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148 views12 pages

Financial Rules

To become wealthy in your 30s, follow these financial rules in your 20s: 1. Increase your earnings, decrease spending, and invest everything left over. Make sure to have an emergency fund. 2. Pay yourself first by investing at least 20% of your pay before spending what's left. Automate good financial decisions like savings and investments transfers to prevent mistakes. 3. Follow the "50-30-20 rule" by allocating 50% to investments, 30% to needs, and 20% to wants to become a millionaire. Minimize the big expenses of transportation, housing, and food.

Uploaded by

Thanseem Abdul Hameed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

TO BECOME WEALTHY

IN YOUR 30S,
LEARN THESE
FINANCIAL RULES
IN YOUR 20S
01 3 Principles
Rule
This is the foundation of it all:

1. Increase earnings
2. Decrease your spend
3. Invest everything left over

Ensure your investments include an


emergency fund and you're prepared
for the unexpected.
02 Pay Yourself
First Rule
Too many people get paid, spend on
their lifestyle, and then invest.

You need to invest at least 20% of your


pay FIRST and then spend what's left.

Make your investment a priority. Do it


first, and live off the rest.
03 The Automation
Rule
You make 35,000 decisions a day.
This leads to decision fatigue and bad
decisions.
Automate good decisions to prevent
mistakes:
get paid
auto-transfer to savings
auto-transfer to investments
set up auto-bill pay for your bills
04 50-30-20
Rule
The average American household saves
10%.
Some have proposed the following:
50% - needs
30% - wants
20% - investing

To be a millionaire, flip the script:


50% - investment
30% - needs
20% - wants

The closer you can get to this, the better.


05 The Big 3 Rule
The big three expenses for you are:
transportation
housing
food

A certain amount of each expense is a


need, the bare necessity.
The remaining portion you can control,
the want.
The first step in reducing spend is to
know: need versus want.
06 20-40-10 Rule

If you're buying a car, use the 20 - 40 - 10


Rule.
20% down payment
loan term no more than 4 years
Spend less than 10% of monthly
income

This keeps your car expenses reasonable.


07 $27.40 Rule

If you save $27.40 every day, you'll


save $10,000 per year.

If you start investing $10,000 per year


at 8% at 20, you'll have $2 million at
55.
08 Rule of 72
Compounding is the 8th wonder of the
world and has the power to make or
break you.

Rule of 72 indicates how long it'll take


your money to double taking
compounding into account.

If an investment earns 18% per year, it will


double roughly every four years.
09 The Subtract 100
Rule
Subtract your age from 100 and put that
percentage of assets into stocks.

If you're 20, you should have 80% stocks


and 20% bonds.

Some argue, given longevity and


retirement horizons that you should put
more into stocks.

Consider your risk tolerance.


10 The 4% Rule
The 4% rule is the safe withdrawal rate
and indicates what you can withdraw
from your investments without drawing
down your principal.

Said differently:
1. Calculate monthly expenses
2. Multiply by 12 to annualize it
3. Multiply by 25 (4% safe withdrawal rate)
SIGN UP
FOR THE
NEWSLETTER
And receive my free guides to help you
Be Better, Achieve More and Be
Financially Free
Link in Bio

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