Practical Rules for Life

Things that will help you avoid some common pitfalls

1.     Get some kind of education or training that will allow you to get a job that pays reasonably well. Not everyone needs to go to college but you need some kind of specialized skill. Unskilled customer service and other lower-wage jobs generally don’t pay enough to support a person in reasonable comfort and financial security.

2.     Don’t have children before you are able to responsibly support them, pay for quality childcare, and provide a stable, healthy environment for them. Note that if you do not have a reliable partner it requires a much larger income to do this on your own. Having a child too soon makes everything else on this list a lot harder.

3.     Budget carefully. Don’t spend more than you make, even if it means you have to live with roommates or in less desirable circumstances.

4.     Be very selective about debt. Don’t run up credit card bills you don’t already have the money to pay. Generally the only circumstances where debt is acceptable are student loans, mortgages, car loans, or emergency situations, and these should be kept to a minimum and paid off as soon as you can.

5.     Treat education as an investment. Don’t spend more on your education than it will pay you back in increased earnings. Spend as little as you can on it while still achieving the desired goal.

6.     Prioritize medical insurance, even if you have to live very frugally to afford it. Try to never be without it, because it may be difficult to get it again if something happens while you’re without it.

7.     Make sure your budget has savings in it, even if it means living frugally. Emergencies will happen and you’ll need to be able to pay for repairs, medical care, and other urgent and unplanned expenses. Plan to save a certain amount out of each paycheck.

8.     Save for retirement. The earlier in your life you can start, the better, because if you save a little bit early in life, you won’t have to save a lot later.

9.     Understand investing. Even if you don’t think you have enough money to invest yet, understand how it works, and start small. Otherwise your savings can disappear when prices go up, and you’ll always be dependent on someone else paying you. Owning things that make money is much better than working to make money, but you usually have to start out by working to make money before you can own things.