Essential Money Rules to Live By

Essential money rules are often based in the common sense notions of conserving money through saving, monitoring money use with budgets, prudent investment of money through financial planning etc. Life makes it very easy to lose money with cost of living, surprise expenses, family, taxes etc. This is due to the way the economy is structured, but is also determined by personal financial decision making.

Maintain positive cash flow

Positive cash inflow is the net gain after the subtraction of cash outflow. Furthermore, in order to retain and grow what money one receives, one must also save. The rest is easy provided one has fiscal discipline, which is the next rule after that. Fiscal discipline covers a wide range of money management areas including keeping a budget, paying bills on time, spending within financial means etc.

• Generate income
• Spend less than is earned
• Save and budget

Exercise fiscal discipline

Fiscal discipline can address some of the major areas of personal financial management such as debt management, investing, retirement planning, budgeting and spending and saving. Finding an order to these events is not as important as the primary rules but can be a good idea depending on one's unique financial situation. That is to say, if one has a lot of high interest debt, that may be a good place to start not only for increasing positive cash inflow but also in improving one's personal financial stability. Money rules that reflect fiscal discipline are listed as follows:

• Avoid high interest credit cards
• Shop prudently
• Invest wisely and in accordance with personal goals
• Create an Emergency Fund
• Save for retirements using a tax deferred financial instrument ex-IRA
• Maximize legal tax deductions for optimal taxation

Why money rules are important

Money rules are important because without them financial life can become haphazard, chaotic, unprofitable and perhaps even insolvent. Managing finances is a part of life as is hygiene, shelter, and sustenance. We may be trained to not consider personal financial management to be high on the totem pole of needs, but in one of the essential ingredients to acquiring and sustaining a fruitful and balanced life in which needs are met is money. Therefore money is important and money rules can help achieve life goals and needs.

To understand the nuances and importance of money rules, one need only look to eminent financial managers and fiscally savvy individuals such as Peter Lynch, George Soros, Warren Buffett, Richard Branson, and the historical Benjamin Franklin, Adam Smith, and John D. Rockefeller. All these people are current and past financial gurus who create or created financial success using money rules of one kind or another. To glean some of their wisdom one can read some of what they have had to say about money.

"I believe that thrift is essential to well-ordered living." -John D. Rockefeller

"Beware of little expenses. A small leak will sink a great ship." -Benjamin Franklin

"All money is a matter of belief." -Adam Smith

"If all the economists in the world were laid end to end, it wouldn't be a bad thing." -Peter Lynch

"And obviously, from our own personal point of view, the principal challenge is a personal challenge." -Richard Branson

Everybody's life and financial situation is different, and because of this money rules may be best thought of as methods, ways and techniques that point one in the right direction rather than show one the exact path to financial success. The money rules in this article are intended to assist one in gaining financial control and direction rather than demonstrate how to become rich in a step by step formula. 

Money and its behavior in people's lives and economies is a fluid and dynamic medium and instrument. In other words it is subject to a wide range of economic, psychological and commercial forces. In light of this, finances have the ability to not abide by fixed rules, yet still abide by the truths of underlying principles.

Source: http://www.bainyquote.com (Brainyquote)