As a kid, I was always one to follow the rules. I walked the straight-and-narrow and avoided getting in trouble, mostly because I didn’t want to be singled out or be in the spotlight (also, I grew up in the 80’s so I also needed to avoid the wrath of a spanking parent).

When it comes to money, though, you’re probably more likely to stand out if you do follow the “rules”. Everyone knows the basic rules, such as:

• Spend less than you earn (yep)
• Have an emergency fund (heard this before)
• Save 10% of your income (uh huh, yep)

But, do you know how few people actually do all of these? Only 68% of adults could cover a $400 emergency expense without going into debt. And nearly half of Americans making $25,000-$100,000 per year carry a credit card balance (source: 2021 Report on Economic Well-Being of US Households).

Who Wants to Follow Rules Anyway?!

Why don’t people just follow these very basic rules? Well, because personal finance is so much more about psychology than it is about actual behavior. When we hear these rules, we think we’re supposed to:

• Spend as little money as possible
• Delay what we want now in order to save for some random unpredictable future event
• Spend our free time doing math (yeah, no thanks)

Fixating on the negative aspects of forced saving and restricting spending certainly isn’t the best way to motivate ourselves to improve our money situation.

Shifting Our Perspective

What if instead, we focus on what we can do instead? It’s always best to come at life from a perspective of abundance and gratitude, rather than negativity and scarcity. Ramit Sethi, whose entire business focuses on living a rich life, shares his own personal money rules (there are 10 in total) including:

• Always flying business class for flights over 4 hours.
• Do not limit spending on health or education.
• Buy the best and keep it as long as possible.

These are “rules” I’m much more excited about following. Money “rules” like this are actually meant to improve your life rather than restricting it, while still guiding you in making decisions.

Making Your Own Rules

In order to craft your own rules (ahem, guidelines), you need to understand what is most important to you personally. Here are some steps:

1. Think about what is most important to you.

When it comes to spending money, what are your non-negotiables? Perhaps it’s something as simple eating lunch out during the work week. Yes, you could pack your lunch and save money, but maybe this is important to you in order to connect with your colleagues and get a break from work stress in the middle of the day.

Starting with a list of your values could help you start identifying some of your own rules. For example:

• Adventure (traveling to new locations)
• Comfort (first-class seats like our friend Ramit)
• Convenience (prepared meals/meal kits)
• Connection (meeting friends for events)
• Generosity (contribute to charitable causes)
• Health (gym membership, private trainer, organic food)
• Security (emergency fund with 6+ months of expenses saved)
• Status (name brand items)

2. Factor in your own financial situation.

Okay, so if we hadn’t enough reality by convincing you to make yet even more rules in your life, now we need also to face the fact that we all have limited resources. You might value exquisitely made Italian shoes, but if you wouldn’t be able to pay for groceries or your kids’ soccer camp this summer if you were to buy them, that’s a no-go.

Keep them on your future money rules list for when your kids finally grow up and support themselves (P.S. don’t comment and tell me that this doesn’t actually happen because I need hope in my life, mkay?).

3. Practice mindful spending & saving with balance.

Now, if your money rules only include nothing but saving-saving-saving or alternatively, only spending-spending-spending, let’s stop for a minute. Most of us generally identify as either a saver or a spender, but extremes on either end don’t make for a balanced life.

Life is about enjoying today while ensuring you are taking care of the future as well. So make sure you are balancing both.

4. Create and write down your money rules.

Now that you have a good understanding of your values, what’s possible for you, and have been lectured on not being stingy or over-indulgent, it’s time to finalize your rules.

Write down 5-10 rules that you feel will make the biggest impact in helping you make financial decisions. You no longer have to feel guilty about spending on these things and you can feel that what you have saved in your emergency fund is “enough”.

5. Document the “why” and “how” behind each rule.

You’ve likely already thought through the why when you were creating your rules, but as a reminder to yourself, it’s helpful to write down your thought process. Also, think through exactly how you plan to implement these rules on a daily basis. Then if you’re questioning whether to apply the rule, you’ll remember!

For example:

Money Rule: Always have 6 months of expenses in an emergency fund.
Why: I never want to be forced to stay at a toxic job due to money.
How: I will always keep $30,000 in a high-yield savings account. If I have an emergency that requires the use of some of the funds, I will prioritize replenishing this account before other spending or savings goals.

Want To Know My Money Rules?

I’ve been completely redoing my own financial plan due to my divorce and it’s given me the opportunity to think a lot about what I truly value. Here are a few of the money rules I’ve come up with for myself:

Money Rule #1: Never forego medical care due to cost.
Why: My health is my absolute number 1 priority and value.
How: I would rather take out debt than forego medical care. In addition, I currently have a gym membership—that I actually use!—and a personal trainer to keep me accountable and keep those future medical costs low.

Money Rule #2: Never keep a balance on credit cards. In addition, never succumb to the “credit card float”.
Why: I’m risk-averse and having debt would cause me to lose sleep at night.
How: I use YNAB to give every one of my dollars a job and ensure that I’m spending intentionally. I save monthly for expenses like annual auto insurance and Christmas gifts to make sure they don’t sneak up on me.

Money Rule #3: Keep an emergency fund of at least 3 months in both my personal and business finances.
Why: This buffer allows me to take more risks and grow my own business, as well as turn what would be a financial crisis into a mere inconvenience.
How: My emergency fund is nonnegotiable and kept in a separate account from my regular expenses. I only allow myself to spend it on true emergencies.

Final Thoughts

Money rules help you to live intentionally and prioritize the things that are most important to you in your life. They allow you to spend more, save just enough, and live your life intentionally and to its fullest. So add a few extra rules to your life in order to subtract out some stress.