21 money and investing rules to achieve financial freedom

You can imagine how complicated money and investing has become that one has to start to offer rules to navigate the terrain. No one is spared – young, old, rich, not so rich.

So, here’s a fresh set of reminders. The bottomline is that you don’t need to do a lot to be successful in investing. A few good habits and control over your mind is all it takes.

And if you seem to forget what are they, then here are 21 rules for you and your money.

1. Save first and then spend
2. Save more than you spend
3. Start investing early, like as early as you can
4. Buy health insurance for yourself (a personal cover, even if provided by a corporate)
5. Buy pure life insurance – term plan (specially if you have financial dependents)
6. Build an emergency fund – 6 to 12 months of your regular expenses
7. Do your tax planning; However, don’t invest just for saving tax
8. Invest in equity – unless you are inheriting a fortune, this is the only way to build real wealth in long term.
9. Learn how equity works as also what is a stock or a mutual fund.
10. Stock trading is not investing – it’s a different ball game. Be careful.
11. Take a regular (6 monthly, or yearly) stock of all your investments. This includes EPF, PPF, FDs, Stocks, MFs, etc.
12. Understand how compounding works with investing and several other life habits. This will help you align your actions specially of investing regularly.
13. Have 1 or max 2 credit cards and if you find yourself spending more because of them, shut them down.
14. Pay your credit cards first and in time, don’t roll over credit, don’t incur interest or late fee charges
15. Don’t borrow or take loans for items that depreciate in value (car, phones, etc). You will kill the compounding.
16. Don’t let buying a house become a noose around your neck.  Invest for it, build the funds and then buy, ideally with 100% down.
17. Read good books – on life, money, investing – you can learn a lot through experiences of others
18. Have a hobby that you can spend time on outside work. This will keep you from destroying your investments and the compounding.
19. Stay away from financial media (specially those that tend to get you to act every now and then)
20. Engage an investment adviser/financial planner right in the beginning to build good financial habits and to prevent your from making BIG mistakes.
21. Keep it simple.

Now, I have come across several individuals who know much of this but follow none.

Even today, merely reading these up is going to be of no use to you. If you want to really benefit then, make them a part of your life. Here’s how:

1. Write down each one of them (or the ones you are missing on) on a piece of paper or your computer.
2. Follow through every week and see if you have started the practice or not.

That’s where you will see real change.

Between you and me: What other money habits have helped you? Do share in the comments.