7 Rules for Saving Money

by Ben Meer

CREDIT: Ben Meer @SystemSunday

50/30/20 Budget Rule

Allocate your income to these buckets:

50% Needs
• Housing
• Food
• Transportation
• Basic Utilities
• Insurance

30% Wants
• Entertainment
• Travel
• Fashion/Gear

20% Savings
• Debt payments
• Emergency fund
• Retirement
• Investments 

The Rule of 72

Get excited about saving.

Use the Rule of 72 to quickly calculate how many years it will take to double your money.

(Divide 72 by the interest rate)

• 8% investment return = Double your money every 9 yrs 

1% Rule for Impulse Buys

Use the 1% Rule to curb impulse buys.

If the item is over 1% of your annual gross income, wait 3 days.

If you still want the item after 3 days, get it.

Why this works:

You’ll often realize you don’t actually want/need that thing. 

401(k) Match Rule

Many employers will match part of the money you put into retirement.

So maximize your 401(k) contribution—

Up to the highest employer match offered.

This is free money. 

3X Emergency Fund Rule

Keep 3-6X your monthly income in an emergency fund.

When a rainy day comes, you’ll weather that storm.

(I learned this rule from my friend, @AccentInvesting.) 

The Rule of Automation

Defaults are powerful because people are lazy.

So make savings your default by automating it.

I highly recommend the book “I Will Teach You to Be Rich” @ramit

• Save and invest money before you ever see it
• Create an automated money system 

Item in, Item Out Rule

If you purchase one item, then donate, toss, or sell another.

Minimalism is a dual discipline:

Manage both inbound and outbound possessions to enjoy equilibrium. 

TL;DR Money Saving Tips

1. 50/30/20 Rule
2. The Rule of 72
3. 1% Rule for Impulse Buys
4. 401(k) Rule
5. 3X Emergency Fund Rule
6. The Rule of Automation
7. Item in, Item Out Rule