15 Rules of Personal Finance

Cash Flow

  1. Salary is not the same as savings. Having a high salary does not automatically make you rich; having a low salary does not automatically make you poor. All that matters is how much you save out of salary.
  2. Saving is more important than investing. Pay yourself first. The best investment decision you can make is setting a high savings rate because it gives you a huge margin of safety in life.
  3. Live below your means, not within your means. The only way to get ahead financially is to say behind your own earnings power.
  4. If you want to understand your priorities, look at where you spend money each month. You have to understand your spending habits if you ever wish to gain control of your finances.
  5. Material purchases will not make you happier in the long-run. There is something of a short-term dopamine hit we get through retail therapy, but it always wears off.
  6. Make more money. Saving and/or cutting back is a great way to get ahead, but it is an incomplete strategy if you are not trying to earn more by enhancing your career.
  7. Build up that savings account. You have to have liquid assets to take care of things when life inevitably gets in the way.


  1. Avoid credit card debt like the plague. Credit card debt is a great way to negatively compound your net worth.
  2. But credit itself is important. Have a solid score can save you thousands of dollars by lowering your borrowing costs on the biggest purchases of your lifetime, home(s) and car(s).
  3. Get the big purchases right. Overextending yourself on housing and transportation can be a killer.


  1. Always get the match. Max out your 401(k) retirement contributions. At a minimum you should always save enough to get the company match.
  2. Save a little more each year.  Avoiding lifestyle creep can be difficult, but that's how you build wealth.
  3. Do not think about retirement, but financial independence. The goal should not be about making it to a certain age so that you can ride off into the sunset, but rather getting to the point where you do not have to worry about money anymore.


  1. Taxes matter. Everyone should try to do their own taxes at least once just to understand how it all works. Take advantage of as many tax breaks as you can and always understand your personal tax situation.
  2. Cover your insurable needs. This is a huge personal finance margin of safety item. Insurance is about protecting wealth, not building it.


CFA® - Chartered Financial Analyst

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