Money Rules

I made you the little at-a-glance chart in the middle of this article to help you memorize a few money rules so your money can rule (lead and empower) your financial and physical life and not wreck (destroy or delay) your health, hopes, dreams, and plans.

If you're already living by a few of these rules below, then you know how to make them work for you--not work against you. If your money isn't yet working for you, I encourage you to put a strategy in place that makes the best use of these money rules, the sooner the better.

Before I got super serious about building wealth myself, I'd get bored reading the fine print and figuring out all the money rules I was up against. Not only bored. I really was disinterested. Not anymore. Today, the thing I'd tell my younger self is how I want her to learn to love to read the fine print; I realize now that it's been there all along to help me.

Sometimes fine print is there to protect who's writing it. Reading it with that perspective is helpful to me too, in a reverse engineering way. Reading the fine print is never going to hurt you--unless you read it way too late. It's like exercise... we may not want to, but we know doing it is good for us...

Sometimes I read fine print twice, I break it down, read it backwards and forwards, and really check myself that I understand the meaning a third time through it. Each round, I lock in more understanding and always think to myself, why can't they write this legal jargon in more readable and consumable ways, using regular words the way we'd all just talk to each other down by the watercooler?

I have written my fair share of content, disclosures, disclaimers, and other corporate policy, procedure fine print over my career as a communicator. Here's my attempt at describing some of the more important money rules to you in regular words to help you launch from here into your own deeper understanding. If you understand these basic rules, you're already more financially literate--and probably more financially fit--than most people, I'd say! Yay! Now tell the others!

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Basic Money Rules At-A-Glance

Money Rule Name:​	Who cares about this Rule?	​Why should I personally care?​	Does it help me at all?​	What do I get?
Rule of 72 Author Unknown	Everyone on earth who is trying to grow their wealth and reduce their debt. You too, I'm sure! :)	Well, because it's cool and understanding it can make you rich; Einstein described this Rule of compounding as the "eighth wonder of the world."	Yes. Those who understand it, will earn it. Those who don't, will pay for it.	You get a quick estimate of how long keeping a growth mindset will take to double your dough. Divide the number 72 by your expected interest rate to calculate the number of whole years it will take to double your dollars.
Rule of 72(t) Author: The United States Internal Revenue Service (IRS)	​ People wanting to retire early and want / need to access their retirement accounts’ balances prior to age 59.5.​	​Allows for early penalty-free withdrawals from your retirement savings accounts if the dollars are taken out in "substantially equal periodic payments" (SEPP). ​	​Sure! More flexibility, options, and choice as you plan your financial future are always good, right? But you may find the Rule of 55 even more flexible. ​	​Earlier access to your funds in qualified retirement accounts. ​
Rule of 55 Author: The United States Internal Revenue Service (IRS)	55-year-olds (or older) leaving their employer who may need to tap their 401(k)s (or 403(b)s, prior to age 59.5.	​Allows for early taxable withdrawals without a tax penalty from your current employer’s 401(k).​	​Sure! If you needed to make penalty-free withdrawals from your 401(k) after leaving your employer at age 55 or older.​	You'll get up to 4.5 years' worth of earlier access to your workplace retirement savings without a penalty! ​
35 years of earnings rule Author: United States Social Security Administration (SSA)	You! During your working career life, you are going to want to know which of your highest-earning 35 years of working will weigh into the Social Security Administration (SSA) equation.	The SSA will use your highest-earning 35 working years to calc your SSA benefits. If you don’t have earnings for 35 years, the gap years are calc’d at $0 earnings to come up with your monthly average and benefit calc.	​Not necessarily helpful to you if you plan to work less than 35 years / retire early and therefore limit the math that goes into the SSA factor (also known as the AIME, average indexed monthly earnings).​	Social Security retirement benefits payments if eligible. You'll get the flexibility to choose when and how much your payments will be up to the monthly maximum starting after the earliest age of 62, generally.​ (Sorry, France!).
RMD at Age 73 (Required Minimum Distribution) Author: The United States Internal Revenue Service (IRS)	Anyone who saved in a tax advantaged retirement savings account during their earning years, will care about this once they reach age 73 (this used to be 72, and is now 73 since Dec. 31, 2022).	At RMD age you may not want to yet take any withdrawals (distributions). But the IRS wants their portion of now-due tax payments you enjoyed deferring (putting off for later), and it's not your choice anymore to put them off, they must be paid at RMD Age.	Being mandated to withdrawal dollars you don't need in your pocket isn't helpful, but understanding this Rule can help you proactively strategize--consider how starting Roth contributions today can net you a pot of golden-years-cash never subject to RMD or tax).	If you don't calculate your required minimum distributions accurately or on time, you may have to pay a penalty for overdue taxes. The penalty used to be 50%. Ouch! But has dropped to 25% and could be even lower (10% - 0%) if explained and corrected quickly.

Some rules above are general rules of thumb and some are written into actual law. Rules written into law are generally subject to change and can and do change. The Money Matters Club enjoys keeping up with changes in these types of Money Rules. Knowing the rules helps you rule your life the way you decide.

There's one more Rule of Thumb I've been thinking about. I'm sure I'm in no way the first to describe it this way. But it goes like this:

Don't intake more calories than you can burn, don't spend more dollars than you can earn.

Not novel certainly. We all generally accept the science that says that if we consume way more calories than we burn up in a day, we'll put on excess body weight. Logically, most will agree that if we spend more dollars than we earn in a day, we'll load up on excess debt too.

The long-term costs associated with excess body weight and excess bad debt are generally mitigatable or avoidable risks we'd all do best to address early and consistently. To let either accumulate for too long, the harder and longer it will be to get physically or financially fit.

These concepts generally go hand in hand. You need to care about how much debt you're putting on your balance sheet in the same way you care about how much excess weight you're carrying around on your body.

If you care about building wealth and achieving financial freedom, not knowing the key money rules that will govern your finances (such as the few outlined above) and taking on excessive bad debt too could severely delay or destroy you plans for financial freedom.

Stronger financial health can lead to stronger physical health outcomes. Just like you can consume good calories, there can also be good debt you plan to carry around. Good debt can be leveraged and part of an overall financial strategy.

Consider good calories from fruit and vegetables and think about good debt in the same vein. Deductible home mortgage interest, investing in yourself and your education or personal development, or creating other net positive cash flows or income-generating assets that perform even better than just covering their own costs.

On the flip side consider the impact on your bottom line from consuming bad calories from say refined sugar and fast-food. Unhealthy and risky excess financial debt can be overly consumed too, such as being stuck in a high interest flexible rate Home Equity Line of Credit (HELOC) that was not spent to improve your home so won't be deductible, or an expensive credit card or personal loan with a very high APR you've still got to pay off on now-aging and depreciating assets you may not even have or want anymore. Debt so expensive you can't easily dig out of it, leverage it, or shrink it is ultimately very bad for you.

Excessive bad calories and excessive bad debt can both put strain on your body. This stress, no matter its cause, can lead to poorer health habits and manifest in serious health concerns, absenteeism, poorer job performance, and hastier personal decisions. I think we'd all agree that it's far harder to be a top-earner at the top of your game if you're suffering in poor health and stressed about it and your financial fitness too.

Putting yourself on a path to a long-term, sustained, clean bill of health for both your annual physical and financial charts is a smart move. To start today: aim to consume far fewer bad calories and commit to taking on no more bad/risky debt.

It is generally more expensive to live without a clean bill of physical and financial health. You'll simply pay more at the doctor and more at the bank or with creditors. Identifying a committed accountability partner who knows your physical and financial goals can help keep you on track and increase your chances of achieving good health and wealth.

Reading more about healthy money habits in The Money Matters Club can also lead to better outcomes! I'm glad you're here!

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Let's grow together!

Comment below to list any more money rules you know and follow. Or, add questions, more considerations, or personal learnings that you have to share with your Club Friends. Let's support each other as we continue to reinforce our learning and money muscle growth. Remember, if you got something helpful here, don't forget to pay it forward and tell the others!

Because money matters,

el

E.M.Powers ("el") is a regular person with no particular financial credentials or expertise who happens to be a money enthusiast and the founder of The Money Matters Club, a virtual watercooler for like minded individuals with a thirst for building their own financial health. Since 2006, she's helped thousands of co-workers build their financial literacy and wealth by participating in The Money Matters Club, a community she built on her employer's internal network. Since 2023, she's been attempting to scale The Club's reach through its second home on the World Wide Web. Her opinions--as well as the opinions of all participants--are just that: opinions, which are subject to flawed logic, math, typos and correction. She keeps a growth mindset and is also always learning something new or bolstering her own understanding after discussions at The Club. All information shared is done so with the best intent to inspire and empower others to learn more about money considerations toward building their own financial muscles. Nothing shared is meant as individualized advice that anyone should act on without doing their own curious research and personal decision making. There are no dumb questions at The Money Matters Club. Your financial health and literacy are what this Club cares about. All investing involves risk. All results can and will vary.