Your priorities and the lifestyle you have in your 20s will be much different then what they will be in your 40s. Your money habits will change throughout the years too. Regardless of where you’re at in life, these money rules are what everyone should live by. 

1. Buy a Used Car

You don’t have to buy a rusty junker to get a satisfying deal on a vehicle.  Although, to maximize the value of your purchase, you do want to avoid buying brand new. The sweet spot is to buy a car 3 years old. Surprisingly, as reported by, “the price gap between the average new and used car is right around $20,000.”

Not only is the sticker price a lot larger on new cars, they instantly start depreciating in value. Used cars still continue to depreciate but at a much slower decline after the first 3 years of the car’s lifetime. Another factor to consider is that the sales taxes on a new car versus a used are much higher. Buying a used car from a private party as opposed to the dealer can increase savings even more by potentially avoiding other random fees like processing and advertising.

2. Save for Retirement

Retirement planning 50 years ago was much different than it is today; Americans could retire with the promise to live comfortably from a pension plan. Now, it’s the responsibility of the worker to save for retirement. The most important thing you need to know is to start saving right away. Compound interest is your friend. “The power of compounding turns a dollar saved in your 20s into ten dollars saved in your 50s” (

If your employer offers a match to your retirement contribution, such as a 401K plan – take it. It’s literally free money! The easiest way to save is to have it automated. You won’t even miss that portion of your paycheck. Consider starting small and increasing your contribution by 1% every quarter or year until you’re where you want to be. See if your goals are on the right track by using this retirement calculator.

3. Pay Off Debt

Have you ever heard of the snowball method to tackling debt? It’s easy; first you will need to list out your debts from smallest to largest amount owed. You pay the minimum payment on all your loans with the exception of the lowest one. That one you will attack ferociously! Put any extra cash you can to that smallest payment with the main goal of abolishment in sight.

Here is a great example by Let’s say you have the following debts:

  • $500 medical bill ($50 payment)
  • $2,500 credit card debt ($63 payment)
  • $7,000 car loan ($135 payment)
  • $10,000 student loan ($96 payment)

In this example you have an extra $500 a month you can pay towards your debt. That medical bill is gone in a month. Then you’ll be paying $613 on the card (the freed up $550 plus the $63 minimum payment). Four months and you’re half way through your debt list. Now you’re on to $748 a month towards your car loan. Ten months later, the car is 100% owned by you. The final check mark - student debt - you’re paying $844 a month on it which will only last about 12 months. Done! You just paid off $20,000 worth of debt in only 27 months!

The reason why this method works is because of the confidence boost you get by crossing out items on your debt list. When you try tackling it all at once it seems overwhelming, like seeing yourself in a debt pool and struggling to stay afloat. You’re more likely to give up and stop paying any extra all together. By prioritizing your payments and focusing on it in steps, it makes being debt-free much more attainable.

4. Create a Budget

Most people think of budgeting as giving up the fun expenses like going out to dinner or the movies. When in reality a good budgeting plan helps save you from the worry of overspending. It is a tool to help you properly allocate your money. Budgeting helps you keep your eyes focused on your money goal.

First you will want to write down how much you make in a month. Then, minus out all your expenses including child care, grocery expenses, gas, and so on. Also include an area for how much you plan on saving each month for the unexpected emergencies. Now you have your dollar amount of fun items like entertainment, shopping or stopping for coffee in the mornings. Then when you want higher priced items like a new TV or traveling to Florida, you know where to cut back and how long it will take you to get to your goal.

Buying a car, saving for retirement, paying off debt, and creating a budget are all done at different stages in life. The smarter you choose to handle these life goals, the larger your savings can be. Remember to live by these easy money rules.


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