A few weeks ago I was watching the movie Fight Club. In one of the scenes, Brad Pitt’s character Tyler Durden was explaining the 8 rules of fight club. If you wanted to be part of the club, you had to follow the rules. It was pretty simple and didn’t need much more explaining, but what if we applied these rules to personal finance?

Okay, they don’t translate exactly, but if we established our own rules of personal finance then things would be a lot easier. Think about it, it would be a basic set of guidelines that people could follow to get their finances in order – plus you don’t need to get beat up with these rules.

rules of personal finance

1st RULE: You will save your money

Saving money may not be very fun, but your future self will thank you for it. You basically need to save money for anything you want, sure you can put it on credit, but why would you want to pay interest when you don’t have to? It doesn’t matter if it’s short term savings or long term, just start saving.

2nd RULE: You will avoid paying fees

It may be impossible to avoid all fees, but the ones you can eliminate are bank fees. There’s no good reason why you should be paying ATM, account, and Non-sufficient funds fees when they can all be avoided. Don’t think that these fees aren’t costing you much, they add up in the long run.

3rd RULE: You will not buy things you can’t afford

This rule ties directly with saving your money. It doesn’t matter if it’s a new computer, car, or a house, don’t buy things you can’t afford. Don’t let low monthly costs trick you into thinking you afford something.

4th RULE: You will take free money

This is one of those rules of personal finance that’s often overlooked that’s a huge mistake; who doesn’t like free money? If your employer offers a pension plan or some kind stock program then make sure you sign up for it. Free money is rare these days so you need to take advantage of it when you can.

5th RULE: You will pay your credit card bills in full and on time

If you’re not paying your bills in full and on time every month, you’ve probably already broken rule #3. Interest rates on credit cards are insane, think 20%, at those rates it won’t take long for your purchases to double in price. Technically speaking your credit score won’t be affected as long as you’re making minimum payments, but again why would you want to pay those interest charges?

6th RULE: You will read a book about money

If you read just one book about money then all these rules of personal finance will become pretty obvious. Learning how to manage and invest your money is really not that complicated, you just need to take the time to read about it. Honestly, if you read just one book, you’ll probably know more about money than 80% of the population. Check out my favourite personal finance books for Canadians for inspiration.

7th RULE: You will not care how others are doing

Just because your friends have a nice car and big house doesn’t mean they’re good with their money. Who cares what they have, just worry about your own finances. Too many people get obsessed with comparing themselves with others, but it doesn’t matter. Those people could be heavy in debt and struggling, yet you wouldn’t even know it.

8th RULE: You will have an emergency fund

Some people say that emergency funds aren’t important as long as you have access to a line of credit, but borrowing money during a crisis doesn’t sound like the smartest idea to me. To me, it makes more sense to have a fully funded emergency fund that you can access easily. Saving 3-6 months of expenses won’t be easy so save what you can every month until it’s finally paid off.