The ONE Thing I Wish I Had Done …

While out for dinner the other night, a friend asked me a question.

“What is the ONE thing you wish you had done when you were younger?”

Surprisingly, an answer popped into my head immediately, and now, a couple of days later, I wouldn’t change it.

The one thing I wish I had done when I was younger was to implement the “Money Rule of Thirds.”

The “Money Rule of Thirds” is something I came up with and committed to several months ago.

Please note that when I say that I came up with it, it is highly likely that I heard or read about the idea somewhere and it has been lying dormant in my subconscious.

Either way, I think it is a solid concept and something everyone who is able should start putting into practice immediately, unless they already have a solid money management system they follow.

Here it is.

Everything you earn, split it into thirds. One third is for “today”, one third is for “tomorrow” and one third is for “future.”

“Today” money is for daily spending. It includes things like food, rent, bills, clothes, dining out, and health.

“Tomorrow” money is short to mid-term savings to buy stuff that is out of your “today” budget. Things like travel, a car, or unexpected emergency expenses.

“Future” money is long term savings, and this is split in half. One half goes into a savings account for big ticket items, such as a home or expensive emergencies. The second half is invested.

As you may have noticed, this is a pretty flexible system. If you don’t have enough for basic living expenses in your “today” fund, you can take it from the “tomorrow” fund. And if you don’t have enough in your “tomorrow” fund when there is an emergency, you can dip into your “savings” fund.

To make this work, there are a few rules.

1. Only take from other funds in emergency situations.

For example, if you don’t have enough to buy groceries, or there is a medical emergency, or your car breaks down and you need it to go to work. These are good reasons to share money between funds.

Buying a new dress or going on a pub crawl are not.

Live within your means.

2․ Live within your means.

If you want to increase your lifestyle, increase your income. There are numerous ways to do this. Get a raise, get a second job, start a side hustle, or start a business, just to name a few.

3. Stay out of debt.

The ONLY debt I think is potentially worth getting into is a mortgage for a home.

Getting a loan to buy real-estate to make money is not a good idea, unless real-estate is your business and you really know what you are doing.

Of course, I optimize my life for freedom, and in my opinion, as long as you have debt you can not be truly free.

4. Never withdraw money from your investment unless investing is your business.

For the average person, the best investments are low-cost index funds. Set it up, add money regularly, and then just don’t look at it. Put at least one-sixth of everything you earn into two or three low-cost index funds for 20 plus years and you will probably be able to live off the dividends for the rest of your life.

If I had started this when I first started working I’m pretty sure I’d be a millionaire by now, and I’ve never had a high paying job.

5. When you have spare money, invest it.

The term ‘spare money’ is relative to your needs and wants. You could save up a lot in your ‘tomorrow’ fund and take an epic holiday, or you could take a normal holiday and invest the rest.

What you choose to do depends on your goals and desired lifestyle. However, the more you invest the faster compound interest will make you wealthy.