3 basic rules for managing your money

How we see money determines how we treat it and this in turn creates the financial circumstances we experience. Having a mindset of wealth and abundance doesn't mean being irresponsible with money and disregard the basic rules. The celebrity world is littered with tales of stars who have been forced to declare bankruptcy despite the fact of having earned hundreds of millions of pounds during their career. For example, Michael Jackson is purported to have earned over $500m; yet at the time of his tragic and untimely death, it is estimated that his estate was over $400 million in debt.

Far from disregarding basic financial management rules, a mindset of wealth and abundance positively embraces the realism of living within your means and being able to defer gratification. When you truly embrace wealth and abundance as a way of being, you no longer look to possessions to make you feel good. The need to constantly top up the feel good factor by purchasing more and more stuff is one of the strongest drivers for living beyond one’s means. Also living beyond your means plays into the lack mentality. You have to have it now because it may not be available by the time you have saved the money to pay for it.

The three basic rules for creating money harmony and financial security, which have served me well, are:

1. Live within your means,

2. Save regularly and

3. Invest regularly and wisely.

However, what if you haven't lived by these rules? What if you’ve always spent more than you had, never saved any significant amounts and you have not managed to put aside any investments for your nest egg? Scarier still, what if you are already over 40? Is it too late for you? Are you destined to live out your extended days either working until you are 80 or living in poverty? Well if this is you, the good news is that it's not too late to change your future. You have the capacity to create a future of financial independence now.


First things first, let's dispel the number one myth when it comes to marrying the idea of a wealth and abundance mindset to implementing practical steps to achieving your goal of a financially secure future. The myth that it should be effortless! We in the west seem to have got hung up on the idea that everything should be effortless and easy. Indeed if anything seems like too much effort and hard work (or “its long” as my teenage son puts it when I ask him to mow the lawn!) we are automatically turned off it. However the truth is that effortlessness is a process not a fixed state. Effortlessness comes after you have put the work in and built the foundation that enable you to leveraged your efforts so that your future return is significantly greater than the effort you put in now.

If you have left securing your financial future until 10 to 15 years before you reach the current retirement age, in order to catch up you will need to work hard at it. Not like breaking rocks in a chain gang, but it won't be like eating grapes on a Chaise Lounge sofa either.

The following diagram illustrates this point

So the good news is you can change your financial future by applying some concerted effort now. Moreover if you direct that effort in the right direction you can achieve your goal within 3 to 5 years.

What rule do you follow for managing your finances? Please share your experiences; I look forward to reading about them.