RULES OF MONEY
Mastering money starts with understanding the fundamental rules that lead to financial success. This page explores key principles such as budgeting, saving, investing, debt management, and wealth-building strategies. Whether you're looking to grow your wealth, achieve financial freedom, or secure your future, these essential money rules will guide you toward smarter financial decisions.
Rule of 25:
After accounting for her Social Security and other sources of retirement income, Katie plans to spend $100,000 a year in retirement. 100,000 x 25 = $2.5 million, so Katie would need $2.5 million invested to cover annual expenses of 100,000.
The 4% Rule:
Katie, now a retiree, has $2.5 million in retirement savings and follows the 4% rule. She can safely withdraw $100,000 annually (4% of $2.5 million).
The Rule of 72:
The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return. Alternatively, it can compute the annual rate of compounded return from an investment, given how many years it will take to double the investment.