Rules are made to be broken — or are they? When it comes to money management, there are some financial rules you’re better off keeping. While some money rules have loopholes that can work out, other types of financial rule bending could wreck your finances. Here are four money rules you should never break.
1. Plan for the end
Save for your retirement. While you might reason that you can just work until you die, this isn’t such a great plan. If you happen to become disabled, chances are high you won’t be able to work. And if you are able to work, you may not be able to work at your previous level. So start putting away money for your retirement now. There are better plans than breathing your last breath at your office desk. If you’re off to a late start, make an effort to maximize contributions to your retirement plan. For 2016, you can contribute a maximum of $18,000 to a 401(k). Those who are age 50 or older can make an additional catch-up contribution of $6,000.
2. Don’t spend like a billionaire (unless you are one, then carry on)
Live within your means. You’ve probably heard it hundreds of times before, but it’s worth repeating. Following this rule will keep you out of a lot of trouble. If you like to flash your cash, you’re in for a really tough time when it comes to financial health. Nursing bad money habits that cause you to live above your means will likely result in a mountain of debt. However, if you make smart choices with your money, you’ll be one step closer to building and protecting your wealth. One of the keys to living within your means is to carefully track your income and expenses. Know exactly how much money is coming into and going out of your household. This way, you can avoid overspending each month and relying on credit cards to help you bridge the gap.