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Stop asking $3 questions and start asking $30,000 questions.

Every day we wake up, there are a million money-related decisions we can make.

Should I eat out?

Should I buy this new kitchen appliance?

I’m going grocery shopping—should I go to Whole Foods or another store?

By narrowing down a few key beliefs, you can eliminate 99.9% of decision making and focus on more important things.

By doing this, you don’t have to worry about spending at a general level. Why? If the rules you set are followed correctly, they will lead you to the right place.

When you’re suddenly faced with the choice of paying extra for guacamole on your burrito, the decision becomes effortless if you’re taking care of more important issues like contributing a higher percentage to your 401k.

That’s the difference between asking $3 questions and $30,000 questions.

“Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.”

Part of creating your money rules is making them creative for YOU. Rules generally sound bad or restrictive, but developing personal money rules can be fun and interactive. Reframing the idea of having rules can be empowering and freeing, especially when they are so personal.

Money rules should be tailored to you and your values, they are not meant to be cookie-cutter decisions. In this post, I want to summarize one of this week Books and podcast shared by my Broker, "Sethi’s Money Rules". Having rules about money is a great forcing function to focus on what really matters and where our priorities lie.

Rules can be about people, not just money. After all, what’s money for? At a certain point, after you’ve covered the basics—you should use money for the people and things you love.

1. Always have 1 year of emergency fund, cash.

How to implement Rule #1:

  • Create a detailed personal budget that tracks your income and expenses.

  • Calculate your monthly fixed (rent, utilities) and variable (food & dining, shopping) expenses to know exactly how much you need in an emergency fund. If one year is too overwhelming, try to save 3 months.

2. Save 10% and invest 20% of gross income, minimum.

How to implement Rule #2:

  • Calculate your annual gross salary and allocate 10% to a high-yield savings account, and 20% to investments.

  • I calculated how much I need to save annually and have an automatic transaction from my checking to my savings account each week. Moving smaller increments makes me not notice that it’s missing from my spending account.

3. Pay cash for large expenses

How to implement Rule #3:

  • Assign every dollar in your budget a job. My budget includes a line item that allocates money to my savings account. I consider this an expense in my budget since I’m paying—myself.

  • When I was planning to propose to my now fiancée, I calculated my budget for a ring and allocated an appropriate amount into my savings account each month to completely cover the cost when it was time to make the purchase.

4. Never question spending money on books, appetizers,

health, or donating to a friend's charity fundraiser.

How to implement Rule #4:

  • I have a fun implementation of this rule. When my friends started getting married, I made a rule that I would give them a very nice chef’s knife as a gift. I love cooking and it’s something we have to do almost every day. With a good knife, prep becomes easier and the recipient of the gift will always think of you.

5. Business class on flights over 4 hours.

How to implement Rule #5:

  • Nick Maggiulli wrote an excellent post on this topic called Climbing the Wealth Ladder. He framed making financial decisions based on your net worth. If a purchase decision is 0.01% of your net worth, it’s trivial and you shouldn’t spend too much time thinking about it. As you move up in levels of wealth, $1 decisions, $10 decisions, $100 decisions eventually become trivial.

6. No limit on spending for health (personal trainer) or

education (courses, events, etc.).

How to implement Rule #6:

  • To a certain extent, we all have things we buy where the price tag doesn’t matter. If you’re doing well on saving and investing with money left over, you shouldn’t have to stress about buying something that makes you happy.

  • I value experiences over material possessions, so I will always default to spending more when I’m on vacation or out with friends.

7. Buy the best and keep it for as long as possible.

How to implement Rule #7:

  • It can cause some initial sticker shock, but buying quality products that last can be a game-changer for your overall wealth. If you don’t have to replace what you buy frequently, you can be free to save and invest more money. I bought some All-Clad pots and pans recently that I hope will be with me for decades.

  • There’s a Subreddit dedicated to these items called /r/BuyItForLife

8. Earn enough to work only with people I respect and


How to implement Rule #8:

  • This is another rule very specific to Sethi. Most people are not in the position that he’s in, we don’t have the benefit to make hiring decisions and choose who we work with.

9. Marry the right person.

How to implement Rule #9:

  • The thinking behind finances for couples is extremely outdated. It used to be that men controlled the finances and women got allowances. The premise of most of I Love Lucy was Lucy spending her allowance one way or another.

  • Communication and respect for your partner go a long way to getting on the same page about your finances. This is both for married couples and especially those who are thinking about getting married.

10. Prioritize time outside the spreadsheet

At a certain point, your money will work according to the systems you set up. Everything is good. You’ve won the game, and now it’s time to live life outside of the spreadsheet. This means prioritizing family, loved ones, and health—not sitting and looking at Excel every day. A “rich life” is lived outside of the spreadsheet. There are so many more interesting things in life after you get the 85% solution implemented with savings and investments. Tweaking assumptions is not going to improve your life, but picking up a fun hobby will.

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