7 Money Rules You Should Never Break If You Care About Your Future

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 seven money rules you should never break.

1. Plan for the end

retirement label on jar filled with coins
Do you really want to work until you die? | iStock.com

Save for your retirement. Although 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 might 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 2017, 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)

Man holding money
Make smart choices with your money. | iStock.com/Alen-D

Live within your means. You’ve probably heard it hundreds of times, 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.

3. Prepare for the worst

piggy bank with dollars
Have a solid emergency fund. | iStock.com

Emergencies happen. No matter how careful you are, something is bound to happen that could wipe out most or even all of your financial resources. This might be one of the most important financial rules of all, but many Americans are failing miserably when it comes to building an emergency savings fund. A recent Bankrate study found most consumers are unable to manage a financial emergency, such as a $500 car repair or a $1,000 emergency room bill.

4. Don’t cosign a loan

student loan
Cosigning is a responsibility you don’t really need. | iStock.com

While it might seem heartless, cosigning a loan could spell trouble down the road. When you add your name to someone else’s loan, you’re on the hook if that person doesn’t pay up. Do you really want that kind of responsibility hanging over you?
Besides the responsibility, also know cosigning a loan will increase your debt-to-income ratio. You could also end up ruining your credit if the other person consistently makes late payments or skips payments. Because a cosigned loan appears on your credit report, you might want to do yourself a favor and avoid this potentially disastrous situation at all costs.

5. Closely manage credit

woman chooses one credit card from many
Check your credit report annually. | iStock.com/BernardaSv

If you’re like most Americans, you’re probably among the 174 million who have at least one credit card. You might think you’re doing OK by paying your bills on time and in full each month, but that isn’t enough. If you want to have excellent credit, it will be necessary for you to actively manage it.
An important part of managing your credit is ordering a copy of your credit report each year. This will allow you to see whether there are any mistakes that should be corrected. Checking your report also gives you an opportunity to see whether someone might be fraudulently opening accounts in your name. Staying on top of your credit activity and taking steps to correct mistakes could help you raise your score and stay in good standing with your creditors.

6. Negotiate

boss hands check to employee
Negotiate your salary. | iStock.com/AndreyPopov

Don’t be shy when it comes to your money. Those who know how to negotiate always come out on top. This is especially true when it comes to major purchases, such as a home or car, or when it comes to salary.
Surprisingly, only 38% of millennials negotiate their first salary, according to a NerdWallet survey. That’s a big mistake because employers said they actually had room in their budget to offer a bigger salary. Three-quarters of employers told NerdWallet they could have increased their first offer by 5% to 10%.

7. Be cautious about lending money to friends and family

father and grown son
You don’t want money to strain any relationships. | iStock.com

At some point, a friend or family member might ask you to borrow money. Although you want to help out, it might not be the best idea. This is especially true if you’re experiencing financial difficulty. Your best bet is to treat family loans like a gift. There’s a chance you might not get your money back. So it’s best to go into the arrangement with an attitude that if you get the money back that’s great, but if you don’t you won’t cut your loved one off because of it.
 Follow Sheiresa on Twitter @SheiresaNgo.