I propose that there are 3 rules in life for building sustainable wealth while on your journey to being financially independent.

  1. Earn money.
  2. Spend less than you earn.
  3. Invest the difference.
  4. Break the rules.

How much you follow the rules depends on your needs and wants. Here’s my guidance for how to be successful in following the rules. This is what I’ve learned and what has worked for me.

Earn money.

  • Work smart and hard at what you are good at, enjoy, and can do consistently for years. Be hungry.
  • Assess and take calculated risks. Control what you can control. Realise that there is a lot you cannot control.
  • Invest in yourself. Continually learn and evolve.
  • Help others. It’s not about you.

Spend less than you earn.

  • Budget. Know where your money goes. Spreadsheets are beautiful.
  • Spending money is behaviour, not maths or spreadsheets. Don’t live in your spreadsheets.
  • Spend money on experiences, not things. Enjoy the journey.
  • Buy nice things. Quality over quantity.
  • Delay gratification. Control your emotions. Be humble. Be hungry.
  • Help others. It’s not about you.

Invest the difference.

  • Don’t gamble, trade, or speculate. It’s a waste of time in the long term. If you do, do it with small amounts.
  • Buy a house to live in if you live in Australia and pay off the debt faster than what the lender allows.
  • Invest into businesses as shares.
    • Allocate the majority % as a core passive investment in broad index tracking ETFs.
    • Allocate the smaller % as a satellite active investment into individual companies that you believe in.
  • Diversify. Don’t put everything you have into one thing.
  • Leave your investments alone for decades. Don’t interrupt the power of compounding.
  • Invest in being open to a life partner who makes you a better person. Continually work on the relationship. It will be the most important wealth decision of your life.
  • Help others. It’s not about you.

Break the rules.

  • Context is crucial. Everyone is different in different circumstances.
  • Think for yourself.
  • Know when to break the rules.
  • See the world as it is, not as you would have it be.
  • Act to change the world as you would have it be.
  • Help others. It’s not about you.