Most articles about money give you long to-do lists (e.g., Prof. Harold Pollacks Famous 9 Rules). In our view, ask a million people about money and you will probably get a more than a million rules for how to do better financially. Better instead to distill things to their irreducible essence — a core set of rules that apply regardless of financial situation, demography, gender, etc. This article does just that.

Recognize – rather obviously –  that savings is simply the difference between your income and expenses. You try to increase the former, while decreasing the latter!

Income Rules

Rule 1: Know your worth

For most of us, wage income forms the lion’s (and often only) share of income. Make sure that you are paid commensurate to your contributions. This is easier said than done but requires you to understand what you bring to the table that your employer needs. If you decide to confront your boss and ask for a raise, go in thoroughly prepared to answer this crucial question: How much do you believe you should be paid, and why?  

Rule 2: Grow your worth

Basic idea: Make yourself more valuable to your (current & future) employers by improving the knowledge and skills you have to do the job. The knowledge and skills you possess today will not be adequate tomorrow. Employers are increasingly using robots on the factory floor, outsourcing other jobs to lower-wage countries and expecting current employees to do more. So you need to keep up. Even if you are doing well today think about your profession ten, twenty years out — will you still be competitive then?

While job knowledge and skills are crucial, one other skill transcends all others in its importance — the skill of networking. Connected people find the good jobs at the right time. Don’t be adding connections on LinkedIn when you lose your job!

Rule 3: Diversify income streams

Most of us have a single income stream — wages. Focus on getting other passive income streams. These can include: interest & dividend income (from investments), rental income, etc.

The stock market looks attractive when markets are going up but beware that it requires considerable discipline and skill to do well consistently. Warren Buffett recommends low-cost mutual funds [PDF] (he recommends the Vanguard S&P 500 fund). There are many similar funds — do your research and pick the one that has the least fees but reflects the broader market.

Rule 4: Know the value of what you sell

When you sell something, make sure you get the appropriate value for it. Most of us are only too happy to get rid of things often at substantial discounts because of items that we no longer need or that clutter up our house. But remember that your yard sale is a big loss to you and a big gain to someone else. To get more value than that obtained in a yard sale, you need to do some work. Take photos, write a nice description if online, find the right venue to sell the item, etc.

Expense Rules

Rule 5: Know the value of what you buy

First, ask yourself if you NEED the thing you are buying. Can you live without it? If not, can you postpone the purchase until you can get it at a substantial discount to what is currently available? Perhaps, you can get a discount coupon? Or, someone will sell one at their yard sale and you can profit from their low prices?

Two key points:

Do not overpay. It sounds simplistic and trite. Look through the purchases you have made recently both big and small and catalog the ones in which you paid more than you should have. The list for most people is larger than they’d like to admit.

More things are negotiable than you might imagine. For most of us, negotiating looks an awful lot like “confronting” — so we don’t do it. However, negotiating is simply valuing your money. When you ask a plumber how much it would cost to fix a leaky faucet, he is negotiating when he quotes you a price. Be forearmed with information about competing quotes that you have gotten when you negotiate.

The Rule That Rules

Rule 6: Know the value of time

Each one of the 5 rules above takes up time to do well. Where to get time when we are all so busy? Good question — Master this rule well and you will do extraordinarily well! The answer for where to economize on time will vary.

Did this post resonate with you, affirm your own thinking or made you think differently? If so, I’d love it if you would please share ideas, insights, critiques in the responses below or contact me by email (info on my profile).

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  • Sridhar Ramakrishnan


    Arnexa, Inc.

    Sridhar is the Founder/CEO of Arnexa, Inc.  which is focused on providing innovative tech solutions to help user prosper financially. From secure messaging tools that eliminate phishing to better retirement and savings tools. Prior to Arnexa, Sridhar founded two other start-ups, and worked at Hewlett-Packard in various engineering and management roles. More information is at