If you think that financial independence is all about “start saving once,” I have a truth for you: Warren Buffett made his first investment at eleven. And if you think it’s too late now, let me tell you – the best time to start is today. Money doesn’t wait, and neither does inflation.
In a world where Instagram celebrates waste, TikTok offers “quick money”, and every other ad promises instant wealth, it’s time to step out of the fog and get on the right track. This article will reveal 7 basic rules of money that everyone should know before the age of 25 – because billionaires didn’t become billionaires by accident. Get a notepad ready (or at least a screenshot key).
1. The 50/30/20 Rule – Your Personal Financial Compass
Money without a plan is like a GPS without a signal – you end up somewhere you don’t want to be. So divide your income:
- 50 % for necessities: food, rent, utility bills (yes, water is not free),
- 30 % for desires: Netflix, weekend getaways, new sneakers (but in moderation),
- 20 % for goals: saving, paying off debts, investing.
If your mommy is still saving you from the red numbers, it's time to grow up. Make a budget, because it's the most basic adult thing besides paying taxes.
2. Rule 4 % – The Key to Eternal Vacation
Dreaming of a carefree retirement with a cocktail in hand is cool. But dreams are not a strategy. The 4 % rule states: you can safely spend only 4 % of your savings each year in retirement.
Example: If you have €1,000,000 in savings, you can spend €40,000 each year (about €3,333 per month before taxes). Easy? Yes. Can you? Only if you start now. Because waiting is the equivalent of financial suicide in the world of compound interest.
3. The 3x–6x Emergency Fund Rule – Your Financial Safety Belt
Life can surprise you. And surprises come at a cost. The golden rule: have 3 to 6 months of living expenses saved. That means rent, food, bills – not including new iPhones and weekend getaways to Italy.
Why? So that an overpriced tire or a toothache doesn't send you into a debt spiral. Your emergency fund isn't your "first aid kit for sales," but your invisible shield against stress.
4. The 2x Investing Rule – Show Your Future Self Some Love
A new fashion trend? Fine. But before you drop €300 on a dress, set yourself a challenge: invest the same amount in your future self.
Buying something for instant gratification is easy. Building wealth? That's an art. So every treat you give yourself becomes a treat for your future self. Warren Buffett would be proud.
5. The 3x Rent Rule – So that the roof over your head doesn't eat everything
The rule is simple: rent should not exceed 1/3 of your monthly income. If you're paying more, you've chosen a rental that's too expensive or you needed a new job yesterday.
Make your home your paradise, not your financial prison. Leave yourself enough room to save, invest, and (of course) take at least one trip a year.
6. The 20/4/10 rule for buying a car – Don’t become a slave to four wheels
If you are buying a car, keep this in mind:
- 20 % deposit (yes, even if you have to sell your Playstation),
- 4 years maximum repayment (if they offer you 7 years, run away),
- 10 % your monthly income for the maximum car expenses.
A car may look sexy on Instagram, but once you're eating a can of tuna for lunch because of it, you'll quickly start to like it less.
7. Rule of 72 – Your best friend in the world of investing
How long does it take for your money to double? Simple: 72 divided by the interest rate on your investment. If you are earning 10% annual returns, your money will double in about 7 years.
An investment in a good understanding of this rule is more profitable than another pair of shoes, I promise.
You don't have to be the next Warren Buffett (although that wouldn't be a bad thing). Just be smart with your money now, when you have your greatest asset: time. Use these rules to turn your life into a story you'll be proud of.
Because being rich at 40 is the new being cool at 20.
