Non-Financial Rules for Financial Success

In my book Basic Personal Finance, I listed Ten Rules of Thumb for financial success. After that list, I said there are “non-financial rules that have an even bigger impact on whether you live a successful life (e.g., don’t do drugs, don’t get arrested, etc.).” In the back of my mind was a very short list of things I was thinking about, but thought might be too controversial for a finance book. That list was:

  • Don’t do drugs
  • Finish high school
  • Don’t have kids until you’re married

The original person who said that claimed following the list would almost certainly keep a person out of poverty. At the time I wrote the book, I didn’t realize that a similar list was published by the Brookings Institution in 2013, “Three Simple Rules Poor Teens Should Follow to Join the Middle Class.” Their version:

  • Finish high school
  • Get a full-time job
  • Wait until age 21 to marry and have kids

If it was said by Brookings, it must not be that controversial. Plus their list is backed up with research. The article says only 2 percent of adults who followed these rules are in poverty, and 75 percent joined the middle class (earn $55,000+ per year). They don’t say what happened to the rest.

I still like the first list better. After all, doing drugs will make it difficult to keep a full-time job (not to mention the unnecessary expenses of paying for the drugs). Maybe a fourth item for “don’t commit crimes” would also be good to put on the list.

The point is people have the power to get themselves out of poverty, and it has nothing to do with knowing personal finance. The list is short and simple. Unfortunately, as the Brookings article says, following that list is more difficult for people already in poverty, mainly because no one ever tells them how simple the list is.

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