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12 Rules of Life for Financial Freedom

by Phia @ Freedom 101

*The 12 Rules of Life for Financial Freedom was originally published on October 22, 2018.

Since well known psychology professor at the University of Toronto, Jordan Peterson, published his 12 Rules of Life: An Antidote to Chaos, everyone and their dog has thrown their own 12 rules into the mix.

The craze has proffered some insightful pieces, such as Malcolm Gladwell’s one single rule of life.

Pull the goalie.

A logic based argument suggesting that you always go with the choice which is supported by the numbers, regardless of the prevailing popularity of that choice. Or the subsequent social ramifications.

I like Gladwell’s rule, it’s simple and applicable to almost everything. Not to mention, my personality leans pretty heavy to the logic based approach. And it helps that it’s a hockey reference, which for a hockey playing Canadian girl, strikes a nostalgic chord.

I also like most of Peterson’s rules, even if his book was unnecessarily wordy.

Yes….pot…..kettle…..I get the irony here. But his was an academic wordy, which let’s be real, is *yawn* incredibly boring.


As good as his rules are, I will pass on the whole stopping to pet a cat whenever I encounter one on the street rule. Incase it didn’t come across in The Pet Mortgage, I’m not really a cat person.

I get his underlying messaging, but still. No thanks.

With all these rules being tossed around out there, I thought it was high time Freedom Seekers had their own set of rules to steadfastly adhere to.

So lets jump in.

12 Rules of Financial Freedom: The Antidote to Involuntarily Working Till You Die.

1 – Spend Less Than You Make

No rule is more essential to obtaining Financial Freedom than implementing this single principle. If you stand any chance at all of reaching AND sustaining Financial Freedom, you simply must spend less than you make.

And I’m talking about all spending.

Whether it’s money being used to buy your daily coffee, or money to pay your mortgage, your overall expenses include every outgoing penny that slips through your fingers.

And all of it needs to total less than your incoming paycheques, substantially less. After all, the wider the gap between your income and expenses, the faster you can leave your job behind.

2 – Find A Business/Life Partner

Your significant other should be someone you are willing to partner with in business. Because frankly, you should treat your finances a lot like a business. And if your partner isn’t someone you’d go into business with – you’ve got a serious problem.

Finance is the number one reason marriages crumble, so being able to openly discuss money, set mutual goals, challenge each other, and work together are cornerstones of Financial Freedom and a happy relationship.

3 – Don’t Be Stupid

Protect your biggest asset. You. If you injure yourself, you could reduce or even lose your ability to generate income, creating life-altering consequences for you and your family.

While we can’t avoid every freak accident that life may throw our way, we can certainly minimize our exposure risk.

So just don’t be stupid – it’s price tag is simply too high.

4 – Delay Gratification & Enjoy The Process

Learning to delay gratification takes practice. But when you are good at it, your expenses can drop dramatically and you can avoid the trap of impulse purchases and bad investments.

Embracing the delay is learning to enjoy the process rather than solely the outcome. When you do that – you’ll never feel like you are sacrificing a thing.

PS: This skill has the added bonus of directly translating to diet and exercise as well.

5 – Eliminate Debt

While debt has it’s place and can be useful for advancing your plans for Financial Freedom – the ultimate goal is to owe nothing to anyone.

That’s true Financial Freedom.

When you don’t have payments looming over your head, you have true freedom to do what you want.

6 – Diversify Your Income Streams

Didn’t your Grandma ever tell you not to put all your eggs in one basket?

Never have only a single source of income. Build income streams and diversify them as much as possible. Doing so insulates your sources of income from each other, and if one is negatively impacted, you likely won’t have to reach for your emergency fund.

7 – Always Have An Emergency Fund

Which brings us to Rule 7. Always, always, always have an emergency fund.

As Forest Gump so aptly said, life is like a box of chocolates and you never know what you’re gonna get. Sometimes you get a rotten chocolate, like Covid-19. So don’t be caught with your pants down.

Have emergency cash available so that you aren’t trying to liquidate asset’s at a moment’s notice. Usually at a time when crisis and stress levels are already high. Or in the case of Covid-19, when the stock market is free falling.

8 – Never Pay More In Taxes Than You Absolutely Have To

There is generally no bigger expense in life then your taxes. So know the tax laws that apply to you, and know how to streamline your tax efficiency to the absolute maximum allowable.

It’s okay if you can’t know it all yourself – but then pay to get an accountant who does. One who will work hard to find every eligible claim, and area of savings. Not one that just copies the information off your tax documents into an online tax filer and hits submit.

A good accountant is worth their weight in gold, and definitely worth every penny you will pay them.

9 – Save, Save, Save

Everything you aren’t spending or paying in taxes, you should be saving.

Simple as that.

Save as much as you can, as fast as you can. The sooner you can build your nest egg, the more time you will give it to grow.

10 – Invest Over Time

Unless you’re Warren Buffet, don’t try to be a magician with your investing.

Dollar cost average by buying investments steadily over time. By doing this you will inevitably buy in the highs and the lows, but your pricing will be averaged over the long term.

Time in investing is your greatest friend – even the most average investor will do well if they simply steadily buy and let time do it’s thing.

11 – Avoid Get Rich Quick Schemes

Whether it’s a “tip” on the next big stock, or a real estate investment that’s just too good to be true, don’t try to strike it rich quick.

It’s a surefire way to lose your money and take you one or more steps back on your road to financial freedom.

Be the tortoise – not the hare.

12 – Don’t Smoke

Any true addiction is expensive, destructive, and harmful for your health.

If needed, refer back to Rule #3.

I feel like this one is particularly obvious – but a lot of people still seem to be doing it.

Not only is smoking a complete and utter waste of your money – it’s also like paying someone to sloooowwwlllyyy kill you. And if you do all the work of obtaining Financial Freedom – you definitely want to enjoy it for as many years as possible.

But dont worry, if you’re currently a smoker, look at the bright side – quitting is an excellent exercise in improving your self-discipline.

The Bottom Line

If you do nothing BUT stick to these 12 simple rules of Financial Freedom, you will find yourself experiencing it first hand.

Probably much sooner than you think.

Because at the end of the day, Financial Freedom is simple. That doesn’t mean it’s easy – but it really is this simple.

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Insuring Your Financial Future – FREEDOM 101 : The most valuable currency is time – choose how you spend yours November 26, 2018 - 9:32 am

[…] also talked about not being stupid in the 12 Rules of Financial Freedom. This is an area where that rule can come in very handy. If you do stupid things in life, your odds […]

Sharon June 22, 2020 - 9:10 am

As always a good read and sound advice, I will share with my girls. Thanks Phia.

phiafreedom101@gmail.com June 24, 2020 - 12:32 pm

Thanks so much for reading and commenting! I hope it’s helpful to the girls 🙂

Jordan June 29, 2020 - 7:19 am

Number 12 is a good one. What’s the point of it all if after 10years you get really sick? Same goes for keeping fit and eating well on the FI journey. Sure you might be able to save some money on the way with cheap unhealthy food while you are younger, but how much will you pay for those choices later on? Prevention is better than any cure 🙂

phiafreedom101@gmail.com July 3, 2020 - 9:48 am

Hey Jordan! Couldn’t agree with you more that we have to think long term with our lifestyle choices when it comes to our health and wellbeing. I actually write about exactly that point in my 30 tips for designing your best life https://freedom101.ca/2020/02/24/design-your-best-life-part-1/ if you want to check it out 🙂

Sounds like we are on the same page regarding the importance for proactively making healthy choices. Thanks for reading!

Budget Life List June 29, 2020 - 9:47 am

Simple is my favorite. As you mentioned, its not always easy but its preferred. I am thinking more about the taxes part right now. I don’t think there is many tax advantages we can be making use of right now but I haven’t really researched it either. Things to think about…..

phiafreedom101@gmail.com July 3, 2020 - 9:57 am

Thanks for your comment Budget Life List! Yes, taxes are huge. It took us a long time to start to see areas where we could create tax advantages for ourselves, given at the time we worked typical government jobs.

I always recommend people start by seeing if there is a way to write off a portion of their housing expenses, especially given this is generally peoples largest monthly cost. There are so many out of the box ways to do it AND bring in some extra income. Check out point #5 on this post https://freedom101.ca/2017/10/09/step-5-the-side-hustle/ for some inspiration on that, followed by this post https://freedom101.ca/2017/11/13/everyday-im-hustlin/. Those should get you started in the right direction 🙂

Let me know if they are helpful, or flip me an e-mail if you want to chat about the specifics of your situation. Thanks for reading!

The Financial Engineer June 30, 2020 - 2:28 am

Great rules to live buy. It seems like everyone has their rules or guidance that blogs that point to the same basis.

Spend less than you make, Save some, Save more, Invest some, Invest more, and take care of yourself!

I wonder if we all have addictive tendencies? I think the un savvy allow their addictive natures to be focused on smoking and drinking, while the savvy release it on things such as personal finance?

phiafreedom101@gmail.com July 3, 2020 - 10:03 am

Yes I think these are the underlying current of financial security. You can write about all sorts of complex strategies, but at the end of the day, this is the foundation.

And excellent point/question on the addictive tendencies!! You’ve also read my mind. I’m working on a post right now all about “achievement addiction”, because I do believe that we all tend to have those underlying traits to varying degrees. Certainly it’s prevalent in the financial community. And the pivotal point between those traits propelling us or dragging us down boils down to our ability to recognize them, set healthy boundaries, and channel them into a positive direction. It’s a fascinating topic!

Thanks for your comment!

Smith Mitchell July 23, 2020 - 2:05 am

I think point 1 is the priority. Some do not live off their income, but take loans that they cannot pay off, and then wonder why they are in trouble. I must say my list is super!


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