The Financial rules to live by as a Freelancer

For Businesses & Startups
1-on-1 Consulting
About Me
Contact

Rule of 72

It calculates the number of years it takes your money to double, given a rate of return.You just need to divide 72 by the interest rate.
If your investment returns 4%, it will take 18 years for your money to double (72/4 = 18).

Rule of 114

It calculates the number of years it takes your money to triple-double, given a rate of return.An investment growing at 7% will triple in about 16.29 years (114/7 = 16.29).

Rule of 144

It calculates the number of years it takes your money to triple quadruple, given a rate of return.An investment growing at 9% will quadruple in 16 years (144/9=18).

10-5-3 Rule

This rule tells you how different asset classes give you different types of returns.- Equity / Mutual funds: returns expected to be about 10%.
– Debt : returns expected to be about 5%.
– Savings returns are expected to be about 3%.

The 50/30/20 rule

This is a rule for budgeting.
50% of your income should go toward your needs, such as rent, utilities, and food.
30% for wants such as dining, entertainment, and leisure.
20% for financial goals, such as paying off debt or saving for retirement.

100 minus your age rule

It is used for asset allocations.Subtract your age from 100 to know the equity vs. bond allocation.
Age 30: Equity: 70%, Bonds: 30%
Age 60: Equity: 40%, Bonds: 60%
Some people use 110 or 120 to be more aggressive in their allocation.

Rule of 70

Divide 70 by the inflation rate to find out how quickly the value of your investment or money will be decreased by half.For instance, if the inflation rate is 5%, it will take 14 years to reduce the value of your money by half.

3X Emergency Rule

This rule states that one should have at least three months of their monthly income in an emergency fund.3X the monthly income should be saved.
Some people save 6X of their monthly income to be more conservative and safe.

The 20/4/10 rule

This is used if you finance a car.- Put at least 20% down.
– Pay off the car in no more than 4 years.
– Spend no more than 10% of your gross monthly salary on car expenses.

4% withdrawal rule

This is used to calculate your retirement number.If you said that you would retire with an annual income of $50,000, divide your annual income by 4%.
In this case, you need $1.25 million saved.

40% EMI rule

This rule applies when a person is borrowing money.It states that a person’s monthly income should not go toward their EMI (equated monthly installment).
For instance, if you make $5,000/month, you should have less than $2,000 of EMI.

Source: https://www.investopedia.com/

The Financial rules to live by as a Freelancer

Rule of 72

Rule of 114

Rule of 144

10-5-3 Rule

The 50/30/20 rule

100 minus your age rule

Rule of 70

3X Emergency Rule

The 20/4/10 rule

4% withdrawal rule

40% EMI rule

Leave a Reply Cancel reply

For Businesses

Engineering OS

Contact