The 9 Money Rules of the Top 1%: Unlocking Elite Wealth Strategies

In my journey from a broke 22-year-old to a multi-millionaire, I’ve discovered the secret Money Rules that the wealthiest 1% live by. These principles have not only transformed my financial life but have also challenged my perspective on wealth itself. Today, I’m sharing these nine powerful Money Rules that can revolutionize your approach to finance and potentially set you on the path to join the ranks of the affluent.

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Rule 1: Act Your Wage

The first of the Money Rules I learned was to act my wage. It’s a simple yet profound concept: your wealth isn’t determined by how much you earn, but by how much you keep. This rule hit home for me when I made a colossal financial blunder in my early twenties.

Fresh off a lucrative consulting gig, I decided to treat my brother to a lavish ski trip. We lived like kings for ten days, staying at the finest hotels, dining at upscale restaurants, and buying top-of-the-line gear. It felt amazing until reality came crashing down with a phone call from my father.

He asked if I had set aside money for taxes. My heart sank as I realized I hadn’t considered that nearly half of my earnings weren’t actually mine. This wake-up call led me to hire an accountant and implement a crucial strategy: automation.

Now, I ensure that when money comes in, it’s immediately distributed to various accounts without my interference. I pay myself as little as possible, living on a fraction of my income. This approach has allowed me to accumulate capital for investments and opportunities.

Remember, you can’t save your way to wealth, but you certainly can’t spend your way there either. The key is to live below your means and focus on investing in yourself and income-generating assets.

Rule 2: The 10% Rule

Among the Money Rules of the wealthy, the 10% rule stands out as a game-changer. I currently live on 10% or less of my income, reinvesting the rest in income-generating assets and personal growth. While this might seem extreme, it’s a goal to work towards, not an immediate expectation.

Start by living on a higher percentage of your income and gradually reduce it. The aim is to save and reinvest as much as possible. Remember, one of the best assets you can own is a life you’re proud of. This rule isn’t about deprivation; it’s about strategic allocation of resources.

Most people operate with a scarcity mindset, trying to live on as little as possible but then failing to utilize their surplus effectively. The goal is to learn to live comfortably on less while accumulating wealth to invest in opportunities that align with your values and goals.

Rule 3: Prioritize Investments

This Money Rules principle distinguishes the wealthy from the rest. Broke individuals make money to buy things, the middle class makes money to get loans for purchases, but the wealthy invest in income-generating assets.

Many people are just one investment away from opportunities that could cover their desired lifestyle upgrades. Instead of putting money into depreciating assets, consider investing in skills that could immediately impact your income-generating ability.

Could you learn a new skill to secure a promotion or start a side hustle? The focus should be on investments that increase your earning potential rather than temporary lifestyle inflation.

Rule 4: Have a Nest Egg

One of the critical Money Rules that separate the wealthy from the rest is maintaining a substantial nest egg. I learned the importance of this during the global events of 2020 when many businesses faced unprecedented challenges.

A friend of mine had to shut down his business because he hadn’t saved enough to cover just three months of operating costs. This scenario plays out all too often in personal finances as well. Most people find themselves unable to afford unexpected setbacks, leading to a negative financial spiral.

My rule of thumb is to have at least six months of expenses saved in a liquid account. This isn’t tied up in stocks or other investments that might incur taxes if sold quickly. It’s readily available cash for emergencies.

Six months might seem like a lot, but it provides a crucial buffer. I’ve never encountered a situation where someone losing their job couldn’t find an opportunity within six months if they had this financial cushion. It allows you to reset without making hasty financial decisions.

This nest egg is more than just financial security; it’s peace of mind. It allows you to operate from a place of abundance rather than fear, making calm and rational decisions when others are panicking.

Rule 5: Don’t Be Over-Leveraged

This Money Rules lesson came to me the hard way in my early twenties. Excited by the prospect of new furniture and enticed by a “no interest for two years” offer, I jumped at the chance to finance my purchase. What I didn’t fully grasp were the terms hidden in the fine print.

That “free money” ended up costing me far more than expected, taking four years to pay off completely. It’s a simple example of how consumer debt, home loans, and other financing can create a hole of financial challenges that’s hard to climb out of.

Banks make most of their money collecting debt, especially when it converts to high-interest scenarios. It’s shocking that 47% of people carry credit card debt month to month, paying an average interest rate of 22%.

If you’re borrowing to maintain a lifestyle you can’t afford, you’re only delaying your ability to create real wealth. The Money Rules of the wealthy dictate that if you can’t afford something outright, you should focus on increasing your income to acquire it, rather than taking on debt.

Rule 6: Invest in Your Skill Set

Among the Money Rules I’ve learned, investing in personal development has yielded the highest returns. In my early twenties, out of desperation, I hired a business coach named Bob. I could barely afford his fees, but I committed to an annual program, believing that if Bob was good enough, he’d teach me how to generate the money to pay him.

That first year working with Bob, my income skyrocketed to nearly a million dollars. This experience taught me the immense value of investing in myself. Prior to this, I’d barely been willing to buy books, let alone invest significant sums in personal growth.

Over the years, I’ve invested about $1.7 million in coaches, seminars, and educational programs. If I had put that money into the S&P 500, it would have grown, certainly. But the knowledge and skills I gained have produced returns that far exceed any traditional investment.

Many people don’t grasp this concept. If you’re not investing in your skills to become more valuable to the market, you’re always at the mercy of others deciding your worth. The 3-5% annual raise most people receive isn’t enough to keep up with increasing living costs, let alone build wealth.

My philosophy, which I was fortunate to adopt early, is to delay lifestyle expenses as much as possible. Instead, take that money and invest it in yourself to build a surplus. Get to a point where your income significantly exceeds your spending, save the difference, and you’ll create real wealth.

Rule 7: Know Your Risk-Return

A valuable saying in the financial world goes, “When someone with money meets someone with experience, the person with experience ends up with the money, and the person with money ends up with the experience.” This has been my reality, and it’s a crucial part of the Money Rules of the wealthy.

I’ve observed that many people get persuaded by loved ones to invest in opportunities they don’t fully understand. Excitement about potential gains often clouds judgment, leading to risky investments outside one’s area of competence.

To understand risk and investment, I use a risk-investment quadrant. On one axis, you have risk, and on the other, return potential. All investment opportunities can be placed in one of four boxes:

1. High risk, high return (e.g., Bitcoin)
2. Low risk, low return (e.g., index funds)
3. Low risk, high return (e.g., buying a business or real estate with value-add potential)
4. High risk, low return (this box should remain empty)

The goal is to maximize investments in the low risk, high return box. The best business to be in is the one you know. If you’re a real estate agent, stay in real estate. If you’re a designer, focus on design projects.

My strategy now involves seeking situations with asymmetrical rewards. I invest in or buy businesses where I have a guaranteed level of upside due to my expertise, with a fixed downside because it’s an industry I know better than most. I don’t personally guarantee these investments, so my entire net worth isn’t at risk.

Rule 8: Build a Personal P&L

One of the most powerful Money Rules I’ve adopted is treating my household like a business. Every household should have a profit and loss statement (P&L). You have your income (salaries), expenses, and either savings or losses at the end of each month.

Many people avoid managing their money because they’re afraid to confront the reality of their financial situation. But ignoring the numbers doesn’t make them better. Not being good with numbers isn’t an excuse not to know where you stand financially.

This concept applies to the wealthy as well. I had a friend, a successful businessman making tens of millions a year, who always said he wanted a simple life. When I dug deeper, I realized he was overwhelmed by managing his multiple homes, vehicles, and other assets.

I suggested he hire someone to manage his personal assets, just as he had people managing his business assets. This revelation transformed his life. Now, he has a house manager responsible for all the things that used to burden him and his wife.

If your possessions are causing you stress, you’re a prisoner to them, regardless of your wealth level. The wealthiest people often have estate managers, a team that runs their personal life just like a business.

To implement this, create a personal P&L. List your income and expenses, create budgets, and treat your personal finances with the same diligence you would a business. Some people call this a family office, where a team of wealth managers, accountants, and legal professionals review your investments and decisions to optimize your financial health.

Rule 9: Money is a Tool, Not the Goal

The final and perhaps most important of the Money Rules is understanding that money is merely a tool, not the ultimate goal. The purpose of life isn’t to accumulate wealth; it’s to use that wealth as a resource to create, expand, and serve others.

I’ve met people who are so poor that all they have is money. They lack meaningful relationships, personal growth, and opportunities for impact. That’s why I took two years to drift, learn, and create rather than just focus on accumulating more wealth.

The journey of creating wealth is really about personal growth. Money is like a battery – it needs to be put to work to be useful. If you’re not using it to help others and only focusing on yourself, it can lead to a lonely existence.

The point is to use money to buy you time, which you can then invest in becoming more valuable. This increased value allows you to make more money, buy more time, and focus on projects that truly light you up.

Regardless of how much money you have, true wealth comes from reaching a place where you can be happy regardless of your possessions or bank account balance. This requires personal growth and a shift in perspective.

In conclusion, these nine Money Rules of the top 1% aren’t just about accumulating wealth. They’re about creating a life of purpose, growth, and impact. By implementing these principles, you’re not just working towards financial freedom; you’re investing in becoming the best version of yourself.

Remember, it’s not about the destination but the journey. As you apply these Money Rules, focus on who you’re becoming in the process. That’s where the true value lies. So, start small, be consistent, and watch as these principles transform not just your finances, but your entire approach to life.

We strongly recommend that you check out our guide on how to take advantage of AI in today’s passive income economy.