7 Money Rules to Live By

By REDBOOK

We asked finance expert Jean Chatzky, author of the new book Money Rules: The Simple Path to Lifelong Security, for a boiled-down, say-it-straight list of the basic rules of money for women in their 30s and 40s. Make these your money mantras.

1. CONTROL THE THINGS YOU CAN CONTROL

Can you control how much you earn? You can try, but not always. Can you control how much your investments make? Not always. Can you control how much you save and spend? Yes and yes. You have a much better chance of managing your saving and spending than you do the rest of your financial life. Put your focus there.

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2. EMERGENCIES HAPPEN

Your car will break down, or the roof will spring a leak, or one of another thousand things will go wrong. And you need to have money for when they do.

3. IF YOU DON'T ASK FOR MORE MONEY, THE ANSWER WILL ALWAYS BE "NO"

Here's a shocker: In 2011, newly trained female doctors earned salaries that averaged $17,000 less than male doctors'. It's not that women were picking less-lucrative specialties or that they were asking for more flexible work schedules. (That used to be the case, but not this time.) The difference now: Women don't ask for the money they want. If you don't ask, the answer will always be "no."

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4. DO DECLARE SOME FINANCIAL INDEPENDENCE

Just because you've married someone (or love them enough to live with them) doesn't mean the two of you are the same person. You need some money of your own so you can make small financial decisions--like whether to eat lunch out, whether to buy that dress--without asking permission. Minus that, relationships start to feel parental rather than romantic.

5. EVEN GOOD DEBT ISN'T FREE

A debt's real cost is in opportunities lost. When you take on a new monthly payment (even at a low interest rate), you're making a commitment against your future income--often for a very long period of time. What could you be doing with the $423 a month you spend on a second car? Over a month, not much. But over 60 months, it's more than $20,000. Committing to debt prevents you from taking advantage of other opportunities. You want to take a lower-paying job because you love it? That's tougher to do with a new second car sitting in the driveway.

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6. YOUR RETIREMENT TRUMPS THEIR TUITION

You know when you're on an airplane and the flight attendant tells you to put your oxygen mask on first before assisting a child? Saving for your long-term financial needs is the same way. If you don't save for your own future first, you won't be able to help your children when they need it. There is no financial aid for retirement; there is financial aid for college. Don't feel guilty about this.

7. KEEP SOME SKIN IN THE GAME

Think about how a kid spends money. If it's a parent's cash, there's no hesitation in handing it over to the cashier. But if it's money the kid has earned, he's more hesitant--it has to be "worth it." Use that same rule yourself. Don't just swipe your credit card for a purchase you can't afford to pay for right now. Save for it, then ask yourself--again--how much you really want it.

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