Financial rules of thumb don't always hold true. It doesn't give an exact answer but a ballpark figure. Like all rules of thumb, the rule of 72 isn't precise.

But if you were able to earn 12% on your investment, that money would double in six years. If your savings account yields 4%, say, it will take about 18 years for your nest egg to increase by 100%. This shortcut says that if you divide 72 by a particular rate of return, you'll get the number of years it'll take to double your money. You've probably heard of the “rule of 72”, for example. In these cases, it's nice to have some rough guidelines you can rely on. You don't always have time (or want to take the time) to create elaborate spreadsheets when choosing a course of action. I now cycle everywhere on my electric bike, which also cut my transportation cost to almost zero.Īdditionally, I go for walks and do workout videos at home on the terrace.After twelve years of reading and writing about money, I've come to love financial rules of thumb.įinancial rules of thumb provide helpful shortcuts for making quick calculations and decisions. Similarly, going to the gym is the easy way to exercise, but I have found several alternatives. Since I am handy at sewing, I can easily alter the clothes to look stylish and fit my needs. My Swiss family members have countless tops they have almost never worn and are thrilled to “declutter”.

The struggle involved in working hard and creating something new is much more satisfying than just going out to the store and buying the item.įor example, I often “inherit” other people’s clothes. In my early 20s, I’d bought a lot of unnecessary luxuries, but by the time I found out about FI at age 24, I had realised that none of them brought me lasting happiness. I immediately identified with this concept and took it on board. In “ Frugality is the New Fanciness”, Pete argues that real strength of character is displayed by people who lead a non-fancy lifestyle.įinding alternatives to spending money takes courage, creativity, and a certain amount of intelligence. But with debt so easily available, most people nowadays don’t own their assets, and having fancy things has become the norm rather than the exception. In the past, a person’s status was displayed by the clothes they wore, the food they ate, and the house they had. What’s more, I have spent time upgrading my writing skills and have been able to start a second business as a writer. Instead of worrying about poverty and the environment, I have started making regular donations to effective organisations and volunteering as a gardener in my local park. This shift in mindset has prompted me to start pursuing many activities I might otherwise have put off.

Instead of spending all your time thinking about things you can’t influence, learn new skills that allow you to change the local or global environment. MMM teaches his readers to focus on increasing their circle of control instead. This wastes a lot of energy and doesn’t accomplish anything. Most people worry about a lot of things that are within their control and even more things that aren’t.įor example, they closely follow politics and complain about celebrities whom they have no influence over. “ How big is your circle of control?” was another excellent article that changed the way I viewed the world.

The simple math behind early retirement