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23 rules for boosting wealth

I've been investing a long time, and almost everything I have learned has been by trial and error, and a lot of both. Being a stubborn person, I've been known to make the same mistake numerous times before I finally "get it" and do it differently the next time.

So on a whimsical note, I decided to pass on part of my hard-won knowledge about making money. Perhaps there are people out there who, unlike me, are able to learn without having to go through the personal experience process.

1. Spend less than you make. Without this rule, all the other rules have no value because if you don't save, you can't invest. If you spend it all, you may have fun, but you will never get rich except by accident.

2. Only a fortunate few get rich quick. The rest of us have to do it slowly. Just like in Aesop's fable, the hare starts out ahead, but the tortoise wins the race. Start early, invest conservatively (but not too conservatively) and, most of all, invest each month, even if it is only $50.

3. Pay yourself first. If you wait until the end of the month to invest, there will be nothing left with which to invest.

4. If you don't invest, and you aren't rich now, the only other options are to inherit money, marry money or win the lottery. What is the probability that any of these will happen in your life?

5. Minimize your taxes as much as possible and pay for good advice if necessary. A dollar saved on your tax bill is a dollar you have to invest.

6. Take full advantage of 401(k) plans, Thrift Savings Plans, etc. If your employer matches some or all of your annual contribution (for example, if the company matches the first 3 percent of salary contributed each year), and you make a 3 percent tax-deductible contribution, you have doubled your investment for that year if a matching employer contribution is made in addition to your own. A 100 percent profit and a tax deduction is a really good deal.

7. If you can afford to make additional retirement investments, choose a Roth IRA.

8. Try to save at least 10 percent of your salary each year. Be sure you have money in a savings account that is at least equal to three months of expenses. Six months is better.

9. Set up an emergency fund in a separate account.

10. Plan ahead, but expect that your plans will change and make the appropriate adjustments as you go along.

11. Pay off your credit cards in full each month. Use your emergency fund (Rule 9) to pay for things that you cannot otherwise pay for from your regular monthly income.

12. Think before you buy. Do you really need it? Is this purchase the best use of your money?

13. In a growing area, real estate is usually a good investment. Buy a house to live in if you can. However, real estate can and does go down in price periodically. Do not use fancy financing to buy a house that you would not otherwise be able to afford.

14. Statistically, people in a good marriage are happier, healthier and wealthier than those who are single. If you have a good marriage, work to make it last and to make it better. The grass usually is not greener on the other side of the fence.

15. Money gives you choices, and it makes life easier. It does not make you happy, and happiness has almost no relation to the amount of money you may have. If you don't believe me, go to the supermarket and read the tabloids next to the checkout counter. I have never seen such a parade of beautiful, rich, famous and miserable celebrities. Whenever I want a new perspective on things, I go to the grocery store.

16. There is always another bus. Stand on the street corner, and soon another one will come along. My dad passed on this bit of wisdom to me when I was a teenager. So don't be discouraged if you did not buy California real estate in the early 1990s. Another opportunity will come along.

17. Think of each investment as if you were buying a business. No sensible person would buy a business that doesn't make money now and has little prospect of making money in the future.

18. If you are lucky enough to buy before a big run-up in prices, whether in real estate, tech stocks or whatever, remember that when the music stops, not everyone will make it to a chair. No one ever went broke taking a profit, but in doing so, you may miss a lot of the run-up in prices, as well as the subsequent collapse.

19. If it sounds too good to be true, it always is.

20. Don't be afraid to take risks, but make your risks prudent ones. Never bet the farm on anything, no matter how good it may look at the time.

21. Celebrate your triumphs and forget your mistakes. Tomorrow is another day, so remember Rule 16.

22. Smell the flowers along the way. No matter how rich you may get, you can't take it with you. Don't ever put off living until you are wealthy. Becoming wealthy may not happen, but living a full life with what you have now is something everyone can do.

Final rule: Give back to others some of your good fortune. It will come back to you in ways that you will not expect.

Barbara H. Pietrowski is a licensed certified public accountant, certified financial planner and personal financial specialist. Her practice includes tax preparation, fee-only financial planning and investment management. Her office is in Kensington, Md. E-mail her at barbarapietrowski@yahoo.com.