Want to Stay a Self-Made Millionaire? Follow These 9 Money Rules

Congratulations! Your business has made you wildly wealthy. So what do you do next?

If you’re patient and lucky and work hard at your business, one day you may find yourself facing the ultimate privileged problem: What do you do with all this money?

1. Live below your means, for the long haul.

You’re rich. Do something nice for yourself and your family to celebrate. Then remem­­ber: You want to preserve your wealth, by continuing to spend with the same restraint that helped you earn it in the first place. Saving, investing, and living aren’t sprints. They are long-distance runs.

2. Spend no more than 7 percent of your windfall every year, after taxes.

Say you inherit a post-tax sum of $1 million–which is really not that much. If you want this money to last, spend it slowly, drawing on investment returns while leaving most of the principal intact. Spending 7 percent every year, or $70,000 in this scenario, is actually a lot. If you are very young and really want this money to last, consider buying an annuity that could provide you with $50,000 per year for the rest of your life.

3. Create a reasonable budget to help the people close to you.

It’s always hard to say no when friends need help–especially when they know you have money. You’ll likely start hearing from friends, relatives, and acquaintances with worthy causes. Set up an account specifically for their requests, and stick to its limits. Sometimes you’ll have to disappoint people or give them less than they ask for.

4. Pay off high-interest debt, and avoid new loans other than a fixed-rate mortgage.

Weirdly enough, now that you’re rich, you’re far more eligible to borrow money. Resist that temptation. Pay off any credit cards or other high-interest loans, and avoid taking out new loans, other than a plain-vanilla 15- or 30-year mortgage. If your business has burden­some debts, talk with a financial professional about the pros and the cons of paying them down.

5. Be a prudent steward, not a creative investor, of your new wealth.

You are good at what you do. But this success shouldn’t tempt you to believe you are savvier at investing or making financial decisions than you probably are. Stick to business investments and deals that align with your core expertise, and consult a professional for advice about your personal investments.

6. Invest in low-fee index funds and annuities based on them.

Simple index funds out­perform almost all other investments. Avoid gimmicky assets and passing fads like ICOs, or deals that are advertised to shield assets from taxes or from college financial aid obligations. Put some chunk of your new money into a fairly priced annu­ity, which will give you a realistic idea of how much you can spend.

7. Get a good accountant, lawyer, and fee-only financial adviser who commits to a fiduciary standard in all dealings.

You want to follow a boring financial strategy, and you want to have reputable professionals to help along the way. You need specific fiduciary protections, too–without them, your financial adviser can (and often will) sell you over­priced investments. If you’re expecting a windfall, consult these professionals before you get it, so you can be proactive about logistics and tax implications.

8. Don’t make any financial decisions on your own.

Consult your accountant, lawyer, and financial adviser whether you’re considering opening up a new retirement account or selling some stock to finance a child’s college tuition. These professionals can explain tax fallout and the other ramifications for you, your family, and your heirs.

9. Give generously to reputable charities.

You are blessed. Remember to support causes that are meaningful to you and your community. Don’t forget to do your due diligence on any nonprofit organization; start with Charity Navigator, GiveWell, or Effective­ Altruism.

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