The first three laws of money 💰

Welcome to The Letter Home - my weekly newsletter about building financial confidence on the path to the life you want 🏡

Each week, we break down one meaningful money concept and leave you with an exercise that you can use to put it into practice.

This week, we're looking at three laws of money that have been around for thousands of years and still hold up today 👇️

There's a book called The Richest Man in Babylon that was written almost a hundred years ago. It tells the story of a man in ancient Babylon who builds wealth from nothing using a handful of simple principles.

The principles haven't changed. Most of us just never learned them.

We're taught how to earn money, but we're not necessarily taught how to keep it (and there's a massive difference between the two).

So this week, we're going back to the fundamentals. 

Three laws that form the foundation of every meaningful financial plan. They're not complicated or flashy, but they work.

Most people get paid and immediately start spending. 

Rent, groceries, subscriptions, a dinner out. Whatever's left over (if anything) gets saved.

This is backwards!

The first law says you save before you spend, not after. 

You take at least 10% of every dollar you earn and set it aside before it has a chance to disappear.

The formula is simple: Income minus Savings equals Spending.

NOT Income minus Spending equals Savings.

That small reorder changes everything. It turns saving from an afterthought into a priority. 

If 10% feels like too much right now, start with 5%. Start with 2%. The percentage matters less than the habit.

Once your savings are spoken for, you learn to live on the remaining 80-90%.

This forces you to get honest about what you actually need versus what you want. Not in a restrictive, guilt-driven way. In a clear-eyed, adult way.

If your income is unpredictable (freelancers, commission-based work, side hustlers), the guideline shifts. Budget based on 60-70% of your peak earnings instead. 

That buffer protects you when months are lean and keeps you from inflating your lifestyle when months are good.

The goal here is sustainability. 

A budget that makes you miserable won't last. One that gives you breathing room will.

Saving is the foundation, but money sitting in a savings account is slowly losing value. 

Inflation chips away at it every single year.

The third law says your money needs a job. It needs to go somewhere it can grow. 

That means moving from saving to investing, and focusing on assets that appreciate over time.

You don't need to become a stock picker or a real estate mogul. You just need to understand that the gap between "saving" and "building wealth" is bridged by putting your money to work.

There's another way to think about all of this that makes it click:

Every dollar you spend cost you more than a dollar to earn. If you're in a 25% tax bracket and you spend $50, you actually had to earn about $75 to make that purchase. 

A third of your effort went to taxes before you saw a cent.

We can reframe saving not as sacrifice, but as self-respect. 

You worked hard for that money, and keeping more of it isn't cheap. It's honoring the time and energy you traded to earn it.

That's the shift to focus on. 

Saving isn't about going without, t's about recognizing that you have three currencies: money, time, and energy. The way you manage one affects the other two.

This week, try the Reverse Spending Challenge.

For the next 7 days, every time you decide not to make a non-essential purchase, do three things:

At the end of the week, total up your logged amounts. Pick one item from your list and actually redirect that money toward your future. A savings transfer, a small investment, a debt payment.

Through this exercise, you can train yourself to see the real cost of each purchase and make intentional choices about where your money goes.