Ray Dalio's 3 Rules To Financial Security and Success | Exploring Markets

Ray Dalio's 3 Rules To Financial Security and Success

If you haven't watched Ray Dalio's masterpiece, How The Economic Machine Works, make sure you add it to your calendar for eventual viewing. In it, Dalio explains how the economy works from his perspective. Most importantly, he tells everyone how to achieve financial freedom:

1. Do not accumulate too much debt. The lesson is simple. Don't have more debt than your yearly or monthly income. If that happens, get out as fast as you can. Think of yourself like a business. If you have more debt than income, you're a business that's essentially losing money. Be profitable and don't let this happen.




2. You should always be working to improve yourself. Education, experience, and personal goals are all ways to grow your abilities. This leads to a second important point: your income should never exceed your work or profession. Why? The second you start earning more than you produce is the second you no longer become competitive. You are essentially ripping someone off – they are paying you for certain work and you're NOT doing it at a fair rate. At that point, they should hire someone else who can do the same work for less.




3. At the end of the day, what you produce is everything. This will eventually define your income, your professional career, and potentially even your life outside of work. This is why education or a certain mastered skill is so important. Find something you're good at and perfect it. Become an expert and earn money. The key here though is a little trickier than anyone might think: you need to know what it is you're great at and how you'll get better over time.