Back on Monday I gave you 10 tips on how to handle your finances. That was a very short and to the point post, but not enough to really get you thinking about it. I thought I should dig a bit deeper into it and really hammer the point home.

You’re probably asking “Why do I care?” I care because I want to make money so I can pay my bills, buy things I want, and live life how I choose. I figure I’m not alone. I also figure that two things got us into the financial mess that the world is in; greedy rich people and greedy ‘us’.

Greedy rich people, like those running banks, pulled scams on many of us and got our money before failing when things went bad. Greedy ‘us’ spent money recklessly because we weren’t paying attention and ended up doing things we shouldn’t have been doing.

Sure, that’s pretty simple, but think about it for just a few seconds, then move on. Because this isn’t about blame; it’s about moving forward. And it’s also about coming to grips with what’s real. Immutable means not subject to change; that’s what I feel the things I mention below are all about, and trust me, if you haven’t come to grips with these things, or don’t have some of them, you need to think about it and get it done.

On with the 5 immutable laws of personal finance:

1. You’re going to need money.

Tell me this isn’t at the top of your list. Everyone needs money; even people who have no idea about money need money. Money is what makes the world go around. Money is what allows every one of us to live, to enjoy life, or even to not enjoy life.

Money is protection. Money is what saves the poor. Money is what protects those few groups of people left that have never heard of money. Money is what allows you to read what I’m writing now, whether you have your own computer, or are at the library, or reading it somewhere else.

But the more money you have the more you can do. The better you budget your money the more you can do with more money. And even if you have little money, sometimes all it takes is a little money, a little luck, and some good planning to make more, or at least to survive another day to take another shot at it.

2. You’re going to need stuff.

What do you need? What do you want? You need food and clothing. You want… well, every and anything else you can afford. For some people it’s never enough; for others, it’s enough, and then they start thinking about what they can do with the rest of it.

At a certain point you need more than food and clothing. You just might need a car as opposed to want a car. You might need a house as opposed to want a house; depends on where you live. You might need an advanced degree if there’s a certain career you want that requires it. You might need to purchase instruments if you’re going to be a professional musician.

Needs grow with ambition and time. Not all needs directly need money, but money allows you to pursue goals and dreams. It allows you to pay bills and take care of all that other stuff that comes up while you’re shooting for those goals and dreams.

3. You’re going to need insurance.

How many of you don’t have insurance of any kind? How’s that working for you? Truth be told, we all need insurance. We need insurance for our car; we need insurance for our health; we need insurance for our house or our apartment.

Why do we need insurance? Because without insurance it costs us a lot more money than we sometimes have for other things. More than 62% of people who claim bankruptcy have a large medical bill listed.

What do you think it will cost you for surgery on a broken leg if you don’t have insurance than if you have it? What do you think it will cost you, if you don’t have your license revoked and spend some time in jail, if you don’t have auto insurance if you’re in an accident, whether you caused it or not? Do you think you can replace all that much if your house or apartment catches on fire and you don’t have any insurance on it? Do you want your family to struggle trying to figure out how to live once you’re gone, or even how to bury you?

4. You’re going to have to invest.

Sorry, but this is something you’re going to have to do in some way. How you do it is another matter. For many people, working somewhere 30 years then retiring will earn them some kind of pension, and once social security kicks in they think life is going to be sweet.

Unfortunately, I’m here to tell you that’s not how it’s going to be for the majority of people. It just might be enough money to survive on, but surviving isn’t always living. To do that, you need to think about putting some money away for your retirement, or even for that rainy day you’re hoping never comes.

How you decide to put money away is another thing entirely. It turns out my mother hoards money; she’s got investments, but she also stores money all over the house, and neither of us knows where a lot of it is. But it’s one of her ways. For everyone else you can think about a savings account that might pay you .5% a year on whatever you put in there. You can think about an IRA or money market account. You can think of investing in real estate (not these days) or direct stock market prospecting. Or you can have money jars, which is one of my methods, to drop all of your change in and watch that grow.

Regardless of how you do it, it’s something you should think about, but probably don’t think about. It never hurts to have more money than you need.

5. You’re going to have bad times as well as good times with money.

Did you hear a couple of days ago that the average American family lost 40% of its wealth in the last 4 years? How were you touched by the world recession? I’d have to agree with that statement; doesn’t mean we all immediately went broke, but it’s been hard.

Unemployment jumped. Consulting opportunities fell. Travel companies started to suffer some, as well as entertainment, news, etc. You want to hear some strange information? Some rich people took hits of more than 75%. They were still rich, but not as rich as they had been. Many that had private planes sold those planes; the same went for mansions. Some of them start flying coach unless someone else was paying for their travel; even P Diddy, one of the richest men in the world, started flying coach.

So bad times hit almost everyone. But that only means good times are around the corner, and when the good times hit, almost everyone prospers. The thing overall is that there are always good and bad times. When times are good we should have some plans to help us ride out the bad times, because they will come.

There you are, 5 immutable laws of personal finance. How did you do? How will you do?

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