Five personal finance rules to follow

One-size-fits-all financial advice isn't supposed to work, as the rules that guide us should be molded to our individual situations. But some rules of thumb can be really helpful. Here are five money rules to live by:

Buy used cars, drive them for 10 years

New cars are lovely, but they are expensive and lose an astonishing amount of value in their first two years. Let someone else pay for that depreciation and take advantage of the fact that today's better-built cars can run well for at least a decade, if properly maintained. You can save hundreds of thousands of dollars over your driving lifetime this way.

Start saving early to pay for your kids' college

Retirement saving is more important, but get in the habit of putting at least $25 a month aside for college soon as your child is born. Your kids can always get student loans, but as you have probably heard, no one will lend you money for retirement. Your children will not thank you if the price for their education is your having to move in with them because you are 70 and broke.

Don't let insurance sweat the small stuff

Cover yourself for catastrophic expenses, not the stuff you can pay out of pocket. Insurance should protect you against the big things — unexpected expenses that could wipe you out financially, such as your home burning down or a car crash that triggers a lawsuit. You want high limits on your policies, but high deductibles, too.

Pause before prepaying mortgage

You have better things to do with your money than prepay a low-rate, potentially tax-deductible mortgage. Shaving years off your mortgage and saving money on interest sounds great. But before you consider making extra payments, make sure you are saving enough for retirement and have paid off all other debt that likely has higher interest rates and won't help you at tax time.

Save 15 percent for retirement

If you got a late start or want to retire early, you might need to save more. Run the numbers on your retirement plan. For most people, 15 percent including any company match is a good place to start. Even if you can't save as much as you should, start somewhere and kick up your savings rate regularly.