On Your Road to Wealth and Financial Freedom
On Your Road to Wealth and Financial Freedom
Here are some helpful tips to help you on your journey.
Make more money - when all else is equal, person A who makes 140,000, vs person B who makes 70,000 has 2x the upperhand. Person A has the ability to invest more money because they have more capital to work with. It’s not impossible for Person B to do so either, but it will come with more challenges.
Education is a main driver of wealth and success, and it doesn’t always have to involve formal schooling unless you plan to have a career in fields such as medicine or law. Self-education is very easy and prevalent nowadays with the help of the internet. Online classes, borrow books, study on your own.
Easier said than done but a lot of people do not have the self-drive to do this on their own and need outside triggers to push them to do these things. Same concept as people who need to go to a formal class to study and learn or need a personal trainer to workout/exercise. There’s nothing wrong with that. It’s just an extra step. If you have the drive to do these things on your own, then you probably aren’t reading this blog since you’re already making it happen.
For those that need a little push, you can find mentors like me, to help motivate you into the right direction. Find somebody who will encourage you to be successful. Sometimes this requires you to meet new people.
I hate formal schooling, but I love learning. I read business and finance books for fun. I study foreign languages for fun, because I travel a lot and I find it very helpful to understand the language.
When starting out your financial journey, shoot for the biggest pay you can get relative to your cost of living.
Here’s a scenario,
Person A and B both live in San Francisco, a very high cost of living area.
Person A makes 2x as much as Person B.
In SF, somebody who makes 70K is barely surviving (the numbers keep changing due to inflation, so focus on the concept not the actual numbers here). They are most likely using all that capital just for necessities, because monthly rent/mortgage/house expenses/bills can rack up an average of 3-5K/month depending on how many roommates you have. And really that’s a thing in SF. People have so many roommates in order to survive.
If you’re closer to person B (ignore the 70K amount but remember the concept), you’re better off getting a higher paying job.
For example, if you are currently a secretary, think about doing side gigs but at the same time study for a career that pays more. Thanks to the internet, there’s now more options for side gigs whether it’s something you can do at home or on the go.
Don't stop there, always shoot for the highest pay, but keep your expenses as stagnant as possible. If you’re like me, who grew up with not much or very little money, you most likely have a very frugal lifestyle by necessity.
The issue arises when you start making a lot of money, your brain all of a sudden gets a huge dopamine rush and you feel like you’re in cloud 9. You may think you can keep this going forever, and that this is now a constant. So you end up elevating your lifestyle to match the paychecks. The ratio of what you make and spend stays the same. You get used to the comfortable lifestyle and it’s harder for you to save and invest money because you now do not want to go back to your previous lifestyle.
Keep things simple. Nothing is wrong with elevating your living conditions. But be mindful of your expenses.
Try this breakdown soft guidelines for your paychecks:
-necessities: rent/mortgage/house repairs, bills, healthcare, insurance - 50%
-fun money: for whatever the f*ck you wanna spend it on, have fun - 10%
-save and invest: the ratio between what you save for emergency funds vs. invest for your future will differ from person to person depending on their situation. - 40%
-Oh, if you have credit card debt and student loans, pay those off quickly first and foremost, in that order, because if you don’t the power of compounding will work against you. Those usually have high interest rates and they will negate your savings and investment interests.
Track your expenses. It’s a lot of work, but if you know exactly where your money is going, then it’s easy to redirect them to the things you want them to go to instead of the things they automatically veer towards. Here is my free expense tracking worksheet TRACK YOUR EXPENSES. Do this at least once a month. Build this activity into your routine, then it will become second nature. You will be surprised at how much money you think you spend vs how much you actually spend on things that are optional. Hey, I’m not saying restrict yourself, but keep your expenses below your paycheck so you can save and invest, because I want you to be rich.
Keep life simple. If you’re still starting out on your financial journey, automate what’s free and necessary. Hold off on fully optimizing your life until you have more free capital (after savings and investments are funded)
Automate: to save time and to help you actually get it done. This forces you to be diligent with your budgeting and actually achieve your goals.
-bills
-savings
-investments - auto deposit a certain amount per month of your paycheck into your savings and investments so that you learn to live on what is left without having to make the hard decision of manually putting money away for later.
Trim your subscriptions:
-cable
-netflix
-hulu
-disney
-youtubeTV
I’m missing a lot more, but you get the point.
Do you actually use them?
There are certain subscriptions that actually help you save money but most subscriptions are just plain consumptions for entertainment. Maybe if you need re-allocation of your capital (money), start with these and trim them. You can even split subscriptions with a friend or roommate(s).
Some subscriptions can be useful such as Amazon and Costco, unless you live really close to Walmart and WinCo. Which sells cheaper products without the need for membership.
Wait to optimize: this depends on your free capital, if it makes sense and you can still fully fund your S & I (savings and investments) then go for it, because it will save you a lot of time, and you can use that time for more productivity such as creating a business, taking care of a side gig, studying, etc).
-delivery services
-cleaning services
-dry cleaning for your work clothes (unless paid by the company)
Invest in robots for automation - they aren’t that expensive these days thanks to multiple competition. This frees up so much time that you can use for productivity instead.
-vacuums and mops
-security
-pool cleaners
-lawn mowers
Celebrate small wins! When your current net worth is currently far from your long term financial wealth goal. You can feel hopeless and may want to give up. But don’t. Every month or every week that you check your expense sheet and you achieve your goal for the week or the month, celebrate it. Not only are you using positive reinforcement for your subconscious mind, but your also are building great habits.
Don’t forget to set very clear goals. Successful people know exactly their life goals and they can articulate it clearly to anybody who cares to ask. Make big goals, but also create a lot of little short term goals that lead to that big long term goal. In doing this over time, your big imposing goal eventually doesn’t seem that intimidating after all. I’m not going to expand on goal setting since I have a lot of prior articles written about this subject in my blog. Read those.
That’s all for now. If you have questions, write them in the comments below. I started this blog to encourage and inspire people to chase their dreams and shoot for bigger goals, because I know you can. I am here to be your mentor and will help you along the way. Stay tuned.
