I grew up witnessing my family struggle and be stressed about finances. When I was around nine years old, I remember one month I was afraid to play video games because I overheard my mom saying something about not being able to pay the electricity bill. In this article, I’ll share how I went from a broke kid in college to being worth over half a million dollars.
I’ll give you my best personal finance tips that I live by along with my favorite finance apps in my top learning resources so that you can hopefully build your net worth and live a more financially secure life.
Now my childhood laid the foundation for how I feel about money now. And as I started to grow up, I tried to analyze the reasons for financial struggles and avoid them myself. Money definitely isn’t everything but it is one of the many important tools that can lead to a more satisfying life.
Tip #1: Take Advantage of Software
Today’s apps have made personal finance so easy compared to what my parents had to do almost everything. Now even though our money is just digital numbers on the screen. So to optimize your money you should be taking advantage of all these useful apps which are usually completely free.
These are all the finance apps and sites that can help you manage your money:
I use “Mint” for budgeting and tracking my finances.
I use Chase for mobile banking for investing.
Robinhood, Betterment and Wealthfront
I used Robinhood, Betterment and Wealthfront for investing.
I used CreditKarma to stay up-to-date on my credit score.
I use wave for business accounting software.
And I use PayPal to manage my customer invoices.
That’s a lot of apps, but they all play a part in my personal finance plan. It’s super important to be able to quickly move your money around and automate it and usually, multiple apps are needed for that.
Tip #2: Keep Learning About Personal Finance
Always continue learning about personal finance. Education has been absolutely crucial to building net worth and the best thing about personal finance advice is that you can customize it to your own situation. Everyone has their own rules so what I try to do is design my financial life using my favorite guidelines from many different experts. These are some of the top resources that have either taught me about personal finance or made an impact on my self-worth or net worth in some way.
A podcast includes: “Listen Money Matters”, “Smart Passive Income”
by Dave Ramsey.
Books include: “I Will Teach You to Be Rich”, “Think and Grow Rich”
“How to Win Friends and Influence People”.
Websites include: Reddit (Personal Finance and Financial Independence subreddits)
Blogs include: Financial Samurai, NerdWallet, Mr. Money Mustache
Now the sooner you start learning about the foundations that make up a solid personal finance plan, the quicker you’ll increase your net worth. Reading this article means you’re already trying to do that. So good job.
Now when I first started, I eased into it by listening to Dave Ramsey during my commute and browsing the finance sub reddits. Then I eventually started to read personal finance and self-help books, listened to business podcasts, all of which not only made me a better money manager, but it taught me how to be a more valuable person. So read books, listen to podcasts, watch videos, take courses, whatever it is, just keep learning.
Tip #3: Earn, Save, & Invest As Soon As Possible
Start earning, saving, and investing as early as possible. I got my first summer job when I was 17 as a lifeguard that barely paid minimum wage. At age 19 I started working a part-time job in my career field of IT that paid 16 dollars an hour while I was still a full-time college student. Luckily, that position included benefits so I was so excited to have a future pension in 401k. Seriously, what kind of 19 years old is excited about retirement. And all the adults at the time told me to make sure I put at least 3 percent in my retirement so I could get that employer match because it was free money. And I’m so glad I did. I honestly wouldn’t be where I am today financially speaking if I hadn’t applied for that job and taken advantage of the perks that came along with it.
So it sounds obvious but tries as early as possible to start earning, saving, and investing. Even if it’s just a little bit at the beginning. As long as it’s something it is always much better than waiting and you don’t have to be a market expert or even choose individual stocks. I recommend Betterment or Wealthfront, because they are Robo advisors, meaning they use a computer algorithm to help you invest your money in the smartest way possible without having to think about it. They both have intuitive apps that walk you through a quick setup of any investment accounts including retirement accounts. And they choose a diversified portfolio based on your age, income, and goals.
They also have some of the highest interest savings accounts so I recommend signing up just for their savings accounts even if you don’t open any other investment account.
Tip #4: Relentlessly Avoid Debt
Debt is the worst. Try to avoid it. My $500,000 net worth is broken down like this: half of it is real estate in physical assets and the other half is cash and investments. Now, none of it is debt.
Now there is such a thing as “good debt” and everyone’s opinion on debt is different. However, I personally try to avoid it at all costs. I decided to save money for years to pay off my house and car. But had I instead invested that money I most likely would have a higher net worth right now. But I prefer having the peace of mind of not having any debt. Now I’m pretty risk-averse, so it just feels better to be debt-free even though I probably missed out on some potential ROI from other investments.
Of course, almost everyone including me has to get a loan for something at some point. I’ve had to take out four loans in my life for each one of those loans I exhaustively saved as much money as I could to pay those off as quickly as humanly possible. So it’s okay to need a loan for something as long you have a plan and the ability to pay it off within a reasonable amount of time.
But try not to get into credit-card debt. Use a credit card to build up your credit but don’t let it build up debt. Always pay it off each month in full. Now the absolute best way to pay off debt quickly is to have the money to do so which brings us to my next tip.
Tip #5: Maximize Your Income
Do whatever it takes to maximize your income. It’s no surprise that the biggest factor that led to my high net worth at a relatively young age is the extra money I made in my spare time. So not only did I increase my income by working my way up the ladder at my day job by getting certifications and applying for higher-paying positions, but my biggest income boost came from when I started earning money on the side in my early 20s. I started dedicating a lot of my spare time to working on generating an online income mostly from YouTube. Not too long after that, I started my own videography business by working hard in my spare time to create extra income. I was able to exponentially increase my net worth.
So, find out what you’re good at, learn about business utilize the internet or even go back to the basics and do simple things that can earn you extra money. Take the “Garyvee” route, and hustle as much as possible. Stop watching TV and replace that time with working hard toward creating some type of income-generating business. If you’re at a day job and learn how to increase your salary by negotiating your pay. Applying for better-paying jobs, earning certifications, or completing courses that will lead to a higher salary.
Go out and network, meet people. Some people say your network is your net worth because it’s super important to know the right people so you don’t miss out on any beneficial opportunities that may arise at.
Tip #6: Minimize Your Biggest Expenses
Minimize the biggest expenses in your life. There are five potential things in life that will cost you the most money. House, car, college, weddings, and kids. Try to take each one of those decisions very seriously and be patient with them. Don’t rush into any of those without thinking because it could be more costly than you can handle.
Now the cars I drove as a teenager were old hand-me-downs until I got my first career job and saved up enough money to buy a used 12,000 dollar Pontiac and I researched for months before I found it. Now for college, I didn’t want me or my parents to go into debt so I chose to live at home for my first two years and go to an affordable local Community College for my associates. Then I got my bachelor’s through their low-cost online program.
Once I moved out of my parent’s house I lived in a small apartment with three friends to minimize living expenses. And I finally moved out on my own I chose a very modest apartment for my house. I did the same thing I took my time stuck to a strict budget and requirements and try my best to live within my means and not buy anything overly expensive.
My wife and I chose to have a very non-traditional elopement style wedding. It was small and intimate and we tried to be as frugal as possible. Seriously, my suit was $70 from Amazon and since we’re videographers we filmed the wedding ourselves, and guess what, it was amazing. We had so much fun, I think the total cost for both our wedding and honeymoon was no more than ten thousand dollars altogether. And of course, we are waiting for the right time to have kids, which is probably the biggest expense for any adult. So take your time with those five big life decisions.
As for monthly expenses, I like to look at them each month and use the 80/20 rule. To find the 20% of my purchases that make up 80% of my total expenses, then try to decrease those as much as possible.
Usually, the biggest monthly expenses are things like insurance, food, restaurants, online shopping, and utilities. Decreasing the biggest expenses will make the most difference in the long term. Some things you can do is shop around for different insurance to get the best rate. Take your time to find the best deal online if you’re for sure buying something. Switch to a different electricity plan if your company offers it. Call your internet company and negotiate the price and change your cell phone plan. In the past year, I’ve done a lot of those things and it goes a long way.
Remember, at the end of the day money is just a utility that should be helping you live a happier life. Try not to stress about money and try to be intentional about how you manage your personal finance. It’s really quite simple when it comes down to it, to increase your net worth you just need to earn more than you spend. Easier said than done, but still simple. I also believe that if you take care of the little things and the big things will take care of themselves. So make sure you’re getting into the details of each one of these tips to make sure that you maximize your earning potential while minimizing your biggest expenses as much as possible. Then let the software automate your money for you and all you have to do after that is be patient. Good luck with your personal finance journey.