Everybody always wants to make more money and have financial freedom, and here’s the secret:
It’s not very complicated!
In this article, I walk you through 5 SIMPLE, practical steps you can start taking today, to jump start your journey to financial success. Best part is? It doesn’t involve scammy programs that promise millions of dollars overnight (ones that actually make you broke). If you were hoping for that – sorry to disappoint? But I’ve got something better, so read on!
Step #1: Run your personal finances like you might run a business.
Now whether or not you’ve actually run a business before is besides the point, but it’s the mindset here that’s important. As a business, in order to just survive, you need to be bringing in enough money to cover your expenses. Simple. Now I imagine you’re not reading this article because you just want to survive, you want to exceed that and live very comfortably. In order to do that, you need to do one of a few things:
- Bring in more money, but don’t spend more
- Don’t bring in more money, but spend less
- This one is my favorite, bring in more money AND spend less
Now there are slight variations here, like make more money and still spend more, just don’t spend too much more. I start with this step because it leads you to think a little differently about what you choose to spend money on and what you choose to not spend money on. If you think of yourself as a business, you’re more calculated about those dollars that go in and out, and how can you get the most bang for your buck whether it be investments, food, or entertainment.
Step 1 is a good foundation for the next couple of steps.
Step #2: Reduce your expenses!
This means you save more of your money, and there are plenty of ways to do this that span a variety of current spending habits you might have. Here are a few of my favorite ones:
- Cut the cord! If you have cable, get rid of that and go with just internet and some streaming service like Sling for live TV, or Hulu, Amazon Prime, and Netflix for a bunch of other great content. But be careful to not go overboard here because the streaming services do actually add up to where you might be back to paying the same price as cable!
- If you use a food delivery app like Uber Eats or Door Dash, skip it and pick up the food yourself! Of course, there’s an upcharge for the convenience of having food delivered, but in some cases, that upcharge can be quite extreme and add up over time. In one instance, I would’ve spent almost 40% more through Door Dash compared to ordering directly and picking it up myself. Call me cheap (I prefer the term frugal), but for a quick 30 minute trip, this is like making $10 bucks just for the slight inconvenience. Think of life before these food delivery apps. Better yet, cook a meal and eat in! That’s often much cheaper.
- Make your own coffee. Seriously. You can make it yourself for well under a buck vs going out for coffee and spending $5. Do that everyday of the year and you spend a little over $1,800! Not saying you can’t treat yourself from time to time, but you’ll want to revaluate the habit if you have it. Because think about it this way, imagine your job gave you an $1,800 bonus out of the blue. You’d be pretty excited about that! It is the same here, just without the immediacy and impact of being given all $1,800 at once.
Also think about other monthly recurring fees you have: gym membership, are you getting the full use out of it? Could you go to a less expensive gym with fewer features? Are there certain subscription services that you maybe used only once or twice and have never bothered to unsubscribe? When is the last time you shopped for a better rate on your phone bill, insurance, or loans? The list goes on and it pays to examine that.
The money you save here can be better used elsewhere like in the next three steps, which we’ll go to now.
Step #3: Invest in YOURSELF.
Like a business, you make investments in equipment, people, etc, all with the intent that you can conduct your business more efficiently and grow profitably. For you, this means investing in your education and skillsets. I make it no secret that I’m a fan of online learning, and with what all is out there at all kinds of price points starting from free, you have no excuses. Find skills that you think you would enjoy learning and that you can make more money from doing professionally, or using your education to advance your career in other ways.
Not only that, educating yourself can lead to very interesting opportunities, which isn’t just relegated to a traditional career, but you get exposed to new topics and ways of thinking that may lead you down a path of starting your own business. There’s a big risk in doing so, but if it’s something you’re passionate about and there’s a legitimate market opportunity, there’s a ton of upside and you can really accelerate building your wealth.
Step #4: Invest your money wisely, starting with retirement accounts.
I’ve got a separate article you can check out in the on my website that talks about this step in a bit more detail, but here in the US, you have 401(k)s that are company sponsored retirement accounts and you have regular IRAs and Roth IRAs. Without going into too much detail, these are accounts through which you can invest money in stocks/bonds (preferably in index funds) where the gains on that investment grows tax-deferred or tax-free, and is available to pull at retirement age 59 ½. Bottom line is, this is a way to grow that puts you in a better tax situation so that you ultimately pay less in taxes than alternative investment methods.
Apart from retirement accounts, you can still invest in the stock market and I’d strongly recommend index funds which gives you the best chance of consistent and reliable long term growth. Real estate is another option, but a steeper learning curve and far more involvement. I’ll cover that in another video.
Step #5: Pay off high-interest debt!
There’s nothing quite like high interest that can eat away at your money, but needless to say, credit card debt, pay that off ASAP! In fact, don’t buy anything, apart from real estate (and maybe a vehicle) that you couldn’t afford to pay for in cash on the spot. The average interest on a credit card is 16%. Here’s the deal, for most people, there is virtually no investment you could ever make that can reliably and consistently deliver 16% returns per year, so it’s not like your money could be better invested elsewhere other than in paying off high interest notes asap.
**Everything I’ve mentioned here is fairly simple and you could begin applying right now because it starts with a mindset of running your finances like a business. Reevaluate what expenses you can reduce while not negatively impacting your lifestyle too much. Use education as a way to open new doors to opportunities to increase your income, make wise investments, and don’t let high interest debt chip away at everything you’re already working hard for.
Folks, let me know in the comments below what financial strategies have helped you out the most to get you where you want to be.
Thanks for reading – I’ll see you around!