The Best Money Advice & Tips Everyone Should Know

Income: What You Earn Every Month The #1 most valuable asset you have is your income, your ability to make money month in and month out. Everything you do should be focused on increasing that amount, maintaining that amount, and preserving and protecting a 50-year stream of it from age 20–70. Everything you do from choice of careers, choice of college, to choice of what city to live in will all determine what your income is.

Debt: What You Owe Others The #2 most valuable tip is to live debt free from day one. NEVER get into the debt trap. If you have a $10,000 balance on a credit card that is a 29.9% APR interest rate, that creates a $3,000 per year impact on your life. $300 per month may not seem like a lot, but over 10 years, that $30,000 in payments would have grown to well over $60,000 if you had invested it well. If you were to maintain that amount of debt over all 50 years of earning, then you would have not only thrown away the $150,000 you would have paid, but you would have also missed out on the $1.3M that that $150,000 would have become if you had invested it. Paying off debt has the net effect of an immediate return that is equal to the credit card rate of interest. Where else can you get a guaranteed 30% return? Nowhere!

Monthly Expenses: How Much You Pay Out Each Month The next most important idea is to live frugally on a fraction of what you make in income. My recommendation is that your total expenses should not be more than 50% of what you make. However most folks are not willing to make that sacrifice. In that case, the breakdown should be as follows given the ranges from low to high percentages necessary for success on the low end, or survival on the high end.

Percentages of Income

Housing: 25%-50% of Income Typically the #1 most expensive choice we will ever make. Ironically it is also the least understood in proper terms. You work 8–10 hours a day, usually at an office. You sleep 6–8 hours and you get ready for work and ready for bed 1–2 hours per day. That means that 15–20 hours per day, you aren’t even using anything more than your bedroom and bathroom. That means that the other X number of square feet of your house is a needless expense.

Food: 10%-20% of Income If you are single this number can be very different than if you have a family, but generally speaking you should never eat out or at least limit it to “date night” once per week, but even $100 per week in eating out is over $5,000 per year, and the 50 year impact to your savings and investing is $2.17M over 50 years.

Cars: 0%-20% of Income Despite rumors to the contrary, you do not need the latest and greatest car to survive. Car payments are the #1 killer of income after eating out. Many car payments are easily $500 per month these days and over $5,000 per year. That is a $2.17M impact over 50 years.

Utilities and Phone: 5%-10% of Income If you are renting, getting power, water and other utilities included in your rent is the way to go. Also, news flash: That latest iPhone for $1,099 that you “can’t live without” is costing you $40 per month for 2 years, and if you can’t pay cash for it, don’t buy it. That $40 per month well invested is another $200,000 over 50 years.

Savings and Investing: 0%-30% of Income Well if you have been keeping up with the ranges, if you were at the high side of spending for every category, unforchantly now you have $0 and 0% left for savings and investing. In the US, 98–99 people out of 100 are in the same boat. Misery does indeed love company. If you keep the low side, you may be amazed that you now have 30% of your income left to save and invest. Congratulations — welcome to the top 1%-2% of people in the US! While others have enjoyed their $70 steak and lobster and their $100 bar tab, you are going to be enjoying your golden years not eating spam and looking for dropped coins in parking lots. If you get to this point you will have won. If you just did #2, #5, #6 and #7, you you have saved a staggering $5.9M over 50 years. Enjoy. You now can do whatever the hell you want to do in retirement.

For investing, I recommend the below to where I have personally made excellent gains: Wealthfront: http://wlth.fr/1QHm2mi Betterment: https://goo.gl/v8QwMa Fundrise: https://fundrise.com RealtyMogul: https://www.realtymogul.com LendingClub: https://goo.gl/BecQ86 Vanguard: https://investor.vanguard.com Retirement Planning Calculator Software: http://bit.ly/2wHQpHT