Ep. 414: The Best Financial Advice I’ve Ever Received

It’s Easier to Lower Your Expenses Than Raise Your Income

This is pretty simple. If you keep blowing up your expenses, then you have to pair that with additional income and if you need to be offensive with your money, then you need even more on top of that!

So keep your expenses low in relation to your income.

 

Even Rich People Have a Budget

I’ve been around wealthy people since my early twenties from working in insurance and such…and these folks all had budgets. Maybe they weren’t keeping track of every single dollar, but they had an idea of their expenses and how much they were willing to spend per month.

Have a budget. Do you know monthly what it costs to live?

 

Great Credit Is an Asset

If your credit score is in the 500s to 600s, you’re at a disadvantage. A credit score is kind of like an adult report card. If your credit score is low, you can’t borrow and if you can, you pay a ridiculous interest rate that makes paying back the loan very difficult.

Grow your credit score.

 

Live on a Fraction of What You Earn

This is different than what I said earlier. This is a specific percentage. I live on about 2/3rds of what I earn. This is a strategic amount that I am saving.

 

Cash Is Hard to Accumulate – Guard It

Early on when I earned $1000, $500 in lump sums, I did my best to put it away and not touch it. When you accumulate lump sumps of money, don’t spend it. Put it aside.

 

Pay Yourself a Wealth Tax

This is how you save. As I stated above, I pay myself about a 1/3rd wealth tax. You may be different and have to start out at a way lower amount, perhaps even 2%. You can increase it as you go.

 

Create Multiple Streams of Income

You can’t just have money coming from one area. You need to learn how to create passive income.

If I didn’t do anything for a month, how much money would come in?

Start thinking of money in terms of earned income and passive income.

Money Needs To Create More Money

Money is a chess piece. Use your money to advance your net worth. I do this through investing in new business, marketing, real estate, etc.

 

Never Lose Money

This is a bit of an exaggeration. Never lose large percentages of your net worth.

When you’re younger and you lose half of $10k it’s okay. You’ll get over that but when you get older you’ll have a percentage of your total money that is NEVER is put at risk. If you lose it, you have to make it back AND still grow from there.

 

Don’t Invest in Things You Don’t Understand

For me, it’s crypto currency. Why? Because I don’t understand it. This isn’t anything against crypto itself but for me it doesn’t make sense. It’s not a tangible thing to me.

 

Leverage Debt for Larger Returns

I’m not going to spend $100k to break even. That’s a straight trade off. I leverage debt very cautiously to get significant returns.

 

Don’t Loan Money

There’s a 50% chance you’re not going to get it back. If they’re asking for a loan, they have a significant in the first place.

Any money loaned would be an amount that would not alter my day in anyway to the point I would write it off as a gift.

 

Buy Assets, Not Liabilities

I like to buy things that appreciate. Real estate, companies, even watches sometimes.

Everybody has wants and I’ve had my share of silly purchases as well but in general, I strive to buy assets and not liabilities.