Money

It’s not how much money you make, it’s how you spend it.

I think a basic financial primer like this would benefit many of the younger guys out there, and there doesn't seem to be many post with financial flair. Make note, i am not a financial adviser (or professional writer for that matter)i’m just a 30 year old guy living in Middle America that has had some good success through experience, research, planning and some financially smart parental influence (i grew up lower middle class, my parents are now comfortably retired at 60). I'm sure there's tons of you doing way better bringing in your millions or what not, if so post some advice for everyone else.

Everyone has different circumstances, living conditions, opportunities and goals when it comes to finances. The key is to make the most of your situation and try to continually improve it, or change it to a situation where you can improve. While this post isn’t all encompassing take what you feel will be useful from it.

Live Below Your Means

One of the most common issue is see is people living at or above their means. Trying to keep up with the Jones or demonstrating conspicuous consumption and living paycheck to paycheck will finally fall through when something happens, (and it will) whether it be a job layoff, injury, change of living situation etc. When events like these happen they tend to have a domino effect on your financial situation, and the further you get behind the harder it is to get ahead. Living below your means will allow you to save cash to invest, payoff debt, or enjoy life.

You need to remember how the world works. EVERYONE is after your money. They want to take your cash and put it in their pocket. This is easily demonstrated by the advertising industry, these people pay hundreds of BILLIONS of dollars for you to give them your money. And it has only gotten worse with the onset of digital advertising, data collection and target adds.

Some simple examples of ways to start reducing costs.

• Have a budget. Know what comes in every month, what goes out and where it goes to.

• Screen each purchase and reduce impulse buying. Do you REALLY need it right this second? If not shop around online and get it cheaper. Capitalism and competition is great, take advantage of it.

• Fixed expenses- Reducing fixed expenses even by a small amount saves a lot in the long term. Shop around Cell phone plans, Cut the cord on your cable TV and hack a firestick, install LED bulbs to reduce your electric bill. Take some time to shop around for insurance every 2 years.

• Buy in bulk things that you know you will use. This is an advantage the poor usually don’t have on a shoestring budget but leads to substantial saving on items that are a need. (toiletries, food, motor oil etc)

• Buy Generic. Not everything but a lot of things are the same the same as brand names. and usually made by the same manufacture in the same facility. They just slap a different label on it. a big one is OTC medications, next time you’re out take a look at a brand name and generic of the same meds. Their ingredients are exactly the same down to the milligram. Now not everything generic is the same (i can’t stand generic cereal) but you get the point.

Credit

Build your credit. Many of things you want in life are probably expensive, no one is going to to loan you money if your credit is bad or non existent. Not only will good credit increase the probability of getting a loan, but you’ll get much better interest rates which can lead to substantial savings. If you are already drowning in credit card debt, student loans, car payments etc. don’t fret. Budget accordingly to pay them off and when it’s done your credit will likely be in good shape if not excellent. There are many resources online for how to build credit, many come naturally through life such as purchasing vehicles, houses, credit cards and other loans. ALWAYS make at least the minimum payment on your notes, read up and understand how compound interest works and know what you are getting into before making any large purchase.

• Credit card are only bad if you are irresponsible, if you utilize them correctly they can be a great asset. Everyone should have 1 or 2 and the longer the account was open the better. Don’t let your spending get out of control.

• Understand how interest rates, loan terms, and any special “introductory offers work”

• Always at least make the minimum payment on your notes. Even if it doesn’t put a dent in the principle.

• Check your credit score annually for free to see if there are any items on there that shouldn’t be.

• If you have a particularly bad note that seems impossible to deal with, contact the debtor directly, many times a payment plan can be worked out. They would rather get what they can then risk you going bankrupt and leaving them high and dry. This works well with Medical bills and student loans (though you can’t go bankrupt on student loans)

Maximize Earned Income ( this is geared towards someone’s standard 9-5 job.)

Make as much as you can while maintaining whatever balance you enjoy in life and always try to maximize your income. Many people get comfortable in their positions and never bother to look elsewhere. I look at the job market in my industry every few months just to see what’s out there or what’s in demand and submit my resume (which should be regularly updated every few months) when i see a good potential prospect. I’ve have had offers from other companies that were more than my current salary, i would discuss with my management that i received an offer from a competitor but would consider staying if my current salary was match or adjusted. Don’t be afraid to ask for an increase in your wage or salary either, just be sure to have justification for the increase when they ask “why?” (and not just “i’ve been here for 5 years”). If you can produce value for your employer and they know it they will be more inclined to want to keep you. If anyone off the street can do the same quality of work for less pay, you will probably be SOL. If you’re stuck in a dead end job with no room for advancement, get out. You are spinning your wheels. Get educated and acquire more marketable skills, this doesn’t necessarily mean college. Learn a trade, get some training certificates, or get some experience in work that requires some actual skill or aptitude. We are no longer in a manufacturing society, robots have taken over. Hard labor just doesn’t pay when a machine can do it much cheaper. Get some Skills.

Starting your own business is also a great way to earn income. Though you need to understand the difference between being “self-employed” and being a business owner. Owning your own business has a higher risk/ reward than conventional employment. While conventional employment gives you some comfort in a steady paycheck and work/life balance. Personally, i have both a day job and a side business (real estate investment, management and maintenance) but as the business grows i have been slowly transitioning out of my 9-5.

While many people are motivated by money, it is important to remember a quality life should have a good work/life balance. If you love your work, and don’t mind putting in 65hr/week consistently to make some big bucks go for it, however don’t actually sacrifice living to try to make a good living.

• Keep your resume updated and always be on the lookout for new opportunities

• Always look to acquire new skills, certifications, licenses etc. this will make you look more valuable to current and potential future employers. Some employers will even pay for further education.

• If you are in a skilless job, get some skills and leave. Every employee is expendable, the unskilled ones moreso.

• Ask for a raise if you feel you earned one, worst they can say is no.

• Machiavellian principles can get you a head, it can be ruthless out there.

• Start your own business. This is the most common way for regular people to become very rich. However not everyone is cut out to be an entrepreneur. Many times, businesses will fail and you’ll be worse off than before, however you’ll have learned what doesn’t work.

Cash

Once you’ve practice the points previous paragraphs you’ll start noticing your cash flow is increasing. This is usually where people either go on to become millionaires, or end up back where they started. Many times when people start having more free cash they end up spending it, which seems natural. however this is where a lot of people trip up on their financial journey and it takes them back to living paycheck to paycheck except now they have a bunch of junk they bought. The old adage “Its always better to have your money work for you than for you to work for your money” is how a majority of millionaires are made. And to be honest, in my younger days not many people reasonably thought being a millionaire was very feasible. Now with increased salaries and higher inflation, more people are becoming millionaires now than ever before, though the value of the dollar isn’t necessarily what it used to be. The best thing you can do with your free cash is to invest it or leverage in assets that will make it grow. This can include mutual funds, stocks, IRA’s, 401K’s, Real estate, business partnerships, startups, home businesses and perhaps even crypto currencies (though i don’t really consider CC’s investing , more of a gamble, i’m sure i’ll get some flak for that statement)

• When you start noticing you have have more free cash available, reward yourself for your hard work but don’t let it start burning a hole in your pocket.

• Always have some some liquid reserves, sometimes you may need cash on short notice

• Cash can be leveraged to increase its value, if you followed the previous steps and have your Credit and Income at good levels, cash is the last piece of the pie before you can really start seeing results.

Passive Income

This is where things get fun. Passive income is money made off investments, or simply put, your money making money. There are multiple streams of passive income. They require some upfront footwork but can be a steady income stream with little to no effort on your part. I won’t go through every form of passive income do your own research, but i can honestly say that i currently make as much money passively as i do at my job. And it’s much nicer to get 10k check every month for making a few phone calls than to work 50 hours a week for the same amount just to ha