If there’s one thing I love about personal finance, it’s that there’s a billion ways of explaining things to people and we all have our own quirks to “getting it.” I could say the same exact thing to any three of you reading this right now, and each of you would take it in and digest it in your own way – all depending on how relatable it was to you or not.
It’s also the reason why most of us money bloggers say the same thing over and over again too, with just a tad bit different spin on it each time – the basics of finance has pretty much remained the same for centuries! Haha… and it never hurts to be reminded of it every now and then too ;) Just like with my latest convo with my brother the other day…
He’s always asking me for the “latest tip” on money, and what he can do real fast to up his game a bit more (hint: nothing rarely happens as fast as you’re wanting it to go in your head), but overtime I’ve gotten better at knowing what he’s *really* after when he asks me stuff like this. Which is really a new way to tell him the same thing I always tell him whenever he’s looking to reach that end goal of his down the line: Financial Freedom. Or, as we both like to talk a lot about – a bigger net worth (cuz it’s easier to track and get our heads around than the term “freedom”).
So, as always, I spit out the two MAIN things to keep concentrating on which improves these numbers the most:
- Lowering your debt/expenses
- Increasing your income
It’s really that simple. Hard to put into practice and stay on top of 24/7, but still very very simple when it comes down to it all. And if y’all watched that killer video I posted yesterday on Joe’s mission from No More Harvard Debt, you’ll see he focused on that *exact* straightforward mantra that got him out of $90,000 debt in a mere 7 months. Pretty incredible!
Let’s go over these two for a bit…
1) Lower Your Expenses
Everyone already knows and wants to do this one, of course, but it’s still very much overlooked. People like me focus on saving a lot and investing even more, but there’s equal impact in lowering all your expenses and getting your lifestyle in check too. Something that I only recently started getting better about myself (remember that post on wanting to need LESS going forward? I have to keep reminding myself that it’s still just as important!).
If you think about it, the less money you need to continue your current lifestyle, the less you should need in the future. The problem people usually have is they spend so much time scrapping by and just killin’ it to get rid of all their debt, but THEN they go right back out there and end up getting some more! Maybe in the form of a new car, or a bigger house or new toys, etc etc. Something we like to call “lifestyle inflation” around here – and something I used to SUCK at too – up until I hit about 25 (I’m now 32).
There’s nothing saying you can’t enjoy life and continue to treat yourself to rewards every now and then – that’s what money is for! – BUT you just gotta be careful of falling into that lifestyle trap of needing more and more money the more successful you get. All those raises and salary bumps you get will try to keep pushing up your expenses, but don’t let it! It’s a trick!
2) Make More Money
This is the other side of things. And again, something everyone knows and wants in life, but for whatever reason never act on it like they wish they would. We talk a lot about side hustles and part-time jobs here on the site, but it’s not because we just like working for the fun of it (although sometimes we do :)), but more because we KNOW what that means in the long run: MORE MONEY! Money money MONEYYYYY!!!!! And the more we make at an earlier age, the faster we hit that almost untouchable goal at the back of our head: getting financially free.
Even though we all like to sugarcoat it, making more money really CAN help you get to where you want to be in life – even if not directly. Some people require more to live out their dreams than others, but at the end of the day the easiest way to get you from point A to point B is by having more money to pull from. (And don’t say you wouldn’t want a million dollars or a ton of money either, because even if you care more about charity or your family or friends or love, or whatever, you can surely use money to help increase your missions there too – it doesn’t all have to be about the devil and greed, contrary to popular belief ;))
This 1-2 punch is the key to reaching these ultimate goals of ours. The more money we can save up from all that hustling we’re doing, and the better we get with each of our expenses – especially the long term ones (*ahem* our mortgages) – the more free our lives will become as the years fly by. Those 2 things alone will speed up the process as fast as it could really go – short of winning the lottery or getting a fancy pants inheritance of epic proportions (which, btw, is totally the wussy way to go – not that you could really help that last one, haha…)
So that’s what I tell my brother every 2 months, and that’s what I’ll keep telling you here too. Nothing we haven’t already talked about over they years, but a fresh reminder to always keep in the back of your heads. Especially as you question things from time to time and/or want that “quick fix” to everything. It may not always be easy, but it’s 100% the honest to goodness truth. Keep on lowering those expenses and bringing home that bacon, baby! You’ll thank yourself every 5 years from now, I promise ;) And you can bet your sweet tookus I’ll be doing the same (Woot!).
(Flag by DonkeyHotey, tweaked by J$)
PS: If you’re just getting started in your journey, here are a few good resources to help track your money. Doesn’t matter which route you go, just that it ends up sticking!
- The "Budget/Net Worth" spreadsheet - the colorful Excel template I personally use.
- The "Money Snapshot" spreadsheet - a simple Excel template I created for my former $$$ clients
If you're not a spreadsheet guy like me and prefer something more automated (which is fine, whatever gets you to take action!), you can try your hand with a free Personal Capital account instead.
Personal Capital is a cool tool that connects with your bank & investment accounts to give you an automated way to track your net worth. You'll get a crystal clear picture of how your spending and investments affect your financial goals (early retirement?), and it's super easy to use.
It only takes a couple minutes to set up and you can grab your free account here. They also do a lot of other cool stuff as well which my early retired friend Justin covers in our full review of Personal Capital - check it out here: Why I Use Personal Capital Almost Every Single Day.
(There's also Mint.com too btw which is also free and automated, but its more focused on day-to-day budgeting rather than long-term net worth building)
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!