Sometimes I get envious of new bloggers. They start with a clean slate and can write about anything. After blogging for many years, developing a new way to give the same timeless money advice is hard. However, it’s always good to have a refresher. If you are beginning your money journey, this article will be an excellent place to start. If you are well on your way on your money journey and want to take it to the next level, I’ll also include some advanced tips. Beginners, feel free to skip over these sections.
Let’s get started:
Step 1: Be Frugal and Focused
It’s important to know the value of a dollar. Luckily, I grew up in a household where the culture was saving money and not being wasteful. Being frugal came naturally to me. Try to develop a frugal state of mind. Then you’ll instinctively realize that brewed coffee at home and bringing lunch to work can save you $15-20 a day over Starbucks in the morning and Chipotle for lunch. Being frugal can save you more than $500 a month. Those savings will be extremely helpful when we get to the next step.
Additionally, focus on saving money on “The Big Three”: Housing, Transportation, and Food.
Housing is always expensive, but it’s never been this expensive in my lifetime. It’s not just the price of homes, but mortgages are high, creating a very high total monthly payment.
There are a variety of ways to save money on housing. Some people get a roommate or two. Another option is to get a spouse – but don’t rush into that one to save money on housing, right?
Some people buy a tiny house. Some rent a cheaper place. There are entire books about hacking your housing expense to keep it as low as possible.
If you live in a big city, you can bike or walk places. That will save you some money on the subway. For the rest of us, buy the cheapest reliable transportation you can. The goal is to get from point A to point B.
Cook at home. Eat out at restaurants as little as possible. Use these tips to eat healthy food without spending a lot of money.
If you are buying a house, you want to avoid buying high. How do you know if the market is high or low? There’s an easy metric to understand when to buy and sell real estate.
In 2005, I bought a condo at the wrong time. The metric showed that housing prices were high. My wife and I bought property again in 2011 and 2012. We live in the home we purchased in 2011, and the property we bought in 2012 is worth more than three times today than what we paid for it.
Step 2: Grow Income
You can grow your income by getting more education to advance your career, starting a side hustle, and/or starting a business. We combined growing income with investing by buying a rental property and being a landlord. That’s investing, starting a side hustle, and business – all at once! Thanks to Joe from Retire by 40 for the suggestion.
Overall, the most important thing is that you provide value. If you can identify a need or solve someone’s problem, you can usually demand more money.
Growing income is almost always unique to each individual’s strengths and weaknesses. I don’t know you, so it’s impossible for me to give you actionable advice on what might work best for you. You may find some trusted friends who can help you determine which way to go with this one.
I climbed the corporate ladder for a bit but got burned out and interested in other things. I pivoted to blogging and, most recently, to dog boarding. I also do some freelance customer service as a side hustle. This blog provides a tiny bit of income as well.
Advanced Tip[This space is intentionally left (not so) blank. If you have some ideas for what should go here, please leave a comment.]
Step 3: Invest
There are a lot of brokerages, and many bloggers make money recommending a specific one. The costs for all the major ones should be low, so the big differentiator is customer service. Unfortunately, you don’t know how good the customer service will be until you cross that bridge. Everyone has their own experience.
If I were starting, I would go to Vanguard.com and create an account. Then I’d set up an automatic investment that transfers money and buys VASGX. VASGX is a balanced mutual fund. It invests 80% of your money in stocks – some in the United States and some outside. The other 20% of your money is invested in bonds.
Sit back and relax for the next forty years. (Okay, maybe look at it every six months or a year to make sure that money is still going in and being invested.)
Investing is one topic that can get exponentially complex very quickly. If we stick to the stock market, there’s a metric that can help you know if the market is high or low. It’s not perfect, but it’s better than nothing. I use it to help me plan my asset allocation. I buy bonds when the metric says that the stock market is high. When the metric says the stock market is low, I buy stocks.
Step 4: Protect Your Money
Two main ways to protect your money are Buy Insurance and Avoid Scams.
I know some very smart people close to me who don’t have insurance on some precious stuff. I shudder when I think about it. Buying insurance is some of the best money I’ve ever spent. As we learned in 2020, you never know what disaster lurks around the corner. It doesn’t just have to be a health problem, but it could be a fire or any other random circumstance.
It’s hard to tell you how to avoid getting scammed. You have to develop critical thinking skills. As they say, if something is too good to be true, it probably is.
There are a lot of scams out there, and I can’t address them all. My best advice is to avoid MLM scams. They pretend to be “business opportunities,” but 99.9% of people lose money.
There are three more things about MLM you should know:
- Is every MLM a scam? Yep IMO – Click on that link for my explanation why.
- Is MLM a business? Nope – Click on that link for my explanation why.
- Does [Insert MLM Health Product] “Work”? Nope – Click on that link for my explanation why.
I probably missed a few more steps that would get you to a million dollars faster. Let me know by leaving a comment.