avatarFrankie Calkins

Summary

The web content provides a comprehensive list of 101 personal finance lessons aimed at achieving financial freedom and understanding money management.

Abstract

The article titled "101 Short Lessons About Money & Financial Freedom" offers concise, actionable advice on personal finance, emphasizing the importance of saving, investing, and financial literacy. The author, who has extensively researched personal finance, shares insights on topics ranging from budgeting and debt management to investing in index funds and the power of compound interest. The lessons advocate for financial discipline, such as paying oneself first, avoiding lifestyle creep, and utilizing tax-advantaged accounts. The article also touches on the psychological aspects of money, including the impact of social circles on financial habits and the importance of aligning financial decisions with personal values. It encourages readers to take control of their financial future through consistent effort and informed decision-making.

Opinions

  • The author believes in the value of self-education in personal finance, suggesting that formal education often overlooks this critical area.
  • There is a strong emphasis on investing in index funds and avoiding individual stocks unless one is prepared to lose the entire investment.
  • The concept of "paying yourself first" is highlighted as a fundamental principle for building wealth.
  • The author advises against the accumulation of debt, viewing all debt as detrimental to financial health.
  • Passive income is praised, particularly through the creation and sale of digital information products.
  • The importance of having a "money mentor" or studying a finance hero is suggested to guide one's financial journey.
  • The article promotes the idea of giving back, even when resources are limited, to cultivate a generous mindset.
  • The author debunks the myth that renting inhibits wealth building, asserting that renters can also amass significant wealth.
  • Tax-advantaged accounts and strategies are recommended to legally minimize tax burdens.
  • The use of credit cards is encouraged for rewards and cashback, provided the balances are paid off in full each month.
  • The author suggests that financial success is not about income level but about managing and investing the income wisely.
  • The article discourages speculative investments, including cryptocurrency and NFTs, and instead focuses on proven investment strategies like dollar-cost averaging.
  • The author stresses the significance of automating finances to ensure consistent financial progress.
  • The concept of financial freedom is presented as a primary goal, with financial decisions aimed at maximizing personal freedom and happiness.

101 Short Lessons About Money & Financial Freedom

Everything I would teach my younger self about personal finance

Photo: Pablo Heimplatz/Unsplash

I’m a list guy. I love quick lessons, tips, and hacks.

I’ve written 2 books that each cover 101 tips and hacks so I feel uniquely qualified to write this article.

I spent the last 3 years self-learning (see also: obsessing over) all things personal finance from scratch. Here are the 101 most important lessons I’ve learned, delivered in a no-nonsense and to the point list. It’s everything I wish I knew 10 years ago…

  1. Pay yourself first.
  2. Understand the true definition of savings: It’s anything that positively increases your net worth.
  3. The more you learn, the more you earn.
  4. A penny saved is a penny earned.
  5. Find and eliminate your latte factor or factors.
  6. Ask yourself: how much is enough?
  7. Financial success is small efforts, repeated day in and day out.
  8. You don’t need a budget. You need a why.
  9. Save and invest half, retire twice as fast. If you save half of your income you can retire in as little as 17 years.
  10. If you want true wealth, you must invest.
  11. Don’t buy individual stocks, unless it’s with money you’re comfortable losing 100% of.
  12. Buy index funds that track the entire stock market and/or buy index funds that track the S&P500.
  13. If you’re young (20s and 30s), you don’t need bonds. Stick with a basket of stocks.
  14. You are the sum of the 5 people you surround yourself with, financially. So choose your friends and close people carefully.
  15. Make a list of financial to-do’s. Circle the top 5. Don’t think about the rest until the top 5 are done.
  16. If you don’t find a way to make money while you sleep, you’ll work until you die. -Warren Buffett.
  17. I think the best form of passive income is to create and sell information products digitally (ebooks, YouTube, courses).
  18. You need a money mentor. At the very least, you need a finance hero you can study.
  19. Thank your money when it comes. Thank your money when it goes.
  20. If you have bad consumer debt, pay that off first before you do anything else.
  21. There’s no such thing as good debt.
  22. Compound interest is when your money earns interest, and that money earns interest and so on from there.
  23. More money doesn’t mean more problems. It means more responsibilities.
  24. Money doesn’t buy happiness.
  25. If you want to start a company, start a company of one.
  26. Give, even when you feel like you have very little to give or donate. Because if you don’t give money when you’re broke, you’re very unlikely to give when you’re wealthy.
  27. Giving can be giving time when you are light on funds.
  28. Money, you can hack it. With creativity and my book.
  29. Remember the 1% rule of money. That means to work on your personal finances for 1% of your day, which is 14:24 if we’re being specific.
  30. If you’re buying something on sale you’re not saving money. You’re still spending it.
  31. You need a 5 to 9.
  32. Learn how to legally pay fewer taxes. Start with your tax advantage retirement accounts.
  33. If you want to get good with money, get resolved about it. Set a money resolution
  34. Everything you need to know about money fits on one index card.
  35. Everything you need to know about early retirement fits on this downloadable index card.
  36. You do not need to keep a balance on your credit cards to improve your credit score. That is a myth. The opposite is true.
  37. If you are picking individual stocks, always bet on a winning horse.
  38. You should bank 100% of your windfalls, like a bonus from work.
  39. Use a tool like personal capital to track your net worth.
  40. Build up an emergency fund before investing.
  41. However much you think you need for an emergency fund, double it. Aim for 3 to 6 months of expenses in cash on hand.
  42. Keep your financial goals in sight to keep them in mind.
  43. Create smaller financial goals. Celebrate in a fiscally responsible way when you achieve them.
  44. DO talk about money. It doesn’t have to be so taboo. Especially talk about money with your partner. Literally, schedule time but don’t call it a money meeting. Call it a money party.
  45. Renting is awesome. You can absolutely build wealth as a renter.
  46. If you are a homeowner, divide your monthly mortgage payment in half. If you get paid bi-weekly, pay that amount each paycheck. You’ll pay off 13 months in 1 year.
  47. If you buy your groceries online, you’ll save because won’t be tempted by delicious-looking things you don’t need in the store…
  48. Get an HSA if you can. Invest within it. Yes, that’s a thing. It provides an amazing triple tax benefit.
  49. Spend your FSA or HSA savings on Amazon.
  50. Don’t spend money on a product that will give you the same results as an average version. Example: fancy pens vs. regular pens to write.
  51. Get good 1 travel and 1 good cashback credit card.
  52. Join a warehouse club. Buy common household items in bulk.
  53. Take a money health day. It’s exactly what you think it is. A day off dedicated to working on your finances.
  54. Get term life insurance.
  55. Get pet insurance if you have a pet or pets.
  56. Become a financial minimalist by consolidating investment accounts, staying organized, living on less than you earn. Keep things simple. Less is more.
  57. Avoid the Diderot effect. It’s when we buy nice things to match our new nice things. In other words…
  58. Avoid lifestyle creep. And creeps in general.
  59. Dollar-cost averaging should be your investment strategy.
  60. If you have a 401(k) employer match, you must contribute up to the match. That’s literally free money. A 100% return on your investment.
  61. You can contribute to last year’s IRA until you do your taxes this year.
  62. Live off of 4% of your retirement investments in retirement to never run out of money (statistically speaking).
  63. If you’re deciding between a Traditional or Roth IRA, choose a Roth IRA. Let your money grow tax-free.
  64. They didn’t teach us money in school, so it’s your responsibility to become a lifelong learner.
  65. Save your savings in an online-only high-interest savings account. You earn next to zero interest with a big bank. That money is technically losing money year after year due to inflation.
  66. Open up separate savings accounts for separate goals.
  67. Sign up for a free annual credit report via www.annualcreditreport.com
  68. Get money owed to you via this Today.com article that has links by state to see if money is owed to you. Think: old deposit you forgot about.
  69. If you’ve never heard the phrase “compound interest” until today, spend time learning about it immediately after reading this.
  70. Avoid speculative investments. Yes, that includes cryptocurrency and NFTs.
  71. Never gamble or buy lottery tickets. See above.
  72. Your best opportunity for increasing your income is asking for a raise directly.
  73. Increase your retirement saving/investing by 1% a month. You won’t even notice. Future you will.
  74. If you need income today, sell things around your house.
  75. Challenge yourself to have a no-spend week. It’s eye-opening.
  76. Take time to assign beneficiaries.
  77. Don’t become obsessed with money.
  78. File your taxes early to avoid hackers and scammers.
  79. Use security management password software to avoid hackers and scammers.
  80. For your clothes, find your uniform (ex: black pants and a button-up or light sweater and jeans).
  81. If you can live without a car, live without a car.
  82. If you can break up with your big bank, do it. Join a credit union instead.
  83. Invest in yourself
  84. There is at least 1 membership or subscription you can cancel. TODAY.
  85. Instagram submission: if you know nothing about investing, try robo-advisors like Betterment. Or try Acorns
  86. You can only reduce your expenses by so much. But your income earning potential is unlimited.
  87. If it’s a purchase over $100 you’re on the fence about, wait 30 days to think on it.
  88. If you have to own a car, don’t buy a new car.
  89. When it comes to investing, understand the rule of 72. That means taking 72 and diving it by your expected earnings rate annually. If it’s 8%: 72 divided by 8 is 9. It’ll take roughly 9 years to double your money with an 8% return.
  90. Your biggest opportunity to reduce your expenses is to focus on reducing the big 3: housing, food, and transportation.
  91. Credit cards are fantastic if you earn great rewards or cashback and pay them off in full each month.
  92. Buy quality. Not quantity.
  93. Learn to say no.
  94. If you always do what you’ve always done, you’ll always get what you’ve always got.
  95. The 3 most important words in personal finance are automation, automation, and automation. Be sure you automate your savings.
  96. Staying busy is one of the best ways to save money. Because people spend money when they’re bored.
  97. Don’t keep up with the Joneses. Comparison leads to unhappiness.
  98. Don’t look for shortcuts. Do the work.
  99. The point of acquiring money is to acquire financial freedom. Also known as freedom. It’s time back so you can choose how to live a more rich life. Financial freedom is a mental construct. Learn how to live rich if you aren’t rich yet.
  100. What would you do for work if money wasn’t a factor? Consider doing that.
  101. Pay it forward. A rising tide lifts all boats.

Here’s a bonus:

Patience is a shortcut. Slow down to enjoy the journey. It’s the best part.

Watch the tips on YouTube here.

This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.

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