10 Financial Tips to Master Your Money

Personal finance advice is like Russian roulette. On one side, you have people telling you to invest your savings in a Roth IRA and buy S&P 500 index funds. On the other side, you have people telling you to put your money in a high yield savings account and let it sit there gathering monthly interest. Who should you believe? And what should you do? 

I read an interesting book called The Psychology of Money that focuses more on the mental and emotional aspect of money than on complex financial strategies. How you grew up and what your perspective is on money defines your attitude and actions you take with money. Not all of us were taught how to handle money from a young age, and financial wisdom becomes something we learn through making mistakes and trial and error. 

Sometimes, we attach our emotions to money. Some of us are shopaholics, using shopping as a coping mechanism for deeper psychological issues. Some of us save every penny, refusing to buy even a coffee from a cafe when we are in need of a boost of energy when we’re outside. Some of us measure life by coupons and discounts. What is the right way to live? What is the right way to think about money?

I think it’s different for everyone. As it should be. Different people have different financial circumstances. Being realistic about how much you can spend versus how much you should be saving is a huge mental shift. 

Pay Future You First

There’s the 50-30-20 rule. You spend 50% of your income on necessities, 30% on wants, and 20% on savings. Automate the savings part. Once income hits your checking account, transfer at least 20% of it to a high yield savings account. This method protects the future you. Don’t touch the savings account. Let the money in the savings account accumulate and draw interest.

Build a $1000 starter buffer before anything else.

Gurus tell you to build an emergency fund of 3 to 6 months of living expenses, but building a $15k savings fund when you’re starting from 0 is daunting and potentially paralyzing. 

Create a financial goal to build $1000 in a HYSA (High-Yield Savings Account). 

Once you’ve saved that amount, you’ll feel a sense of relief. $1000 is a lot of money. You can use it  to pay off sudden medical expenses, last minute flights, high interest credit card debt, and food. Once you’ve exhausted the $1000 fund, replenish it. And eventually, when you get more income, you can expand on it to build an emergency fund. 

Get a job.

You should always be earning. If you don’t have a job, get one. If you don’t have a job that can be a career, get a part time or substitute job. and on the side, build on your skills and apply for jobs in your desired career sector. 

Spending money without earning money is a sure way to get into debt fast. I’ve learned that the hard way. It costs to live, and not everyone has parents funding our spending habits. I’ve left those days behind in middle school. 

Make money, or lose money. You should be earning more than you are spending. 

No easy way around it.

Tackle Debt 

We all obtain debt at some point in our lives. Student loans, high credit card payments, etc. If the debt has a high interest rate (anything above 7-8%), you need to pay it off. This debt will drag you down and slow your wealth building. 

When paying off debt, finance experts argue between:

The Debt Snowball - Paying off the smallest balance first for a psychological win.

The Debt Avalanche - Paying off the highest-interest debt first to save the most money.

Focus on Big Wins Over Micro-Frugality

Cutting our daily coffee and skimping out on Netflix and HBO can save you money monthly, but at the cost of daily joy. You can cut your spending down to zero, at the cost of living like a hermit and increasing your stress levels. 

Instead of stressing over tiny expenses, optimize the Big Three:

• Housing - get a roommate, move back in with your parents, renegotiate your lease, lower your rent. Lowering your rent by at least $300/month can save you a huge amount of money

• Transportation - Spending money on Uber/Lift is a sure way to get bankrupt fast. Use public transit or drive a used car. 

• Subscriptions - Audit your recurring subscriptions. If you don’t use it, then lose it. 

Give Every Dollar a Purpose

Money without a goal drains away unnoticed. To stay motivated, assign clear visual destinations to your funds. 

Short Term Goals - vacation, emergency fund, the Macbook. Keep this cash safe in a HYSA where it earns interest without market risk.

Long Term Goals - retirement, long term wealth, FIRE (Financially Independent Retire Early). Put this money in a 401k or Roth IRA.

Track your money

Look over your monthly spreadsheets and track your expenses versus your income.

Maximize Income Leverage

Skills that are in high demand will give you an increased income. Build multiple income streams to diversify your income so you aren’t reliant on a single employer. 

Invest in Index Funds

S&P 500 index funds are a good way to accumulate wealth, they have an annual growth rate of 12-15%. Do your research before investing though. I’m not a trusted financial advisor, so take it with a grain of salt. Also, you might not be in a position where you can invest. Save your $1000 before thinking of investing, and make sure your monthly income can support monthly investments. 

Calculate your risk tolerance and money preferences.

We all have different personalities and preferences when it comes to money. Some of us like to trade and risk money on the stock market. Some of us like to put money away in a HYSA. Some of us like to spend money more than we earn money. Some of us like to be financially secure while some of us like to live life on the edge.

Sometimes, it matters to know what kind of person you are. Do you want to save money? Do you want to be financially secure? We all want to be wealthy, but people obtain this in different ways. Debating over the smartest way or the best way to obtain wealth is completely pointless and inefficient. 

If you have the time to read this article, thank you. With the time you spent reading this, you could have been earning money or building your skills to earn money. I hope this article was a good investment for you. If not, remind yourself that it was your choice.

We all have choices in life.

May the choices ever be in your favor.