The NO Bullshit Financial System A Financially Illiterate and Prodigal Finance Major (That’s Me) Now Uses Which Takes 5-Minutes to Read

Preface: I wrote this on a whim in 10-minutes and I’m not a financial advisor, so consult your lawyer or something and please don’t sue me. This is a guideline that I use and the objective is to encourage further research by the reader. There’s also hundreds of people smarter than me who have similar posts, so don’t hate me if this is repetitive.

Like many 20-somethings I get constantly bombarded with financial advice on how to save, how to earn more, retirement saving, 401Ks, automating finances, etc. Most of it is bullshit, and the time you take reading all these articles would be better spent increasing your earning potential by learning new skills, starting a business, or just enjoying life a bottle of wine at a time along with a good book.

1. Automate your retirement savings using a Roth IRA and automated financial management application like Wealthfront. If your company will give you free money matches (401Ks) do it because it’s free money, but, a lot of companies don’t do this, and while you will lower your pretax earning to reduce the amount you pay in taxes, you will have to pay in the future. If you are long on the future and expect things to get better and the value of your positions to increase, I recommend a Roth IRA as your contributions are post-tax and anything you put in and earn won’t be taxed in the future.
2. Align your expenses/investment deductions on a singular day of the month and cut out the fat. I went as far as to cancel and then resubscribe to both Spotify and Netflix to align everything I pay out fixed, including #1 above, on the first day of the month. Including rent, insurance, my cell bill and student loans this wipes out my first paycheck but ensures that everything is paid, and I’m not worrying about fixed expenses paid throughout the month. On expenses I make which don’t need (e.g. cell phone insurance for $10/month can be replaced by a great $5 case), I simply deleted. For courses you want to take, pay up front. Recently I realized I was being charged $39/month for GrowthHacker.tv which was costing me more that just buying a lifetime subscription. Bronson’s team was incredibly fair and given I’d already paid out much more than the $179 lifetime cost, they simply gave me the lifetime pass.
3. Credit cards that give you miles to travel are great, but once you get those miles consolidate all your spending to a single credit card where you get cash back (or miles). Having to many credit cards and keeping track of the fees, interest, etc is mind-numbing, and gets complicated really quickly. The cognitive offload of having everything in a singular place is an incredible feeling. This is lifestyle engineering at it’s finest. Make things as simple, fast, and streamlines as possible so you can focus on what matters most to you.
4. Increase your earning potential. For most people this is at your job. Get great at what you do. Ask for raises if deserved and seek out compensation based on future performance, which is how you should be paid. For others this might be starting a business or side business. With Steps 1–3 taken care of, you will have a lot more time to think about and work on Step 4. The reason the first 3 steps are there is because anybody can do them, even if you don’t have an active job. I wrote this wanting these steps to be replicable to pretty much anyone.
5. Earn, save, and invest towards goals. Like Harvey Specter from Suits says, “I don’t have dreams, I have goals”. Save up for something that is so compelling you’re willing to cut out that great dinner. I realize I want to invest in learning math, science, languages, technology, travel and give away more money to nonprofits making a difference in the world. I also want to invest in the future of money via buying Bitcoin. I’m starting to put in tangible goals aligned with each of these. To do this, I realized over dinner last night with a new girl I’m dating, that instead of spending $100 on dinner, I could have probably cooked and bought a bottle of wine for half the price and twice the fun. It was a moment of clarity and awareness outside of the normal human patterns of do something because that’s how it’s done. While I like her a lot, I would rather be spending my money on ending malaria in Africa.

There are a lot of great people who write on this stuff despite so much content which is trash out there. I’d recommend checking out Ramit Sethi and various articles on Tim Ferriss’s blog (which is where I was introduced to Ramit).