Get Rich Slow, a Guide on Personal Finances

The Mindset, Saving and Investing

Published in

Student Voices

5 min readMay 11, 2018

Getting your money right is important. Perhaps one of the most important skills you can develop is how to understand money and how to manage it.

When I started working fresh out of college, I had a bunch of questions related to personal finances. My online researching got me even more confused.

Too much information. Too much misinformation.

This post is my attempt to condense all the information I learned into a simple guide, detailing how to manage your money effectively.

A Full Stack of Questions

Nobody gives you the “money talk”. Personal finances are surrounded by a cloud of mystery and as a result, most people have no clue why their financial situation sucks.

The only thing my parents would tell me about personal finances is that I need to save. Save, save, save. But I always wondered: “Should I just save forever?”

As I started earning my own money, I begin asking more and more questions. I wanted to start on the right foot.

Finding the Imbalance — Expenses and Earnings

Everyone wants to earn a lot of money and live THAT life. The more you earn, the more you spend.

How silly is that?

Yes, having a well-payed job and earning good money is desirable but it doesn’t justify superfluous spending. If you are willing to put ego aside, having a well-payed job can create the foundation of financial success.

The bigger the imbalance in favor of earnings, the more you get to keep.

Cover your basic needs (including Internet of course), eliminate and/or minimize fixed expenses and keep your ego in check.

PRO TIP: Learn how to cook. Restaurants are overrated.

How Much Should I Save?

Ideally, you want to save all much as possible. Yet, here is a measuring stick:

7% to 10% — Conservative

10% to 15% — Modest

15% to 20% — Ambitious

> 20% — Aggressive

As I mentioned before, how much you can save really depends on your current situation. But no matter the situation, you MUST have something at the end of the month.

Protect Yourself from Yourself — Savings Account

Great, you managed to keep some of your money. Now let’s remove it from the danger zone.

A savings account is a great way for you to literally save your money from yourself. Once I adopted this strategy, I realized how powerful it is.

Once the money was out of my daily expenditures, it is like it never existed.

There are only two rules you MUST follow. Otherwise, everything is for nothing.

You must deposit your month’s saving EVERY month (Ideally, you want to make it happen automatically)
You must restrain yourself from spending money in the savings account (we will discuss how much is enough)

PRO TIP: Almost all banks offer the same savings account products but still, stay away from maintenance fees and try to get the best interest rate.

PRO PRO TIP: Don’t worry too much about the low interest rates (0,1 % is already pretty good). The money is not meant to grow in this environment.

Money In the Bank, Now What?

So far, we worked on designing a process for financial growth. Ideally, this process will keep going for many years and in no time, you will accumulate a respectable sum of money.

At this point, you want to make sure you use all the money you saved to pay up any debt you might have. The faster you get rid of that dead weight, the faster your financial growth can develop.

Once that is taken care of, it’s time to setup up your very own emergency fund.

Imagine the worst possible scenario. You are fired, your house burns down and you basically need to start over.

How much money are you willing to have saved to aid you during this transition period?

Adopting this mindset will put a cap on the amount of money you will save.

As you might expect, this will largely depend on your risk tolerance. It´s highly personal so decide how many months worth of expenses you want to have saved based on your own judgment.

PRO TIP: I personally have saved 6 months worth of my current expenses.

Personal Finances Hard Mode — Investing your Money

Depending on your financial goals, saving might be enough. Yet, taking calculated risk be investing part of your money has the potential to take you to the next level.

Yet, because of the risk surrounding investment, most people stay far away from it. Or if they invest, they have no clue what they are doing. Therefore, a disclaimer.

I am not a financial adviser and my first-hand experience with investments is quite recent so take everything I say here with a grain of salt. Actually…

Take EVERYTHING you hear about investing with extreme skepticism, especially if it is coming from banks or brokers.

Getting into the Stock Market

When you hear how much Facebook stock or Apple stock increased over time, you might be tempted to invest in such companies. Pick a company you like and hope they deliver. This is exactly what you DO NOT want to do.

Diversification is king and therefore when I was making my portfolio, I stayed away from single companies and instead went with ETF’s.

ETF’s are investment funds that track index funds. For example, instead of investing on Facebook, you invest in the S&P 500 (the top 500 companies listed in the American stock market).

The risk is relatively low compared with single stocks and you get to learn the ins and outs of how to create a portfolio. Because ETF’s track index funds, the fees are super low compared to other products like investment funds.

I designed the following lazy portfolio to fit my geographical location (Europe) while keeping fees as low as possible:

iSHARES EURO GOV BONDS ETF (%33)
iSHARES EMERGING MARKETS ETF (%22)
iSHARES S&P500 ETF (%20)
STOXX EUROPE 600 (%25)

For more information on this topic, search “Lazy portfolio” or “ETF portfolio”.

Remember, keep fees low (below 0.7%). No need to give your money away to somehow who doesn’t risk a cent.

Only for The Strong Ones — Cryptocurrency

Savings account — No Risk, No Gains

ETF lazy portfolio — Some Risk, Controlled Gains

Cryptocurrency — Chaos

Crypto is the most volatile investment type I own, yet it holds the biggest potential for growth (in my opinion).

I am not going to get too much into the details on this one but remember this: Understand the technology before you jump head first.

This space has all the ingredients for bad things to happen: volatility (emotions get in the way), unregulated (scams, ICO’s) and low barrier to entry.

Like the stock market, I believe you should invest in multiple coins. I have a blend of the top 10 market cap coins and a handful of small coins that I am passioned about.

Do the research and invest only the money you are willing to lose.