I’m pumped that you’re here to learn the only five things you need to know about personal finance! It’s true. There is so much personal finance information out there and so much of it is conflicting or, worse yet, bad. Take it from an actual accountant who wrote a best-selling book and has created a financially successful life using the exact strategies I am about to share.
There is nothing to buy here and no tricks, just the truth. Be sure to read, write some planning notes and then implement! Why bother learning anything if you’re not ready to apply what you learn to your life? Are you ready now? If so, let’s jump in!
#1 – GET HEALTHY
Eat healthy food, exercise and create healthy habits! Out of the thousands of personal finance books out there, there isn’t one (except for my book) that tells you to get healthy. That’s crazy! You will not improve your financial situation eating junk, sleeping like crap and being out of shape. There is a proven relationship between healthy habits and financial success. And it doesn’t have to cost more! In fact, it will probably SAVE you money to prepare your own food, go to bed on time, exercise daily, wake up early, eat whole foods and avoid putting bad stuff into your body. You will have less anxiety, be more confident, ask more questions, take more chances and be someone that people want to be around. You will attract better luck and more opportunities! This is #1 for personal finance success!
#2 – BE PREPARED
Build up an emergency fund of 3-6 months and that’s it. You do not want a huge savings account balance unless you have a target asset that you’re saving up to acquire. Once you have an appropriate emergency fund, get the rest of your cash working for you by investing it. This could be stocks, real estate or a new business, as three examples. Use your cash to create or buy assets that earn you money while you sleep.
#3 – PAY YOURSELF FIRST
Yes, pay yourself first! Let’s say you have a job and receive a paycheck. Automate your finances so the highest percentage you can handle moves to a savings or investment account so you don’t have a chance to touch it. Whatever is left over is what you should live off of. It will be near impossible to spend more than you earn this way. And never shop for the dopamine rush or to fill a void. Buy only what you need. Pay off credit cards in full each month. Get your automated savings and/or investing number as close to 50% of your net pay as is possible. Yes, that is aggressive. If you’re serious about your future, aim high and live on what’s left for now. Need more money? Focus on increasing your income next.
#4 – TOSS IT
Get rid of things you don’t need and things that are bad for you. Clean house, sell stuff you don’t use, stop spending money on things that don’t serve you and your money goals. Are you spending more on bars than you are on your mental growth? STOP IT! Any form of bad debt, such as credit card debt… get rid of it! Pretend you are Marie Kondo, take full inventory of your life and do what she would do… ditch everything that doesn’t bring you genuine joy. This mental and physical clarity is important for happiness.
#5 – USE AN APP
Use an app to track your money. Whether Personal Capital, YNAB, Mint or any of the other great free personal finance tools out there, choose one and have it track your money. I use Mint. Do not use Excel like your grandparents did. Be sure to connect all of your accounts. Once you’re on a good path with a budget, then just use the app to monitor activity and to track your net worth. Set specific goals and work to make your net worth grow! If there is ever a decrease in your net worth, you will see it and can address it immediately.
#6 – THERE IS NO #6
That is it! You don’t need to read thousands of lengthy “personal finance” books. You do need to learn and implement the only five things you need to know about personal finance above! And if you want to learn more about any of these topics, make sure you do so.
Want to know more about positive habits? Pickup Atomic Habits by James Clear. Want to learn about healthy eating habits? Look up Max Lugavere or Dr. Gundry. Want to know more about paying yourself first, automating your money and how to improve your life so you get more of it? Get my five-star book that you can read in two hours. That’s it! It absolutely does not need to be difficult!