#011 | 5 Ways to Accelerate Your Wealth-Building
A breakdown of life changes that have put more money in my pocket, and can potentially do the same for you
Hey friends,
As we approach the end of February, I can hardly believe that we're already one month away from the end of Q1-2024.
Given we only have a few weeks left in Q1, now is the perfect opportunity to pause, reflect, and assess if your new habits and systems are working or not.
Think back to those New Year's resolutions and financial objectives you set at the beginning of the year. Have you made meaningful progress, or is there room for improvement?
In today's issue, I want to share 5 life changes that have played a pivotal role in accelerating my journey toward financial freedom. So let's dive in:
1. Embrace Minimalism
Minimalism isn't just about owning fewer things - it's about prioritizing what truly adds value to your life and shedding unnecessary clutter.
It promotes contentment and gratitude for what you already have, rather than constantly chasing after more.
By learning to find fulfillment in experiences, relationships, and personal growth rather than material possessions, you can break free from the cycle of consumerism and avoid lifestyle inflation.
This shift in mindset often leads to reduced spending on non-essential items, allowing you to allocate more resources towards savings, investments, and debt repayment.
2. Avoid Debt
Avoiding debt loosely ties in with minimalism, since many people use debt to buy things that they can’t afford, and usually don’t need.
By living within your means, you can avoid the burden of high-interest debt and the stress that comes with it.
Living within your means is simple when you learn how to budget. Your budget doesn’t need to be complicated; it can be as easy as saving 10% of your income and spending less than the remaining 90%.
Instead of relying on borrowed money to fund your lifestyle, save up and pay for things upfront.
High levels of debt will limit your options and make it harder to pursue career changes, entrepreneurial ventures, and other endeavors that require financial flexibility.
I understand why this can be hard for people though - I experience the same thoughts and desires as many of you.
For example, I’ve been heavily considering a new car for years now.
I love the idea of getting a Tesla Model 3.
I rationalize how I can afford the payments. I have no other debt, so how bad would a car payment really be if it was less than 10% of my income?
Damn, I’d look good in that black Model 3.
But I don’t need a new car right now.
Here’s the thing - would you rather pay yourself and invest $600 per month, or pay $600 a month in principal and interest to your lender?
If you want autonomy in your financial life, you must be disciplined and avoid debt. Delayed gratification is key to financial success.
3. Increase Your Savings Rate
By avoiding unnecessary debt (as well as paying off existing debt), you free up more of your income to save, invest, and grow your wealth over time.
Many people think they need phenomenal investment returns to achieve financial freedom.
Investment returns help, but they are completely out of your control.
But you know what you can control? Your savings rate.
Many people save up for goals such as a down payment on a house, car, or some other doodad.
This is fine, but the truth about saving is that you don’t need a reason to save. You should save for the sake of it.
“Saving is a hedge against life’s inevitable ability to surprise the hell out of you at the worst possible moment”
–Morgan Housel, The Psychology of Money
I believe everyone should save 10% of their take-home pay at a minimum, but ideally, they work to get this number closer to 30%. I currently save and invest ~33% of my income (16.5% to savings and 16.5% to investments).
Don’t forget to make you make your money work for you - deposit your savings in a high-yield savings account (HYSA) to earn interest on your balances. The income you earn compounds, albeit at a slower rate than the stock market.
4. Take Care of Your Body
Your health is your most valuable asset.
You only get one body, so make sure that you take care of it - it will pay dividends in more ways than one.
By prioritizing exercise, proper nutrition, and adequate rest, you not only improve your quality of life and health… you also reduce healthcare costs!
And I’m not talking small dollars here. A healthy body will literally save you thousands.
I’m no stranger to this either, so here’s a quick story for you.
I was dealing with some health issues during most of 2023. I’ll spare you the details since it was GI-related and I don’t want to ruin any of your appetites.
But I paid thousands of dollars after multiple appointments with my primary care doctor, a GI specialist, and a proctologist (yuck).
You know what they told me? Eat more fiber.
Seriously, thousands of dollars and several appointments to be told “try eating more fiber”.
I was dissatisfied with the whole experience, so I took matters into my own hands and started doing research. This issue was affecting my life, so I was willing to take extreme actions to achieve extreme results.
Hours of research confirmed that yes, I need to eat more fiber, but I should also try a plant-based diet.
I wasn’t sure how I could do this. I spend a lot of time in the gym, so I eat a lot of meat (pause) to make sure I get an adequate amount of protein.
There are two big issues with meat though - it’s low in fiber and high in iron.
Most of us know that fiber is important for our digestive health.
However, it turns out that excess iron in your diet may also cause numerous gastrointestinal issues.
Further compounding the issue is the fact that your body doesn’t naturally pass iron when you go to the bathroom…
So how do you rid the body of excess iron? Blood loss… which can be achieved by donating blood.
A win-win for everybody involved. The more you know!
While I haven’t started donating blood, I did start the plant-based diet.
Believe it or not, all my issues have subsided.
My gut health is better than it’s ever been and things are getting back to normal. I’ve been crushing it in the gym and on my runs again.
As a result, I haven’t had to spend money going to the doctor’s office anymore.
Please don’t take any of this as medical advice though… I’m just a finance professional who’s sharing his experiences, not a doctor.
Another surprising facet of a healthier lifestyle is that my trips to the grocery store got significantly cheaper.
I spent less than $100 on groceries last week while living in the NYC area - your money goes a lot further when most of your shopping is done in the produce section.
5. Automate Your Investing
Automating your investing is a game-changing strategy to simplify your financial life and stay consistent with your investment goals.
Every payday, I dollar-cost average into my Roth 401k, HSA, and taxable brokerage account.
Dollar-cost averaging is a strategy that involves investing a fixed amount of money at regular intervals, regardless of market fluctuations. This can help smooth out volatility and potentially lower your average cost per share over time.
It also helps you overcome common behavioral biases that can sabotage investment success, such as emotional decision-making and market timing.
By removing the temptation to react impulsively to market movements or second-guess your investment decisions, you stay focused on your long-term investment strategy and avoid costly mistakes.
Most importantly, automating your investing saves time and effort, which enables you to focus on higher ROI activities that contribute to personal and professional growth.
Whether it's enrolling in online courses, attending workshops, or pursuing certifications relevant to your field, investing in your education can pay off handsomely in terms of increased job opportunities, promotions, and salary advancements.
By dedicating time to continuous learning, you position yourself as a valuable asset in the marketplace.
Finding ways to increase your value will also contribute to a greater degree of success in networking. It turns you into somebody worth networking with.
Networking is a powerful tool for career advancement and business growth, as it provides access to new opportunities, insights, and mentorship. So spend time building and cultivating those relationships.
That’s all for today - thank you for taking the time to read!
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