If there is one lesson I wish I would have learned much earlier in life, it is putting my earned money to work to make more money. Growing up my parents taught me to work hard, be a good employee, always do a good job, and set money aside in a savings account. This is how they lived their life and it worked for them. It was simple, humble, honest, and was probably enough growing up in the 1950s’.

They bought their house for $12,000 dollars and carried a $159/mo mortgage. My father had a small pension and later a small 401K. The majority of their savings went into a standard savings account at the local bank. Over the years they survived lay-offs, loss of pension funds, illness, and list of numerous surprises that life throws at you over the years. At retirement age, they had paid off their mortgage and had a remaining $17,000 in savings and $37,000 in retirement investments. With social security income, they could survive month to month as long as costs remained fixed. You see where this is going right.

They were taught to save the way their parents saved, they survived the depression after all! Which made them hesitant to invest much in anything beyond a savings account. Which started out at 2% interest that only decreased every year to below 1% return. That $17,000 will really only ever be worth about $17,000. This year, next year, every year, the value will be the same. My father today at 83 is so afraid to touch any of it, because it is all he has at today’s cost of living.

Until my late 20’s, I was heading down this exact same path. The very concept that I could structure my money to have it make more money was so foreign. With my first ‘real’ job, I spent more money on things that externally showed my success that I found myself eventually living paycheck to paycheck. Along the way, promotions and raises relieved the pressure for a time, but eventually, I would wind up in the same place. It is a vicious cycle in our consumer-driven, me too economy, which is why I wanted to write this post. Maybe there is a younger version of me out there that needs to hear this? Building wealth does not begin with making money, it begins with learning how to keep what you have and multiply it.

Growing up I had a friend who was raised with a different set of financial values. He made less than me annually, yet at 25, he had already bought his first house, started his own business, and he never ever talked about money struggles. He always seemed to have cash available. In his family, he was taught to invest, let his idle money work for him. From the time he started working as a dishwasher at the age of fifteen, he was already stacking and compounding his earnings.

Stop Chasing Status Symbols

You work hard, and it’s okay to own nice things. But when buying those things causes you to incur debt or limits your future, it starts a cycle that is hard to break. I know because I used to live beyond my limits and play games to manage my debts. Deep down, I knew I needed to stop, but I had no idea how to actually do it. I had such a limited perspective of what the future could be, and I just wanted to look the part now. The clothes, the car, that first cellular phone (bag phone). I had zero focus on the long game. I was so focused on external signs of success that I became poor and in debt in the process.

It took me a long while to admit that this was an empty pursuit. To realize that my fragile external veil would not hold up to scrutiny. It did not improve my relationships, it did not improve my lifestyle, it only created more stress, want, anxiety, and fear about maintaining the appearance of success. As messed up as it was, I valued looking successful over being successful.

Even though I know it, the full perspective shift took some time to sink in, but there was a point when I let it go and committed to achieving real success was the goal. To get there meant that I needed to become a like submarine, running below the surface, quiet, hidden, and focused on my mission. Even today I still follow this principle. My lifestyle is very unassuming. We have a very nice home, but it is not a mansion. We have nice cars, but they are not status symbols. We spend money on lasting experiences and memories, not just things. By external appearances, we do well, but you would not know my actual net worth.

The key thing is what that low-key perspective enabled over a lifetime.

• We carry little personal debt
• Cars are paid for
• College Funds are good to go
• We own two modest, but fun vacation properties
• We travel as a family fairly often
• We enjoy nights out without worry
• Retirement will be an adventure & not a struggle
• About 40-50% of current earnings get invested or re-invested
• Can now focus on building generational wealth to pass down (empire-building)

Pay Yourself First

It does not matter if you are working a W-2 job, starting a business, or working that side hustle. Make sure you pay yourself first. By ‘pay’ yourself, I mean in an intentional and conscious way. Can you cover your basic living expenses, plus some fun money? After all, “We work to live and Not Live to Work”. I believe this also means prioritizing investing over non-essential expenses.

I am not a financial planner, but we can apply some common sense to your finances. It is important to live today and plan for our future. Remember, financial security and stability are crucial for a prosperous and stress-free life. So, make it a habit to set aside a portion of your income for savings and investments.

I believe it’s really important to honestly assess your personal financial situation. Many people are unwilling to confront their spending habits. When you prioritize saving, it’s crucial to be intentional about living within your means and deciding where your hard-earned money goes. The aim is to maximize the amount of money we save by avoiding unnecessary expenses, thereby allowing us to invest more in the things that will generate greater returns over time.

When starting out the objective is to identify existing waste spending that can be reallocated into systems that passively make money. Figuring out wasteful spending doesn’t have to be complicated. You can begin by making a list of all your monthly expenses and categorizing them into four different groups.

• Must Spend: Such as Food, Shelter, Transportation, Utilities
• Should Spend: Such as Clothing, Savings, Investing, Debts
• Could Spend: Such as Phone, Travel, Entertainment
• Would Not Spend: High Bank Fees, Subscriptions, Nice to Have items

Many discover up to 30% of their existing income is being spent on low-value, low-return, low-joy items. A number of them likely come with some recurring fees that sum up to substantial numbers monthly or annually.

High Intrest Savings

Do you have three months of savings covering your critical living expenses? If the answer is no, this goal should become a top priority, before focusing on investing or stacking. Life changes happen fast. At any time, anyone of us can go from doing fine to ‘in trouble’ in the blink of an eye. This buffer is your insurance policy when life goes sideways at unexpected moments.

If you are saving, then you should know that all savings accounts are not created equal. Do you know what rate of return you are currently getting from your bank account? After all the bank is not holding your money in a safe, it is taking your money and investing it to make money for themselves. It is only reasonable to expect that you profit along with them.

Most major banks count on customers not caring or doing research. Often offering savings account returns at now at sub 1% annually. Additionally, when combined with high checking account fees and miscellaneous charges many end up losing a little money every month. The moral of this story is to choose your bank wisely. Find a bank that helps you make money.

With just a little research, you can easily find banks today offering close to 5.0 % annual return on savings accounts with no monthly fees. This means that every $1.00 you deposit will grow to return $1.05 annually. This may not seem like much, but this is free money for doing nothing. In the first year that breaks down to an additional $5 per hundred, or $50 per thousand saved. Every year we keep that money in the account those returns will compound. Compounding is when the rate of return is based on the original investment plus the previous gains. Let’s look at two examples. Bank #1 is offering a sub 1.0% rate savings account and bank #2 has a rate of 5%.

Where would you rather keep your savings? Especially when you scale this up to several thousand dollars or more. If my father had taken that $17,000 and just saved it in a higher-interest savings account for 5 years, it would be worth about $21,600 today. A gain of $4,600 for doing nothing.

Reducing Debt

There is healthy debt and unhealthy debt. Healthy debt ends with you owning an asset of real value. Unhealthy debt ends with owning something of depreciated value or debt incurred owning nothing at all. A mortgage is a debt towards owning an asset of value. Credit cards, or a car payment is debt purchasing something that has depreciated in value.

Eliminating unhealthy debt should be a top priority for anyone aiming to achieve financial stability. It is crucial to begin by identifying and tackling debts with high-interest rates and significant balances. By consolidating these debts and making extra payments on one account at a time, individuals can effectively and methodically chip away at their financial obligations. This strategy allows them to focus their resources and efforts on eliminating a single account until it is completely paid off.

Once the first account is settled ($0), it is vital to maintain momentum by redirecting the consolidated payments toward the next account in line. This systematic approach ensures that the progress made on one account is carried over to the subsequent ones. By repeating this process consistently, individuals can establish a pattern of reducing their overall debt and steadily marching toward financial freedom.

The end goal is to reallocate money currently covering high-interest debt payments, to investment where that money where it will generate a positive return.

Investments

Getting over 4% return from our bank savings account is a pretty good start. But our money can work much harder than that for us! Once you have stable “emergency savings” established there are other options to evaluate and consider. Where can you take that same money and start returning 8%, 10%,12%, or more?

While you will hear stories of magical stock trades or crypto success, that is not where I want to focus. Those are high-risk / high-reward gambles and more akin to lightning strikes. I do think they have a time and a place once a stable wealth-building stack is in place. My personal rule has been to never take a risk that could bankrupt me.

There is always risk associated with the market, which is why I work with a financial planner to structure and balance my accounts as needed. I did OK starting out initially on my own, but my planner has amplified my results year over year for over a decade. Just know that not all financial planners are the same, I chose to work with a vetted Fiduciary, as they are obligated and motivated to work on my behalf over a broker.

I wanted to share a peek into the current stack setup just so you have a sense of how this could work. Again your personal finances would look different. When I started mine looked different when I first started investing only about 5% of my income was available to invest. With time, some success, and keeping working my debt ratio low, I was able to slowly step that up to about 40% of my income invested today. That is 40% of what I earn, is stacked to grow compounded above 10%.

To keep this simple, this part of my investing stack is broken into three main components.

• Money I want to grow but have relatively easy access to when needed.
• Money that I want to grow at a better return, available if needed but not quickly.
• Money that I want to grow for retirement and will not touch until I retire

Money I want to grow but have relative easy access when needed

A non-retirement brokerage account that is weighted with S&P 500 index funds. The target of funds here is a somewhat predictable rate of return, with the ability to access funds if/when needed. About 25% of what I invest overall winds up in this account.

Money that I want to grow at a better return, available if needed but not quickly.

A non-retirement brokerage account that is weighted with REIT (Real Estate Investment Trusts) and Lending investments. The target here is more aggressive on returns longer term despite short-term volatility. While these funds are accessible if needed, it takes time to liquidate assets. About 10% of what I invest winds up here.

Money that I want to grow for retirement

Retirement brokerage account which is a collection of IRAs, Roth-IRA, and rolled up 401K. The remainder of what I invest winds up here. The goal is to live easy and retire early.

Revenue Investments

Here is where things get interesting. While I do consult in the tech space and have a few personal projects and side hustles in various stages of maturity.

I have started growth by portfolio acquisition. Rather than building a business from scratch, I seek out existing established small businesses, that are profitable, to invest or purchase.

Each adds an established revenue stream along with the opportunity to expand and grow over time. Income from here, also get invested.

None of this is quick, instead, it is a longer play to set up the system that builds wealth over time. There is a build-up to a tipping point where growth accelerates even faster. Take the value that is here and start building now. You will look back in five years and thank yourself for being wise enough to take action.

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