Young Adult | Money Management and Growth
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The T.Y.M. Path to Wealth
The “Teaching You Money” Financial Freedom Process
- Maximize Income
- Create a Savings Plan (Take Advantage of Compound Interest)
- Have a Budget (Minimize Expenses)
- Eliminate Bad Debt
- Invest in Assets
1. Maximize Income
While this may seem straightforward, there is more to this piece of the puzzle than initially meets the eye.
When should you ask for a raise? Should you get a side gig? When should you leave your job in pursuit of a better one? When should you leave your 9 to 5 job and start your own business?
Getting this step sorted out will help enhance your ability to work through everything that follows. The initial money you’ll need to get started in building a lifetime of wealth has to come from somewhere. You’ll want to ensure you’ve done what you can to maximize the money coming in so each step in this process feels practical and sustainable.
2. Create a Savings Plan (Take Advantage of Compound Interest)
Once you’ve started to make money, what should you do with it?
I believe you should be putting at least 15% of your income towards retirement accounts – which investment portfolios you choose will depend on the stage of life you’re in. It is best to begin this process as early in your life as possible to take full advantage of compound interest.
For checking and savings accounts, I believe you should find a bank that is FDIC insured and offers a higher interest rate on checking and savings accounts than a majority of other banks.
I believe you should always make use of an employer matching program when it comes to retirement planning. Take advantage of the full match available – it is literally free money.
I believe you should have an “emergency fund” made up of at least 3 months of your income should anything unexpected happen to you or your job. Get out of the cycle of living paycheck to paycheck.
I believe you should give 10% of your income away however you would like.
3. Have a Budget (Minimize Expenses)
When I had just graduated college, I was dating a girl who decided to take out a $3,000 loan to buy a couch for her new apartment. I couldn’t believe it. She had just started her first full-time job, and along with it came a hefty price tag she’d be paying off for the next several years.
This isn’t simply about the debt she was placing herself in (we’ll talk about that next), it is about determining which expenses are necessary and which expenses are luxuries.
At Teaching You Money, our interest is in creating a scenario where you can purchase all the luxuries you’d like – but only when your budget allows you to do so.
Becoming aware of where your money goes every month can be incredibly helpful for building wealth in the future. Looking at what you “want” vs. what you “need” and planning accordingly.
4. Eliminate Bad Debt
Potentially Good Debt = Mortgage
Bad Debt = Everything Else
80% of Americans are in debt (https://www.daveramsey.com/blog/americans-have-debt). This number is far too large. From credit cards, to car loans, to student debt, it is safe to say we have a giant debt problem in the United States.
After doing what you can to maximize your income, creating a savings plan, and eliminating unnecessary expenses, it is time to get rid of your debt.
With debt comes interest – meaning that your debt, if not paid off, will continue to grow. We don’t want your debt to grow, we want your money to grow! I’ll help you do everything possible to get control of your debt by creating a plan to pay off all your debt starting with the highest interest loans and snowballing your payments down to the lowest interest loans.
I’ll have plenty of content here to discuss the best ways to become debt-free, but the important piece here is simply realizing that debt is not helping you become financially wealthy. It is a burden keeping you from financial peace.
5. Invest in Assets
When I get rid of all my debt, I can spend my money however I want, right?
Not exactly.
I believe the money you had been using to pay off your debt can start working for you instead of against you.
I define an “asset” as anything that will make you more money because you own it. Typically, this narrows down to:
- Paper (investments)
- Business (owning)
- Commodities
- Real Estate
Just as you want to create a snowball of money paying off debts, you’d like to start generating a snowball of wealth. This happens when our excess money starts getting invested into assets.
Teaching You Money – We Want To Help You Become Wealthy
Teaching You Money was created to help you shift your money mindset, grow your knowledge, and build your wealth.
We exist to help you financially thrive.
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*I am not a registered investment advisor*
