Personal Finance 101
There are many advantages to understanding your finances. The financial planning industry is worth $56.9 Billion-with-a-B in 2021, and growing by 3.6% per year. It is easy to understand why: being smart and responsible with your money is really valuable. For those with significant amounts of capital at stake (you know, those with enough money that they call it capital in the first place), it is worth it to get a financial planner. For those who are getting serious about retirement and want to stick to a specific timeline, it is worth getting a financial planner. For those who are just getting started managing their finances (or unwilling to trust a financial planner), you have come to the right place.
We start by explaining what financial independence is. It is a straightforward concept. Total financial independence means being able to survive without going to work. It can be achieved two different ways: either by saving enough for you to live the rest of your life on, or by buying enough appreciating assets to provide you with income to live on (and then your children, too, once they inherit the assets). This is explained further in Understanding Financial Independence.
Your financial independence ultimately hinges on three different factors: your cost of living, the size of your savings and investments, and how well you make your savings and investments work for you. Your financial independence can be increased by any combination of decreasing your cost of living, increasing your savings, and increasing the efficiency of your savings. This is explained further in Building Financial Independence.
Getting a raise is a critical point in your journey to building financial independence. A common habit is to increase your spending and save the same percentage of your new salary, but this is a mistake because it dilutes the savings you have already built and actually decreases your degree of independence. It is better to save a higher percentage of your income than you were before. This is explained further in Getting a Raise.
Ultimately, everybody wants to retire. In Saving for Retirement, we discuss three strategies for saving for retirement while working. You will need to max out your retirement plans and invest on your own. There are plenty of websites and apps which allow people to invest on their own. If you don’t know what you are doing, though, you will end up just gambling away your money online (while paying tons of fees to do so). In Investment Advice, we offer opinions on investing you never asked for but are there for those who are curious.
Finally, in Budgeting, we walk you through one way to construct your monthly budget. Creating and maintaining a responsible budget is a critical part of establishing sustainable long-term financial habits.