Work, get paid, buy stuff on credit cards, save a few bucks and put it in a traditional bank. This is what most of America is doing. In order to have financial independence you need to treat your finances like a science project: Meticulously. The truth is, that you have to be meticulous once, and then the hard work pays off for itself.
Get Your Budget On Paper
You need to do this at least once, really thoroughly in your life. Once you have a detailed budget in Google spread sheet or Excel, all you have to do is keep tweaking it. A budget will give you clarity once it’s on paper. “I’m spending 20% of my income on eating out.” Stuff like that.
High Yield Savings Account
Skip investing in old legacy banks. Pull your money out of your savings from Wells Fargo and put it in a online savings account. Your interest rate will be a hundred times more. Ally and Synchrony are the most popular names, but there are plenty of other reputable banks. Some of the smaller banks/credit unions have better rates, but they may nickel and dime you death. Check their fee sheet.
I urge every single person to open a variety of credit cards and start charging them. Credit card usage is key in getting your credit score up. But if you do not pay the full amount off every month then you will be charged a very high percentage on the balance. If you can’t pay it off every month, you may need to reconsider that purchase.
ETFs and Stocks
This is the good stuff and is literally what makes people millionaires. Whatever you have left at the end of the month, invest it. Put it in a SP500 fund, a NASDAQ 100 fund, or a Vanguard fund. If you have a lump sum in your bank, get that into the market and let the market do the heavy lifting.
Debt is bad, and debt with high interest is even worse. Interest rates play a big role in how quickly you can get out of debt. Pay off your debt before you invest. You will have a psychological advantage. Credit card and auto loans are the first things that come to mind.
Retirement should be in the back of your mind. You should at least think about how much you need to retire and how much you have. I won’t go into the details as I have a full blown article coming out on this. Understand 401k’s, IRA and Roth IRAs. I’m not a big fan of these instruments as I believe socking away your hard earned dough so that a money manager makes fat fees on your stash while your money remains locked up is not my cup of tea.
Have enough money in the bank to support yourself for 6 months if you lost your income. Necessity items are: Rent, car payment, food, utilities, cell phone, medication etc.