Getting rich the boring way

I was recently reflecting on a few key steps I took in my 20s that set me up for financial freedom in my 30s--the ability to extend my savings to start a business and investing enough to get my money working for me.I wrote about my top 5 learnings in a recent newsletter installment, and wanted to share for those who might be navigating early-mid career personal finances.*********Some of you might have been born naturally confident, outgoing, and at ease with the world. Not me.I've encountered self-doubt and an ever-present worry about financial security that I inherited from my parents. Despite majoring in Finance, getting in MBA, and working in financial services, I realized no one teaches us personal investing. And not all of us get it through dinner table conversations.Sharing a few things I've learned in my 20s that's set me up for strong financial foundations in my 30s:1. There's a ceiling to how much you can save and scrimp. There's no limit to how much you can earn. I wasted a lot of mental energy in my 20s applying for a card here or there to get rewards or finding ways to save small amounts (hey Uberpool), but ultimately learned to value my time and keep things simple. Naval Ravikant, the venture capitalist, says it's a good idea to set a high "hourly rate" for your own time--because it reminds you not to waste it.2. Focus on building your career edge and "circle of competence" (in Buffett's words). What can you be world-class at? Developing your edge, as my friend Devesh shared, is what allows you to maximize your earning power and make your career experience much more rewarding. We each have an edge, and while not all "edges" and talents can be monetized equally, we're entering into a huge boom in the creative and entrepreneurship economy where niche talents marketed to the right audience have huge potential.3. IRAs, and invest early and often. Since my first college part-time job at Merrill Lynch, I've put money into a Roth or Traditional IRA in addition to maxing out my 401(k) most years. There where times in grad school or job transitions where I couldn't quite swing it, but doing it *most of the time* makes a huge difference. Our friend compounding (the returns on our money earning more money for us) favors the people that start early in life. You want to give your money more time. To work harder for you.4. Take a ton of professional risk. The downside is really limited. Don't be afraid to speak up, call out what's inefficient, illogical, bureaucratic at your company. If you work at a startup, raise your hand for everything you can do well after you become an expert in one thing you can do *really, really* well. Related to finances, try to build enough financial security + career talent that you never fear losing your job. You'll stand out and move past those who operate with a fear-based mindset.5. Don't waste too much time budgeting. Focus on what will move the needle. I know. Sounds blasphemous when it comes to personal finance but this is what I mean. It's a waste of time depriving yourself of a coffee, going out with friends, or whatever thing adds a lot of joy to your life. I have honestly never used a budget and always lived as far below my means as possible. Post-business school, that meant moving out of my studio in NY and living with two college friends in a 2.5 bedroom apartment like we did in college. I've always looked at my top three expenses which usually accounted for 60% of my overall costs anyways and moved the needle there instead of worrying about tracking receipts or using some budget app. For example, in grad school it was 1) tuition (got TA jobs to get 25% tuition discount); 2) rent (took on Resident Mgr role in my apartment building to save 30% on rent); and 3) food (meal prepped 80% of my time, and went out 20% guilt-free).All this is the say large cumulative progress can be made by taking small, initially unimpressive steps. It's not an overnight success path, yet as you go through the world, you realize how much of life is hard work and patience and how little of it is instant success. It's not a get-rich-quick-path, yet those schemes seldom end well.Sometimes the formula that works most of the time, for the most number of people is quite simply: get a few things right, and do them repeatedly.*********If you enjoyed this post and want more no-b.s., simplified personal finance ideas and insights, sign up for Sunday Antidote, a weekly newsletter helping you get smarter about your money and build financial independence earlier: Bit About Me:I’ve spent the past decade as a mentor on the topic of personal finance & investing. I teach a Personal Investing course empowering people to invest their money to build financial independence earlier. I led Member Services at the nation's largest student-run Credit Union, worked in Financial Services, and at a global macro hedge fund. I have a degree in Finance from Georgetown University and an MBA from UC Berkeley.
@yxzhang I literally love you (yah I know it sounds creepy)ALL OF THIS especially #5! I absolutely HATE budgeting. What are your thoughts on saving a % every month and just working with what's left?
I love my budgeting spreadsheets, just because I CONSTANTLY have too many things going on (e.g., saving for a trip to Portugal, building up my emergency savings, RothIRA & 401K savings, etc). Money going EVERYWHERE!!!You should definitely pay yourself first a percentage of your paycheck every pay period.Figure out what your fixed expenses are every month, so that's always covered.Try to have a good idea on groceries, gas, self care, etc.Have an "Unexpected Fund" which is usually the Emergency Fund for those, "Damnit!" events.And after all that's been handled - yeah. Play with what's left & treat yo' self!