The Truth About Building Wealth in Your 30s!

23:24So I'm on my soapbox about cars here, but I see these payments so much that we want to make sure that we are thinking through this and ensuring that we are not getting taken advantage of that. Number six is opportunity cost anxiety. So at some point in your thirties, the math becomes clear. Every single dollar is going to matter more. And every year that goes by, the opportunity cost that you have is starting to get lower and lower and lower. So we need to make sure that we are investing our dollars as much as possible. Now, the beautiful thing about being in your 30s, everybody in your 30s listening right now is time is still on your side.

23:57It is never too late and it is definitely not too late in your 30s. You have so much time left. You have so much time and opportunity to be able to build wealth. And I want that for you. I think that is one of the most amazing things about what you're doing right now is you can build wealth and you can still do it. You have this time, but the realization that time is now, you need to make sure that you were taking advantage of this now. That is what is most important. So each and every single one of you, I want you to make sure that you start investing something now. If you haven't yet, I don't care if it's a hundred dollars.

24:30I don't care if it's$200. I don't care if it's$10, but you need to invest every single month and you need to get the ball rolling. Number seven is comparison is distorting your reality. Meaning if you're comparing yourself to other people out there, if you're comparing yourself to folks on social media, that is going to distort your reality of what is really happening. And the more you compare yourself to other people, the less happy you are gonna become, especially when it comes to money. There's always, always, always gonna be somebody out there who has nicer stuff than you. There's always gonna be somebody out there who has the better car than you.

25:04There's always going to be somebody out there who has a nicer house than you. And guess what? That's okay. Because you need to focus on the things that you can control and focus on your family and building wealth for your family. Let me ask you a question right now. If you were going to go buy a car and you went out and there was nobody else in the world, nobody else in the world to see what logo was on that car or to see what was in that car, but you had to make a financial decision based on how much you make right now, would you buy the same car that you currently drive? Would you buy the car that you're driving right now if nobody else could see it?

25:38Because here's the thing, and Morgan Housel talks about this in The Psychology of Money. He says, for most people, when they see a guy or a girl driving a Ferrari, they don't think, man, that person looks so cool in that Ferrari. No, instead, what they think is, man, I would look so cool in that Ferrari. They don't think of you as a cooler person, they think of themselves in that vehicle. And overall, money psychology is one of those areas where you need to master it. And once you understand this, it'll make a big difference in how you compare yourselves to other people. So don't look at what social media is talking about.

26:13Don't look at what your friends are doing. They're going on these marvelous vacations. They're buying these fancy cars. They're buying these fancy houses. A lot of times when I see that and people doing it over and over and over again, I think most likely they're living paycheck to paycheck or they're broke. People who have high incomes can still live paycheck to paycheck, and a lot of them do. And the number eight is a lot of people in their 30s who did not start investing. They feel the pressure to catch up. They feel pressure. They feel anxiety around their money. And a lot of them just don't know.

26:39They freeze and they don't know when to take action. And so, again, that is a big area that I think once you master this psychology, you know what to do next, which is why Master Money Academy exists. Again, I would love for every single person in here to try Master Money Academy, which is why we have this huge discounted rate that'll be linked up down below because I know once you try it, you will absolutely love it. And so we're offering that there. But if you have that pressure to catch up, I really, really would love to see you understand what you need to be doing next and not really worry.

27:07You're gonna overcome it. You can do this. I know you can do this. And just don't take these unnecessary risks that you don't need to to try to catch up. Don't feel like you gotta make the big leap or invest in the perfect stock or find the perfect business in order to catch up. No, you've got time, my friend. And we're gonna help you through that process. as time goes on. So next, I want to dive into some of the biggest money traps that you could fall into in your 30s if you're not careful. So we're going to talk through those next. So the first money trap that I do not want you to fall into in your 30s is the lifestyle creep disguised as progress.

27:42So a lot of us in our 30s, we're going to start to make more money in your 30s. And you're going to see this as, hey, this is fantastic. I'm really making progress. Your lifestyle expands and you feel like you're making progress. You say to yourself, we deserve this nicer place. We deserve this fancier car. We deserve to have these vacations every year. And instead, what is happening is you overspend on some of these areas, maybe even go a little bit into debt. I have talked to really high earners in the past who are making hundreds of thousands of dollars per year. And I'm talking close to a million dollars per year.

28:12And they still live paycheck to paycheck. I know doctors. I know attorneys. I know folks who are really high earners who live paycheck to paycheck because they don't have a financial education. And this, my friends, is one of the saddest things you will ever see because they have the biggest opportunity of all. And if you are a high earner, you have a huge opportunity to take advantage of wealth building and a lot of people don't. It is unbelievable how many people don't. And so listening to this podcast and spending time reading or spending time understanding and getting a financial education is the number one thing I want you to be doing if you feel like you're in that situation.

28:46A high income with a low savings rate is gonna mean that you are constantly gonna be stressed. And so what I want you to do instead is increase your savings rate so that you can ensure that you have financial freedom later on down the line. Number two is carrying high interest consumer debt. So if you take on credit card debt in your 30s because you want to inflate your lifestyle, you wanna compare yourself to the Joneses, or you take on a car loan with a high interest rate, or you take on the buy now, pay later personal loan and it has an interest rate, All of these different things are gonna cause problems.

29:17Debt is a wealth killer. Debt is a pants on fire emergency, especially any debt above a 6 % interest rate outside of your mortgage. Any debt above a 6 % interest rate, that is gonna be a huge, huge, huge problem when it comes to wealth building. So we wanna make sure that we get rid of that debt as fast as possible. And there are way too many people dealing with this. Number four is becoming house poor again. If you're spending more than 30 % of your income on housing, you are in the red zone. You are in the house poor zone. And that is something that is hard to hear, especially in today's day and age when housing is so expensive.

29:48If you live in a high cost of living area, this gets harder and harder and harder. So instead, what needs to happen is if you do live in a high cost of living area, we need to adjust some of the fixed expenses in other areas. Maybe it's transportation, maybe it's food, but some of those other fixed expenses need to be adjusted in order to accommodate the difference. Number five is skipping the safety net or not saving in your emergency fund. Listen, your emergency fund is going to reduce your stress. It's going to reduce your anxiety and it's going to protect you against life. And once you are protected against life, there is nothing that can stop you here.

30:20And so building up that emergency fund and making sure you have that in place ensures that if your water heater breaks, you have the money just there. If you lose your job, you have six months of expenses there to cover you until you find your next job. If you go and your car breaks down, you have the money there to go and fix your car. The first time I ever experienced having to use my emergency fund was the most freeing feeling ever. Why? Because I had a$2 ,500 engine repair on my old vehicle. My engine was leaking, and if I left it any longer, the entire engine would blow and it would diffuse.

30:53And so I had this$2 ,500 expense that popped up out of nowhere. Now, in the past, before I had built that emergency fund, that would have stressed me out completely. In fact, I wouldn't know what I would do or even find the money. And what a lot of people do is when they don't have an emergency fund, they pull out the old trusty credit card and they decide, OK, you know what? I'm just going to put on the credit card and I'll figure it out later. But folks with an emergency fund, they know that they can take care of this and not have to stress at all. So when I had that twenty five hundred dollar expense in my mid 20s, I didn't even worry whatsoever.

31:24It was the most amazing feeling. And all of a sudden it unlocked this light bulb in my mind where I said, this is it. This is the feeling I want every single person out there to feel where they don't have to worry about their finances anymore because the money is just there. And having confidence with having the money there, there is no better feeling in this world. Now, we have a ton of people in Master Money Academy who are over and over sharing their wins there. And a lot of them are talking through, hey, I had the emergency fund set up and I didn't have one set up before I joined here. Now I have it set up and stuff happens in life and I don't even stress about it anymore.

31:58And it's the most amazing and freeing thing that I see from some of our members in there. And I think it is just so incredibly powerful. So again, that is an amazing thing to having an emergency fund. Do not skip that safety net. Number six is overcomplicating your investing out of anxiety. So a lot of people think investing is a very complicated thing. Wall Street wants you to think it's complicated. CNBC wants you to think it's complicated. Guess what? It's actually not that complicated. And once you learn the steps to take when it comes to investing, I automate all my investments. I hardly look at them throughout the year.

32:28I buy some individual stocks because it's fun for me. I like to buy individual stocks. But for the most part, 95 % of my portfolio is index funds and ETFs. Why? Because passive investments over time outperform active investments. And so we know, and I know, that over time, I am just going to continue to buy the market and continue to invest in index funds and ETFs and continue to contribute to my portfolio month in and month out every single month, I am consistent and I am a long-term investor. That is the way I think about money. That is the way I think about investing in the fastest way I know to build wealth.

33:02We're way too many people. They're saying to themselves, I got to find the hot stock or I got to start trading options or I got to start investing in crypto. I'm way behind on that. No, develop your investment plan and stick to that investment plan. That's what I want you to do and think through. Number nine, and this is for some of you out there who are my frugal weirdos, and you know who you are. If you're overly frugal out there and you spend way too much time thinking about saving money, maybe you're an extreme couponer or you drive across town just to save five cents on gas. This is for you.

33:29Okay. If you ignore income growth while obsessing over savings, you're doing it backwards. Income is the catalyst. Income is the way to build a tremendous amount of wealth. And if you can grow your income, that gap is infinite. You can only save so much and you can only cut back so much. And so this is an exercise that when you're focused so much of your time and energy on cutting back. It really is not productive. If you focus that same exact time and energy on increasing your income, guess what? Your earning potential is literally infinite. You can earn more from side hustles. You can earn more from small businesses.

34:03You can earn more from doing so many different things, and it makes a massive, massive difference. Getting a 10 % raise means that you earn 10 % more every single year for the rest of your life as long as you're employed there. Doing a strategic job move and making 20 % more means that you're going to earn 20 % more every single year. Upgrading one of your skills or upgrading your skill stack, that means you have that skill in your arsenal forever and nobody can take that away from you and nobody can take that earning potential away from you. These are the types of things that I want you to focus on so that you can make more money.

34:36Now, we have an episode coming up on skill stacking and how to develop some of those skill stacks. Really excited for that episode. So make sure you're subscribed to this podcast if you're not already, so that when we release that, you're one of the first ones there. So those are some of the money traps that I do not want a lot of you to fall into. Very important that we make sure that we realize these are happening. And things like living someone else's highlight reel or thinking through childcare is something that will not allow you to build wealth. Those are all just other things that you have to deal with.

35:03And so we gotta make sure that as we progress here, we know exactly what to do next. Next, we're gonna talk about the core principles of building wealth in your 30s. and then we're going to talk about step-by-step what you need to do. Billion-dollar investors don't typically park their cash in high-yield savings accounts. Instead, they use one of the premier passive income strategies for institutional investors, which is private credit. Now, the same passive income strategy is available to investors of all sizes thanks to Fundrise Income Fund, which has more than$600 million invested in a 7.97 distribution rate.

35:37With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. So visit Fundrise.com slash PFP to invest in the Fundrise Income Fund in just minutes. The fund's total return in 2025 was 8%, and the average annual total return since inception is 7.8%. Past performance does not guarantee future results. Current distribution rate as of 12-31-2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found at the Income Funds Prospectus at fundrise.com slash income.

36:10This is a paid advertisement. The first day of spring always does something to me. I start to clean out closets. I start to clear out the garage and getting things organized again. And every year, it makes me think about the bigger stuff too. Not just spring cleaning my house, but cleaning up my long-term to-do list. And one of those things is protecting the life that we built. And that responsibility can feel heavy. Making sure your family would be okay financially if something happened to you isn't exactly a fun task, but it's an important one. And that's where Policy Genius comes in. See, Policy Genius isn't an insurance company.

36:43They're an online marketplace that helps you compare life insurance quotes from some of America's top insurers side-by-side for free. And their licensed team works for you, not the insurance companies. They help you find the right coverage, amounts, prices, and terms, answer your questions, handle the paperwork, and advocate for you along the way. It's about clarity and peace of mind. Protect the life you've built. With PolicyGenius, you can see if you can find 20-year life insurance policies starting at just$276 a year for$1 million of coverage. Head to PolicyGenius.com to compare life insurance quotes from top companies and see how much you can save.

37:20That's PolicyGenius.com. I remember when I first started investing, I kept telling myself, I'll start when I have more money. I didn't feel like I had enough. But what changed for me was realizing it's not about having a lot, It's about starting. That's why I like Acorns. Acorns is the financial wellness app that makes it simple to give your money a chance to grow. You could sign up in minutes and automatically invest your spare money, even when all you've got is spare change. One feature I really like is the potential screen. It shows you how your money could grow over time with the power of compounding.

37:52It's motivating because it shifts your focus from where you are today to where you could be tomorrow. And Acorns grows with you. Whether you're just starting or planning for bigger goals, it keeps everything in one place. Investing, saving, and building better habits along the way. Sign up now and Acorns will boost your new account with a$5 bonus investment. Join the over 14 million all-time customers who have already saved and invested over$27 billion with Acorns. Head to acorns.com slash PFP or download the Acorns app to get started. Paid non-client endorsement. Compensation provides incentive to positively promote Acorns.

38:27Tier 2 compensation provided. Potential subject to various factors such as customer accounts, age, and investment settings. Does not include Acorns fees. Results do not predict or represent the performance of any Acorns portfolio. Investment results will vary. Investing involves risk. Acorns Advisors LLC, an SEC registered investment advisor. View important disclosures at acorns.com slash PFP. Tax season is funny because for a lot of people, it is the one time of the year where you actually sit down and look at your full financial picture. Your income, your spending, your savings, maybe even your investments.

38:54And when you see it all together, you start asking different questions. Am I actually making progress with my money? Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, budgeting, accounts and investments, net worth, and financial planning together in one dashboard on your phone or laptop. Feel aware and in control with your finances this tax season and get 50 % off your Monarch subscription with code PFP. Now, one thing I do every day is my five-minute drill. Just a quick daily check-in with my finances.

39:27Monarch makes that really easy because everything is all in one place. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use code PFP at monarch.com for half off your first year. That's 50 % off at monarch.com, code PFP. All right, so let's talk about some of these core principles to building wealth in our 30s. And one of the big things that I want you to note is these are the core principles that if you do these things, you can't help but build wealth. And number one is to spend less than you earn. Now, this sounds simple. Everybody knows this.

40:01Everybody knows the need to spend less than they earn currently. But guess what? If you actually do it, you spend less than you make and you invest the difference, you can't help but start to build wealth. Anybody who does this, even if it's$100 every single month, will be able to build wealth. And I want you to know that you really need to take this to heart because people who do not take this to heart, people who decide that they are just not going to listen to this or they decide, well, I'm not going to track my spending or I'm not going to track where my dollars are going. And instead, I just like to live my life.

40:34I just like to have a little bit of fun. If that's you, then guess what? We need to shift that mindset because if you don't, your investing is going to stall and you are not going to be taking advantage of compound interest and time, which is your most valuable asset, your debt is going to grow. And if your debt grows, that is working backwards against you when it comes to wealth building and your stress is going to compound. And when your stress compounds, this is an area that I want every single person to understand. Money stress is the worst stress of all. It is one of the most stressful things that you can deal with.

41:04I remember when I first started, I had money stress. And once I got my finances together, that stress melted away. Do you know how good life is when money stress melts away? Sure, you're going to have stress in relationships. Sure, you're going to have stress in business or your career. But when the money stress goes away, you make better financial decisions. You make better overall decisions in life because you're not worried about the finances. Instead, you're worried about how to protect your children, how to protect your family, how to make sure that you guys are doing exactly what you want to do in life, how to make sure you create those core memories.

41:37That's what you care about. That's what you want to be spending time doing. and instead, if you're worrying about money or the finances all the time, that is not a place to be. How many of you are feeling that right now? Every decision you make, you're making because of financial reasons. I don't want that for you anymore. I want you to make decisions in a position of strength, not in a position of weakness. And if you feel like you're making decisions in a position of weakness because you gotta think about the next dollar and you gotta think about your budget and you gotta think about where each of these dollars are even gonna fit into taking a family vacation or being able to do just a very specific certain things, That, my friends, is not a place you want to be in.

42:12I want that money stress to go away, and it starts with spending less than you make. Number two, automate your money before you optimize your money. We have a lot of optimizers that listen to this podcast. Obviously, we talk about frameworks, we talk about optimization all the time on this podcast, so naturally, a lot of you are optimizers, but when we think about optimizing our money, we want to make sure that we are automating our money first. And so money automation is a really core thing that we talk about a lot here on the Personal Finance Podcast, and at Master Money and in Master Money Academy that we really would invite you to learn how to do.

42:44Now, we have a little mini course called Automate Your Money in One Weekend. If you're interested in that, Master Money Academy members get it for free, but that is a way where you can learn how to automate your money over the course of a weekend. But I'll show you how to automate your money right now. So the first thing I want you to do is I want you to, when money hits your checking account, figure out where it needs to go next. So one, we need to make sure we are saving first. We need to pay ourselves first, and that's very important. Two, then we need to make sure that we are paying our bills automatically.

43:11And three, then we need to make sure we are saving for future goals and future things that we wanna be doing. And so to do this, we set up something like a high yield savings account and automatically send money in different savings buckets. That's how simple it actually is when you break it down, but we wanna make sure that we are doing this every single month. And once you set up your money automation, you can do a set it and forget it system and it will absolutely change the way you think about this. We also have full episodes on exactly how to do it step-by-step, but you need to make sure that you are actually automating your money.

43:39This means your money actually gets invested. This means your bills actually get paid. This means your money actually gets saved and you're not relying on your willpower. You are the big stop loss here. You're the person who is the problem. Whether you like it or not, you're the problem. And if you don't move that money, then it'll never get moved. So automating it and making sure it moves automatically is the big key overall. Number three is to pay yourself first. This is a core principle that we talk about a lot, but making sure you pay yourself first and then spending what is left over is the key.

44:10Warren Buffett said it best. It is the number one principle he had when it came to building wealth was to pay yourself first. And I want each and every single one of you to take that to heart and make sure that you are doing this. So route money to your savings account and your investment accounts first, and then you spend whatever is left over. You do not pay somebody else first. Instead, pay yourself first. Number four is to protect the downside. Always, always, always protect the downside. And so what we want to do is first, have that emergency fund in place. That's protection number one. Two, having the proper insurances in place from auto to liability to whatever else that you, homeowners insurance, renters insurance, life insurance.

44:49Those are the types of things we want to make sure that we are protecting and ensure that we have in place. Always, always, always protect the downside. We have this free tool, by the way, that we just partnered with money on. And this tool actually helps you save on your car insurance. I know insurance prices are, oh my goodness, they are off the charts right now. And so if you are looking for ways to save on that, that car insurance tool is actually very, very cool. We'll link it up down in the show notes below. Number five is to make time your biggest advantage. So guess what? You have so much time left if you're in your 30s.

45:20It may feel like you don't. You have decade after decade left to build wealth. And so we wanna make sure that we are investing our money. In your 30s, time is still your greatest asset. You may think it's not, but I'm here to be the guy to tell you, it is your greatest asset. You can change your exact financial life if you actually stick to this stuff. It reduces how much you need to save later, and it turns average returns into extraordinary results. We are long-term investors here. We're not flashy. We're boring. We are the boring folks here. Wealth builders are boring. But you got to be boring if you want results.

45:53And that is exactly where we are going to land. Number six is we avoid high interest debt. We avoid anything above a 6 % interest rate outside of our mortgage. Sometimes mortgage rates just dictate when you buy a house, you may have to pay a little bit more. But if you're going much higher than 7 % on a mortgage, I really would not consider that. And overall, we are trying to make sure that we are avoiding debt at all costs. Debt is a wealth killer. The older I get, the less I really like any type of debt whatsoever. Now, let me give you an example. I have a 2.5 % mortgage. I'm not going to pay that off anytime soon.

46:27I got my house in 2020. Just got lucky. It wasn't like I timed it or anything like that. I'm not some genius who figured all this out. No. Instead, I just got lucky, built my house in 2020. And when I built my house, the mortgage rates were low. You may be getting unlucky and you bought a house when mortgage rates were at 7 % or 8%. The goal is to reduce that debt over time. But if you are someone out there who took on consumer debt or you took on personal loans or you are the buy now, pay later king or queen, then guess what? We need to make sure that we stop doing that. We need to make sure that we stop taking on these high interest loans because they are wealth killers.

47:04And so getting those paid down is very, very important. You want to make sure that debt isn't robbing you with credit card interest or compound interest is working against you. Instead, you want it always, always working for you. Proverbs says the borrower is the slave to the lender. And it's very true because what happens is you wake up every single day. You drive through traffic to work or maybe you work from home. You go to work all day. You grind through the corporate politics. You grind through pleasing your boss. You drive all the way home. And it's just so you have enough money to make your debt payments.

47:37And that is not a great position to be. You are a slave to your lenders. You are a slave to the folks who you need to go out and pay. And instead, we want to make sure that we have the opportunity to not have to do that. And so debt, debt freedom is one of our ultimate goals. Number seven is to use the tax code to your advantage. As you start to make more money, the tax code is your friend. And so there's a bunch of things that you want to make sure that you are doing. But one is you need to ensure that taxes are going to be one of those areas that you decide, I am going to reduce some of the spend in this area.

48:09The less you give to Uncle Sam, the better off it is for you because you have more opportunity costs to take those dollars and put them towards wealth building activities. And so one is hiring a CPA is a great option overall. So in Master Money Academy, we have this document that we show everyone where it's questions to ask CPAs when you want to interview them to see if you want to bring them on board. And when we go through those questions to ask a CPA, some of the cool stuff that is in there is like, hey, how can I ensure that you're going to save me more than what I do like on TurboTax or anything else right now?

48:38And it goes through detailed questions. We have like 20 or 25 questions on that document to ask and interview CPAs so that you can find one that actually fits exactly what you want to do. Two, though, it is also your responsibility to understand some of the new tax code changes that could really help you when it comes to your finances. And so there have been things that I brought my CPA multiple different times so that he could figure out, okay, well, how does this fit into Andrew's financial situation? And so you need to bring those things to your CPA and stay on top of some of those various tax changes that could be happening, especially in this specific given year.

49:13There are a lot of tax changes in this given year and we'll be doing episodes on them that are gonna help benefit you financially. And so you need to know about those so that you can take advantage of them. Number eight is to keep investing simple. That is a core principle that we talk about here. Index funds and ETFs are my go-to. You may like dividend stocks, but I like passive, easy investments, automating into those every single month. And so we keep investing as simple as possible. Simple makes you rich. I'm gonna say this again. Simple makes you rich. So understanding, just putting a simple process together and making sure that you put it into play is very, very important.

49:51Number nine is to grow your income without over-inflating your lifestyle. So increasing your lifestyle by 50 % of your income growth, that's A-okay. But increasing your lifestyle by 100 % of your income growth, that's not okay. And so we've talked about that at the top of the show, but just wanna make sure that you know that is one of the core principles of building wealth in your 30s. And then build systems that survive busy seasons. You are the busiest you will ever be. You are busier than you will ever be in your entire life. And we want to make sure that we are building systems and putting automated systems in place so that we can build wealth even when we get to our busiest.

50:26Even when we don't have a single second in the day to even think about this stuff, we have systems in place that are going to help us do that. And so automation helps you do that, making sure that you set up savings to your retirement accounts and set up savings to your investment accounts and set up savings to your emergency fund automatically and setting up savings to your high yield savings accounts. Those are all the things that you need to be doing in order to make sure that you are building wealth on autopilot because the busier you get, the harder this gets. And we want to ensure that we are on top of our money this entire time.

50:58When emotions are high, you're not paying attention. And when emotions are all over the place, you need a system that just helps you build wealth in the background. So that's why we call it money on autopilot because once you set up your automated system, You don't have to worry. Boop, you push a button and it runs on autopilot. So now what I want to do is I'm going to give you the step-by-step blueprint to building wealth in your 30s. All right, let's talk about the step-by-step blueprint to building wealth in your 30s. I'm going to give you some exact steps here that are going to help you get started and get the ball rolling if you've never thought about this stuff before.

51:31Number one is let's stabilize that cash flow, baby. So your first few 30 to 60 days here, I want you to figure out exactly where your money is going. So we actually have a budgeting spreadsheet that I will link up down below. It is a simple budgeting spreadsheet to make this as easy as possible for you if you're interested in it. So I will link that up in the show notes down below so that you have that available. But I want you to stabilize your cash flow and understand how much you're first spending every single month. What is your burn rate? How much do you spend on food? How much do you spend on clothes?

52:00How much do you spend on transportation and housing and healthcare and bills and debt? How much are you spending in every single category? We need to understand that. So the way to do this is to go back and pull three to six months of your expenses or your bank statements. I like to go back as far as I possibly can. You can go back 12 months if you want to and pull those bank statements and understand how much you're spending in each and every single category. This is going to help you know, on average, what you spend. Well, you may be saying to yourself, well, some of these months I was buying birthday presents for my uncle or we were giving money to a different organization.

52:31Well, that's okay. It still is part of your monthly spending cadence and pull out the average. Even if there's higher months, there's going to be lower months, but that's how life is. Life is going to be that way. So you want to keep those in and get the average going. And you want to know exactly how much margin exists between your income and how much you have left over so that you can invest the difference and figure out what we need to do with the amount of money that is left over. Now, the next few months, over the course of the next six months, our goal is to figure out and cap our lifestyle at a certain number.

53:00So once you kind of know average how much you spend, we want to cap our lifestyle during that timeframe for at least the next six months so that we can take some of the excess money and start to decide where we wanna put these dollars. Now, spending, my friends, is a massive skill that you need to learn. And so what we're trying to do is capping how much we spend every month so that we can learn the skill of spending with this extra money that we have left. And so our ultimate goal is to take our extra dollars and put them towards wealth-building activities and then also towards things that we actually value.

53:29So let's say, for example, that you value your financial freedom, you value your retirement, you wanna make sure you're saving for that, You want to make sure that you're saving for your emergency fund. You want to make sure that you're putting some money aside so that you can go on a family vacation this year. And you want to spend a little more money on fitness. You want to get really healthy this year. And that's your entire goal is to do those four things. Well, let's figure out how to make sure that we are accomplishing each and every single one of those goals with this extra money. So making sure that you cap the difference of the average of the amount that you spend every single month.

53:58Don't increase or inflate your lifestyle during this period. We want to understand what we need to do next with our dollars. Now, step three is let's build in that safety net. So when you get your high yield savings account set up, we want to make sure that we are automating money from our checking account every time we get money, every time we get paid into our high yield savings account, especially when it comes to our emergency fund. And so start building up that emergency fund with what we call the 136 method. Now, here's how the 136 method works. I'll give you a quick rundown. We have an entire episode on this, and it's actually one of our most popular on YouTube if you want to check that out.

54:31But in the 136 method, That means you save one month of expenses first. That's your first goal. Once you save one month of expenses, then you pay off high interest debt. When you have high interest debt paid off, then you get to three months of expenses. So you need two more months of expenses to get to three months. And so we have the three months of expenses. That's the three. Then you can start to invest. And while you're investing and saving in three months of expenses, then we get to six months of expenses. And that is the way to think about your emergency fund and building up towards that six months.

54:59It's a process. It's a grind. It's a slog. But once you get there, then you know that you can do this over and over and over again when you need to use your emergency fund. So stop waiting for financial disasters to happen and then reacting. Instead, make sure that you are ready for those financial disasters so you can catch them softly and be able to go on with your life. Step four is I want you to eliminate that toxic debt. When you have that toxic debt like credit cards with high interest or personal loans with high interest or high interest rate car loans, all of those are detrimental to your finances.

55:31and we need to get rid of those as fast as we possibly can. So what I want you to do is I want you to order them from smallest balance to greatest balance and I want you to order them and then I want you to look at those interest rates. If you have some of those small balance debts that you could pay off pretty quickly, I want you to attack those very quickly and get rid of those and make minimum payments on everything else and then roll those payments that you were making towards those small balances towards the next largest, then the next largest, then the next largest and as you get those paid off, you're going to see a snowball effect happening.

56:01This is why Dave Ramsey calls this the snowball method. Because once you start to pay some of this debt off, you're going to see it just grows. You can pay it off faster and faster and faster as these debts get paid off. And so that is one way to do it. The other way to do it is something called the avalanche method, or we call it the wrecking ball method. Because like Miley Cyrus, you're going to come in like a wrecking ball on your debt. And you're going to order those debts from highest interest rate to lowest interest rate and pay them off. The snowball method has been shown by numerous studies to be the method that most people actually pay off their debt with.

56:30Why? Because it's motivating. You're getting the small ones done first and then going towards the largest. And so I would highly encourage you to look at the snowball method. I think that's the way to go long-term. But if you want the most efficient or fastest method, the debt wrecking ball is a little bit faster. But again, it's harder to stick to if you have high debt with high interest rates. Step five is I want you to lock in retirement investing. You need to make sure that you are looking at your HSA, your Roth IRA, your 401k, and looking at those different accounts and starting to contribute to those based on your financial situation.

56:59And so getting the full employer match is number one. You wanna always get your 401k match or Roth 401k match or whatever other employer matches you have. That is free money. It's 100 % rate of return and I love free money. I don't know about you, but free is my favorite number. And so that is why we are trying to get that. Number two is we wanna gradually increase contributions at least around 3 % every year because of the rate of inflation. We wanna increase our contributions by the rate of inflation of the previous given year. So usually that's right around two to 3%. And so I always, always, always want to make sure that you are increasing those contributions.

57:32And then aiming for 20 % plus retirement contributions is the ultimate goal. And adding IRAs and HSAs when necessary is very, very important. So that is the way I would think about that. And then always, always, always reinvesting dividends and always looking at some of those investments. And we invest in index funds and ETS. Step six is we need to automate our investments, meaning we need to take our dollars when they hit our checking account. And we need to make sure that we automatically automatically every single month, send it to our investment accounts and it automatically invests. Vanguard and Fidelity both can do this now where you can send money automatically and it will auto invest in the funds that you were looking at.

58:08And so we want to make sure that we do that every single month. So we don't have to think about it. We don't have to rely on our willpower. Step seven is we want to make smart housing decisions. We want to avoid being house poor, keeping those expenses below 30 % of our income. If they are way above that, we need to make a housing change. And I'm sorry to say it, but it is a drastic move that you're going to have to make in order to make sure that you get your finances together. If you really care about your finances, you will make sure that you are spending less than that or adjusting some other area of your finances, especially if you are way above that 30 % number.

58:39If you're like 32 or 33%, you don't have to do anything drastic. You don't have to worry. You're just going to have to adjust some other categories. But if you are way above that 30 % number, you really need to make that adjustment and you really need to make a shift. That is going to be very, very important. Number eight is we want to grow our income aggressively. And so I want you to do a number of different things. There are different levels that you can pull, but one is skill acquisition. So acquiring skills are going to help you earn more money. This could be sales, this could be marketing, this could be getting additional certifications, this could be a bunch of other things.

59:10Two, salary negotiation. We have an entire system on how to negotiate your salary and how to earn more money. And I want each and every single one of you to learn how to do this. Three is strategic job changes. So when you have strategic job changes, I want you to see that that is making a drastic difference for you. And so if you go from your current job where you are not making enough money, they will not give you a promotion, you've gone through some of the salary negotiation stuff that we talk about on this podcast, and they still will not give you a raise, then it's time to strategically move jobs where you can make 15 to 20 % more just by job hopping.

59:45Loyalty doesn't pay anymore, but that's okay because if you can strategically hop jobs, that is the way to go. and then also side income or side businesses. We have episodes where we talk about the best side businesses that could turn into a full-time income. That's my favorite series. We have another one coming out soon. Really, really excited for you guys to hear that one. And we talk about these ideas all the time. Would love for you to start one of those. I think that is a huge opportunity right now as we go through this. And then ownership opportunities. If you have opportunities to own a part of a business where you don't have to run the day-to-day, but you can own part of that stuff and increase your income by getting cashflow from that business year in and year out, That is another great opportunity if you can find some of those.

1:00:25Now, step nine is I want you to, if you don't have kids yet, I want you to plan for child care and expensive seasons. I want you to start to think about that now. If you're planning on having kids, start to set up a savings account for that. Maybe you get yourself a year cushion every single year so that if something happens and the season becomes very difficult or you lose an income at some point in time, you have a great cushion so you can take care of child care and not have to worry about it. It doesn't have to be such a big stressor. Now, if you already have kids and you're in this season of childcare, acknowledge there are going to be high cost years up front.

1:00:57Acknowledge that if you can keep investing, even if it's at reduced levels, even if you have to invest a little bit less, but you are still investing, that is the big key overall. Just finding ways to invest more is the huge key. And then avoid debt to smooth out that cash flow. Avoid getting the new car during those years. Avoid the extra debt payments that are coming on if it's going to hurt or dip into your investments. That's what you want to do as much as possible. So for most of you in your 30s, you need to be driving those cars longer unless it's not going to make you struggle to hit your investment goals.

1:01:26And the number 10 is to review and adjust annually. Always be looking at this. Always be adjusting your plan. Always be meeting with your spouse and talking about money. We have episodes coming up very soon on that, too. So really, really excited for that. And make sure that you check your net worth. Check your review your savings. Look at our year-end money checklist. And we'll be doing those throughout the year if you're not already. So listen, for folks in their 30s, this was an ultimate episode. We dove into a lot of information in this episode. Hope this was super, super helpful for each and every single one of you.

1:01:55And I'm gonna send you an invite right now. I would love to meet you inside Master Money Academy. Master Money Academy is not a course. It is not a place where you're gonna just go there and we just throw you in there. No, we have all of our courses in there, sure. But what it is, it's a place where you are gonna transform your life and your finances. Where when you join Master Money Academy, we do weekly group coaching calls inside Master Money Academy. We give you the exact framework on what you need to do with your next dollar. And then if you have questions on that, you can ask me every single week live on Master Money Academy.

1:02:25We have small groups where people are meeting up with common goals every single week and looking towards accomplishing that specific goal. We have a goals group that's meeting right now that I'm really excited about where they are working on their specific financial goals and they're keeping each other accountable. I mean, there are so many different things that are happening inside Master Money Academy. People are recommending ways that they save on car insurance. People are recommending different products that they are using. It is just so cool to see the growth and progress of everybody in Master Money Academy.

1:02:51And the best part is people sharing their wins and we celebrate those wins together. Money is something that a lot of friends, a lot of family members don't like talking about. But inside Master Money Academy, we talk about it all the time because that is how you win with money. Would highly recommend that you join if you're interested. And again, we're doing a huge, huge deal right now if you join Master Money Academy, because I know if you try it, you're going to absolutely love it. So listen, thank you so much for listening to this episode of the Personal Finance Podcast. Make sure you're subscribed if you're not already and leave a five-star rating review if you got a value out of this episode.

1:03:27It helps us share this message that we believe anybody in this world can build wealth. And our goal is to create a million millionaire. So thank you so much for being here and we will see you on the next episode.