Nearly half of all Americans will die completely broke.
This isn’t my opinion. It’s a fact.
Research has shown that nearly 46% of all retirees will die with less than $10,000 in savings.
Even with things like home equity taken into account, this isn’t a particularly pretty picture.
The problem isn’t that we are lazy or just bad with money.
The problem is that we were never taught how to successfully manage and grow our finances.
We never learned how to achieve financial freedom and create the lives that we really want.
After receiving countless requests from you guys to create more content around money management and finances I decided to put together this ultimate guide to finances.
Over the course of this article you will learn:
- What financial freedom really is and why it doesn’t require as much money as you thought
- The only three paths to financial freedom
- Why you can’t save your way to wealth (and what to do instead)
- How to increase your income and then use the extra money to create freedom
- The importance of building a “War Chest” and why you should only invest in ONE thing (until you have $50,000 or more)
- And so much more
Sound like something you’re interested in?
Then let’s get down to business.
Financial Success Defined: Why You Don’t Need to Be a Millionaire to Experience Abundance
Before we can dive into the rest of this guide, we must first define a few terms.
Specifically, the term “Financial Success”.
When most people think about financial success, they imagine mansions, Ferraris, luxury watches, and Armani suits that cost more than some people’s cars.
And for some people, this definition works.
But for our purposes, financial success is a little bit different.
I define financial success as:
“The ability to do what you want when you want, where you want, and with whom you want… within reason”.
Financial success is ordering what you want from the menu instead of what you can afford.
…driving a car that you enjoy instead of driving the only car in your price range.
…the ability to have all of your bills paid on time every time without ever having to think about them.
….having the savings required to take advantage of opportunities or support yourself for at least a year if everything goes south.
…eliminating the stress you currently have around money and replacing it with peace and calm.
Some of you reading this might be laughing at yourself thinking, “Wow, wouldn’t that be nice? But I can’t really achieve that…”
If this is you then I want you to stop yourself right now.
It is possible to achieve financial success and this guide will show you how. Nearly every successful person that I’ve interviewed on the podcast has come from nothing and achieved financial freedom.
- Grant Cardone was in line for unemployment before his uncle forced him to get a job selling cars. Today he is worth nearly $750 million.
- Bedros Keulian was a poor immigrant who literally grew up dumpster diving for food. Today his company does more than 8-figures in annual revenue.
- Gary Vaynerchuk grew up in a single room apartment with 8 family members. Today his business does $200 million in annual revenue and he’s well on his way to buying the New York Jets.
Plenty of people have started with less than you, come from worse than you, and still risen to the top.
You can too.
You are willing to put in the work, apply the right systems, and be disciplined.
I promise that, with a little perseverance and ingenuity, you can achieve far greater levels of financial abundance than you currently do.
And with that out of the way, I’m going to show you how.
Finance for Dummies: Three Paths to Financial Freedom
Although there are plenty of gurus out there who try to make financial freedom sound so complicated that it would require an advanced degree in differential calculus just to get started, it’s actually quite simple.
In fact, there are only three ways that you can achieve financial freedom:
- Increase Income
- Decrease Expenses
- Leverage High Return Opportunities by Creating a “War Chest”
Everything that you can imagine falls into one of these three categories.
From starting a business to cutting your cable to trading on the FOREX, any tactic that you can imagine for achieving financial freedom falls under one of these umbrellas.
Which makes things a lot simpler…
If your expenses are low but you still struggle to make ends meet, then you know that you need to focus on increasing your income.
If you are earning 6-figures per year or more and still struggling to pay the bills on time, then that’s a pretty good indication that you should focus on decreasing your expenses.
And if you have plenty of money and want to start freeing up more of your time then, you guessed it, it’s time to dig into your war chest and invest in cash flow producing assets.
Now that you understand the three paths to financial freedom, let’s break each one down to help you get started.
Simple Strategies for Wealth Creation: How to Increase Your Income and Join the New Rich
Before we can dive into the different strategies for increasing your income, let’s go ahead and get one thing straight…
You cannot save your way to wealth.
Go ahead and say it with me… “I cannot save my way to wealth!”
Sure, you can cut back on your expenses and invest the difference into a mutual fund or something similar.
But at the current rate of inflation, it’s unlikely that you will be able to save enough to retire on, let alone to live your dream life.
Unfortunately, frugality is one of most people’s favorite strategies for wealth creation.
They trip over dollars to save pennies when they could just ignore the pennies and pick up the dollars.
Just think about it…
Even if you lived the most barebones quality of life (which for the record is not good for your health, longevity, or future earning potential) and you were able to cut your expenses back to only $1,500 a month on a $3,000 a month salary, you’re still sacrificing 80% of your quality of life for a fractional financial gain.
If you spent the same amount of energy on doubling your income that you currently spend on scrounging for deals and clipping coupons, you would be able to enjoy a quality of life that is more than twice as high and still invest an additional $2,000 a month into your Roth or 401K (which I don’t really recommend, but we will get to that).
Do you get the point?
Living below your means is necessary for financial success.
But unless it is combined with a steady increase in your income, it will never be enough to break free from the system and live the life that you truly desire.
With that out of the way, here are a few of my favorite ways to increase your income.
1. Start a Freelancing/Service Based Side Hustle to Generate Cash Out of Thin Air
The fastest and easiest way to make up some extra cash is to use your existing skill set to find new clients that will pay you on a per-project basis.
This could be anything from writing sales copy, designing marketing campaigns, remodeling homes, working as a personal trainer, or editing videos.
It really matters what you do.
If someone will pay you for it and you are able to charge a reasonable rate, you can turn just about any interest, skill, or hobby into a healthy side income.
There’s money to be made with just about any skill set as long as you know the right place to look.
2. Start a Business that Pays You Money While You Sleep and Gives You a Proven Path to Wealth Creation
For those of you with the patience to make it to profitability, starting a business is an excellent way to boost your income that will allow you to create automated systems to generate money without your direct input.
Even though it took almost five years to work out the biggest kinks (and I can promise you that it is an ongoing process), I’ve built Knowledge for Men to the point where I could generate 6-figures+ per year while working fewer than 15 hours a week… If I wanted to.
If you have the time, patience, and capital to dive into the world of part-time (or full time) entrepreneurship, these are a few of my favorite interviews to help you get started.
- Pejman Ghadimi – Millionaire by 25 and the Founder of The Secret Entourage
- MJ Demarco – Author of The Millionaire Fastlane
- Cameron Herold – Author of Double Double
- Sean Ogle – Founder of Location Rebel
- Alex Charfen – 7-Figure Entrepreuer
- Jay Samit – World Renowned Consultant and author of Disrupt You
These interviews will provide you with more than enough juice to get started down your journey to entrepreneurial freedom and if you take action on this content in conjunction with a few of the top business books, I promise you that you can achieve your entrepreneurial dreams faster than you ever thought possible.
If you’re interested in building a virtual coaching business the same way that I did, then I’d like to invite you to attend one of my upcoming webinars on how to become a highly paid virtual coach in 10 weeks or less.
I leave nothing unturned and will help you crack the code to building a profitable coaching business now.
Just click this link to sign up and get started.
3. Negotiate a Raise and Get Paid What You’re Worth
The final way to increase your income is simply to negotiate a raise at your current position.
Depending on your field, this could be as easy as talking with your boss for 15 minutes this Friday or it could require 3-6 months of working overtime and proving your worth.
I don’t know your specific field and I have no idea what your manager’s temperaments are like, so instead of trying to give you a blow by blow checklist for negotiating a raise, I’ll provide you with a few tried and true principles that can help you increase your annual income by 10-40%.
-Timing is Everything:
If you ask for a raise during the wrong season or after an expensive reorganization then you will be shot down every single time. Try broaching the topic of a raise during your company’s highest-grossing months or after some sort of positive event like a successful product launch.
-Request a Raise on Merit, not Tenure or Market Conditions
You can’t expect to receive a raise if your performance at work hasn’t earned it. When you go into negotiations, be sure to focus on the quality of work that you’ve been providing not the length of time you’ve been with a company or the salaries that the competition is paying.
-Manage Your State During Negotiations
One of the worst things you can do is to show up to your salary negotiations with weak and defeated body language. I know that these meetings can be tense and awkward, but maintaining an upbeat and positive attitude will make a “Yes” much more likely.
-Figure Out the Number Beforehand
If you go into salary negotiations without a clear understanding of exactly how much of a salary increase you want and why you deserve it, you’re going to fail. If you bid too high, you’ll offend your employer and seem like a bit of a narcissist. If you go too low, the increase won’t be substantial enough to matter to you or your employer.
-Handle Rejection Gracefully
If your manager or employer says “No” the first time around (and this is very likely), don’t get discouraged. Simply thank them for their time and ask them “What specific outcomes would be required for me to receive this raise within the next 3-6 months?” If they can’t answer this question, you should probably find another employer.
How to Be Frugal 101: Adopt Better Money Habits to Reduce Your Expenses without Sacrificing Your Quality of Life
“Spend extravagantly on the things that you love and cut costs mercilessly on the things you don’t.” ~Ramit Sethi
Although increasing your income is the best way to move closer to financial freedom, in and of itself, it is rarely sufficient.
Most people tend to spend whatever they earn and, without the proper systems in place, increasing your income will result in less financial freedom and more payments on pointless crap that you don’t need.
Embracing Minimalism and an Experience-Driven Life
The first and most important step that you can take to reduce your expenses without sacrificing your quality of life is to commit to the minimalist lifestyle.
Ever since the 1950s and the inception of the “American Dream”, our society has become hell-bent on owning and accumulating lots of “Stuff”.
We spend $5,000 on our couch, $2,000 on a new TV, and $400 for a freaking nightstand.
But when you stop and think about it, is this really the best way to spend your money and achieve happiness?
I’m not saying that you shouldn’t want or buy nice things. But there comes a point where materialism can detract from the experience of living life.
When you are mired in credit card debt and have more than $1,000/month in payments for things that you’ve financed, it makes it difficult to spend time and money on the things that really matter in life.
So I want to encourage you to become a minimalist.
One of the better money habits you can adopt today is to spend your money on things that will really matter in the long run.
Would you rather have:
- A couch from restoration hardware
- A brand new Lexus
- A new wardrobe from Gucci
- A four-week backpacking trip across New Zealand
- A year abroad in Europe with your girlfriend
- A one-week seminar learning how to become your best self
Some of you may truly prefer things to experiences, but according to the research, people derive the greatest amount of happiness by spending their money on experiences and relationships, not things.
I won’t tell you how to live your life or how to spend your money.
That’s up to you and the next section will help you create a plan for your finances that is tailored to your personality and values.
But I will tell you that becoming a minimalist was one of the greatest decisions that I ever made and I’d encourage you to give it a go for yourself.
The Conscious Spending Plan
Most people despise the idea of a budget because the method they’ve learned feels restrictive. In reality, however, a budget is simply a plan for spending your money.
Since “Budget” has become a four-letter word to many people, I prefer using the term “Conscious Spending Plan” (coined by Ramit Sethi).
Instead of having a specific destination for every single dollar you earn, you should have a written system that determines what portions of your income will be spent on what expenses and luxuries.
But before you can do this, you need to know where you want to spend your money in the first place.
How do you do this? By following your values.
There’s an old saying that, “If you show me a man’s calendar you can show me his priorities.” I believe that this is true, but I believe that it’s even truer that “If you show me a man’s spending you can show me what he values”.
Your conscious spending plan should reflect your internal values and goals, not meet some arbitrary standard set by society.
If you are a single guy who doesn’t spend a lot of time at home, then why in the world should you spend 30% of your income on an expensive apartment?
Conversely, if you are a married man with two children, it doesn’t make much sense to spend 10% of your income on car payments if you could simply buy a used car in cash and roll the 10% into a bigger and more comfortable home for you and your family.
The only non-negotiable item in your conscious spending plan is your personal growth and development.
If you aren’t setting aside at least 10% of your income to invest in coaching, masterminds, courses, books, and seminars, then you are doing it wrong.
I’ve spent tens of thousands (maybe even more than 6-figures) on my personal growth and ever single investment I made paid back dividends.
So right now, before you go any further in this article, I want you to take a minute and write down the answer to a few questions.
- What would I do if money was no object
- If I was given a blank check that could solve one problem in my life, what would that problem be?
- If I was given $10,000 and was forced to spend it on FUN how would I spend it?
- What is the one thing I would change about my current living situation (housing, cars, clothes, etc.)?
Good. These questions will help you figure out your values and how you should allocate your money.
By having a clearly defined set of values, you can decide exactly where you want to spend your money.
For example, if you don’t spend a lot of time at home, you can spend less money on your apartment while spending more on dining out and partying with friends.
If you are someone who doesn’t enjoy nightlife and prefers to be outdoors, you can create a conscious spending plan that allows you to spend $15,000 a year on adventure vacations and epic trips.
Or maybe you are someone with a wide array of interests and you just want to have $500 a month to spend on whatever catches your fancy at the time.
A conscious spending plan allows you to do just that!
When you cut back on the things you don’t love, you will naturally have more money for the things that you do.
Negotiating Lower Payments on Your Biggest Expenses
Although I’m not a fan of penny-pinching or scrounging for deals, there are a few key expenses where you can save yourself $1,000/year+ with just a few phone calls.
- Car Insurance
- Phone Bill
- Loans (Credit cards, student loans, etc.)
Most people overpay for services and are completely oblivious to the massive number of discounts and specials that are offered by banks, insurance companies, and apartment complexes.
For example, if you’ve been insured for more than a year and your premium hasn’t dropped, you should be able to get your insurance lowered with only one phone call.
In twelve months, your car has lost a significant amount of value and this depreciation will only be reflected in your insurance premium if you are willing to call and request a rate change.
The specific scripts and tactics that you should use to get a lower rate are beyond the scope of this guide, but Ramit Sethi has an excellent article on finding hidden income that will teach you the word by word responses you should use to lower your biggest expenses.
The Ultimate Financial Hack: Becoming a Digital Nomad
For those of you with a location independent income source, or the ability to find/create one in the next 12 months, becoming a digital nomad is the ultimate financial hack.
Although more and more people are leaving the country in favor of cheaper locales, it amazes me how few people truly understand the power of geoarbitrage.
In the United States, you can expect to spend:
- $1,200+/month for a single bedroom apartment
- $500+/month for groceries
- $200+/month for utilities
- $400+/month for transportation (Insurance, car payment, gas, Uber, etc.)
- Oh and 20%+ of your income in taxes
If you were willing to relocate to a developing country like Colombia, Thailand, Vietnam, Nicaragua, or Budapest you could simultaneously spend less money for a greater quality of life.
Although prices vary, based on conversations with my digital nomad friends you should expect to spend:
- $750/month for a luxurious single bedroom apartment in the city center
- $200/month for groceries
- $100/month for utilities
- $200/month for transportation (or less)
This is just a rough estimate and I’ve even known guys who have lived on less than $1,500 a month abroad.
In and of itself, it’s pretty amazing that you can enjoy a higher quality of life, travel the world, and save money, but the real financial incentive comes from the tax advantages of living abroad.
For individuals who spend 11 months or 330 days outside of the united states in a given calendar year, the first $102,000 that you earn are income tax exempt.
Depending on the state that you live in, this could be a total savings of more than $25,000/year JUST for living outside of the country!
Talk about a life hack.
If you can adapt to life on the road, becoming a digital nomad is one of the best financial decisions that you can ever make.
And you’ll have a helluva time while you’re saving money.
Building Your War Chest: The Keys to the Financial Success and Unlimited Wealth Creation
I’m not a CPA.
I don’t have special knowledge about different investing strategies and I couldn’t help you pick out the best index fund for your savings if I tried.
However, over the past 10 years, I’ve consistently applied a single tactic that has allowed me to invest in opportunities that 2X, 5X, or even 10X’d my investment.
I call this tactic the war chest.
Better than a 401K: Why You Should Focus on Your War Chest and Not Your Retirement Fund
I know that plenty of gurus still preach the importance of investing in low-risk medium yield mutual funds and index funds.
But I respectfully disagree.
You’re never going to enter into the upper echelons of wealth by earning a 7%/year return on a few thousand dollars.
You’re going to do it by amassing massive sums of money and then investing that money into highly profitable opportunities and endeavors.
I realized early on that I would never be able to consistently save money if I was putting my hard earned cash into a boring fund or a 1% interest savings account for a “Rainy Day”.
So I decided to make savings a game, to make it exciting!
So, ever since I graduated college, I’ve been consistently socking away part of my income every single month into my “War Chest”, a savings account that I use exclusively for high yield investments.
This war chest allowed me to:
- Quit my job and build Knowledge for Men for an entire year without needing to make a profit
- Earn $15,000+ in 14 days during the Crypto-Craze back in November 2017
- Generate more than $300k in revenue by spending $6,000 on a high-level sales coach
- Invest in heavy hitting companies like Spotify and Netflix when they started to peak
And so much more.
But you aren’t going to use your war chest for any investments like these… Not yet at least.
For now, you are going to invest the funds from your war chest into one thing and one thing only.
The First Investment
I wasted thousands of dollars investing in lousy stocks when I was in my early 20’s.
Eventually, I realized that I could only generate real wealth if I developed myself personally and professionally. So I decided to start investing all of my disposable income into improving myself and furthering my education.
And today I have a 7-figure+ business that makes me money while I sleep and generates enough cash that I can invest in cryptocurrencies, real estate, and new startups at my leisure.
Here are the five best investments I ever made that helped me build the life and business of my dreams.
Books are hard to beat. They can distill 50 years of knowledge into 200 pages and they cost about $10 a pop. I recommend getting a library card and working through the.
For only $100 (the cost of a library card + purchasing whatever books they don’t have), you can download all of the knowledge that you need to become healthy, wealthy and wise.
2. Online Programs
If you’ve saved up $1,000 or more, you can invest that $1,000 into a high end online course that will help you learn a new skill or tactic to increase your income.
You can learn anything from:
- Website Design
- Online Course Creation
- Facebook Ads
And so much more.
Anyone of these skills can help you increase your income by 50–100%.
If you consistently complete and apply high-level online courses over the period of 2–3 years, you can easily build a 6 or even 7-figure lifestyle business that will allow you to live the life that you desire.
3. Seminars and Live Training Events
Whether you go to Tony Robbins’s Unleash the Power Within, Grant Cardone’s 10X Conference or even(shameless self-plug 🙂 seminars and live training events are one of the greatest investments you can ever make.
I try to go to at least one event per year and will often spend more than $10,000 on a one-weekend seminar simply for the networking opportunities that it presents.
These events are powerful ways to get inspired, network with amazing people, and learn practical skills to increase your income and value for years to come.
The best of the best all had coaches from Michael Jordan to Connor McGregor to Kobe Bryant.
I once paid $6,000 for 3 hours of over the phone sales training.
Within 12 months, the tactics I learned over those three hours helped me close more than $300,000 in sales.
Whether you decide to hire a life coach to help you break out of a rut and move towards your dreams or an industry-specific coach to help you eliminate your blind spots in your sales, marketing, or some other aspect of business, every successful person invests in coaching to go from good to great.
The final investment that you should make in yourself is an investment in travel
My director of Content spent $28,000 and traveled around South America for 11 months.
The connections he made, experiences he had, and clarity that he gained completely changed him as a person and he will tell you to this day that it was the best money he ever spent.
Traveling the world will expose you to new people, ideas, and cultures and it will challenge you physically, mentally, and emotionally.
No one ventures on to the open road and returns unchanged.
If you don’t have a definite direction or chief aim in life, then buy a Kindle, download a few books, and start traveling.
Personal Finance for Dummies: Eliminating Debt and Using Credit Cards Responsibly
Once you start increasing your income, decreasing your expenses, and investing the difference into your war chest, you are well on your way to achieving financial freedom.
However, there is one final hurdle on your pathway to achieving abundance.
The average American has roughly $16,000 in credit card debt and that number doesn’t appear to be declining anytime soon.
If you have no debt, then I want to congratulate you. You can skip to the final section of this article and call it a day.
However, if you are struggling with student loans, credit card debt, and exorbitant car payments, here’s a simple five-step process to become debt free and achieve the financial life of your dreams.
1. Calculate your debt
The first step in liberating yourself from debt is to actually know how much debt you have.
Take an afternoon sometime this week and commit to finding the exact number of dollars that you owe. Calculate everything from your credit cards to student loans to car payments.
Leave no stone unturned and make sure that every dollar you owe is accounted for.
2. Find the Most Expensive Loans
Once you know how much debt you have it’s important that you create an effective plan of attack.
To figure out which loans you are going to pay off first, you need to figure out which loans are the costliest.
To do this, the only thing you need to do is calculate the interest rates on your loans compared to the amount owed.
Typically, your costliest loans will be on your credit cards so these are generally a good place to start.
3. Reduce APR
Once you know how much you owe and have itemized your list of loans according to the interest rate, it’s time to call up the banks and negotiate a lower APR.
Again, I don’t have the time to dive into specific negotiation tactics so refer back to Ramit Sethi’s guide.
4. Find the funds
Now that you have negotiated the lowest possible APR on all of your loans and know exactly what you need to pay off first, it’s time to find the funds to pay down your debt and achieve financial freedom.
The amount of debt that you have will determine the location from which you should draw your funds.
For example, if you only have a few thousand in debt, you can use the extra income that you created by lowering your biggest payments to pay off your debt.
However, if you have 5-figures+ in debt, then you will need to dip into some of your “Fun” money for a few months until you whittle your debt down to a manageable size.
Do what you need to do to get your debt paid off. You cannot achieve financial freedom when you owe other people more money than you currently have. Period.
5. Get Started!
As soon as you’ve completed steps 1-4, it’s imperative that you take the first step and begin paying off your debt immediately.
Tony Robbins always instructs people to “Never leave the site of setting a goal without doing something that move you closer towards its attainment.”
So get started NOW! Even if it’s simply paying off a $50 purchase. Do something that will move you one step closer to financial freedom.
Use Credit Cards Responsibly
Once you have paid off your debt and no longer have any revolving credit card debt, you are ready to begin using credit cards responsibly.
By putting the majority of my purchases on credit and then paying them off at the end of every month, I’ve been able to enjoy thousands of dollars of free electronics, flights, and other goodies simply for buying things that I already need.
Do your research and find the best credit card for your specific needs then begin using it responsibly until you amass thousands of rewards points and tons of free perks.
Financial freedom is one of the best gifts that you can give yourself.
You don’t need millions of dollars to become more financially fit than you are today.
You don’t need a crazy investment plan and you don’t need to follow some guru’s dogmatic advice.
Instead, you simply need to have a conscious plan that fits your lifestyle and allows you to spend lavishly on the things that you love.
If you follow the principles I’ve shared in this article, then you will be able to do just that.
So apply what you’ve learned.
Increase your income, decrease expenses, build your war chest, and get out of debt.
Your future self will thank you.
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