As some of y'all may know, I was a financial advisor at a national investment bank before I started Beardbrand. Sound financial practices, investing and prudent spending habits have always been of high importance to me. In fact, it's something that I encourage our team at Beardbrand to master.
Sadly, I know this article won't get the same amount of traffic or views of the other content - but it's one that may make the biggest impact on a person's beard.
Yup. What I'm trying to tell you is that when you master your finances, then you will have what is commonly referred to as fuck you money. And with that, you can say fuck you to whoever tries to dictate what you do with your beard.
Now, to many people, fuck you money conjures up thoughts of millionaires and old money, but it doesn't have to be that. The entry level into fuck you money is that length of time it takes you to get a new job that affords you the same lifestyle or better. Now, I've built a nice little guide to help you to get to that point and beyond.
How to get "Fuck You" Money
So both growing a beard and personal finance are two really easy things to do. With growing a beard, you just stop shaving. With personal finance, you just stop spending more than you make. That's it!
But, since we are humans, it's a bit harder and our emotions affect our decisions and can't ultimately harm us from hitting our goals. So to help you get to your goal of fuck you money then you've got to automate and setup processes that take out your emotions. However, before automating, you need to have a strategy for how the money will flow.
Here's the outline:
- You must track all your money, both coming in and going out
- Separate the must-haves, the nice-to-haves, & debts
Must-Haves: Food, Shelter, Transportation, Internet, Entertainment, and of course Beardbrand products ;)
Nice-to-Haves: Fancier versions of Food, Shelter, Transportation, Entertainment and Beardbrand products
- Pay off debts
- Save capital
- Have Fuck You Money
Now let's get a little deeper into the strategy with how you can automate somethings, and how you can look at other things to speed up your process of getting you to step #5.
Step 1: Track Money / Set a Budget
Trying to manage your finances without knowing what's coming in and what's going out is similar to driving blind. Yes, it's likely that you're going to go somewhere - but it's probably not where you want to go and it's likely to end up with you crashing. For many, this is a very tough pill to swallow because you know you are currently spending more money than you are making and you think you can leverage credit cards to get you out of the hole. Well, here's your wake up call.
Once you finish reading this article, make an excel spreadsheet that has everything on it. Here's how mine looks and you can modify yours to suit your lifestyle.
Eric Roth IRA
Anne Roth IRA
Electric / Gas
Nanny / School
You'll need to find out how much you are spending for each category. Spend 3 to 5 hours on this and go through your credit card statements for the past 3 or 5 months to get a good average of what you spend. Be honest and be conservative (costs higher than expected & income lower than expected).
Step 2: Prioritize your Spending
Now that you've got a good snapshot of your current financial picture, you'll need to find areas of your budget that you can cut and move those to debts/savings. Now, this is where things get hard because it's going to directly affect your lifestyle. For instance, when things were tight for me and my family, we ended up eating the cheaper cold cut meats for sandwiches, and I cut my lattes in favor of drip coffee.
There is no wrong or right way. The more you sacrifice for today, the quicker you'll get to fuck you money. But on the other end of the spectrum, you could be dead tomorrow so you need to live for today. It's a balance and the only wrong thing to do is spend more than your making.
Step 3: Pay off your debts
Ok, this is a big one and I understand many younger people today have no intentions of paying off your unsecured debts. If that's you, I'm ashamed of your decision. When you took your loan you agreed to pay back that money. By not paying it back, you are essentially stealing from those who have given to you in good faith. If you are that person, you are probably in the process of victimizing yourself so you don't feel guilty for stealing - but take ownership of your actions and commit to doing the right thing.
When it comes to paying off your debts, there's a couple of strategies. One is to put the most amount of money to the debts with the highest interest rates and the other is to pay off the smallest ones the quickest and roll over those bill payments to the next highest one. From a fundamental standpoint, the highest interest one is the best strategy. That being said, from a psychological one, the snowballing strategy is very rewarding.
Personally, I prefer paying off the smallest ones first because it feels like I'm accomplishing things. The biggest risk with that strategy is spending those extra savings rather than putting it towards the next debt. Keep the eye on the prize and maintain your lifestyle so you can pay your next debt even quicker.
You have the ability to add automation to this step. Set up automatic bill payments that take care of the thought process of paying the debts. You can set up side savings accounts used just for this purpose and won't even be part of your "spending" money.
Now, there's a good argument for paying yourself before you pay your debts, I won't disagree with that strategy. I think you need to be both paying off your debts and saving simultaneously.
Step 4: Save Capital
Like your strategy of paying off your debts, you can automate your strategy of saving. There are many banks out there that even offer different types of automated saving strategies. Again, auto-transfers are going to be your friend with this step. Before you know it, you'll have a nice chunk of money saved up and you won't be waiting for that paycheck to come around.
Once you build up a sizable amount of wealth you'll need to develop a strategy for investment. I'm not going to dive too deep into that, but my personal favorite is to dollar cost average the Exchange Traded Fund (ETF) VOO every month. This helps break my emotional decisions towards investing and gives me a diversified portfolio that meets my risk tolerance at a very low cost.
I was talking with Greg Berzinsky the other week and he offered some very great advice. Early in his marriage both him and his wife worked, however, they spent money as if they were living on one salary. This allowed one of them the freedom to stay at home to raise the children if that's what they chose. In addition to owning his home, these good finance habits have allowed them to live a comfortable and free lifestyle on an attainable income.
Step 5: Have Fuck You Money
There, you've done it! You've now got cash in the bank, your loans paid off, and no financial obligations. Instead of purchasing houses and cars with loans, you are just paying for it with cash from your savings. If someone gives you shit about your beard, you tell them to "fuck off" because you can do what you want and you can handle the repercussions of that.
A shit-ton of people are struggling with their finances, and it's always going to be an issue. It's human nature to want more than we have, and that's the very reason why humans have created so much. But controlling your finances is controlling your freedom. For everyone that freedom comes in monetary amounts and there is no right or wrong number. Don't be a slave to your job, to your debts, or to your materials. Break the chains and take control of your life. As always, thanks for reading and keep on growing!