7 Simple Ways to Build Wealth 💰

I’ve spent 20 years in finance & have seen just about everything. Because of my unusual upbringing (more on that below), helping people get ahead financially is a personal mission.

TBH I have a chip on my shoulder...

..against our financial system. It's rigged against regular working Americans in ways that most aren't even aware of. Rich or poor, hear me out & I bet you’ll pick up at least one strategy to beat the system. But first, a short personal story:

I grew up in a home that operated on a cash-only basis—my parents literally kept stacks of 💵 in a safe in their closet.

In their whole lives they never had a loan, credit card, insurance, or investment of any kind. 😲

I lived in constant fear of money (maybe that’s why I studied math & went into finance). Observing my parents' terrible financial strategy did teach me one valuable lesson: When you deal in cash you can’t spend more than you make and your net worth can’t go below zero.

Ironically, just being above zero put my parents ahead of millions of other Americans despite the fact that they missed out on a lifetime of compounding, never accumulating wealth.

The 🍎 doesn't fall far from the 🌳...

I inherited some of my parents’ depression-era mindset, always avoiding debt like the plague and only buying things I could easily afford. But there’s one big difference between my parents & I:

From an early age I saw the power of compounding—buying things that grow in value (stocks, real estate, etc.) and letting time do its work.The magic of compounding is that growth becomes exponential over time. You don’t need to understand the math—you just have trust it.

My bizarre upbringing caused me to blindly stumble into the most powerful 1-2 punch in personal finance:

🥊 Spend less than you make
🥊 Buy appreciating assets

It sounds simple… and it is, yet—like my parents—millions of Americans never accumulate assets.

And it’s not limited to low income brackets—I know 7-figure earners who live paycheck to paycheck! Make 2022 the year that you get ahead! To help, here are 7 strategies that you can (literally) take to the bank:

Step 1

Keep it simple. We make personal finance complicated but it doesn't have to be. I’ve used the same super-simple system for 30 years—it works for any level of wealth. You don’t need 20 apps & accounts. You don’t need a financial advisor or a complicated budget.

I want to see the my net worth go up each month. If that happens, I’m happy. The rest is details. If not, I spend a little time figuring out why—was it a market down turn? Did I spend too much this month?

My point here is it’s important to have a *simple* dashboard that allows you to get a directional read on your money each month. If it's too complicated (as most banking/financial apps are) you won't stick with it.

Step 2

Make “asymmetrical sacrifices”. What does that mean? It’s a financial move that's uncomfortable but *temporary* and has huge upside (It's "asymmetrical" because the reward is much greater than the sacrifice). It's a way to make a big leap forward or turn things around quickly.  Check out this twitter thread  that is a great example of an asymmetrical sacrifice that changed the trajectory of someone’s life.

The hard truth is if you want to get ahead you have to do things that are uncomfortable—things that most people aren’t willing to do. A few examples of asymmetrical sacrifices:

🚙 Drive a crappy car
💎 Opt out of luxuries
💡 Start a side hustle

Despite receiving a lot of criticism, the FIRE movement (Google it or check out@mrmoneymustache) is a good resource rebooting your spending habits and identifying opportunities for asymmetrical sacrifice.

Step 3

Accumulate appreciating assets, not 💩. Too many of us—rich or poor—buy stuff we don’t need (with money we don’t have). I promise that it feels way better to buy things of lasting (and growing) value. Instead of buying another pair of 👠 👟, buy 1 share of a company. Then another & another.

Step 4

You might think that this mindset only applies to the poor but it's exactly the opposite! 

👉 The wealthiest, smartest people I know are obsessed with buying appreciating assets and have an allergy to spending money on anything that doesn’t add to their wealth.

Step 5

Own your home. I’ve written extensively about this, so read this threadfor details. For 95% of Americans owning your home is the single best financial move you can make. It’s one of the few situations where the system is rigged in YOUR favor.

You should aggressively avoid using higher rate debt to buy things that *lose* value—such as cars, appliances, clothes, etc. Credit cards have always been the big culprit here but more recently “Buy Now Pay Later” financing tempts us at every checkout.

Avoid debt might seem like an obvious move, but by the numbers Americans aren't doing it and it’s responsible for ruining millions of lives. And sadly, banks & credit card companies have done nothing to help us reduce debt—it's just the opposite.

Step 6

Only use debt as leverage. What is leverage? It’s debt that is used to buy *assets*—things that hold or gain value. The simplest example of leverage is your home mortgage. It’s called leverage because—like a crow bar—it multiplies your return on effort/investment.

There’s nothing wrong with putting a small portion of your net worth—I advise 2-5%—into speculative "YOLO" investments, understanding that you might lose it all. But in general don’t gamble with your money.

I recommend that the vast majority of your money be put into diversified index-type funds (or managed funds like Titan) or into cash-flowing or appreciating assets like real estate.

Step 7

Spend money on experiences, not things. This may seem in conflict with everything else I've said. After all, experiences aren't hard assets. But it’s important to remember this saying: Everything in moderation, including moderation.

🚤 Sure, things can enhance experiences—a boat is one example. But those in the know will tell you that the best boat is one owned by someone else. Rent—don't own—things that enhance experience but are not assets. Don't buy a boat. 🤣

Remember, magical experiences—especially for kids—don’t have to cost a lot if you use your imagination. Travel is at the top of the list. Nothing inspires & expands your mind like exploring the world—starting with your own backyard.

My hope is that these ideas help at least one person build more wealth in 2022.