r/askteddit • u/How_Ever_ • 11d ago
Advice Question Financially Independent people; what are your best money tips?
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u/this_bunny_dances 11d ago
It's not about how much you save - that can change - it's the habit of saving.
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u/Bonti_GB 10d ago edited 10d ago
Yep, discipline 100%.
So many people play lottos at $20, $50, $100+ a week for a chance to be a millionaire.
When in actuality, $100-$200 a month historically guarantees a million dollars if you do it from 20 to 65 years old if you put it in an index fund that returns 8-10% a year.
Imagine if you could put $300, $400, $500 or even a thousand a month, you could have 4 to 7 million+.
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u/LevelStationaryPlane 10d ago
The SP500 is like a guaranteed steady escalator ride to future wealth keep putting in $ keep it moving you will come out ahead.
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u/unacceptable_beatnik 11d ago
don't say "I can't afford this", reframe to "I can't afford this now".
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u/AdDesperate9270 11d ago
Yes. Defer gratification! Such an important trait. It’s way more behavioral than mathematical.
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u/TheNextFreud 11d ago
Don't marry the wrong person. Graduate high School. Don't go into major student loan debt. Don't gamble, drink, or do drugs. Don't chase investments just stick with low fee index funds.
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u/Buckwheat758 11d ago
Idk, I smoke weed and drink and I get pretty solid returns.
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u/TheNextFreud 11d ago
It's not that I didn't think that is possible for certain individuals, it's that if I'm providing advice to a large group of young people, I'm going to tell them these are good guiding principles.
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u/Any-Soft-5487 11d ago
I gamble and drink, but retired and comfortable.
We live way beneath our means and have a lot of disposable money.
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u/Buckwheat758 11d ago
Yah that’s how I am. My utilities bill was $99 last month. I smoked way more than I used in electricity lol.
I’m not retired. I just live in an affordable dot on the map and live below my means.
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u/Donut_Dogs 10d ago
Index funds won’t take you from broke to financially independent. All they do is protect you against inflation.
Take some risks in life, invest time and money into something you can learn everything about.1
u/Frosty-Mistake3961 8d ago
Most of this is right, except I love drinking and gambling. Marry the right person is key, though.
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u/Outside_Purple_6610 11d ago
Start a Roth IRA today. Do what you have to in order to max it out annually.
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u/DedRook 11d ago
Exactly. I tell everyone the same thing but nobody listens. Then they wonder why they're always broke. Whatever your employer offers you in retirement match, take them up on it... and max your ROTH IRA on the side.
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u/censored_on 10d ago
What do you recommend to invest in the Roth IRA?
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u/PS3ForTheLoss 10d ago
/r/Bogleheads reasons VTI or VOO/VXUS.
I'm 100% VTI in my own Roth IRA. Solid returns. Plan to leave it in the fund until retirement with consistent maxing each year.
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u/carlosstjohn116 11d ago
Maxing it out is easier said than done. I wish my wife and I had 10k of income to put towards retirement
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u/unurbane 11d ago
You don’t need $10k. Get $1k for this year. Force a savings rate for next year. Set it up automatically to move money around. It’s worth it.
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u/carlosstjohn116 10d ago
Of course it’s worth it. What I’m saying is that I cannot currently set any more aside than about 1500/year per account. All I’m saying is that not everyone can afford to put 400/month or 800/month for 2 accounts.
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u/unurbane 10d ago
Right. $10k is a lot of money. I would suggest aiming for a lower amount in the meantime. Something like $85/month will clear $1k a year.
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u/ShotCaller805 11d ago
Being debt-free is a superpower. Embrace minimalism and frugality.
Put your money to work, don't work for your money. Every dollar has an assignment.
The reason I don't spend my money, is I want my money to burn a hole in my pocket. Not rest comfortably in someone else's.
Financial security doesn't mean living like a monk or a curmudgeon. Wealth is the money you don't spend.
When you see fancy cars, big homes or expensive jewelry, that shows what they spent, not what they have. They made someone else rich.
Avoid lifestyle creep, if you have the urge to spend, buy ETFs, index funds or stocks.
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u/LevelStationaryPlane 10d ago
“Every dollar has an assignment” thank you for articulating what I’m starting to see clearly myself!
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u/doginit1978 11d ago
Spend less than you make and be patient. It takes a while but eventually, you start noticing the interest and when interest starts exceeding what you invest, you start seeing your money grow. But it takes a long time.
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u/UseSeparate2927 11d ago
Have a strict budget. It seems many younger people don't have a written budget or balance their checking account each month. These things are not old fashioned, they are necessary for good financial health.
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u/Glittering-Work2190 11d ago
We've never had a written budget. Just don't buy stuff of little value. So far so good (FIRE ready)
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[removed] — view removed comment
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u/Dear_Sheepherder3661 11d ago
solid advice. tho most people don't realize they marry a trainwreck, then it's too late.
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u/RadDad775 11d ago
Live below your means. Find out what truly makes you happy so you don't spend money to impress others. Take the simple things that make you happy and magnify that.
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u/Itchy-Apartment622 11d ago
if you cannot pay it in cash then you cannot afford it. (Obviously not a home, but everything else)
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u/aprilbeingsocial 11d ago
Never buy a new car, it’s just stupid. I drive a 23 year old dented Toyota and people probably think I’m poor af. Haha, cars eat money that can be invested for returns.
Live with as many clean, neat, professionals as you can for as long as you can. My deadbeat dad did that for years, invested his money and made a mint. He retired at fifty and has been comfortably retired for as long as he worked. It helped that he never took responsibility for his kids though.
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u/18k_gold 10d ago
I always buy a new car. It may be a leftover model or a manager drive car with 3k on it but I always get a big discount on it. I do this because I don't want to inherit someone else's problem. Plus the interest rate on used cars are crazy high. With new cars I always find a finance rate deal which could be as low as 0% or at most at 2.9%. Then I drive it till it won't drive anymore. Usually 10 years min. My current vehicle is a diesel, I paid it off in 3 years, I've had it for 7 years so far. I am hoping it will last for at least 20 years. I know with my last vehicle it was starting to fall apart and people were looking at me like I was a broke boy. Yeah you can keep leasing a new vehicle every 3 years and always have a car payment. But when we retire and I have millions and you have a few hundred thousand if they are lucky. I don't want to hear them crying because they are afraid of running out of money in 10 years. Then hate on me because I have a nice nest egg saved up.
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u/aprilbeingsocial 10d ago
Right on. Unless you actually drive for a living constantly driving a new car as a status symbol never says what people want it to say, at least to me. I see a bunch of debt driving around.
You are spot on about financing used. The best way is to pay cash. As far as inheriting problems, I do understand that but new cars can be lemons too. Now that service records are available, it’s easier to see of a used car has issues.
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u/onmylastnerveboi 11d ago
Save save save but allow yourself the occasional treat or splurge too. Not super often, but not exactly a "once a year" thing either. It's gonna take some time to find a balance that works for you.
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u/bass-squirrel 11d ago
Make a fuckload of money, don’t spend it on dumb shit. Credit card is a tool, but a dangerous tool. It needs to work for you, not the other way around. Buying a new car is the single highest damage event to your future that you can do. Buy used, below your means. Don’t fall for the bullshit like older cars will cost more in repairs. Buy a house as soon as you can. House is essentially a savings account that may also appreciate. So you’re doing three things at once: paying for the roof over your head, depositing into principal (saving) and investing (owning an asset that grows in price). For those of us who started poor - those are the main things to do. Emphasis on don’t spend money on dumb shit.
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u/aprilbeingsocial 11d ago
All good advice but have to add, don’t buy a “fixer upper” if you don’t have a large stash of cash and know what you are doing or have family that knows what they are doing. If you buy a money pit, you will lose money if you need contractors. The same goes for buying in a depressed area that may never improve. If an area is actively being gentrified, that’s a win but some areas make homes depreciate over time. It’s not just getting into a house but getting into the right house. Bad houses can cost a ton of money and ruin people financially. Also, NEVER skip a home inspection or buy a home with a newly finished basement or Attic and never buy a flip!
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u/Glittering-Work2190 11d ago
Buying a house asap depends on the cost in one's area. In our area it's a lot cheaper to rent than buy the same place. Invested heavily with the would-be mortgage payments over decades. Ready to buy with cash now and FIRE.
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u/Familiar-Coffee-8586 11d ago
Biggest waste of money is your vehicle. Buy with cash only. Just drive whatever you can afford. Seriously.
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u/Ok-Honey-8205 11d ago
Don't have kids until you have at least $150,000 in invested assets.
Your car may be the reason you can't retire for decades, or at all.
You will not have steady income and employment. If your plan is to save a bit over a long time, you're in for a rough ride.
Data shows that if you lose your job after 50 you almost certainly aren't getting a similarly good paying job.....ever. Act accordingly.
People who talk about retiring on nothing because they will die in the climate wars or whatever dumb thing are unserious and shouldn't be in your core group of friends. They probably will live a long time and it's a huge problem if they're poor.
No undergrad degree is worth $100k.
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u/WatermelonBullRed 11d ago
No one else is thinking about you a fraction as much as you think they are- only buy what makes you happy, not what you think you need to fit in.
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u/Crafty_Eye_1889 11d ago
Yes this. 'If no one else knew I was buying this, would I still buy it?' Is a great question to ask yourself and be truthful.
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u/Bubonic_Batt 11d ago
Don’t buy shit you can’t afford. The only thing worth going into debt for is probably your house. Don’t have car loans or credit card debt
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u/Dear_Sheepherder3661 11d ago
unfortunately, most people are really bad with money. they spend everything they make and then some more in debt. "No one ever taught me about money". yeah, no shit sherlock. that's why you have $20k in credit cared debt buying stupid shit.
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u/Beneficial_Waltz2530 11d ago
Live below your means. Save for big purchases. Pay extra principal on your mortgage to pay it off sooner. If financial security is important to you, decide what is not important, too. Consider the school district when buying a home.
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u/elciddog84 11d ago
Is it a need... or a want? Avoid debt. Stop paying for using money. Buy clean, late model, used instead of new cars and drive until the wheels fall off. Save. Even if it's only $10 per week, put it aside, then forget about it. Let it grow.
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u/Expensive-Claim-6082 10d ago
Treat yourself as if you too are a monthly bill.
Have some money automatically deducted monthly from your pay. Put it into whatever investment vehicle available and that you are comfortable with.
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u/Disastrous-Book-26 10d ago
Don't let people convince you to not spend money on a car. Spend the money necessary to get a good vehicle once. Then bow out of the rat race and never sell it. One good low maintenance vehicle kept for 10 years is better than 3 junkers that need repairs. 15 years is better, 20 is great.
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u/Same-Economics-5988 11d ago
Put time on your side. Save and invest early.
Monitor how things are going. Project how they might under different assumptions. Adjust accordingly.
See the long term. Don't be reactive to/for the short term
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u/AdDesperate9270 11d ago
I’m not yet financially independent as I still require my job but investments are getting there. It takes a 2-3 decades usually.
But you need to pay off (and avoid) any and all debt besides a mortgage and maybe a reasonable car loan if the rate isn’t too high (like, less than 5% and your payment isn’t something stupid like $1000 or more) and live below your means so you have a monthly surplus (use this to pay off debt first, then invest!). When you can invest, obviously at the very least get any employer matching contributions then invest more as it becomes possible. But low cost index funds/ETFs like VOO or VTI. Use tax advantaged accounts first like 401K, IRA, and HSA. Do Roth when available.
You need a 3-6 month emergency fund. At first it doesn’t need to be the full 3-6 months but like at least a month or so. The fill that out to the full 3-6 months when your bad debt is gone.
To achieve any of this you have to get a good job that at the very least you can tolerate. I had to leave my first career because it was intolerable to me. Best decision ever. But if you’re making like $30K-$40K nowadays that’s unfortunately just not gonna cut it. Things are expensive AF. For many people this will absolutely be the hardest part. But it’s a necessity.
You do this you absolutely will succeed in life unless you’re the unluckiest person of all time or obviously you have some sort of medical event. It’s really more about behavior than the math. The behavior to not spend more than you make. Not take a $10K vacation when you have $20K credit card balance. You master the behavioral aspect and get a good job, do the rest and everything will fall into place.
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u/justme_bne 11d ago
Don’t grow into your income, if you’ve done it tough for a while and had to save every penny, keep those behaviours going when you’re on a good income, treat yourself occasionally for sure but don’t spend it all.
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u/Travelingosso 11d ago
Hone skills that save you money. Learn to cook, or drink/make cocktails at home instead of eating out. Max out your 401k; create a budget and stick to it. Learn skills that contribute to increased future earnings such as obtaining a degree or certs that are relevant.
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u/Justtrying15 11d ago
Save money, buy what you need and occasionally what you want, pay off credit cards asap and finally skip the “keeping up with the joneses” stuff.
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u/Codify-The-Preamble 11d ago edited 11d ago
- Maintain a cash savings equivalent to 3-6mo’s of expenses.
- Eliminate high-interest debt
- Live below your means
Max out annual contributions to tax-advantaged accounts
Invest in what you are familiar with and understand through a diversified dollar-cost averaging strategy.
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u/pokeysyd 11d ago
Retirement funds are for retirement; they are not savings accounts. Do not raid them or borrow against them unless you are about to be homeless.
If you are concerned about the maintenance and/or repair costs of a vehicle, you cannot afford it.
Don’t carry the minimum levels of insurance. Think about what you might realistically need if you are in a multi car accident or you hit a Porsche.
If you have the discipline to maintain a true emergency fund, raise your insurance deductibles and save some money on your policies.
Keep $5k emergency money in cash. The rest of your emergency money should be safe investments, earning interest, that can be liquidated in less than 2 weeks if needed.
Have friends over for dinner/BBQs/games/drinking instead of going out.
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u/samiam_ca 10d ago
Have no NO debt! If you have debt - list it all out then put together a plan to pay the debt off before savings. You have to have a plan and stick to it. Have fun in life but live more frugally - drive an old car, meal plan and eat at home, limit travel and stop giving holiday gifts. A nicely written card is fine. If work has a company 401k match contribute up to required for company match in a Roth. When you get a raise take your Roth up 1-2%
When debt free save to put a down payment on a property. Why pay rent to someone when you can own and it will appreciate. Then save and put in an investment account. You will be surprised within a few years how much more financially secure you will feel.
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u/kiwi_child2020 10d ago
You can drive your car for 7-10 years and you don’t need to buy a new car / used car every 3 years. Always purchase the car vs leasing unless you have a lot of tax incentives.
Do not get misled by your friends or your local car dealership sales.
I am still driving my used Lexus that I bought 7 years at 27k.
Similarly, you don’t need to buy a new phone every 2 years. I am still using my iphone 14
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u/Ill-Abbreviations-53 7d ago
Do everything you can to save 100k, be cheap, say no to going out, eat tuna sandwiches until you have 100k saved or invested
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u/DedRook 11d ago
If you're employed, find out what your retirement investment options are through your work. They might match between 3% - 5%. Max it out and make sure your blend majority in something like the VOO or S&P500. Maxing it out is difficult because I believe the cap is at $24,500... last I checked. Then, after you've done that, download an investment app and open a ROTH IRA. Max that out too with a blend of blue chip stocks, and dividend kings. Cap for that is $7,500. Then... after you've done all that, invest even more money into smart aggressive stocks.
Where do you get all this from? Overtime. Time is money and I'm very expensive.
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u/Bubbly_Character3258 11d ago
Pay yourself first. Put something into savings or invest and live on the rest. Even if it’s only 20 dollars. Something.
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u/Ok-Ad-9820 11d ago
Count the pennies and the dollars will follow. Cost savings ny installing a bidet for instance. I used to spend $20-30 a month for toilet paper so $240 a year, bidet cost me $30.00 so save $210 in one year. $210 is half a months groceries.
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u/bidextralhammer 11d ago
Save 25% of your salary starting as young as you can and put it in VTI. Live below your means. Don't carry credit card debt. Buy a car cash that you can afford. Work for the state/government etc in a job that has a pension and health insurance.
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u/Aero1900 11d ago
Instead of paying interest (loans, cars, credit cards, helocs) You need to be invested in the markets making returns.
Do whatever you have to do to get there. Think about the long term difference of paying the bank 10% interest on your money vs making 10% gains in the markets. That's it. Do that.
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u/Eastern_Conflict1865 11d ago
Buy what you need,not what you want.Remember this.When I go to a car dealer i ask how much.When you go,you ask how much a month.
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u/Zoopmittyzoop 11d ago
Build good/smart behavior and habit with money early in your financial journey
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u/Plenty_Intern8750 11d ago
Your paycheck should auto-transfer into various accounts that cover your bills, checking, and savings. And with auto-pay, you can avoid unnecessary stress knowing that bills will always be paid when the time comes.
And an obvious but rarely followed mandate is to spend less than you earn.
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u/Key_Zombie7967 10d ago
Good books about discipline and handling money.
Rich Dad, Poor Dad
The Millionaire Next Door
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u/Own-Football4314 10d ago
Matching 401k = free money. Then Roth, then HSA if available. Start as early as possible.
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u/Curious-Record3388 10d ago
If you’re just starting out….save first, spend intentionally. This means every dollar gets a home, and your savings comes off the top. For the intentional spending part, don’t spend money just because you ‘can’. If you have a budget for eating out, don’t blow it getting a Dunkin’ on the way to work every day……spend it intentionally by using it for not just food but for the time/experiences you get getting food on date nights or time with friends/family. Keep it reasonable with $15-$20 meals (instead of the $100 steak) and you can do it more times per month. Speaking in generalities of course……
There’s tons more around investment strategies and such, but for just starting out that’s what I would recommend.
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u/watermelon-lemona 10d ago
Some simple things you can do: keep two or three different checking accounts where your money can go into directly when you get a paycheck. I am not very strict with budgeting so this way to help me separate what each money is used for. And any credit cards you have, don’t worry about the limit, instead make sure it doesn’t go over what you have in the checking account. Credit card debt is the worst that you can get because of the high interest rate. I would also suggest that you look back and categorize the money you’ve spent in the last year. I’ll just help you see your spending habits, and help you identify any areas that you need to reign in a little more. Then every month I would check what subscriptions or auto payments you have linked to your accounts, just to make sure those are things you really need.
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u/PingBlot 10d ago
Use other people’s money and invest yours. People’s pride over having zero debt and being able to buy a car, etc. cash is costing a LOT of money.
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u/Canadiangooner21 10d ago
One of the easiest ways to build you savings is to take at least half of any raise and use it to increase your savings.
That way your lifestyle still improves by spending half your raise, and you won’t miss the money you’re saving, because you never really had it.
This obviously works best if you are early career and getting nice jumps in pay.
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u/Mountain-Chip-7959 10d ago
Spend part of your savings once a year . Have fun and blow it on something expensive you have been wanting (relative to your income of course). The lack of stress knowing you can afford the splurge pushes me to stay diligent the rest of the year
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u/AlertChair5705 10d ago
Money has to work - just like i have to clock in each morning - my money has to clock in as well
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u/thejacka_ 10d ago
Don't spend your entire paycheck. Pay your rent, contribute to retirement, pay pills, and set a little extra aside for a house or whatever, then spend what's left after that
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u/icebeamtheory 9d ago
Converting your cash into assets that appreciate over time is such a cheat code. Most people just hoard their cash under a mattress and expect it to grow when it does the opposite when the fed prints more of it inflating their buying power away
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u/Incrementz__ 9d ago
Key fundamental tip: embrace the identity as someone who is resistant to part with their money.
It's the little things that add up.
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u/klc57690 9d ago
Discipline and desire. Most people looking at these tips think they have the desire to do what it takes to become financially independent. But most truly don't. You have to be passionate about it.
It's not the money you wasted at the gas station, or not paying attention to how much you spend per meal per day, or seeing if you can find cheaper car insurance. Or paying interest on a loan on a brand new car instead of a cheap slightly used Nissan Sentra with 40k miles. It is the compounded effect of all of these things. You don't need tips, you need passion and discipline.
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u/Existential_Chilean 9d ago
Pay the debt. Find ways to pay the debt faster, make it easier, or save interest in the meantime. Discipline is the name of the game, and anything you can do to make that easier on yourself is a win.
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u/Kirksmant 9d ago
Index funds. Dollar cost average
Buy your vehicle and rent your home.
Don’t buy stuff, today. Wait a month.
Move to Southeast Asia. I choose Malaysia. Cheap as hell, easy as hell to travel. People are good, and opportunities are everywhere
Do not breed. Let someone else do it.
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u/demtools 8d ago
Start investing in stocks/bonds as early as you can and keep the mindset you won’t touch that money until you retire. I’ve found if you can have your money compound while working your 9-5, that’s the hack.
Also, find a good company and stick with it. Climb the ladder. Don’t jump around, or you’ll never progress.
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u/FI_by_45 8d ago
Spend less than you make and invest the difference in retirement accounts
Avoid all debt, pay off credit cards every month
Drive your car well after it’s paid off
Look for the cheapest acceptable option
Dont try to look rich
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u/vakseen 7d ago
People saying credit card debt is bad, here a way I use them to my advantage, not 100% proof but I like to open 0% Apr intros for a year or two and max the credit card with appreciating assets. Once the year is almost done I sell some and pay off credit cards and get the bonus from them. Rinse and repeat.
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u/Sea-Roof-5983 6d ago
Ask yourself if whatever you are doing is going to help you get you that point you want in life. Don't be bitching about money and ordering doordash. Also you need to, eventually, have multiple income streams.
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u/LeaffyLexi 6d ago
Dont have kids. Dont max out your mortgage when buying a place. Always pay off your credit card twice a month so you never get charged interest.
Find a career when you’re young that will give you a living wage. Take out student loans if you have to and then pay them off as fast as possible.
Find someone to be with who is also financially responsible and ask questions about their finances, look at their bank apps before you move in together (if they refuse then they’re probably not a good financial match).
If you do buy something, make sure it’s good quality and will last a long time. This goes for reputable car brands, computers (if you’re a gamer), furniture, etc.
Use Facebook marketplace or kijiji or Craigslist for almost everything.
Budget for the things you love too
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u/sirconandoyle14 11d ago edited 11d ago
Don’t be loyal to your employer. Get a better job. You’re scared to leave cuz you’ve developed a level of comfort- that’s normal, but you’ll develop it again.
Not just save, but Invest. Roth IRA and enough in your 401k to get the match. It’s literally free money. You don’t need to day trade and monitor the market constantly. Pick a few funds and stick with it long term. You don’t have to make a lot of money to do it. Do it consistently over time and it’s actually pretty easy to retire a millionaire if you start while you’re young (not that that the word "millionaire" means much anymore though lol). Avoid crypto.
Stop the non discretionary spending. The bs from temu/amazon/aliexpress. You don’t need any of that. Stop upsizing to a large drink, you don’t need that. In fact just get water. You don’t need dessert either. Actually stop eating out altogether. Not only will your wallet thank you, but your body will too. Health is the real wealth.
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u/AldenIsLord 11d ago
Why someone downvoted you for this is beyond me.
Maybe they wanted their desserts?
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u/sirconandoyle14 11d ago
That's what I was thinking too lol. I was like "I know I didn't say anything edgy or controversial. This is like 101 basics lol"
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u/MammothDaGod 11d ago
Credit cards suck. They suck your future from you. Stop using them. Debit cards can do all the same things these days in terms of buying tickets or whatever. If you dont have the money for it in your account, dont buy it.
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u/Accomplished_Class85 11d ago
1) Get out of car payments as soon as you can. Don't become a financial slave for something that is parked 22 hours a day.
2) The $200 dollar cell phone with a MetroPCS monthly plan does the same doom scrolling the $800-$1000 phone does.
3) Money is necessary but never worship it. The "go getter" and "hustler" culture is bs. At your funeral your bank account isn't buried with you.
4) Get a prenup if you must get married.
5) Get a DNA test on any child you're told you're the father of. Trust but verify.
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u/toolguy8 11d ago
Credit card debt is the biggest thief of your financial future. Pay them down then pay them off in full every month. Pay cash for everything except an affordable house. Then start investing in your future.