Are you looking to build your wealth in your early twenties? If so, you will enjoy reading this week’s interview with Will. Will blogs at First Quarter Finance which is about building wealth ASAP! He started FQF because he wanted to create a resource for young people who want to make money early in life. He uses his personal past and present experiences to give tested advice for building wealth early in life. He does this by telling his story of how he began investing at age ten.
“Combining early investing with a healthy income and a frugal lifestyle and… magic happens. Haha. That sounds corny but it’s true.”
If you want to see exactly what he is doing or even emulate it, visit FQF.
Let’s learn how Will has managed his financial life so he will be able to retire at an early age:
I watch this PBS documentary about the high cost of managed investments. I decided after watching to stop buying managed funds and go with the E/R index mutual funds offered at Vanguard.
What area of your financial life needed the most simplification?
My investments. Hollywood makes it seem like investors should take crazy risks and constantly be screaming and yelling. I decided to stop the buy and sell, scream and yell nonsense. Turns out I’m actually making more money with my simplified approach. Warren Buffett may be onto something…
When did you begin to simplify your financial life?
I was 23 years young when I decided things needed to be simpler.
What was your biggest challenge or roadblock when it came simplifying?
Having to bite the bullet and sell my American Funds!!! I already paid massive front-end load fees. I felt like I already paid to join the club and now I was foolishly giving away my membership by selling. I finally sold all those funds and lost the approximately $4,000 I paid in loads over the years. Ouch. Oh well, it needed to be done. Front-end loads aside, the expense ratios were so high I needed to get out.
How did you overcome this challenge or roadblock?
I did the math on how much more I would make if I switched to low cost investments. Over the long term, selling my American Funds made sense. It’s hard to argue with math.
How has simplifying changed your life?
My investments are now on auto-pilot. I couldn’t be happier with them. I’ve also simplified my life by riding a bike more often than I drive. I also stopped buying empty calories. When you think about it, those cookies won’t help you out one bit.
How long did it take you to simplify?
I’ve taken a pretty simple approach to my finances my entire life. I’ve never had to make any major corrections except with my investments. However, simplifying my food budget took years. I began with giving up soda. Then I stopped buying bread and made baked at home instead. Eventually I stopped buying heavily processed foods.
Today is May 28, 2015 and I’m proud to say I’ve only had one unhealthy item all year. It was a sucker my adorable 6-year-old cousin begged me to eat after telling me, ‘It’s the best food in the entire world!’ It was a green Blow Pop. It was not good.
How much of your personal finances have you automated?
I automate AS MUCH AS POSSIBLE. Life is too short to slave over paying bills. Heck, even Dave Ramsey promotes automating your finances.
Everything is automated except my invoicing to my freelance writing clients. Maybe I could get something going there… I do use Quickbooks…
What do you automate?
Bills, dollar-cost-averaging my investments, I even use Digit for my savings.
What advice or tips would you give to others who want to simplify their finances?
Use the rule of first principles. Elon Musk said it best:
“I think it’s important to reason from first principles rather than by analogy. The normal way we conduct our lives is we reason by analogy. [With analogy] we are doing this because it’s like something else that was done, or it is like what other people are doing. [With first principles] you boil things down to the most fundamental truths…and then reason up from there.”
We should not live our lives based on what we witness around us. Just because your coworkers eat out for lunch doesn’t mean you have to as well. Just because your coworkers drive fancy cars to work doesn’t mean you have to as well. Just because most people are in debt, it doesn’t mean you have to be as well.
What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?
Well, the site you’re reading this on is a pretty great resource! I’m partial to my own blog as well, First Quarter Finance. Other than those two obvious answers, I recommend people read A LOT of books. I’m always reading at least one personal finance/self-improvement/business book. Doing this is opening up my brain to even more than what I learned in college.
I hate to use this because it’s such a cliché but I recommend you read The Millionaire Next Door. It will cleanse you from the Hollywood millionaire BS you’ve already been exposed to in ample quantities.
If money was not a concern, what would you do for fun?
My life would not look much different. Heck, I still drive the same car I got when I was 16. I’m now 25 and have hundreds of thousands more dollars than I did back then. I’m a sucker for sports cars so I suppose I would have one or two more.
What’s your best savings tip?
Don’t do anything just for the sake of saving money. Life is too short for that. You need to have a greater reason for doing something other than saving money. I bike to work because it’s healthy (and saves money). I drive an older car because I love 90s sports cars (and it’s cheaper than a new Porsche 911). I cook at home because I don’t like the low quality ingredients and hidden calories served at most restaurants (and I can eat steak at home for what I could pay for a paper thin burger at a fancy restaurant).
It’s hard to be motivated by saving money alone. Think bigger.
Are there any areas of your finances that you still need to simplify?
I still have things to sell on eBay and Craigslist from my younger years. Most of the items are listed, they just need to sell. I hate owning things I don’t use. I can’t stand the waste.
Will appreciate you sharing your story with us today. You offered some great advice on how to simplify your finances as well as your life.
To read previous interviews in the series click Simple Inspiration Interviews.
If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you. Enjoy the rest of your week. Til next time, take one step at a time to simplify.