Assuming your income and assets are reasonably well funded, hire a hourly rate personal financial planner. Many finance books I've read failed to mention INSURANCE (life, disability, umbrella, etc.). In my view, insurance is paramount to secure your long term future.
If you are still starting out, here is the general guideline:
1. pay yourself (emergency fund first, then retirement funds (401K, IRA), after that, special funds such as wedding, down payment, etc.)
2. protect yourself (term life if you have kids, medical, rental or home owner insurance, etc.)
3. pay your debts (pay off debts with the highest interest rate first, that's usually credit cards, student loans, etc.)
4. pay it forward (sponsor some worthy causes. I do children international for 20 years now. Open source, etc.)
5. be frugal, but enjoy life (frugal is good, but sometimes, it's good to enjoy finer things every now and then)
6. the remaining money goes to portfolio focus on growth
Obviously there’s an infinite rabbit hole you can go down, but what I do is pretty straightforward.
Short term money: stored in a relatively normal checking account.
Mid term money: United States Treasury Bills. They typically beat bank interest, are just as safe (if not safer) as an FDIC bank account, and depending on where you live have a lower tax burden than regular bank interest.
Long term: Vanguard ETFs. I don’t have a ton of interest in spending hours every day trying to beat the market. I figure that as long as I can wait out bad economies, it’s better to invest in the total market than basically anything else. If you’re willing to hold onto the ETF longer than a year, typically the capital gains tax burden is lower than the income tax you’d pay in bank interest. Something like VOO or VTI are fairly low risk and since they’re not human-managed they have really low fees.
I am unemployed right now, but typically when I get a paycheck I immediately put 10%-15% of it into some form of the above savings, before I pay any bills. For psychological reasons I don’t really understand, if I pay my bills right away I never have any money left, but if I put 10%-15% aside immediately I still manage to pay my bills while also having savings.
I‘ve read a few dosen value investing books and would advise to read Richer, Wiser, Happier by William Green. It has a bit of a sketchy title but is actually a very good summary. The takeaway is: if you are as dedicated as these value investors and want to pick stocks then go and pick stocks, but for most people index funds are probably the way to go. The book also talks a bit about philanthropy.
Most importantly it talks about the mindset that you need for good financial planning. A very long-term and patient mindset. People who prefer to spend more than they own, for example, will not be suited for investing since they typically can’t wait long enough.
I replaced YNAB with TillerHQ. It dumps transactions into a Google Sheet/Excel and came with some standard templates. It's less opinionated than YNAB but way more flexibility.
E.g., I have formula-driven sheets that:
1) Aggregate taxable transactions across accounts that I can send to my CPA to prepare my quarterly tax payments
2) Aggregate account balances and period-over-period changes for my living trust that I send to my lawyer every year to include in the trust's documents
3) Flow into calculations for FiRE
4) Flow into aggregated/filtered views that I can share with specific family members, like showing what's in 529s I have for some relatives
and it's entirely in a spreadsheet in my account -- if they go out of business, all I have to replace is transactions import. The rest of the tool is forever mine.
Spend less than you make.
Stack rank your expenses and optimize from the top down.
Take advantage of 401k match.
Volunteer your time and preferably your brain.
Invest in index funds.
There are only two other things that I do on top of that: I practice "pay yourself first" -- that is, I take 10% off the top of every dollar that comes my way and park it where it's really hard for me to get at it.
Then, I practice "repay your neighbors" -- that is, I take 10% off of the remaining money and use it for philanthropic purposes primarily focused on my local community (in the form of monetary donations, or the equivalent in my time). The point of this is to recognize that none of the success I've had could have happened without the support of my community, and this is a way to repay the favor.
Those two things happen before anything else -- before paying bills, investing, saving, etc.
I don't micromanage my finances, primarily because I hate dealing with money and focusing too much on it makes me unhappy.
I've been doing this for over 30 years. I've iterated to this. The first iteration was not managing my money at all.
The watershed was when I had my first real success with my own business, combined with having my first child (both happened at about the same time). That forced me to face the reality that some sort of money management was essential, and through a couple of years of experimentation, I settled on this as a balance that worked well for me.
"Pay yourself first" is something I stole from the classic book "The Incredible Secret Money Machine" by Don Lancaster. That, by the way, is the only business book I've read that I found real value in.
I feel like every company I've worked at talks about "exploring" a 401k match every year, but never makes it happen. After a merger or acquisition, they'll bring it up again but it never happens.
Quite interesting self-hosted tools with overlapping features.
Actual can also periodically sync with your bank to have your most recent transactions on the app. it works with read-only tokens.
Read widely online and find a financially-oriented community that matches your level of expertise and situation. Serendipity can play a major role. Stumbling across early on LEAP (i.e. long-term option) trading and later learning to navigate the complex world of closed end funds, helped me -- after many twists and turns -- realize a very comfortable existence. Ruthless self-awareness of one's limitations is useful. Expect to make many mistakes.
If you do delve into the beguiling world of options, so full of snares and pitfalls, at some point take the time to learn how option market making works behind the scenes. This will help provide a more seasoned understanding of why the price action of of stocks in advance of LEAP expiration (the 3rd Friday in January each year) exhibits apparently irrational behavior (often major drops, like AAPL recently) and can prove invaluable, e.g. in understanding why holding through expiration is normally foolish.
Additionally, a comprehension of the role of volatility in option pricing (part of the Black-Scholes formula) is crucial, often decisive. Enjoy the journey.
Everything flows into a spreadsheet I created that has a row for each month, and tracks my spending, income, and net worth. The data for each new row comes from a few different places.
Lunchmoney aggregates and categorizes my spending data.
My net worth is tracked in another spreadsheet that updates as asset prices change. This spreadsheet also tracks my asset allocation across my accounts, which is roughly based on the 3 fund portfolio from bogleheads (with a bit allocated to crypto as well) [0].
In terms of cashflow, I use Fidelity's cash management account, where I keep a buffer in a money market account. Income flows into this account, and bills flow out. They automatically liquidate the money market if I need more cash, which is nice.
And in terms of investing, historically I kept a 6 month emergency fund, then invested the extra every few months based on my desired asset allocation. More recently I have been increasing my cash cushion with the intent of paying off my recently purchased house in several years (since the interest rate makes it less attractive).
It was a mixed bag. Interest rates were higher, but I also had a lot more negotiating leverage than I normally would have had. The house I bought had been sitting for a few monthd, which allowed me to get it for what I found to be a fair price.
And interest rate wise, I figure I plan to pay it off early, so I'm less concerned a out the rate.
Good deal. Yeah, we recently did a small search and had a similar impression, but prices simply hadn't fallen enough in our market to justify moving forward.
- Adaptive Asset Allocation and The Intelligent Asset Allocator
- Define what your long term goal is then work backward, doing the math
- Risk isn't the risk that you lose money, it's the risk that you won't reach your long-term goal. Everything you do should aim at the goal
- Prioritize your retirement fund over house and car expenses. Make monthly deposits into a high interest savings account for house and car maintenance. Withdraw when you use the balance. Always, always contribute to your retirement fund.
- Save for insurance payments through the year in a high interest savings account, pay a lump sum at the end of the year. This way you earn, and don't pay interest.
- With investing you probably want a robo investor, and adaptive asset allocation is the way to go
After a few years managing my finance after learning that I should do it (review of my first year of full time work), what I retain is two things: Envelope budgeting, Every dollar is used, and don’t sweat the small stuff. I have an envelope for each category of spending, each goal and one for saving. My income is split between these everytime I get it. I don’t bother tracking small expenses (less than 10$) if it’s not done automatically (credit card). I used Ynab first, then banktivity, now I use Ledger.
My goal is only to track If I’m not spending more than necessary and my runway if I have no income.
Lunch Money is a beautiful little independent app for personal finances: https://lunchmoney.app/
Won't do lots of complex stuff like investment strategy and estate planning, but covers all the essentials for a personal / family budget.
Gives you a good overview of your spending, net worth over time, and lots of charts and querying functionality. Made a big difference for me. Before I was spread across a bunch of Google sheets that I rarely updated.
For personal finances, I use Microsoft Money 2004 edition, running in a windows 2000 VM. Once a month or so I go in and add all my transactions. I don't actually use it for anything, though. Spend less than you make and the rest solves itself.
Not that I’m particularly good at this myself… but it is our mission at yeekatee[^1] to help people manage their finances and invest wisely, in the long term.
Right now we offer a rather good portfolio aggregation, either via manual or automated syncing (read scraping… alas, the state of financial technology…). From basic to rather advanced figures, a lot of explanations. Market data, news, and dividends.
And finally a social network to discuss and learn with like minded folks. We wanted to do a proper Show HN in a few days actually, but I thought I’d leave it here as you could find it useful!
My household has a high savings rate, around 50-60%, so I don’t actively monitor anything monthly. A few times a year I will dump excess savings into retirement, college funds, etc.
I Will Teach You to Be Rich
Book by Ramit Sethi, is a good place to start. He has lots of great free content on YouTube you can check that out first and decide if you wanna give the book a try.
I'm using Capitally (https://mycapitally.com) which I started building to replace my 3 spreadsheets that needed constant attention and broken down quite often. It now completely covers tracking my investments - spreadsheet nr 1, still two to go - portfolio strategy and budgeting.
This is not financial advice but here’s what I do:
High level - "Earn, Save, Invest"
In order for your money to make more money you need to execute all three steps: Figure out how to make money, manage not to spend it, and produce a return from that money.
Try to optimize each step. Make more money if you can / are comfortable (deserve a raise? change companies/jobs? start a side hustle?). Spend less (make and live by a budget, cook your own food, buy used, get cheap hobbies, stop keeping up with the Joneses). Understand the tax efficiency, risks, potential returns, and effort required from different types of investments.
I take credit for none of the ideas above, they are cobbled together from various online sources. Some things to search / places to start: Reddit personal finance flowchart, The Millionaire Next Door, Index / Boglehead investing.
Treat everything as if it were a bill. My wife and I started to treat savings and investment as a bill and it has changed our psychology a lot, especially the mindset of "Ehhh don't need it. We can spend it." to "We have to pay this bill!"
I spend much much less what I make (maximum 35%). So every month I save at least 2 more months of living. Over the past 3 years doing it regularly I have enough saved for some 10 years.
Not really constant but growing maybe double the inflation?
Most of my money is invested in things that pays 2/3x inflation and are quite safe investments. Also I'm not planning on starting taking the money out yet so probably will get to 20 or more years of expenses. Then, just the profits of the money would be enough to pay my expenses.
No, pretty much the opposite but I'm reasonably frugal. Nowadays 1/3 of my income is enough to live well almost everywhere (if not everywhere) in the world. So I focus on 2 things: not spend too much and making more money.
For those searching for it, they've rebranded to Empower. I've been using them for years and they've done an excellent job.
Only downside is that there is a slight nagware aspect (only when you're inside the app though) and they do cold calls to get you on an investment plan. Then again, it's free and they have to make money somehow...
If you are still starting out, here is the general guideline:
1. pay yourself (emergency fund first, then retirement funds (401K, IRA), after that, special funds such as wedding, down payment, etc.)
2. protect yourself (term life if you have kids, medical, rental or home owner insurance, etc.)
3. pay your debts (pay off debts with the highest interest rate first, that's usually credit cards, student loans, etc.)
4. pay it forward (sponsor some worthy causes. I do children international for 20 years now. Open source, etc.)
5. be frugal, but enjoy life (frugal is good, but sometimes, it's good to enjoy finer things every now and then)
6. the remaining money goes to portfolio focus on growth