Editor's note: This column is intended for informational and educational purposes only and should not be construed as professional financial advice for your individual situation. Please consult with a financial professional before making any serious financial decisions.
I am a dad, carpenter, writer, and retired software engineer who has been living in Longmont since 2005. I used a few simple but powerful life principles to become wealthy enough to retire at age 30, and went on to start a blog called Mr. Money Mustache that has now reached over 30 million people in the past nine years. Now it’s time to take these ideas to the streets of Longmont, so send in your questions about money and life!
With the state of the economy, I am feeling stressed about my financial future. How do I learn more about best financial practices to help me grow my small savings? Where do I go to expand my financial literacy?
— Pensive in Pensacola
Welcome to American life! The bad news is, this general feeling of stress about money is very common, even in the best of times. The good news, it’s pretty easy to cure in just the way you are seeking: by learning more.
Although it can seem complicated, the role of money in your life can be incredibly simple: As long as your needs and wants are less than the amount of money you spend, you will live with a lifetime growing surplus of money - and never have to worry about it.
Now for the less obvious part: the key to this is almost always in your spending rather than your income. Because out there right in your own community, there are people who are living on $20,000 per year and still able to save half of it, and other people who are making $500,000 and spending all of it (or more!) So the first step is to streamline every single part of your existing lifestyle to cut out waste, hopefully without compromising on fun.
For example, if you are using a car to get around, is it a low cost, fuel efficient model? If not, you can sell it and replace it with one that is. Is there any way to drive it less? Can your life be arranged to allow more biking and walking, with car errands consolidated into one day per week? For the average household, streamlining this one area of life can already cut your costs by $5,000-$10,000 per year.
That’s just one category - next you can streamline housing/rent, food, utilities, restaurants and drinks, personal services, phone/internet, (especially cancel cable TV service if you haven’t already done so!), care and house and medical insurance, and so on. When I coach people through a budget like this, we are sometimes able to cut their annual spending with just the ideas from one session.
Moving on to actually answer your question, you can learn more about all aspects of personal finance from articles on my own blog (complete list here), and supplement with deeper reading from real books. Some of my favorites include The Millionaire Next Door, Your Money or Your Life, and on the investing side, The Simple Path to Wealth.
I also recommend balancing out your educational program with general life skills in the areas of happiness, mindfulness and physical health. For this, you could tune into a fantastically written blog called Raptitude.com by David Cain, and The Primal Blueprint by Mark Sisson.
Hopefully this is enough to get you started. I find that every blog and book always leads to a dozen others, so this should be plenty for now. Good luck and let us know how you are doing in a few months!
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