Nathan's Finance Tutorial (12/8/2024)

 I've watched so many finance videos my brain is literally going to rot. Since they all say basically the same things anyways, I've decided to make an easy to follow finance tutorial here:

Also, this was written in the dms between me and another friend and I'm too lazy to make it actual proper English so please ignore all the bad formatting and abbreviations.

1. get a high paying job

-This is ur cash cow. most of ur money will come from here. Only super rich ppl (millionares) get good money off of their investments

2. Figure out ur living costs

-figure out ur wants and needs

-find ways to save money whenever u can

-live beneath ur means (spend less money than what u could technically spend at ur pay grade)

-avoid lifestyle creep (same thing as above, basically means to not spend more and more money as u get more money.

ex: getting a raise and immediately buying a BMW)

3. cash cow pay - living costs = amount u can save. this is an important number

4. set aside an emergency fund

-if ur poor -> living costs of 6 months

-if ur doing kinda better (stable job, maybe parents can help a little bit, etc) -> 3 months

-if u have enough support where like ull be ok even if everything in ur life goes to shit (car breaks down, lose ur job, house burns down or something) -> u can do 0 months, kinda risky tho

5. determine how much cash u want liquid (aka in savings accs, checkings accs, etc)

-kinda based off of ur emergency fund + any money u need on like a monthly basis + savings for a big purchase

example: i have 5k in my emergency fund, i spent 2k a month using credit cards, and im saving up to buy a car

-> keep 5k liquid + 2k to pay off cards + some number that u build up to pay off the down payment for ur car

6. put all the rest of ur money into savings

this is the order to do it in:

-401k -> always contribute at least to ur employer match (ex. they match 4%, contribute at least 4%)

-Roth IRA -> put the rest of ur money in here

-HSA -> put more money in here after

any money left over -> throw it in a brokerage and then just buy some mutual fund or etf and let it grow

and thats it 🙂

 
Extra notes:

the single best way to get rich is to get money somehow. for most ppl, this is a good job

the second best way is to reduce ur spending.

the third best way is investing

-ive been investing for like 3 months and ive made like only like 200$ lmfao, this is like literally nothing compared to how much I make with my job

in like 10 years thatll probably change, but it takes 10 years to get to that point so focus on getting a good job its so much more important for ppl like us

401K is best bc u get free money from ur employer

Roth IRA is second best bc u can withdraw it tax free once ur 65

HSA is third best bc even though u throw money in there tax free and withdraw tax free, u can only use it for healthcare

some ppl dont even have an hsa lmao, it depends on ur healthcare

what brokerage should i use?

-doesnt matter. all the same

what etf/mutual funds/stocks should I buy?

-lowkey also doesnt matter that much (LOL)

-i let fidelity monitor my 401k, and im doing my best to follow a three fund portfolio for my roth ira, and i just bought some random ass snp 500 tracker for my HSA cuz that shit dont matter

also, while finance is cool and interesting and fun (mostly), its important to still spend money. money is earned to be used, and when it wont matter if u have 100 million when ur 70 yrs old and u cant even spend it all.
so if u have like a concert to go to or like a shirt that u wanna buy or a place that u wanna travel to just do it, although if it really fucks ur money maybe consider it more heavily
something i saw on ig is the 1% rule, where if u make any purchase thats more than 1% of ur net worth, really think hard about if its worth it