Harness Money

The biggest mistake that people make with their money is not knowing where they are in the game. Money works similar to a video game. You begin the journey in the field and then go conquer the big bad monster and there are lots of different levels in between.

The big bad monster is your ‘retirement’ investments. That big stack of money that you should have after working for many years. I think of it like a monster because the amount is large and it is difficult to acquire. Working each day is like going into battle even if you love your work. Sometime the monster wins a few rounds of the fight. But ultimately you can defeat the monster and your reward will be waiting for you.

Level 1: Building a Foundation

My game started at $0.

I was broke after college and had to take several different jobs to earn money.

Luckily I never went into debt, but it also took a long time to find a decent apartment and car and job. But I was just at the beginning.

I never went into debt, but I never made very much money either and was always struggling to pay for things I needed like a new bed or healthcare. For a long time I did not want to deal with my finances, because I knew that I did not have much there, but I was shortchanging myself.

It was not until I sat down and laid out my numbers that the game really began. I saw where I was and then I opened a savings account and put $10 in. And then I added more each month and slowly it started to grow.

Level 2: Emergency Savings

Before you try and take on the real estate world or start a new business make sure you have the basics covered. Like an emergency savings account and a ROTH IRA.

An emergency fund is a savings which you add money into in case something horrible happens like losing your job. I recommend having 1-2 years worth of expenses saved in this type of account. This is separate from other savings for things like a house, car or vacation. Having this money set aside will give you a huge piece of mind and options if you decide that you do not want to work or work at another job.

Level 3: Roth IRA and HSA

A ROTH IRA is a retirement account that every individuals should have. It is an account where an individual contributes money today with earned income, the individual will pay taxes on those funds earned, but once the money has been contributed to this account the money will grow tax free. You can withdraw any of the principal which you contribute to the account at any time, but the gains remain in the account till you reach 59 1/2. This is one the best tools you may use to save for retirement.

An Health Savings Account is another great investment account. If it is right for you. It is not right for everyone. An HSA is account you where you may contribute money in order to pay for future health expenses. But you are require to have a high deductible health plan. A PMO health plan will not qualify for this account.

Any money you contribute is tax deductible and will grow tax free. But you will eventually be spending the money on health care expenses.

Make sure your money system is running properly adding money to each bucket on a regular schedule.

Once you have your system running you then get to level up.

Level 4: Brokerage Account

This is where most people try to skip levels. They go straight from bank account to brokerage account. Don’t skip steps!

Contribute to your stock brokerage account after you have those retirement accounts funded.

But this is where you get to really have fun. Make riskier investments. Buy ETFs or individual stocks. Having retirement savings locked down will give you peace of mind to take a little bit more risk.

Level 5: Real Estate

Real estate is a great way to build wealth. But it is far from passive income and there is a lot of knowledge that goes into being a successful real estate owner.

It also take a lot of money to be a real estate investor. Once your emergency fund is fully funded then you can buy a rental property, but not before. Each property that you own should have savings for maintenance and repairs allocated. If something happens to the property it is up to you to have the money to make the repairs. This can be a lot of capital.

Also have a plan.

Just like stock investments, you should have goals and a plan to get there.

Level 5.2: Starting your own business

I love entrepreneurs. I am an entrepreneur.

Also, as your going through your game and level, take notes. I have found that as I have aged my priorities have changed. Write down specifically what is happening in your life and what you want your life to look like. Then as you level up you can craft each level to fit into your life.

Don’t skip steps

When I started investing I just wanted ‘investments’. Whatever that meant for my money to grow. But then as I learned more I wanted to have bonds and income stocks and specific investments for my healthcare needs. Each layer added more protection for myself and family.

Don’t get ahead of yourself.

It can be really tempting to jump from level 1 to level 5, but be patient and your money journey will be really beautiful.

Your turn

Assess where you are on your financial journey. Maybe you are the beginning just starting your emergency savings. Or maybe you are in student loan debt. The first step is to determine where you are financial.

Know your numbers.

Next is to get clear about your goals. How much money do you want to have in the bank? What do you want your money to do for you?

The more precise you can get the better plan you can create.

Once you are clear on your goals then you can create a plan to get there. It may be discouraging at first if you think your goals are far off in the future. But remember that money compounds once you start down the path to financial freedom you pick up momentum along the way and reach goals faster and faster.

Keep learning

Warren Buffett is in his 90’s and still learning about different investments. He invested into Apple and Activision Blizzard. Do you really think he knew much about video games?

He kept learning and processing new information.

You need to do the same.

I’m still learning and finding new levels, like increase my business revenue and writing articles etc. Never stop growing your knowledge about your money. There is so much more out there waiting for you.