Whether you realize it or not, sometimes the smallest actions can lead to life changing results. For instance, swapping out that can of Coke for a bottle of water can be the difference between having a 40 inch waistline or being in impressive shape. Alternatively, giving up one hour of video games a night could be the difference between losing your scholarship and graduating with honors. These same minor changes can result in massive steps forward in our finances too and as such I want to share with you the 3 things that changed my financial life forever!
Number 1: Tracking My Financial Progression
My world famous saying is “if you ain’t tracking, you ain’t stacking” and while I live by this rule religiously today, this wasn’t always the case. You see, back in the day my money management practices were lackluster at best. Perhaps my financial negligence was due to my frustration with my income at the time or was the result of laziness, but I never really gave much thought to where I stood financially. Now, don’t get me wrong, I wasn’t a total delinquent with my money. I’ve never gotten myself in serious credit card debt or done any permanent damage to my credit but I have to say that I was getting in my own way when it came to getting ahead financially.
Then, one day I got the financial wake up call that changed my life forever. I was around 25 at the time and was back on the dating market. After getting my bearings and lining up a few dates, I thought it would just be a matter of time before I found my future partner! I mean, who wouldn’t want to date a guy like me, right? Well, apparently the answer to that question is, every girl I went out with. What caused the dates to go south? There was one simple question that sank my battleship every time it was asked. When my dates would ask, do you have your own place, I would sink into my chair and admit that at 25 years old I was still living at home. This was a total game killer however after getting rejected time and time again due to this same impediment, I knew I had to start taking my money game seriously. So, what did I do? I created a system that ensured I started to build up my financial position to the point where I could buy a house and kiss my childhood bed goodbye!
This is when the DIIS system was born. After having been mocked, or dissed relentlessly by my dates, it’s only fitting that the acronym for my financial review system is DIIS which stands for Debt, Investments, Income and Savings. The goal of this system is to ensure that you are constantly progressing monetarily by continuously being reminded of where you stand financially. To use this system, there are three steps you must follow.
Step one is to determine baselines for each of the four pillars in this system. Add up your debts, total your investments, determine your income and review your savings. Once these starting figures are set, the second step is to create actionable steps that will get you closer to your financial goals. For instance, if you aim to save $100 by next month then create a plan to cut out $100 worth of expenses or make a bit of extra money. Finally, after a month passes, step three involves reviewing where you stand within each of these four pillars and determine if the goals you set out for yourself were achieved. If they were, create new goals and actions. If not, ask yourself where you went wrong and how you can change your approach to ensure your goals are met.
Now, you may be wondering, “Adam, did this system allow you to eventually buy a house?” and the answer is yes. By tracking all of my major financial markers, I was able to amass enough money to buy a house which now allows me to confidently say on dates that “Yes, I do have my own place” and let me tell you, that definitely hasn’t hurt my dating game.
However, I would have never gotten to this point in my financial life without primarily focusing on one of these four pillars which was my income. So let’s get into how I gained the income I needed to buy my house and exponentially raise my overall net worth!
Number 2: Implementing the $50 Rule
Over the last few years, I’ve analyzed thousands of financial behaviors of people I interact with and one thing has become abundantly clear. Most people don’t have a savings problem, they have an income problem. I mean sure, there are people who make impulse purchases from time to time or use retail therapy as a means of dealing with the stresses of their lives but generally speaking, the obstacle that impedes most people from getting ahead financially is how much money they make on a monthly basis.
I know this is the case because for many years, I was in the exact same position. You see, I have always had ironclad savings practices. From the moment I arrived in this world, my parents drilled into me the importance of being frugal. As such, I would only ever buy something after saving up for it first and every time I got my allowance or birthday money, I would stash it away in my bank for safekeeping. In my eyes, I was doing everything right and once I grew older and got my numerous degrees and designations, I figured it wouldn’t be long until I was living the good life! Boy, was I wrong.
You see, after spending many years and thousands of dollars obtaining my post-secondary education, I had some pretty high expectations for what I would be earning when I entered the workforce. Unfortunately, my expectations were met with a paltry $40,000 salary and this was the moment when it hit me that making money was no easy task. After 7 years of studies and three degrees to show for all the time I had put in, I was still barely making enough money to cover my bills every month. Let’s just say that this realization hit me pretty hard. Fortunately, I’m not one to give up easily and as such I knew I had to find a way to make more money if I ever wanted to see my finances start moving in the right direction.
Oddly enough, around the same time that I had what I call my “income epiphany”, I was a bit on the bigger side after having bulked up to put on more muscle and needed to lose around 40 pounds to get down to a more lean physique. I’ll admit, the thought of losing 40 pounds was intimidating but given that I had lost weight before, I knew I could take it one small step at a time. So, what did I do? I started doing cardio to burn off the fat. However, after a while, I noticed that doing the same 30 minutes on the treadmill ceased to lower the number on the scale. This prompted me to add an extra 5 minutes on the treadmill and what do you know the weight started coming off again. This stall and adjust process worked wonders for my weight loss progression and one day on the treadmill it hit me, “what if I use this same approach with my money!”. This is where the $50 rule was born!
The $50 rule states that each month, you should aim to increase your overall income by $50. Now, you may be thinking to yourself “$50, that doesn’t seem like a lot!” and that’s the point. If I told you that next month you had to make an extra $3,000 you would probably have a mental breakdown in front of me but being told to make an extra $50 wouldn’t even have you breaking a sweat.
Now, the sneaky part of the $50 rule is that it does in fact start to add up quite dramatically over time. If you continuously earn an extra $50 over your previous month’s total, in just a year’s time you’ll have made almost $4,000 in extra income! I can tell you first hand that implementing this money rule into my life has allowed me to put away more money than I ever have before and next I will explain how I went about making this extra money and the benefits I realized when doing so!
Number 3: Earning Outside My 9–5
I’ve already told you that my career didn’t exactly start off with a bang when it came to my income and while I was downright pissed at the time, in hindsight it’s been an absolute blessing. The final element that has changed my financial life forever has been looking past a job when seeking to earn more income. Now, don’t get me wrong, there is nothing wrong with having a 9–5 job and for 99% of people, this should be one of the pillars of their money making plan. However, there are some inherent limitations to this income generation model which I’m glad I realized sooner rather than later.
What are these limitations you may be wondering? Let me explain. The 9 to 5 income model suffers three major limitations for you as an employee. First, you’re trading time for money which means that if you don’t work, you don’t get paid. While this wouldn’t seem like that much of an issue for most people, the fact of the matter is life is full of surprises and your ability to competently do your job could be compromised at any time. Second, getting raises and promotions is out of your control. You can be the best employee your company has ever seen but if your boss doesn’t like you or your business is going through tough economic times then you can kiss that pay raise goodbye. However, let’s say you do get a raise. Congratulations! I’m sure that 2% raise is going to dramatically change your life. Not! The final issue with making more money through your job is that most companies give raises of between 2–5% which after inflation means that you’re left with enough money for two tanks of gas and your Netflix subscription for the next six months.
Once this realization smacked me in the face, I knew I had to look outside my current working world to make more money. For me, I turned to two primary means of generating extra income. First, I started my YouTube channel Betterment Boss. Starting this channel has been one of the best decisions of my life as it has allowed me to not only raise my income significantly but has given me opportunities to help others improve their financial IQ at the same time.
My other means of generating more income is through freelancing. By offering copywriting and animation services to clients, I have been able to close numerous deals a year and again generate income to supplement what I presently earn at my 9 to 5 job.
Now, the obvious benefit of making more money via these two means is well — making more money. However, the benefits run deeper and I want to share them with you because they are the real reasons why this has been such a life changing event for me.
First, making money outside your 9–5 gives you an amazing sense of financial confidence. Because you’re likely going to have to learn new skills to make more money, you will be forced to grow as a person and knowing you have the ability to generate an income from nothing is powerful.
Next, there’s the ability to save and invest. Do you think I was saving and investing thousands of dollars a month when I was making $40,000 a year? Hell no. But, once I started to supplement my income through my online businesses, my ability to save and invest skyrocketed and this has been a game changer for my overall financial position.
Now, last but certainly not least is financial security. As we saw during the pandemic, no job is safe. As such, by having numerous income streams that you rely upon, even if you lose your primary job, you can have other means that will keep you afloat while you get back on the job hunt grind.
If you ask me, all these benefits make earning income outside your 9–5 job a no-brainer and I can personally attest that doing so has dramatically improved the quality of my life hence why it’s one of the three things that has changed my financial life forever!