The Personal Finance Podcast - How to Build Wealth on a Low Income (You Can Do This!)

Episode Date: February 14, 2024

In this episode of  the Personal Finance Podcast,  we are going to be talking about how to build wealth on low income. How Andrew Can Help You:  Don't let another year pass by without making significant strides toward your dreams. "Master Your Money Goals" is your pathway to a future where your aspirations are not just wishes but realities. Enroll now and make this year count! Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining  Index Fund Pro! This is Andrew’s course teaching you how to invest!  Watch The Master Money Youtube Channel!  Ask Andrew a question on Instagram or TikTok.  Learn how to get out of Debt by joining our Free Course  Leave Feedback or Episode Requests here.  Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at  shopify.com/pfp Monarch Money: Get an extended 30 day free trial at monarchmoney/pfp Thanks to Fundrise for Sponsoring the show! Invest in real estate going to fundrise.com/pfp Indeed: Start hiring NOW with a SEVENTY-FIVE DOLLAR SPONSORED JOB CREDIT to upgrade your job post at Indeed.com/personalfinance Thanks to Policy Genius for Sponsoring the show! Go to policygenius.com to get your free life insurance quote. Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/  Links Mentioned in This Episode:  The Easiest Way To Invest: Target Date Retirement Funds The Complete Breakdown of The 2-Fund Portfolio (The Warren Buffett Portfolio) The Complete Guide to Investing in ETF's (and How to Become an ETF Millionaire!) Direct Indexing Vs. Index Funds: Which Is Better? -Money Q&A Connect With Andrew on Social Media:  Instagram  TikTok Twitter  Master Money Website  Master Money Youtube Channel   Free Guides:   The Stairway to Wealth: The Order of Operations for your Money  How to Negotiate Your Salary  The 75 Day Money Challenge  Get out Of Debt Fast  Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

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How do you and welcome to the personal finance podcast? I'm your host, Andrew founder of mastermoney.co. And today on the personal finance podcast, we're going to be talking about how to build wealth on a low income. If you guys have any questions, make sure to email me or hit us up on Instagram, TikTok, Twitter, at Master Money Co. And follow us on Spotify, Apple Podcasts, or whatever podcast player, You love listening to this podcast on it. If you want to help out the show, consider leaving a five-star rating and review, and make sure you follow this show on your favorite podcast player.

That makes a massive difference. We cannot thank you guys enough for leaving those reviews and following this show so that you can get more great content. Don't forget, you could follow us on YouTube as well on the Androgen Cola YouTube channel. That's where all the personal finance podcast content is. And so you can also watch that on YouTube if you'd like. So today, we are going to be talking through how to build wealth on a low income. And this is a subject that I am so incredibly passionate about because part of the reason why we started this podcast was that we believe anybody in this world can build wealth. And I envision folks who may be in a very poor situation being able to find this podcast, this free podcast, they could go out and they could listen to and gather information so they too could learn how to build wealth and absolutely change their family's tree.

Because if you're listening to this podcast, I want you to hear me out when I say this. You can change your family tree. It doesn't matter if your grandparents were poor, if your great grandparents were poor, if your parents were poor and your family tree has had folks come all the way down the line where nobody's been able to build wealth. You've been stuck in this cycle. I'm going to tell you right now, you have the opportunity to make that change. Now, if you are in a situation where you have a low income, or maybe you're just an entry-level

graduate and you're starting off with an entry level job. You can absolutely build wealth. And I'm going to take you through the steps on exactly what you need to be doing in order to build wealth and how to navigate this crazy financial world. There is so much bad information out there, but really what it comes down to, and I'm going to make this simple right off the top, what it comes down to is how much can you keep of your wealth. Now, when you are living in a situation where your income is low, you're trying to get day to day, week to week, month to month. You're not thinking about this massive future. You're trying to just get by to the next day. You're trying to get to that next meal. And so it's a very difficult thing for a lot of people who

teach personal finance to understand you just need to get to that next step. That's all you need to do is get to that next step so that you can go forward in building wealth. So the first thing I want you to do is as we talk through some of this stuff, I want you to change your mindset. Because if you've grown up in poverty situations or you've grown up in middle class situations where nobody really ever had money. Maybe you have parents and, you know, they have a couple hundred thousand dollars saving their retirement. They're living off Social Security. They have no retirement plan whatsoever. And you have folks in your life who just have not been the best financial influences. And maybe they have financial opinions. I want you to remember this. Not everybody who you love

is going to have the best financial opinions. And so you got to realize this early on. How you were raised is a major impact on how you treat money. But I want you to change your mindset because you absolutely have the ability to build well. Let me give you a couple of fantastic examples here. One is my favorite overall. And I remember when this story actually hit the news. I was watching CNBC, which I rarely ever do now, but I was watching CNBC and they did this feature on a guy named Ronald Reed. And if you've never heard of Ronald Reed, Ronald Reed was a gas station attendant and a janitor. Now, this is a guy who worked very low-income jobs. And he would work very hard, but he worked very low-income jobs.

And Ronald Reed had a very modest appearance. He had plain clothes. He had clothes that you would think a janitor would wear. And he was someone who did not show off whatsoever. But what's amazing about Ronald Reed is with those two careers. Think about that career selection there. With those two careers, he was able to build a massive amount of wealth. In fact, Ronald Reed died in his 90s.

And when Ronald Reed died, his entire family had no idea how much wealth he had. and they were absolutely shocked to find out what his net worth was. He died with $8 million in the bank. Why did this happen? How did Ronald Reed actually do this? Well, first of all, Ronald Reed started to invest very early, but he needed to just invest in anything. They didn't have crypto back then and he was just buying Bitcoin when it was a dollar,

and now it's $60,000. What he did was he found companies that have been around for a very long time and invested in those companies for the long run. What does that mean? He invested in blue chips, So if you don't know what a blue chip stock is, these are companies like railroads, utility companies. Everybody needs utilities. Utility companies have been around forever. He invested in companies like Procter and Gamble, which makes pretty much every single household product you can think of. He invested in companies like JP Morganer, which is Chase Bank. And all of these investments allowed him by 2014 to amass $8 million on a janitor salary. Now this is one example that is absolutely amazing. Here's another example. A guy named Jeffrey Holt. And Jeffrey Holt was a groundskeeper at a mobile home park. I'm giving you these extreme examples because this is really, really powerful

stuff. And what he did is he lived a really frugal life. He actually lived in a mobile home. And he was very well known for wearing old clothes. He would actually get around town sometimes in a lawnmowers, what they would say, which this is not a life any of us would want to live. That's not what I'm saying here. But what he did was he lived really frugally. And he was able by investing slowly over time to amass a fortune of $3.8 million. And this is just another fantastic example of someone who had a low income and they were able to build wealth because they made the right decisions. And I'm going to teach you how to make the right decisions today so that no matter what your income is, if you pair time,

you pair a little bit of discipline and you pair the fact that you have the potential to be able to build wealth and you can change your mindset, it is absolutely going to change your life forever. Now, one thing I want you to do is as you begin this journey to build wealth on a low income, I want you to commit to doing something. I want you to commit to reading some personal finance books and I want you to commit to continually listening to this podcast because the stuff that we talk about on this podcast is stuff that if you do this over time and you do this consistently over time, you are going to be able to build wealth. I can promise you that. but you have to have the discipline to continue to do it over time.

And then there's personal finance books I want you to commit reading to. Number one is the simple path to wealth. The simple path to wealth is a book written by J.L. Collins. And this is the perfect example of how to simplify your financial situation and learn how to build wealth. This is one of the best personal finance books out there. Okay. Number two is a book called The Millionaire Next Store.

Longtime listeners know, these first two books I absolutely love. and the millionaire next door is going to help you learn how do millionaires actually act. What do are real millionaires do? Not these fake millionaires that drive Lamborghinis and Ferraris. These are folks that may have high incomes, but a lot of times, the majority of them do not build wealth. So I want you to think through what are real millionaires to. Number two is that millionaire next door. Those two books alone are going to get you so much farther than the majority of other books out there.

And if you want a couple of other recommendations, we have a high performance. book club in the Mastermoney newsletter. So mastermoney.com slash newsletter and you can sign up and every single week when I sent out that newsletter, we also talk about the book that I am reading in that newsletter. Sometimes it's personal finance. Sometimes it's a business book. But when we talk through that, if you follow that track or you look at some of those books on there and you pull some that look interesting to you, those are going to be really,

really powerful. A third book I want you to read is I will teach you to be rich by Ramit Sethi. And if you read these three books, I think that you will have enough knowledge to understand how wealth is built. These are three fantastic books that are going to teach you how to build wealth. But I want you to read those three books, commit to reading those three books, commit to continuously listening to this podcast, make sure you're subscribed to this podcast, and we will get you set up perfectly. So I hope you're excited. This could absolutely change your life. So without further ado, let's get into it. All right, so number one,

the first thing we want to do is we are going to develop out our spending plan and we're going to find our baseline. Now, your baseline is what you need to spend every single month in order to get by. This becomes incredibly important when it comes to living on a low income. Because what you're thinking about, like we talked about at the top of the show, is you're not thinking about month to month or year to year. You're trying to get by to the next meal and or you're trying to get by to the next paycheck. And so a lot of times, you're trying to figure out how do I break this paycheck to paycheck cycle or what do I need to do if I have this low income in order to build wealth? Well, first, we want to make sure we have a spending plan in place. Now, you're going to

hear me talk about a couple of different budgets if you've listened to this podcast for a long time. One I talk about a lot is the reverse budget. And the reverse budget is fantastic for people who have a little bit of extra wiggle room and they're able to budget without having to get a spreadsheet out or using a tool like YNAB or Rocket Money or all these other great budgeting tools. And when you look at something like this, it becomes very apparent that if you have a low income, you're going to have to budget. And I want you to budget in a system that actually looks at every single dollar in cent. This is not something you have to do forever because as we go throughout time, you're going to get a cadence and you're going to get a rhythm and understanding your finances.

But I want you to do this first. You have to have a budget in place to understand where everything is going. Because you may not even be living on a low income. You may just be spending too much of your income and you're going to find newfound dollars. But if you are living on a low income, every extra dollar matters. And so you want to make sure that you are a good steward of every extra dollar. And the only way to do that is to track your spending. Now, I don't want you to think about this as restriction.

Here is the powerful part about a budget. A budget is actually freeing. Why? Because you are telling your money exactly where to go. How amazing is that? Instead of your money just flying out of your hands, you can actually tell your money where it needs to go and have power over your money. There's power in budgeting.

and there's power and controlling your spending because then you can take your extra dollars and put them towards the things you value. This is how money is earned, and this is how you build wealth, is finding those extra dollars and putting them towards the things that you value. What if you could take more vacations?

What if you could start to invest for retirement? These are things that could absolutely change your life. So when we do this, when we start to budget, we are first going to find our financial baseline. This is the number that we want to get to where we figure out, hey, what are the things that I absolutely need to spend money on every single month? These aren't the extra discretionary things like eating out or all those different things.

This is your financial baseline figuring out what are my fixed costs or what are my costs that I really need to make sure that I have this amount of money in my account in order to fund my lifestyle. And so when we do this, you can collect bank statements, you can look at credit card statements or bills for the past few months and get this comprehensive view of it. Now, we are working on a tool to make this super easy for you where you're just kind of filling out the numbers inside of this tool. And this is going to be really, really helpful for, I think, a lot of people. And then what I want you to do is look at all of your regular bills. So this is going to include your

debt as well. So I want you to look at like rent or mortgage payments. Your utilities are something that you're going to have to pay. Now, think about the high end on utilities, average that thing out. And so they may vary every month to month. And if they don't vary month to month, that's going to be a lot easier. Think about things like your car payment, your insurance premiums. And if your insurance premiums over the course of six months, take that six months, break it down and divide it by six and make sure that you have that money in your budget month to month. You don't want to get to the end of six months and all of a sudden you have this huge insurance bill hitting and then you have to pay it all at once. How stressful would that be? Instead, you save it month to month and then the money

is just there. So next, what we're going to talk about and make sure you have your insurance premiums in there, your loan payments in there and any other regular payments you have that are available to you. Then, obviously, groceries, anything like that, all need to be accounted for inside of your financial baseline. I want you to think through that and have that financial baseline. All your necessities need to be in there and what you need to live on. Because this is a really, really important number. Because when you have these expenses all added up, you're going to figure out this is the number that I at least need to get to every single week or every two weeks or every month that's going to allow me to live. Then I have this number.

and now I can figure out what do I want to do with the extra income that comes in. And so as you do this, find your baseline, figure out what that number is. And I'm going to show you what to do with that extra money next. If you have money left over, if you don't have money left over, I am also going to explain exactly what I want you to do as we go through this process. And we're going to jump into that right after this break. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy.

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And the elephant in the room is the fact that you have a low income. And the fact that you have a low income can be something that you have the opportunity to change. Now, I am no way, shape, or form saying this is easy. Because increasing your income at times, especially if you have a low income, is not an easy thing to do. And I do not want you to think like all these gurus on TikTok or Instagram that you You need to buy 64 houses, and then your income problem is going to be solved in real estate.

No, what I'm talking about here is that we need to figure out a way to possibly earn more. If you just looked at your financial baseline, we just ran the numbers, for example, and you went through that process, and your needs and necessities are more than what you make, then we have ourselves a real income problem. Now, income, I want people to really, really hear this. Income is the part of the equation that has talked about less when it comes to personal finance, is the catalyst to building wealth, meaning that if you focus on increasing your income, which is where I really want you to focus your time and energy over time, but if you focus your

energy on increasing your income, that is what is going to get you to real big wealth numbers. Well, you may ask yourself, well, how the heck do I increase my income? I'm just working as hard as I possibly can. I have two jobs. I have three jobs. I don't know what else to do. This is something that can be very difficult. So what I want you to think about here is first, where do you spend most of your time? What is your day job? Maybe you work in a corporate office in a cubicle, you have an entry-level job. Well, that is a situation where we need to figure out what do I need to go to get the next level? What do I need to do to get promoted at my job? The same thing, if you're working for a grocery store, for example, in your local town.

What do I need to do in order to increase my income? Do I need to gain special skills? Or can I work towards becoming an assistant manager and then a manager? And what kind of things do I need to do in order to get there? Look at the people above you. How did they get in that position? So for me, when I first started working in my entry-level job, I was making $30,000 a year. And for me, I very quickly realized I'm living paycheck to paycheck. So I looked at the people who were one level above me, two levels above me, three levels above me, and said, hey, what skills do these people possess that allowed them to get to that manager position? And so I went through and said, hey, I am in the financial world. I'm a financial analyst.

Well, the person right above me is really good at Excel. and they're really good at creating these specialized reports for upper level management and executives that make them look really good. And in addition, they have these skills that nobody else in the company has. So initially, I worked on my Excel skills. Then I looked at some other people above me. I said, hey, this person is really good at corporate politics. The last thing I ever want to work on is corporate politics. So I figured out a way, hey, how can I work on this? Pulled out a book called How to Win Friends and Influence People. It's a controversial book now for some reason. But that book does have some great insights in there that you can utilize when it comes to corporate politics. Then I said,

hey, what does some of these other people have? And I started to work on my sales skills. I would take sales classes. I actually went to seminars and took a week-long sales class to learn how to sell better. And these were just different skills that I was trying to gather. And then I would have the big meeting. So if you've never heard our system where we talk about how to get a raise at your job, we have an e-book. So if you go to mastermoney.com slash resources, you're going to see an e-book called Finally Get That Race. And what that ebook talks about is my exact six-month system that is going to allow you to get that raise. It's absolutely free, 100% free.

So I want you to check that out if you've never read that e-book. It's not very long. I think it's 30 total pages. And when you go through that, it is my exact six-month system. And what this is going to teach you is, A, how you and your boss can get on the same exact page. And over the course of six months, you're going to be talking to your boss on how you can get a raise.

You're going to set up parameters on how you can actually go out and get a raise. And then you're going to achieve that, but going out. and doing it. And so it's a situation where instead of you walking into your boss's office and saying, I want to raise and I want to raise now, this is one where you're going to go out and you're going to earn that raise. And they're going to be happy to give it to you because you're increasing productivity. You're increasing the bottom line at your company. You are helping out the business that you work for. And so this is the way to get a raise at your day job. In addition, there's a lot of other things that you can do. I could talk about side hustles until my lungs turn blue. One thing that I did when I was

earning that $30,000 per year is my wife and I started a Christmas tree stand. It's a very weird side hustle to start. But that was the first side hustle we start in a big foray for me into business. Then I would sell things like snapback hats on eBay. I would do retail arbitrage with different stores, meaning I would go into stores. I would scan products and see if I could make a profit on Amazon or eBay. And I had these side hustles galore. I had blogs that would earn a little bit of income. And I started to add different things to my side hustle bag that allow me to increase my income over time. Then I would get those raises and then I would start other businesses and I failed in so many different businesses until I found businesses that worked. Now, one thing I want you to understand

is if you've done a couple of side hustles and those side hustles have not panned out yet, you may just not have the best side hustle for you. I'm not a big fan of like driving for Uber. Those are good for like really quick. If you need money now, then those are great options. But what I really want you to do is find a side hustle that may be able to even turn into your full-time job. So we'll do a separate episode on some of the best side hustles that I'll I see right now and some creative options that may be out there so that you can do this. One great leverage point, though, is online because you can get home from work and maybe you only have an hour or two per night. Then you can go out and work on that side hustle online,

and this is going to help you leverage your time. I like side hustles that allow you to leverage your time and earn more income over time that could potentially become your full-time thing or really, really help you out with your income over time. So those are just a couple of ways to earn more. Now, another one, you heard me talking about going to different seminars for sales, for example, and working on my Excel skills. I actually bought an Excel course. I would buy a lot of different courses when I was trying to increase the skills that I have. But this is one big thing that you need to do as well is find income producing skills like this.

So thinking through, let's say, for example, you're a nurse. And usually nurses don't have low incomes. But if you are a nurse and you had a low income or you're someone who just works at a hospital and you want to become a nurse, well, maybe you need to go out there. get additional certifications. Maybe you work in a blue collar industry. What certifications can you go out and get that would allow you to make more money? For example, my in-laws own this company that is a bridge painting company.

And inside this bridge painting company, there are different certifications where if people get certain certifications in this blue collar industry, they can go from making $1,000 a week to $4,000 a week very quickly just by getting this one certification because it's so incredibly rare. So if you're in a blue collar industry, maybe that's something you can do is find certifications or gain some of those skills as well. What things can you do in your industry that are really, really powerful? Now, another great idea is maybe getting a second part-time job. Now, I'm not just talking about any second part-time job. I'm talking about something that you're really,

really interested in. So for me, for example, one of the businesses that I own is I own a pickleball facility. And so we have folks in this pickleball facility who are incredibly passionate about Pickleball. And so what they do is they come into our facility and say, hey, I would just love a part-time job. I just want to teach pickleball. I'm super passionate about it. I'm actually very good at pickleball. Can you hire us? And we'll go ahead and teach for, you know, five, 10, 15 hours a week. Guess what? The folks that do that, they are very good at it and we pay them very well. And so you can find side hustles around things that you're passionate about in the same space. You know, if you're into yoga, I talk about that all the time. If you're into yoga, why don't you become a yoga instructor

you're part-time. You're possibly already going to yoga classes. You can do your yoga and get paid at the same time. Or if you're really interested in fishing, why don't you become a part-time fishing captain one day a week on Saturday or Sunday and you can earn extra income that way? And so these are things where if you have to get a second job, why don't I get a second job surrounding your interest? Another great thing that you can do with a second job is that you can go out and get a second job in an industry you're interested in. So maybe you have this job right now and it's a steady income coming in. It's a low-paying job, but you have steady income coming in. And there's another industry that you're very interested in getting into, but you're not sure if you're going to like it. Why not take that second job in that

industry and see if you actually like it? Or if you can find a person who could be a great mentor for you one or two days a week. And you take on maybe a low paying internship as a second job, but you're earning that income and you're learning a ton. These are all very, very powerful ways to increase your earning potential over time. So I'm giving you a bunch of ideas out here. I'm shooting from the hip, but at the same time, these are all very systematic and you can pick one of these paths and go with it or you can do a couple of different things. So your personal and financial education are really, really powerful in helping you earn more. But I want you to work towards earning more because this is the way that you can truly make a change. Because really, when it comes to building wealth, it's the

difference between how much you earn and how much you spend. The difference between how much you earn and how much you spend is called the gap. The gap is where wealth is built. So you've got to think through this and say if I can save some of what I earn and get me started here, that'll be the catalyst to actually allowing you to produce some amazing results. Now, let's get into the next step, which is if you are on a low income, one thing you need to do first when it comes financially, outside of working towards earning more, that's a big, big piece to all of this, but that is actively working as you're completing some of these steps, is what do you do with those extra dollars? You found your financial baseline, you are budgeting, and what do you do with that extra

chunk of money that you just produced. Maybe it's $100. Maybe it's $300. Maybe it's $500. I don't know how much extra money you have. After you run those financial baseline numbers, figure out how much extra money you have. And if you have extra money, this is what I would do with that extra money. First, I would start to build my emergency fund. Now, an emergency fund, if you don't know what that is, it is money that you put in like a high yield savings account. A high yield savings account is an online savings account that allows you to have higher interest rates then you would by just going to a brick and mortar bank. Something like Chase or Wells Fargo would not be the options I would choose.

I would go to a high-yield savings account like Ally or Capital One or CIT bank or any synchrony bank. There's a bunch of them out there that are fantastic. And they're going to pay you a four and a half to five percent for you to save this cash. But you have to have an emergency fund in order to be able to build wealth. Why? Because things in life are going to happen. Life is going to happen. Your car is going to break down.

And when your car breaks down, if you have no cash, at all in your entire life, you will never get ahead. You will always be going backwards and you will be living in that paycheck to paycheck cycle forever. The emergency fund gets you out of the paycheck to paycheck cycle. In fact, studies have been done that folks who have been living in the paycheck to paycheck cycle for the longest are folks who have never had an emergency fund. The reason for that is so many different things are going to happen to you in life. In fact, this month alone, I don't know what is going on in 2024.

I've had 15 different things happen to me where I've been paying up. unexpected expenses out of pocket. And the only reason why I can handle that is because I have a big emergency fund. And that is what I want for you. I want you to have a fat old, juicy emergency fund that you can pick from anytime anything happens to you in life as well. You know why? I cannot tell you how much less stress I had in my life once I had an emergency fund. The car would break down. Ooh, I'm not stressed. I got the money just there. My house would have an issue. I'm not stressed, I got the money just there. What happened to me a bunch of times this month is my dog is 12 years old. She got sick. I've had thousands of dollars of vet bills, but the money was just there.

And this cycle goes on and on. And you have money just there. So I want you to put money in your emergency fund. Now, how do you do that? What is the number I need? You're going to hear people like Dave Ramsey out there say, you need a $1,000 emergency fund. Some people will say, just, you know, get it started here. I've heard people on TikTok say, well, the ideal amount of emergency fund is $20,000. What is the actual number? What do you actually need? Well, it actually depends on how much you spend. So what you want to do first is I want you to aim to obviously get that first $1,000

just to try to get some money into your emergency fund. Now, for some people, that might take a couple of months. For some people, it might be one month. It depends on what your income is. Then after that, I want you to target your first $5,000. The average emergency right now in the U.S. is a little over $3,000. And so if you have $5,000 in that account, you can handle a couple of emergencies.

Maybe you have a surprise medical bill. Maybe your dog gets sick. Maybe you have a leaky faucet. Maybe your washing machine goes down. And all of these happen to me this month all in one month. Maybe your kids get really sick. And so you have a bunch of medical bills surrounding that. And so all of this is to say that when this happens to you, you have the money just there and you can handle it.

Then I want you to go to that $5,000 target first. Then I want you to start to grow this emergency fund to three months of your expenses. It's really important to do this. This allows you to protect yourself in case you ever lose your job. So what are emergency fund's biggest purpose is, is that if you lose your job, you are going to be able to fund your lifestyle still, even if you lose your job. So this is something that I think is really, really powerful for most people. Then the final goal when it comes to your emergency fund is first you get to your first thousand,

then you're going to get to 5,000, then you're going to go to three months of your expenses. Then you're going to go to six months of your expenses is the final draw where I want you to be. because six months expenses where I think everyone should be at some point in time, this is where you're fully protected. This is the full protection, the full suit and armor against life. And then as time goes on, then you can increase it if you want to. But I want you to have enough cash on hand where you're just kind of slightly uncomfortable with how much cash you have on hand.

That is a really, really powerful place to be. And that is exactly where I love to have my emergency fund as well. All right. So the next thing I want you to think about here is I want you to think about as you have that emergency fund in place, I want you to start thinking about investing. One big thing about investing is that you really got to make sure that you start to invest as early as possible. Now, your emergency fund comes first and paying off high interest debt also comes first. So if you have high interest debt, if you have like credit card debt or if you have debt above a 6% interest rate, that needs to go first.

And the reason for that is debt is an absolute wealth killer. It is going to take away your wealth building ability if you don't take care of that debt. And most people who live on low, incomes may have gotten into some sort of credit card debt from overspending or something like that. If that is you, if you're listening to this podcast, I have a free course that is going to teach you how to get out of debt. So if you get to mastermoney.com slash courses, you will see our free get out of debt course. That is going to give you an entire plan on how to do this. So I'm not going to go in deep, deep detail today, but that comes before investing. It's getting out of high interest debt, not a mortgage or something like that, but high

interest debt, something above 6% interest rate. I want you to get rid of that first. Next, we are going to be looking at your investing and your savings. So as you go through this, I want you to really start investing as soon as possible. And you may be saying to yourself, well, why should I start investing? Because the only way to retire, the only way to not ever have to work again is to invest your money. What investing is you are planting a seed to build out a massive money tree. And what that does is over time, you're going to start investing small amounts of money.

And what you're going to say to yourself is, man, this really isn't moving as far. as I thought it would. So you get the 10 years and you're like, this didn't move that fast. This must not work. But you keep on doing it. You keep on compounding and you keep on adding money to your investment accounts. And then in 20 years, you're saying to yourself, wow, this is way larger than I ever thought it would because of something called compound interest. And compound interest takes time and it takes energy, meaning that it takes more dollars every single month to be deposited in that account. And so consistency with this is really, really powerful. We have a couple of episodes talking about why your first 100K is the hardest because really

It's you powering that account to your first 100K. Then after that, it starts to get easier and easier over time. So making sure that you start to invest is really, really important. Now, the question then becomes, where should I invest? Where should I invest my money? Well, the first place is absolutely 100% rate of return on your money. This is your 401k match. If you work at a company that has a 401k, then you need to make sure that you get that 401k match.

If you do not know, then ask the owner of your company or ask your HR department, do I have a 401k? If I do, what is the employer match if there is one? If they have an employer match, meaning that you put in a certain percentage and they will match that percentage, that means you get a 100% rate of return on your money for investing in your 401k match.

Absolutely always, always, always take advantage of that. Okay, so that's number one. Number two is I love an account called the Roth IRA. And the Roth IRA is an account that you pay tax on the seed that you put inside the Roth IRA. So the money you put into a Roth IRA has already been taxed out of your paycheck. The money grows tax free and you can pull the money out tax free. Now, if you've never heard me talk about the Roth IRA or if you're new to this podcast, when I talk

about this, it is so powerful how it works because as it grows over time, say you max out your Roth IRA every single year. And the last year maxing out your Roth IRA was $6,500. This year at the time I'm recording this in 2024, it is $7,000. And when you max out your Roth IRA, if you did this every single year, you'd have well over a million dollars in that account. And of that million dollars, now this is over the course of 30 years, but over $800,000 would be completely tax-free. Imagine if you could have $800,000 by just putting $200,000 into something.

You take that deal every single time. And so if you got that 10% rate of return over the course of 30 years, that's what would happen. And $800,000 would be completely tax-free. So I love the Roth IRA as number two because of that tax-free growth. And you can pull the money out tax-free. Number three, I love going back to your 401K if you have one. If you don't have a 401K, something like an IRA is something that you can open up a traditional IRA. And if you're self-employed, there are things like solo 401ks or SEP IRAs. There's a

bunch of cool options there as well. And so thinking through those options are really, really powerful. If you're brand new to investing, by the way, and you want to learn how to invest, we have a course called Index Fund Pro. An Index Fund Pro will actually take you step by step, teaching you how to invest in index funds and ETFs, which are my favorite way to invest, which we'll talk about here in a second. And then lastly, if you get to maxing out all of those, which is a lot of money, but if you get to maxing out all of those, then you can go to a taxable brokerage account. And a taxable brokerage account is just a standard account that you open up at, you know, Fidelity or Vanguard or any of these places.

And you may be asking yourself, well, where should I open my account? I like Vanguard. I like Fidelity. I like Charles Schwab. Those are my three places that I would be interested in opening up an account. Those are three fantastic brokerages. And there are brokerages out there I don't like, like Robin Hood, for example, is one. And so making sure that you choose the brokerage that really works well for you is really,

really important, but Vanguard Fidelity are the two that I personally have, the two that I personally use, and the two that I absolutely love and I've used for the longest. I've had a Fidelity account actually since I was 15 years old. And then I've had a Vanguard account since I was in my early 20s. So this is two really powerful accounts. I love those two brokerages because they just have the most options. They have fantastic options and they have fantastic funds. Now, what do you invest in is the question. I like index funds. I like ETFs. I like bonds. You got to put together the portfolio that works for you. And so making sure you understand where to start is going to be really, really important. Index fund pro shows you how to do this, but we also have a bunch of different

episodes teaching you how to invest. So we have one talking all about index funds and we have one talking all about ETFs. We will link both of those up down below as well so that you can check those out because those are really, really powerful ways for you to invest and they're very low cost. In addition, another great way to invest is something called a Target Date Retirement Fund. And you can find target date retirement funds in your 401K, for example, and they are another great way to invest. And we have episodes on those as well. Now, the last thing I want to talk about here is one great way to set up your finances is to learn how to automate your finances, meaning that when bills come up, if you have the cash on hand, you can set up automatic bill payment. And you can set

that up so that you don't have to think about money. When you have to invest your dollars, you automatically invest in different investment accounts. When you have to go out and you want to save money in your emergency fund. You automatically transfer that money into your emergency fund. This is going to remove your willpower out of the equation. And for most people out there, you know that you can't rely on your willpower. It is very difficult to rely on your willpower. So it's very, very important to make sure that you automate all of your investments as well. And so this is going to really, really help you throughout time to ensure that you're building wealth. So listen, these are just some of the steps that I want you to think through when it comes

to building wealth on a low income. If you guys have any questions and you are trying to build wealth on a low income. Please reach out to me. Ask me those questions and I will do whatever I can to to help you through this process because I am so passionate about helping people with their money. And that is exactly what we want to do. We want to bring you as much value as possible on this podcast. So definitely please reach out to me and I will help you through that process so we can get you on the path to learning how to build well. Thank you guys so much for listening to this episode. It is absolutely a privilege for you to be listening to this podcast. And I cannot thank you guys enough. If you got value out of this, share this with a friend. And don't forget to

subscribe to the podcast and leave that five-star rating and review as well. Again, thank you guys so much for listening and we will see you on the next episode. Frozen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-Ojo. The online casino with all the latest slot and live casino games. What you win is yours to keep with no wagering requirements, instant payouts, and no minimum withdraws. Hey, I just One.

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