Someone Else Made Your Budget
Money in, money out.
Make $10k a month, and spend $10k a month.
And put a bit into a 401k
Over and over and over.
This basic system of budgeting (checking account+ 401k investing) can be traced back to how someone else initially set up your financial life.
Your first employer, who said “give me your routing number for direct deposit and oh, here’s your 401k”, created the system for how you run your money.
You made the money, they told you where you should put it, and in doing so, they said without saying – “this is how you should run your financial life.”
Excuse me?
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Here’s the deal:
You gotta build your own system that reflects what you want to do financially.
There’s way more to life than what can be covered in a 401k and a checking account.
401ks are great. Checking Accounts are great
But sticking with this conventional checking account + 401k strategy that someone else gave you almost guarantees you only invest in your retirement accounts.
Investing is not just about retirement.
Investing is about efficiently growing money.
Most people could grow money and reach financial goals faster if they had a more complicated account set up custom built for themselves.
Meaning income is going to more places than just the checking account and 401k.
Enter investfirst.
The Right Accounts, Which Cost $0 To Open.
investfirst requires a broader set of financial accounts because your financial goals are broader than retirement.
Having a different account set up means you have more options to invest. These could be:
- Taxable Brokerage Accounts
- Roth IRAs
- 529s
- Traditional 401ks
- HSA Investment Accounts
- Trusts
- Business Brokerage Accounts
- Solo 401ks
- SEP IRAs
Cash deserves to be in a rainy day fund, but beyond that, there are infinite ways to grow money faster.
Remember, cash sitting in checking accounts loses value every year to inflation.
investfirst details what accounts you need to reach your financial goals faster.
Here’s a list of accounts that ultimately fall under my personal investfirst system that get touched monthly with new money. These accounts cost $0 to open and anyone with a name, address, and social security address can have them.
- One Checking Account
- One Brokerage Account
- Traditional 401k
- 529 for all three kids
- Checking Accounts for Business
- Brokerage Accounts for Business.
These eight accounts are all tied together, pushing my financial life forward monthly.
Notice how most of these accounts are investment accounts (six) vs checking accounts (two).
Suppose I didn’t have these accounts. I would not be where I am at, financially speaking.
Without the right accounts, it’s almost impossible to grow assets efficiently.
To grow wealth, you need a set of accounts like mine above.
But how much should you put in these accounts?
The Right Accounts with the Right Amounts
I will start this section with the most damaging account that needs to be deleted from your existence.
The credit card.
Get those bad boys to zero, move on, and try your best never to be charged interest by them again.
With that out of the way, here’s the goal of investfirst:
- Fill the right accounts
- In the right order
- With the right amounts
Your contributions could be made first to your 529s, 401ks, HSAs, or brokerage accounts, and then the remainder of your income would be deposited into your checking account for spending like it always is.
It’s about prioritizing investing first, then spending.
How you invest/spend is 100% up to you.
I wrote a few months back that I am currently investing more in my 529s than in my 401k.
“That’s not “textbook” financial advice, Tom. Makes no sense.”
Why would I do this?
My wife and I saved a lot for retirement in our 20s, and we want to catch up on college savings for our kids and compound money in their 529s for as long as possible.
It’s just math and how I want myinvestfirst budget to look.
Once you have the right accounts opened and you know how much to contribute each month, you can own them for life.
I’ve had a brokerage account since I was a kid.
The account that started with a few shares of Disney in the ’90s has become a massive blessing to me and my family.
We’ve contributed consistently over the years and have used the investment gains to help buy our first home, start Fjell, fund our HSAs, donate money, invest in our future, and more.
All these things would not have happened had investing not been a part of our budget.
We’ve lived out investfirst, and by following its principles, we’ve won.
But it gets even better.
Feeling like a boss
You all know Dave Ramsey and his Baby Steps.
He’s helped millions of Americans get out of financial trouble.
I am a massive fan.
What makes Baby Steps powerful is also what makes investfirst so powerful.
Both systems are designed to create financial momentum.
And once you experience even the slightest taste of financial momentum (more money, less debt, more freedom)
You feel like a boss.
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And while money is very tangible and real, don’t neglect the importance of how you feel about your financial situation.
And let me tell you, you want to feel like this guys staring you down as you read this.
You need to feel you are making progress in your financial life for you to stay motivated to invest vs spend.
This is true while working, and in retirement.
investfirst is meant to do this.
Simple as that.
If you want help building an investfirst budget, we have an awesome wealth management service called Scale.
A custom investfirst budget is the first thing you get when working with us.
After your investfirst budget is up and running, your randomly invested old 401ks and brokerage account will be professionally reviewed, and we’ll tell you your optimum investment strategy moving forward.
Oh, and you can ask your advisor any question regarding your money anytime.
It’s a heck of a deal (in my humble, biased opinion) and costs less than you think.
