The 10 Step Framework to Saving Your First $100K

In this episode of the Personal Finance Podcast, we're going to talk about  10 steps framework to saving your first 100K. How Andrew Can Help You: Listen to The Business Show here. 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. Car buying Calculator 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 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/ Thanks to Fundrise for Sponsoring the show! Invest in real estate going to fundrise.com/pfp Thanks to Policy Genius for Sponsoring the show! Go to policygenius.com to get your free life insurance quote. Go to joindeleteme.com/pfp20 for 20% off! Indeed: Start hiring NOW with a SEVENTY-FIVE DOLLAR SPONSORED JOB CREDIT to upgrade your job post at Indeed.com/personalfinance Turn your business dream into reality! Apply now at www.oneday.org/pfp Go to Acorns.com/pfp and start automating your investments and get a $5 bonus today! Delete Me: Use Promo Code PFP for 20% off! Shop Data Plans and Save Big at mintmobile.com/pfp Links Mentioned in This Episode: How to Save Your First $100K 7 Side Hustles That Can Turn Into a Full Time Business The 1-3-6 Method For Building & Managing Your Emergency Fund The Mega-Back Door Roth IRA (How to Get an Extra $43,500 in Your Roth!) 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

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Andrew Giancola?

  Longtime listeners know, one of the best ways to build wealth is to increase your income. And one way to do that is by starting a side hustle. And that's one reason why I absolutely love Whatnot. Now, my son and I, we love collecting sports cards. And we've used Whatnot to buy and sell cards. It's been a really fun way to enjoy something we love together. Now, Whatnot is a live shopping platform where people sell everything from sports cards to clothing, electronics, and collectibles. And what's really cool about it is you can turn something you're passionate about into a business. And you could do it right from your phone. You don't even need a storefront or a website. So whether you're looking to make some extra money or find great deals on your next shopping trip, check out Whatnot.

• 0:44Andrew Giancola?

  Search Whatnot, that's W H A T N O T, in the App Store. Download and start selling right away. When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI website builder.

• 1:27Andrew Giancola?

  I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer or developer needed. And Hostinger doesn't stop at launch. Their AI can help with SEO, website copy, email marketing, and more. Plus, your domain, website, email, and marketing can all live in one account, with plans starting at just $3 every single month. Hostinger builds your vision step by step. Create your website today. Go to hostinger.com/pfp and use code PFP for 10% off now. On this episode of the Personal Finance Podcast, 10 Things to Do to Get Your First $100K.

• 2:23Andrew Giancola?

  What's up everybody 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 10 things to do to get your first 100K. If you guys have any questions, make sure you join the master money newsletter by going to mastermoney.co/newsletter and don't forget to follow us on Spotify, Apple Podcasts, YouTube, or whatever podcast player you love listening to this podcast on. And if you're getting value out of this show, consider leaving a five star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Can I thank you guys enough for following the show and leaving those five star ratings and reviews. Now today, we're going to

• 3:08Andrew Giancola?

  talk about one of my favorite subjects and I love this subject so much that the very first episode of the personal finance podcast was actually on this topic. And I really love talking through and helping folks get to their first 100K. Why? Because when you start to go and try to get towards your first 100K, that means you are building out your financial foundation. And this is a very important time on your financial journey as a wealth builder, because as you start to build out that financial foundation, you're going to be able to set yourself up for life. Now, your first 100K is the hardest by far. And we've done a couple of episodes on why that is, but the real reason is because you have to do all the work with your first 100K. Your contributions,

• 3:52Andrew Giancola?

  meaning the amount of money that you put into your investments are going to be the majority as you get to your first 100K. As time goes on, you get to 100K, then 200K, then 500K, all of a sudden, your money is going to start to be working for you. But at the beginning, you're going to have to save your way to your first 100K because you're fighting, A, number one, these returns. So say, for example, if you have $8,000 invested and you, you know, invest that money, that won't move the needle much because a 10% rate of return is going to be 100 bucks. But if you have $10,000 10% rate of return is only going to be $1,000 per year. So as you can see, you've got to invest more dollars so that you can start to see compounding working in your favor.

• 4:34Andrew Giancola?

  Secondly, is a lot of people who are on their journey to their first 100K, their income might be lower. And so because your income is lower, you're going to have to work a little bit harder and you can't get there as fast as someone who may have a higher income. We're going to talk more about that, though, here in a second. Third is life's pretty expensive. News flash, if you haven't seen it thus far, there is a high rate of inflation. Food costs are at all time highs. Egg prices are absolutely out of control and pretty much housing, transportation, everything else is at an all time high. And so we want to make sure that since life is expensive, we need to still figure out a way to find that gap, which we'll talk about more. And then you have to build the habit. So building the habit, a lot of this is automation.

• 5:16Andrew Giancola?

  A lot of this is having the discipline to save consistently and making sure this is automatic. Now, because of this, I think about this in three phases. Phase one is what I call the grind and the grind is 0 to 50K. And 0 to 50K, your savings is about 95 to 90% of what you are getting out of this and about 5 to 10% is going to be compounding. So at this stage, you are putting in the majority of the work. You're investing $500 per month at a 7% rate of return. Then your portfolio may gain a few hundred dollars per year. And so you want to make sure that you are really trying to save your way to wealth. That's what has to happen in phase one during the grind, which is 0 to 50K. Now momentum is going to start to build in phase two.

• 5:59Andrew Giancola?

  And this is the momentum building point in time where between 50,000 and 100,000, this is where your savings rate is going to be right around like 85% of what the growth of your portfolio is going to be. It's going to be in that 75 to 85% range as you start to build up wealth and compounding is going to be closer to that 15% range as you start to do this. So on a 10% return of 50,000, that means you're adding $5,000 every single year, equivalent to an extra $400 every single month, which can be a major asset for you and help you save more because that means. You are making these contributions and you are actually moving the needle a little bit more. So that's where it could be a big phase for you.

• 6:41Andrew Giancola?

  Now, the turning point is above 100,000 because that is where you're going to start to see some of these returns helping you out and grow your wealth. And seeing those returns help you out and grow your wealth after 100,000 is amazing. Now, the real big tipping point, we did an episode on this from your first 100,000 to a million, is a big, big difference. And when you get to that first million dollars, all of a sudden, a 10% rate of return is what? $100,000 in one year. So as you can see, as you start to build wealth, you are going to have this money compound so much faster. It is amazing how fast this money can compound when you get to that million dollar market. So all of our goals, listening to this podcast, is we want to at least have a net worth of a million dollars in our investment portfolio. And so we want to make sure that we are starting to build up assets towards that.

• 7:26Andrew Giancola?

  My goal for each and every single one of you is every single person listening right now, you may already be a millionaire right now, you may be just starting your journey right now. It doesn't matter what end of the spectrum you are on. I want each and every single one of you to become millionaires. We want to create a million millionaires on this podcast. And so that is the goal, is for each and every single person to get there. And the only way to get there is to start with phase one, getting to that first 50K, then starting with phase two, trying to get to your first 100K, and then going beyond that is where we will start to unleash a lot of compounding and you're going to see it accelerate so much faster. If you haven't heard our past episodes talking about how to get to your first 100K, those are going to be some great ones for you to also reference because we go into a ton of this math. But in this episode, I'm going to give you 10 things you need to be doing

• 8:11Andrew Giancola?

  that are going to help you propel yourself to that first 100K. If you're ready for it, let's get into it. All right, the number one thing that we need to be doing when we are on the journey to our first 100K is we want to maximize our income. Now, I've talked about this a number of different times, but when I first started in the corporate world, I was making $30,000 per year. It was an entry level financial job. Now, this was over a decade ago now, but it was an entry level financial job. And this was something I realized very, very quickly that I have myself an income problem. I was living paycheck to paycheck because I did not make enough money and for some of you out there who are listening to this podcast and you're like, I don't even know how I can save a little extra. You most likely are going to have either an income or a spending problem or maybe both.

• 8:56Andrew Giancola?

  And if you have that income problem, this can be something that can be solved by doing a few different things. Number one is focusing on high income skills. Now you may have heard us talk about this in the past, but high income skills are going to be the number one investment that you can make in yourself because once you have a high income skill, something like coding or sales or marketing, once you have that high income skill, that stays with you forever and it's going to help you increase your income over time for a very long period of time. And so, learning how to develop some of these skills is going to be really important. Let's say for example, that you work in a field that has additional certifications that you can get. Well, if you go out and get those additional certifications and focus on gaining some of those high income skills, you're going to make

• 9:39Andrew Giancola?

  more money forever. And so, that's where focusing on that is very, very important. Secondly, is asking for a raise. Now, we have a very specific system on how to ask your boss for a raise. This is not something where you're going to walk into your boss's office and say, "Hey boss, I want a raise and I want it now." That's what a lot of people do. I watched people do this in the corporate world. They would have their yearly review, they would walk into their boss's office and say, "Hey, I'm not paid enough money. I want you to pay me more money." Their boss is caught off guard and neither one of them have collaborated or they have not given the proper reasons as to why they deserve that raise. Instead, what we talk about is developing a six-month system where you start six months before your yearly review and every

• 10:21Andrew Giancola?

  single month you are working with your boss so that you can get that raise. That's the most important thing. If you want that system, if you go to mastermoney.co/resources, it is there. It is called How to Get a Raise. It's a free ebook for you if you want to check that out. So, those are the big two I want you to think about first, is what are the high income skills that I can develop so that I can increase my income? Why? Because we need to get more dollars into investments. Why? Because we know at the beginning, the more dollars that we get into these investments, the faster we can get to our first 100K. And so, that is why it is so important early on. To make sure that you are increasing your income. Your income will solve a lot of financial problems for you if you increase your income.

• 11:03Andrew Giancola?

  It is not all of it because we know so many different six-figure earners who still live paycheck to paycheck. You still have to know how to manage money. You have to set up automation systems, but this is the first step, especially if you are at the beginning of your journey. And you're saying to yourself, well, I make $40,000 per year, or I make $30,000 per year, or I make $50,000 per year, I want to increase my income because I have a family. If that's you, then we are going to work on doing that. Now, we can also do something like a side hustle. And what I did is I did all three of these at the same time. So I would look at focusing on high-income skills. I would ask for a raise of my boss and I would go through the raise system. And I was focusing on building side businesses as well. This is exactly how I did it, where I got to my first 100K.

• 11:46Andrew Giancola?

  It took me two years to get to my first 100K, making $30,000 a year salary. And I did it because I focused on all three of these things. I increased my income was the biggest thing first, though, is making sure I earn more so I could take more of those dollars and put it towards my first 100K. And so, starting a side hustle into something that could turn into a full-time job can be very, very helpful. Now, you can also turn in, if you're like, big, big goal right now is to get to your first 100K, and that's what you're thinking about, and you just want to do gig work. You know, you want to do handiwork on the side, or you want to drive for DoorDash, or Uber Eats, or any of these different things, and you're just trying to hit that goal as fast as you possibly can. More power to you. But my interpretation of a side hustle is more so doing something that could turn into a full-time business if you wanted to.

• 12:29Andrew Giancola?

  Or you could hire an employee to run that business and you can make a little more passive, and I'm doing that in quotations, but more passive income by having an employee help you run that business while you're at your day job or whatever else. Because eventually, if you have additional incomes that could turn into full-time businesses, that is what I see, additional security that is not going to interrupt your financial life if you lost your job. Because if you lost your job, and let's say your side hustle is making half of your day job income, but you're only spending a couple hours a week on that side hustle, and then you turn it into a full-blown business and you can make more than what you did at your day job, that is additional security. That is absolutely amazing. Now, we have episodes where we talk through, hey, these are seven different side hustles that could turn into a full-time income. We've done two or three of them already.

• 13:14Andrew Giancola?

  We have another one coming up pretty soon, so make sure you're following this podcast. But those are some of my favorite episodes to do. Also, is if you've been at a job for a long time, and you have been there over the course of maybe the last five years, six years, seven years, and you have not gotten a raise, or you've just gotten that 2% or that 3% raise every couple of years, then maybe it's time to start switching jobs, because statistics show that those who job hop every two to three years are going to make 15 to 20% more than people who do not job hop. And so, thinking through, am I really loyal to this company? Or do I need to find another company that's going to pay me more? Usually, if you are not getting paid more and you've been there for a very long time, going to another company is going to be really beneficial for you.

• 13:56Andrew Giancola?

  And then also, learning how to monetize some of your existing skills. So if you have existing skills right now, and you are looking to monetize some of those, maybe you can consult. Maybe you're really good at math and you can help kids tutor. Maybe you are really good at a specific sport and you can help coach kids. There are so many different side hustles out there where you can use your existing skills to earn more. But that's number one, is to earn more income. Number two is to live below your means. Now, this is going to be optimized spending is really what I mean by this. And optimizing your spending does not mean you're just cutting back only. What optimizing your spending means is you're figuring out, what do I value? What do I like spending money on? What do I value spending money on?

• 14:41Andrew Giancola?

  And what do I absolutely hate spending money on that I am currently spending money on? Now, this is not like, I don't like paying my electric bill, so I need to cut that out. That's not what I mean by this. What I mean by this is figuring out, where am I frivolously spending money that does not matter to me? Where am I taking my dollars and spending? And it really just does not matter because learning how to optimize spending can be one of the most valuable skills that you develop over time. And so number one, we want to look at and evaluate where we are spending our dollars currently. So you can look at your last three months bank statements, pull those up. Sometimes I will throw them into chat GPT. I got some comments back from people saying, I'm not throwing my bank statements into chat GPT. Okay, blackout the account numbers, blackout all the additional information and just give it the data.

• 15:26Andrew Giancola?

  That's all you gotta do. If you're worried about anything else in there, then fine, but just blackout those different things. It's a very simple process and then you can go ahead and utilize that. So chat GPT will go and it will, you know, look at all your last three months for you and total up and create budgets for you and all different things if you wanted to utilize that. I specifically use a budgeting app. So Monarch Money is the one that I am currently using right now and it will optimize and give me all my spending reports for me. But we just want to know and understand how much we have spent over the course of the last three months on certain things. If you don't want to use any of these tools, then you can use a spreadsheet. If privacy is a huge concern for you, which I get it, it's a huge concern for me too. Then you can use a spreadsheet and kind of go through this manually. And so what I want you to do is look at how much you've been spending over the course

• 16:10Andrew Giancola?

  of the last three months and then we're going to optimize. What are some subscriptions, for example, that you have been utilizing or spending money on that you really don't need anymore? That's the quickest way to just boom, boom, boom, knock it out because we can reduce some of these subscriptions. Now we just found some money and when you start to cancel subscriptions, for example, you take those dollars and you put them towards your freedom. That's what I want you to do. So let's say you have Netflix, you have HBO Max, you have Hulu, you've got it all. You've got Apple TV, you've got all of this stuff and you are not using most of these subscriptions. Well, instead, if you go and cancel three of them, and let's say you saved 40 bucks by canceling three of them and I want you to take that extra 40 bucks and now I want you to start automating into your investments because if you allow that $40 to just go back

• 16:53Andrew Giancola?

  into your checking account and commingle in your checking account, what's going to happen? It is going to poof disappear into thin air. I don't want your money disappearing in thin air. We want to be proactive with what we do with our dollars. And so as you start to reduce spending in certain areas, you take those extra dollars. And automate it automatically. You're going to automate it into your investments. If you don't know how to automate your investments, we have a free investing course. That is every single Tuesday. If you go to mastermoney.co/investingforbeginners, it shows you how to open your account. It shows you how to automate your investments. And so definitely go and check that out. Secondly, is we want to make sure that we have our spending in check. So we want to be spending 50 to 60% on our baseline expenses.

• 17:37Andrew Giancola?

  Our baseline expenses are our needs. So this is going to be housing, food, transportation, debt payments, the stuff that we need, medical care, all of that stuff is our needs. Okay? So that should be in the 50 to 60% range. If it's below 50%, great. That's more power to you. That is absolutely amazing. If it is way above that range, then either we have an income problem or we have a spending problem. Okay? And so that's where we want to look at that. But we want it to be in that range. Okay? And so then we want to look at, well, hey, what do we have left here? Well, we want to be spending 20 to 30% on things that we truly value. And we also want to be spending 20% at a minimum on our future value. Okay?

• 18:20Andrew Giancola?

  So 20% goes towards investments. This is going to your retirement accounts, and this is going to your emergency fund. This is also going to your brokerage account. So if you're investing your dollars, it is either going to your emergency fund or it is going towards some of those other investments. So that's the second thing. It's just getting your spending in check, making sure you have that available. Next is we want to make sure that we are looking at some major purchases that are coming up. We are planning for those, like your major car purchase, or if you're going to go buy a house, and think through that purchase and make sure we run total cost of ownership. Okay? So total cost of ownership is a very important metric that we talk about a lot on this podcast that allows us to figure out how we optimize our spending. So we have two total cost of ownership calculators. One is available.

• 19:03Andrew Giancola?

  Both are available if you go to mastermoney.co/courses. One is for cars, one is for housing. But you need to go and use that spreadsheet. It's free in order to make sure that you are spending optimally on those. And so looking for ways to reduce and live below our means can be really important. Have to live really, really frugally. That is not what I'm talking about here. Living super frugally is not what we are looking for. We're looking to optimize our spending so we can do what we want in life. A, if you want to invest more money, which I think most of us listening to this podcast do. B, if you want to go on more vacations and spend more time with your family on vacations, which I think a lot of people listening do. C, if you want to spend more time with your hobbies, like if you love to play golf or if you want to do more workout classes, or if you want to do more things that you actually want to be doing day in and day out.

• 19:48Andrew Giancola?

  Maybe you want to take art classes. You want to be involved in different communities, but you have to pay to be in those communities. There's so many different things that you can do. If you want to be involved more in that stuff, then you have to make sure that you're optimizing your spending because you can afford anything, you just can't afford everything, as Paula Pant always says. And so I think that's really, really important to make sure that we are thinking through that. And so when we start to look at our spending, we may say to ourselves, okay, well, I'm spending a lot of money on eating out and I'm also spending a lot of money on just random Amazon purchase. Well, if that's you, the way to reduce your spending is to gradually reduce spending. This is going to be something where it's not going to be, hey, I'm just going to cut this all out all at once. Instead, let's use eating out as an example.

• 20:32Andrew Giancola?

  I always use this example for eating out because a lot of people overspend in this category. So let's say you spend a thousand dollars a month eating out. Okay, that may be really high for a lot of people, but let's just use this as an example for easy math, okay? Well, if you spend a thousand dollars a month eating out and you want to get it down to $400. If that's the case, let's do this over the course of six months. So in month one, let's cut it back to 900, okay? In month two, let's cut it back to 700, okay? In month three, maybe your friends come to visit you and now it's back up to 850. You made a mistake, no worries whatsoever. In month four, we're going to cut it back to 600, okay? In month five, we're going to cut it back to 500 and then in month six, we're down to 400. That's how you do it, is you want to gradually do it over time

• 21:17Andrew Giancola?

  because this reduces the pain felt, okay? Reducing that pain, reducing that friction is what we want to do with our money. So we want to gradually do this over time. Number three is as we We start to progress through this process. We are increasing our income. We are starting to optimize our spending, which means when we optimize our spending, we're going to find money. And when we find money, we're going to put it towards wealth building activities. Very important stuff to do there. Number three is we're going to automate our savings. So it is so incredibly important to automate your money. It is the number one thing that will change your life. And I promise you, when it comes to your finances, that's why I like to talk about it so much. We're going to do an entire mapped out episode. Don't worry, it's coming on how to automate everything.

• 22:00Andrew Giancola?

  And when we do that, I want you to understand how important this is. Setting up automatic transfers to things like your high yield savings account and your investment will be world changing for you. It reduces friction. It reduces your need to have willpower to save money. And it changes the way that you think about money because all of a sudden money is just automatically saving every month. And it's automatically investing every month and you don't have to worry. And so I like to set up a savings account that has savings buckets. And we've talked about this before, but it is the bucket method. And in the bucket method, what I teach is that you need to be saving into different categories in your high yield savings account. Now, why do we use a high yield savings account? Why? Because it has higher interest rates than your regular old savings account at your bank.

• 22:45Andrew Giancola?

  If you're at Chase Bank or Wells Fargo or Bank of America and you're using their savings accounts, they are paying you 0% interest. But if you get a high yield savings account, you're going to get anywhere from 3% to 5% interest and make more money on your money. And so it's literally free money. Make sure you're using a high yield savings account and make sure that high yield savings account has buckets. And so when you start to use these buckets, you can start to automatically save into these buckets. It literally allows you to budget inside your savings account. So you can start to save for your emergency fund or for your next vacation, or you can start to save for your kid's college, or you could start to save for all these different things. And so it's very, very important to make sure that you're automatically doing this every month so that it actually happens. So here's what I want you to do also is when you start to save money,

• 23:31Andrew Giancola?

  you want to A, start to save in your emergency fund at least one month of expenses if you don't have one yet. So we're going to do the 136 method for your emergency fund. So one month of expenses. Then once you hit one month, we're going to add another two months of expenses in there to get to three months. And then after you get to three months, we're going to add another three months of expenses to get to six months. Our goal is to get to ultimately to six months expenses saved in an emergency fund. That's going to protect you against life, that's going to protect you against anything that will happen to you. Because the last thing you need is for wealth building to get interrupted unnecessarily. And so your emergency fund protects you against life. Your car is going to break down, your house is going to have some sort of issue. You're going to have some sort of medical issue throughout your life. It's not if, but when will that happen? Your emergency fund protects you against that.

• 24:15Andrew Giancola?

  And it also protects you against the biggest thing of all, which is job loss. If you get laid off, you are one person's decision away from having zero income. Your emergency fund helps you solve that problem because it gives you a six month runway to go out and find another job. That's very, very important. This is huge. If you have not heard our episode talking about the 136 method in detail, we have an entire episode on that. Make sure you check that out. It's called the 136 method for your emergency fund. And so savings is a non-negotiable expense specifically for your emergency fund. That is going to be really, really important. Number four is to invest early and consistently. So getting to your first 100K, you've got to invest your money. You have to start investing your money to get to that first 100K. This is going to help you grow your money over time.

• 24:59Andrew Giancola?

  And so opening the right accounts is very, very important. So once you have three months of expenses saved in your emergency fund, that's when we talk about you could start investing your dollars. And so you can start investing those dollars by opening up investment accounts. Now, we here at the Personal Finance Podcast, love things like tax optimized accounts. That means you can use things like a Roth IRA or an HSA or your 401K and always be getting your 401K match. Those are things that we absolutely love to invest in. And if you start early, it is going to be so much easier for you to grow your money over time. Someone who starts in their twenties is going to have to invest half of what someone has to invest when they start in their thirties. And so it's a massive, massive difference because time is your biggest asset when it comes to investing money.

• 25:44Andrew Giancola?

  And so starting early is going to be really, really important. Secondly, what do you invest in? We like to invest in Low-cost index funds and ETFs, that's what I personally invest in. You could be a dividend investor if you want to. If you like individual stocks, you can look at that as well. I like low-cost index funds and ETFs because I am a passive, long-term investor. Now, if you want to learn how to invest, again, we talked about this earlier in the show, but you can go to mastermoney.co/investingforbeginners and that is a free masterclass teaching you how to open your accounts, why we invest in index funds and ETFs, and it talks about automating your investments as well. So make sure you check that out. Now, also, what you want to do is always be reinvesting your dividends when you have them. If you're investing in things like index funds and ETFs, because this is going to help your money grow faster and you want to avoid market timing.

• 26:29Andrew Giancola?

  So the big thing here is we don't day trade here whatsoever. This is not something we are jumping in and out of investments. Instead, we stay invested for the long term. Now, why do we stay invested for the long term? Why don't we day trade? A, nobody has a crystal ball. Nobody knows what's going to happen in the future. And for people who say that they do, they are lying to you. Nobody knows what's going to happen in the future in financial markets. And you can even say day-to-day and week-to-week. We host another podcast called The Business Show. And on The Business Show, I give you your daily news in 10 minutes or less. And on that show, you can see every single day when the news comes out, none of these publications knows what's going to happen next. They always say it's doom and gloom and, oh, the market's surging back again. And it's, oh, it's doom and gloom. It just ebbs back and forth.

• 27:12Andrew Giancola?

  The market day-to-day is absolutely ridiculous. It is a popularity contest and you don't want to play that game. So instead, what we are is long-term investors, because you can take out a stock market chart and you can look at that time horizon for the longest time horizon you can get on your phone. So take out your stock app and look at the last 20 years, okay? If you can, or go to the longest time horizon. On the Apple Stock App, it says all. Just push all and what you're going to see is that stock chart goes in one direction when it's a long-term. It goes up. And so that is historically what has happened. And that's what we anticipate as long-term investors. You do not want to be market timing whatsoever. You want to stay invested for the long run. So invest early and consistently is the fourth one. So let's just recap the first four we talked about.

• 27:55Andrew Giancola?

  Maximizing our income, living below our means, automating Our savings and then we want to make sure that we are investing early inconsistently. Now, if you just do those four things alone, just starting off, and we'll talk about the fifth one in a second, which is also very important. But if you just do those four things alone, you can become very, very wealthy. Now, as we go through some of these other ones, I'm really excited for this because you can hit your first 100K even faster, and we'll talk about those next. All right. My relationship with money has changed a lot over the years. Early on, I thought building wealth was about making more money. Now, I know it's really about having clarity. When you know exactly where your money is going and whether you're on track, you make better decisions. That's one of the reasons I love Monarch.

• 28:40Andrew Giancola?

  It's the personal finance app that tracks everything from your accounts and investments to your savings, goals, and spending. So you can see your entire financial picture in one place. One habit that's made a huge difference for me is my five-minute drill every single morning. I open Monarch, check my spending, investments, cash flow, and net worth, and I'm done in just a few minutes. It gives me confidence that nothing is slipping through the cracks. I also love the AI weekly recap because it'll flag spending changes, upcoming expenses, or shifts in my net worth before they become a problem. Instead of reacting after the fact, I can make adjustments early. It really feels like having a financial advisor in your pocket. Write your own money story with Monarch. Use code PFP at monarch.com

• 29:24Andrew Giancola?

  to get your first year of Monarch Core half off at just $50. That's 50% off your first year at monarch.com with code PFP. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some of America's top insurers, side by side, for free. And their licensed team helps you compare coverage, prices, and terms, answers your questions, and even handles

• 30:09Andrew Giancola?

  The paperwork so you can get the right policy without the hassle. For me, having life insurance isn't about expecting something to happen. It's about knowing my family is protected so I can actually enjoy these moments together instead of worrying about what comes next. And with Policy Genius, you can find 20-year life insurance policies, starting at just $276 a year for $1 million of coverage. Head to policygenius.com to compare life insurance quotes from top companies and see how much you can save. That's policygenius.com. If you've been listening to this show for a while, you know it's not just me anymore. It takes a great team behind the scenes to make everything happen. And if I had to hire someone tomorrow, I'd want someone who could jump right in and make

• 30:54Andrew Giancola?

  an impact. That's why I'd use Indeed Sponsored Jobs. When workplace chaos hits, Indeed Sponsored Jobs helps you reach qualified candidates faster. Your job gets boosted in search results, so you're spending less time searching and more time interviewing the right people. Plus, you only pay for results, which I absolutely love. Sponsored jobs posted directly on Indeed are 95% more likely to report a hire than non-sponsored posts. That's a huge advantage when you're trying to grow your business. Spend less time searching and more time actually interviewing candidates who check all of your boxes. Less stress, less time, more results. When you need the right person to cut through the chaos, this is the job for Indeed Sponsored Jobs.

• 31:38Andrew Giancola?

  And listeners of this show will get a $75 sponsored job credit to help get your job the premium status it deserves at indeed.com/podcast. Just go to indeed.com/podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com/podcast. Terms and conditions apply. Need to hire? This is a job for Indeed Sponsored Jobs.

• 32:01Speaker 01

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• 32:31Andrew Giancola?

  So number five is to reduce or eliminate debt. So one of the most important things that you want to be doing is after you get one month of emergency funds saved up, you want to look at your debt and you want to say, do I have high interest debt? What does that mean to have high interest debt? What that means is any debt with an interest rate above a 6% interest rate, we want to make sure that we are paying that down and we want to eliminate that high interest debt. So this for a lot of people is going to be credit card debt. If you have credit card debt right now, then we want to get rid of that as fast as we possibly can. In fact, we call that a pants on fire emergency, which they're, hey, you made a mistake. There's nothing wrong with admitting that you are in credit card debt and now it's time to eliminate it. So we want to make sure that we get rid of that debt as fast as we possibly can.

• 33:15Andrew Giancola?

  But you can also look at other things that may be out there, like a personal loan could have high interest debt. You may have some car loan that has high interest debt because you had some predatory lender who tried to take advantage of you and it's a 10% interest rate or something like that. And so if you have high interest debt outside of your mortgage, I want you to focus on paying that down as fast as you possibly can. This is going to A, help you increase your net worth to your first 100K, but B, it's going to give you extra dollars so that you are able to take those extra dollars and put them towards wealth building activities. Put them towards your investments so that you can grow that much faster towards your first 100K. So my favorite way to do this is to look at your debts, put them in order and figure out which ones you can pay off really quickly. If there are some that you can pay off really quickly, you just get rid of those out of the way.

• 34:00Andrew Giancola?

  And then outside of that, you want to go by interest rate. So whichever one has the highest interest rate, you want to knock that out. Okay? So that's how I would think about that, so that you can get rid of it really, really quickly. And you want to avoid unnecessary new debt. That's a big thing I think a lot of people mess up on is you don't want to go back or deeper into debt. Instead, we want to make sure that we are creating a situation where we are being wise with our finances. In addition, if you get a tax refund or if you get windfalls, those windfalls need to go to that high interest debt. They don't need to be going towards you buying a new TV. They don't need to be going towards you doing some other things. Instead, let's take those windfalls and take the majority portion of those and put them towards high interest debt. Yourself a little bit fine, but I would rather you take all of it and put it towards that

• 34:44Andrew Giancola?

  high interest debt. Now, if you are in debt, we have a free debt course. If you go to mastermoney.co/courses, we have a free debt course that is actually going to help you get out of debt. So if you're interested in that, make sure you check that out. Number six is we want to optimize our taxes. Now, this is going to be a fun one because we want to make sure that we are paying less in taxes. The last thing you want to do is pay more to Uncle Sam or pay more to the country that you reside in. And instead, we want to reduce the amount that we are spending in our taxes. So, number one is to max out our pre-tax accounts. So this could be things like your 401k, your traditional IRA, your HSA. Those have tremendous tax benefits. So if you're investing your money, you can definitely, definitely do that. You can also

• 35:26Andrew Giancola?

  take advantage of employer benefits like your FSA or your ESPP, Employee Stock Purchase Plan. So those may have some employer benefits that can help you over time. And a lot of investors out there are also taking advantage of things like tax loss harvesting. If that's you, you want to make sure that you get a little help with that. You don't want to be doing that on your own every single time because that's going to be something else that you could do. So, the big ones are these pre-tax accounts. So the way that these work is if you have a 401k, for example, and you are putting dollars into a 401k, you are getting a tax deduction upfront, or you're not paying taxes at all. The easiest way to think about this is when you put money in, you're not paying taxes on that money, your money grows, and then when you pull the money out, that's when you pay taxes. Just remember, Uncle Sam always wants his money. And so when

• 36:10Andrew Giancola?

  you pull that money out, you got to make sure that you are paying taxes. And so that's going to be the time when you pay taxes. Now with an HSA, it's a little different. An HSA stands for Health Savings Account. And we have an entire episode coming up on this, an updated one. So I hope you guys are ready for that one. But with an HSA, what we're talking about here is this is what I call the super retirement account, because money goes in tax-free. You can invest, and the money will grow tax-free, and you can pull the money out tax-free as long as you have a qualified medical expense. And so the HSA is a very, very powerful account. And the IRA works the same way as a 401k, but it has lower contribution limits, and there's just some additional rules surrounding it. Now, we also have other retirement accounts like The Roth IRA. Now Roth accounts are amazing because they grow tax-free and you can pull the money

• 36:55Andrew Giancola?

  out tax-free. So when you contribute money into a Roth IRA, it's money that's already been taxed. You've already been taxed on it from your paycheck. And so you, when you contribute it, you've already had after-tax money that you're putting into the Roth. The money can grow tax-free when you invest it. And this is the amazing part, because the majority of your wealth over time, especially if you're in your twenties, thirties, forties, the majority of your wealth over time is going to be the growth. And so because it is the growth, that means a Roth IRA is truly beneficial for a lot of people. Now, the Roth IRA has income limits, meaning you can only make so much money in order to contribute to a Roth IRA. And so if you're above those income limits, what you need to do is called a backdoor Roth IRA. Now, the backdoor Roth IRA is going to help

• 37:37Andrew Giancola?

  you get money into a Roth IRA. We have an entire episode on that if you want to check that one out. And then the last thing is to optimize your tax strategies to get a CPA. If you don't have a CPA already, having one in your corner is tremendously beneficial to you in the long run. I would make sure that you work with a tax professional, especially if you have a very complex situation, or if you own a business. Those are very, very important reasons to work with a tax professional. All right, number seven is going to increase your savings rate over time. So we want you to start saving 20% of your income right off the bat. If you can't do that, you can follow what we call the 1% rule, meaning starting with the max amount that you could start with, and then increasing that by 1% every single month until you get to 20% of your income saved. This reduces the pain

• 38:21Andrew Giancola?

  and the friction. It allows you to increase your income slowly over the course of those months, and will allow you to get to that 20% number. But over time, in reality, if you want to get to your first 100K, and in reality, if you want to get to your first million, you want to make sure that you are increasing the amount that you're saving over time. So when you get bonuses, when you get raises, all of those, here's how we think about those, is the 50/50 rule, meaning you take 50% of your bonus and put it towards your investments and increasing your savings rate, and the other 50%, you can blow that money on whatever you want unless you have debt. So you can blow it all on vacations, you can blow it all on trinkets, I don't care what you blow it on. You could blow it on whatever you want. But, we want to make sure- That we are taking 50% of those raises and 50% of those financial windfalls and putting them

• 39:04Andrew Giancola?

  towards some amazing stuff. Now, if you're someone who is out there and you're saying, well, I just got an inheritance that was $200,000. I'm gonna take $100,000 to go blow it. That's not what I mean. What I mean by this is for people who get raises, maybe you get a bonus every year and it's 10 grand. Well, take 5 grand, spend it on a vacation, take 5 grand and increase your savings rate. That's how I want you to think about this as you start to go through that process. So, increasing your savings rate over time is really, really important. And then thinking through as you start to, one quick way to do it again is to cut back on some of those expenses and optimize your spending. That's gonna help you get that savings rate up pretty, pretty quickly. Number 8 is to protect your money. So, obviously, the emergency fund we have already talked about, that is the number one fortified way to protect your money. But we also want to think about

• 39:48Andrew Giancola?

  insurances, for example. And so, getting renters, or homeowners, or car insurance, making sure those are optimized is really important. Avoiding scams and too-good-to-be-true investments are also really important to protect your money. And then making sure you are staying wise. So, for example, one thing I always do is when I'm shopping online, I like to utilize credit cards, because credit cards have a little bit better financial protection than debit cards do. And so, for me specifically, I like to get those points of rewards and I like to use those credit cards. Now, if you have been in credit card debt in the past, that's not for you. But if you haven't, and you want to optimize the way that you are protecting yourself online, utilizing credit cards is a great way to do that. Freezing your credit is another great way to do that to prevent

• 40:29Andrew Giancola?

  identity theft. And so, making sure that you freeze your credit is going to be really beneficial for a lot of people when they are not getting a loan, or when they're not trying to buy a car, or get a loan for a house, or opening a credit card, then you can freeze your credit. And the way that you do that is you go to the 3 major credit bureaus, freeze your credit, and then you unfreeze your credit when you're not utilizing that. So, this helps you not fall prey to scams online and things that can happen there. In addition, another thing that you can do is you could remove your personal information from the internet. And so, one of the best things that you could do out there is if somebody gets a hold of your personal information, they can take that information and go start to file for student loans in your name, or they can go file- For credit cards in your name if they start to get a hold of your personal information.

• 41:13Andrew Giancola?

  And so the way to avoid this is to get your information removed from data brokers. Because data brokers can sell your information to so many different people, including scammers. That's the worst part about this whole situation is that data brokers can sell your information. So you need to get your information removed from these data brokers. The fastest and easiest way to do that is to use a service called Delete Me. If you go to joindelete.me.com/pfp20, you can actually get 20% off Delete Me at that URL. And it is by far my favorite service that I have used over the course of the last couple of years. Because Delete Me is a service that helps you remove your personal information so incredibly fast.

• 41:54Andrew Giancola?

  So Delete Me is a great way to get your personal information removed from the internet. Also, you want to make sure that you have a basic estate plan to also protect your money. So things like having a will, having beneficiary designations, those are going to be really, really important in having those in place. I use a website called Trust and Will to do mine, and it was a great, you know, simple way to kind of get that done. If you guys are interested in that, just let me know. Number nine is the way to stay on track when it comes to getting to your first 100K is to build systems so that you stay on track. So automating your bill payments and tracking your payments is number one. Making sure you just automate all of that so that you don't fall behind on bills, so that your credit score doesn't get messed up. You just want to automate all your bill payments.

• 42:36Andrew Giancola?

  Secondly, is you want to make sure that you're utilizing some sort of automated budgeting system. Now, I like to utilize something that has a spending plan in place. So I use a tool called Monarch Money. There's other great ones out there like YNAB is a great one. And there's a slew of other apps out there that you can use. I like Monarch Money. I've been using it for a long time. And what you can do is then you could do a monthly check-in on your progress. And so there are monthly things that you always want to be checking on, like your savings rate, how much you invested over the course of the last month. But you also just want to do a check on your spending. And why I like Monarch Money is it literally does the budget automatically for me. So I automate all of that system, so I don't have to think about it ever. In addition, if you are someone who struggles with motivation with your money, see if you can find an accountability partner. Maybe you both are working. Towards your first 100K together.

• 43:21Andrew Giancola?

  This is an amazing way to facilitate some of this. So here's something we're working on and I want to kind of talk through this a little bit. Is we are working on a community that is going to help you really just master your money in general. You could start from wherever you are right now. It's going to help you automate all your money. It's going to help you put together these financial systems and it's going to help you connect with accountability partners as well. In addition, there's going to be so many more things than just that. But these are just some of the things that are going to help you have, build systems and stay on track is to have some of this stuff in place. Next is to review and adjust your investment allocations annually. So these are some of the systems also that you want to have in place is to review some of those allocations. And you want to make sure that you're tracking your net worth. Your net worth is your scorecard and this is how we get to our first 100K.

• 44:05Andrew Giancola?

  You want to make sure that you are tracking that so that you can see where your money is moving and how close you are getting to your first 100K goal. Now lastly, is this is a big one for a lot of people. On average, it can take people seven to eight years to get to their first 100K if you have an average salary. Now that may sound daunting to a lot of people, but I think this is something I want you to understand. Is once you get on this path, you need to develop a long-term mindset. And your mindset is going to be everything when you are on this journey to your first 100K. People who are not successful with their money, what they do is they have this short-term mindset. Maybe they try this for three months and all of a sudden they quit. And the way that you develop this long-term mindset is with those automations.

• 44:45Andrew Giancola?

  So automations are going to remove the friction and the willpower of you trying to remember to save your money or to invest your money. Instead of just automating it every single month, reduce that friction and willpower. And that will allow you to be consistent automatically. I don't think most of us can rely on our willpower, especially when it comes to saving money. Hey, there are so many different shiny objects out there and so many things we want to spend our dollars on that that money is going to disappear so much. So if we can develop this long-term mindset and understand building real, true, lasting wealth takes decades sometimes. And that is completely okay, because by the end of it, you are going to have the discipline to reward your future self. And so that is how I define discipline. It is a person who is delaying gratification.

• 45:30Andrew Giancola?

  So that they can reward their future self. It is someone who does not fall prey or get tempted by the instant gratification in today's world, and instead they have this long-term mindset. And that's what I want for each and every single one of you. Building wealth is doing all of these things. It is thinking about growing your income. It is doing the small things right. So it is thinking about growing your income. It is thinking about how can I optimize my spending? It is thinking about how do I invest my dollars the best way? It is thinking through, how can I go out and reduce my debt and get rid of my high interest debt? But in addition, this is one of those things that you are trying to work through the grind in phase one. You are trying to work through the momentum in phase two. And you are investing early. You are investing consistently. You are optimizing your taxes.

• 46:15Andrew Giancola?

  You are protecting your money. If you do all of these things, you'll get to your first hundred K. But guess what? Once you have your first hundred K, you already have the habits built to become a multimillionaire. And all of you who get to your first hundred K in that seven to eight years, I truly believe that you'll be a multimillionaire, not just a millionaire, a multimillionaire with the same exact habits. It's consistency day in and day out. My story is, I was broke when I first started my job. By the age of 25, two years later, I had my first hundred K. By the age of 32, I had my first million. It is because I developed the long-term mindset and I had the habits in place to be able to do this. I know each and every single one of you can also do this, which is why I'm so passionate about teaching you this. So if you guys have any questions, please make sure you join that master money newsletter,

• 46:59Andrew Giancola?

  send in your question and we will get your question answered either on the show or we will get your question answered via email. And that's going to be something that we absolutely want to prioritize helping you as much as possible. Listen, thank you guys so much for listening to this episode. Make sure you follow the podcast on all your favorite podcast players. And if you're getting value of this episode, consider leaving a five-star rating and review. Thank you guys again so much for listening. We will see you on the next episode.

• 47:38Speaker 02

  At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are, with personalized financial strategies that help protect what matters, so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich, together. Edward Jones. Member SIPC.