Personal Finance

👋 Welcome!

Personal finance can be stressful. There are countless places to find information and they all say different things. This page is a practical collection of useful insights I've gathered through extensive research and personal experience. It hopefully serves as a comprehensive starting point to help you grasp the fundamentals of personal finance and navigate your finances effectively.

This guide will help you:

How to use this page

  1. Read through the glossary to get a rough understanding of terms you might come across on your financial journey.
  2. Read through the guidelines to get a rough understanding of how to manage your money.
  3. Use the calculator to get insight into what it looks like to start saving.
  4. Get some expert advice from the brothers who have been through this before.
  5. Ask the chatbot any outstanding questions you might have.

If you're wondering, "What am I supposed to do with all this?", then skip to the bottom where you'll find a list of things to do next.

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📚 Contents

  1. Glossary
  2. Guidelines
  3. Calculator
  4. Quotes
  5. Chatbot
  6. Links
  7. Next steps

🔎 Glossary

definitions toggle
Term Definition
Cash Money you have on hand, usually in a checking account. When you're younger this might be sysnonymous with "all your money", but as you start investing this will be a smaller and smaller percentage of your net worth.
ETF Exchange Traded Fund, or a pool of grouped investments. Instead of investing in Coke or Apple, you can invest in an ETF, which will help diversify your portfolio, or reduce the risk that one stock tanking will make you broke. Similar to an index fund.
Index Funds A collection of stocks or bonds. Similar to an ETF.
✨ S&P 500 Standard & Poor's 500 -- A historically sound index fund. Dad says invest in the S&P 500, then forget about it until you retire. I do that. It's sound advice.
Retirement Account A special account for retirement savings. You'll usually deposit into this account and leave the money there until you retire. Trust the process. Plan to retire. You can both save and have fun in your twenties, I promise.
✨ 401k A retirement account offered by your employer. If they're cool they'll match your contributions up to a certain amount. That's free money.
✨ IRA A retirement account you can open on your own even if you're unemployed or getting paid under the table.
✨ 401k Match Money your employer contributes to your 401k
401k Vesting The amount of time you have to work at a company before you own the 401k match
401k Rollover Moving your 401k from one company to another
Traditional IRA A retirement account where you pay taxes when you withdraw money
✨ Roth IRA A retirement account where you pay taxes when you deposit money
Emergency Fund Money set aside for unexpected expenses. I've found it nice to have 6 months expenses set aside. If I lose my job, get in an accident, or decide to fuck off an travel, it's a nice safety net to have. It took me a few years of slow contributions to save up 6 months living expenses.
Retirement The time in your life when you stop working
Retirement Savings Money set aside for retirement.
Retirement Income Money you receive in retirement
Assets Things you own that have value
Liabilities Things you owe
Net Worth Assets - Liabilities
Income Money you earn
Expenses Money you spend
Net Income Income - Expenses
Debt Money you owe
Interest Money you pay to borrow money
Principal The amount of money you borrowed
Equity The value of an asset minus the amount of debt you owe on the asset
Stocks A share of ownership in a company
Bonds A loan to a company or government
Dividends A payment made by a company to its shareholders
Capital Gains The profit you make when you sell an asset
Compound Interest Interest on interest

🧭 Guidelines

Check out the glossary above if you haven't already, it will help this make more sense.

Cash Checking and Savings

  1. Spend less than you make.
  2. Keep enough cash on hand for immediate expenses.
  3. Put whatever's left in high-yield savings accounts.

Investments Stocks and Bonds

  1. Invest aggressively early, more conservatively later.
  2. Set it and forget it.
  3. Don't chase cheap thrills, follow the s&p 500.

Retirement Long Term Investments, IRAs, and 401ks

  1. Put 20% of each paycheck aside for retirement.
  2. Max out yearly Roth IRA contributions ($6,000). You'll pay taxes when you deposit money (now) but none when you retire and pull that money out. You'll most likely be paying more in taxes later, so getting taxed on deposits now is ideal.
  3. Max out 401k contributions, especially if your company matches.

General Keeping it simple

  1. 50/30/20 — 20% of your income should go towards savings and retirement. More is fine; less may mean saving longer. 50% (maximum) should go toward necessities. 30% goes toward discretionary items.
  2. Take your time with this. A solid "set up" session and semiannual check ups are plenty.
  3. Percentages change as you age. Check out the image below to see a solid guideline on how much to save when.
Saving guidelines

Feeling overwhelmed? Don't worry. At the bottom of this page there's a section called "Next steps?" that will help out all this info to use.

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🧮 Calculator

What do the above guidelines actually look like in practice? Use this calculator to see what 50%, 30%, and 20% of your monthly income is to get a rough idea of how to budget.

Realistically, it will be hard to save 20% early on when your income is low. Use the slider to get a feel for how much you might be able to save.

0%20%

Necessities: 50%

Discretionary: 30%

Saving: 20%

Monthly Annual
Necessities $1000 $12000
Discretionary $500 $6000
Savings $300 $3600
Total $300 $3600
This chart shows after-tax values. It will subtract taxes based on your income level.

💁🏼‍♂️ What are the brothers saying?

One thing I'd like to add is that there are lots of ways to do budgeting! I use all the same tools as my friend and he tracks every transaction and dollar. I pay enough attention to build an accurate spreadsheet and mental model of what ins and outs are such that I can project a timeline for any savings goal.

~ Will

The best way to start investing is to create a separate account that gets an automatic transfer every time you get paid - and you keep that account separate. You don’t have a card with you for that account, you don’t transfer money out, etc. you just invest. Mutual funds are a great start.

~ Guillermo

Don’t listen to me I’m 35 and I live with my parents.

~ Luke

Jake. I’ll respond soooon. Sorry.

~ Dad

Uhh... use the chatbot?

~ Jake

💬 Still have questions?

Hey there! I'm a chatbot and an expert in all things personal finance. What can I help you with?

☑️ Next steps

  1. Set up an account on Mint or Monarch to get useful insights into your spending and savings.
    • You can set up a budget here, linking any banking or investment account you possess, or use something like Google Sheets to estimate income and spending.
    • The point of these tools is to make sure that things are generally trending in the right direction.
  2. Set up an account on Betterment to start investing.
    • Betterment's bread and butter is goal oriented saving and automated investing. For me, that means that this jargon can turn into tangible life changes, like buying a house or getting a dog, while the automation takes the headache out of deciding how to invest my money.
    • To keep things simple, take this quiz to get started with a betterment account and let them help you get started. I would love to do this with you, as it might be daunting, and I might be able to provide context from my experience over time by showing you how I've set up my finances with Betterment.

We can do these tasks together, or you can do this on your own. There's no need to do this all at once. The first and most important step is thinking about it. You're a star.

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👋Welcome 🔎Glossary 🧭Guidelines 🧮Calculator 💁🏼‍♂️Quotes 💬Chatbot 🔗Links ☑️Next steps