Why the financial theme? Well, after ruling out topics such as romance, yoga and business etiquette due to a lack of qualification, saving money was just about all that was left. And being able to say that I have been able to build a solid financial foundation over the past five years, starting with zero dollars in my bank account and the absence of any sort of family trust fund, I am at least partially qualified. And after having worked with, managed, dated and talked to a number of individuals who were struggling to stay on top of their finances; I thought this might actually interest some people. It should be said that I am no financial advisor, and also do not take responsibility for you following or extrapolating any of my tips (ie, robbing old ladies to fund your emergency savings account). Last but not least, the picture above is not a $50,000 dollar bill but rather 50 Euro. Sorry folks. Alright, let's get started. Why $50,000? It's enough to make a downpayment on a starter home or condo in just about any market. And despite all the current real estate jitters, I think buying your first own home will always be a smart goal for young investors. Most of these examples are at least somewhat based on my personal experiences and beliefs. If you're not interested in buying a home then this might be an interesting exercise on how to save $50,000 - which is 20% of a 250,000 real estate purchase. I am going to just start with some tips that I believe in and follow myself. Then based on popularity and demand, I am going to keep updating this blog entry based on your feedback and my experience. Don't budget how much you spend but rather how much you save I hate spending budgets, just as much as I hate people telling me what I can or cannot do. But I love seeing my bank accounts grow. So rather than limit myself to how much how I can spend, I set a budget on how much I will save every month. And I like to save a lot. It turns a limiting notion into something positive and motivating. Save more than you spend Believe it or not, the minute I got my first salary job (and it wasn't a big salary, especially not living in Los Angeles), I started saving 50% of my annual net income. And while I have gotten a number of raises over the years, I never stopped saving less than half of my income. That does include what I put into my 401K retirement. To clarify, I had no belongings or obligations at this point of my life, which was a direct result of my spartan lifestyle. So you probably won't be able to save this much at the beginning, but you need to try. That's the only way to get ahead. Grow your income, then your lifestyle You're probably wondering how the heck I'd possible be able to save that much (50%). If you have ever dated me or lived with me, you know. I didn't have a car for over a year when living in Los Angeles. I took the bus and rode my bike everywhere (oftentimes while wearing a suit), packed my own lunch and build my hobbies and passions around where I lived. I walked to Yoga classes, rode my bike to the soccer field, skateboarded to my improv comedy lessons and once carried a 60 pound TV for 12 blocks. That wasn't cool. Fact of the matter is, you might have to lower your lifestyle a bit. Sell your car, get a roommate, go out during happy hour and walk your groceries. Can you do it? Once your income grows (so do your savings, btw), your lifestyle will grow with it. And you'll appreciate every bit of luxury (or normality) in your life. Build a second stream of income This one has a lot to do with me being able to accomplish my saving goals while still being able to travel and get out to enjoy life. An extra few hundred dollars a month will go straight to your savings bottom line and allow you to enjoy a few more of life's luxuries. The key here is to try and build a steady (and almost passive) stream of income. Something that you build once and that then keeps making money for you. Rather than babysitting, write a guide on babysitting and sell it on the Internet. Depending on how much time and effort I put into this, I am usually able to cover all my fixed expenses through a secondary stream of income. Past money making activities have included: teaching online at a University, selling ties on ebay in Germany, selling dating site memberships on the Internet, building websites that sold flights and hotel rooms, publishing a book on writing complaint letters, etc. It's really very easy. You just need to think about it, determine a plan, execute, optimize and then sit back and enjoy. The money you make with this will directly correlate to the time and effort you put into this. Pay off your credit card debt There is good debt and bad debt. Mortgages and student loans can sometimes considered be good debt, as they're likely to carry lower interest rates and sometimes even are tax deductible. Ongoing credit card debt is always bad. It carries a high interest rate, and therefore should hinder you from participating in any other investment vehicles. For example, it's stupid to save 4% with your savings account when your credit card company charges you 18% interest. That means every dollar you invest in your savings will net you a negative 14% return. So, do whatever it takes to pay off your credit card debt. Get a second job, consolidate your credit accounts into one that doesn't carry any interest for a certain time period. Then put your credit card into a glass of water and put it in the freezer. Once you have paid off your credit card debt and understand the danger of such, you can start using a rewards card for every day purchases as long as you pay it off on a monthly basis. 401k, k? Regardless of your credit card debt situation, I would invest the maximum amount necessary for a maximum employer contribution. Once you have stabilized your personal debt situation and build a 6-month emergency fund (see next paragraph), you can start putting more money into your 401K. You won't pay taxes for it until you cash out when you're bald and grey, but this the earlier you can start filling your 401K koffers, the better. Money grows over time. Save Smart, Invest Smart And Do It All Automatically I like investing money, more than I like spending it. But investing money can be a risky business, especially if you don't have a lot of experience doing it. Or even if you have a lot of experience, but still don't know what you're doing. I have lost some money in the stock market, which I fortunately was able to balance with some lucky wins. So, if you don't want to spend a lot of time managing your investments, here's what I'd do. First start saving money and create an emergency fund that is worth about 6-month worth of living expenses. This money should be in your savings account or an insurable vehicle such a CD. I love ING Direct, and they automatically deduct a certain amount out of my checking account on a weekly basis, which is growing at anywhere between 4-5%. Once you have established your emergency fund, you can start thinking about investing in some stocks which is a great long-term vehicle. Rather than try your luck at choosing the right mix of stocks, I would recommend you just buy index funds. The Vanguard S&P 500 Index Fund consistently beats 90% of all other domestic stock funds. Again, invest automatically and re-invest your dividends. Use potential negatives as an opportunity to save Everybody is fretting high gas prices these days. One of my good friends used this market situation as an opportunity to sell his car and switch to riding a motorcycle and using public transportation. Rather than now paying an extra $50-$100 a month, he saves $400-$500 in car payments, car maintenance and gas. While not everybody can sell their car, we can all look at the current situation and potential hardship, as an opportunity to actually improve our financial situation. Enjoy the financial freedom Everybody enjoys life's little luxuries differently. I like to travel, eat great food (at home!) and buy geeky toys from time to time. And through responsible money management, I am now fortunate enough to do so without having to feel guilty about it or doing so via credit card debt. The one piece of advice that I have about enjoying your new found financial freedom is to not lose it right away. Don't buy toys such as a big car, a boat or a small airplane when that means you all the sudden have to make ongoing payments and then lose your financial freedom again. Buy things you can afford, enjoy them and then keep saving. To be continued.