The Ultimate Guide to Personal Finance – Part 1:

Money Mistakes that cost you
millions (what to avoid)

First, here's what this guide is not:

  • Your parents' old money management and investing advice
  • An economics textbook that takes a math degree and 10-years experience to understand
  • Frugality that demands you pinch pennies and cut back on everything

In this guide, we're going to stop the overwhelm, confusion and frustration. You'll get five simple steps to create a personal money management system that practically runs itself.

Before we get there, let's start with what keeps us from being effective with our money

If you avoid making costly money mistakes, you can save hundreds of thousands – if not millions – of dollars over your lifetime. Knowing what NOT to do with our money is half the battle.

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Mistake #1

Debating minutia

Did you ever wonder why so many
people get fat after college?

After I graduated from Stanford, I noticed a lot my friends – the same ones who used to say things like “There's no, way I'll ever get fat!” – packed on the pounds a few years later.

Why is that? Weight gain doesn't happen overnight.

Instead it creeps up on us a few pounds at a time. And before we know it, we look up and we're 20 lbs heavier.

So what do we do? We overwhelm ourselves with small choices, (which brand of protein bar to buy? Which running shoes are the best?) instead of focusing on the big wins of eating less and exercising more.

If you think about it, money works the same way.

We spend years obsessing over every single, tiny financial detail and never take action.

Before we know it, we're in a bad situation and getting out seems overwhelming.

Or worse, we just ignore the topic of money completely… because it make us feel guilty, like our fitness or food.

Both options lead to the same results: NONE.

Why is money and food so similar?

Just like with our fitness, when it comes to our personal finances, most people only need to focus on two things: setting up reliable, no-fee bank accounts with automated savings and bill payments and investing earlier on in life so we can let our money grow for 30+ years.

But that's not as sexy as chair-throwing and ratings-driven cartoons on TV calling out thousands of complex investments you need to make.

And it's not as tactical as the penny-pinchers who tell you to stop spending on everything.

But it is what works.

Mistake #2

Relying on Willpower

Actual, real articles that someone wrote about how to save money

These are actual, real articles that someone wrote about how to save money.

You won't find that kind of advice here. If frugality is what you're after, please go back to 2 hours of carefully separating toilet paper by hand to save $1.42 a week.

If you don't want to be that person, I want to show you how to actually save money without guilt, frustration, confusion, or constantly being bombarded with terrible money advice.

“Keep a budget!” and “Cut back!”

None of this advice is applicable in the real world, but frugalistas keep touting it as if it's their religion.

Turn coffee and loose change into a retirement dream? WRONG.

But probably the biggest rallying cry for frugality “experts” is to cut back on your morning coffee. You've probably seen a chart like this.

The explanation goes something like this:

If you save $2/day by making coffee at home, you'll save $62/month which equals around $700/year. “Properly invested,” that'll grow into $10,000 in 10 years!


Why doesn't this work?

  1. We have to make this choice EVERY DAY

    Regardless of factors like we love Starbucks caramel double lattes, we're feeling stressed, or we drive by the coffee shop on the way to work, we have to use our limited willpower first thing in the morning, every day, forever.

    And what these no-latte, finger-waggers aren't taking into account – as they gorge on their homemade coffee – is that every decision we make to not buy that latte, to not consume that, to not have that depletes our willpower.

    The result looks something like this.

    Motivation over time graph
  2. Even if we're “successful”, we don't invest the money we've saved

    You've skipped morning coffee every day for 365 days. You have $730 dollars, right!? Probably not. $2/day is not significant enough that you'll “see” the savings at the end of the month. Unless you physically put aside $2 every single day. Which brings us back to point #1. And even if you do it, how do you invest it? What account do you put it in? It's easy to see how this becomes much more complicated than putting grounds in your coffee maker.

Mistake #3

Thinking you can wait

Procastination is a silent, but slow killer for your money.

We all puts things off, of course.

But waiting until the last minute to get smarter with our money is one of the worst things we can ever do. Every year we wait to get started with investing and saving puts a huge dent in our long-term financial plans.

Here's an example.

How to make $50,000 more than your friends (with less work)

Look at the chart carefully. Smart Sally actually invests less than Dumb Dan, but ends up with about $50,000 more.

She invests $100/month from age 25-35 and never touches her money again. Dumb Dan on the other hand WAITS to do anything with his money.

He doesn't start investing until he's 35. Then he invests the same $100/month every year until he's 65.

So Smart Sally only invested her money for 10 years. While Dumb Dan invested for 30, and she still comes out nearly $50,000 ahead with less work.

There's a hefty price for waiting to take control of your money. Starting early is the single best way to get rich.
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I want to help you get started today

You don't have to be perfect to be rich. Or the smartest person in the room. Or a type-A personality. In fact, with my six-week program to financial independence, you can start with any amount of money, do just a portion of what I suggest, and succeed brilliantly through good times and bad.

To help you get started,
I want to give you Chapter 1 of my New York Times best-selling book, I Will Teach You To Be Rich for free.

I Will Teach You To Be RIch book cover

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Money Mistakes that cost you millions (what to avoid) | The Ultimate Guide to Personal Finance