Your net worth is a useless number without the proper context to help you understand what it means for your situation.
A more relevant number is your total wealth relative to your annual spending. A $1 million net worth means a lot more to someone who spends $30,000 per year compared to someone who spends $250,000 per year.
I’ve written a lot about my personal definition of financial freedom, which is spending your days doing work that you love without worrying about how you will pay the bills.
In this article, I’ll show you why the following three numbers are…
To borrow and recreate a phrase from Will Ferrell’s character in Zoolander:
Side hustles; so hot right now!
Yes, side hustles are very in fashion these days and with good reason. Even before the pandemic, wages had been stagnant for years while the cost of housing and higher-education (a classic means to increase your wages) have reached all-time highs.
The impacts of COVID-19 have been devastating. Not only from a public health perspective but from an economic perspective. Many of the same people who found their wages stagnant in 2019 found themselves out of a job in 2020.
The most important factor that determines how wealthy you will become is the cards you were dealt.
I know the “pick yourself up by your bootstraps” crowd doesn’t want to hear that, but it’s the truth. You can be the best poker player in the world but if you’re starting hand is an offsuit 2 and a 7 (the worst possible hand,) you’re probably not going to win.
Millennials have drawn a 2 and a 7 at every turn, and all some people want to do is criticize them for how they played their crappy cards.
In this article, I…
The entire point of accumulating money is to trade it in for time and freedom.
But, how much money do you actually need to exchange for a lifetime of doing what makes you happy and fulfilled? The answer to that question can be incredibly clarifying for your financial plan.
To come up with your minimum number for what you consider “enough,” we need to talk through three issues;
The highest level of financial freedom is having enough passive income to cover your living expenses. If you manage to reach that point, you can spend your days doing whatever makes you happiest.
If passive income is the key to financial freedom, then anyone who can enable others to generate passive income will be able to wield massive influence and make themselves wealthy. That is why the internet is full of spammy articles and videos, promising easy solutions to generate passive income.
Here is the brutal truth about passive income.
Generating enough passive income to cover your living expenses takes…
Young people today need to be a lot smarter with money than past generations.
Credit Suisse's 2021 report on global investment returns paint a bleak picture for the investment prospects of young people today;
Young investors today can expect to earn less than half the annual return that baby boomers enjoyed during their careers.
In a world of record-low interest rates and stretched equity valuations, we can’t expect the same level of investment returns that we have experienced over the past decade to continue in the near future.
In this article, I discuss what the low return environment means for…
In my opinion, the best personal finance podcast around is the “Rational Reminder.”
If you love evidence-based financial discussions (no “hype” or BS) I can’t recommend it highly enough.
And no, I have no affiliation with this podcast. The hosts have no idea who I am, it just happens to be my favorite podcast I am listening to in 2021.
Check it out here:
Here are the most thoughtful comments I read from Making of Millionaire articles this week.
I like the way you describe or illustrate stable income jobs as bonds and building business/entrepreneurship as stocks. It really encourages me to add my ‘stocks’ portfolio to my human capital.
Here was the major takeaway from the article:
To balance out and diversify your human capital, choose a side hustle that has the opposite characteristics of your day…
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Written by: Ayodeji Awosika
Becoming a billionaire is improbable. And, you probably wouldn’t want to do the work required to get there. You don’t need to be a millionaire either. …
It’s possible to make and invest a lot of money and still go broke.
If there is a high correlation between your income and your investments, you could find yourself in a painful (and avoidable) situation where you lose your income and the value of your investments crash at the same time.
Where your paycheck comes from should be the number one factor that drives your investment decisions.
In this article, I use a common example of real estate agents investing their money in local rental properties to highlight the dangers of connecting your paycheck to your portfolio, especially if…
Economic policy wonk by day. Personal finance writer by night. I write about investing, debt, and all things related to money. Editor of Making of a Millionaire