The Secrets of Personal Finance

I managed to totally screw things up for myself at the ages of 20, 22, 24, 29, 33, 37, and 40 so I decided to write everything I know about so-called “personal finance”. The words personal finance are a total scam but I’ll save that for another time. Let’s just say, this is about how to build wealth and preserve your wealth.

I managed to totally screw things up for myself at the ages of 20, 22, 24, 29, 33, 37, and 40 so I decided to write everything I know about so-called “personal finance.”

The words personal finance are a total scam but I’ll save that for another time. Let’s just say, this is about how to build wealth and preserve your wealth.

The things you need to know. 

The first answer is: nothing. You need to know absolutely nothing about personal finance. Buying a cheap beer versus buying an expensive beer will not help you get rich.

But, that seems cynical. So let me say congratulations first. You’re 20 years old! Yay!

I can’t even really remember 20 years old. I started my first business then. And failed at it. But that’s another story.

When I was 22 I was thrown out of graduate school and then fired from 3 jobs in a row at higher and higher salaries where I saved nothing.

When I was 24 I moved to NYC and began the first of about ten career changes. The first rule of personal finance is that it’s not personal and it’s not financial. It’s about your ability to make ten changes and not get too depressed over it.

During those career changes I made a lot of money. Then lost a lot. Then made a lot. Then lost a lot. Then made a lot more.

I did this so many times I made a study of what was working for me on the way up. And what wasn’t working on the way down.

So I’m not an expert on anything. I just know what has worked for me to create massive success. I’m admitting it right now. I’m not just a failure.

First off, don’t bother saving money. You get more money in the bank by making more money. That’s rule #1.

People might think this is flippant. What if they can’t make more money. Well, then, you’re going to run out of money. No personal finance rule will help.

Buying coffee on the street instead of in a Starbucks is the poor man’s way to get rich. In other words, you will never get rich by scratching out ten cents from your dollar.

People save 10 cents on a coffee and then….overpay $100,000 for a house and then do reconstruction on it.

Or they save 10 cents on a book and then…buy a college degree that they never use for $200,000.

Now your real education can begin:

A) Don’t save money.

Make more. If you think this is not so easy then remember: whatever direction you are walking in, eventually you get there.

B) That said, don’t spend money on the BIGGEST expenses in life.

House and college (and kids and marriage but, of course, there are exceptions there). Just saving on these two things alone is worth over a million dollars in your bank account.

The Journey towards Personal Freedom Starts with YOU

It’s time to make the most important decision of your life: Choose Yourself.

I will show you how…

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C) But doesn’t renting flush money down the toilet?

No, it doesn’t. Do the math. You can argue all you want but the math is very clear as long as you are not lying to yourself.

D) Haven’t studies shown that college graduates make more money 20 years later?

No, studies have not shown that. They show correlation but not causation and they don’t take into account multi-collinearity (it could be that the children of middle class families have higher paying jobs later and, oh by the way, these children also go to college).

E) Don’t invest in anything that you can’t directly control every aspect of.

In other words…yourself.

In other words:

  1. You can’t make or save money from a salary.And salaries have been going down versus inflation for 40 years. So don’t count on a salary. You’re 20, please take this advice alone if you take any advice at all.
  2. Investing is a tax on the middle class. There are at least 5 levels of fees stripped out of your hard-earned cash before your money touches an investment.


F) If you want to make money you have to learn the following skills.

None of these skills are taught in college.

I’m not saying college is awful or about money, etc. I’m just saying that the only skills needed to make money will never be learned in college:

  • how to sell (both in a presentation and via copywriting)
  • how to negotiate (which means win-win, not war)
  • creativity (take out a pad, write down a list of ideas, every day)
  • leadership (give more to others than you expect back for yourself)
  • networking (a corollary of leadership)
  • how to live by themes instead of goals (goals will break your heart)
  • reinvention (which will happen repeatedly throughout a life)
  • idea sex (get good at coming up with ideas. Then combine them. Master the intersection)
  • the 1% rule (every week try to get better 1% physically, emotionally, mentally)
  • “the google rule” – always send people to the best resource, even if it’s a competitor. The benefit to you comes back tenfold
  • give constantly to the people in your network. The value of your network increase linearly if you get to know more people but EXPONENTIALLY if the people you know, get to know and help each other.
  • how to fail so that a failure turns into a beginning
  • simple tools to increase productivity
  • how to master a field. You can’t learn this in school with each “field” being regimented into equal 50 minute periods. Mastery begins when formal education ends. Find the topic that sets your heart on fire. Then combust.
  • stopping the noise: news, advice books, fees upon fees in almost every area of life. Create your own noise instead of falling in life with the others.

If you do all this you will gradually make more and more money and help more and more people. At least, I’ve seen it happen for me and for others.

I hope this doesn’t sound arrogant. I’ve messed up too much by not following the above advice.

Don’t plagiarize the lives of your parents, your peers, your teachers, your colleagues, your bosses.

Create your own life.

Be the criminal of their rules.

I wish I were you because if you follow the above, then you will most likely end up doing what you love and getting massively rich and helping many others.

I didn’t do that when I was 20. But now, at 46, I’m really grateful I have the chance every day to wake up and improve 1%.

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  • Samuel Barrett Gross

    James, great article. As a 23-year-old, I’m realizing how important it is to gain skills and experience through persistent trial-and-error- and I couldn’t be more excited about the journey. Thanks for the advice!

  • Heywood

    I would like to see the “at least 5 levels of fees” detailed in an article

    • John Richards

      I am aware of two levels, mutual fund and 401K plan – perhaps also the brokers on both the buy / sell side, and any employer kickbacks funded from plan returns – but for a large 401K or a Vanguard IRA, I think that’s a minimal impact if you mostly buy and hold. Personally I don’t really care… over 20 years, my 401k has returned an average 10.3% annually, and I saved enough that I don’t worry about retirement. That’s one way to do it, the way I did it. It worked just fine, regardless of who else had their hands in my pot. However, even though I expect to retire with a few million, that won’t make me ‘rich’… just very well-off. James seems to have a different approach, that seems to be working for him, and is a more likely way to make big money – my method isn’t going to yield, say, a $25M net worth, but his easily might. I would speculate (and his history seems to show) that James’ approach has more boom and bust – higher highs and lower lows. That’s cool too. That approach just wasn’t for me, though I can see myself adopting it within ten years – when my youngest is on his own. Of course, that’s just the money side of things – and I only drew a contrast with James because I have saved my way to “enough” contrary to his advice – but since true wealth is not defined by money, there is much else to consider on this topic. I think in the end, if you ‘did it your way’, that’s a great thing. I will say that what I like about James’ overall blog and the advice / lifestyle / workstyle he advocates is that it seems geared around personal fulfillment. Hard to go wrong if you win on that score.

  • Charlotte

    I’ve always known I don’t see the world through the same eyes as most people and after reading your blog I now feel excited to embrace it! Everyone wanted me to go to university but I didn’t see the point because 90% of people I know went so it can’t mean it’s that special. Plus what is the point in spending a fortune when you don’t even know what your good at/love yet? Then everyone wanted me to get a proper job instead of Uni but I decided to go snowboarding for 3 years instead because it’s fun. Then I got a job ( at the same time all my friends at Uni were finishing studying and also looking for a job ) and worked in recruitment where I earnt at least 5 times more than anyone else I knew that went to study. Then everyone (mainly my employer) wanted me to buy a house but I didn’t see the point and I didn’t want to be trapped. Then this year I set up a recruitment business and everyone said I should grow it because I will be rich but I have been honest with myself and realised I don’t actually love it. So now even though I could be rich relatively quickly I’m going to quit and get rich doing something I love. So I have been following your idea advice and come up with some ideas I am going to try! OBSERVE THE MASSES AND DO THE OPPOSITE!

  • John Richards

    James, I differ a bit on D), but I think it depends on what you want from life. A feb. blog in the NYTimes noted a Harvard/Berkeley study that indicates that whatever financial/social ‘class’ you end up in is largely consistent with your predecessors, generations ago. I said ‘indicates’, not ‘proves’, clearly the data is too indeterminate for the latter. That would support your contention that college is not necessarily the driver behind lifetime earnings, but at the sametime… I did go to college, and it was a great experience for me – I learned a lot that I still use everyday in my work. I also learned a lot that I don’t use at work, but makes my life richer in many ways. Finally, of course, if you want a job with a big company (rather than starting your own, or building something entirely new) a degree is almost mandatory.

  • Gary

    Mind blowing post. Thank you James

  • Samuel Finlay

    It’s a very informative and helpful blog. Thanks for
    sharing. You should check out

  • CK

    Homes in San Diego, e.g., have been priced at 7x the median wage in San Diego for 40 years now. (Source: Piggington). So when you get a raise in San Diego, your house value goes up 7x your raise. That in itself is evidence of an insane bubble over 40 years. The previous 40 years, housing went nowhere.

    In 1982, interest rates were very high, suppressing land prices, and boomers were in their 30s ready to start buying homes. A perfect time to buy. Now, interest rates are very low, goosing land prices, and boomers are ready to start selling homes. Doesn’t seem like a great time to buy.

  • if you wanna save money on expensive coffee, go to any Starbucks and ask if you can get the double espresso for $2 instead of $2.7. You’ll be surprised….if you have the guts to do it…

  • Christine Dow Coraccio

    Looking forward to hearing more about what you mean by living by “themes instead of goals (goals will break your heart).” I used to be very goal driven but I’ve found in my forties that I don’t have the goal setting motivation of the past and I’ve become drained by constant goal setting. Sounds like you’ve experienced something similar. Thanks for another great post James!

  • You want to blow a twenty-year-old’s mind. Tell them what daycare cost.

    We don’t live in a world anymore where you can live a true salaried middle class life with two kids and a dog and save money. The life most people want to live just cost too much.

    In the middle of my wife’s first pregnancy I quite my full time salaried job. It was the best decision I’ve ever made because it gave me the opportunity to get up every single day and hustle for what I know I really need (and I mean hustle as in work hard). I’m very thankful for that one day where I was sitting in a meeting and said to myself “I’m wasting time here”. It’s hard to chase opportunities chained to someone else’s desk. I walked back to that desk and wrote a resignation letter.

    I’m not recommending anyone do that without a plan. I had a plan that I had been working on for a while. But it well worth all of the effort.

  • Alex

    Well, if you ask me, the most critical part of structuring your finances and optimizing savings is just having a plan. Whether you use a spreadsheet or a tool like Geltbox money or some other website — you have to get everything out if front of you so you can make smarter decisions. Once you do that, then implementing your disciplined savings strategy becomes critical

  • Idahoballer

    Oh, I see, it’s so simple. Just make more money. Amazing, why didn’t I think of that! Brilliant!

  • Alex

    Track your spending. If you don’t know where your money goes, it can be difficult to find opportunities to save. Keep track of your spending habits to help identify areas where you can cut expenses.

    I use Geltbox Money -automatic download from any website (banks,credit cards), high level of security (Your financial data is securely stored and encrypted only in your personal computer),

    When using Geltbox you don’t need to give your banking account numbers and passwords to a third party.

    Geltbox doesn’t use any third party Aggregation site (the user can aggregate his own data without exposing private data to any third party /web site).

  • Hi James

    Do you now or have you ever owned any dividend paying cash value whole life insurance contracts ?

  • Robert T. Bockel

    Knowledge certainly does not equal successful investing. In fact dumb luck frequently determines success.

  • Robert T. Bockel


  • Akhi

    I noticed the same but James breaks things down to relate to an everyday person.

  • Akhi


    I had my days where I didn’t have enough and now I make 150k yearly gross. I now mentor people who have got richer than me and still thank me for believing in them. I have contributed to communities to better education and help people in need etc. I am constantly learning and reading any chance I get to keep growing myself. I have few big goals I am working on at that time with end goals around Jan 2017 and June of next year.

    Having said all that, I’m hitting a plateau on my income and motivation as the hunger fades away. I’m not sure how to bring the hunger back and and keep growing income. I assume the answer will fall right around having my own start up and not work for a boss. But where and how I take the first step? I am type A personality which has all the traits to bootstrap but need an idea or something where I can envision an end-goal before attacking it. Hope you know where I’m coming off so you can provide me with some knowledge on the subject.

  • Dave Ives

    Thanks James for another great article. I reckon college is a lot like the casino … the only people who make any money are the owners. So, the best way to make money from college is to own one or two …

  • JoAnna Coakley

    Could you please expand on what you mean by “themes, not goals”?

  • Marco Weston

    I often think his controversial comments are targeted at making people thing for themselves and do the financial math instead of just jumping on the college or house buying bandwagon.

  • MoonManLives

    what if I love sitting around doing nothing