Finances. Money. Moolah. Cash. Bucks.
No matter what you call it, it all means the same thing... Promissory notes.
A piece of paper or digital data that promises you the ability to purchase something within that price range.
Most of us are living outside of that range on the daily.
The Game of Life requires players to accumulate points to upgrade certain, if not all aspects of their game.
If you wish to play at the level of comfort, you must accept the terms and conditions.
This chapter is about understanding the rules so you can win.
What is the one thing that rules the entire world, something that no one can do without AND is the one thing that we are not taught in schools?
Money. And how to manage it, get it, keep it, and make more money with the money you already have.
Financial literacy is not taught in schools because if you knew how money works, the top 1% won't get their money to pay for their extravagant lifestyles.
Think about that for a moment.
Knowledge is power, and money knowledge is the most powerful knowledge you can have.
A dollar ain't a dollar anymore. Because it can be printed at will, money is losing value fast.
The more money the Federal Reserve "creates", the more it lowers the value of cash.
This causes inflation which reduces the buying power of your dollars.
Removing the gold standard, which was there to give money security in actual gold value, made it possible for the government to basically pull out the charge card and leave it to the lower class to pay off.
If you were to save money in, say, your mattress, it would be worth much less when you need it.
The trick is to find yourself a way to have your money make more money than it's currently losing.
This is where investments and money markets come in. Pay attention now or you won't be able to afford to pay for anything later.
First off, we need to acquire a flow of cash.
That can come in many forms such as a job or service. You can work for someone else or start your own business.
You could have a few gigs to bring in a few bucks.
If you choose to work for someone else, you become an employee.
An employee has benefits: you don't have to worry about setting aside money for taxes, and you don't wear a bunch of different hats.
Being an employee is a great way to start out making money while you build the skills for your own business.
If you are hoping to start a business one day, figure out what kind of product/service and/or what niche you want to be in so that you can choose your job accordingly.
A niche is like a category (pronounced NEESH), such as medical, food service, or IT.
You could use the job as training for the business you want to build, and they will pay you while you learn!
Henry Ford said it best: "If you think you can or you think you can't, either way you're right."
Getting a job can be fairly easy if you look at it as an easy task.
"I think I can, I think I can." Just like The Little Engine That Could. Better think that you can.
Whether or not you are searching for a job, remember that you are always marketing yourself — in the real world when out and about, or online when scrolling.
It's important to keep a professional attitude both online and IRL (in real life) as you will be publicly noticed during hiring and layoffs.
Your social media profiles will be searched. It's best to go through all your profiles before applying for a job and erase anything inappropriate.
That includes talking bad about companies, wild parties, or stupid things you've done.
If it doesn't flatter you or reflect your best, erase it.
Don't forget that private messages can be screenshotted so always be on your best behavior.
That not only keeps you out of trouble, but it is the first step in creating a wonderful life.
Being good keeps your vibrations higher and that, combined with the law of quantum mechanics, results in happiness.
Think about what you would love to do with your time in exchange for money.
When you feel you have an idea, do a little research into companies that fit your interest.
It's not wise to go on an interview and know nothing of the product or service. But don't get cocky either — no one likes a showoff.
If you are showing up to a company without an appointment, show up early, preferably before 10:00 a.m.
When showing up close to lunch, you're dealing with people who are slightly hungry and in a hurry.
When you come after lunch, you seem lazy because you didn't go there first thing in the morning.
It's okay, you'll get through it.
Knowing you have an interview, think of how you want to be seen.
How you want others to perceive you. Don't be fake but remember there is a time and place for everything.
Not everything in every place.
Set intentions before you get to the interview. Think about what kind of energy you want to bring to the meeting.
Do an imaginary interview in your head, thinking about what questions may be asked:
There are many more. Find a good list at novoresume.com
Find out what the dress code is even if you must send a friend into the office to "ask for directions".
If other employees are wearing dressy suits, don't come in jeans.
Likewise, if it's casual attire, don't come in your best suit.
Tip: Don't choose Friday to find out the dress code. It could be casual Friday and you show up Monday in jeans!
Show up for the interview no later than 15 minutes early but stay cool, calm, collected and be prepared to wait.
Sometimes for quite some time.
Plus, having to wait longer gives you time to breathe, collect your thoughts, and go over how you want to interact with the interviewer.
I got hired once after waiting almost an hour for my interview. I was told they were looking for someone with patience. I knew that wasn't the real reason, but I went with it. Luckily for me, I used the time to replay in my head how I intended to feel when they say I have the job. By the time I went in, I was all smiles, even after a lengthy wait. I almost said "I know" when they said I was hired!
This is something most people fail to think about. They just go with the flow without realizing they can play the scenario in their mind first, choose what kind of energy to bring, and what they want to get from the situation.
There have been times I was sure I was going to get the position and was just devastated but then, because of the energy I put into trying, something better popped up very soon.
Just remember to keep the thoughts on the positive; you never know who may be admiring your strengths.
Even saying to yourself (if you don't get that job) "that just gets me closer to my dream job!" Your self-conscious wants to make it true and will be on the lookout for opportunities.
When one prepares and actively chooses the energy they bring, they have a greater chance of accomplishing their goal. Your positive attitude is important even when no one else is watching. When you think positively, your subconscious mind works to make your thoughts reality.
Bring the joy. Do not be disappointed if you do not get the first job that you apply for. In fact, don't be disappointed if you don't get the first 20 jobs you apply for. Be persistent. The squeaky wheel gets the grease. Let them know that you are eager and willing to do what is necessary to get the job.
When you receive the good news that you've been chosen for a position, you will be asked to provide personal info and fill out some paperwork.
They will most likely ask for your school records or previous employment info.
You will need to provide:
You will fill out a form called W-4.
The IRS' Form W-4 helps your employer know how much of your check to hold back for federal income taxes.
On this form it will ask you how many dependents you have. If you are by yourself, you have the choice of choosing 0 or 1.
When you choose zero dependents, you will be withholding the most taxes. At the end of the year, you will be reimbursed for the overpayments in the form of a bigger tax return.
If you choose to count yourself as a dependent (1), you will pay less taxes out of your paycheck and receive a smaller return.
The new 2020 update on the W-4 allows you to adjust how much is withheld in cases where you have a second job. It's best to overestimate what you think you need. To either be square or be owed a refund is the best strategy.
Important: Do not falsify this information. Adding imaginary kids will bite you in the behind later. You will have lied on a federal tax document!
Paying taxes throughout the year via your paycheck withholdings often proves to be a benefit come tax time the next year.
The employees of companies that have worked there in the previous year will be given a form called W-2 in late Jan/early Feb.
W-4: Tells your employer how much tax to withhold from your paycheck.
W-2: Shows how much you earned and how much taxes you paid.
If you worked the previous year and haven't received your W-2 by mid-February, contact your employer right away. You will need that form to file your taxes.
The employer paid a set amount of taxes according to your W-4 information. When tax time comes around, you have the chance to get some of that money back, plus more in some cases.
Therefore, it's important to keep good records of your expenses and assets.
You could pay someone like H&R Block to do your taxes or do them yourself at turbotax.intuit.com and save yourself money.
Often you can file federal taxes for free and state taxes for a small fee.
Being self-employed is a bit different in the tax department.
You should save 30% of your income to pay the taxes and are responsible for paying them quarterly. Four times a year.
When you are actively searching for a job or in your first couple weeks and haven't gotten paid yet, food may be hard to come by.
Instead of resorting to skipping meals or eating cheap ramen, try applying for food stamps.
They could approve you for emergency food stamps and then receive them for at least six months.
Go to USA.gov and follow the instructions. Local food banks are also an option at 211.org or dial 211 from your phone.
There will be many types of insurance you will need in your life, but the three main insurances will be health, car, and home/renters' insurance.
This section breaks down each one so you can make informed decisions.
If you have a job that gives health benefits, do take advantage of that as the rates are most likely lower because your employer will be paying part of it.
When you need health insurance and your employer doesn't provide it, you can go to healthcare.gov and pick your state, give your email address and submit.
Information will be sent to you.
Lately, car insurance has been skyrocketing. When shopping for car insurance, don't take your first quote.
Always get at least four to five different quotes because it's amazing how drastically the prices change.
It's a lot like shopping on Amazon and seeing the same product sold by different sellers at different prices.
You just need to do due diligence and get many quotes.
The rate given on a particular day is chosen based on ALL the claim information for a specific time period — 3 or 5 years ago to the present day in your particular zip code.
For example: If there was a large 20 car pile-up on the freeway 2 years, 11 months, and 28 days ago with 9 cars from your local insurance company, that accident would still be within the 3-year period and set rates quite high.
If you wait a few days, that large accident would be outside the 3-year period and rates will be lower (assuming no other large claims were made).
Real Example: I received a quote for $1,068 that turned into $409 just a month later from the same company!
Your credit score is also used in determining your insurance rates. Your FICO score is used in calculating your insurance rate.
A score of over 700 would get lower rates than, say, 500-600.
It's always good to be on your best behavior when it comes to your credit health and personal health.
Living within your means is a term used to explain how to not overspend.
When you live within your means, you know your spending limits and have disciplined yourself to not give in to impulse buys.
Spending more than you have forces you to go into debt, which in itself, incurs its own debt.
Does the item make you money? If the answer is no, it's best to wait and save.
Otherwise, you will be paying more for the item in the long run.
Also, when you purchase an item, the cost doesn't stop at the register. That item needs care and often it takes up space, money, and time.
Take that wonderful cashmere sweater on sale for $60 (down from $200). A steal, right? But now it must be stored with moth-proof satchels, in a damp-free closet, and needs to be dry-cleaned after wearing.
Items that you buy just for aesthetics — nick knacks (or "dustables" as I call them) — are items that need regular dusting, occasional cleaning, and don't give a return on investment.
Such items should NOT be put on a charge card. Examples: Collectible toys, figurines, commemorative plates, etc.
Paying interest on non-productive items is a waste of resources.
If you fancy that wall art and don't have the cash for it, ask if it can be put on lay-a-way.
That is where you pay for an item in payments but don't take possession until final payment, avoiding interest.
Beware of the rules for each store's lay-a-way — if you don't pay all of the money, you may not get your money back or may have to pay a restocking fee.
Allocation means to dedicate a certain amount of money to go towards things like housing, food, entertainment, travel, etc.
Some make a rule like the 50/30/20 rule that allows you to spend 50% of your income for needs, 30% for wants and 20% for savings.
The envelope system is good for those who like to use cash.
Get an envelope for each category and add a preset amount from each paycheck. You can only spend what is in the envelope, and when the money runs out, that's it.
Example: You put $125 in an envelope labeled "Eating Out". This is where you grab the money going through the drive through, sitting at restaurants, or grabbing snacks at gas stations. All out-of-home eating comes from this one envelope.
When you run out, pack a lunch from home. Do not take money from another envelope. Wait until your next paycheck.
It helps to write on the envelope what you've bought and how much. Much like a checkbook ledger, you can see at a glance how much you have left. This way, you can adjust amounts come next paycheck.
There are also colorful envelope systems you can purchase with preprinted lines for recording transactions and labels for categories.
On the digital side of budgeting there is an endless array of apps claiming to help with your money woes.
I found an app that I will promote, without compensation: RocketMoney.com
They have been the most useful tool in my arsenal for combating debt.
You can connect all your accounts safely through a third-party app that connects you to your bank. Rocket Money will keep tabs on your expenditures and allow you to categorize each purchase.
It also alerts you when bills are due, when you get paid, and when you have a trial subscription ending — plus much more.
It's not complicated because it's practically on autopilot. It will even ask you about certain charges, prompting you to choose if it's reoccurring or tax deductible and allows you to add notes to each purchase.
After you've had Rocket Money for a few weeks, you get a breakdown of your spending habits so you can monitor your spending in certain categories.
If there is one thing that can tell others how responsible you are, it is your credit score.
Your FICO* credit score is based on your credit report.
There are three major credit reporting agencies: Experian, TransUnion, and Equifax.
Credit Karma tracks your credit accounts through two of the three major bureaus (TransUnion and Equifax).
You can also go to Experian.com for your free credit report and FICO score.
All three may be slightly different as not all companies report to all three bureaus.
You can also obtain a free credit report from all agencies once per year at AnnualCreditReport.com
*FICO stands for Fair Isaac Corporation and is the largest (and best known) credit score company.
The FICO base score 8 ranges from 300 to 850:
When starting out, nothing on your credit report may sound great, but believe it or not, it is WORSE than bad credit!
How can no credit be worse than bad credit?
Credit lenders are in business to make money. They need reassurance of repayment. When you have never had any credit extended toward you, you cannot prove your worthiness.
This is where bad credit is better than no credit: You have some history. They may not like your low score so you have a higher APR, but at least they can assess the risk.
The best way to establish your credit worthiness when you have none is to open an account with Kikoff Credit Builder
You will get a $500 line of credit to use in the Kikoff store where you can purchase digital items and make payments as low as $2 per month.
Payments even as low as $2 per month are worth the same as higher payments on traditional cards.
Kikoff reports your payments to credit bureaus to help you build credit. It takes at least six months to get a credit score from no score.
Another choice is getting a secured card. You put money, usually around $200, in a bank and they extend you $200 in credit.
This is credit even though you already paid. The money you put down is the security deposit in case you don't make payments.
Important: Wait for your statement to come in before paying off a charge. Why? Because it needs to show in your statement so you can prove you can borrow now and pay back later. If you pay it off right away, that just shows you had cash — not that you can handle credit.
But be sure to pay before the due date to avoid interest. That gives you about 21 days from statement send and due date.
Best practice: Make several small charges, wait for the statement, then pay them off before the due date. This builds credit without costing you interest.
Keep your debt under 30% of your credit limit. That means use $60 of your $200 limit.
Most important factor in scoring: ON-TIME PAYMENTS!
Assets are things that make you money.
Liabilities are things that take your money.
Basically, if you're not making money on a purchase, you are losing money.
A car can be an asset — IF having the car causes you to bring in more money than owning the car costs.
If you're only using it for pleasure, or you work from home, or live close to your job — the car is NOT an asset; it takes more money to keep than it brings in.
When you use a car a lot for work (not just to and from), make sure it's bringing in enough to support itself AND you.
Your house you live in: NOT an asset (you live in it)
A house you own but don't live in: AN ASSET (you rent it out)
Comic book collection: NOT an asset if you won't sell it. If you're just collecting and spending money on storage, it's a liability.
True assets: Cash, real estate, REITs (Real Estate Investment Funds), stocks/equities, bonds, etc.
Not long ago, if you wanted to buy stock in a company, you had to go through a stockbroker, invest a lot of money, and not have control over your stock.
Now you can buy stock with as little as a dollar on many trading platforms. This levels the playing field for everyone.
Stash Bank offers a debit card that you earn stock back on all your purchases.
You can sign up for an investment account, bank account, retirement account, or all of the above. They even have custodial accounts for parents to open for their children.
Get $20 in free stock just for signing up!
Go to get.stash.com/karma937jy and start investing!
Making a conscious decision to not fall into the trap of recycling your debt will be the smartest move you will make.
When you roll debt over to the next month, interest fees come with it, and when you make only minimum payments, it starts to compound.
You can end up paying three times the original amount for a purchase.
Setting reasonable financial goals will help you stay in control and get you a good credit score.
Example goal: Save $150 per paycheck until you have saved $10,000 for a down payment on a car or home.
Keeping your goals in mind daily will help you stay on track. If your goals are on the back burner, you might miss opportunities.
Having a finance journal will help you fine-tune your financial health to achieve big goals.
When faced with a temptation, ask yourself: "Is it worth X number of hours of work to have it?"
Sometimes when you look at it in hours-worked instead of dollars-spent, it hits you right in the pocketbook differently.
Are you sure you want to work 15 hours just to sport those expensive shoes? How are you going to show them off if you're working your butt off to pay for them?
The high you get from shopping peaks at the register. It doesn't last long enough to be worth it.
Being disciplined in your finances does not mean you can't have good times. You will have good times, but you will be responsible during those good times.
Being on vacation doesn't mean you should eat extravagantly or shop till you drop. Vacations are times to unwind and experience something different.
Be smart about playtime — it will allow you to have fun for much longer than those who want the best amenities and luggage.
Saving money outside of a high interest savings account is not advised as the money you save as cash will quickly disappear with negative interest rates.
Find yourself an account that offers interest on your savings.
While there are many choices, a high yield savings account is good for quick access plus quick growth.
A traditional savings account has very low percentage rate such as 0.01% APY.
The best high yield savings accounts earn over 1% APY. Keep that in mind when looking for a spot to hold your cash.
What is APY? It is the annual percentage yield — the amount of return you receive on your savings. It's like the APR you pay when you borrow, only this is what's paid to you.
In high yield savings accounts, your money is easily accessible, but they do limit the number of withdrawals each month.
With a Certificate of Deposit, you must hold your money in there for quite some time.
If you withdraw early, you'll be charged a penalty.
That's good for long-term goals but if you want higher yield AND access to your cash, the next option may be for you.
Money market accounts pay more than regular savings accounts and may also allow you debit card transactions or checks.
This is the sweet spot between savings accounts (low return) and CODs (no access).
Examples of good money market accounts (based on Bankrate.com):
Either way you choose your account, be sure to keep records of all deposits and withdrawals.
The IRS may need the information come tax time.
The surest way to have the IRS ask for them is to not have them.
Cryptocurrency is a digital asset used like money, which can circulate without a central bank.
Cryptocurrencies are made using cryptographic techniques to allow private yet verifiable transactions.
They travel using blockchain technology, a type of ledger which will be very useful for more than just cryptocurrency.
Trading in crypto is becoming more acceptable by the day.
NFTs (Non-Fungible Tokens) are also using blockchain to achieve their place in the tech world.
More people than ever are exploring cryptocurrency as an investment and wealth-building tool.
Keep record of your transactions just in case. The IRS takes crypto seriously for tax purposes.
The first year I tried crypto, I did hundreds of trades — many in one day. I didn't think to write down EVERY transaction, sometimes trading in the middle of the night when I woke to pee. (TMI?)
When tax time came, the IRS asked one question: "Did you purchase any cryptocurrency?" I said yes. Big mistake. They wanted EVERY SINGLE TRANSACTION.
I panicked! I went through all my transaction history on Coinbase and in my bank accounts, flooding the tax paperwork with transactions. It took forever. I was exhausted.
I decided then and there I wasn't going to deal in crypto anymore. Too stressful for taxes.
But here's the twist: I found minor amounts of crypto I'd forgotten about in other accounts. I cashed it all out.
When tax time came around again, I had two or three transactions. They asked if I made crypto transactions. I said yes, ready with my info.
That was it? That was ALL the questions? Just "did you make transactions?" YES or NO?
I guess the IRS got overwhelmed trying to verify all the many transactions people had reported. Now they just ask yes/no.
Still: Keep your records just in case.
Money may not be glamorous, but financial literacy will change your life.
You now have the knowledge to take control of your finances. Use it wisely, apply it consistently, and watch your wealth grow.
The difference between those who build wealth and those who don't isn't luck — it's knowledge and discipline.
You've got this.
You've mastered the fundamentals of financial health. Now it's time to explore one of life's biggest investments.
→ Proceed to Chapter 3: Housing
Learn about home ownership, renting, and building your foundation for stability.