Let's talk about personal finance.
I mentioned earlier today on Twitter that paying for all my transition costs totally wiped out my finances when I was 27. I'd worked for Amazon for four years and medical bills took every bit of savings and stock I had back then.
This was before health plans paid for any transition-related costs no matter how progressive they were. I'd been married and saving for almost five years for the future. When my wife and I split she kept her family assets and I kept my stock, but when the dust cleared I was flat broke
Starting fresh at 27 felt impossibly hard and unfair. Looking back, I was actually in an incredibly fortunate and privileged position (still had a job, no debt), but it still felt like getting pushed to the bottom of a very tall hill, and especially compared to my peer group.
Losing all your savings is terrifying. But it taught me some important lessons about grit and rebuilding.
I did not grow up with a family that had money, so I had to learn as I went, on my own. I get how hard and scary it feels when you don't know what you don't know. My financial advice for all of you is kind of unremarkable in how boring and conventional it's going to be, but often no one tells you this stuff.
So let me tell you about this stuff, as someone who has been around the block a few times.
Step 1: Murder Your Debt
Step 1 with financial planning, especially early in your career, is to get out of or avoid debt as much as possible. It is a yoke around your neck that will limit your options, sap finances at a time in your life when your money has the most future potential, and possibly lock you into work you hate doing because you need the cash.
Yes, there are clever financing things you can do with debt, and yes, not all debt is bad all the time, but these situations MOST LIKELY don't apply to you if you're younger than 28 or unless you have family money.
You are not a financial wizard. Do not take on debt to "invest smarter."
If you're just getting your career rolling, the faster you get out of debt the more options you have. The best way to get out of debt is not to take on debt in the first place. It's oh so tempting. Resist the temptation.
Student Loans are the #1 source of debt at this phase of your life, and if you have the option, avoid them as much as possible. Scholarships if possible, going to less expensive schools if not. Don't get an advanced degree unless you're absolutely certain you need it for your career.
A trap people sometimes fall into is that they get their bachelor's degree, can't find a job, and so they borrow more and get their master's degree. Usually this doesn't actually increase your lifetime income potential a ton--especially if it's not a STEM degree.
I had a guy on my team once that was $150k in hock to his private college for a Master of Arts in photography. He was working as a PM in tech because he needed to pay the bill when he would have preferred to be doing photography.
If you want to make art, forget school and go get started making art. You don't need to pay an institution the equivalent of a small house to become known for your art, and it may actually delay your ability to make a name for yourself if you really have the chops for it.
If you have other debt, like credit card debt, focus on that first. All your debt is associated with an annual rate of interest, and you should consolidate it into the lowest rate a bank will offer you if you can and pay it off ASAP.
If you do have multiple sources of debt and you can't consolidate, pay off higher APR debt first even if you have to make minimum payments on the lower APR debt to do so. Your goal is to stop handing out free money to creditors.
If your college loan debt is REALLY low, like sub-3%, you can choose to be slightly less aggressive about it if you need to, but I don't recommend doing so because it instills bad habits with regard to thinking about debt and financing. The less debt, the more options you have.
There is only one caveat to this, and it's that you also need to build a safety cushion before you can start slinging real money at your debt.
Step 2: Cover Your Ass...ets
You need to have a safety cushion of savings to protect yourself from the stress of emergencies and to avoid having to tap expensive short-term debt to deal with them. Life happens. You can lose your job. You can get sued. You can have unexpected medical bills. One or all of these things will eventually happen to you, and it's very stressful.
Extra stress in an already stressful situation will come from not knowing how you're going to pay the costs in these situations, and maintaining a liquid (cash) safety net will give you peace of mind and the bandwidth to solve problems without being distracted by fear.
A good baseline is to figure out what your total monthly costs are for rent, food, utilities, and a small cushion for incidentals, and multiply that by 3x. You should aim to ALWAYS have that much cash available for an emergency. I prefer to keep 6-12x on hand.
Once you've saved enough to handle this scenario, forget you have it. This is not a vacation fund. This is not an "oh I really need a car" fund. This is money that you've specifically set aside to protect yourself in emergency situations.
At some point, you will be glad you have it. The peace of mind alone in knowing that you can handle weird one-off occurrences will lower your stress level substantially. If you spend it anything from it, make refilling it your top priority.
This brings me to my next point: Let's say that you've got your 3-6mo savings cushion, you've either paid off your debt or are on a low-interest fixed payment plan you can manage and WILL pay it off within ~10 yrs.
What do you focus on now?
Step 3: Be Frugal, Define Your Goals
This is where your personal goals come into play. You need to think about what you want, what you need, and what you need to do to move from where you are to where you want to be in very concrete terms.
There are a million ways to live and maximizing wealth is just one.
But let's assume that you, like most of us, have big dreams (or you don't know what you want yet but you know money would be really helpful).
How do you maximize your income and make the best of use it while planning for the future?
Your career goals matter a lot here. Not everyone wants to claw their way up the corporate ladder (though it's okay if you do), and not everyone wants to work an 80-hour work week as long as they aren't struggling to make ends meet.
Furthermore, these things might not be viable options for you (especially if you couldn't or didn't get a college degree in the first place--good for you on avoiding debt, but you have a harder road in front of you too).
The best way to save money is not to spend it. Frugality is virtue.
It might sound counterintuitive, but earning more money doesn't actually help you if you haven't mastered NOT SPENDING it in the first place, because your spending tends to grow to match your income level for most people. I picked up bad habits around this growing up.
When I got my first corporate job, I felt like I was filthy rich and immediately spent my signing bonus on a ton of new clothes, furniture for my apartment, and toys. This was dumb.
Try to practice asking yourself whether you really need the thing you're about to buy.
Think it through. How likely are you to actually use it regularly? Have you made purchases like this in the past that you didn't end up using? Can you make do without it or find a way to build it yourself, or an acceptable substitute?
Learn to see money as a vehicle you can ride toward future prosperity if you hang onto it and a solution for problems you really don't want to deal with, rather than a means to get whatever you want in the moment.
The reason you want to avoid spending it on impulse purchases or things you don't really need is that there are better uses for it, which we'll get into shortly, and you want to keep it available as much as possible for those ends instead while you figure out where you're going.
One of the best ways to avoid spending money is to take a really hard look at your life and ask yourself where you can afford to downgrade. Do you do remote work? Consider moving somewhere cheaper, even if it's not exciting. By used instead of new, and negotiate on price.
When I did the math, I realized I was paying almost $24,000/yr for the privilege of living in downtown Portland. That was when I bought an RV for $20k (in cash I had, because I had saved it).
It has already paid for itself in saved rent costs over the last year, I now don't have to pay rent, and I have an asset that's worth AT LEAST $20k (more actually, but that's due to weirdness with RV market right now).
Live with your parents if they're willing and if you get along with them. Move in with a partner if you're serious about them. Find a roommate (or three) if you're single. There are lots of ways to stretch rent and your goal is stacking cash at this stage.
You're getting yourself set up for future success and there is zero shame in being frugal. It's savvy. Dumb people live above their means and never build wealth. Smart people invest in themselves and only when it's useful.
If you ARE going to spend money, spend it on things that directly improve your knowledge or earning potential (this is not an academic degree--I'm talking about courses in hard skills or lessons from a trainer or coach who knows what they're doing). Invest in yourself.
It's really hard to do this if your friends are wealthy or are nouveau riche with bad spending habits and are always luring you to blow cash on stuff, but either politely decline or find new friends. Resist the marketing to blow cash on "big experiences."
The Mediterranean might be lovely this time of year, but you have your whole life to see it, and when was the last time you took a walk to your local park and really just looked at a leaf? Life is full of amazing experiences. Don't let hype screw you over.
Beauty is everywhere around you and you don't need to fly to a foreign country to have fun. This is a lack of imagination. A beach is a beach wherever you are, and Cali or Florida are both cool and guaranteed to be closer than Europe. Flip this statement if you live elsewhere.
Step 4: Choose Your Friends Wisely
Speaking of friends, your choice of friends and especially your partner makes a difference here. Make sure you hang with people and date people who have similar financial goals and intuitions as you. It's way too easy to let the people around you suck you down a debt spiral.
This is especially true for life partners. Not everyone has to be good at managing money, but if your partner isn't, make sure that they take the lead from you on financial decisions. Money issues get bigger with time, and it's a leading cause of divorce.
Divorce is expensive. Best case, you'll lose half your assets in an amicable split. Worst case, you'll lose much more after the lawyers are done fighting or wind up paying alimony or child support (whether you're male or female this situation sucks for everyone).
Your partner's inability to mesh with your spending style will be a massive source of friction, so look for this early and figure out how to address it as a couple.
If you find someone you're attracted to and who is good with money, move in with them and build a life.
Note that I didn't say get married! Marriage is fantastic with the right person, but only if your goals are aligned. If you want to start a family, marriage is a great first step. If you share life goals, marriage can be great.
But you don't need to rush into it otherwise.
Making the wrong decision on a partner is much more expensive than waiting and seeing how your feelings evolve if you're not sure, so if you're not sure, have no kids, and nothing is forcing it, either wait or move on.
Having compatible attitudes towards kids/family planning goals and toward money are two of the biggest things that will predict both your future happiness and success in a long term relationship and especially marriage. Choose wisely.
Step 5: Avoid Gambling and Focus on Your Network
Okay, so let's say you've taken all of this advice so far. You're living with an s/o or roommate, you have your safety net, you're debt free or will be soon, and you're starting to stack up a little baby pile of cash that you're very excited about. Let's talk about investing.
Investing is something that seems super lucrative when you don't know anything about it, and I hate to tell you this... but there's no such thing as a free lunch.
If it were easy to turn $1,000 into $50,000 passively, everyone would do it all the time as much as possible.
If you're younger than 26, you have basically grown up with Bitcoin, which is a horrible disservice to you because the last 15 years or so have been so objectively weird. There's a reason I'm always talking about how insane everything is right now.
Bitcoin's meteoric growth has almost certainly skewed your intuitions about what it possible or normal for investing, and we've also mostly been in an extended bull market since the housing crash of 2008. The stories of overnight millionaires are not normal.
Yes, it's possible that you can spend $500 on Shiba Inu and be a millionaire in four years, and it's far more likely than other weird ponzi schemes of times past. But it's still pretty unlikely and it's NOT A PLAN. Weird bets are orthogonal to your primary strategy.
When you're in your 20s and 30s, your primary source of wealth will be coming from your work rather than from any investments you make. This is because you don't have enough money yet to make investments really pay off.
You're on the right path, but you should never count on getting lucky. What you want to do is maximize your income while living a life you can be happy with and focus on creating more opportunities for yourself to "get lucky" in your 30s and 40s.
Sometimes people think they can "play the stock market" or "trade options" for massive returns, but you probably won't be good at this. Best case you'll see a >15% return across your portfolio and it'll mostly be luck. Worst case you'll overextend and lose everything.
The right way to create luck for yourself is to lean super hard into your career and make lots of friends. This doesn't need to be mercenary. Friends are one of life's greatest joys. Be genuinely interested in people and curious about them. Be really fucking good at your job.
If you suck at your job, make a plan to get better or find a new job. Your actual income matters less than people appreciating what you do and you enjoying developing mastery at something. Focus on being an information sponge and learn from talented people whenever you can.
This will open doors for you. Developing good social skills will both improve your life and increase the number of people who will tap you for jobs, for investment opportunities, for sexy new trends, and for learning new skills together. Build stuff with people. Experiment.
If you do lots of small creative projects that don't cost you anything, some of them may expose you to niches or opportunities that you had no idea existed. The broader your range and network, the better positioned you are to jump on lucky chances when they come.
More importantly, you'll build relationships with people and have fun. They'll grow in skill and capability alongside you and even if your projects don't go anywhere now, it might be why they call you to join their startup 10 years from now, because they like and trust you.
From 20-30 is the period in your life where you don't have a ton of money, you can afford to make big mistakes and be totally fine, and you're not yet usually dealing with heavy stuff like kids or the loss of a parent to distract you. Take advantage of it and experiment!
If you do get unlucky and wind up with kids you didn't plan for or a rough divorce or a transition you didn't expect that wipes you out, you have a lot of time to recover at this stage and you have decades to revise the plan.
But maybe everything is going great, you're kicking ass at your job, making tons of friends, you have a compatible life partner, and you want to know where to stick the money that's stacking up. Wow. You are blessed. Stop for a moment and appreciate that. Have gratitude.
Whether you have a big stack or a little stack, here's what I recommend: Historical returns from "safe" investments have been about 7% per year averaged over time on index funds. This is a perfectly viable strategy for you if you're happy with how things are going.
There's nothing wrong with sticking your money in an index fund on a regular basis, maxing out your 401k and taking your employer match, and continuing to be frugal and enjoy your life and friends. This is a lovely scenario for you, and if you're happy, why rock the boat?
Step 6: If You Must Gamble, Be Smart and Plant Seeds
But maybe this safe, conventional path isn't really your ideal. Maybe you'd rather be working for yourself, or you're a little comfier with risk, or you wanna really put the pedal down. Maybe you just want to see where life can take you if you don't play it safe. This can be really exciting.
You can still "play it safe" by taking calculated risks in a careful framework that never expose you too much to any individual risk. You never wanna roll the dice on a Hail Mary throw unless you have to. What you want to do in this situation is plant lots of small seeds.
Once again, you do small, cheap experiments. You should still be living well under your means at this point and resisting the urge to let your lifestyle creep up on you, and when you have enough money to do this you should spread your disposable income around.
Divide up the cash you have available and coming in from your work in a risk portfolio you feel personally comfortable with. No one can tell you what this is. You have to feel it our yourself. With investing, ask yourself, "How would it feel to lose all of this?"
If you're not okay with losing 50-90% of an investment, don't make it. It can feel a little scary, but if the reality of that situation happening would put you in a bind, you're overextending. OTOH, don't be ruled by fear. Our intuitions about money are often bad.
If you grew up not having much of it, you have to break your fear mindset. Frugal is good. Frightened is not. Challenge yourself to think through logically what the loss of an investment would mean for you and how you would handle it. This can help a ton with that fear.
You have to expect the unexpected. I lost almost $10k this year on options trading when Robinhood unexpectedly froze trading and my options expired during that window. That was not part of my risk calculation, because it was so unlikely.
But I made that bet knowing I could lose it and accepted it at the outset, so even though it stung it felt bad for a few days and then I got over it because it was only one of many calculated risks I was taking. You need to feel like this about any risky bets you make.
If you don't, the stress can break you, which will further damage your finances. Don't play with money you can't afford to lose.
When I talk about planting seeds and spreading your bets around, it's not just about stocks and crypto, either.
Let's say that you have about $500 of discretionary income each month and you want to grow it over time. Parcel this out to different opportunities. Put 1/5 in an index fund, 1/5 in a hot stock you like, 1/5 in crypto, and put $200 toward a business venture for yourself.
No investment will grow as fast as business ventures you're driving yourself, for your own benefit, when you find something that resonates with users/your audience/customers. Building something has massive leverage because you own all of it.
Plus, trying to start your own business ventures will teach you important lessons and skills that will be invaluable for your career even if you don't become an entrepreneur. It will build confidence and teach you about what works and what doesn't. If you want to know more about how to do this, read my articles on business and writing.
There's a big caveat here, and it's crypto being really fucking weird right now. I can't tell you not to roll the dice on an investment with such ridiculous returns, because I've never seen anything like it before. Just know that you ARE rolling the dice.
Saying "crypto is too risky and might crash" ignores the fact that a small investment in crypto right now might be a better investment than literally anything else you could do... but it's still risky, and it's not a replacement for investing in yourself or your own business.
It's a really weird time and it would be stupid not to allocate SOME portion of your disposable income to crypto with how it's grown over the last few years, but don't depend on its continued growth and don't go all in.
Also, apply the same leveraged risk scenario to crypto that you do to investing overall. Don't go all in on meme coins like DOGE. Spread your investment around and keep your eyes on the horizon. The whole segment is growing. Play cautiously.
Your goal is not to be an overnight millionaire, tempting as that might sound. If it happens, great. Buy a yacht and call me when you throw a party so we can laugh about how you ignored my advice and won big.
Your goal is to build a happy life and have more security tomorrow than you have today.
You need to build a life for yourself that's comfortable for you where you are now, and full of opportunities for wealth and abundance such that any single one of them doesn't feel like life or death.
You never want to be in a place where you NEED something to work out for you, because that's a bad place to be. You're going to lose that game eventually. You want to have the leverage and means to move when you know it's worth moving.
When something is working really well, try to figure out why and cautiously push more resources into it. When something isn't, cut your losses and move on. Over time, watering and nurturing your seeds like this will bear a whole garden of fruit for you.
If you can reduce the amount of time you spend in a fear/need/panic/scramble state, you'll be living your best life and better equipped to see when your little seeds are growing and when they're not and make good decisions about them.
In Closing: On Sustainability, Grit, and Well-Being
So to recap, here's what I did when I was 27 and broke: I worked super hard to improve my social skills and be awesome at my job. I started making friends. I built a wonderful relationship with someone who shared my financial and life preferences at the time.
I cut costs everywhere I could and spent disposable income on things that either directly improved my skills or served as experiments in businesses I could own and grow. Most of those experiments failed. But some got traction, and I thought through what worked and why.
I kept pushing on earnings and income sources and focused on my goal of building my own business, investing where I could afford it, and experimenting to learn as much as possible. This process never stops, by the way.
Remember last year when I launched TextSpark AI? Yeah, that didn't work out like I hoped it was going to. But it took my B2B sales and my coding skills to a whole new level for... 8 months of my life and a few grand in the hole? Totally worth it.
It's worth it because I can use those skills elsewhere and my next tech business will benefit from my prior failures, because nothing teaches you like firsthand experience. Compare to spending $80k and 4 years on a CS degree, and still not knowing how to run a business.
My publishing business is doing SUPER WELL meanwhile and it takes less than 4 hours each week to keep rolling, pays my bills, and gives me slack to do other things: Consulting, game design, writing more books. That started from experiments I did almost 10 years ago now.
I'm not remotely rich by most middle-upper-class standards, but I'm happy, comfortable, free, and my income each month is about 10x my living expenses. I get to do basically whatever I want all the time and hang out with friends, and I get to keep experimenting.
You get there by hedging risk and doubling down on what works. Life is long. You're running a marathon. Don't sprint, trip, and screw up your long game. I expect to be in a better place 10 years from now than I am today, and it's because I leverage risk and invest in myself.
Plus it's way more interesting to do it the hard way. Do you really want to be a millionaire because someone handed you a check? It might seem like a dream when you don't have it, but without the skills you built along the way how would you keep it? How would you grow it?
And what would you do if you lost it all?
If someone handed me a check for a million dollars and I lost it all, I'd shrug and trust that I could rebuild anyway because I know what I'm doing and built the right skills to have confidence in myself.
Money can't buy that.
Wealth is not about assets. It's about developing a mindset and environment where abundance is all around you and you have more opportunities than you can possibly take advantage of, and they're all good options. That's the goal.
It's about having friends to call if you're really flat on your back who can get you a job, and the freedom to turn down a terrible job you don't want or the ability to tell you boss to fuck herself if she asks you to do something unethical.
This is the kind of life you should create for yourself, and it doesn't happen overnight. Focus on the process. Chop wood. Carry water. Pay attention. Reduce anxiety and stress.
Don't gamble with your whole roll, and surround yourself with people who have similar goals.
When your needs are met, you have self-confidence, and you have options because you've structured your life that way, money just becomes a number, and investments become a game. It doesn't matter if you have a lot or a little in this environment, because you have enough.
So this is my financial advice. Take it or don't, but for god's sake, at least make sure you know why you're doing what you are and that you're enjoying your life.
You only get one of those, and if you're not having a good time, you're probably doing it wrong.