Let’s talk about money. My guess is, nobody has talked to you about money so far. Not really. Not your parents, not your teachers, not your friends. But money is important. And it isn’t complicated.

I wrote up this financial education for everyone who asks me ‘what should I do about money’. I kept it short and simple, without financial lingo: let’s say keeping money instead of saving money, and growing money instead of investing money. Keep & Grow. Simple.

But why? 

I was shocked by how little my friends really know about money. People in the prime of their careers, between 35 and 45 years old, with significant financial responsibilities, at work and at home, and often even managing big budgets at big companies. Some own homes, most have kids, and all have one or two cars that go with it. 

But towards the end of the month they are scared to look at their bank accounts, afraid of how empty it would be – and probably is. They live ‘paycheck to paycheck‘, with little insight into their own finances.

The only thing they have ever learned and really know is how to spend money. 

That’s when I realized: none of us got a financial education. We are not taught about money. We don’t learn about its ways and mechanics. Schools don’t teach us. Parents don’t teach us. And they were not taught either. And there are only a few exceptions.

Our financial literacy is low. And because our financial literacy is low, we feel incompetent, even inconfident. We make bad financial decisions, or procrastinate financial decisions, or worse – don’t make any financial decisions at all.

That really bothered me. Money is important. It’s part of our life. We should learn and know about it. We should be financially literate and confident. We should all have a basic fluency about money. We need to be able to operate it – women and men equally. 

I made this site to help my friends get smarter about money. They want to know about how to have more money for tomorrow. And they don’t know where to start. I share with them what I know and what is helpful for them in their situation. I want to empower them so they can make better money decisions and become financially literate. This is what the site is about. 

Personally, I learned about money from a friend. He was curious enough to teach himself. And I was curious enough to ask him. I certainly don’t know everything about money but I know quite a bit. I want to pay-forward that gift of knowledge. 

About Tom: I am in my forties. I am a Designer and I love my job. But I want to do what my uncle did, and retire early. Let’s say, at age 50. That is well before regular retirement. It feels frivolous. But I consider this an experiment – I want to put myself in a situation where I would not have to work for money. To me, retirement means shifting from work you have to do to work you want to do – and I am curious what I’d choose to do. It’s interesting and exciting. Maybe I’d still choose the same line of work because I really like it – that would be a wonderful confirmation of my life’s choices. But maybe I’d walk right past it, straight to the airport. Who knows? Gotta find out! 

“Find a job you enjoy doing, and you will never have to work a day in your life.”

Mark Twain

And what if I don’t hit my goal of ‘retiring at 50’? Then I add a couple of years and still end up retiring early. Currently I save 40 – 50% of my income towards that experiment.

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Chapter 1. Mindset

Pulse check – how well are we doing with money

I saw many statistics and they all paint a similar picture – people struggle with money. The following list is exemplary with some US statistics and some central European statistics.

The majority of U.S. citizens barely makes ends meet. But the number of private stock owners is high – often thanks to their retirement savings plans (401k)

⅓ of American households have no savings

55%  of Americans just break even or live beyond their means

56% of Americans own stocks or fonds

7.9% Personal savings rate in Nov 2019; but 33% during Corona

However, younger generations keep and grow more than previous generations

¾ of American millennials are saving in 2020

59% of millennials with savings have $15.000 or more

24% of millennials with savings have $100.000 or more, but this often includes retirement savings

44% of millennials have an emergency fund than can cover 3 months of living expenses

Most Germans save money, but only few people invest money – they seem uncomfortable with risk

9 – 12% Average savings rate

14.7%  of Germans own stocks or fonds

82% reject growth in favor of safety and avoid stocks or fonds

¼  of German households have no savings

Typical symptoms of financial procrastination – do any of these sound familiar?

You don’t keep money but only spend money

You just don’t seem to be able to hold on to money. As soon as you have it you are looking for ways to spend it. It’s gone as quickly as it came in. Here are some reasons:

• I don’t have any money. I am a student.
• For the first time, I do have money. I want to spend it all.
• I first have to get that (next) promotion or raise, then I start keeping some money. I promise.
• I cannot save money now. I am starting a family and need every penny.

You keep money but you don’t grow money

You save some money, sometimes more, sometimes less. It’s sitting in your savings account and it gives you a sense of security. But it’s not much and it’s definitely not growing.

You grow money but you don’t grow continuously

You actually have some money invested somewhere, for example in bonds, fonds, or even shares. Maybe your dad set this up for you, or a friend helped you. But you never managed to do it again, by yourself. You don’t know how to or what to buy.

We struggle to own our finances

The numbers look bleak, even when you consider the slightly positive trend amongst younger generations.  

A million things seem to keep us from doing something about our money. But we only receive little support and little education during our upbringing. As a result, money is a confusing science to most of us. 

Don’t worry! And definitely don’t be ashamed. Most of us struggle in the same way. 9 out of ten people I spoke to are procrastinating financial decisions. The typical reason keeping them from taking charge is their perception of money as complicated – they don’t feel competent enough, not yet. All of them want to learn just a little bit more to feel a little bit more competent to then finally make those long overdue financial decisions.

It’s not like that. It doesn’t take that much. And it’s easier than you think. 

Magic Money Mantras

There are a few rules of thumb that will get you really far. Think about them as magic money mantras which guide you on your path to financial freedom. They are like financial mediation, and with daily practice you can reduce your financial suffering and reach peace and financial freedom in your life so that you can free your mind instead of worrying about the next paycheck.

Wealth over status. Favor frugality	Stop lifestyle inflation. Live below your means	Pay yourself first. Spend what’s left.
Tiny habits compound. Do a little for a long time.	Buy less, buy better. Make it last.

Wealth over status: favor frugality

Work and status are glorified. But having a high-status, high-income job does not automatically mean you are wealthy. 

“Many people who live in expensive homes and drive luxury cars do not actually have much wealth. […] Many people who have a great deal of wealth do not even live in upscale neighborhoods.”

The Millionaire Next Door by Stanley and Danko

There is not necessarily a strong link between earning much and having much. But there is a strong link between being frugal and being a millionaire. Many first-generation millionaires do not have a high income – but they value frugality. Frugal behaviors are eg conscious consumption, thrift, budgeting, record-keeping, bargain orientation.

Also, being frugal reduces your carbon footprint on this planet. Less stuff, less waste, less resources.

Frugality might sound like you are depriving yourself of things, similar to smokers, who fear the ‘loss’ of smoking when in fact they don’t lose anything but gain everything. Financial frugality will help you gain wealth. Frugality frees up money which you then can grow into wealth.

Stop lifestyle inflation: live below your means

Lifestyle inflation is shit. It’s important to recognize it – and to stop it.

Lifestyle inflation is the steady increase of your expenses. The more you make, the more you spend. You get a payrise, a bonus, a promotion, a new job with a higher salary, an unexpected inheritance – and suddenly you find yourself spending more than before. Suddenly you desire things you never needed before. That is lifestyle inflation.

“The unchecked striving for more, for endless growth, is a dysfunction and a disease.”

Eckart Tolle, A New Earth

When I talk to friends about lifestyle inflation, most of them understand the concept but only few recognize lifestyle inflation in their own lives. One friend insists that he can barely make ends meet. It sounds really dire. However, what I can observe is a constant stream of purchases and additions to his life, big and small, several times each month. Whenever there is money, there are purchases. And he and his partner already have so much, including two happy kids, a spacious house, plenty of beautiful furniture, frequent and enviable trips, a car, fantastic food, coats for every weather, pots for every dish – a generally abundant life. But from his perspective, there is simply no money left to keep at the end of the month, and no way to get there. And there is always something they don’t have yet. Lifestyle inflation is difficult to see once you are enveloped in it.

Instead, spend less to keep more. Live below your means. Accumulate wealth.

You are now swimming against the tide of consumerism.

Live below your means

Living below your means is important. It means that you are spending less money than you could spend. That means you are keeping money. That’s how you build wealth.

“Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend.”
—The Millionaire Next Door by Stanley and Danko

However, many think they cannot live below their means. It seems impossible. They just have to spend every penny they make. Every single expense is absolutely necessary and totally inevitable. 

But isn’t it suspicious how your current expenditures match exactly your current income? And your previous expenditures exactly matched your previous income? That perpetual increase in income and expenditures is ‘lifestyle inflation’. And living below your means is the antidote to lifestyle inflation.

I live below my means. I am on high alert whenever I sense lifestyle inflation in my actions and desires – because I know it doesn’t really add anything. In fact, it only subtracts, starting with money.

Stop stuffocation

Stopping lifestyle inflation has another benefit: a de-cluttered life. A de-cluttered life prevents stuffocation – the suffocation from too much stuff in your life. This is particularly appealing to the minimalists among us. But having less stuff to worry about is liberating for all of us. Things and stuff pollute our life. 

Don’t let them into your life to begin with and you will never suffer from their loss.

Everytime you get more things, you will absolutely hate letting go of them ever again. That’s called loss aversion. We just hate parting from things, even though it would be good. It traps stuff in your life, in your basement, in your garage, in your attic, in your rented storage unit, and in your mind. And most of these things you really only keep ‘just in case’ – three words that should be alarming to you.

Check your consumption

Most material desires are very temporary – they fade quickly. Don’t give in promptly. Don’t go after instant gratification.

I interrogate my material desires. I do not instantly and readily give in but resist, at least for a time. It is a test of will power – I park the desire and observe it. If it persists for days or weeks, I then give in, and buy that thing to scratch that itch. 

“Be intentional about the things you allow in your life.”

Connie Biesalski 

Usually, the anticipation is much more exciting than the actual ownership. The ownership often is sobering. More than once, I later realized that the thing didn’t hold the appeal I anticipated. And very frequently, I then gladly return the thing to get my money back.

The problem is not consumption. The problem is compulsory, unchecked consumption.

Pay yourself first: spend the rest

Keeping money is consciously not spending it. It helps to think about kept money like a payment to yourself. And you want to really pay yourself before you pay anybody else. It’s for you. You deserve it, in fact, you earned it.

“Do not save what is left after spending. Spend what is left after saving!” —Warren Buffett 

Keeping money can be done in frequent small sums or infrequent big lump sums. For example, when you sell something, or you receive a bonus, or when you inherit money, you receive a lump sum. Lump sums are very satisfying, keep them and invest them. But they are infrequent.

Keeping is best done frequently, and automatically, with small sums. Automation is key. Simply set up a recurring wire. Ideally right after you have been paid and right before any other payments go out. This way you avoid having to think about it again and again. Consider this recurring wire a priority – a ‘payment to yourself’. Name it ‘payment to yourself’, or ‘financial independence’, or ‘wealth booster’.  Set it up once and let it run long.

Even small amounts make a difference, like 25 or 50 or 100 bucks. Keeping a little money is 100% better than not keeping any money. It doesn’t have to be much. If you spend it instead then you cannot keep it, and you definitely cannot grow it. Many small, even tiny actions, compound over time to big effect.

Tiny habits compound: do a little for a long time

Wealth and financial freedom are worthy goals. And they are not even that hard to reach. It only takes time. Time is your biggest lever. 

Doing something small, frequently over a long time period, yields massive returns. 

If you save a little every day, every week, every month, it compounds to massive savings. If you read a little everyday, you will have read a lot after some years. If you meditate a little everyday, you will improve your mental and physical well-being massively over time. If you skip one FlatWhite every week, you will have kept thousands of dollars after some years. Tiny habits compound. The earlier you start, the longer you can compound. Make time your ally! 

I wish I would have understood the compound effect earlier. Now I do. So I set up a savings plan for my daughter the year she was born. If she follows suit and continues what I started for her, she will be financially independent early in her life.

There are some great books about the power of doing a little a lot. James Clear turned his blog posts into a New York Times bestseller called ‘Atomic Habits’. Then there is the ‘1% Rule’ by Tommy Baker. And then there is the ‘Compound Effect’ by Darren Hardy. All of them celebrate the compounding power of small actions repeated regularly over time. It is quite fascinating actually.

Buy less, buy better – then make it last

You buy things – no matter how frugal or minimalist you are.

Minimalism is not anti-materialism. You still buy things. But buy consciously. Buy quality and make it last. No fast fashion. No excess. No landfill. Less waste.

Buying things is like a valve that regulates your outgoing money and your incoming stuff. You want to keep that valve in check with two things: interrogate your material desires, and when you decide to give into the desire, don’t buy crap.

Don’t buy crap

When you buy, buy consciously. Buy better. Don’t buy crap.

My granddad used to say ‘if you buy cheap, you buy twice’. And not only do you spend twice, and collectively more than initially planned, but you are also adding a cheap, frustrating object to your life. It’s a lose-lose-lose, not a win-win-win. I made that mistake over and over when I’d find something I want and then look for the best deal to then go for the cheapest option. Idiotic.

Buy it right, don’t go cheap. High quality things can be expensive. It will make you think twice about whether you really really really need it, and if you do, it will make you love love love it.

Put space between the impulse and the purchase

Resist the instant gratification of buying something right now this moment, maybe on credit, and instead save up for it first. Saving up first is a guardian. When you still want the thing just as much after you spent time saving up for it then it really means something to you and you should get it.

Make it last

My father maintained everything carefully and regularly. His stuff was in good knick and lasted forever – to this day I still have some of it. I think he got it from his father. And I think I got it from him.

Just recently, I prolonged the life-time of three things and I really enjoyed it: my hiking shoes, my favorite pair of jeans, and my moka pot. 

Make it last with maintenance

The hiking shoes (LOWA) are 18 years old and were not cheap. But this year the rubber sole started disintegrating. I sent in the shoes to the manufacturer (LOWA). They offer to replace the sole, for a fee. When the shoes came back after two weeks, they looked fantastic and looked just as new. I am surely going to keep them for another one or two decades. Nice.

Make it last with repairs

The pair of jeans (NUDIE) is one of those that fit just right. I tried to buy the same pair of jeans from the same brand in the same size, but they were not the same. I really wanted to keep this pair. But after a couple of years and lots of wear and tear, the jeans ripped and not in the cool way you’d pay extra for. I handed them in to one of their shops and after two weeks I got my pair of jeans back, mended, and for free. Sweet.

Make it last with custom details

The moka pot (BIALETTI) is a different story. It wasn’t broken. It was fine. But it had this cheap, plastic cover around the handle. It bugged me every morning. So I started shopping around for new moka pots. Wait, what? That seemed unnecessary since there wasn’t anything broken. In fact, no new moka pot will produce any better coffee than my current one. But something had to change or it would keep bugging me. So, I removed the cheap plastic cover from the handle and got some thick, rich, red, rubber tube to take its place. It works. It looks better, it feels better, and most importantly – it made the moka pot unique. I boosted the value of the pot for me. My desire to shop around for other pots dried off instantly. I disarmed the desire.