5 Things I Did to Improve My Personal Finances

Ever since I was a kid, I was interested in business. The same cannot be said about personal finance, though. While I was enjoyed learning and figuring out how to earn money, I never really thought deeply about how to build wealth – and about how the two differ.

That has changed a couple of years ago, though, and today, I am fairly happy with my “personal finance game.” That does not mean, of course, that I don’t need or want to earn more. Instead, it means that I can earn more knowing that every incremental dollar that enters my account will be put to good use rather than leak out into someone else’s pocket without a good reason.

Below are five of the things that I credit with this change the most.

All of them are fairly easy to implement and, with hindsight, all of them are common sense. However, I decided to share them as it took me a while to truly take all five to heart.

I hope you will find at least one or two points below that you will attempt to implement.

1. Investing Time Into Learning About Personal Finance

While, if you are reading this, the first point might sound obvious to you, I still think it’s important to mention. That’s because just like chemistry or physics, personal finance is something that has to be learned. Something that you have to put time into to understand it better.

Unfortunately, though, unlike chemistry or physics, personal finance is not taught at school extensively. Sure, you may learn about simple and compound interest – the latter of which is extremely important – but that’s about it. And, let’s be honest, chances are that you didn’t pay much attention when those two concepts were discussed in your math class either.

With that, it’s no surprise that many live paycheck-to-paycheck, regardless of their income.

Naturally, the data varies based on a number of factors, but the American Payroll Association and the National Endowment for Financial Education reported that 74% of all employees live paycheck-to-paycheck and a Nielsen study found that 25% of families in the United States making $150,000 or more every year are in the same situation.

Similarly, it is also no surprise that, according to a recent Gallup poll, only about half of US adults own a stock.

Luckily, with personal finance YouTube channels and blogs now being abundant, it is easier than ever to close the gap between what you didn’t learn (or didn’t listen to) at school and what you need to know to get your finances in order and to avoid or dig yourself out of a paycheck-to-paycheck lifestyle.

While I am fortunate enough not to have the experience of living paycheck-to-paycheck, it still was only after following a number of those channels and blogs, most notably Wealth Hacker, and immersing myself in this type of content that I started thinking about personal finance seriously.

And, most of all, that I actually started to take action.

Some of the topics I recommend learning about include compounding, budgeting, creating an emergency fund, and tax-advantaged investment accounts. If you are in considerable debt, you should also learn about how to deal with that. One of the places to start in that situation would be Dave Ramsey’s 7 Baby Steps.

2. Learning to See Money as an Income Generating Asset

By far the most important thing in my personal finance journey to date – other than actually starting to learn and care about the topic – was changing the way I look at money.

As a kid, if I got or earned money, I viewed it as something to spend. I looked at a $20 bill (or a 500 Slovak crown bill to be precise since I was born and raised in Slovakia) and would see a soccer ball. Or an aircraft model. Or a pack of trading cards.

I maintained a similar mindset for a long time.

I would view money as something that I work hard to earn and then enjoy spending.

While that is not bad per se, that sort of mindset misses a very important point – it misses the fact that every time you spend money, you are making a trade-off.

A trade-off not only between getting a $100 pair of jeans versus a $100 pair of sneakers but also between spending that $100 now versus turning that cash into an income-generating asset like a piece of an index fund or a piece of content for a blog. A trade-off between a certain level of gratification now and a potentially higher level of gratification in the future.

Now, don’t get me wrong.

Just like Ramit Sethi, I don’t believe that cutting down on lattes or things that you enjoy is the right way to wealth. I enjoy eating out and travel among other things, and I spent a considerable sum of money on those. We only live once, after all.

However, I also am careful about my level of spending in other areas, areas that don’t necessarily bring me much joy.

And, more than anything, I am careful to avoid the hedonic treadmill, the reason that keeps many people living paycheck-to-paycheck. The tendency to increase one’s spending and lifestyle when seeing an increase in income.

3. Spreading Money Across Various Bank Accounts

Speaking about the hedonic treadmill, I think there’s no better way to avoid it than by making yourself feel poorer than you actually are. And, one of the easiest ways to do so is, I believe, by spreading your money across a number of different bank accounts.

You can read about the bank account set-up that I use here.

While the ideal set-up will depend on your exact situation, I think having at least three accounts is a must:

  • One that you use for your day-to-day transactions like receiving your salary and paying your bills
  • One that you use as an emergency fund where you save money up to a certain predetermined level and don’t touch it unless something really (really) bad happens
  • One where you save the rest of your money

You can also have additional accounts (or sub-accounts if your bank allows those) for specific saving goals (car, house downpayment, etc.), for your side hustle if you have one, and so on.

Implementing a set-up similar to the above and moving money to the saving accounts each time you get paid will move a certain amount of money out of your sight.

And, as you know, “out of sight, out of mind.”

4. Investing Regularly and Not Speculating (Too Much)

Years ago, I opened a brokerage account.

At that time, I had very little idea about what I was doing. As such, after depositing money into the account and buying a stock – just to see my cash balance decrease but stock holdings remain at zero – I canceled the order, gave up, and never looked back for quite some time.

Of course, all I had to do at that time was wait to see the order execute (which, depending on the situation, can take some time) and then the stocks would appear in my account.

Regardless, after becoming more familiar with the basics of personal finance, I decided to give investing another shot. This time around, however, I changed my strategy, and rather than trying to “pick the winners” and “time the market,” I decided to go broad and bet on “time in the market.”

In other words, I started investing regularly – monthly and later twice a month – into index funds. The key pillars for me are two funds, one tracking the S&P 500, and the other the Dow Jones. Being in Japan, I also regularly buy a fund tracking the Nikkei 225 index.

While I also buy some individual stocks every now and then, I only do so using a relatively small amount of money and I treat that part of my portfolio more like an alternative to playing poker in Macau. I treat it as a form of entertainment with a chance of winning rather than as the backbone of my investment strategy.

5. Tracking My Net Worth on a Monthly Basis

Lastly, being obsessed with tracking – whether its page views on my blogs or the amounts earned from my various income sources – it was a natural next step for me to also start tracking my net worth.

While there are some automated tools for doing that, I prefer to do it manually in an Excel spreadsheet on a monthly basis. It only takes a few minutes each month and gives me a chance to better understand my financial position. The reason I do it manually is that believe having to go through the process of entering the various account balances rather than just having a number presented to me by a tool helps me make better financial decisions.

The two figures I calculate are liquid net worth (cash and liquid investments like index funds and stocks less payments due) and total net worth (liquid net worth plus the estimated value of my online businesses if sold).

Considering that at this point, I have no plans of selling any of my blogs, it’s the first figure that I find more helpful. At the same time, I find it valuable to calculate the latter as it lets me see my overall progress and also the amount that I would likely have if I decided to stop working on my business tomorrow.

The latter also helps me understand what I would be leaving behind if I was to die tragically tomorrow. While I hope that point is decades away, and not tragical, you never know – which is also why I am planning to prepare a document detailing my finances including instructions about how to sell my content sites at one point or another.


While it’s easy to think that it is the level of income and of expenses that determines one’s potential to build wealth, that is just one part of the equation.

In fact, I’d argue that before even attempting to increase your income, you should learn the basics of personal finance first. Only once you understand those, and once you implement some basic strategies (hopefully one or more of the five listed above), will you be able to turn the extra income into wealth.

If you increase your income before understanding personal finance and wealth-building, you will likely end up upgrading your lifestyle and spending more with each incremental dollar you earn.

You will end up on the hedonic treadmill. You will end up like sports stars that go broke after they are done with their careers because when earning millions they lived like rich millionaires rather than wealthy millionaires.

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