10 Money Moves That Never Fail
Build a Cash Buffer Before You Need One
Cash often gets a bad reputation, especially when interest rates fall
or during a bull market when stocks and real estate are climbing.
However, the real purpose of cash is not to make you rich;
it is to keep you from becoming poor.
An emergency fund acts as a decision-making tool
that protects you from being forced to sell assets at a loss
or taking on credit card debt with high-interest rates
during emergencies.
During market downturns, having cash reserves even allows you
to buy quality assets at deeply discounted prices.
Increase Your Income Every Year
If your income remains stagnant for a few years,
your lifestyle will slowly move backward due to inflation.
Relying on an employer for an annual raise is often not enough.
Research shows that workers who switch jobs or actively upgrade
their skills often receive significantly larger pay increases.
Income generation should be an active project.
You can achieve this by learning a specialized skill,
actively negotiating your salary, or building a side business.
Always ask yourself how this year’s income
can become larger than last year’s.
Increase Your Savings Rate Before Your Investment Return
While investing is essential, increasing your savings rate
is often the most practical first step for building wealth.
Earning an extra $10,000 through a 7% investment return requires
having roughly $143,000 already invested.
For most people, it is much faster to find that $10,000
by keeping more of the money they already earn.
Wealthy individuals spend a vast amount of time
and resources on money-keeping machines,
like holding companies and tax optimization,
to protect the wealth they already possess.
Buy Assets That Pay You to Own Them
Not all assets are created equal.
Some appreciate in value over time (like gold, art, or a collectible),
but productive assets appreciate
and pay you cash while you hold them.
- Rental properties provide monthly income.
- Dividend-paying stocks distribute earnings to shareholders.
- Businesses generate ongoing cash flow. The wealthiest households hold a significant share of their wealth in corporate equity and businesses because the cash produced can be reinvested to buy even more assets.
Own Equity Whenever Possible
Salaries alone rarely create massive wealth.
The moments where ordinary people become extraordinarily
wealthy usually involve equity events—such as an IPO,
an acquisition, or stock options vesting.
When negotiating compensation,
try to tie a portion of it to ownership or future success.
Whether you are joining a startup, helping a small business grow,
or freelancing, negotiating for equity can result
in a payout that equals decades of standard raises.
Negotiate Every Major Purchase
Many people will aggressively negotiate their salary
but accept the sticker price on major expenses.
Negotiating $10,000 off the price of a house
or a car provides the exact same financial outcome as
a $10,000 raise, except the savings are tax-free.
Before saying yes to a major purchase, ask for a better price,
better financing, or better service.
Leave Low-Ceiling Careers Early
Before spending a decade becoming exceptional at a job,
make sure the industry has a high enough ceiling
to reward your effort.
You can evaluate a career’s potential by checking three specific ceilings:
- Income Ceiling: What do the top 10% of earners in this field make?
- Demand Ceiling: Is the industry growing, flat, or declining?
- Ownership Ceiling: Can you eventually own a piece of the business, or are you permanently trading time for money? If the people ten years ahead of you are not living the life you want, it is time to pivot.
Avoid Lifestyle Inflation
Upgrading your lifestyle provides a temporary thrill,
but due to a psychological phenomenon known as hedonic adaptation,
you will quickly return to your baseline level of happiness.
A luxury car or an expensive penthouse feels special at first,
but it becomes the new standard within months.
Recognizing that every lifestyle upgrade has an expiration date
on its excitement can prevent you from
needlessly inflating your expenses.
Don’t Finance Depreciation
The faster an item loses its value, the less willing you should
be to borrow money to acquire it.
While it is sometimes necessary to finance
a depreciating asset like a car,
you must understand the trade-off.
Borrowing money for a work truck that helps you earn
a living makes financial sense,
but paying interest on a luxury vehicle that loses value every year
is a very difficult financial game to win.
Know Which Bucket You’re Spending From
Before making a major purchase, always identify
where the money is coming from.
The three main buckets are:
- Income: The money you earn from working.
- Returns: The money your assets generate (like dividends or rent).
- Principal: The asset itself. Many wealthy families and endowments follow a simple rule: spend the returns and protect the principal. Selling investments to fund a lifestyle choice isn’t inherently wrong, but you must be honest with yourself that you are shrinking your portfolio to do so.
