Financial Wealth Development

Reflections on my financial journey and wealth principles

Originally published on February 20th, 2025

Intro

Welcome to financial wellbeing post #2. In this post, I share a bit about my family’s financial journey as well as my Principles of Financial Wealth Development. I invite you to reflect on your own journey during this brief trip down memory lane..

The soundtrack to this post is “Nag Champa” (Instrumental) - J Dilla

Background

In October 2000 - ten months after I graduated from college - I had just started a new job. My wife and I were parents to a three-year-old boy and a four-month-old girl. We had NO savings. We were living paycheck to paycheck. We had TENS of thousands of dollars of debt. We had NO financial investments. Yet, for some reason, I think of the last few months of 2000 very fondly, with a bit of nostalgia. Twice a month on payday, I would - without exception - stay up past midnight, waiting for my paycheck to show up in my bank account. I’d then sit at the computer and pay bills.

I used to read Black Enterprise a lot at that time, because I was trying to educate myself about personal finance. In each issue they would do a profile of a young couple, and they would show their Financial Net Worth Statement. I enjoyed looking at the data, so I began tracking our family’s Financial Net Worth starting in June of 2000. The first time I did it, it was -$80,000…. yes MINUS $80,000. Our budget was a high wire balancing act. We brought in just enough to just cover rent, groceries, diapers, utilities, loan payments (including a car note), auto gas and auto insurance. We were living in Silver Spring, Maryland but most of my family was in my hometown of Brooklyn, NY. There were often family events back home, but our budget did not accommodate the trips. We still went as often as we could, which would place more tension on our finances. If the car needed an unexpected repair, more tension. An opportunity to put our son in a camp or class... more tension.

I distinctly remember a call with my older brother where I was expressing my frustrations about our financial situation and he responded in a very encouraging tone, “Ah! This should be a pretty easy problem to solve, there are two things you can do, and they are guaranteed to help… increase your income and/or lower your expenses.” I still reflect on that simple but profound feedback anytime I’m addressing a financial challenge.

Over the past 25 years, I’ve continued to track our family’s Financial Net Worth. I can see how my spending habits were sometimes offset by a particularly good year of income. I highly value “freedom” and “energy” and as such, I like to act quickly when I see something that I want to acquire. I can also see how during years when our income was lower, we exercised more discipline and learned how to be more value-oriented in our spending. We haven’t created new credit card debt since 2000 (Refer to an earlier post to revisit some of my trauma around credit card debt... linked at the bottom of this post).

Through fatter and leaner times, there are 10 financial principles that I have discovered, practiced, evaluated and refined - over the past 25 years. I call them the Principles of Financial Wealth Development. I believe the first six should be practiced by everyone starting from teenagers (and perhaps even earlier) up to those at retirement age.

Principles

1. Save for a rainy day

2. Minimize interest paid (avoid interest particularly on consumer debt)

3. Spend less than your income

4. Buy what you love (shout out to Ramit Sethi)

5. Track and grow your financial net worth

6. Develop a marketable skill

The last four principles should be practiced by most people but there are exceptions.

1. Invest with diversification to beat inflation

2. Buy a home

3. Minimize taxes paid (obviously obeying the rules of the IRS)

4. Pursue financial independence

What do you say?

I’ll delve into these principles in subsequent posts. In the meantime, I encourage you all to reflect on the following questions:

• Which of your favorite financial principles is missing from this list?

• What is one financial habit that has served you well over the past month?

• What’s one thing you could try, starting next week that will help you achieve your financial goals?

Please share some of your responses in the comments.

Thanks for reading...

Be well (and also wealthy)...

Wellbeing Grant