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CHAPTER 1

Work Smarter, Not Harder

The point of this book is to have your money work smarter, not harder. There are things that I wish I had learned in school that could have helped me as I lived on my own and had the responsibility for my own money. For example, I realize now that I should have started saving as early as possible, because money can grow exponentially over time.

Simple tricks and a foundation of knowledge can lead you to a future full of financial prosperity. You can work your whole life making an hourly wage, but you will only be paid for the hours you are at your job. How can you get ahead of that trend and earn more than the hours you physically work? The answer is putting your money where it can work for you.

Later in this book, I will get into investing your money and how to start growing your wealth. Investing is a fancy term for putting your money in different places that will grow over time. Investing is a way to make passive income.  Passive income is when you earn money without having to physically do anything. (Sounds pretty good to me!) In this book, you will find different options where you can invest your money so that you can build a more prosperous life. These ideas are based on my personal experience from continuous research and aid from professional financial planners with many years of experience.

First things first, in order to build any wealth, you will need to open a checking account. This can be done at any local bank and usually has a minimum amount required in the account—typically a smaller amount, like $500. A checking account is beneficial because you don’t have to keep track of your cash. You can directly deposit money from your job into it, and you can retrieve money from the checking account using a debit card or check.

Feel free to research and check out different checking (and savings) plans that different banks have. Each bank can vary when it comes to monthly maintenance fees, minimum balances, or overdrawn account charges. Keep location and convenience in mind when choosing a bank if you are going to make frequent visits. Reasons for visiting could include depositing or withdrawing cash from your accounts or depositing checks. The bank I have lets me deposit checks through their mobile app, which reduces the visits to a bank location. That’s a huge advantage for me.

You also have the option to open a savings account. A savings account should be used a bit differently. A savings account is just that—money sitting in an account that is used as savings. It should be considered “untouchable” and used more as an emergency fund. A good starting point is to have three to six months’ worth of expenses saved up for when something out of your control happens. This could be placed in your savings account for when your car breaks down or if you lose your job for a short time. You can always transfer money from your savings into your checking account, but otherwise, you are not able to access it through your debit card.

Some people never get beyond this point because they spend the money they have in those accounts. They are never able to build up enough money to have extra to spend. That’s why budgeting is crucial. If you build up a lot of money in your savings account, some will advise that a typical savings account is no longer needed if you can access the money elsewhere. You can invest this money into other areas, which we will get to later, that could serve the same purpose and earn you more money in the long run.