Today’s question comes from CJ. He asks:
“I related a lot to your story. I look around the cubicles here at NBC and see a lot of older people doing what I’m doing and it scares the crap out of me.
I’ll be 30 years old in 4 weeks and make $70,000/year and live in Brooklyn with my girlfriend (28) who makes the same. We split our rent, $2,100/month ($1,050 each) and utilities. I like to say I live comfortably poor. Currently I’m not saving any money, and generally living paycheck to paycheck. We want to be able to start our own production company and work for ourselves in the next 5 years. This basically means having financial freedom. I estimate that we will both be making just over $100,000 a year, respectively, within the next 3 years.
Like I said, we have not been saving money, and have no investments or 401K or anything like that. What are the basics that we should be doing in order to save significant money over the next 5, 10, 20 years?
After taxes, I take home $3,400/month. Most of that goes towards rent, utilities, food, transportation, gym membership, etc. How much of my monthly paycheck should I realistically be saving?
I have NO CLUE how to invest my money and just want to start getting into the game.”
Bronnie Ware spent years talking with people about to die, and she found they all wished for the same things: That they’d been happier, stayed in touch with their friends, expressed their feelings, and hadn’t worked so much.
Want to guess what their biggest regret was? It was, “I wish I’d had the courage to live a life true to myself, not the life others expect of me.”
At 30 you have a big hairy goal to start your own business and reach financial freedom. The good news is you can because you have decades left to do it.
I’ve said it before, and I’ll say it again: You can get whatever you want in this life, and it doesn’t require money, it doesn’t require a degree, it doesn’t require luck. It only requires the ability to learn and to take action.
And here’s what you should do.
1. Set up your 401(k)
You can’t keep procrastinating about this. Why not? Because a third of people near retirement age are going to live in poverty for the rest of their lives. And most families entering retirement only have $104,000 saved up. Trust me, you don’t want to do that to your future self.
Besides, you’re probably leaving free money on the table. Most employers offer a 401(k) match, meaning they match whatever you’re putting in (usually up to a certain percentage). For example, if you put 4% of your paycheck into your 401(k) they match it with another 4%.
So, contact your HR department and get your 401(k) set up. And put in at least the minimum to get the full match.
2. Stay comfortably poor
Together you guys earn $140,000 and soon that will be $200,000. But there are a lot of people who make $200,000 and still live paycheck to paycheck.
So here’s a trick you can use: If after you get your raises you keep spending the same amount of money you are now you’ll automatically be saving $60,000. And that’s not just one big lottery-sized check, that’s every year, forever.
You can keep that money in a savings account or you can invest it for retirement. But if you really want to try starting your own business then keeping it in a savings account is what you should do.
3. Start your business
You shouldn’t start a business because you want some specific outcome like financial freedom. You start a business because you have to.
You see, the media likes to make it look like success happens overnight for everyone, when in reality it takes 10 years of insanely hard work for someone to “succeed overnight.”
And if you start a business based on want, you’re going to fail.
So, if you have to start your business then just do it now. Remember, you don’t need money or a degree or luck, only the ability to learn and take action.
In fact, you have an incredible opportunity because you work at NBC, and they do what you want to do. You can find mentors there, build your network there, and learn everything you need to know.
It’s kind of like when I started this site. At first, I just wanted to get my ideas out there, but after a couple years I got interested in how I could turn it into an online business. I didn’t know how to do that, but I was willing to learn take action.
But here’s the mistake I made: I looked at the people who were 5 or 10 years ahead of me, people with 6- and 7-figure businesses, and thought I needed to do what they were doing.
That I had to get professional head shots, start a podcast, do videos on YouTube, have an email list, do SEO optimization, run A/B split tests, and on and on.
That’s tactical hell. And I was in it, wasting time and energy.
So I decided to focus my resources on what I thought mattered most, which was writing. And what happened? My writing skills improved because repetition is the mother of skill. Once I sharpened my writing skills I could focus on the next skill.
You need to focus on your one thing. I can’t tell you what that is.
But it might be something like making short films. And once you sharpen that skill, then you move on to sharpening the next one. And at some point you’ll have the skill set to start charging for your work, and when you can start charging for your work it means you take the leap.
And you won’t have to worry about money because you’ve been saving $60,000 every year.
Starting a business will be the hardest thing you’ve ever done. That’s why wanting isn’t enough, you do it because you have to. And because you want to to die saying, “I’m glad I did that,” instead of, “I wish I had.”
If financial freedom is a byproduct, all the better.