If you are looking for personal finance tips that go beyond the common advice you hear all the time, you are in the right place.
In this article, I am going to cover 9 advanced personal finance tips that you can implement to enrich your financial life. They will fall into three buckets.
First, I will talk about income and some practical tips on how to make money beyond your current level. Second, I will discuss budgeting and spending tips that will supercharge your financial discipline. Third, I will talk about some unconventional investing strategies that go beyond the normal advice you hear.
Now, I assume you already know the foundational stuff, like spending less than you earn, setting aside the difference and saving it for a rainy day, managing your debt, having an emergency fund, investing in a diversified portfolio of assets, and so on.
If you would like a refresher, check out my article on the five pillars of personal finance, which goes into (i) establishing the right money mindset; (ii) managing your cash flow, (iii) getting a handle on your debt, (iv) securing and growing your income, and (v) basic investing options.
We’ve got a lot to cover, so let’s get into it!
If you would like to see a condensed version of this article in video format, check out my YouTube video on the topic below.
This post may contain affiliate links. If you click on a link and complete a transaction, I may make a small commission at no extra cost to you.
The information contained in this post is for informational purposes only. It is not a recommendation to buy or invest, and it is not financial, investment, legal, or tax advice. You should seek the advice of a qualified professional before making any investment or other decisions relating to the topics covered by this article.
Part 1: Tips on How to Increase Your Income
1. Labels Matter at Work: Become the High Potential Guy (or Gal)
Let’s start with maximizing your earning potential for the job you already have. We have all heard the typical advice that hard work pays off.
But does it?
Yes and no. If you don’t work hard, you aren’t really going to get anywhere, so I think of it more as a baseline. But hard work alone is not going to get you that raise or promotion. You need to break away from that mindset.
If you want to skyrocket your career, you need to become someone whom the higher ups view as having high potential. In fact, when I worked for one of the largest banks in the country, we had a program to identify, nurture, and train these types of people for senior management positions. We referred to them as Hi-Po’s
That’s all great, but the real question is how do you get flagged as someone who has high potential.
The answer is simple.
Appear brilliant without seeming to try. You do this by being super prepared. Study a project or question that you have been tasked with completing. Be meticulous and figure out all of the risks and issues involved. Then come up with really great and innovative solutions.
But the key is not to tell the boss you spent all night thinking about it.
Just casually mention your ideas when the chance presents itself and make it seem like they are spontaneous thoughts. Your “off the cuff” ideas will give everyone the view that you are just that brilliant.
That’s the image you want. People spend so much time doing things – almost no one spends time just thinking. You will be amazed what even 10 minutes of deep and uninterrupted thinking everyday yields.
So, it does take hard work to get that promotion and move up the ranks, but not in the way that you think.
The next thing you want to do is work on the right projects.
These are projects with high visibility in the organization. The ones that your boss and your boss’s boss care about. Try to avoid spending a lot of time doing mundane projects that are work-intensive. Remember, you don’t want to be known as a good old reliable work horse.
It may take some time to build up enough trust with your boss to get him to assign you to an important project, so keep at it. Do well on smaller projects and ask to be given more high profile ones as they come up.
Lastly, take credit and don’t be afraid to talk about your accomplishments with people that matter.
It may seem a bit gauche, but you can do it tastefully and when the opportunity seems right. Once you have firmly established your reputation as an inspired and brilliant employee that is going places, the money will follow.
2. Make Passive Income On the Side
Ok, so what if you are not working in the corporate jungle and don’t really have the promotional path that is available there. Not to worry, there is plenty that you can do to still increase your income and build a better financial future.
One of my favorite strategies is to start building a passive income stream.
If you have money, you can invest it in assets that produce passive income, such as stocks and bonds as well as alternative assets like real estate. We’ll discuss that in more detail later.
If you don’t have a ton of money, you can still start creating passive income streams, such as a blog, ebook, online course, or dropshipping.
For those who don’t know what dropshipping is, it’s an order fulfillment method where you don’t keep the products you sell in stock. Instead, you buy inventory as needed from a third party—usually a wholesaler or manufacturer—to fulfill orders.
All of these passive income ideas will take a good amount of work upfront, but they can be started with very little money and can provide a nice, steady stream of money once you have done the initial work.
Some of these passive income businesses can generate hundreds, if not thousands, of dollars each month. Check out empireflippers.com if you need some real world proof. They are a platform that offers online businesses for sale and I use them all the time to hunt for profitable businesses I can buy at a good price.
On any given day, there are blogs selling on that site that were started just a few years ago that are making tens of thousands of dollars per month.
If you want to learn more about affordable passive income strategies, check out my article on low cost passive income ideas. The ideas I cover there all cost $500 or less to start, so definitely worth a read.
3. Shed the Worker Bee Mindset and Start Making Real Money
The last tip on increasing your income is more psychological. Many people fall into a familiar routine. They go to work, get paid, and hope to not get fired. They rely on their employer for their financial well-being. That’s a worker bee mentality.
But that mentality is naturally limiting.
How much you make is determined by how much your employer is willing to pay you. Maybe you might get that 3% raise. Maybe you might get a promotion that will give you a 10% or even 15% raise. While those increases are nice, they are not going to radically change your financial life.
You can’t break free and start making real money unless you start your own enterprise.
Related Reading: If you want to learn how to start your own business, check out my ultimate beginner’s guide to the topic here.
Now I don’t want to scare you.
I am not saying quit your job and start a business. But you can start becoming a freelancer on the side and see how things progress. With the emergence of the gig economy, becoming a part time freelancer is easier than ever. Check out sites like Fiverr and Upwork.
If you want a more detailed look at how to do this, check out my article on the 12 Easiest Freelance Jobs For Beginners.
You never know how your little side gig may grow – there are plenty of people who started this way, but turned their side gig into a full fledged business that far eclipsed what they made at their regular job.
Part 2: Tips on Budgeting, Saving, and Spending
I hate budgeting and I hate having limits on what I can spend, but if you want to get anywhere financially, you will need some measure of discipline when it comes to reining in your expenses and saving for the future. Some basic tactics include paying yourself first and the 50/30/20 rule.
If you want a comprehensive look at saving, budgeting and managing your money, check out my article on the topic here.
But we are not here for the basics, so let’s get back on track.
Here are a couple of advanced tips if you want to improve your financial savvy in these areas.
4. Be Strategic With Your Spending
A lot of people advocate that you cut out the little things because little things add up. But I think that kind of thinking is limiting and it makes you a penny pincher. If you want to really cut down on your spending, target the big items. For most people, that means housing, transportation and food.
If you downsize your home, you will not be saving pennies, you will be saving potentially hundreds of dollars a month. If you buy a used car instead of a new one, you will be saving thousands of dollars over the course of ownership of that car because you will not be taking the worst of the depreciation hit.
If you commit to cooking at home, rather than going out or ordering in, you can save hundreds per month as well.
Add all of these up and you can be talking about hundreds if not thousands of dollars every month. These are huge savings that can be applied toward debt or toward investing, both of which can have amazing positive effects on your finances long-term.
Speaking of debt, if you have high interest debt, such as credit card debt, you absolutely must make eliminating that a priority.
Having credit card debt that is charging you 20% interest or more is a massive head wind to your progress. Refinance it if you can with a different card with a lower interest rate. If your credit is decent, you can probably find one.
Or you can simply call your credit card company and see if they will lower it – you’d be surprised at what happens by just asking.
5. Unconventional Emergency Funds
Part of saving is funding your emergency fund.
As the name implies, this is basically a pot of money that you can use when emergencies happen. You want money in your emergency fund to be liquid, so most people just put it into a checking or savings account. If you do that, you will earn a meager return and get taxed on that return to boot.
You can do better. You can use your Health Savings Account or your Roth IRA as unconventional emergency funds. You’ll get some amazing tax advantages by doing so, without really sacrificing liquidity. If you want to learn more about how to do this, check out my article on the topic here.
Advanced Tips on Investing
6. Diversify Your Portfolio with Alternative Investments
Everyone knows that if you want to manage investment risk, you should try to diversify your portfolio with uncorrelated assets. That’s just a fancy way of saying you should own stuff that won’t move together as markets fluctuate.
For example, you are not diversifying your portfolio of stocks if you buy more stocks, because generally speaking the broader stock market tends to lift or depress all stocks (i.e., they all move together).
So what are some interesting options for diversifying your portfolio of traditional assets, like stocks and bonds? Some of the better known alternatives include real estate, commodities, precious metals, art, and derivatives.
While they do offer significant diversification, they are often illiquid and risky if you don’t know what you are doing.
There are some even lesser known assets that I think are interesting. They are (i) buying royalties, (ii) investing in private equity, and (iii) investing in private funds that specialize in buying online businesses like blogs and Amazon FBA shops.
If you want to learn about buying royalties streams for music, movies, and other intellectual property, check out Royalty Exchange. You can go on their site and purchase these rights. Once you have secured the IP, you can start earning passive income with it.
Their website claims a 10% ROI and $90 Million in transaction volume. Really interesting concept.
Investing in private equity is usually reserved for accredited investors (who are people who typically have at least a $1 million net worth or $250,000 in annual income for the last two years). What is private equity? It’s just investing in private companies (usually large established ones that you have heard of, like SpaceX, etc.).
But there are some interesting options to invest in this space, even if you are not accredited. Check out my article here to learn more.
If you believe in the online business model and want to get in on the action without actually starting your own blog or Amazon FBA business, you can check out Empire Flipper’s EF Capital Fund. This fund invests in these types of businesses, but you need to be an accredited investor.
7. Always Reserve Some Money in Cash to Take Advantage of Opportunities
When I was younger, I hated having uninvested money.
I wanted to extract every ounce of return I could from my capital. But I have realized over the years that having a healthy amount of money in cash is no bad thing. It allows you to take advantage of market downturns and other investment opportunities that may arise. It also serves as an added safety blanket if times turn tough.
I shoot for at least 10%-15% in cash at all times.
When you are 100% invested and the market drops, all you can do is look on helplessly while you see your money evaporating. But if you have a stash of money, you can take advantage of the dip and buy assets for cheap. I have lived through several market declines and this simple piece of advice made me a lot of money during those downturns.
9. Start a Side Business and Shield Your Income With a Solo 401(k)
Did you know that you could sock away a ton of money through a tax-advantaged retirement plan if you start a business and create a solo 401(k).
Now your business can be a side business and you can still continue working and contributing to your employer’s 401(k) plan. The great thing about a solo 401(k) is that it allows you to contribute up to $61,000 in 2022. You can contribute to your solo 401(k) in two ways.
As an employee of your business, you can contribute up to 100% of your compensation or $20,500, whichever is less.
As the employer (yes, you act as both), you can make a contribution of up to 25% of your compensation or net self-employment income, which is your net profit less half your self-employment tax and the plan contributions you made for yourself.
When you add the two together, they cannot exceed $61,000.
Obviously, if you are contributing $20,500 as an employee to your “normal” job’s 401(k), you can’t double dip on that piece.
To learn more, check out this link to IRS talking about these types of plans. As with all of these types of accounts, they can be complex, so you want to make sure you check with your financial and tax advisor before taking action.
I love this strategy and am in the process of exploring it myself to shelter a lot of my online business income from taxes. I don’t need the money right now because my regular job supports my bills and lifestyle, so why not sock away that money from my side gig in a great tax-advantaged vehicle?
Don’t know how to get started setting up your own business? Check out my ultimate beginners’ guide on how to do this. It’ll take you step by step through the entire process.
9. Get Free Money With Your Employee Stock Purchase Plan
If you work for a publicly traded company, they may offer an employee stock purchase plan (or ESPP for short). In many cases, these plans allow employees to buy company stock at a discount. So if the stock is trading at $100, you can buy it for $85. That’s amazing and it’s basically free money.
You can dollar cost average these purchases and maximize your profits in the long run or you can buy them at a discount and sell them right away for some instant cash.
To learn more, check out my full article on how to make the most of your ESPP.
So there you have it – 9 advanced personal finance tips that go way beyond the basics. Hope this has been helpful and best of luck on your personal finance journey.