Over the past 5 years when I run into someone and tell them about my family wealth building podcast, one major question that continues to come up is “What have been your biggest takeaways?”
It’s a great question.
It’s the whole reason I started the show. I wanted to learn from some incredibly smart, family-centric, wealthy, philanthropic, independent, in control of their future rock stars that would motivate me to give my family the best life possible. And it’s worked.
During the course of the podcast, we have done some incredible things. For example:
- Paid off our $200,000 mortgage in less than 5 years
- Become millionaires in 10 Years (starting at a -$50,000 net worth)
- And achieved Coast FIRE by saving and investing over $500,000 before 40 years old
That is just a short list of the things our family has done during the last 5 years. I honestly believe that if it weren’t for the over 200 interviews I’ve done with young millionaires, financially independent couples, and debt-free parents, I don’t think we would have had that much success.
Now the other major reason I wanted to start a podcast was to help others. I have a feeling in my brain, my bones, my heart that I want to give back. I love helping people win. It makes me happy.
In that spirit, here are my “10 Steps to Family Wealth and Happiness” courtesy of the money geniuses I've interviewed on my podcast and blog.
1. Define the Life You Want to Live
You can’t get to where you want to go without first defining where that place is …
So what do you want out of life?
And it’s not just “I want to get rich!” Sure money can solve a lot of our problems, but if we don’t tell our money what to do, then we may find ourselves in the future asking, “why am I still unhappy?”
In order to define the life you want to live, try this:
Share Your Financial Dreams With Your Partner
When we’re overwhelmed and our financial situation isn’t looking so hot, we forget our dreams because they seem so impossible. Take some time to dream together with your partner.
- Do you want to own your own business?
- Are you ready to stay at home with the kids?
- Do you want to start a new career?
These discussions can motivate you and your partner to make major financial progress together.
Plan Your Path Together
Once you hone in on your dreams, it’s time to put some action steps below them.
For example, if your goal is to go down to one income and leave your job to stay at home with your kids, you’ll need to figure out how to decrease your living expenses, eliminate debt payments or increase your household income. With a strong partnership, it can become a reality.
Make a Commitment and Support Each Other
If you’re paying down $200,000 of student debt, that path can feel like an eternity!
It helps when you have a supportive partner to help you along the way. This will not be a quick process. It may take years or even a decade to achieve big goals, but that’s why they are big goals.
Not everyone does them and they continue living lives they aren’t inspired by … we’re talking family wealth and happiness today. So let’s go get it.
Oh, and don’t forget to celebrate along the way. In our student debt example, have some fun when your balance is at $100k, $50k and $25k.
You and your spouse can track the progress together, drink some bubbly or go out to dinner to celebrate each milestone. This is an incredible moment in your lives that should be remembered.
Related Content: How We Paid Off $50k of Debt in 1 Year
2. Control Your Money
Now that we’ve defined our dreams and committed to making them a reality, let’s talk about how we can gain control of our money.
For some of us, life can get away from us. We had control of our time and our money, but now it feels like it’s escaped our grasp.
It’s time to take back control! Here are some quick tips to make that happen:
Craft Your Family Budget
With your family goals and values defined, develop a monthly budget that supports those goals and values. That way, your money is doing what you want it to do!
The fun part of the budgeting process is that fintech has made it a lot easier lately. Our family’s favorite budgeting app is Mint because it tracks our spending for us, has a slick app and it’s very convenient. But there are dozens of cheap or free budget apps that’ll help you get the job done.
Save up $2,000 for Emergencies
If you save $2,000 for an emergency, you’ll have twice as much money as 61% of the US, and it’ll keep you away from using credit cards for your emergencies in the near future.
Over time, you’ll want to grow this emergency fund to 3-6 months of expenses as is recommended by most financial professionals.
Eliminate High Interest Debt
Credit card debt is crushing our country’s ability to build family wealth and move ahead. When you’re paying over 20% interest on your credit card each month, your family wealth game is moving backward.
Find out how much you need to completely pay off your credit card debt, save up the amount needed and pay it off for good.
I believe people can keep their credit cards if they develop smart habits like setting up living on a monthly budget and setting up automatic monthly payments. If you can’t commit to these things, I wouldn’t recommend using credit cards.
Related Content: Create Your Budget on Mint in 10 Simple Steps (for Free)
3. Invest Early and Consistently
Automated investing and compound interest will build us a huge nest egg and help us to retire comfortably. If we set things up correctly, we can essentially get rich while we sleep!
Here are a few tips to consider:
Take Advantage of your Workplace 401k (403b or 457)
By consistently investing in your workplace 401k you’re doing 3 things:
- Automatically investing your money and never touching it so it grows for a really long time
- Taking advantage of compound interest. This is when your money starts to make money.
- If your company matches your contributions, you are essentially receiving free money!
Using these methods over the past 10 years has helped us grow our family’s investments to over $550,000! If we let it grow (and don’t contribute another dime), we could have over $2,000,000 by the time we retire.
Look into Index Funds
If your 401k or other retirement routes like Roth IRA or Health Savings Account (HSA) have the ability to invest in low-cost index funds, consider it. You can save a boatload on fees and mirror indices like the S&P 500 that provides you with a solid long-term return.
The key is not to touch it until retirement. Hence the name “retirement savings”.
Invest with Tax Advantages
If you have the income and ability to, steadily increase your contributions to tax-favored retirement options like the 401k (or 403b or 457 plan), IRAs and HSA.
By taking full advantage of these, you’ll get the full tax-saving advantages available to you and your retirement funds will skyrocket.
We all have to pay taxes, but if we can pay fewer of them legally, that’s a nice deal we should all be taking advantage of.
Recommended Resource: Lively – The #1 Rated Health Savings Account (HSA)
4. Protect Your Family
We can make a lot of money and develop a mass amount of family wealth, but if we’re not protecting it, it can be a disaster for our family. This message isn’t meant to scare you. It’s meant to help you and your family rest easy.
Here’s how you can do this:
Get Term Life Insurance
If your family depends on your income, you need term life insurance.
Find a partner that shops the marketplace on your behalf and finds you the best deal. I like Quotacy and I’ve recommended them for years.
Depending on your situation, Whole Life can be very pricey, with less coverage and not the best investment. For most families, an inexpensive term life insurance policy is your best bet.
Craft Your Will and Trust
To protect your family and ensure they are in good hands if the unexpected occurs, get your last will and testament going ASAP. And as you’re building your family wealth, look into a trust to ensure you avoid issues for your family if you were to pass away.
Trust & Will is a trusted provider that makes this process easy.
If you have been divorced, have children from other marriages, have property in other states, or own a business, consider seeking out a trusted lawyer who can help you draft your will.
Review Your Insurance Coverage
Everyone’s situation is different, but here are some types of insurance to keep your family safe:
- Homeowners / Renters
- Long Term Disability
- Umbrella (if you have a net worth over $500k).
- Life Insurance
Once you’ve got these squared away, you can rest easier knowing that your family is taken care of.
Related Content: Do I Need a Will? Who Needs One and Why
5. Grow the Gap
You have your income (the money you make) and your expenses (the money you spend). The larger gap between these two numbers, the more family wealth you can build.
So for example, let’s say you’re making $100,000 per year and you’re spending $100,000, your savings rate is 0%.
Now, let’s say you’re making $100,000 per year and spending $75,000 per year, your savings rate is 25%
With that 25%, you can save for your 3-6 month emergency fund and invest for your future family wealth. The larger the gap, the more money you have. So let’s grow the gap!
If you’ve been consistently exceeding expectations at work and it’s been a while since you’ve received a raise or promotion, it’s time to ask for what you deserve. Check out industry sites like Glassdoor to find out what people in your position and in your area are making.
Perhaps overtime or a side hustle is an option that you want to take advantage of. This way, you can meet some of your near-term financial goals. Grab that extra money and bank all of it!
Careful on the burnout factor here though… we don’t want to sacrifice our mental health. Listen to your mind and body and rest when you need to.
For some easy money, look around your house for things you don’t need or use anymore. We’ve made thousands of dollars reselling stuff on Facebook Marketplace over the years.
The easiest way I’ve found to meet my financial goals is just to spend less money.
I get it. It doesn’t sound fun, but what if we started with the things that weren't fun like …
- Renegotiating your recurring bills (cable, cell phone, internet)
- Shopping at a lower cost grocery store like Aldi
- Using a lower cost cell phone plan like Tello (our family just switched and the service has been better than Verizon for us)
These are just a few actions our family has taken to save thousands of dollars per year. It’s also a smart way to fight any growing inflation concerns!
Eliminate Other Debt
At this point in the process, I’m hoping you are feeling more in control of your money.
To grow the gap, even more, it’s time to eliminate your other debt. These are debts like car loans, student loans, medical bills and so much more.
When you are not worried about making these payments anymore, you’ll have more room in your budget for the stuff you really value.
Recommended Content: Tello Review: How This Carrier Stacks Up Against Verizon
6. Inspire Generational Wealth
As a parent, I feel inspired to give my kids a better life than I had. My parents did the same thing for me and I believe it’s my duty to strengthen our family tree for generations to come.
I’ve had the chance to speak with some inspiring parents and learn how they are setting up their children for generational wealth.
Here are some thoughts to consider for your family:
Start Investing Early
The earlier you are able to invest in your children’s future, the more time and compound interest can work in your favor.
Before plunking down money to help your children have a brighter future, make sure you are taking care of your retirement needs first. If you’re investing a good percentage of your income for retirement or you’ve hit Coast FIRE already, then we can turn our focus back to the kiddos.
If college is important for your family, consider a 529 College Savings Plan to help you invest for your child’s future college costs. We use this tax-advantaged account because we believe college is important for our kids.
You can also open a UTMA (Kids Brokerage Account) as well for life savings goals outside of college. This could be a starter home downpayment, funds for the wedding celebration, or for their first car.
Another route is a Roth IRA for Kids. This is a retirement savings account and can only be used if your kids have earned income. I helped my 16-year-old nephew get his started and the balance has grown substantially since then (index funds made it simple)!
Teach Money Lessons Early
Some statistics have shown that kids' ideas around money are set by 7 years old. I believe there is much more time to inspire healthy financial behavior after that time, but hey, it doesn’t hurt to start early.
Simple things like talking about your purchases at the store and how much things cost are easy ways to get kids thinking about money.
When they are old enough, allow them to have their own money so they can learn and even make mistakes with it. In my opinion, the best way to learn and have the lesson REALLY stick is trial and error.
Encourage Family Contribution
Help your kids understand that with hard work comes reward. The things they truly want in life are there for them if they want to work for it.
This can start off very young with chores around the house. A consistent tradition like this can help them learn responsibility, integrity and how money really works.
And some great advice from John Lanza, when your kids get to be pre-teens or teens, give them enough allowance to cover their clothes, food out of the house and cell phone costs. This way they will learn how to be responsible with money early.
They will surely make mistakes, but better to do it at 14 instead of 41.
Lastly, look into scholarships! They are available and waiting to be earned. Work with your kids to fill out the applications and start earning that free money.
Related Content: UTMA vs 529: How Are These Accounts Different?
7. Create Family Financial Independence
There’s something about reducing your financial worries that just makes me smile. And when I share these family financial independence hacks, I continue to receive positive messages from families who truly benefit from them.
These tips aren’t your typical FIRE Movement moves, but they’ve worked well for our family and as I’m finding… thousands of other families as well.
Achieve Coast FIRE
After investing for our retirement for a decade, I started to ask myself … When can I stop?
When will I have enough invested that time and compound interest will do the rest for me?
Then I found the term Coast FIRE. That’s when you have enough invested in retirement that you can let time and compound interest do the heavy lifting for you until you get to retirement age.
It’s a beautiful concept because it allows you to take your foot off the gas of retirement savings and enjoy more life today. The concept can be difficult to swallow, but it’s one that I’m working on embracing right now to make more memories with my family today.
Become Mortgage Free
Eliminating your mortgage after achieving Coast FIRE is what I would recommend for most people. You’ve taken advantage of the stock market to allow for a comfortable retirement, now turn your focus to enjoying more time today.
And mortgage freedom gives you just that.
According to Business Insider, the average monthly payment on a 30-year fixed mortgage without property taxes and insurance is around $1,000.
With that gone, what would $12,000 to use how you please look like back in your life?
The options abound.
Earn Passive & Happy Active Income
My version of financial independence includes work. Not a career I don’t enjoy, but work that makes me happy it’s Monday.
In this step, I’d suggest starting to include income streams in your life that you enjoy and start to slowly move away from work that doesn’t make you happy.
For me, this looked like investing in a small business until I made enough to leave my corporate career.
For others, that may mean investing in real estate rental properties or passive investing in a taxable brokerage account. The goal of these sources would be to bring enough to cover your annual living expenses.
Related Content: The 10 Steps I Took to Quit My Job and Start My Business
8. Give Generously
When Nicole and I became mortgage-free, it was an incredible moment. One thing we realized is that weren’t giving to the best of our ability.
In fact, we were giving 1% of our income.
We decided to ladder up our giving over the next few years:
- Year 1: 1%
- Year 2: 3%
- Year 3: 5%
And now, we give an additional 5% to family, friends, and neighbors in need. It’s our own form of 10% giving.
Let’s go over some ways you can give generously.
You see it every day. There is something wrong in the world that you want to make right.
Well, it’s time to be the change you want to see and put your money behind it.
Do your research on charitable organizations through Charity Navigator so you can intelligently give. Ladder up your giving over time if you’re not currently giving how you want to.
In time, you’ll be making an impact that truly helps your community, your country, and the world.
Recently I heard about a concept giving 5% of your money and 40 hours of your time per year on one of my favorite podcasts Pete the Planner. As a young father, I thought this amount of time was appropriate and feasible. Perhaps that’s why I latched onto it.
If you don’t have the means to give your money, give your time. You can volunteer in your local community and support causes that call to your heart.
Use Your Voice
Perhaps you don’t have the time or the money, but you still want to put some positive change out there in the world.
Well, using your voice in person, online, through a podcast, and on social media can truly help people and causes you care about.
I started my podcast to help young families find financial freedom and live the lives they’ve always wanted. The positive notes and feedback I receive from simply using my voice have been incredible.
So what causes are you passionate about? There’s someone out there waiting to hear your voice.
And hey, if you can give your money, your time, and your voice … I believe that’s how truly positive change happens.
Related Content: Charitable Giving Strategies: How to Make Charitable Giving a Family Tradition
9. Maximize Life Experiences
At this point in your life, you’ve checked all of the boxes. You are crafting a life that not only makes you proud, but you’re helping others along the way.
It’s time to enjoy.
After reading the book Die With Zero by Bill Perkins recently, I came across the term “Maximize Your Life Experiences”. I love that.
Instead of dying with a pile of money, I’d rather die with a pile of memories and good times with the ones I love.
So for those of us who’ve checked all the smart financial boxes and created a simple family wealth structure, it’s time to have more fun.
I love vacations. With our Michigan winters, getting away is a must!
Also, there are so many places in our state, our country, and the world that I want to see. With more time, more money, and more options, this is now possible.
At this point in your journey, I want to encourage you to remember that you’ve already hit Coast FIRE so now it’s time to coast.
Invest in your Marriage
I love my wife so much. And I’m thrilled to continue strengthening our marriage.
Whether it's figuring out how to communicate more effectively or creating fun traditions, I know the best part of our marriage is just beginning.
After almost 12 years of marriage, my best advice is to make time. If there’s not enough time to focus on your marriage, then you need to make it.
In the past, my priorities were out of place. If I didn’t have time for my wife, then I’d prioritized other things ahead of her. And that’s not right.
Create Memories with your Kids
There was a point in my career where I was working and traveling so much. I felt like I was missing my kids growing up. My wife was awesome with sending me photos and sharing funny memories of things the kids said, but it wasn’t the same as BEING THERE.
I wanted to be there.
Now that I have the time, I’m going to make the most of it. Here are some ideas that may inspire you:
- One-on-one time with your kids locally
- Daddy-daugther vacations
- Father-son vacations
- Volunteering with them
- Coaching their sports teams
This is an area I’m diving into more and can’t wait to learn from other parents how they are doing it.
Related Content: How Pursuing Financial Independence Lead us to Marriage Counseling
10. Teach Others How
At this point, you’ve gained a lot of knowledge. You’ve achieved your own version of family wealth and happiness.
I believe the final step in this process is to teach others how you’ve done it.
You can do this in many ways. Here are a few:
Volunteer in your Community
Share your time, knowledge, and spirit with others who don’t have as much as you. By pouring into others, you’ll get so much more in return.
Use your unique skills and give back where it’s needed most in your community. You’ll be creating and improving the area where you live, work, and play.
Become a Content Creator
The internet gives people access to free and incredibly helpful information.
Join in on this revolution and share what you know through a blog, creating a podcast, YouTube channel, or social media. It’s not only a great way to teach and give back, but it gives you a medium to plan, reflect and journal about your future.
Teach Your Kids
I love the saying “Give your kids enough money to do something, but not so much that they do nothing.”
We want to empower them to keep this legacy alive. As they grow older, we should give them progressive levels of responsibility when it comes to their money. And, most importantly, give them the knowledge that empowers them to become financially and personally confident.
And we should always do our best to communicate and model strong financial habits. After all, kids are great imitators.
Final Thoughts on Family Wealth and Happiness
Well, we did it! We hit on all 10 steps for achieving family wealth and happiness!
These are not hard and fast rules. They are concepts that I gleaned from over 300 episodes sharing what we know and learning from hundreds of others families.
I’m using these steps. And they are working REALLY well for our family. Life is great right now.
And I’m thrilled to see where we go as a family and as a community together.
What do you think of these family wealth and happiness steps? Where are you on your family wealth journey?
Please let me know in the comments below!
Andy thanks for all the great content you put out there. When it comes to this list I would push back on two points:
1) Instead of choosing a debt free life, I would advise young couples to learn and understand finance. I realize it’s not everyone’s favorite subject but it’s the one subject that will light up the path to FI. You will need to finance your life until you die so it’s worth the investment of your time. Also once you understand finance you don’t fear debt, you actually embrace it as a tool to supercharge your path to FI.
9) instead of waiting till you reach FI to follow your passions, I would advise people to start following their passions now. You don’t need to quit your day job, but find a way to explore that passion as soon as possible. Why? Because you might discover that it’s really not your passion and you want to learn that as early as possible so you can put that dream behind you and start focusing on the next one. Also by starting to follow your passion early you may discover that you need some additional skill and you will have time to acquire it. My advice “start with the end in mind”. With a clear vision of your destination you have a powerful tool with which to filter all the options in front of you.
All the other points are solid – especially 2) Partner with your partner. In my experience who you partner with in life or business is the best predictor of the success of that venture.
Keep up the great work Andy.
Thank you for the thoughtful comment! I truly appreciate it.
#2 is very personal. Some people don’t mind debt and the risk that comes with it. Others (like me) don’t like it … It may be more emotional than mathematical at times, but all in all people should choose a path that suits their situation best. I agree with you that some debt can really benefit your situation, but high interest debt (credit cards, etc) should be avoided at all costs.
For your point on #9, I wholeheartedly agree with you. Follow your passion from day one and have that converge with your talents and you’ll never “work” at day in your life.
It’s hard to make steps without them crossing over at certain points. This is a step that I’m discovering and very excited about.
I truly appreciate the dialogue and you taking time to provide constructive feedback.
Awesome post! This is amazing advice for ANYONE, and laid out in a super easy to read and understand way. Thanks for spreading the good news.
Thank you so much! I worked really hard on this one and it’s going to be a guiding post for me as well. I would say I’m still in Step 5 and climbing!
We started a reward system for our son. He’s trying to save up enough stars to turn into cash. With enough cash we’ll get him some V-Bucks so he can use them for his Fortnite video game. Something new to make him work harder for his money!
That’s awesome Chonce! I believe it’ll pay dividends in the future.
Fortnite can be a huge motivator then!