Patience and discipline are key factors in being financially free. Most of us got through school without a single lesson on how money actually works. No one explained compound interest, APR on credit cards, emergency funds, or how you can make your money work for you. By the time we realize it, many of us are already behind or drowning in consumer debt.

These steps are worth knowing early and can save you in a time of distress. None of them are complicated. Most are things we wish someone had sat us down and explained to us, like I was 5 years old: which is what we are attempting to do here.

Pay yourself first

The default way most people handle money is to spend first, save whatever is left. The problem is that there is usually nothing left. Something always comes up. Most people just go day by day, living in the negative.

Denzel - Pay yourself first means the moment money hits your account, a fixed amount moves to savings automatically before you touch anything else. Even if it is $50 a month. You adjust your life around what remains rather than trying to save from what you have left. Set up an automatic transfer on payday and stop thinking about it. It does not feel like much at the start. Over time, it is the single habit that matters most.

Jess - I try to set budgets ahead of time. Limit my spending throughout the month. As soon as I get paid, I clear out all my debts. Anything left after expenses goes directly into my HYSA (high-yield savings account).

APR (Annual Percentage Rate) - the sneaky way credits take your money

First things first - credit cards are great, but you cannot spend money you do not have. Think of it as borrowing money; you will have to pay it back. Nowadays, interest rates are really high, some up to 25% or more. If you just pay the minimum, you will be paying the amount owed plus the APR, it adds up. Please take the time to look at all your card statements and see how much money you're just handing to the credit card companies in interest. Pay them off and avoid interest charges!

Jess - My goal is to never pay any interest on credit cards by paying the full amount before the billing cycle ends. I don't ever make any purchases with my debit card. Credit cards are safer, and they all give me 1 - 3 % cashback. The only thing that has to be paid with my checking account now is rent :( but otherwise, every purchase I make, I get cashback, which is a win for me.

Build your emergency fund before anything else

Jess - Non-negotiable. You need a minimum of three to six months of your actual monthly expenses (money for rent, bills, essentials to survive, etc.) sitting somewhere you can access it quickly. Ideally, these funds should be in a high-yield savings account - many of these give you between 2.5% to 5% interest, while a traditional savings account gives you less than 1%. I think the average is like 0.38% and goes as low as 0.01%. I literally learned about these in the last two years, and it blew my mind how much money I was losing by having my savings locked into a traditional savings account. Anyways, YOU NEED AN EMERGENCY FUND. Life is always life-ING, you never know whether you'll get sick, be injured, your car breaks down, or you lose your job - all possible real-life scenarios that will be 100% more manageable if you have an emergency fund.

Denzel - The argument against this is usually that the money could be working harder somewhere else. That is true in theory. In practice, when your car breaks down, you lose your job, or something goes wrong at home, that fund is the difference between a bad week and a financial setback that takes a year to recover from. Once it is built, you barely think about it. But you will be glad it is there the first time you need it.

Have a plan AKA a budget

Almost everyone knows how much they earn, but do you really know how much you're spending?

Jess - To get a good idea of my spending habits, I had to print my last 3 months' worth of credit card and checking account statements. I started with the essential things I need to survive, such as rent, gas, utilities, and groceries. This total was pretty manageable. I was shocked to see that more than 50% of my spending was on things that I did not actually need, such as subscriptions (half of which I had forgotten about), way too many impulse purchases (due to those sneaky ads on IG), and going out way too often.

To create a budget:

  1. You need to know how much you make - write that down.

  2. Figure out your essential living costs. Subtract the two - now you have discretionary spending money.

  3. From your discretionary amount, set an amount for your savings goal. The savings can be for different things - an emergency fund, travel, fun, down payment on a house, whatever you want to spend your money on. 

That's it, 3 simple steps. Then you'll have to choose the amount you’re willing to spend on all non-essential things after your savings are where they should be! 

The 1/3 rule for housing

Your housing costs should be no more than one-third of your gross monthly income. That means before taxes, before deductions, just your raw monthly pay divided by three. If you earn $4,500 a month gross, your rent or mortgage should not exceed $1,500.

Jess - Personally, I think it should not be more than 1/3 of your net income - meaning your paycheck after taxes, but this is a good rule of thumb.

Most people stretch past this without realizing it, especially in expensive cities where a decent apartment already eats up half of what you take home. When housing takes too much, everything else gets harder. There is less room to save, less room for emergencies, and you feel it every month.

The TRAP - Lifestyle Creep 

Denzel - It happens to all of us. You live, you learn. I’ll be transparent here - after leaving my first job, I was able to move to a new company, which resulted in a big pay raise. At the time, it seemed reasonable to move somewhere closer to work. Unfortunately, the rent was very expensive; just that alone made it so that my pay raise quickly became insignificant. I was spending a lot more, but somehow my leftover income was the same as my previous job.

A pay increase should not automatically mean your spending goes up by the same amount. It usually does, though, and most people never notice it happening. A nicer apartment, a newer car, and more eating out. Each individually feels reasonable. Together, they mean you are never actually ahead, just spending more. When your income goes up, let some of it improve your life and put the rest somewhere it compounds (a small perspective on investing in the next section). The people who build real financial security are not always the highest earners. They are the ones who did not let every raise disappear before they noticed it.

Start investing early, even if the amount feels embarrassing

Jess - I will say I am honestly a little bit skeptical about the whole investment thing. Part of me wonders why I am putting money into big companies that have wayyyyyy more money than me… And yet I still do it because the math on compound interest is the closest thing to a cheat code that exists in personal finance. Money invested early has more time to grow than money invested later, and the “J” curve of just letting the gains get reinvested is crazy exponential growth. My investments consist of a 6% match 401K account at work (which they say it's 100% return on investment instantly). I also started to invest in a Roth IRA because everyone kept telling me I should. I use Fidelity and only put my money in Index Funds, which are safe and diversified. So far, I think retired Jess will thank me if I make it that long. 

Denzel - I believe that everyone should start investing as early as possible, even if it is just $1. Fidelity offers a neat 52-week challenge. The challenge starts with investing just $1, and it adds one more $1 each week. If you start on Jan 1st, by the time you reach the end of the year, you'll have $1,378 in your investment account. This just shows how consistency over time can really compound into greater gains, and that's not including money gained after it has been invested. 

You do not need a lot to start. Index funds through a regular investment account or a retirement account let you put in small amounts regularly without needing to pick stocks or understand markets in depth. 

In conclusion - thanks for reading! Hope this helps :) 

None of this requires a big life overhaul. Pick the one that applies most to where you are right now and do something about it. Set up the automatic transfer. Open the account. Pull up three months of bank statements and do the math. The financial version of your life five years from now depends almost entirely on the small decisions you make consistently, not on finding the perfect strategy. Most of the work is just starting.