You can save money by making coffee at home, but what will really move the needle is cutting back on your biggest expense: where you live. One of the most common factors that prevents people from becoming financially independent is that they’ve spent too much on housing (both from renting and buying). So whatever you do, don’t fall into this trap.

To clarify, 30% is the MAXIMUM you should spend on rent. Don’t go looking for a more expensive place if you are spending below 30%. The less you spend, the better.

Yes, we know that some cities cost a TON to live in and you might not be able to get more than a shoebox for 30% of your salary. But if you spend more than that, it will be very difficult to find money left over to save and invest. Get roommates, move further away from the city center, or find a way to increase your income to keep your rent under that 30%. Your future self will thank you.

This is also a reminder to be cautious of lifestyle creep. As you become a higher income earner, it’s even more important to stay well below the 30% maximum. For example, if you make $300K/year you could spend up to $7,500 according to the 30% rule. And you’ll probably spend more on clothes, food, and travel too. But if you increase your spending too much as you increase your income, you won’t be any better off financially. Keep your expenses steady even when your income goes up. Invest the excess in index funds and you’ll be on your way to achieving financial freedom.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎

-Vivi & Shane