You know, money has a funny way of
rewarding the same decisions over and
over again. If you look at people who
build wealth over the last 50 years,
they almost always made a handful of
decisions that kept paying them. Today,
we're counting down 10 money moves
you'll never regret. And these are not
trends. These are decisions that have
survived recessions, inflations,
bubbles, crashes, and everything in
between. Welcome to Alux.
Number 10. Build a cash buffer before
you need one. The average emergency
expense in America costs well over
$1,000. For many families, that single
bill is enough to trigger credit card
debt, missed payments, or a loan with
painful interest. Now, cash has
developed a bit of a bad reputation.
Every time interest rates fall, someone
declares that cash is trash. During a
bull market, cash feels lazy because it
isn't climbing as fast as stocks or real
estate. Watching money sit in a savings
account can feel like missing out. But
that misses the real purpose of cash.
Cash isn't supposed to make you rich.
No, cash is supposed to keep you from
becoming poor. The people who need money
the most are usually forced to sell
assets at the worst possible moment.
People with cash don't have that
problem. Instead of selling investments
during a downturn, they can leave them
alone to compound. Instead of putting an
emergency on a credit card, charging 25%
interest, they pay the bill and move on.
Sometimes they even become buyers while
everyone else is selling. History is
full of examples. During the financial
crisis of 2008 and the market panic in
early 2020, many investors who had
enough cash were able to buy quality
businesses at prices that looked
impossible just months earlier. Those
purchases often became some of the best
investments of the decade. Even giant
companies keep cash reserves all the
time. Warren Buffett's Berkshire Hathway
regularly keeps tens of billions of
dollars available even when critics
complain the money isn't fully invested.
The same principle works at a personal
level, too. An emergency fund isn't just
an investment portfolio. It's a
decision-making tool. It gives you time
to think instead of forcing you to
panic. Money creates freedom long before
it creates luxury. And once you've
protected yourself from life's
unexpected expenses, the next question
becomes obvious. How do you make sure
there's more money arriving every year
than the year before? Number nine,
increase your income every year. If your
income stays the same for more than 2 to
3 years, your lifestyle slowly moves
backward. Most people hope their
employer will solve this problem with an
annual raise. Sometimes that works. Most
of the time it doesn't. Research from
payroll companies and labor economists
has consistently shown that workers who
switch jobs often receive significantly
larger pay increases than employees who
stay with the same company year after
year. Loyalty has value, sure, but
markets usually pay more than habits.
That doesn't mean everyone should resign
tomorrow. It means income should become
an active project instead of a passive
expectation. Learning a specialized
skill can increase your earning power.
Negotiating your salary can permanently
raise every paycheck that follows.
Building a side business creates another
source of income that isn't tied to one
employer. The way you do it doesn't
really matter that much as long as it is
legal, of course. But every year, you
should try to answer one simple
question. How can this year's income
become larger than last year's? You see,
your career is often your largest
financial asset long before your
investment account becomes one. And once
more money starts coming in, the next
temptation is waiting. Trying to find
the perfect moment to invest. Number
eight, increase your savings rate before
your investment return. Everyone agrees
that saving money won't magically make
you rich. And that's true. Yet somewhere
along the way, people started treating
savings as if it barely mattered, while
investing became the answer to every
financial question. And the reality most
people don't want to say out loud is
that for many this is actually
backwards. So imagine your goal is to
improve your finances by $10,000 this
year. There are two ways to get there.
First is through investing. Assuming you
earn a healthy annual return of around
7%, you'd need roughly $143,000
already invested just to generate an
extra 10K before taxes. Most people
don't have a portfolio anywhere near
that size. The second option is
increasing the amount of money you keep
each year. That might mean skipping one
expensive vacation, driving your current
car for another 2 years, negotiating a
better insurance rate, cooking at home
more often, cancelling subscriptions you
barely use, or simply resisting a few
purchases that feel exciting today but
will be invisible in 6 months time. Now,
you might say that this is some kind of
poor people mentality. And that's an
interesting argument because wealthy
people spend an incredible amount of
time trying to keep more of the money
they already have. Holding companies,
trusts, tax attorneys, family offices,
estate planning. These are not
money-making machines. They're money
keeping machines. And inside the Alux
app, we've got some excellent expert
collections to help guide you with these
strategies, like the one presented by
Katie Donnagle called How to Retire
Early for Real. The savings and
investing playbook she outlines are
definitely money moves you will not
regret. You can take the app for a free
7-day test drive at alux.com/app.
But once you see the value on the
inside, come back and scan this QR code
for 25% off your annual membership.
Number seven, buy assets that pay you to
own them. Not all assets work the same
way. Some assets become more valuable
over time. Others become more valuable
over time while also paying you to own
them. That small difference has created
an enormous amount of wealth. Think
about a gold bar. If the price of gold
rises, you've made money. The same is
true for a rare watch, a collectible
car, a piece of art, or even your home.
These assets can appreciate. One day,
someone could be willing to pay you more
than you originally paid. Now, compare
that to a productive asset. A rental
property sends you rent every month. A
dividend paying company distributes part
of its earnings to shareholders. A
self-s storage facility collects rent.
According to Federal Reserve data, the
wealthiest households hold a much larger
share of their wealth in businesses and
corporate equity than the average
household. In fact, the richest 1% own
more than half of all public and private
business equity in the United States.
They produce cash while they're becoming
more valuable. That cash can be
reinvested into another acquisition. The
asset starts helping you to buy the next
asset. That's how wealth begins to
compound beyond investment returns
alone. Number six, own equity whenever
possible. Now, there are only a handful
of moments where ordinary people
suddenly become wealthy. Whether it's an
IPO, an acquisition, a partner buyout,
stock options festing, the sale of a
family business, or an inheritance, they
all have one thing in common. They're
equity events. When Microsoft, Apple,
Nvidia, Amazon, and Google grew from
ambitious companies into trillion dollar
giants, salaries certainly increased.
But thousands of employees became
millionaires because part of their
compensation was tied to ownership
instead of wages alone. People negotiate
salaries while the wealthy negotiate
ownership. If you're joining a startup,
ask about stock options. If you're
helping to grow a small business, ask
whether there's a path to partnership.
If you're freelancing for a client whose
business is exploding, consider whether
part of your compensation could be tied
to future success. Equity events don't
happen often, but when they do, the
payout can equal decades of raises and
promotions.
Number five, negotiate every major
purchase. Most people negotiate their
salary. Very few negotiate what they
spend. That's strange because
financially they have exactly the same
outcome. If you negotiate a $10,000
raise, you've made more money. If you
negotiate $10,000 off the price of a
house, you've also made $10,000. The
difference is that one usually arrives
before taxes. Somehow we've accepted the
idea that prices are fixed. Walk into a
supermarket, and sure, they are. Walk
into a dealership, a furniture store, a
contractor's office, or a real estate
transaction, and they often are not.
That's where thousands of dollars change
hands every day. The next time you're
about to make a purchase that you'll
remember 5 years from now, pause before
saying yes. Ask for a better price. Ask
for better financing. Ask for a better
service. Ask whether there is any
flexibility at all. The worst answer
you'll receive is no. The best answer
might just save you more money than your
next raise. Number four, leave low
ceiling careers early. Every industry
has a ceiling. Before optimizing your
career, check out what that ceiling is.
And there are two very simple questions
to help you figure out where the ceiling
is for you. First, is this industry
creating more opportunity than it did 5
years ago? And second, are the people 10
years ahead of me living the life I
want? If the answer is no to both of
them, leave. Every profession
essentially has three ceilings. An
income ceiling. How much do the top 10%
earn? If the absolute best people make
90K, that's the ceiling. Demand ceiling.
Is demand increasing? Is it flat or
declining? and ownership ceiling. Can
you eventually own something? So things
like an agency, business, equity, or
partnership, or are you permanently
selling hours? Before spending 10 years
becoming exceptional at something, spend
10 hours making sure it's worth becoming
exceptional at. Number three, avoid
lifestyle inflation. You know what's
more exciting than a brand new BMW? A
brand new BMW. You see, every lifestyle
upgrade has an expiration date. every
improvement in your life will fade out
much faster than you expect and there's
pretty much nothing you can do about it.
There's actually a psychological term
for this. It's called hydonic adaptation
and you can go look it up afterwards,
but essentially what it means is that
people tend to return to a relatively
stable baseline of happiness after both
positive and negative life events. What
it looks like in real life is you can
legit move to the most expensive
penthouse in Manhattan and drive the
latest sports car right now and the
excitement will only last for like 6
months until it will start to fade away
and you can start looking for something
else. So be aware that special becomes
standard very quickly.
Number two, don't finance depreciation.
The faster something loses value, the
less willing you should be to borrow
money to buy it. Now, of course, this
doesn't mean you should never finance a
depreciating asset. Sometimes you
genuinely need a car. The point is to
understand the trade-off. If you're
borrowing money for something that will
be worth less every year, make sure the
value you're getting from it is greater
than the money you're losing. A work
truck that helps you to earn a living is
very different from a luxury SUV that's
mostly there to impress your neighbors.
But paying extra for the privilege of
owning something that's becoming cheaper
is a hard game to win.
And number one, know which bucket you're
spending from. Before every major
purchase, ask yourself one question. Am
I paying for this with income, returns,
or principal? Income is the money you
earn from working. Returns are money
your assets generate. Principal is the
asset itself. So imagine you want to buy
a boat. Maybe this year's bonus pays for
it. Maybe the rent from your properties
pays for it. Or maybe you have to sell
part of your investment portfolio. Same
boat, three very different financial
decisions. That's why many wealthy
families, university endowments, and
charitable foundations follow a simple
rule. Spend the returns, protect the
principle. Because the portfolio has one
job. Keep producing. That doesn't mean
you should never sell an asset.
Sometimes selling investments to travel
the world, help your children, or buy
your dream home are exactly the right
decision. Just be honest about what
you're doing. Financially, you're making
your portfolio smaller. Maybe you're
making your life bigger. Those are not
the same thing. Neither one is
inherently right or wrong. You just you
got to know which trade you're making.
All right, that's a wrap for today,
Luxer. We'll see you back here next
time. Until then, take care, my friend.