Building “financial wealth” may be one of the most pondered about topics in the world. For some, it’s an everlasting mystery tied in with a life of struggle. For others, it’s an addicting and fascinating game. In this post, I share ideas on how to save money and build wealth with 12 savvy finance tips so you can travel more. Or whatever it is you wish to do with financial freedom, starting today! These are practical actions from my own personal experiences and those around me who have also succeeded in doing so.

The word “wealth” differs from person to person and there really is no set dollar amount to determine if one is ‘wealthy’. Ultimately, it’s how you feel internally that matters. Not how others view you, unless you really care what others think. In the Merriam-Webster dictionary, wealth is often defined as ‘material possessions and money’. Though in the first line, it also mentions “resources”. Resources can be access to education, healthcare, quality family time and any type of strong support system. However, the more one is able to manage their finances, oftentimes they can manage more resources and time. Which provides the whole spectrum of “wealth”.

12 Savvy Finance Tips to Travel More

Save Money by Eating Out Less and Making Coffee at Home

• This advice seems rhetoric but we all need to be reminded of it regularly. I save at least $50 a month (4 cups x $3 per week) by not buying coffee. It doesn’t seem like a lot but this adds up. $600 in savings a year = a roundtrip flight internationally.
• Pack your lunch a few times a week.
• While traveling, try to eating some meals at the hotel/airbnb whether it’s breakfast or pack a picnic from the store.

Have at Least 3-6 Months of Reserves as “Emergency Fund”

• In case you get fired, laid off or disabled. This would be a simple calculation of how much you need per month x 3 or 6 months. If you need $5000 a month to cover rent, car payments, student loans, food, then it’s $5000 x 6 months = $30,000 in reserves you should always have readily available.
• However, if you have cashflow coming in from Real Estate, Stocks & other investments, then you can conservatively count on half of that as part of the reserve. I’m suggesting half in case of sudden repairs or expenses on the property. Or a dip in the stock market that would disrupt the usual cash flow.

Put Away at least 10-20% of each paycheck into a Savings Account

• This is plain and simple advice. Make it a discipline before spending it.

Open a High-Yield Savings Account

• Now that you have your savings aside, make sure you have a separate Online High-Yield Savings Account. I personally use CIBC (one of the largest Canadian Banks with a US presence) which yielded a 2.39% rate of return in 2019 and now it’s dropped to 1.35%. That’s still way higher than 0.05% of whatever it is that your regular savings give. This is not a CD account that’s locked in for X amount of time. You can pull the money out at any time. Learn more here: https://us.cibc.com/en/home.html
  • The Nerd Wallet website also provides 10 Best High-Yield Savings Accounts of 2019: https://www.nerdwallet.com/blog/banking/best-high-yield-online-savings-accounts
  • Just be sure that the bank is FDIC insured and you’re good to go!

Apply for a New Credit Card Every 3 Months

• Most readers here are aspiring to travel as much as possible. There are so many credit cards out there that give you a substantial amount of points & miles upon signing up. Many of the major airlines basically give you enough points for a roundtrip flight. If you become savvy in this game, you virtually won’t ever have to pay for a flight again in your life. As well as Hotel cards.
  • Ie: Delta, American and United Airlines offer an average of 40-60,000 miles after spending $3000 within 3 months. This shouldn’t be hard to do. If you don’t spend that much, ask a trusted family member or friend to help you charge the amount. An international roundtrip flight can cost as little as 30,000 miles/points depending where you go. Apply to 3 cards per year, and earn 3 international trips. Why not?
• The most popular card is the Chase Sapphire Reserve which everyone should apply for. They are giving 50,000 points now which is equivalent to a $650 flight. Don’t be intimidated by the $450 annual fee as they will refund $300 back on travel-related purchases. And also a Priority Pass which allows access to Airport Lounges around the world (worth $100).
  • You can learn more about Travel Credit Card hacks through websites like Finance Buzz or The Points Guy. Learn about transferring points to a sister card so that you can cancel the existing before annual fee renewal. Then reapply for the same amount of bonus points on a new credit card when it is allowed.
    • For Chase, it’s every 4 years before you can reapply for the Sapphire.
    • For Southwest Airlines Card, it’s after 30 days and you get the same amount of bonus points.

Opening Multiple Credit Cards won’t drop your Credit Score as long as you have No Balance 

• There is a misconception that if you open a lot of credit cards, that your credit score will go down. The point of CREDIT SCORES is to make sure you are responsible in paying all your bills, mortgages, debt on time. This measures your ‘credit worthiness’. I personally have about 15 open credit cards with a 0 balance. My balance is paid off monthly and I have a credit score of 825. I have opened a new credit card every 3-4 months. Each time you open a new credit card, they open an inquiry which drops your credit 5-10 points at most. This will easily recoup within a few weeks and is nothing to worry about.
• Even if you are not much of a traveler, there are plenty of credit cards with cash back points to use such as the Chase Freedom and Costco Citi Card.

Use Credit Cards to Pay for Everything

• Unless there is a charge to use your credit card, then do the math if it’s worth paying that extra charge VS the points you will lose if you don’t. I’m talking about charging 50 cents at the parking meter, coffees and $8 meals. All the way to the big stuff like paying for your 6 month Car Insurance policy and utility bills. I also pay my 6 months car insurance up front to save some money than paying monthly at a slightly higher cost.

Shop Your Car Insurance

• Everyone who drives needs car insurance, it’s the law. Many people get into the routine of paying for their bill every time it arrives. It doesn’t hurt to shop around at least once a year.  It’s not in your insurance broker’s best interest to shop unless you ask as they typically make a % of your premium (so the higher for them the better). My boyfriend had habitually used the same Insurance Broker for many years. I randomly asked him one day how much he was paying and then shopped it with my own broker. I reduced his car insurance premium by 45% (from $1000 to $550) for 6 months with the same exact coverage.
  • Costco Auto Insurance is a good place to start shopping. The Costco Auto Program is also the best place to start shopping rates when buying or leasing a new car. They have special relationships with certain car dealerships. Whether you go with that dealership or not, you can use that car quote as a basis when shopping elsewhere.
  • My 2 trusted Insurance Brokers if you are in California:
    • Michelle Lin, Red Wave Insurance: Michelle@Myredwave.com (408)-836-4560 / MyRedWave.com
    • Charlie Razzouk, Pledge Insurance: Charlie@pledgeinsurance.com

Avoid Paying ATM Fees

• Avoid ever paying for unnecessary ATM fees. Always have some cash on you. If you’re traveling abroad, make sure you have an international ATM & Credit Card with no foreign transaction fees. I use Charles Schwab for the Int’l ATM card.

Should you pay off DEBT?

Depends on what type of debt and at what interest rate you’re being charged.

• Something to think about:
  • Could you use the money you would use to pay off debt to invest elsewhere for a higher return?
  • And then use that cashflow to pay off the lower interest debt?
• In general, it is advised to pay off your student loan asap.
  • Say you have $10,000 saved and you are considering paying off your whole student loan.
  • But if your student loan is at 4% interest and you have this option to invest into an index fund or investment property that yields an average 7-9% return. Where do you think it would be better to spend your saved cash initially?
  • You can use the cashflow from your higher investment return with the money you have to pay off your student loan quicker. You are growing your investment fund/equity while paying off the loan.
• This same idea goes to whether or not you should pay down your Mortgage Principal
  • I had asked my mortgage broker recently on whether he would advise me to pay an extra $100 towards my monthly payments. He replied:
    • “If you buy a new property, the interest rate will certainly be higher than your Mortgage Interest Rate at 3.25%. So the additional money of say $100 would be best going toward the property with the higher interest rate to minimize the amount of interest paid over the life of the loan. In other words, $100/mo toward that property (with higher interest rate) has more value than $100/mo toward the property with the lower interest rate.” -Ross Garcia, Prei Capital

Invest in Real Estate. Use Debt and Loans as Leverage.

• Traditional financial tips and the Middle-Class way of viewing debt is to PAY IT ALL OFF. There is this huge obsession with paying off your mortgage so that you can live “debt free”. This may work for some people who want a simpler way of life. For those who want to grow their financial wealth and up their financial savviness, USE DEBT AS LEVERAGE.
• Take out as many Mortgage Loans that is allowed. As long as you can cover the payments monthly through your renters. Calculate in the risk of an ever-changing market where prices could temporarily drop. If you have holding power, as in your Real Estate asset will continually rent out even if prices drop, then you don’t have as much to worry about.
• Even using an FHA loan to put 3.5% down while living in one of your multi-units (up to 4 units), means you have more money to invest in another property.

Invest in Stocks or Real Estate?

• Consider this:
  • You invest $100,000 into a Stock Fund. You earn a steady 5% return by the end of 5 years. In the end, you will have only earned the 5% return.
  • Invest the same $100,000 into a Property. You also earn 5% return but you also build equity in 5 years (as well as a Mortgage Tax write-off). In the end of the 5 years, you come out with a lot more money from the 5% return + Equity built + increase in Real Estate prices.

Does “Financial Wealth” Have a Set Dollar Amount?

I no longer see financial wealth in the terms of INCOME BRACKETS that puts you into categories of lower, middle and upper class. A household could be making $500,000 a year living in Beverly Hills, sending their kids to private school and barely break even every year. Sure they get to live in a nice house and provide their kids with a great education compared to those living in the hood scrapping by. But they are also enslaved to making money. If it makes them happy, that’s all that matters.

In another scenario, Brandon Neth of Finance Buzz (in his early 30’s) lives off $2000 per month with his wife which are generated from multiple Real Estate properties and other investments. They have no mortgage payment, barely spend any money on ‘things’ yet travel several times a year off Credit Card points. I would consider them more financial savvy and ‘wealthier’ in resources than others making a lot more money who are struggling.

• Read more on Brandon’s Finance and Points & Miles Tips: https://financebuzz.com/authors/brandon-neth

Take another example of a happily married couple who are public servants in the professions of a Teacher and Police Officer. Let’s just say that they make a combined salary of $120,000 per year, live in a modest house that costs $220,000 (the median home price in America in 2018).

“The National Association of Realtors (NAR) reported that the average price of homes purchased by first-time home buyers was $219,300 in the final quarter of 2018. This is a 9.5% increase over the average price from 2016.”

They put away 15% of every paycheck to savings as well as 5% to their children’s college fund and are able to retire by the age of 50. Along the way, they’ve invested in another property that yields cashflow. They have a 401k/Roth retirement fund and bountiful benefits through the city. That can be seen, also, as a healthy balance of financial wealth. For others, having a net worth of $10 million isn’t enough. Some people are simply greedy and money hungry. Others want to build an empire so that their children live comfortably. Everyone has a different purpose and passion. 

Build Wealth so that You Can Contribute to Society’s Advancements &
Give Back to the Less Fortunate

Billionaires like Bill Gates and Warren Buffet have passionately built products, medicine and services that have advanced technology and made lives easier. They’ve also made strategic financial investments while vowing to give the majority of their money to charity after they pass. There is no right answer to what “financial wealth” is except how it makes YOU feel each and every day.

For anyone that feels that they ‘struggle’ financially, it means that there is work to do. Both as a mindset as well as a time to form a strategic way to tackle your personal finances. Some people will always feel that they don’t have enough money. Many of these thoughts come from the conditioning of our parents. We particularly feel it from immigrant families who struggled financially when they came to the US and are always saving for that ‘rainy day’. It’s also about budgeting and making wise, savvy financial decisions. There’s also this common habit of spending more and raising your living standards once you make more money. We have to continually be content and grateful with what we have TODAY despite our circumstances.

Read my other Articles on Savvy Finance Tips so you can Travel More

Listed on the Travel Tips section:

• How I afford to Travel the World as a Female in my 20’s: https://www.bohemianvagabond.com/how-i-afford-to-travel-as-a-girl-in-her-20s/
• Financial Freedom through Real Estate Investing: https://www.bohemianvagabond.com/financial-freedom-through-real-estate/
• Saving Money while Traveling Abroad: https://www.bohemianvagabond.com/saving-money-while-abroad/