Thread by @dickiebush

THREAD: 3 real-world money lessons I've learned since graduating college (that radically improved my relationship with money)

1. You make half as much money as you think. Or, everything costs twice as much as you think.

Why?

Taxes.

Coming out of college, you look at income as pre-tax and expenses as post-tax.

But there's a mismatch here - and it's not your fault. College teaches you nothing about personal finance.

Say your apartment is $1,500/mo. That's $18,000 per year in POST-TAX expenses.

So if you want to compare it to your salary, you need to cut your salary in half to normalize it post-tax.

Or, you can double your rent (and all other expenses) to normalize them pre-tax.

Suddenly, everything is more expensive! (Or you make a lot less, whichever way you choose)

This brings me to lesson number 2:

Stop thinking in terms of expenses. Start thinking in terms of investments.

You are a resource allocator. Every dollar is an employee working around the clock for you, 24/7.

Said another way, every dollar is earning you some type of return.

Why should you think like this?

Because it will shift your money mindset from one of scarcity to one of abundance.

And I'm convinced this is the most powerful mental money unlock you can make.

When you think in terms of expenses, you work from a fixed pile.

And since every dollar you spend comes from that pile, your focus becomes trying to spend less from that pile every month.

This is seeing money as scarce (because you don't focus on growing the pile).

But when you start to think in terms of expenses, you shift from scarcity to abundance.

You start to deploy money from your pile towards things that *help you grow the pile.*

You look at the money through this lens: what is the return on this investment?

Some returns are easy to measure:

Money in a savings account? 0% return.
Money in stocks? ~10% return.
Money in riskier crypto? ~50% return.

But what about all of your normal expenses? Food, rent, books, fun?

How do you turn those into investments and measure their return?

This brings me to lesson number 3: you need a way to value your time, energy, and knowledge.

Why? Because the best investments are things that bring you more of these three things.

And unfortunately, valuing these three is almost impossible with a salaried job.

Sure, you could take your salary and divide it by the number of hours you worked and get a rough estimate.

But if you found a way to do all of your work in 1/2 the time, would you be able to double your income? Unlikely.

The same goes for if you worked twice as many hours.

And what if you showed up to work every day with 2x as much energy, so you were 2x as productive? You can probably answer that one too.

So you need something where your increase in time, energy, or knowledge leads to a tangible return on investment.

https://twitter.com/naval/status/752325388034973696?s=20

And the easiest way to do this is to start some kind of permissionless project.

Something over which you have complete ownership and don't have to answer to anybody but yourself.

Start literally anything, and do it before you're ready.

https://twitter.com/dickiebush/status/1420177361295880192?s=20

Then you have a better lens to view things: this investment frees up X time per month and brings me Y more energy.

With that extra free time and energy, I can put it towards this project which can hopefully earn Z more income.

Again, rough estimates here, but you see the point.

This will lead you to invest in far more productive things - specifically health, convenience, and learning.

And this brings me to the last lesson: these quality-of-life upgrades are *cheap* when you view them through the lens of return-on-investment.

https://twitter.com/dickiebush/status/1430545744134647808?s=20

Some investments look "expensive" when you don't consider their return.

• Food
• Mattress
• Desk chair
• Online courses
• Laundry services
• Information subscriptions

But when you compare these to the 0% return from sitting in a savings account, these are no-brainers.

This works in reverse too.

You start to look at some things that seem *cheap* and realize they have massive *negative* return-on-investment.

(Going to write an entirely separate thread on this one, stay tuned)

And I'll end with a disclaimer. These are all specific to me.

And I may be getting a bunch wrong here.

I'm 25 years old and trying to figure it out.

These are just some of the realizations I've had in the last few years that have helped me change my relationship with money.

If you enjoyed these lessons, follow me → @dickiebush.

I'm going to start writing more about lessons I've learned on my journey understanding what it means to build wealth (along with other threads on writing, building, and web 3.0).

My best threads:

dickiebush.com/threads

Big money lessons from the last three years:

• You make 1/2 as much as you think (or everything is 2x as expensive)
• Stop thinking in terms of expenses, start thinking in terms of investments
• Find a way to value your time, money, and knowledge.