Camilo is the co-founder and CEO of the Finance Twins, a personal finance media company that shares personal finance best practices. He shared with us the importance of paying yourself first, building spending money into your budget, and investing. Read on to learn more about his tips for becoming financially independent.
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Q: What is your current position/role and when did you first develop an interest in finance?
A: In January 2018 I founded the Finance Twins, where I am currently the CEO with my identical twin brother. The Finance Twins is a personal finance media company. We have an online blog where we cover best practices for personal finance and a social media presence where we share some of those same tips in a more digestible, fun manner (such as on Instagram). We also do partnerships with different companies, banks, and financial institutions where we either help them create financial literacy content or we help spread their message (we’ll partner to promote content on our website or theirs).
I was born in Colombia and came to the US when I was 4 years old. When I was 7 years old my father passed away and my mother had to raise me and my two brothers. I grew up in a low income, single parent household, so I knew from a very early age that I needed to become very studious because education was going to be my path to a secure future and career. I became interested in personal finance when I was in middle school because I knew that I needed to figure it out in order to help my mom navigate the process.
Q: What challenges have you faced with personal finance?
A: I grew up without role models who could teach me basic money management such as budgeting and how to live within your means, so the biggest challenge is having had to navigate and learn it on my own. For example, as a fresh college graduate, I paid too much in rent because I didn’t know what I could necessarily afford. Luckily, I was able to fix my mistakes because I had done well professionally.
Q: If you could give advice to your 18 year old self about managing your money, what would you tell yourself and why?
The number one thing I would tell a new graduate is to always pay yourself first.
So, when you receive your paycheck, set aside a predetermined amount before you spend any of it. For example, if your paycheck is $1,000 and your goal is to save at least 30% of it, my advice is to set up a direct deposit so that $300 is set aside immediately. Research shows that if you don’t see the money you won’t spend it — in effect, automating your finances is very powerful.
Q: What is your top tip for budgeting?
Make sure you build spending money into your budget.
So, say to yourself every month, “I’m going to spend $200 that’s not budgeted for and is my ‘fun money’” and force yourself to spend it. Use this money as a way to treat yourself and make it a reward for sticking to your budget.
Q: What do you think is the most critical step to ensuring financial independence?
A: I would say make sure you start investing early and really understand the power of compound interest.
Once you have enough money saved in an emergency fund from paying yourself first, any extra dollar needs to be invested.
Your money is not going to do any good sitting in a checking or savings account collecting .001% interest per year. Some people are really afraid of investing and don’t do it because they’re intimidated or overwhelmed, so I would say be sure to give yourself the chance to invest in your golden time, which is your younger years.
Also, understand that you can only cut your expenses so much. One thing you can do is work hard in your career and find opportunities that have room for growth and offer changes to increase your income because you can budget as well as you want. But if you’re making $125,000 a year you’re going to have a much easier time than if you’re making $25,000 a year no matter how much you’re budgeting and how much you’re saving.
Q: Is there anything you would like to add?
A: I think that people are at two extremes in their views of their personal finances. One, they live in a fantasy world where hard work equals guaranteed success, and they don’t really understand some of the advantages or privileges they have. Two, they feel hopeless and believe there is nothing they can do because they’re so far in debt that what’s even the point of budgeting. So, either you have total control over everything, and hard work equals rich or you feel like you have no control over anything. The truth is somewhere in the middle.
I always say to people that “I’m not here to tell you that if you create a budget, you’re going to be a millionaire tomorrow.” But the reality is, while my money management tips might not guarantee financial success, you’re guaranteeing that you won’t be successful if you don’t focus on these things. You have to give yourself the best chance of achieving financial freedom by doing your best, working hard, and budgeting.
Also, I think that there is something to be said for balance in personal spending. It’s okay to want nice things and live your life, the goal isn’t a miserable existence because you want to save as much money as possible. You need to figure out a system that works for you: personal finance isn’t the enemy of a happy life, in theory they’re allies.
Financial security and financial freedom are going to give you the ability to live your best life.
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