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10 Best Pieces of Money Advice from a Berkeley Financial Advisor

Jonathan DeYoe has been a financial advisor in the San Francisco Bay Area for over 20 years. He has had offices in Palo Alto and San Francisco and founded Mindful Money in Berkeley, CA. Working in Silicon Valley and San Francisco for multiple Wall Street firms before founding his own firm in 2002, he’s had a front-row seat to an unprecedented explosion of wealth throughout the Bay Area.

Here are his 10 best pieces of money advice:

1. Put your money where your happiness is.

The San Francisco Bay area is expensive to say the least. Whether you come from money or just joined Google, you’ll have to make trade-offs to keep your head above water here.

You don’t have to drive a Tesla. You aren’t required to live in a rad pad in the Mission. You don’t need designer duds or the newest iGadget.

Instead, focus your financial resources on activities and items that build your particular brand of happiness — like a rock-climbing course or killer burritos.

2. Invest in yourself early and often.

Regardless of what field you’re in, constantly hone your craft. Read broadly within your industry. Enroll in continuing education. Find opportunities to network with new people.

The dollars you dedicate to increasing your intellectual capacity and enhancing your ability to work well with others can boost your income substantially. The sooner you embrace continual self-improvement, the longer you’ll enjoy the fruits of your labors, so invest in yourself now.

3. Don’t count your chickens before they hatch.

Over the years, I’ve seen many folks become wealthy through their company stock programs. But I’ve also watched just as many stock compensation packages go up in smoke.

Never forget that your stock has no real value until you’re fully vested and someone is willing to give you cash money for it on the open market.

Don’t borrow against your stock. Don’t pledge your stock as collateral to buy a massive house on Russian Hill. Don’t count your chickens before they hatch.

4. Get your foot in the front door.

Yes. The cost of housing in the Bay Area is ridiculous! When I read a 2015 San Francisco Chronicle article claiming that a Mountain View, California, resident was renting a tent in their backyard with bathroom access but no kitchen privileges for $900, I knew that we’d all gone off the deep end.

Thankfully, the cost of rent has come down in 2020, but the median sales price for a San Francisco Bay Area home is a hair under $1 million! No one is happy about real estate prices, but if you’re planning to stay here for five to seven years or more, consider buying a home. If you stay on the sidelines, don’t be surprised if the market continues to run away from you.

While many cities have strong rent-control laws, remaining a renter means your housing costs will continue to grow — perhaps pricing you out of the rental market and into that tent in someone’s backyard.

5. Turn a passion into a side hustle into a business.

First and foremost, don’t neglect your day job. If your 9-to-5 gig pays the bills and affords you ample pocket money, pursuing your passion for cooking by taking a second job as a sous-chef in a neighborhood restaurant won’t help you get ahead. You’ll burn out.

Nonetheless, there are hundreds of creative ways to capitalize on your hidden and not so hidden talents.

Do you prefer to drive? Try Lyft or Uber. Do you love to write? Start a blog and learn how to drive traffic with social media. Are you a crack web designer? Register on freelance sites like Upwork or Hired.com. Do you have a spare bedroom? You get the idea!

6. Create a financial road map.

Where do you want to go in life? As with any journey, planning your route is essential. That’s where a financial roadmap comes in.

Decide what tradeoffs you’re willing to make to achieve your most important financial goals. For example, take staycations until you’ve saved the down payment on a new house. Keep your old car for six more months until you can afford that new motorcycle. Drive Uber on weekends to cover the cost of those coding classes.

Figure out where you are now (i.e. in debt, $20,000 away from that down payment, underemployed, and so on), so you can plan for a better tomorrow. Remember, planning makes things happen for you. NOT planning lets them happen to you.

7. Make your health a priority.

There are significant benefits to being healthy:

  • Higher energy levels
  • Improved resistance to illness
  • Higher self-esteem
  • Better brain function
  • Reduced fatigue
  • Less anxiety

Research indicates that healthier people may earn more and spend less, as well.

Good health while you’re young gives you the energy and focus to work harder and smarter, which leads to better raises and more promotions, which translates into increased lifetime earnings. And good health later in life means fewer doctors visits, fewer medications, and hopefully decreased long-term care expenses as you age.

8. Save at least 10% of every dime you make.

Or, as the familiar saying goes, “Pay yourself first.”

Once you got your first “real” job and started earning more, you probably started spending more, too. If that trend continues every time you get a promotion or a better job, you’ll never get ahead. At some point, you must make a conscious decision to spend less and save some of your income every month.

Start by saving at least 10% of your gross salary every paycheck, and increase it by 1% a year until you’re saving 20% of your income.

Your savings goals should look like this:

  1. Use your initial savings to build a cash emergency fund with six months to two years of living expenses.
  2. At the same time, contribute enough to get 100% of your company’s 401(k) match. This is free money, after all.
  3. Next, pay off your high-interest debt.
  4. Then, max out your 401(k), Roth, and IRA combo (after consulting with your tax professional.)
  5. Finally, open a taxable investment account and/or pay down your low-interest debts.

9. Invest 90% of your liquid assets in an appropriately allocated, broadly diversified, and annually rebalanced basket of publicly traded securities.

I expect I will get some healthy Bay Area blow-back for this statement: You can’t outperform the market. There is no evidence to support the idea that recent past performance will persist into the future or that folks dedicated to the timing and selection have been or will be successful doing so. Stock-picking requires repeated luck. End of story.

Asset allocation, diversification, and rebalancing give us access to “expected” long-term returns even while they may be volatile in the short-term. They don’t rely on prediction (read: guess-work) and instead rely on something we can control – planning, consistent behavior, patience, and discipline.

10. Always be mindful of the big picture.

Stock markets and the financial media constantly over-correct in both directions in a seemingly endless cycle. Upsides yield to downsides. Excitement leads to despair. The good news? Today’s losses sow the seeds of future gain.

You can’t consistently predict short-term outcomes because the economic details are constantly changing. Nonetheless, the big picture remains the same. Instead of reacting and over-reacting to the market’s whims, be mindful of the big picture and stick to your thoughtfully constructed investment program and financial plan.

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