I'm 27 and I've saved $200,000 — here are the 7 best pieces of advice I can give you about money

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The Money Wizard is a blogger who goes by the pen name Sean. He works as a financial analyst and has saved nearly $200,000 through retirement accounts and investing in low-cost index funds. He hopes to retire by his late 30s.

When I was 16 years old, I hung up my hard hat after another brutal day digging ditches under the Texas sun. That day was special, because it was payday, and I'd finally have enough money to pass $500 in my bank account.

By the time I was 18, that $500 had grown enough to start investing in the stock market.

By age 25, I had $100,000, and by age 26 — $150,000. I'm now 27 years old, and I've saved nearly $200,000.

The way the storyline plays out, you'd think I was either a stock picking genius or a fast-paced career superstar.

The truth is, I'm neither of those. My stock investments mostly underperformed compared to the benchmarks, and until very recently, my salary wasn't much more than the average income in my city.

In reality, I'm a normal guy with a decent job, who was lucky enough to stumble onto some money tips early in life. Here are my seven best:

1. Get a degree that actually pays

These days college gets a pretty bad rep. And I agree, the skyrocketing price of tuition is concerning. But I'm also with Warren Buffett on this one – the best investment you can ever make is in yourself.

Here's the key. You need to view college for what is: a 4-year transaction to purchase a career. Especially when student loans are involved.

And just like you wouldn't take out a mortgage before researching the value of a house, it's equally important to consider the value of a degree.

Some degrees pay well, others... not so much. Research salary statistics, interview people in the field, and attend career fairs.

As a finance and economics major, I was able to quickly find a job as a financial analyst, even at a time when the labor market was iffy about its economic recovery. Now I hope my strategically chosen degree continues building a foundation for a lifetime of earnings.

2. Avoid consumer debt

Once you're out of school and on your way to making money, the next best step is to avoid the trap of consumer debt.

Put simply, it's nearly impossible to build wealth if you're leaking money every month through auto loans and credit card debt.

Benjamin Franklin, one of the country's first early retirees, famously said that a small leak will sink a great ship. And he's right; trying to build wealth while paying interest is like rowing against the current. With a leaky boat.

In order to avoid debt, I bought my $13,000 car without a loan, and although I use credit cards for the rewards points, I've never paid a cent of interest.

This keeps compound interest working for me, rather than forcing myself to swim against the current.

3. Embrace index funds

Like most beginning investors, when I started investing I imagined myself the next Warren Buffet. All my stock picks were sure home runs, I thought, and I'd be crushing the market in no time.

In reality, my not-so-hot stock choices lagged the indexes. By the end, my ambition mixed with greed cost me thousands of dollars.

This shouldn't have been a surprise. There's simply too much proof – individual stock pickers, traders, and actively managed mutual funds just can't compete with the efficiency of index funds.

Don't try to outsmart the market; you're fighting a losing battle. Instead, save yourself the time AND money by choosing a low-fee index fund.

4. Decide if your spending is actually making you happy

Government surveys show that 52% of the average person's budget is spent on housing, cars, and materialistic purchases.

Does a house with all those extra bedrooms really make your life happier, or are you just creating more work for yourself?

When you part with your money, are you carefully calculating the potential benefits, or are you just following what your friends, society, and billions of dollars of advertising is telling you to do?

For me, I realized stainless steel appliances and granite countertops weren't impacting my life, so I chose a more mediocre apartment to save hundreds each month in rent. I also decided my morning commute would be pretty similar whether I was driving a $30,000 car or a $13,000 one, so I found a ride cheap enough to buy in cash.

Figure out how to reduce your no-fun spending to the bare bones, and saving becomes a breeze. The best part? If you decide something really will make you happy, you'll easily be able to afford the splurge.

5. Tax advantages are, you know… advantages. Use them!

Retirement accounts, like a 401(k) or IRA, grow tax free. In the case of a traditional retirement account, you only pay taxes on the back end. For a Roth account, you only pay taxes on the front end.

Compared this to a non-retirement account, where you have to pay taxes on the back end, front end, and even some of the middle… end. These tax advantages are huge!

Even a retirement account with slightly higher fees allows your money to grow faster, which means you can retire hundreds of thousands of dollars richer.

I still remember using one nervous click of the mouse to raise my 401(k) contributions from 5% to over 25% of my salary. The decision paid off though, and my nerves were quickly eased when I saw the staggering speed your money can grow without the constant drag of taxes.

6. Avoid lifestyle inflation

As we move through life, it's easy to want to spend more and more money rewarding ourselves. Most people give into this temptation, start jealously eyeing the latest purchases of their friends, and begin inflating their lifestyles accordingly.

These over inflated lifestyles feed off each other, creating a vicious cycle of "keeping up with the Joneses." Like a giant bubble, the lifestyles grow so big there's eventually nowhere else to go. The Joneses are tapped out, and they're left no choice but to spend all their time and money protecting their over-inflated bubbles from anything that could cause a pop.

I say, screw the Joneses. Chances are, they're a financial mess and can't afford most of what they're buying anyway.

Instead, recognize that your life is already awesome, and hold steady. Your savings, and ultimately your lifestyle, will blow past the Joneses in no time.

7. Wealth is built through consistency, not home runs.

Shortly behind never getting started, one of the most common investing mistakes people make is investing too aggressively.

It's an understandable mistake to make. Our minds aren't really designed to intuitively grasp the incredible power of compound interest, and trying to envision years into the future quickly fogs into a hazy blur.

As a result, many beginning investors mistakenly think the only way to get rich is to take huge risks. They swing for the fences, then find themselves frustrated when their dangerous bets lose money.

As I look back on my path so far, I'm amazed by something simple. I haven't hit any jackpots. Hell, I haven't even come close. I didn't create a hugely profitable company, I didn't get rich quick on a 10-bagger stock, and I didn't strike gold on any highly leveraged real estate deals.

Instead, almost all my investments are pretty darn boring. I invested in low-fee index funds, took advantage of retirement accounts, and consistently saved a lot of money.

I wasn't swinging for the fences. I've just hit a lot of singles, over and over again.

We live in an incredible time of opportunity. The 401(k) account exists. Tax rates are low, at least historically. And the invention of the index fund means anyone with access to a phone or computer can outperform hot shot money managers, and pay only pennies to do so.

The singles are there for the taking. Keep shooting for singles, and before you know it, you'll realize you've hit a home run.

Sean writes for the blog MyMoneyWizard.com, where he shares his plans for reaching complete financial independence by his late 30s.

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