How To Upgrade Your Finances In 2025

Hi Friends,

I would like to welcome Luca Salvatore, Friday Finance's newest member. We are both writing the following article.

You should start developing your financial literacy in 2025. One of the foundations of financial literacy is a simple lesson: ASSETS>LIABILITIES. Assets increase your net worth, while Liabilities lower it. 

The rich make their money work for them. They buy assets that generate income; every dollar in their asset column is their hard-working employee.

Money without financial intelligence is quickly lost, so if you become financially literate will help you in the long term.

Buy assets (shares and property investments) and avoid liabilities (commitments and obligations) on your way to financial freedom. Although, it is good to build up our net worth, if you need to take a mortgage or an auto loan is okay if it is a good decision and can fit in your budget. The poor buy luxuries first, and the rich buy luxuries last. What that means is that The rich buy luxuries with the passive income they have earned, and not with their time, which is why a rich person can call their $400,000 Ferrari "free”.

The financially literate understand that money makes more money, and time shouldn't be traded directly for money. Otherwise, the money you make is limited to the amount of time you trade for it.

Another thing I want to touch on is that I recommend the book Rich Dad, Poor Dad. It's one of the most famous books on personal finance, and every single millionaire I talk to recommends it, which should tell you something.

Another important thing that you need to know is how assets (like a house or car) increase your net worth, it is okay to take a small amount of debt to increase your net worth in the long term. However, it is important that your debt can fit into your budget. You need to not take on too much debt and have your debt utilization under 30%. Make sure your credit limit is $1,000 to not have more than $300 as your unpaid balance. This debt utilization tactic can help improve your credit score over multiple years.

Another important thing to keep in mind for the new year is that you should always PAY YOUR CREDIT CARD IN FULL EVERY MONTH. It is the single most important thing to improve your finances and net worth. If you do this, you won’t have to pay 20-30% interest on your unpaid balance.

The next part is budgeting. Similar to the fact of your assets - liabilities are your net worth, your income - expenses are your net income. The reality is in 2025, you need a budget. You can budgeting apps like Monarch or YNAB. You enter your income including your salary and any other income like rental income. Then you subtract your expenses like Rent or mortgage, recurring bills, and other expenses in your life. You split them into different categories.

This can help you create budgets and see how much money you make every month, week, bi-weekly, or yearly. At whatever interval you receive your income is the interval that you use for your budget, but I and most other people In the world budget monthly. I recommend Monarch Money; which is a bit of a pricier option for a budgeting app. But, it is a full-service budgeting app and I use this app.

Another thing you should be doing is you should be saving over 20% of your income. In addition, you must have a high-yield-savings account, which you may recall in a previous article “Why you are saving wrong and how to do it right”, I talk about high-yield-saving accounts to use. If you are saving 20% of your income and put it in a high-yield savings account; your net worth will skyrocket.

Anyway, Thank you so much for reading this edition of Friday Finance. Thanks so much to our subscribers for subscribing and supporting this newsletter. I am excited to write more with my new writer in Friday Finance: Luca Salvatore. Hope you have a great week and see you next week.

Thanks,

Jacob Gans & Luca Salvatore

Friday Finance