I’ve always been fairly good with money, but I didn’t realize the power of investing and compound interest until I was well into adulthood. How to manage finances in a right way?

My prototype

I was more of a “hide it under your mattress” hoarder of money — which I now know is a surefire way to deplete money’s buying power through inflation — but as a young kid I had no idea.  At age 7, I tried my luck at money lending to my step-siblings. That didn’t go too well, since I didn’t have debt collectors at my disposal and they had a hard time taking their youngest sibling seriously. (They still owe me $50 btw and I am currently charging them interest, so my investment has multiplied several fold…now how to collect?).

Growing up my parents paid us for chores done around the house.  When we received the money (usually $1 per chore) we were shocked to discover that we only received $0.33 for every dollar. “Taxes and Social Security” my Mom said.  Good to know.


In college, my Mom gave me a small stipend to live on because she wanted me to focus on my studies instead of getting a part time job. I saved almost all of it. Every year she’d ask if I needed more money and I’d tell her how much I had left (about 90%), and she’d accuse me of not eating or hiding in my room.  None of that was true, I was totally content and didn’t feel the need to spend more money.

Then real life began. I graduated college and accidentally learned about the power of investing while living in one of the most expensive cities in the world: New York City. I started my first job and took the much-less-than-ideal advice from my parent’s financial planner about which fund I should chose for my 401K.  I set my contribution limit and ignored it.

The big awakening

A few years later I changed jobs, and when considering how to roll over my 401K, I discovered something shocking: despite my relatively low contribution amount, no company match, and a less than ideal fund, I now had almost $30,000 in my 401K.  That was more than I had in the bank. More than I could have dreamed my net worth would be.  I was dumbfounded.  I didn’t understand how this happened. I had just set aside money and forgot about it. Suddenly, the world of compound interest opened to me and I voraciously started reading everything I could find about investing.

What I learned about investing

I soon discovered that investing in low-cost index funds was even more powerful than I imagined. Previously, I had taken my paycheck and bought things with it: food, rent, clothes, drinks, movies, etc.  If, instead, I bought some things and some stocks, that money would eventually pay me!  I realized that eventually my investments could earn more money than I made in the working world.  I could literally make money in my sleep. That was a very seductive prospect.

So, I started working towards the goal of creating passive income.  I made a plan, made a budget, and cut any spending that wasn’t bringing me joy. I changed my phone plan, learned how to travel hack free flights, and drank less at bars while hosting more house parties. Every dollar saved (I already had an emergency fund) went into my investments.

The next year I ramped it up a notch. My partner and I decided we were sick of paying almost $3,000 a month for a 400-square foot studio, with 200-square feet of useable space.  So, we decided to move across the country to Seattle without a job, apartment, friends or family. I was only able to do this because of my savings, my belief that my skills were transferrable, and the knowledge I had enough accessible money to tackle anything that came up.


I am now happily settled in Seattle, working, traveling, saving, investing and feeling confident about my future. 

The Nav.it 101: I had zero understanding of investments when I left college.  I accidently discovered the magic of compound interest and smart investing and that took me down the road to full ownership of my wealth.  I now manage my own money.  I am free to choose the job I want because I have a backup and I see my money as a tool to create the lifestyle that is right for me.

If I can do it, you can do it.  You have everything it takes, you just have to believe you can.


P.S. Here are resources to learn about how shockingly simple investing can be:

The bloggers: jlcollinsnh.com/ (investing); mrmoneymustache.com (lifestyle); madfientist.com (supercharged savings and investing), millennial-revolution.com (investing and world travel).

The books: This books explains the basics of finance and can change your life: The Simple Path to Wealth by J.L. Collins; other good ones are:  Your Money or Your Life by Vicki Robin; Millionaire Next Door by Stanley and Danko; The Wealthy Barber by David Chilton

P.P.S. Here is the simplified Nav.it explanation of compound interest:

Let’s say you put $100 into an investment (they call this your principle).  That investment makes 5% interest over a period of time (one year, for example) so now you have $105.  In the next period, you make 5% on the $105 (instead of just $100), so you make $5.25 and now you have $110.25.  You then get 5% on the $110.25.  So you get interest on interest, and, in finance speak, that just keeps compounding*.  Make sense?

*Don’t be fooled, banks also use compound interest on the balance on your credit cards/debt/student debt–the interest (say 3%) you owe them on the principle loan they give you compounds on itself and adds up pretty dang quickly.