‘Set for Life’ Author Scott Trench Shares His Best Money Advice for Each Phase of Your Financial Life

©Scott Trench

Scott Trench is the author of “Set for Life” and host of the “BiggerPockets Money” podcast. He is an experienced real estate investor who now serves as CEO of BiggerPockets, where he helps everyday people build wealth through real estate.

Recognized by GOBankingRates as a Top Money Expert, here he shares the four levers to building wealth, and how to know which one you should focus on.

Want to vote for Scott as your favorite money expert? Click here and go to his expert page.

What’s the one piece of money advice you wish everyone would follow?

I wish that everyone would remember that the big expenses — housing, transportation and food — are what matters when it comes to saving money, and that a home, in particular, is not an investment — it is an expense. The less you spend in these three categories, and especially on housing, the wealthier you will become. 

Investing for Everyone

What’s the most important thing to do to build wealth?

The most important thing to do to build wealth is to recognize that there are four key “levers” — spending less, earning more, investing and creating assets — businesses, intellectual property, etc. There’s a time and place for each lever — a time and place on your financial journey where each is the most important.

Single 20-somethings likely should concentrate most heavily on earning more. A middle-class family with less than a few hundred thousand dollars in wealth likely needs to tightly control expenses. A millionaire needs to focus on investing. And, the self-employed/entrepreneurs need to focus on creating.

These levers aren’t perpetual, but too many people attempt to focus on levers that don’t apply to them — [for example,] the person with $25,000 who spends hundreds of hours thinking about investing is wasting their time, because even great returns on a $25,000 investment aren’t meaningful compared to what can be saved or earned. Folks need to realistically self-assess and focus on what is meaningful to their position, with where they are at currently. 

Investing for Everyone

What’s your best tip for fighting the impacts of inflation?

The best way to fight inflation is to keep only the amount of cash that you need to sleep well at night, and to invest everything else in assets that you believe will perform well over very long periods of time — like real estate, stocks or high-yield bonds/debt. 

What’s the biggest mistake people make when it comes to money?

The biggest mistake I see middle-class people make is buying too much home, too early in life. A middle-income American who stretches to their financial limits to buy a personal residence too often destroys most of the optionality in their life as a result of that purchase. We are seeing this now, with likely tens of millions of Americans “locked in” to the homes they purchased and/or refinanced in the last few years. They will be forced to work a traditional job, likely in their local market, for many years, until finally the house appreciates enough, or their income grows enough, to free them to once again make major choices about where they want to live and what they want to do for work that aren’t directly tied to their housing decision. If instead, these folks delayed the big home purchase for a few years, lived well below their means and/or considered a way to make their home a real investment — like buying a “house-hack” with multiple units and turning the property into a cash flowing rental property every year or two, they would have so many more options in life.

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Jaime Catmull contributed to the reporting for this article.


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