Strategies for financial security: How to think about money

6 min read
11 Dec 2018

hat does it take to get from middle class to millionaire? And what are the sacrifices? From saving up early in life, to being more frugal with what you choose to spend money on, setting up for a lifetime of prosperity requires a long term-strategy.

This article was written by the original owner of, Ryan Allis, and published on his website in 2012. Read more about why Ryan was happy to hand over his website domain to us here.

The history of money

Money is one of the most important topics to understand on your journey to being able to change your own life and change the world. But what is money?

In the simplest definition, money is just a store of value—an object of value that is generally accepted within a given society as payment for goods and services.

Money replaced the barter system, where people would exchange goods or services they could provide for goods and services they needed. Barter works well—until you don’t have the thing the other person wants, or you don’t want what they have to offer.

The invention of money allowed for two individuals to exchange value, without both of them having to, by happenstance, have the exact thing that the other person wanted. Money stores value, which you can use to buy something that you want later.

Some people consider cattle to be the earliest form of money. Between 9000 and 6000 BC, many cultures used livestock as a standardized form of barter, making them effectively the first currency. Starting around 1200 BC, cowrie shells became common currency—in fact, they are historically the most widely used and the longest used currency in the world. Metal coins were invented around 500 or 600 BC, and in 806 AD the first paper money appeared in China. Today there are almost two hundred different currencies in use around the world.

Understanding how money works is key to your ability to make a big impact in the world.

Starting from the middle class

I was born in 1984 in Pittsburgh, Pennsylvania, the son of an Episcopalian minister and a social worker. My mom stopped working full-time when I turned five, and so our family’s income was about $32,000 per year while I was growing up in Woonsocket, Rhode Island and Bradenton, Florida.

My mom taught me to dream big, be confident, and to understand personal finance. When I was 16, in the year 2000, after reading Rich Dad Poor Dad and Think and Grow Rich, I wrote down an ambitious goal: to build a company to $1 million in sales by the age of 21.

On July 3rd, 2003, my cofounder Aaron Houghton and I incorporated iContact. We worked out of a small office in downtown Chapel Hill. I had two years left until my 21st birthday: August 14th, 2005. I missed the goal of building iContact to $1 million in sales before my 21st birthday, but only by 18 days. iContact reached $1 million in annual sales on September 1st, 2005.

After we sold iContact in 2012, I worked with financial advisors to ensure I could make angel investments in companies I felt were making a difference in the world, invest in building a new company called Connect, and have enough for my family to always be taken care of.

My mum Pauline taught me three key lessons about personal finance which stayed with me throughout my career:

Spend less than you earn every month

Spending less than you earn is not always possible, particularly when you’re taking out a loan to go to school or when a medical emergency strikes you or your family. But as often as you can, on a monthly basis, make sure that what’s coming in (minus taxes) is greater than your expenses.

If you’re making $5,000 per month and paying 35 percent in taxes, you’ve got about $3,300 or $3,400 you can spend on other things. If you’re spending $4,000, you’re actually going into debt every month.

There are two situations people can be in. There are those who pay interest on loans every month and there are those who earn interest on loans every month.

If you can get into that latter category, where you can earn interest on the loans that you’re giving to others—whether they be through savings accounts, CDs, a lending club, or earn returns from other forms of investments—you can grow your assets through the power of compounding returns on your assets over time.

Never go into debt for something that you don’t need

If it’s an investment in education, health, or the future (yours or your family’s), that’s one thing. But if it’s that new boat that you don’t really need (you could simply rent a boat two or three times a year when you really want to go boating), or that big-screen TV that’s sixty inches instead of fifty, don’t do it.

If you can delay gratification for a few years and invest that couple thousand dollars that you would have spent, over time, that can turn into tens of thousands of dollars that will enable you to do so much more in your life.

Save up early in life

Start young. And if you have kids, start your kids young on saving and investing. The law of compound interest helps a lot over time.

What money means to me

To me, money simply meant the ability to make investments in other entrepreneurs, engineers, and technologists who were working on making the world better. I also saw a responsibility to be a steward of the funds and to work hard to build another company that will hopefully someday make a big difference in the world.

But it doesn’t take building a business to become a millionaire. The reality is that anyone can become a millionaire over time by saving $1,000 per month every month for thirty years and then investing it at a rate of return of 7 percent per year.

Why should you even care about setting yourself up for a solid financial footing? Because it’s easier to make a huge positive impact in the world when yours and your family’s financial needs are taken care of. Once this is secured, you can have funds to focus on building a business that makes a difference, and investing in the causes and companies you’re passionate about.

In the next article, I describe what I’ve learned over the last 28 years about money and how to set your family up for a lifetime of financial prosperity. The basics are: pay off your debt as quickly as possibly, save money each month, and invest it so that it grows predictably (perhaps in a place like LendingClub or Prosper), and eventually build a business of your own.

This is the first in a series of three articles which provide a roadmap to becoming a millionaire during your lifetime either by building a business of your own or by consistently saving and investing $1,000 each month for 30 years.

Main photo: Unplash/Rawpixel

*This article was originally published on October 17th, 2018 and updated on December 11th, 2018.