I’ve been on a journey to improve my financial knowledge, drawing from various books, podcasts, and my own research (disclaimer: I’m not a licensed financial advisor). Most of the inspiration for this checklist came from Ramit Sethi’s book, "I Will Teach You to Be Rich," and Tiffany “Budgeonista” Aliche, along with several local financial insights specific to Israel.
Note: Some concepts from the U.S. need to be adapted to fit the Israeli market, especially regarding specific funds and accounts available locally.
Develop the Right Mindset & Acquire Financial Knowledge
✔️ Focus on long-term wealth-building instead of short-term gains.
✔️ Be persistent, adaptable, and willing to take calculated risks. If you’re taking big risks—like starting a business—counterbalance with conservative moves elsewhere, such as maintaining a higher-than-usual amount of liquid savings.
✔️ Stay educated about personal finance, investing, and wealth-building strategies. There are plenty of local resources, workshops, and events in Israel that can provide ongoing education.
Increase & Diversify Your Income Streams
✔️ Diversify your income by considering side hustles, freelance work, or launching your own business. In Israel, consider leveraging the local startup ecosystem or gig economy.
✔️ If you're entering a higher-risk business or venture, make sure you have solid financial safeguards in place.
✔️ Focus on low-fee investments like index funds. In Israel, you might consider using Keren Hishtalmut (education funds) or pension funds for investments, especially in the S&P 500 or similar long-term index options.
✔️ Employ tax incentives where possible but prioritize income growth over tax breaks.
Start Saving and Investing Early
✔️ The earlier you start saving and investing, the better. Take advantage of compound growth.
✔️ Automate your savings—even if it’s just NIS 30 per month—set it up and forget about it. This aligns with strategies in both the U.S. and Israel.
✔️ In Israel, take full advantage of tax-advantaged accounts like Keren Hishtalmut and pension funds (Kupot Gemel). Meet with a pension agent to make sure you're maximizing these accounts.
✔️ Avoid letting tax incentives dictate your financial choices—focus instead on income growth and smart tax management. Automating tax reporting is essential.
Budgeting, Banking, Credit Cards, and Credit
✔️ Set up multiple accounts for better money management, such as accounts dedicated to bills, short-term savings (emergency fund), and investments.
✔️ Your emergency fund should cover 3-12 months of living expenses. How much you need depends on factors such as the number of employed individuals in the household, health conditions, dependents, and whether anyone runs a business.
✔️ Set up a separate account for any unexpected income like inheritance or bonuses, and use that to automate additional savings or investments.
✔️ Establish an account for discretionary spending (entertainment, travel, etc.), so you can enjoy your money while maintaining discipline.
✔️ In Israel, digital banking options are still evolving, with only one primary digital bank offering a 4% interest rate. Be cautious of fees and always make sure you are on a no-fee account if possible.
✔️ Credit cards in Israel work similarly to those in the U.S., with options to earn rewards or miles. However, always pay your balance in full and avoid borrowing on credit unless absolutely necessary.
✔️ The credit rating system in Israel is more complex and less transparent than in the U.S. Ensure your credit stays in good standing by automating payments and paying bills on time.
Leverage Compound Interest and Smart Investing
✔️ Reinvest your earnings to maximize growth. Let compound interest work for you by staying consistent with long-term investments, such as index funds.
✔️ Don’t try to "beat the market"—instead, opt for low-fee index funds like the S&P 500. Many pension and Keren Hishtalmut funds offer these options.
✔️ In Israel, after maximizing your Keren Hishtalmut and pension, consider higher-risk investments like cryptocurrency or stocks, but limit them to 10% of your portfolio to manage risk.
Real Estate – A Thoughtful Approach
✔️ Owning real estate can be part of your financial strategy, but it’s not always the best first step. In Israel, owning an apartment, especially in Tel Aviv, is often less financially feasible than renting.
✔️ Renting in major cities like Tel Aviv can be cheaper than buying, particularly if you’re looking for a high-quality property.
✔️ If you do invest in real estate, consider properties in Israel’s periphery, such as a small studio near a university in Beer Sheva. Investing NIS 100,000 as a downpayment and taking a small mortgage may be a possibility, particularly if you’ve built up funds through Keren Hishtalmut.
✔️ Keren Hishtalmut is a better first choice for long-term growth than real estate. You can allocate 50-75% of your Keren Hishtalmut to the S&P 500 or other similar funds.
Manage Expenses and Live Below Your Means
✔️ Practice conscious spending by identifying your "money dial"—the thing you value most—and splurging only on that. Cut costs aggressively on things that don’t matter to you.
✔️ If you love to travel, you can set up a separate savings account specifically for that purpose. Use Keren Hishtalmut to save for family vacations over the long term.
✔️ Set up a budget and track your spending regularly to avoid lifestyle inflation.
✔️ Keep an eye on digital expenses such as cloud storage and software subscriptions—these can add up quickly. Regularly review and cancel services you no longer need.
✔️ Separate business and personal accounts. If you or your spouse run a business, it’s critical to keep finances separate to protect both your household and credit score.
Increase Income Streams
✔️ In Israel, it’s especially important to diversify income streams due to market fluctuations. Side hustles, freelancing, or creating a business are great options for extra income.
✔️ Avoid investing in stocks unless you’re educated—index funds remain the safer, long-term choice.
✔️ Once you have a solid financial foundation, you can allocate up to 10% of your investment income to higher-risk investments such as cryptocurrency or your friend’s startup.
Take Calculated Risks
✔️ Once you’ve automated and stabilized your long-term investments (such as through Keren Hishtalmut), don’t be afraid to take calculated risks in opportunities like entrepreneurship or high-growth stocks.
✔️ Avoid FOMO—there will always be new "shiny" stocks or crypto investments. Focus on building a strong, diversified base first.
✔️ Balance risk and reward carefully by ensuring that any high-risk investments are backed by stable, long-term assets.
Network with Like-Minded Individuals
✔️ Surround yourself with financially knowledgeable people. Attend workshops, seminars, and local networking events in Israel to expand your knowledge and build relationships with like-minded individuals.
✔️ Seek out mentors who have achieved the financial success you’re aiming for and learn from their experiences.
By following these principles and adapting them to the Israeli financial system, you can build a foundation for long-term wealth and success. Remember, automation is the secret that creates discipline and is your best tool for growing wealth and reducing stress - and in Israel, that’s everything 🙂.
If you’d like to get a to do list to easily check off the items based on the above strategy and arrange your finances, budget like a pro, get a personal coach to make sure you go through all the steps or join a support group, add your info here and you shall get it!
Inspiration drawn from Ramit Sethi’s book, "I Will Teach You to Be Rich," Tiffany “Budgenista” Aliche, and local Israeli financial insights.
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