Book SummarySet for Life, by Scott Trench

1-Page Summary1-Page Book Summary of Set for Life

Retirement often seems like the distant finish line of a long career, but what if you could retire decades earlier than most people? In Set for Life, Scott Trench argues that you can achieve financial freedom at a young age—with enough passive income to cover your lifestyle expenses without needing to work a regular job. He argues that by following a three-step approach of living frugally, increasing your income, and investing wisely, you can gain the freedom to pursue your passions, travel, or spend more time with family without financial constraints.

The strategies in Set for Life are tailored for single, middle-income earners in their 20s and 30s who have minimal savings and are willing to take an aggressive...

Set for Life Summary Three Steps to Early Financial Freedom

Trench writes that most Americans follow the typical path of working a long career and saving only a fraction of their income—a path that requires you to sacrifice the best years of your life and retire late in life with modest savings you hope will last. However, Trench has an alternative three-step approach to achieving financial freedom much earlier:

• Step 1: Cut expenses through low-cost living.
• Step 2: Grow your wealth through higher-paying opportunities.
• Step 3: Invest your accumulated savings in assets to generate passive income.

(Shortform note: Retirement is a relatively modern invention. For most of history, people worked until they physically couldn’t anymore. Retirement only emerged during the Industrial Revolution, when companies wanted to replace older workers with younger, more productive ones. It wasn’t until the late 19th and early 20th centuries that the idea of a formalized retirement with financial support appeared, first in Germany and then later in the US with the Social Security Act. So, for a long time,...

Set for Life Summary Step 1: Cut Expenses Through Low-Cost Living

To get started on the path to financial freedom, Trench recommends you first focus on cutting expenses through smart, frugal living. Aim to save over half of your paycheck and live on less than $2,000 a month. The less you spend early on, the less wealth you need to accumulate later, and the faster you can reach financial freedom.

(Shortform note: If you live paycheck-to-paycheck, you may find it helpful to start with a lower savings rate and gradually increase it when you can. Trench’s suggestion to save over half your paycheck is more aggressive than the conventional 50/30/20 budgeting rule, which recommends saving 20% of your income while allocating 50% to necessities and 30% to discretionary spending. So, if you’re not quite able to save as much as Trench suggests, the 50/30/20 rule can be a good starting point.)

Trench argues that it’s better to focus first on saving rather than earning for two reasons. First, you can cut expenses right away, whereas earning more money takes more time and extra commitment. Second, the money you save by cutting expenses isn’t taxed, whereas the money you earn gets taxed, so...

Set for Life Summary Step 2: Boost Your Income

With a solid financial foundation in place from cutting expenses and building savings, the next step is to increase your income. In this section, we’ll discuss how you can use the financial cushion your savings provide to do two things: buy a house and live rent-free through “house hacking,” and pursue new opportunities to increase your earnings.

Live Rent-Free by House Hacking

Trench writes that you can transform housing from an expense into a source of income through house hacking: Instead of renting an apartment or buying a single family home to live in yourself, you buy a small multiunit property like a duplex. You’d then live in one of the units and rent out the other units.

(Shortform note: In The Book on Rental Property Investing, Brandon Turner says that multiunit properties usually cost more upfront and require more maintenance work since more units mean more things that can break down. If you’re looking for a lower-maintenance option, Turner suggests complex-based properties like...

Set for Life Summary Step 3: Put Your Money to Work

Trench writes that once you’ve earned at least $100,000 by cutting expenses and finding higher-paying work, you’re ready for the final step to financial freedom: investing your money wisely. Your goal is to invest your savings to earn enough passive income to take care of all your living costs. In this section, we’ll cover Trench’s tips for making smart investments, including how to maximize investment returns, use your time and effort efficiently, manage risk, and invest in index funds and real estate.

(Shortform note: According to many financial experts, you don’t need a large amount of money to start investing. You can begin with as little as $3 through investment apps like Acorns or Stash, $500 through robo-advisors, or whatever you can contribute to your employer’s 401(k). However, they recommend that before jumping into any investment, you first pay off high-interest debt, then build an emergency fund covering six months of...

Shortform Exercise: Reduce Your Expenses

Trench argues that the first step to achieving early financial freedom is to cut your expenses through frugal living. In this exercise, you’ll audit your monthly spending to identify areas where you can reduce costs and increase your savings rate.

Take a close look at your spending for the past month. What were your three biggest expense categories? How much did you spend on each?