Beginners Guide To Personal Finance (Learn How To Build Wealth)
Summary
TLDRIn this comprehensive video, Joshua covers a wide range of topics essential for personal finance, aiming to equip viewers with knowledge that surpasses 99% of the population. He emphasizes the importance of saving money and establishing an emergency fund, as well as the significance of budgeting to generate more income rather than just balancing expenses. Joshua introduces the concept of a personal financial statement, distinguishing between assets and liabilities, and encourages viewers to invest in income-producing assets. He also discusses various investment types, including stocks, bonds, index funds, ETFs, real estate, and cryptocurrency, and outlines the process of opening investment accounts with recommended brokers. The video touches on the necessity of understanding credit scores and how they are calculated, providing tips for improvement. Joshua further explores the use of credit cards, the difference between various types of cards, and strategies to avoid credit card debt. He concludes with a discussion on bank accounts, highlighting the benefits of high-yield savings and money market accounts, and briefly touches on the inevitability of taxes, tax brackets, and the use of free software for filing taxes. The video is a treasure trove of financial advice, designed to empower viewers to take control of their financial future.
Takeaways
- 💰 Saving money is crucial for personal finance as it provides options and leverage, and every dollar saved should have a clear purpose.
- 🚑 Establishing an emergency fund is recommended to cover unexpected expenses and avoid debt, with at least three months' worth of living expenses.
- 🎯 Budgeting should focus on wealth building, not just balancing income and expenses, by paying yourself first and investing in assets.
- 🏦 Understanding the difference between assets and liabilities is key to financial health, with assets putting money in your pocket and liabilities taking it out.
- 📈 Investing is an essential part of personal finance for wealth creation, with options including stocks, bonds, index funds, ETFs, real estate, and cryptocurrency.
- 💼 Starting a business or side hustle can accelerate wealth building compared to relying solely on a traditional job.
- 🏦 Different types of investment accounts, such as standard brokerage, retirement, education, and custodial accounts, serve various financial goals and come with different tax benefits.
- 🏆 A good credit score is vital for accessing loans, credit cards, and even renting an apartment, and is calculated based on payment history, credit utilization, length of credit history, types of credit, and new credit.
- 💳 Using credit cards responsibly can provide rewards and benefits without incurring debt, and it's important to pay off the balance in full each month.
- 🏦 High yield savings and money market accounts offer higher interest rates than traditional savings accounts, making them better options for saving money.
- 💼 Tax brackets and filing can be complex, but free software can simplify the process for simple tax returns, and hiring a CPA is advisable for more complex financial situations.
Q & A
What is the main goal of the video on personal finance?
-The main goal of the video is to provide viewers with comprehensive knowledge about personal finance, aiming to have them walk away with more knowledge than 99% of people, enabling them to make significantly better financial decisions and achieve financial independence.
Why is saving money considered the most important part of personal finance?
-Saving money is considered the most important part of personal finance because regardless of how much money one makes, without saving, one cannot accumulate wealth or have financial security. It provides options and leverage for future investments.
What is an emergency fund and why is it recommended to have one?
-An emergency fund is money set aside for unforeseen circumstances such as car breakdowns, household repairs, or job loss. It is recommended because it provides a financial safety net, preventing the need to take on debt or scramble for funds during emergencies.
What is the recommended minimum for an emergency fund?
-The recommended minimum for an emergency fund is at least three months' worth of living expenses. However, starting with a smaller amount, like $1,000, is suggested for those who find it challenging to save a larger sum initially.
What is the key difference between how wealthy people budget their money compared to others?
-Wealthy people budget their money with the intention of generating more income and expanding their means, rather than just balancing their income with expenses. They pay themselves first by investing a percentage of their income and use a personal financial statement to track their assets and liabilities.
What are some common types of investments mentioned in the video?
-The video mentions stocks, bonds, index funds, ETFs, real estate, and cryptocurrency as some of the common types of investments.
What is the purpose of an investment account?
-An investment account is a special type of account required for purchasing securities like stocks and bonds. It allows individuals to invest in various financial instruments and grow their wealth through capital appreciation and dividends.
What are the four common types of brokerage or investment accounts?
-The four common types of brokerage or investment accounts are standard brokerage accounts, retirement accounts (like IRAs and 401ks), education accounts (like 529 plans and ESAs), and custodial accounts for minors.
How does the video suggest one can make money beyond traditional employment?
-The video suggests that to make more money beyond traditional employment, one should consider starting a business or a side hustle. This can include online ventures like a YouTube channel, blog, or website with ad revenue and affiliate marketing.
What are the five factors that determine a FICO credit score?
-The five factors that determine a FICO credit score are payment history (35%), total amount owed or credit utilization (30%), length of credit history (15%), types of credit (10%), and new credit or hard inquiries (10%).
What is the recommended strategy to avoid credit card debt?
-The recommended strategy to avoid credit card debt is to never buy anything with a credit card that you cannot afford to pay off in full at the moment of purchase.
What are some benefits of using credit cards responsibly?
-Using credit cards responsibly can help build a good credit score, provide rewards and cash back, and offer convenience and security as they often come with purchase protection and fraud monitoring.
What are the differences between a secured credit card and an unsecured credit card?
-A secured credit card requires an initial cash deposit that serves as collateral, determining the credit limit, and is often used by those with no credit or bad credit. An unsecured credit card does not require a deposit and is offered based on the applicant's creditworthiness, often with better rewards and perks.
Why should one avoid store credit cards according to the video?
-Store credit cards are advised against because their only real benefit is an initial discount, and they typically do not come with rewards or perks. They also may have high interest rates and can negatively impact your credit utilization ratio if not managed properly.
What are the recommended types of bank accounts for someone new to personal finance?
-For someone new to personal finance, it is recommended to open a checking account for daily transactions and a high yield savings account or a money market account for saving money, as these offer higher interest rates compared to traditional savings accounts.
What is the basic difference between a checking account and a savings account?
-A checking account is designed for frequent transactions and bill payments, offering quick access to funds but not intended for saving. A savings account, on the other hand, is designed for storing money with the intention of accumulating interest over time.
Why are high yield savings accounts and money market accounts preferred over traditional savings accounts?
-High yield savings accounts and money market accounts are preferred because they offer higher interest rates compared to traditional savings accounts, allowing your money to grow at a faster pace while still maintaining relative accessibility.
What are the different types of taxes that one can expect to encounter in life?
-The different types of taxes one can expect to encounter include income tax, sales tax, capital gains tax, and property tax. These taxes are levied by federal, state, and local governments and can apply to various aspects of financial transactions and assets.
How do tax brackets work and why are they important?
-Tax brackets determine the percentage of income that is taxed at each level based on income levels. They are important because they illustrate the progressive nature of taxation, where higher income levels are taxed at higher rates, and can affect how much of one's income is retained after taxation.
What are some free resources available for filing taxes?
-Free resources for filing taxes include software like TurboTax, H&R Block, and Credit Karma, which can automate the tax filing process for simple tax returns. These services may require an upgrade to a paid plan for more complex tax situations.
Why is it recommended to hire a CPA for complex financial situations?
-Hiring a CPA is recommended for complex financial situations because they have expertise in navigating tax laws and can help avoid costly mistakes. Their knowledge and advice can be invaluable in maximizing tax savings and ensuring compliance with tax regulations.
Outlines
💰 Introduction to Personal Finance
Joshua introduces the video, aiming to teach viewers about personal finance. He emphasizes the importance of understanding financial basics, saving money, and making better financial decisions for achieving financial independence.
💸 Importance of Saving Money
Joshua explains that saving money is crucial regardless of income. He illustrates how saving small amounts consistently can lead to significant financial options, like investing in the stock market or buying a rental property. He stresses that every dollar saved should have a clear purpose.
📊 Budgeting for Wealth
Joshua challenges traditional budgeting views and suggests thinking about budgeting as a way to generate more income. He explains the concept of paying oneself first and using personal financial statements to track assets and liabilities, emphasizing the importance of building assets over balancing expenses.
📈 Types of Investments
Joshua covers common investment types, including stocks, bonds, index funds, ETFs, real estate, and cryptocurrency. He briefly explains each type and their roles in a diversified investment portfolio, highlighting the benefits of investment funds and real estate investment trusts (REITs).
🏦 Opening Investment Accounts
Joshua discusses different types of investment accounts, such as standard brokerage accounts, retirement accounts (like Roth IRAs and 401(k)s), education accounts, and custodial accounts. He outlines the benefits and limitations of each account type and emphasizes the importance of choosing the right broker.
💼 Making Money and Entrepreneurship
Joshua advises viewers on the importance of making more money through entrepreneurship or side hustles. He explains that while investing can lead to wealth over time, starting a business can accelerate financial independence. He suggests various business ideas and resources for further exploration.
📉 Understanding and Improving Credit Scores
Joshua explains the importance of having a good credit score in America and the factors that influence it, including payment history, credit utilization, length of credit history, types of credit, and new credit inquiries. He offers practical tips on how to build and maintain a high credit score.
💳 Using Credit Cards Wisely
Joshua emphasizes the responsible use of credit cards to avoid debt. He outlines different types of credit cards, such as unsecured, secured, student, business, store, and charge cards. He advises choosing cards that align with one’s credit profile and lifestyle to maximize benefits and rewards.
🏦 Bank Accounts
Joshua discusses the different types of bank accounts, primarily checking and savings accounts. He explains their purposes and the importance of having both. He also touches on high-yield savings accounts and money market accounts as better alternatives for saving money compared to traditional savings accounts.
📝 Taxes
Joshua briefly covers the basics of taxes, including different types of taxes and tax brackets. He emphasizes the importance of understanding tax obligations and suggests using free software like TurboTax and Credit Karma for filing taxes. He also recommends hiring a CPA for complex financial situations.
🎉 Conclusion
Joshua concludes the video by encouraging viewers to implement the financial strategies discussed. He thanks the audience for watching and invites them to like the video and subscribe to the channel for more content. He expresses confidence that viewers who follow his advice will achieve financial success.
Mindmap
Keywords
💡Personal Finance
💡Financial Independence
💡Saving Money
💡Investing
💡Budgeting
💡Emergency Fund
💡Credit Score
💡Debt
💡Tax Brackets
💡Bank Accounts
💡Retirement Accounts
Highlights
The video's goal is to provide knowledge about personal finance, aiming to help viewers make better financial decisions and achieve financial independence.
Saving money is essential for personal finance, as it provides options and leverage, and every dollar saved should have a designated purpose.
Creating an emergency fund is recommended, with at least three months' worth of living expenses, to cover unforeseen events without incurring debt.
Budgeting should be thought of as a means to generate more income and expand one's financial means, rather than just balancing income and expenses.
Wealthy people pay themselves first, investing a portion of their income into assets before covering expenses, a strategy viewers are encouraged to adopt.
A personal financial statement, including an income statement and balance sheet, is a tool used by the wealthy to manage their finances effectively.
Assets are investments that generate income, while liabilities are expenses; building wealth involves increasing assets and reducing liabilities.
Investing is a key component of personal finance, with various types of investments available, including stocks, bonds, index funds, ETFs, real estate, and cryptocurrency.
Different types of investment accounts, such as standard brokerage, retirement, education, and custodial accounts, serve different financial goals.
Choosing the right broker is crucial for opening an investment account, with options like Vanguard, Fidelity, Charles Schwab, M1 Finance, and Webull.
Making money through entrepreneurship or side hustles can accelerate wealth-building compared to traditional employment.
Credit scores are vital for securing loans and credit cards, and can impact租房 and employment opportunities.
Factors influencing credit scores include payment history, total amount owed, length of credit history, types of credit, and new credit inquiries.
Strategies for improving credit scores include timely bill payments, maintaining low credit utilization, and keeping old credit card accounts open.
Credit cards can be valuable financial tools when used responsibly, without carrying a balance over from month to month.
Different types of credit cards cater to various needs, including secured cards for building credit, business cards for company expenses, and student cards.
Bank accounts, specifically checking and savings accounts, are fundamental for managing daily finances and saving money.
High yield savings accounts and money market accounts offer higher interest rates compared to traditional savings accounts.
Taxes are unavoidable, and understanding different types of taxes and utilizing free software for tax filing can simplify the process.
Tax brackets and filing statuses affect how much individuals are taxed, with higher incomes typically facing higher tax rates.
Transcripts
what's going on guys joshua here so in
today's video i want to talk to you guys
about personal finance and we're going
to go over pretty much everything that
there is to know at least all of the
important things that there is to know
about personal finance my goal by the
end of this video if you actually watch
all the way through and you engage with
the content and you take notes maybe my
goal is to have you walk away with more
knowledge about personal finance than 99
of people out there you should be able
to walk away from this video and go out
into your life and start making
significantly better decisions around
your finances which will in turn create
that that financial independence that
you're looking for right if you actually
stay consistent with the methods that
i'm going to teach you in this video
then it will have a massive impact on
your financial life you know i've never
met a single person in my life who said
to me joshua i hate being financially
free in fact i love living paycheck to
paycheck and never having enough to make
ends meet that's the life that i love i
want to do this the rest of my life i've
never met anybody like that and if you
know somebody like that then i would
encourage you to create as much distance
between you and that person as possible
because that person is inevitably gonna
drag you down if you're hanging around
them long enough okay most of us want to
be successful and most of us want to be
financially independent however the
biggest thing that is usually holding
you back is just a lack of understanding
of the basics right sometimes the basics
are the most powerful part of knowing
something and in the case of personal
finance that's true if you can just
understand the basics of how to manage
your money
how to properly save how to properly
invest your money how to
actually budget the right way so i'm
going to teach you everything i know
because the stuff that i'm going to
teach you has worked in my life and i
know that it's gonna work in your life
as well if you actually stick around and
watch and you take what i'm saying
seriously okay with that being said
let's go ahead and jump in here uh if
you could do me a huge favor go ahead
and drop a like down below really quick
and subscribe to the channel if you want
to see more content like this i would
appreciate that so much so the first
thing that i actually want to talk to
you about today is saving money saving
money is probably the most important
part of your personal finances right
because it doesn't matter how much money
you make you know i could teach you how
to make money all day and you could next
year go out and you can make a million
dollars with a new business that you
started but if you're also spending a
million dollars then at the end of the
year you're left with zero right and
somebody else who's making say thirty
two thousand dollars per year but
they're saving two thousand dollars per
year well at the end of the year that
person who's only making thirty two
thousand dollars a year is better off
than the person who's making a million
dollars per year because they have zero
okay and so you have to begin saving
saving your money is important because
it gives you more options it gives you
leverage let's say that every single
week or or bi-weekly whenever you get
paid every single paycheck you save a
hundred dollars from your paycheck so
after 10 paychecks you've saved one
thousand dollars this is one thousand
dollars that you have that you can now
use to maybe go invest in the stock
market or perhaps you could save it and
put it toward a down payment to finance
a rental property or perhaps you could
be saving it up for some other type of
income producing asset that's what i
would recommend you do and of course
we'll talk about investing a little bit
later in this video but the point i'm
trying to drive home here is that every
single dollar that you save should have
a purpose a designated purpose and it
should be clear it's just like setting
goals for yourself you should be very
clear on exactly what it is that you
want to achieve so that you know what
steps to take to achieve those goals and
saving money is the same way now i do
want to add one minor caveat to that
point the only time it makes sense to
save money and store it in your savings
account and then you know let it lose
value because of inflation the only time
that makes sense is when you're saving
up for an emergency fund which i
recommend that everybody watching has
some type of emergency fund saved up an
emergency fund is basically money that
you set aside for emergencies your car
breaks down your ac in your house breaks
okay these are emergencies you lose your
job and you need to be able to have
something to fall back on while you're
trying to look for a new job this is an
emergency and in those situations it's
much better to have money that you have
set aside that you can pull from and use
instead of trying to scramble and maybe
taking out personal loans or going and
asking family members or friends if they
can loan you money it's so much easier
just to have money
set aside
waiting for you just in case something
happens now let me tell you what is not
an emergency buying a new computer is
not an emergency or buying a new pair of
shoes those are not emergencies an
emergency is something that if it were
to happen to you it would cause your
life to come to a halt okay so for for
example the car breaking down that would
cause your life to come to a halt
especially if you depend on that car to
get you to work or to get you you know
to and from to drive your kids to and
from school or whatever the case may be
that's an emergency and that's something
that you need to get taken care of
immediately and in that situation that's
where your emergency fund comes into
play the actual fund itself should have
at least three months worth of living
expenses inside of it so let's say for
example your cost of living is i don't
know i live in north carolina so cost of
living is much lower than it is in like
california or something but let's just
say for example your cost of living is
two thousand dollars per month then
ideally you should have six thousand
dollars within your emergency fund saved
up and that should you should be good to
go with that okay now if you say to
yourself joshua there's no way i can
save up that much money there's just no
way okay fine save up a thousand dollars
so that if your car breaks down or if
something breaks in your house or i
don't know if something happens at least
you have money set aside to cover that
because the last thing you want to do is
go out and take out a personal loan or
go get your car repaired on some high
interest credit card and not pay it off
for the next six months and so now
you're in credit card debt and you're
getting charged interest every single
month avoid that so the key takeaway
here is that you must start saving your
money and saving with a purpose start
taking money out of each paycheck and
putting it toward some type of
investment be it the stock market or
money toward
financing a rental property or something
also start taking money out of each
paycheck and putting it toward an
emergency fund i want you to do those
two things moving forward let's talk
about budgeting budgeting is such a
boring word and that word alone has
probably turned off more people to
personal finance than any other word
that i can think of but i want to
challenge you for a second here okay
when you think of that word budgeting i
don't want you to think of it in the
traditional sense right where you have
like your boring spreadsheet or some
boring app that you're using to track
your expenses and to track your income
and to try and balance your income and
then you're trying to see if you have
money left over for starbucks at the end
of each month you know i don't want you
to think about budgeting that way
personally i believe you shouldn't have
to cut out starbucks from your life
right i know i know a lot of finance
people say otherwise but if that's a
simple luxury that you enjoy
you shouldn't have to cut it out
personally i believe that you should
ultimately work to expand your means so
that you can expand your expenses and
you can live the life that you want to
live right otherwise why are you living
what's what's the point of trying to cut
out all the things that you enjoy
and then by the end of your life you
were just working for what now when it
comes to budgeting i want you to stop
thinking about it as a way to balance
your income with your expenses okay stop
thinking about it that way instead i
want you to think about it the way that
the wealthy do
which is budgeting your money as a way
to generate more income and expand your
means the first way of budgeting which
is balancing your income with your
expenses is going to keep you poor the
rest of your life guaranteed the second
way will make you wealthy and there's a
reason that the wealthy do it this way
make no mistake about it there's a
reason wealthy people budget their money
the way that i'm gonna teach you here in
a second because it works so there are
two critical differences between how a
wealthy person budgets their money
versus everybody else so let's talk
about that the first difference is that
wealthy people always pay themselves
first okay so what exactly does this
mean the moment money hits their account
whether it's through a paycheck or
through their business or whatever it is
they immediately take between 10 and 20
of their money and they put it into some
type of investment account this could be
a brokerage account where you plan on
going and investing in the stock market
with that money this could be some
external savings account where they're
saving up their money to purchase
another perhaps rental property or
they're saving up money to
start a business or something they're
saving up their money to purchase some
type of income producing asset right an
investment that's going to make them
money that's going to work for them so
that they can continue to build their
wealth without actually having to work
for it so the moment you get paid i want
you to pay yourself first now maybe you
can't move ten to twenty percent of your
income every single paycheck into an
investment account i understand that
start small maybe you can only do five
percent of your income okay that's fine
start there but you have to treat this
like a bill otherwise you're not going
to pay it because you're going to say to
yourself well i'll just skip this month
maybe next month i'll invest some money
and you know next thing you know 10
years has passed and you haven't
invested a single dime you know and
that's 10 years of your life that could
have made a massive impact on your
future but you chose to keep pushing it
off okay so start taking it serious your
future self depends on you to start
investing your money now so start
investing your money the second
difference between how wealthy people
budget versus everybody else is that
instead of using a traditional budgeting
you know spreadsheet or template wealthy
people use what's called a personal
financial statement and trust me it
sounds complex but it's a very simple
concept so this is an example of a
personal financial statement as you can
see on the screen so the first part here
shows the income statement which shows
your income obviously in your expenses
now this is where most budgets stop
however the wealthy take it one step
further they also want to see an overall
picture of their financial standings
with a balance sheet and that's what you
see at the bottom here the balance sheet
consists of two parts assets and
liabilities so let's go ahead and go
over this really quick okay let's start
with the income column any money that
flows into your bank account first has
to go through the income column on your
income statement i think that's pretty
self-explanatory income could be money
from your day job it could be like
portfolio income from stock dividends it
could be any money earned from
investments or like passive income from
a side hustle whatever all of that money
is considered income and that first has
to go into the income column on your
income statement and then of course your
expenses go into the expense column so
things like your bills groceries rent
your investing percentage that we talked
about earlier all of that goes into the
expenses column on your income statement
so that's pretty standard and that's
where most budgets stop but the way
wealthy people budget is they take it a
step further so next you'll go to your
balance sheet and in the assets column i
want you to enter in anything that puts
money into your pockets for example if
you own dividend-paying stocks or rental
properties or any type of income
producing asset these go into the asset
column now i don't want you to feel bad
about this okay because most people are
not going to have anything to put into
the assets column on their balance sheet
but that's the that's the point of doing
a balance sheet is it gives you an
overall broad picture of your financial
situation right now now you can visually
see that you have nothing working for
you to help you build wealth to help set
you up for financial independence you
brought awareness to yourself in the
liabilities column enter in everything
that's taking money out of your pockets
right this includes things like your
mortgage your car okay now i know i just
messed up a few people here by saying
that your mortgage is a liability but it
is contrary to popular belief your
mortgage is not an asset assets are
things that put money into your pocket
your mortgage is taking money out of
your pocket therefore your mortgage is a
liability just like your car even if you
pay your car off your car is still a
liability because every single month
what do you have to do you have to pay
your your insurance you have to pay for
gas you have to pay for repairs
those are all things that are taking
money out of your pockets therefore it
is a liability and your mortgage is the
same way now unless you live in a duplex
or something and you're house hacking
and like you're living on one side of
the duplex and you have somebody else
renting out the other side and they're
paying for the mortgage in that
situation yes you can definitely put
your house as an asset because it is it
is now putting money into your pocket
because you're not having to pay
anything for your mortgage because your
tenant is paying the mortgage for you
with their rent at that point your your
mortgage does become an asset but for
the rest of us who live in single-family
homes like myself this is a liability my
mortgage is a liability because it's
taking money out of my pocket every
single month and this is why a balance
sheet is so important because it helps
to put things into perspective if all
you own are liabilities you're going to
have a really really hard time building
wealth because everything that you own
in life is taking money away from you
because you have nothing in your assets
column and your liabilities column is
jam-packed and you and you have to start
shifting that you have to start putting
more items into your assets column and
removing items from your liabilities
column so the key takeaway is this
budget your money to build wealth not to
balance your income and expenses okay
that's the most important part next save
your money to buy more assets and then
eventually you can use your income from
your assets to buy your liabilities
things like your car or a house or a
boat or whatever you want right that's
what wealthy people do wealthy people
are not making money to go and buy a car
or to go and buy a house they're making
money to go buy investments and then
their investments their assets make them
money and they use the money that they
made from their assets to go by their
liabilities right that's that's the
difference here and so i want you to
reframe your mind i want you to rethink
the way that you see money and that you
use money in your life and i promise you
i guarantee you you'll start seeing
results all right so let's transition
now into investing so investing is one
of those things in personal finance that
seems so scary it seems so intimidating
you know but honestly it's probably one
of the easiest things to do in personal
finance and i mean that when i say it
sounds crazy but i'm being honest for
starters let's talk about some of the
different types of investments out there
or at least some of the more common ones
and then after that we'll transition and
we'll talk about the different types of
investment accounts that you can open
we'll talk about the best brokers and
then we'll talk about how you can begin
investing yourself okay so in terms of
types of investments there's a lot of
different stuff out there you've got
stocks bonds mutual funds index funds
etfs options annuities cds
cryptocurrency real estate and then
you've got your alternative investments
like commodities you know art precious
metals collectibles and things like that
now i know that's a lot to consider
we're definitely not going to go over
each one of these because it would make
this video like 10 times longer than it
already is we're just going to talk
about the ones that you'll most likely
invest in within your lifetime and these
include stocks bonds index funds etfs
real estate and maybe cryptocurrency
depending on your risk tolerance okay so
let's quickly go over each of these and
kind of just discuss what they are so
stocks are basically uh fractions of a
company you can think of stocks as a
pieces of a company when you own a share
of a stock in a company you are
technically a part owner in that company
so for example let's say that you bought
a share of apple so you now own one
share of apple well you now quite
literally own a piece of apple next up
bonds so bonds are essentially just
loans that you give to corporations and
governments in exchange for interest
okay so governments will typically issue
bonds if they're trying to raise money
for various projects or even just like
day-to-day operations and the same is
true with corporations now for
corporations specifically this what i'm
going to say here is not true for
government but for corporations they'll
often issue bonds as a way to raise
money instead of giving up ownership of
the company by issuing shares of stock
right because when a corporation
issues shares of stock to sell to
shareholders they're giving up part
ownership of their company to the
shareholders right so issuing bonds is
just a way for corporations to avoid
having to give up even more ownership of
their company by issuing shares of stock
index funds and exchange traded funds or
etfs are both types of investment funds
now an investment fund is basically just
a basket of stocks or bonds that you can
buy to invest in a large number of
securities at once so for example okay
instead of investing in a single stock
we'll say apple right instead of
investing in a single share of apple
where you're only benefiting from one
share of apple stock you can go and
purchase a single share of an etf that
invests in thousands of different stocks
and by buying a single share of that etf
you're giving your portfolio exposure to
thousands of different companies apple
amazon microsoft facebook coca-cola i
mean these massive brands right all by
investing in a single etf so that's the
benefit of investment funds investment
funds are personally my favorite way of
investing in the stock market i've also
got a ton of videos on this channel
where i talk about the best etfs how to
invest in etfs for beginners and things
like that i'll try to remember to link
those in in the description below so
next up is real estate i think that you
know what real estate is you're probably
sitting in a piece of real estate right
now but in terms of investing in real
estate there's a number of different
ways you can do it the most common ways
would be probably buying rental
properties right properties that you
purchase uh specifically for the the
case of renting them out to tenants who
then pay you rent each month okay or you
could buy real estate investment trusts
or reits and reits are basically i like
to think of them as just etfs that only
invest in real estate and so basically
when you own when you purchase a share
of a reit you're essentially investing
in all of the real estate that that reit
owns okay so you can actually invest in
real estate without having to go out and
finance and manage physical real estate
so reits are a really powerful way to
invest in real estate if you don't want
to actually have to do the work to go
and buy physical real estate yourself
and finally we've got cryptocurrency so
cryptocurrency is a relatively new asset
class and the most widely known
cryptocurrency is bitcoin now
cryptocurrency is highly volatile and
very risky and i would only recommend
that you get into it if you have really
high risk tolerance so those are
basically the most common types of
investments out there so i hope that
that part helped you now i want to
transition and i want to actually talk
about the different types of investment
accounts right because there are
different types of investment accounts
ways that you can invest your money you
know if you want to begin investing you
can't just go to your bank account and
start investing within your bank account
there is a special account that's that's
required to actually purchase securities
securities are just like stocks and
bonds and things like that there's a
special account that's required in order
to buy those assets and and that account
is a brokerage account so there's
actually four common types of brokerage
accounts or like investment accounts and
as you can see on the screen here you've
got the standard brokerage account this
can also just be called the individual
investment account you've got retirement
accounts you've got education accounts
and then you've got custodial accounts a
standard brokerage account is probably
the most common type of brokerage
account it's just a basic account that
an individual can open to invest in
securities like stocks bonds reits etfs
things like that these accounts are
taxable which means that the money you
make with with your investments inside
of the account is taxed by the
government next up you've got retirement
accounts or individual retirement
accounts also known as the ira and this
is essentially just a standard brokerage
account except it comes with tax
benefits okay and these types of
accounts are specifically used for
retirement purposes only which is why
they come with the tax benefits a couple
of popular retirement accounts include
the roth ira and the 401k you've
probably heard about these before so
both of these accounts come with
different types of tax benefits for
example the roth ira is a type of
retirement account where the money that
you put into the account the money
that's going into the account has
already been taxed which means all the
money that you make over the years all
of the capital appreciation from your
investments within that account that you
accumulate over the years and the
withdrawals that you start making once
you retire from that account are not
taxed okay and this is why the roth ira
is such a popular investment or
retirement account next up you've got
the 401k 401k is kind of the exact
opposite of the roth ira all the money
that is going into the 401k retirement
account is not taxed but all the money
that you withdraw once you retire is
taxed as ordinary income next up are
education accounts and these are a type
of investment account that's used for
educational expenses right so a couple
of common educational accounts include
the 529 plan and and esa's or
educational savings plans now these are
basically just standard brokerage
accounts except the money that is going
into this account has to be used for
educational purposes only and lastly
you've got custodial accounts which are
investment accounts for minors and a
minor is somebody who's under the age of
18 and sometimes 21 depending on the
state that you live in custodial
accounts are essentially just a standard
brokerage account except for miners you
can still invest in stocks you can still
invest in bonds and etfs and other
securities except you're doing it on
behalf of a minor and then once that
minor reaches a certain age typically
between the age of 18 and 25 depending
on your state that account is then
turned over to them and they can use the
money in the account for whatever
purpose they choose okay you have no
control over that because it is now
their account so those are all of the
most common types of investment accounts
i would say that the two most common
ones between those four are the standard
brokerage account and uh some type of of
investment account now i do want to
mention that with a standard brokerage
account there is no limit to how many of
these you can open up right it's just
like a bank account you could have a
thousand bank accounts if you wanted to
right and the same is true with the
brokerage account there is no limit to
that with retirement accounts you're
only allowed to have one per type of
retirement account so for example you
can only have one roth ira per person
you can only have one 401k but you can
you can have one of each so you can have
a 401k but also have a roth ira and then
get double the tax benefits on your
income so that's something to consider
if you if you want to save for
retirement and you know really take
advantage of the tax benefits of those
accounts so now i'd like to transition
and talk about the best brokers that you
can use to open up an investment account
with now the investment account could be
some type of retirement account like in
like a roth ira or it could just be a
standard brokerage account whatever you
choose these are going to be the best
brokers in my opinion to do so on the
screen now you should see a list of some
of the best brokers here in the us now
in no specific order they include
vanguard fidelity charles schwab m1
finance and weibull now there are
probably over 100 different broker
options to choose from here in the us
but in my opinion these ones that i've
listed are some of the best okay so i've
got links to all of these brokers down
in the description below if you want to
earn some free stocks okay completely
free stocks i've got a link in the
description that you can use to open up
a weeble account and if you make the
minimum deposit which i think is like
100 or something then you'll earn a
couple of free stocks i think valued up
to 1800 or something like that it's you
just make the deposit you get the free
stocks and if you wanted to you could
close the account and then move your
money somewhere else it's up to you but
it's it's free stocks so you know you
might as well anyways these are all
amazing brokers and they all come with
different pros and cons i'm not gonna go
over each one and and talk about the
pros and cons of each one that would
make this video so much longer but of
course if you have any questions about
any of these brokers or really anything
that we've gone over so far in the video
just drop a comment below i'll do my
best to answer it as quickly as possible
okay so how do you actually go about
opening up an investment account you
know the process can seem slightly scary
at first but i promise you i promise it
is not hard i mean the entire process is
first of all free but also it takes like
five to ten minutes to do and it's super
easy if you've ever opened up a bank
account online then it's pretty much
that except it's just a brokerage
account okay so first of all you're
going to want to choose your broker so
let's just say for example you went with
weeble because you want to get those
free stocks so you go with weeble
weeble's going to ask you for your
social security number your name your
address your employment status your
salary like how much money you make each
year your income
they're gonna ask you all these basic
questions the same questions that a bank
asks you when you're opening up a bank
account okay your brokerage account is
gonna ask you the same questions and
then once you finish the application
process which takes like five to ten
minutes you're gonna have to connect
your bank account with your brokerage
account and you have to do this because
you have to have a way to transfer money
into your brokerage account so that you
can then begin investing it right every
single time that you want to invest more
money you have to transfer money from
your bank account to your brokerage
account so that you can then go and use
that money to buy stocks and bonds and
other types of securities but that's
really about it you know for the most
part every broker is going to be the
exact same they're going to have the
same process uh the application connect
your bank account deposit money start
investing right you'll i think you'll
find that the process is very
streamlined and easy once you just start
doing it next part making money
everybody knows how to make money right
you go to any business in your town you
apply for a job you get the job and you
trade your time for money it's a very
simple straightforward transaction and
everybody knows how to do that okay but
i'm willing to guess that if you're
watching this video that you don't want
to make money that way right you've been
doing it that way for a long time now
and it's not really working out for you
you're still not making enough money you
want to make more money than your than
what you're currently making now you
have dreams you have goals that you're
trying to accomplish that's the reason
why you're watching this video right now
is because you want to learn how to
become better with your finances so that
you can achieve those goals and you can
live out those dreams instead of just
thinking about them in your head you can
actually live them out in color in real
life i know this already that's why
you're watching the video right now but
in order for you to become financially
independent you have to stop working for
other people you have to understand that
if you're working for somebody else it's
going to be extremely difficult for you
to achieve your financial goals okay not
impossible definitely not impossible
because it can still happen but it's
going to take you a lot longer to do so
than if you were to go and start
something for yourself and make more
money than you thought was even possible
i want you to hear me out for just a
second here becoming a millionaire is
not difficult it's actually super easy
all you have to do is just invest a few
hundred dollars each month into a
low-cost etf inside of a roth ira and
then after 30 to 40 years of doing this
you'll become a millionaire it's truly
that simple okay the math is already
there but i'm willing to guess
that you want to become wealthy sooner
so that you can spend your life enjoying
your wealth instead of waiting until
you're much older and then becoming
wealthy and not being able to enjoy your
wealth as much as if you were younger
now there's nothing wrong by the way
there's nothing wrong with with the
latter of waiting until you're much
older like retirement age before you
start enjoying your wealth most
americans do not have that luxury so
even that is fantastic but my guess is
that you're watching this right now and
you want to become wealthy sooner and
the only way to do that is by working
for yourself i don't care what anybody
else tells you unless you're like top
one percent in corporate america like
the ceo of some big fortune 500 company
where you're making a couple million
dollars per year other than that you
will never become wealthy working for
somebody else you have to do something
for yourself another way of saying this
is to start a business but that sounds a
little bit more scary and so we'll just
stick with uh starting something for
yourself okay but it's it's the same
exact thing now i'm not going to get
into like the exact intricate details of
how to start a business or how to start
something for yourself in this video
because it would just it would take too
long but i just want to make it a point
that if you have a desire to build
wealth while you're young then starting
a business or even some type of side
hustle which could potentially turn into
a business is a very promising way to do
so because other than that you're going
to have to invest your way to becoming a
millionaire and that takes time that
takes years and years of compounding
growth and by the way starting a
business does not mean that you have to
go and like open up a brick and mortar
store starting a youtube channel is a
business building a blog online starting
a website and writing blog posts and
getting traffic into your website and
putting ads on your website and
collecting affiliate income and things
like that that's a business i don't want
you to think of a business as like you
know having to go and write a business
plan and going and leasing out office
space and all this expensive stuff it
doesn't have to be that complex i've
actually got a couple of videos on my
channel where i talk about these things
a little bit more in detail and i give
you some ideas so for example i've got a
video called the best side hustle ideas
i'll link that below i've got a video on
the best business ideas that you can
start for under 100
i'll link that down below also making
money is a huge part of personal
finances because if you aren't making
money then you can't save money and if
you aren't saving money then you can't
invest money and if you're not investing
money then you can't increase your
income and build your wealth so it's
just this repeating cycle let's
transition now into credit and
specifically credit scores what factors
determine your score and how you can
build your score from nothing if you
have no established credit whatsoever or
if you have a bad credit score how you
can build it up again to a good credit
score as much as people like dave ramsey
like to preach against the idea of
credit and credit scores here in america
it's inevitable you need to have a good
credit score if you ever want to take
advantage of all of the various lending
options here in america such as
mortgages and loans and credit cards all
things that if used responsibly can have
can really add value to your life and
honestly even beyond just having a good
credit score for the sake of opening up
a credit card or something a good credit
score can also be the deciding factor of
something as simple as you renting an
apartment like a lot of apartment
complexes will look at your credit score
and if you have no established credit or
if you have bad credit then they'll turn
you away also believe it or not some
employers will also turn you away from a
job if you have bad credit because it's
just it's a sign that you're not
responsible in a certain area of your
life specifically with your finances and
so the way that the employer sees it is
that that is going to translate into
other areas of your life as well you
know for example you're not being
responsible with your work and so a lot
of employers will look at your credit
score and determine if they want to hire
you based off of your credit score now i
know that sounds a bit extreme but
that's just the way it is fortunately
with just a little bit of common sense
and a little bit of practicality you'll
be able to build up your score to a 700
plus and then eventually even join the
800 plus club so on a very basic level
there are two types of credit scores
that are used by lenders you've got your
fico score and then you've got your
advantage score the fico score is
probably the most popular one in fact
it's used by over 90 of lenders to make
their decisions about whether they want
to give you a loan or credit card or
something like that so the fico score is
the one that we're going to focus on
specifically uh in this video but just
understand that the vantage score is
another type of score that can be used
to determine whether you get a loan or
are approved for a credit card or
whatever the case may be i've listed a
graphic here on the screen as you can
see and it's going to show you basically
a graph of the fico score range so you
can see here that the fico score range
is between 300 a low of 300 and a high
of 850. so the higher your score the
better off you are so your goal should
be to get to the 800 plus club once
you're above an 800 credit score it
basically just means that you're
invincible and nobody can touch you okay
like no credit card company is gonna
turn you away for anything and that may
either be a good thing or a bad thing i
guess depending on your your spending
habits and how responsible you are but
my guess is that if you reach an 800
plus credit score then you're probably a
pretty responsible person and you're not
going to do anything crazy with your
good credit score when it comes to your
credit score there are five factors that
determine the score
okay so if you have say a 750 credit
score there's five factors that go into
deciding that your score is 750. they
are your payment history the total
amount owed this can also be called your
credit utilization
number three is the length of credit
history for the types of credit that you
have open and number five the new credit
that you have opened up this can also be
referred to as hard inquiries now all
these factors are not created equal what
i mean by that is some factors are going
to have more of an impact on your credit
score than others now in terms of how
important each factor is i've got them
up on the screen here for you to see you
can see here that your payment history
specifically for the fico score the
advantage score is weighed a little bit
different but since we know that the
fico score is used by 90 of lenders
that's the one that we're going to focus
on but your payment history makes up 35
percent of your credit score that's
almost a third of the credit score and
we still have four other factors to go
over okay so the payment history is by
far the most important factor and this
is the one that you really need to focus
on you have to make sure that you're
paying your bills on time okay if you're
missing credit card payments or you're
missing loan payments or even if you're
missing utility bill payments these are
all going to have a negative impact on
your payment history and that of course
in turn is going to decrease your credit
score ideally you want to have a 100
payment history but anything above a 90
is considered good next up is the total
amount owed this is also called like i
said your credit utilization and this
makes up 30
of your fico credit score right so still
a really high number between these two
factors we're talking about 65 of your
score being made up with these these two
factors right here okay so i really want
to focus in and hone in on these two and
make sure that you get these two right
so your credit utilization or the total
amount owed is the amount of credit that
you are currently using ideally you want
to try and keep this below 10 because if
you start utilizing more of your credit
it's going to have a negative impact on
your credit score so keep this number
below 10 so for example let's say that
you have a credit card with a line of
credit of thousand dollars this means
that you cannot spend over one hundred
dollars on that credit card because one
hundred dollars is ten percent of a
thousand if you go and you buy a new
flat screen tv for five hundred dollars
and you carry that balance with you for
for a few months well that means your
credit utilization is going to be above
a 50
and that's going to have a really really
negative impact on your credit score
because it just doesn't look good to
lenders okay so make sure that you keep
that that number below 10 now i've
actually got a trick that you can use to
lower your credit utilization so that
you can spend more on your credit cards
without negatively impacting your credit
score we'll talk about that in just a
minute i just want to get through these
these five factors first okay so the
next factor is the length of your credit
history and this one makes up 15 of your
credit score and it's basically just a
combined average of how long you've had
all of your credit accounts open for so
you can improve your credit score over
time by keeping your credit accounts
open and in good standing generally
speaking credit accounts under the age
of two meaning that within the past two
years you open up that account will have
a negative impact on your credit score
uh typically credit accounts over the
age of seven will have a positive impact
on your credit score the longer you
leave your credit accounts open the
better off you are the next factor that
determines your credit score is the
types of credit this can also be called
the just the total accounts as weird as
this sounds the more credit files you
have open the better right so let's say
for example you only have one single
credit card and that's it you don't have
anything else open within your credit
file well that's actually not going to
have a positive impact on your credit
score i mean it's not going to like
brutally mess up your credit score but
it's not going to have a positive impact
on your credit score compare that to
somebody who has say five different
lines of credit the person who has five
lines of credit will experience a
positive impact on their credit score
compared to the person who just has one
in the world of credit the more lines of
credit you can have the better you look
because to the lender it seems like
you're a responsible person because
you're able to manage all these credit
accounts responsibly without like going
into debt and lastly new lines of credit
this can also be called hard inquiries
this makes up 10 of your score so
basically every time you apply for a
credit card the lender checks your
credit report your credit history and
that creates a hard inquiry on your
credit file every single time that
happens it's going to have a negative
impact on your credit score these do go
away over time they stay on your credit
history for two years but after about
six months to a year they start having
less of an impact on your credit score
but it's still not recommended that you
get too many of them at once because
applying for too many credit cards or
for too many loans at once is gonna
cause multiple hard inquiries to hit
your credit report which of course is
gonna drag your score down significantly
so it's not recommended that you apply
for too many cards at once all right so
now that you have a fundamental
understanding of what credit is and how
your score is calculated i think it's
really important that we talk about how
you can improve your credit score
increase it and maintain a good credit
score so by far the most important thing
to building good credit and maintaining
good credit is to pay your bills on time
consistently you want to try and have a
100 percent payment history and ideally
anything above 90 is good but you want
to have 100 if you're dropping below 90
if you're not paying your bills on time
then it's really going to have a
negative impact on your credit score and
it's just not going to look good to
lenders next you want to try to increase
your credit line as much as possible do
you recall earlier when i said that i
had a trick to lowering your credit
utilization well this is the trick right
here for example let's say that you have
one credit card and that credit card has
a one thousand dollar line of credit
well if you go and you spend a hundred
dollars on that credit card well you've
already hit your 10 utilization okay and
anything past that is going to have a
negative impact on your credit score but
let's say for example instead you have a
credit card with a 10 000 line of credit
well now
spending 100 is not going to make you
reach that 10 utilization so instead you
can now spend a hundred dollars and
you'll only have a one percent credit
utilization which is not gonna have any
impact on your credit score okay so the
point i'm trying to make is the higher
your credit line the higher the higher
your combined credit line for all of
your accounts the lower your credit
utilization will be when you go and
spend money the trick here is to either
try and increase your line of credit for
that specific credit card it could just
be one it could be a couple of them or
the next trick would be to open up a new
credit card which would come with its
own line of credit but that line of
credit would be combined with your total
line of credit for all of your accounts
and by doing that you're increasing your
total line of credit which is going to
lower your credit utilization and
finally the best trick the best tip i
have for building up your credit is to
try not close old credit card accounts
even if you aren't using the credit card
it's recommended that you still do not
close the account because more likely
than not
if you close it it's going to have a
negative impact on your credit score for
two reasons the first reason is that
it's going to decrease your credit
history or the age of your credit
account rather so for example if you
have two credit cards one credit card
you've had for five years and the other
credit card you've had only for a year
if you close the old credit card which
you've had for five years then your your
average your average age of your credit
is going to drop drastically so not only
is it going to affect the age of your
credit history but it's also going to
have a negative impact on your credit
utilization so for example let's say
that that five-year credit card that you
just closed had a credit limit or a line
of credit of five thousand dollars but
your new credit card
only has a line of credit of a thousand
dollars so between those two cards your
total combined credit is six thousand
dollars right one thousand dollars from
the new credit card five thousand
dollars from the old credit card but if
you close the old credit card well
that's gonna decrease your total line of
credit for all of your accounts total so
the moral of the story is this by
closing even just one old credit card
your credit score can really take a
beating so the trick is just to keep old
credit cards open for as long as
possible for the rest of your life if
you can now that we've talked about
credit scores i want to now transition
to talk about credit cards credit cards
are by far my favorite way of paying for
things i literally pay for everything
with a credit card if i could if my bank
would let me i would even pay my
mortgage with a credit card and just
load up on a ton of rewards i mean why
not
it's not like i'm carrying my balances
over from month to month and so i'm
paying interest to the credit card
company i'm not doing that i'm paying
off my balances in full each month and
so i'm literally paying credit card
companies zero dollars and zero cents
they're making no money off of me
because i'm paying my balances in full
each month and that's actually the first
thing that i want to talk to you about
in regards to credit cards is how not to
get into credit card debt right we'll
also talk about the types of credit
cards that you can get and how to choose
the right card for you but most
importantly first and foremost let's
talk about how you can avoid credit card
debt okay because i think most people
have this idea that if you're using a
credit card it automatically means that
you're somehow in debt right because
their parents were in credit card debt
and all of their friends are in credit
card debt and everybody around them is
somehow in credit card debt because
they're not responsible with their
credit card and so now they're afraid
because they think that credit cards are
evil and then you've got people like
dave ramsey who are reinforcing this
idea that credit cards are evil when in
all actuality if you can just use them
responsibly they can be really really
valuable tools in your financial uh
arsenal so yes credit cards are very
powerful tools but with great power also
comes great responsibility as the old
saying goes okay if you want to avoid
credit card debt i literally have the
secret to doing so this is if you just
do this one thing you will never
ever be in credit card debt ever okay
one thing
and that one thing is
never buy anything with a credit card
that you cannot afford to pay off in
full at that moment okay
what do i mean by that so say you see a
new tv and best buy a new amazing flat
screen tv for 700
and you think to yourself well i'm
getting paid at the end of the month and
then you know i can just i can just go
ahead and buy this this uh tv now stop
do not buy the tv with your credit card
because you don't have the money at that
moment to pay for
the tv right what if an emergency pops
up what if your car breaks down and your
money that you were gonna use to pay off
your credit card it now has to go to
fixing your car right think about that
for a second so never buy anything that
you cannot afford to pay off immediately
okay i promise you if you can just do
that
then you'll avoid more headaches and
possibly even more heartaches than you
can imagine so let's talk about the
types of credit cards that are available
out there and then we'll talk about
which ones will work best for you based
off of your lifestyle your spending
habits and your credit score so on the
screen you'll see uh all the different
types of credit cards that are available
you've got you know standard unsecured
credit cards secured credit cards
student credit cards business credit
cards store credit cards and then my
least favorite type of credit card is
the charge card okay so let's just go
down the list here and talk about each
one so the unsecured credit card is is
your standard card they don't require
you to make a security deposit you know
you can open one up you can be approved
for a certain line of credit and then
you can start using that credit as soon
as you get the card now some of the best
unsecured credit cards will typically
require you to have a higher credit
score okay and these cards also
typically come with much better rewards
and perks next up we've got secured
credit cards and these are primarily
used if you have no established credit
at all or if you have bad credit when i
first started building my credit i
opened up a secured credit card and
that's that's what i did to start off
building my credit before i then
transitioned and got an unsecured credit
card now secured credit cards are
considered secure because they require
you to make a cash deposit before being
approved for the card so say for example
you opened up a secured credit card and
you deposited 100 into your account well
that means that your line of credit is
100
that is the most you can spend on that
credit card is 100 now this is obviously
different from an unsecured credit card
which does not require you to make a
cash deposit but with secured credit
cards since you have no credit or since
your credit is bad then the the bank or
the lender wants to see that you can
deposit the money into the account
before they actually give you a line of
credit for that card next up you've got
student credit cards and these are
obviously used by students most of these
cards are only accepted if you go to
some type of school or college or
something and you have to have proof
that you go to school or college and
these cards are designed to help
students build up their credit some
student credit cards are unsecured you
can apply for them without having to
make a security deposit while others are
secured next up we've got business cards
which as the name implies are for
business owners now these are pretty
much your standard unsecured credit card
the only difference with a business
credit card is that they give you the
option to add employees to uh your
credit account right so if you wanted
your employees to have their own company
credit card then you would want to have
a business credit card because it gives
you the option to add multiple employees
to your credit card account next up
we've got store credit cards you
probably know what these are because
every single time you go to the store
you know the cashier the clerk is saying
to you uh you know if you apply for this
card today then you'll save 15 on your
purchase for today only personally i
would advise that you just avoid these
altogether the only real benefit that
you get from them is when you first open
up the card and they give you that
initial discount but other than that
they typically don't come with any type
of rewards you'd be better off going
with an unsecured credit card which
typically do come with rewards or at
least some type of perk that is going to
provide you with some type of value
whereas with the store credit card
you're not getting that and then last my
least favorite you got charge cards now
this is a type of credit card that
requires you to pay your monthly balance
in full at the end of each month now
inherently this is not a bad idea right
because it forces you to pay off your
credit card balance and full at the end
of the month instead of carrying the
balance over for month to month and
paying interest on that balance the one
thing i don't like about a charge card
though is that they usually never come
with any type of benefits and so if you
have the option to go with a regular
credit card versus a charge card i
personally would always go for the
regular credit card especially if it has
benefits and rewards such as cash back
and other perks that are gonna add value
to my life so which of these is best for
you well i think it's pretty
self-explanatory right if if you have uh
average to great credit then you
probably just want to go with a regular
unsecured credit card preferably one
that's going to come with rewards and
there's plenty of great ones out there
okay
if you have bad credit or you have no
established credit at all then you
really don't have any option you're
gonna have to go with a secured credit
card and make that initial deposit into
the account before you can actually
start using the card that's what i did
that's what a lot of people do if you're
just starting out or if you have bad
credit that's just what you have to do
okay
fortunately it shouldn't take you a long
time to start building up your credit
against that you can then transition
into an unsecured credit card and you
can start feeling like you know an adult
again additionally if you're a student
and you have no established credit then
you do have the option as well to go
with a student card these could be good
because some student cards are unsecured
which means you don't have to make an
initial deposit and i know when you're
in college you don't really have that
much money and so you're not really
interested in making a deposit into an
account just to get a credit card like
you would rather just go and spend that
money somewhere else and so some student
cards are unsecured which is a really
great idea uh if you're a business owner
who has employees and you want those
employees to have a business card that
they can use for business purchases then
obviously going with the business card
would make a lot of sense for you yeah
that's about it i wouldn't go with store
credit cards and i would avoid charge
cards as well next up let's talk about
bank accounts now this is a topic that
seems so so juvenile right like bank
accounts what do you mean that's the
most basic thing in the world of finance
but i'm convinced that a lot of people a
lot of americans still don't know how to
properly use all of the different types
of bank accounts out there and if you're
brand new to the world of finance then
you might not know much about it at all
and so i think that this is a really
important topic to discuss when it comes
to personal finance so on a very basic
level there are two types of bank
accounts you've got your checking
account and your savings account so a
checking account is likely where your
paycheck gets deposited into it's
probably where you pay your bills from
you can think of your checking account
as sort of the the highway the freeway
it's a place to get from point a to
point b as quickly as possible right
with a checking account you have quick
access to your money but here's the deal
you should never be keeping large sums
of money in your checking account
because this account is not designed for
saving money it's designed for sending
and receiving money and that's it now
next up we have a savings account and of
course as the name implies this is a
bank account that's designed to save
money it's a good place to put money
away that you don't need right away but
you still want access to it if you need
it quickly many people believe that
there is just one type of savings
account but there are actually a few
different types you got your traditional
account you've got your high yield
savings account you've got your money
market account and then finally you got
your certificate of deposit so
traditional savings accounts are my
least favorite the interest paid on your
money and these accounts are typically
so low that you're actually losing money
due to inflation every single year
additionally a cd or a certificate of
deposit is probably one of the worst
places to put your money because the
interest rates on those things are so
depressingly low that once again you're
losing money due to inflation every
single year and to make matters even
worse your money is actually locked away
into the account until the cd matures
which is typically between like a few
months up to a few years depending on
which type of cd that you go with next
up are my two favorite types of savings
accounts and they are the high yield
savings account and then the money
market account okay so for starters the
high yield account as the name implies
is a type of savings account that gives
you higher interest rates on your
savings you could also choose to go with
a money market account so this is a type
of savings account that has some
checking account features so for example
many money market accounts will also
come with debit cards and checkbooks
right these are things that only come
with checking accounts you cannot get a
debit card on a savings account but with
a money market account you get the high
interest right it's typically much
higher than the traditional
savings interest rate but it's not as
high as the high yield savings interest
rate but if you want those added
features such as a debit card for your
account or a checkbook and you still
want relatively high interest rates on
your savings then i would definitely
consider going with a money market
account so if you're brand new to the
world of banks which bank account should
you go with first things first you need
a checking account okay everybody needs
a checking account it's how it's it's
basically the launch pad for your money
it's how money enters your bank account
and it's how money exits your bank
account in most cases okay also you're
gonna need the debit card and you cannot
get a debit card if you do not have a
checking account now i personally never
ever use my debit card unless i have to
right because some services such as like
your utility bill for example you cannot
use a credit card to pay for your
utilities you have to use a debit card
or you have to connect your bank
directly and so in those situations
those are the only times that i use a
debit card otherwise i'm using a credit
card but you can only get a debit card
if you have a checking account and so
you have to open one up next you should
definitely open up a savings account i
would recommend that you open up either
a high yield savings account or a money
market account because the interest
rates on those two accounts are going to
be drastically higher than that of a
traditional savings account but you
still need a place to store your money
for like emergencies or if you have some
type of like short-term goals such as
like saving up money for a mortgage or
down payment on a car you want to have a
place to store your money that's going
to give you a little bit of interest but
it's not as risky as like the stock
market or something like that okay so
you should definitely open up a savings
account as well so we are approaching
the end here and i saved the worst part
for last
taxes okay taxes are unavoidable nobody
can avoid paying taxes unless you want
to go to prison i am not a tax expert
and i don't claim i don't pretend to be
one so i'm not going to go and talk to
you about all the complex tax laws and
all the irs forms that you're required
to fill out every single year i just
want to talk to you about the different
types of taxes that you can expect to
pay in your life because i think it's
important to know that
i want to talk to you about tax brackets
and then i'll talk to you about how you
can easily fill out your tax returns
each year for free okay so for starters
let's take a look at all the different
ways that your money is stolen from you
i mean uh tax as you can see on the
screen here there are a lot of different
ways so on a very broad level there's
three different types of tax groups
right but under each of these categories
there are dozens of other taxes anytime
money is transacted from one party to
another more likely than not it is being
taxed somehow when you buy groceries in
addition to paying for the groceries
you're also paying a sales tax unless
you live in a state where there is no
sales tax every time you get paid like
from your salary or whatever the case
may be the federal government the state
government and your local municipal
government is taking money from you in
the form of income tax every single time
you sell something you are paying taxes
typically this is like a capital gains
tax but there are other types of taxes
as well if you own a house or a car or
land then you are paying taxes on your
property every single year as the famous
saying goes there's two things in life
that are certain taxes and ice cream
machines at mcdonald's never working
tax brackets what is it and how do they
work okay so here in the united states
depending on your income level the
federal government will tax your income
at a different rate these numbers
literally change every single year so
i'm not going to spend too much time
going over the exact tax rate
percentages and the numbers and things
like that because they change all the
time the most important thing to
understand though about tax brackets is
that the higher your income the more you
can expect to pay in taxes additionally
these numbers may change depending on
your status so for example if you're
married or if you're filing as head of
the household then the numbers will
change depending on those filing
statuses let's talk about filing taxes
you know this can be a very intimidating
topic for a lot of people but i promise
you nowadays because of the advancements
in technology and all the different free
software out there like turbo tax h r
block and credit karma filing your taxes
nowadays is so much easier than what it
was like 20 years ago now as i mentioned
a lot of these services are completely
free to use if you have a simple like
w-2 that you just have to file to the
irs then you can use these services
totally free and they will automate the
entire process for you 100 i know
services like turbo tax and i know h r
black's probably the same way and i'm
sure credit karma is the same way will
require you to upgrade to a paid plan if
you have a more complex return okay
typically these paid plans are still
highly affordable i do want to add that
when you get to a point where you're
making a lot of money and you have a
very complex financial situation perhaps
you own a business or you own like
rental properties or things that are
making you money outside of your w-2 job
then it is going to be critical that you
hire a cpa there are just way too many
tax laws that if broken even by accident
can get you into a ton of trouble and so
it's just not worth taking the risk to
not hire a cpa just to save a few extra
hundred dollars hire a cpa if you're
making a lot of money as it is already
it's worth the investment that's it you
made it to the end of the video my god
if you're still watching right now if
you seriously just went through and you
watched that whole video i have a really
good feeling that you're probably going
to be very successful financially
especially if you can begin practicing
and implementing all the things that we
talked about in this video today if you
stayed and watched till the end and you
have yet to drop a like on the on the
video and you have yet to subscribe to
the channel please do me a huge favor
and do both those things it would mean
the world to me if you like content like
this anyways and you felt like you got a
lot of value from the video subscribe
come back for more i appreciate you guys
so much for watching and as always i
will see you again very soon all right
take care
استعرض المزيد من الفيديوهات ذات الصلة
![](https://i.ytimg.com/vi/i_w-8oWQxHM/hq720.jpg)
HOW TO ENTER YOUR RICH GIRL ERA | money mistakes, mindset and habits + how I invest my money!
![](https://i.ytimg.com/vi/a1MwAkYtYBE/hq720.jpg)
How I Use Credit Cards To Make Money With No Money
![](https://i.ytimg.com/vi/yjS6kc7LiuM/hq720.jpg?sqp=-oaymwEmCIAKENAF8quKqQMa8AEB-AH-CYAC0AWKAgwIABABGH8gIyg9MA8=&rs=AOn4CLA45VVJzmRlIaJy04Q6ErxV24ZoEw)
How to Invest Your First £100: Investing for Beginners
![](https://i.ytimg.com/vi/U16k8cWFEC8/hq720.jpg)
I’ve Made Millions of People Rich… Here’s My Playbook
![](https://i.ytimg.com/vi/UD9c409pBRc/hq720.jpg?v=65c1fe76)
Pé de Meia - Poupar... para Investir - "Invista a partir de 20 euros/mês"
![](https://i.ytimg.com/vi/QQxBN2eIMvA/hq720.jpg)
21 ASSETS that make you financially free | How to get rich hindi | 11 FREE ASSETS | SeeKen
5.0 / 5 (0 votes)