5 Essential Financial Goals To Achieve Before 30
Summary
TLDRThis video emphasizes five crucial financial goals for those in their 20s: constructing a life blueprint to guide financial decisions, tracking expenses to save effectively, balancing saving and spending according to the 50/30/20 rule, maximizing credit scores to access better financial deals, and adopting a long-term investment strategy like the 'chess and rice' compounding model. It also touches on the importance of self-proofing over seeking external validation and suggests using tools like Empower Thrive to build credit responsibly.
Takeaways
- 🏡 Build your life blueprint: Reflect on what you truly enjoy and desire in life without considering financial constraints.
- 💰 Track your spending: Use a savings tracker to understand where your money goes and identify areas to cut back.
- 🌟 Find a balance: Strive for a midpoint between saving and spending that aligns with your life blueprint.
- 💹 Follow the 50/30/20 rule: Allocate 50% of your income to needs, 30% to wants, and 20% to savings for a balanced financial approach.
- 🏦 Maximize your credit score: Aim for a score above 750 to access the most favorable rates and benefits.
- 💳 Use credit responsibly: Only buy what you can pay off immediately and keep your credit utilization ratio below 30%.
- 📈 Adopt the chess and rice strategy: Invest and let your money compound over time for exponential growth.
- 🛡️ Proof yourself: Focus on self-validation and skill development to become indispensable and self-sustainable.
- 💼 Seek self-improvement: Continuously upskill to increase your value and command better compensation.
- 🔗 Empower your financial journey: Consider tools like Empower Thrive to help build credit and manage finances effectively.
Q & A
What is the significance of building a 'life blueprint' according to the speaker?
-Building a 'life blueprint' is essential because it helps guide financial decisions, ensuring that wealth-building efforts are aligned with personal happiness and life goals, rather than just saving for the sake of it.
Why did the speaker realize saving money alone was not enough?
-The speaker realized that saving money alone was not enough after being involved in a serious car accident, which made them reflect on how miserable they had become by focusing solely on saving without enjoying life or pursuing personal passions.
How can someone start building their own life blueprint?
-To build a life blueprint, one should reflect on what they enjoy in life without considering money or accessibility. This includes preferences like renting vs. owning a home, car preferences, and challenges they enjoy tackling.
What was the impact of using a savings tracker for the speaker?
-The savings tracker helped the speaker become more aware of where their money was going, revealing that they were spending $2,700 more than they thought. It also turned saving into a game, helping them cut back on unnecessary expenses.
What is the 50/30/20 rule in personal finance?
-The 50/30/20 rule suggests allocating 50% of income to needs (housing, food, utilities), 30% to wants (vacations, entertainment), and 20% to savings or investments. It offers flexibility but should be adjusted based on individual financial situations.
What mistake did the speaker’s cousin make with credit cards, and what were the consequences?
-The speaker's cousin made the mistake of not paying off credit card balances in full, which ruined his credit score. This led to higher interest rates on loans, costing him over $113,000 when trying to buy a house.
How can one responsibly build credit with credit cards?
-To build credit responsibly, one should only charge what they can pay off immediately, keep the credit utilization ratio below 30%, and always pay balances in full. Regularly checking credit reports is also recommended.
What is the chess and rice strategy, and how does it apply to personal finance?
-The chess and rice strategy emphasizes the power of compounding. Like doubling grains of rice on each square of a chessboard, investing money and letting it compound over time leads to exponential financial growth.
What investment strategy does the speaker recommend?
-The speaker recommends a passive fund investment strategy, particularly investing in index funds like FX or VOO that track the S&P 500, as it offers an easy, low-maintenance way to grow wealth over time.
What does the speaker mean by 'start proofing yourself'?
-'Start proofing yourself' refers to focusing on self-validation and upskilling rather than seeking approval from others. By becoming indispensable through new skills, one gains more confidence and financial security.
Outlines
💼 Building Your Life Blueprint
The paragraph emphasizes the importance of creating a life blueprint in your 20s to guide financial decisions. It shares a personal story of how focusing solely on saving money without a clear life purpose led to a life lacking fulfillment. The speaker suggests creating a blueprint by envisioning your ideal life without financial constraints, considering preferences for housing, transportation, and lifestyle. The paragraph also introduces a savings tracker to monitor spending and adjust financial habits accordingly. The speaker's experience with a savings tracker revealed previously unnoticed expenses, leading to a more intentional approach to saving and spending. The 50/30/20 rule is introduced as a guideline for budgeting, allocating 50% of income to needs, 30% to wants, and 20% to savings, with flexibility to adjust based on personal circumstances.
🏦 Maximizing Your Credit Score
This paragraph discusses the significance of a good credit score for securing favorable financial rates and benefits. It narrates a cautionary tale of a cousin who, due to poor credit management, missed out on significant savings when buying a house. The speaker advises maintaining a credit score above 759 to access the best rates and recommends checking credit reports annually at annualcreditreport.com. The paragraph also offers tips for building credit responsibly, such as using credit cards judiciously and keeping the credit utilization ratio below 30%. It introduces Empower Thrive, a financial app that provides a credit limit and helps users build credit over time, especially beneficial for those with no credit or a poor credit history. The speaker highlights the importance of responsible credit management for long-term financial health.
📈 The Chess and Rice Strategy for Financial Growth
The paragraph illustrates the power of compound interest using the historical chess and rice story, where the emperor's debt grew exponentially due to the doubling of rice grains on a chessboard. It applies this concept to personal finance, explaining how investing and allowing your money to compound can lead to significant wealth over time. The speaker shares their strategy of passive fund investment, specifically in index funds that track major stock indices like the S&P 500. They recommend using a broker like Moomoo for easy and cost-effective investment management. The paragraph concludes by emphasizing the importance of letting your money work for you through smart investing to achieve financial goals and potentially early retirement.
🛠 Self-Proofing and Upskilling for Career Advancement
In this paragraph, the speaker reflects on the futility of seeking validation from corporate employers and the importance of self-proofing. They advocate for upskilling and self-improvement to become indispensable and self-sustainable. The speaker shares their experience of confidently negotiating pay raises and promotions based on their self-assessed value. They encourage viewers to focus on developing high-income skills to maximize earning potential in the least amount of time. The paragraph concludes with a call to action, inviting viewers to discover the best high-income skills through an external resource, highlighting the importance of continuous learning and skill development for career and financial success.
Mindmap
Keywords
💡Life Blueprint
💡Savings Tracker
💡50/30/20 Rule
💡Credit Score
💡Credit Card Utilization Ratio
💡Empower Thrive
💡Chess and Rice Strategy
💡Compound Interest
💡Proofing Yourself
💡High Income Skills
Highlights
Building a life blueprint is crucial for financial decisions in your 20s.
The importance of knowing what you want for your future and how it guides financial choices.
The realization that money saved without a clear life goal can lead to unhappiness.
Creating a life blueprint involves listing what you enjoy and prefer in life without considering financial constraints.
The use of a savings tracker to understand spending habits and identify areas to cut back.
The significance of finding a balance between saving and spending to align with your life blueprint.
The 50/30/20 rule for allocating income towards needs, wants, and savings.
The impact of a good credit score on securing favorable interest rates for loans.
The story of a cousin who lost out on significant savings due to poor credit management.
Advice on checking credit reports annually and maintaining a credit score above 759 for better financial deals.
Strategies for building a good credit score, including responsible credit card usage and keeping utilization ratio low.
Empower Thrive, a service that helps build credit history regardless of initial credit score.
The chess and rice strategy as a metaphor for the power of compound interest in financial growth.
The benefits of passive fund investment for long-term financial growth.
The shift from proving oneself to others to self-validation and skill development for career advancement.
The importance of self-sustainability and being indispensable in the job market.
How additional income from career advancement can be funneled into investment strategies to accelerate financial goals.
Transcripts
these are the five financial goals you
need to achieve in your 20s to set you
up for your future first build your life
blueprint something that took me years
to learn is there's no point in building
your wealth if you don't build your life
when I turned 21 I had no idea what I
wanted for my future the only two things
I actually knew were one I hated my job
and two saving money was good so that's
pretty much all I did I turned out
friend Hangouts bailed on travel plans
and avoided doing anything that cost
money and instead I just went home to
watch TV just to save a little bit more
money all the while daydreaming about
saving enough to retire and live but
then one day I got into a pretty bad
accident on the highway with multiple
cars and I realized just how miserable I
had become I was making and saving money
for the sake of retiring without knowing
what the heck I was going to retire to
and I realized saving 50,000$ 100,000 or
a million dollars means absolutely
nothing if you aren't happy and doing
stuff you love or being with the people
that you love but it was building my
life blueprint that changed everything
it became a guide for nearly all my
financial decisions and here's how you
can build yours get a piece of paper and
answer this honestly without thinking
about money or accessibility what are
the things you enjoy in your life do you
prefer the flexibility of renting or the
stability of owning a house do you want
a fancy car or just something that works
what challenges do you enjoy taking on
your initial responses aren't going to
be your final blueprint
inov ating I became a lot more aware of
what I bought because it turned into a
fun game where I had to try to level up
and save more every month it gave me a
clear idea on where most of my money was
going and what things I could cut back
on that aren't important to me but my
biggest takeaway is I realized I was
spending way more than I thought about
$2,700 more before the savings tracker I
was mentally accounting for what I had
left over after bills food and clothes
but I was ignoring all the expens from
my side hustles I always Justified these
expenses as a just a one-time thing but
thanks to the savings tracker I could
see that I made this excuse often you
can use any app or tracker to do this or
you can download my free savings School
tracker that I use with the link below
immediately after hitting my savings
goal I put my two weeks in and I solo
backpack southeast Asia for 6 months
sure this knocked my savings number down
a bit but the memories and the
experiences I built were Priceless like
I would have never imagined riding
camels in India hiking in the Himalayas
or even getting bitten by a shay dog in
Myanmar so find your halfway point
between saving and spending your money
as you move towards your life blueprint
but how much money should you save the
rule of thumb is the 503020 rule
basically 50% of your take-home pay goes
towards your needs like housing food and
utilities 30% for your wants vacations
entertainment and Mr Magic lamps and 20%
to your savings so if you earn about
$6,000 a month 3,000 would go to towards
your needs 1,800 into your wants and
1,200 would go towards your savings for
future Investments if you can save more
that's fantastic but the beauty of the
50320 rule is it gives you flexibility
and encourages you to look for cheaper
alternatives premium Netflix or regular
organic Freer range guacamole or regular
Whole Foods or little but keep in mind
the 503020 rule isn't a one-size fitall
solution you need to understand your own
personal financial situation and
readjust the ratio accordingly personal
Finance is personal for a reason the
next Milestone I call maximize your
limit what's Wild is my cousin didn't
listen to me on this and he lost out on
$113,000 but the best part is after you
do it once it becomes second nature this
is kind of a sad story but one of my
cousins parents are really bad with
their finances and despite me trying to
help them they never listen so one day
and I I didn't know this happened until
after the fact so don't blame me when my
cousin started using credit cards he
never learned he had to pay them back in
full every month he occasionally paid
the minimum or just Flatout Mis payments
which ruined his credit score and he
didn't think twice about it until 2020
when he was trying to buy a house and
although interest rates were at an
all-time low at 3% he couldn't get
anything close to that rate and don't
underestimate how much a few percentage
points can save you on a
$350,000 30-year mortgage the difference
in total interest you'll pay at a 4%
versus a 5.5% % interest rate is over
$113,000 but a bad credit score impacts
more than just your mortgage renting an
apartment will be harder getting a car
will be more expensive and sometimes
even getting a job could be more
challenging credit scores range from
below 300 to over 850 but I only
recommend you get your credit score
above a 759 when it comes to personal
finance I'm all about efficiency and you
only need above a 759 to get the most
favorable rates and benefits
which is why I believe obsessing over a
score above 800 is largely a waste of
time I recommend you check your credit
report at least once a year to see where
you stand the official site is
annualcreditreport.com where it's free
and it won't hurt your credit score to
check the easiest way to build your
credit score is by using your credit
cards responsibly you should only buy
things with your credit card if you have
the money right now to pay it off also
keep your credit card utilization ratio
below 30% meaning if your credit card
lets you borrow up to
$10,000 always keep your credit card
balance under 3,000 but I get it
sometimes it's hard to build your credit
with credit cards cuz a lot of them only
approve you based on your credit score
so if you virtually have no credit or
have poor credit from mistakes you made
in the past it can be hard to be
approved for one but I found a company
called Empower that can help you if you
find yourself in a situation like this
Empower is a money management app making
financial help accessible to everyone
they recently launched their newest
feature called Empower Thrive giving you
access to a $200 to $400 credit limit
liit that you can grow up to $11,000
over time with your ontime payments and
the best part is all credit scores are
welcome and power doesn't judge solely
off your credit score instead they look
into your connected bank accounts on
their app to look at your realtime cash
flow like your income expenses bills Etc
to understand how responsible you are
today plus Empower Thrive offers you
flexible payment PL so you can pick a
plan that works for you and matches your
lifestyle giving you your best shot at
paying it back on time so you have a
chance at building your positive credit
history one of these plans lets you
schedule your payment to be paid in full
automatically on your next paycheck to
receive 0% APR and if you keep on making
ontime payments and power will regularly
increase your credit limit to get you up
to $11,000 and once you are approved for
your credit limit you have instant
access and can deposit it right into
your bank account to use so if you're
someone who wants another way to build
your credit history or know someone else
who needs to leave a comment below and
check out Empower Thrive with the link
in my description thanks to empower for
sponsoring this video next adopt the
chess and rice strategy which
contributed the most to my financial
success Bar None and it goes like this
thousands of years ago there was an
emperor who learned about the game of
chess and he was so impressed by it that
he offered the game's inventor one wish
anything he wanted the inventor humbly
said that he just wanted rice one grain
of rice on the first square of the chess
board then two grains of rice on the
second four on the third and so on
doubling each time all the way through
to the 64th black and white square the
emperor smirked and quickly agreed
thinking this was such a silly and
simple request but this single promise
led to the collapse of his entire Empire
by the 30th Square alone the emperor's
debt compounded to over a billion grains
of rice by the time he reached the 64th
Square the emperor owed over 18
quintilian with a cue grains of rice
bankrupting the entire Kingdom and
that's exactly what you need to do with
your finances stting investing your
money and let it compound for decades if
you invest $10,000 in year one and get
an average of 10% return on it with thep
500 you'd earn an additional $1,000 in
year two you earned
$1,100 in year three
$1,210 just like chess and rice over
time you earn interest on the money you
originally saved plus the interest you
received for that original amount in
just 3 years you've earned an additional
$ 3,3 $10 without lifting a finger if we
graph this over the next few decades we
get an exponential growth curve which is
why Albert Einstein said compound
interest is the eighth wonder of the
world but what's an even better feeling
than seeing your money grow when you're
not working are the options you have
when you're older you can start a new
career spend more time with your family
or even retire early personally I
primarily do a passive fund investment
strategy this is the easiest way to get
into the stock stock market and you can
just set it and forget it I invest in
passively manag index funds like FX or
vo which tracks the performance of the
S&P 500 basically the 500 largest
companies in the US you can use any
broker to do this I've been using Mumu
for the past 2 years it's free fast and
easy to use sign up with the link below
and it's a great way to support the
channel for free next start proofing
yourself not proving yourself like many
of you when I worked in Corporate
America I wanted to prove myself to my
boss and my co-workers I was caught in
this idea of constantly seeking
validation from them and gunning for a
promotion in retrospect it was all
pretty toxic we'd all brag about how
many hours we worked or how we were
working so hard that we had to skip
lunch we'd kill ourselves just to reach
a deadline and for what the truth is the
company doesn't care about you you are
just a cog in the machine if you
disappear tomorrow the company would
just replace you with another Cog as if
you've never existed so instead of of
proving myself to others I learned to
start proofing myself I stopped seeking
validation and instead focused on self-
validation I started upskilling and
learning new things to the point that I
became both indispensable and
self-sustainable and at that stage I no
longer felt confined by my job because I
knew without a doubt I could easily find
a better job or use those skills to
start my own business Steve Martin once
said be so good they can't ignore you
once you're at that point you'll be more
confident and ask asking for what you
deserve in my case I constantly push for
pay raises and promotions because I knew
what I was worth and any extra income I
got I just funneled into my chess and
rice strategy so I could reach my
financial goals faster which leads me to
something you've got to start accepting
and it's that even if you're doing
everything you can with your money you
might feel like you could be doing even
more and that might be because you don't
know the five high income skills you
need to make the most amount of money in
the least amount of time click here to
discover the best high income skills you
need
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