5 Essential Financial Goals To Achieve Before 30

Summary

This 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

00:00

💼 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.

05:02

🏦 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.

10:03

📈 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.

Keywords

💡Life Blueprint

A 'Life Blueprint' refers to a personal plan or vision for one's life that encompasses goals, values, and aspirations. In the video, it's described as a guide for financial decisions, emphasizing the importance of aligning financial choices with one's life vision. The speaker suggests creating a life blueprint by writing down what one truly enjoys and desires in life, without considering financial limitations, to help shape financial decisions and ensure they contribute to a fulfilling life.

💡Savings Tracker

A 'Savings Tracker' is a tool or application used to monitor and manage personal savings. In the context of the video, the speaker uses a savings tracker to become more aware of spending habits, identify areas to cut back, and increase savings each month. The tracker helps in realizing how much more one is spending than initially thought, leading to more intentional financial management.

💡50/30/20 Rule

The '50/30/20 Rule' is a budgeting guideline where 50% of one's income covers needs, 30% covers wants, and 20% goes to savings. The video uses this rule to suggest a balanced approach to spending and saving, allowing for flexibility and encouraging individuals to find cheaper alternatives to allocate funds according to their financial situation and goals.

💡Credit Score

A 'Credit Score' is a numerical expression based on a level analysis of a person's credit files, used to predict the creditworthiness of the person. The video emphasizes the importance of maintaining a good credit score, especially above 759, to access favorable rates and benefits. It also illustrates the negative impact of a poor credit score on financial opportunities, such as securing a mortgage or renting an apartment.

💡Credit Card Utilization Ratio

The 'Credit Card Utilization Ratio' is the percentage of a credit card's limit that is being used at a given time. The video advises keeping this ratio below 30% to maintain a good credit score. For example, if a credit card has a limit of $10,000, the balance should ideally be kept under $3,000 to show responsible credit usage.

💡Empower Thrive

Empower Thrive is a feature of the Empower money management app that offers a credit limit that can be grown over time with on-time payments. It is mentioned in the video as a solution for those with poor credit or no credit history, as it considers real-time cash flow from connected bank accounts to assess responsibility rather than relying solely on credit scores.

💡Chess and Rice Strategy

The 'Chess and Rice Strategy' is a metaphor from the video that illustrates the power of compound interest. It refers to a story where an emperor, unable to fulfill a promise to double the amount of rice on each square of a chessboard, ends up owing an enormous amount. The video uses this story to encourage investing and letting money compound over time, which can lead to significant financial growth without additional effort.

💡Compound Interest

Compound Interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. The video highlights compound interest as a key to financial success, explaining how it can exponentially increase one's investment over time, as exemplified by the Chess and Rice Strategy.

💡Proofing Yourself

To 'Proof Yourself' in the video means to focus on self-validation and self-improvement rather than seeking validation from others. The speaker suggests upskilling and becoming indispensable in one's job to gain confidence and negotiate better terms, which can then be used to accelerate financial goals.

💡High Income Skills

High Income Skills are the abilities or proficiencies that can significantly increase one's earning potential. The video suggests that mastering these skills can lead to higher income, which can be crucial for achieving financial goals. The video ends with a prompt to discover these skills, implying that they are essential for financial success.

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