Beginners Guide To Personal Finance (Learn How To Build Wealth)

Summary

In 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

00:00

💰 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.

05:01

💸 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.

10:01

📊 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.

15:01

📈 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).

20:03

🏦 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.

25:03

💼 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.

30:04

📉 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.

35:05

💳 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.

40:05

🏦 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.

45:06

📝 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.

50:06

🎉 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.

Keywords

💡Personal Finance

Personal finance refers to the management of an individual's financial matters, including saving, investing, and budgeting. In the video, it is the central theme, as Joshua aims to educate viewers on how to manage their finances effectively to achieve financial independence. The script mentions various aspects of personal finance, emphasizing the importance of understanding the basics to make better financial decisions.

💡Financial Independence

Financial independence is a state where one has enough wealth and income to cover all living expenses without relying on active employment. The video discusses this concept as a goal that can be reached by consistently applying the personal finance strategies Joshua teaches, such as saving money and investing wisely.

💡Saving Money

Saving money is the act of setting aside a portion of one's income for future use rather than spending it all in the present. Joshua stresses the importance of saving as a foundational aspect of personal finance, illustrating how saving a designated amount from each paycheck can accumulate into a significant sum over time, which can then be invested or used for emergencies.

💡Investing

Investing involves allocating resources, such as money, with the expectation of generating an income or profit. In the script, Joshua covers different types of investments like stocks, bonds, and real estate, and emphasizes the importance of investing as a means to grow wealth and achieve financial independence.

💡Budgeting

Budgeting is the process of planning and controlling one's income and expenses. Joshua challenges the traditional view of budgeting as a restrictive practice and encourages viewers to think of it as a tool for generating more income and expanding their financial means, which aligns with the wealth-building mindset of the video.

💡Emergency Fund

An emergency fund is money set aside to cover unexpected expenses or financial hardships, such as medical emergencies or job loss. The video script highlights the importance of having an emergency fund as a safety net, recommending that it should cover at least three months' worth of living expenses.

💡Credit Score

A credit score is a numerical representation of an individual's creditworthiness and is used by lenders to evaluate the risk associated with lending money. The video discusses the importance of maintaining a good credit score for accessing loans, credit cards, and even for rental and employment opportunities.

💡Debt

Debt is an amount of money borrowed by one party from another, with an obligation to repay it. Joshua warns against the dangers of credit card debt and advises viewers on how to avoid it by never purchasing more than they can pay off in full at the time of purchase, which is crucial for achieving financial independence.

💡Tax Brackets

Tax brackets are ranges of income that determine the income tax rate an individual owes. In the script, Joshua explains that as income increases, so does the tax rate, which is a fundamental concept in understanding how taxes affect personal finance and wealth accumulation.

💡Bank Accounts

Bank accounts are financial accounts maintained by individuals or businesses at a bank, which offer various services like storing money, paying bills, and making transactions. The video differentiates between checking and savings accounts, with the former being for daily transactions and the latter for accumulating wealth through interest.

💡Retirement Accounts

Retirement accounts, such as 401(k)s and IRAs, are investment vehicles designed to save for retirement with tax advantages. The script touches on these accounts as a means to save for the future, emphasizing the benefits of tax-advantaged investing for long-term financial planning.

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

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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