10 Smart Things You MUST Do With Your Money NOW

Summary

In this video, the speaker outlines 10 crucial strategies to protect and grow wealth during uncertain economic times. From taking advantage of employer 401k matches and health savings accounts, to sharpening job skills, building a robust emergency fund, and managing debt—each move is designed to prepare individuals for financial stability. Emphasizing the importance of staying informed and automating savings, the speaker provides actionable steps to safeguard against market downturns and position oneself for success in future recoveries. The key takeaway is to act now, before market volatility catches you off guard.

Takeaways

• 😀 Don't leave free money on the table: Take full advantage of employer 401k matches, IRAs, Roth IRAs, and HSAs to grow your wealth with minimal effort.
• 😀 Sharpen your job and business skills: Focus on self-improvement by updating your resume, strengthening your LinkedIn, and learning new skills (including AI and digital marketing).
• 😀 Review and lock in your financial goals: Set specific, actionable financial goals with timeframes and money amounts, and stay disciplined in pursuing them during market volatility.
• 😀 Spend less and earn more: While cutting expenses is important, also focus on increasing income through side hustles or doubling down on your current business.
• 😀 Build a real emergency fund: Aim for 3-6 months' worth of living expenses in cash or liquid assets, with 6-12 months if your income is irregular or your job is vulnerable to automation.
• 😀 Destroy bad debt: Eliminate high-interest and non-appreciating debts (like credit cards and car loans) that drain your financial resources, especially in downturns.
• 😀 Rebalance your portfolio: Ensure your investments are diversified, reducing heavy reliance on any single sector, such as the tech-heavy stock market, to manage risk effectively.
• 😀 Check your insurance and estate plan: Review your life insurance, beneficiaries, will, and trust to ensure your family is protected in case of an emergency.
• 😀 Automate your savings and investing: Set up automatic contributions to retirement accounts and savings, allowing consistency to beat emotional decision-making during market fluctuations.
• 😀 Stay informed, but avoid panic: Monitor key financial indicators and avoid falling into the trap of fear-driven news that can lead to rash, panic-based decisions.

Q & A

Why is the concentration of tech stocks in the S&P 500 concerning?

The concentration of just seven tech stocks making up almost one-third of the entire S&P 500 is concerning because if these stocks experience a downturn, the entire market could be negatively impacted. It creates a risk of market instability, especially if those stocks stumble.

What is the main reason people should be prepared for economic downturns?

Economic cycles are inevitable, including booms, slowdowns, crashes, and recoveries. While we can't control these cycles, what we can control is how well-prepared we are. Being prepared means positioning yourself to win, no matter the market conditions.

Why is it important to take advantage of a 401k match from your employer?

A 401k match is essentially free money, as your employer is offering to match your contributions. It's a 100% return on your money, making it a powerful tool for wealth building. Not taking advantage of it means leaving money on the table.

What makes Health Savings Accounts (HSAs) a great wealth-building tool?

HSAs offer a triple tax advantage: contributions are tax-free, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free. This combination makes HSAs a unique and powerful tool for building wealth.

How can improving job and business skills help during economic slowdowns?

During economic downturns and with the rise of AI, many jobs and businesses face layoffs or closures. Sharpening your skills, updating your resume, and staying adaptable can help you stay employed or ensure your business remains competitive, even in tough times.

What should you do to stay focused on your financial goals during uncertain times?

It's crucial to write out and review your financial goals regularly. During shaky markets, fear can cause people to abandon their plans. However, winners adapt their strategies and continue working towards their goals with clear, specific actions, even when the market is uncertain.

Why is it important to both spend less and earn more during economic downturns?

While cutting back on expenses is important, it's equally critical to increase your income. Relying solely on cutting expenses won’t lead to financial freedom. Growing your income through side hustles or deepening your business efforts is essential for long-term wealth building.

What is a 'real' emergency fund, and why is it essential?

A real emergency fund should cover 3 to 6 months' worth of living expenses (or 6 to 12 months for those with irregular income). This fund acts as a financial cushion during downturns, preventing you from needing to sell investments at a loss in times of emergency.

Why is it important to eliminate bad debt, and what types of debt fall into this category?

Bad debt refers to debt incurred for items that don’t appreciate in value, such as credit card balances, car loans, or financing non-essential purchases. Eliminating bad debt is crucial during downturns because it can drain your financial resources and act as an anchor, preventing you from progressing toward wealth.

How can rebalancing your portfolio help protect your investments?

Rebalancing ensures that your portfolio is diversified and not overly concentrated in one sector, such as tech. If your investments are too concentrated, a downturn in that sector can have a severe impact on your overall portfolio. By adding diversity, you lower risk and increase stability.

What are some key steps to take to protect your family's financial future?

Review your life insurance, ensure you have coverage outside of your job, update your beneficiaries, and keep your will and trust current. These steps ensure that your family is financially protected in case of unforeseen events, preventing chaos after you're gone.

How does automating your savings and investments help with wealth building?

Automating your savings and investments ensures that you consistently contribute to your financial goals without getting emotionally swayed by market fluctuations. Whether you're feeling optimistic or panicked, automation allows you to stay on track and build wealth steadily over time.

Why is staying informed, but not obsessed with market movements, essential?

Staying informed helps you make intelligent decisions, but obsessing over the market can lead to panic and emotional decision-making. Avoiding fear-driven news and focusing on key indicators and fundamentals can help you stay calm and make rational, long-term investment decisions.