Once You Have An Extra $10K Do This (Step by Step)

Summary

This video outlines the essential steps to wisely manage $10,000 for long-term financial success. It emphasizes the importance of first securing employer 401k/403b matches, learning about investing with small amounts, and building an emergency fund. The focus is on developing valuable skills, paying off bad debt, and then investing in appreciating assets like real estate or stocks. The key principle is to follow a step-by-step approach, mastering money management and discipline before diving into investments. Ultimately, it's about creating a strong foundation for sustained financial growth and wealth building.

Takeaways

• 😀 Make sure to take advantage of any employer match for retirement savings, as it's essentially free money.
• 😀 Before investing, create a clear financial plan. Write it down and seek advice from experienced individuals who understand money.
• 😀 Allocate a portion of your money to help others. Giving back creates a cycle of abundance and goodwill.
• 😀 Invest in yourself by using a portion of your $10,000 to develop valuable, high-paying skills that will boost your earning potential.
• 😀 Pay off bad debt, particularly debt tied to depreciating assets, to stop losing money on interest.
• 😀 Build an emergency fund to cover unforeseen expenses. Preparing for emergencies ensures you aren’t caught without funds when needed.
• 😀 Only after securing your finances should you consider investing in appreciating assets like real estate or stocks.
• 😀 The order in which you handle your money matters. Do the basics first—saving, planning, and reducing debt—before jumping into investments.
• 😀 Financial success is about discipline and managing money well. If you can’t handle the basics, even $10,000 invested wisely won’t guarantee wealth.
• 😀 Growing wealth takes time and patience. The key is consistency and making well-informed, disciplined decisions with your money.

Q & A

What is the first thing you should do with your $10,000 according to the script?

The first thing you should do is take advantage of any job benefits, such as 401k or 403b matching. This is essentially free money and should be used to maximize your savings.

Why is it important to invest in developing higher-paying skills?

Investing in higher-paying skills increases your earning potential over time. Many people struggle financially because they have low-paying skills, and improving this can significantly impact your financial future.

What should you do if your employer doesn't offer a 401k match?

If your employer doesn’t offer a 401k match, you should still invest a small percentage of your income (around 3-4%) in a brokerage account to start learning about investing and building your knowledge of the stock market.

Why should you pay off debt related to depreciating assets before investing?

Paying off debt tied to depreciating assets is crucial because you're losing money by paying interest on things that decrease in value. It’s better to eliminate this debt before focusing on investing.

How much of your $10,000 should be allocated to an emergency fund?

You should allocate a portion, or ideally all, of the $10,000 to establish an emergency fund. This will ensure you have money available when unexpected situations arise, like medical emergencies or car repairs.

When is it appropriate to start investing your $10,000?

It is appropriate to start investing only after you've handled the basics, such as securing your job match, developing your skills, paying off bad debt, and establishing an emergency fund. Investing should be a last step in the process.

What is the principle of order, and why is it important in managing money?

The principle of order refers to handling financial tasks in the right sequence. It’s important because managing money out of order leads to confusion, anxiety, and stress. Proper order ensures long-term financial stability.

How does the speaker use the analogy of basketball to explain money management?

The speaker compares learning to dunk in basketball before mastering basic skills like dribbling and passing. Similarly, having $10,000 to invest doesn’t mean you're good with money if you haven't mastered the basics of money management first.

What is the importance of discipline in managing money, according to the script?

Discipline is crucial because without it, you’ll struggle to handle money effectively. Developing discipline allows you to manage your money well, make smart financial decisions, and avoid chaos or frustration.

How does giving and helping others relate to personal finance success?

The principle of giving helps to create a positive flow of money. When you help others, it leads to the concept of your cup running over, meaning that when you're generous, your financial success is more likely to increase over time.