15 Red Flags Of A Financially Uneducated Person

how do you know if someone is actually rich there are a lot of people out there who are faking it just for social status or to sell others a lifestyle and the answer can be summarized in two words Financial education here are 15 red flags of a financially uneducated person number one they live the YOLO lifestyle there's a big difference between living in the present moment and enjoying life to the fullest and making impulsive decisions without thinking long term the YOLO culture sits closer to the second category from impulsive spending to stupid risk-taking Behavior like meme investing which we're going to talk about the YOLO mindset is a quick path to financial ruin and besides that this mindset will hurt you in your 30s when you might decide to take life more seriously the takeaway here is simply this a good and prosperous life requires planning and a certain degree of discipline and if you're not ready for this commitment well you might need to soon book a session with Dr Peterson number two they have a massive credit card debt let's imagine for a moment that you're in a candy store you're allowed to pick as much candy as you want right now but you've got to pay for it later sounds pretty great right well that's essentially how credit cards work you get to go buy things immediately but you have to pay off your credit card bill later now let's say you go a little bit wild in this candy store you fill up your bag until it's bursting at the seams you eat some of your candy right away but it's too much so you decide to save the rest for later a month goes by and the owner of the candy store tells you it's time to pay for all the candy you took but lo and behold that bill is much more than you expected and you can't afford to pay it all at once that's okay the owner says you can pay a little bit now and the rest later however there's a catch for every day you don't pay your bill in full the owner is going to add a little bit more to what you owe this extra amount of course is called interest so the next month rolls around and not only do you still owe for that original candy but now you owe an extra amount for the interest and the longer it takes you to pay off your bill the more interest is added before you know it you owe far more than you ever did for the original candy and that's what it's like to have a lot of credit card debt you're not just paying for the things you bought you're also paying a lot extra in interest and if you're not careful this can get out of control really quickly if someone's got a lot of credit card debt it might mean they didn't fully understand how interest works or how quickly credit card debt can add up number three they live paycheck to paycheck let's play another game think of your financial Life as a journey imagine you're on a road trip and instead of planning your route you just set off in a random Direction you don't know where your next gas station is you haven't packed any snacks and you're not sure if you're going to have a place to stay at night that a bit like living paycheck to paycheck you're getting by but just barely and with a constant sense of uncertainty about what's next now living paycheck to paycheck is sometimes the result of circumstances beyond our controls such as low wages High living costs or unexpected expenses however it can also be a sign that we might need to brush up on our financial knowledge number four they always ask their parents or relatives for money now if you're an adult and this is a constant thing that you do you might want to pay attention firstly regularly asking for financial assistance from parents or relatives as an adult can indicate a lack of financial education because it often suggests a deficit in core financial management skills and this might include essential abilities like budgeting and planning which are fundamental to living within one's means if an individual consistently spends more than their income or fails to account for regular expenses they might often find themselves in situations where they need to ask for financial help and secondly this pattern may highlight a lack of foresight or preparedness for unexpected costs which are a part of life Financial education stresses the importance of having an emergency fund to cover sudden or unforeseen expenses without this safety net an individual may have to turn to others when these situations arise rather than being able to handle them independently and lastly frequent Reliance on others for financial support could be an indication that the individual hasn't fully grasped the concept of financial Independence a Cornerstone of adulthood remember our society is built on two core pillars autonomy and personal responsibility lose grasp of these and you will never grow up number five they borrow money from Friends perhaps you need to work on budgeting planning or developing good saving habits as you can see most of these red flags arise from these issues introducing money into your friendships can often complicate things as you may begin to feel guilt embarrassment or a sense of indebtedness to your friend and they might experience resentment or frustration especially if repayment is not timely friendships are built on Mutual trust understanding and support not Financial transactions number six they buy things they can't afford there's a simple rule you can apply here in order to avoid this Reckless Behavior many financial advisors suggest that a more realistic limit or total for car expenses could be around 15 to 20 percent of your income depending on your overall financial situation and other expenses so in any case if you can't bear to do the math on another mental exercise you can apply this 48-hour rule if you feel like buying something pricey that you might not necessarily need wait 48 hours before making the purchase if you still feel like you want it after that two day Mark well you can do the math and see if you can afford it number seven they think paying rent is a bad thing paying rent is not inherently a bad thing it provides people with the ability to have a place to live without the long-term commitment and financial burden of owning a home for those who may not have the means to purchase a property outright or for people who value flexibility in their lifestyle renting can be a great solution it also comes with the benefits of not having to deal with maintenance or repair costs and property taxes which are typically handled by the owner or landlord in a financial sense thinking that paying rent is universally bad might suggest a lack of understanding of how real estate markets work the buy versus rent decision is heavily dependent on the cost of living in a particular area the local real estate market and one's personal financial situation for instance in areas where property prices are high renting might be a lot more cost effective moreover the money saved from not buying a home can be invested elsewhere potentially leading to Financial growth in other areas so yes if you're in your 20s especially don't rush to buy a house you might not want to settle where you are just yet number eight they have non-existent financial goals most people know they want to have money but what they don't know is why they want that money in the first place and that's when healthy financial goals need to be introduced into the discussion ask yourself basic questions like how much debt do I have and how can I repay it as soon as possible should I budget better am I living above my means after you figure out all of these then you can go back to your goal of becoming a millionaire remember small steps long vision number nine they have zero Savings in their emergency fund an emergency fund is a safety net of money set aside to cover unexpected expenses that can arise due to situations like a job loss a sudden health issue urgent car repairs or any unforeseen financial hardship the purpose of an emergency fund is to provide Financial Security by creating a buffer between you and unexpected events allowing you to handle these situations without resorting to borrowing money getting into debt or dipping into long-term savings or retirement funds building an emergency fund should be a priority and you can get started by setting a goal typically three to six months worth of living expenses Begin by calculating your monthly expenses including housing utilities groceries Insurance transportation and any other necessary costs and once you have this figure multiply it by the number of months you aim to cover with your fund and this gives you a target for your emergency fund now remember this is a long-term goal and it's perfectly fine to start small and build it up over time number 10 they have absolutely zero Investments one of the Key signs of financial education is understanding the power of investment now if someone has zero Investments it could indicate they haven't fully grasped this concept yet investing is how money grows over time turning a modest sum into a hefty chunk of change through the magic of compound interest it's like planting a small seed that grows into a bountiful tree dropping fruit year after year without investing you're essentially keeping your seed in a box and well that's not how seeds work right secondly investing is a Cornerstone of preparing for the future we all have dreams and goals that require a bit more than what we can save from our monthly income it could be buying a house starting a business or Simply Having a comfortable retirement Investments can be the vehicle that drives you to these Milestones by not investing it's like missing out on a ride that could would get you to your destination faster and more efficiently number 11. they can't answer the question what is money money at its core is a medium of exchange it's what we use to buy the goods and services that we need or want but beyond being a tool for transactions money also functions as a unit of account and a store of value not understanding these basic functions of money can signal a gap in financial education and again back to our previous point if you don't grasp how inflation can erode your money's purchasing power over time you might not see the urgency to invest or save wisely number 12 they hate capitalism and rich people people who hate capitalism in the process of wealth creation probably have not studied enough history anyway capitalism has its Dark Side absolutely but those who hate it instead of embracing a balanced approach might do so because they're lacking proper financial education capitalism at its core is an economic system that encourages competition and allows private entities to own and operate businesses it can drive Innovation economic growth and personal freedom if one's view of wealth is overly negative it can discourage them from learning about and pursuing wealth creation strategies themselves number 13 unaware of their credit score love it or hate it your credit score is essentially your financial report card it's a numerical representation of your credit worthiness which is how lenders like Banks and credit card companies gauge the like likelihood of you repaying borrowed money if you're not aware of your credit score or don't care about it you could end up in a difficult situation when you need to borrow money a low credit score May lead to higher interest rates or even loan denials which could hinder your financial goals such as buying a car a house or starting a business hence why being informed about your credit score is a fundamental aspect of financial literacy secondly your credit score isn't just for borrowing money many landlords utility companies and even employers check credit scores to assess risk number 14 they invest in memes seriously guys putting money into memes with the hope of making a profit is not investing it is gambling okay meme stocks or cryptocurrencies are often driven by social media hype and speculative trading rather than fundamental factors like a company's earnings cash flows or economic indicators and this can result in a sort of digital Gold Rush where the value of an investment skyrockets one day and plummets the next making it similar to placing a bet rather than making a calculated investment secondly investment in memes often involves a high degree of fomo or fear of missing out leading investors to make impulsive decisions without fully understanding the risks involved they might see Sensational headlines of people making a fortune overnight and rush to invest hoping for a similar windfall but that's just a delusion it's important to acknowledge that while some people do make considerable gains from meme Investments these cases are more like the exception to the rule number 15 they are never paying their bills on time now this is a sign that some simply have failed to grow up not paying your bills on time clearly shows a lack of financial education because well bills get paid first when you grab the paycheck that's of course unless you want to deal with late fees higher interest rates and a damaged credit score we cannot stress this enough okay a well-planned budget fixes everything now we're curious to ask you what is in your opinion the biggest and most common Financial mistake that people make every single day drop your answer in the comments below we're always curious to hear your thoughts and as always thanks for watching if you'd like to learn some more check out this video next

Channel: Alux.com

Views: 187,451

Keywords: Alux, Alux.com, Alux Youtube, fine living, how to notice a poorly educated individual?, main traits of a poorly educated individual, the main characteristics of an poorly educated person, qualities of poorly educated people, personal finance management, financial education, personal finance, personal finance tips, personal finance for beginners

Id: 0Cfn0n55wQQ

Length: 15min 19sec (919 seconds)

Published: Sat May 20 2023