3 Money Habits You NEED To Create Financial Security | 3 Laws Of Money | Money Habits Of The Rich

hey guys welcome back to the channel and thanks so much for tuning in in today's video i'm going to be explaining the top three things that you need to know about when it comes to handling your money these tips are absolutely key to helping you achieve financial security throughout your life and not only that they'll also show you how it's possible to grow your income so that you can achieve your financial dreams even faster than you thought possible if that sounds good to you make sure you stick around to the end so that you can get the most out of this video and without further ado let's get started first off if you're new here on the channel and you're interested in learning about personal finance investing and everything in between make sure you subscribe down below and also turn on those notifications so that you don't miss out on new videos every single week that are going to help you with just that so the first money principle is going to be to live below your means the importance of spending less than what you earn is absolutely key and there's a reason why it's number one on this list this fundamental principle is how people get rich and stay rich and it also explains why a lot of poorer people stay poor so when you spend less than what you earn inevitably the difference gets saved and that savings can then be invested to create your wealth not only that but it also means that you don't have to worry about being able to pay the bills every month or if a financial emergency comes up that you've got to pay for you know you've got the cash there to pay for it without having to struggle those who do spend more than what they earn end up with growing piles of bad debt like loans credit cards and overdrafts and that in turn creates a lot of stress because you're then working for a paycheck every single month that come payday you're having to pay out all of your income just to service those debt repayments regardless of where you start it's entirely possible for anyone to finish strong living by this simple principle and it also opens up the doors for you to then pursue those higher level financial goals and dreams without having the stress and worry of living paycheck to paycheck it really doesn't have to be over the top either taking just five to ten percent of your monthly earnings and putting that into savings or investments rather than spending it is a fantastic place to start you won't notice a difference in your lifestyle with this amount but when you start to see those savings building up you'll seriously thank yourself for it as i mentioned earlier living below your means is the fundamental reason why people get rich and stay rich but when this principle is ignored the results can be devastating you don't need to look any further than famous actors or sports stars who live a lavish lifestyle on their ultra high incomes but then go broke when they stop working this happens because they fail to realize that one day their income is gonna stop and if they don't find a way to replace it with another type of income then when those checks stop rolling in they're gonna quickly run out of money i can't emphasize the importance of this first principle enough when you spend less than what you earn inevitably you will save or invest the difference and when you start investing your money has the opportunity to go out and earn you more money in the form of interest or dividends or however you invest it and then once you receive that additional income you can put it straight back out into the marketplace to earn even more money for you so this is where the second money principle comes into play and that is to invest as early as you can the earlier you start the more you'll finish with and this is especially important when it comes to your longer term retirement savings saving for retirement ultimately means saving up a huge chunk of money that's going to be large enough to provide an income for you throughout your retirement when you do stop working if you retire at 65 statistics do tell us that you can probably expect your retirement to last an average of around about 20 years now hopefully it is going to be a lot longer than that but what this does tell us is that as a bare minimum you need to generate enough money in your retirement account to provide you with an income for 20 years at least worth of your living costs and expenses fortunately though by saving consistently from as early an age as you possibly can this whole process can be made to be a lot less stressful than it first appears compound interest really comes into play over longer periods of time and by investing from as early in age as you can it really gives your money the opportunity to take advantage of that compound interest and grow into a really healthy amount over the years compound interest basically means that the interest you earn on your money in year one is then added to the value of your investments and that increased some can then be reinvested in year two to earn you even more interest and this cycle can continue indefinitely so for example if you had a lump sum of ten thousand pounds to invest and you invested that at an annual rate of return of ten percent well then at the end of year one your ten thousand pound would have grown by one thousand to eleven thousand pounds but then in the second year you're going to have that whole 11 000 pound to invest and assuming you did that at the same rate of returns 10 then your 11 000 pound is going to grow by 1 100 pounds in year 2 as opposed to the 1 000 pound in year one as you can see from this table this is a never-ending cycle where the results just build on each other and get more and more valuable each year and if you start early enough it will result in some seriously impressive returns with relatively little effort now i know how tempting it is to just think i'll start later or when i've got more money but the truth is you're probably going to tell yourself that next year too and the year after that so it's really important to just get started as soon as you can with whatever amount of money you have and let compound interest work its magic for you because in the long term you're going to really thank yourself for that decision and that leads me on to the third and final money principle which is of course my favorite i save the best till last and that is to expand your means right back at the start of this video i told you about the importance of living below your means but that doesn't mean that you shouldn't be constantly pushing to expand those means so that you can improve the quality of your lifestyle and increase the speed at which your wealth can grow for example if you earn 2k a month right now and all of your costs and expenses are covered within that amount how could you earn an extra 500 or 1000 pounds a month and what could that money really do for you if you were to earn that on a monthly basis remember that this money would be over and above whatever you already earn so once you've paid taxes on it it can then be used in its entirety to pay for whatever it is that you desire whether that be a well-deserved holiday or putting it towards your investments and savings so that you can increase the value of your wealth and decrease the amount of time that it takes for you to build the amount of money that you need the possibilities here really are endless and it's not as difficult as you might imagine to expand your income for example there are ways that you can create passive income streams that will generate income for you every single month without you needing to continually invest your time and effort into them or if you prefer you could simply make yourself more valuable to your employer through gaining a qualification that will enable you to earn a higher wage i do have another video over on the channel which i uploaded just last week explaining the different income sources that are available and how you can create more income for yourself and i'll include a link to that one down in the description so that you can go and check it out i'm also going to upload another video in the coming weeks which is going to go into a few passive income ideas that could put money into your pocket every single month so don't forget to subscribe down below if that is a video that you don't want to miss out on so there you have it i really hope you learned something new here and feel free to leave me a comment down below and let me know if you found this helpful also don't forget to give the video a thumbs up it only takes a couple of seconds to do but it really helps me out and it helps the channel to grow and reach more people too i post a brand new video right here on the channel every single week so if you want to be among the first to be notified when a new video drops go ahead and click that subscribe button and don't forget to turn the notifications on either by clicking the bell icon down below and youtube is then going to notify you as and when new videos are released as always thanks so much for watching have an amazing day and i'll see you back here next time

Channel: Ryan Gibson

Views: 5,693

Keywords: Money habits, money principles, money rules, money laws, rules of money, laws of money, money tips, money rules passive income, money making principles, laws of money and wealth, money habits of the rich, money habits in your 20’s, money habits how to create a rich life, money habits that keep you poor, money habits for 2021, money habits start young, habits of millionaires, habits of rich people, financial security, financial freedom, how to get rich, how to be rich

Id: z7aNUkFBpqM

Length: 8min 45sec (525 seconds)

Published: Wed Mar 03 2021