6 Money Traps To Avoid In Your 30's

six money traps to avoid in your 30s you see from a financial standpoint that your 30s is your most important decade of your financial life why is that now you are past the 20s figure yourself out because in your 20s you're trying to find out okay what is the ideal career for you well what should you focus on what is your purpose you just probably graduate from school now what's next so you trying to figure yourself out in the 20s but in your 30s now you are a little bit more mature right now you have a little bit more experience but you're still young enough to apply some of these financial strategies that will make a huge difference in your financial life now assuming what I'm sharing with you that like most people you have a stable job meaning that you do not have the ability to dramatically increase your income unlike a high income skill so I am sharing these lessons with you assuming that you don't have a high income skill that you have a stable job like everybody else because with a high income skill it means that you could actually dramatically increase your income so assuming you do not have the ability to increase your income by ten twenty thirty fifty or even a hundred percent a year that's who this video is for which is like most people and most people it's not that they don't have the ability to do so to devour high income skill it's just they don't know how right they don't know that a height comes to exist and they don't even understand the possibilities and if you could avoid some of these money traps in your 30s or even in your 40s you would put yourself in the position of financial success and be able to provide a better future for your family money trap number one buy a house that you can't afford you see a lot of times in your 30s most people they are thinking about marriage they're thinking about settling down they're thinking about having kids or maybe you already have kids and you're already married and one of the mistakes that a lot of people make is they want to keep up with the Joneses right because their friends own a certain house now they want at least in the same neighborhood or the same house and they want to compare with other people so they end up buying a house that they actually can't afford now you have to understand this that when it comes to buying your primary residence your home your house it is an expense that affects your other expenses what do I mean by that it means that if you move to a certain neighborhood their house their home affects your other expenses meaning the more expensive your home is it comes with your homeowner insurance your utilities where you shop where your kids go to school what kind of car do you drive it affects your other expenses so it's not just the house itself but everything else that goes with it now that's very very important to understand and that's why most people when they buy a house they can't afford suddenly now all the others of expenses they go up dramatically and now they're in debt I don't want that to happen to you a while ago I made a video call should you rent or should you only can click here and check it out now in the video I teach a rule called the 20% rule what is the 20% rule so when it comes to owning your home let's say you have a net worth net worth of a million dollars I believe you shouldn't spend more than 20% of our net worth on your primary residence so your net worth it's a million dollars you shouldn't spend more than $200,000 on your primary residence you may be thinking well yeah what if I don't have a net worth I just have income I don't I haven't built my net worth yet what do I do the same twenty rule applies so let's say you and your husband or you or your wife together as a household income you make ten thousand dollars per month ten thousand dollars per month then the same twenty rule applies you shouldn't spend more than two thousand dollars a month on your house your primary residence and I know that number is low I know that number is low the reason is low is because you want to be able to live little bit more frugally with your house so that you have more money to put aside so it could save and invest for long-term wealth versus if you make ten thousand a month as a household and you're spending forty percent four thousand dollars a month on your primary residence with all the other expenses you do the numbers it's very difficult to have anything left by the end of the month does that make sense comment below so that's the money trap number one money trap number two and that is to buy a car you can't afford this kind of highs hand-in-hand with money trap number one so buying a house you can't afford buying a car that you cannot afford I get it in your 30s now you're making a little bit more money chances are if you are in the corporate world and you are stable and you want to buy that car I like a new conscience as everybody else right we know my 20s I was getting a new car every year so I understand where you are coming from but financially speaking is not a very smart decision it's not a very smart move because by spending too much money on a car you cannot afford anything else I remember when I was making minimum wage in a supermarket at a time I had a co-worker he was driving a BMW and he was paying $1,000 a month for the lease for his BMW and he was only making around $2,200 a month and I thought to myself how could someone making $2,200 a month spending thousand bucks a month on a cop even on a BMW well it turns out he can't afford it that's all he's got right good but he wants to look cool right you must look good right driving the BMW around but actually it was very very difficult I remember he was I was sitting his car and he was thinking oh my goodness am I gonna have enough money to pay for the gas for the BMW now that's not being smart again your car payment your car expense is expensive controls that affects other expenses the more expensive your car the more expensive your insurance the nicer your car the more expensive gas that you have to get they're more expensive your maintenance just like my Bentley right it costs a couple of thousand bucks just to for oil change right that's what it is when you drive a luxury car sports car everything becomes more expensive so that's money trap number two buying a car that you can't afford money trap number three not investing or not investing enough now in your 30s you still think you have a lot of time right you still have 35 years before even worry and think about retirement well the truth is yes you have time but you don't have a lot of time and most people they wait too long and they think oh I'll wait till I make more money than I will invest no you want to take advantage of the power of compound interest you want to use it to accumulate your wealth even if you put aside a little bit of money every month invest for the long term let's say for example let's say you invest $10,000 right ten thousand dollars since 30 years old and let's say you invest your investment produces 7% annual return year in a year so seven percent every year ten thousand dollars a year by the time you get to 65 years old guess what you would have one point four million dollars one point four million dollars however if you're wait till you are 40 years old so instead of thirty years old forty years old by the time you retire you would just have a little bit over six hundred and fifty thousand dollars so one point four million six hundred fifty because you waited a decade nothing else changes so time is your friend if you use it wisely so don't wait to invest invest and then wait money trap number four not having a high income skill see why do you need a high income skill why do you need to actively every year increase your income you have to understand that with inflation and cost of living going up wouldn't you agree every single year things are getting more expensive right the dollar that used to buy certain amount of things and items that doll is getting thinner and thinner every year so let's say the cost of living is going up by let's say 3% every single year so it means that if your income stays the same year after year it's the same amount you are getting 3% poor every single year when you take that out every 5-10 years 15 years you look at that this is why most people struggle because their earning abilities right the way the the rate that the income is growing is not as fast as inflation so even though if you're staying the same you're actually getting behind so every single year in your 30s you just strive to increase your income every single year actively your active income every single year you want to strive to earn more now the challenge is depends on your profession depends on your job or the company you work for that may may not be the case in fact comment below if you haven't gotten a pay raise or you haven't earned more money for a number of years comment below right so that other people could see that's just a fact in most industries now am I talking about a side hustle like what most people talk about I'm not talking about a sigh hustle a high-income skew is different from a side hustle what is a high income skill high income skill simply means income on your own terms meaning you could generate income where you want where you want with whom you want it is not industry dependent it is not location dependent and it's not company dependent so it doesn't matter if you work for this in company or their company or this industry or that industry with a high income skill you can work in different industry it is transferable this is why it's not a job it is a skill set that you offer to the marketplace in exchange of money now what are some of those skill sets I'm talking about could be blogging it could be YouTube it could be closing it could be digital marketing it could be copywriting it could be consulting whatever skills that you could offer from the comfort of your own home yeah it's beyond then your current occupation I define that as high income skill not having a high income skill puts you in a huge disadvantage why because now you're restrictive right your earning potential there's a cap to how much you could earn so if you want to develop your high income SKU and you just want to find out more about it click the link below I'm gonna teach you a couple of skill sets that I believe are extremely powerful that also has helped my students from all over the to be able to earn more money in a meaningful way right earn more money than they could ever imagine and be able to provide a better future for their family so make sure you check it out check out my masterclass money trap number five not having financial goals I am shocked how many people I talked to actually don't have financial goals when I asked them ok so what are some of the financial goals in the next twelve months one like two years three years five years from now most people is like I don't know I guess I want to be more successful I said do you want to be making more money I said yeah I guess I want to be making more money but it's not very clearly defined so the first thing you want to do in your 30s is make sure that you have financial goals so how much cash you want to save up in your bank account how much savings do you want to have what kind of investments do you want to own how big of a portfolio you want to have how much money you want to be earning on a monthly basis those should be clearly defined see the problem is this most people we are taught to climb that ladder right a lot of success and they say you know what I'm gonna go to school I'm gonna get a certificate I'm gonna get diploma I'm gonna get a degree and that's great nothing wrong with going back to school right for some maybe they get a degree and then they go back they want to get a an MBA a PhD and that's fine but most people do would do that because they are living up to other people's expectations so the first degree didn't get the the results that they want didn't bring them to success that they want but then they thought well I guess the logical thing is I go back and get a second one now if that's what you want to do and that's your vocational goals they want to be a doctor lawyer accountant engineer that's perfectly fine but what I notice is people try to climb this ladder and they realize actually the ladder is leaning against the wrong wall yeah by the time they get up to the letter and they look down it's like this is not what I want this is how did I end up here and now they need to climb down back the ladder right climb down and then they got to find a different wall to lean against and that waste is a lot of time versus if you're clear of that's my goal my financial goals is this and this and this and you ask yourself is this the right letter and I'm leaning against the right wall isn't that a smarter way of doing it so having clarity of your financial goals I think are extremely critical you want to avoid that money trap of not having financial goals because clarity is power and what is power power is the ability to act when your idea when your vision is clear the path is easy it's only when it's vacant and when you're not so sure when your goals are then you're all over the place right instead of being focused so money travel number five not having financial goals money trap number six not being financially literate now it's interesting in a school system we are taught how to read how to listen how to write write how to be literate in the language of English but we were never taught how to be financially literate and this is why we have so many problems financially out in the world in our society because we're never taught some of these things when I say financial literacy I'm not talking about that you need to be an accountant you need crunch all the numbers but I am talking about knowing some of the basics such as budgeting being able to read your own basic financial statements understanding credit cards and and credit scores being able to understand some of these basic terms in terms of loans and interest rates right 401k or some basic investment if it's real estate if it's index fund having an basic understanding of how that works that's on talking about I'm not asking you to be a sophisticated investor unless that's what you want to do but for most people that's probably not doable for most but at the very least you want to be able to like it's like in English you don't need to learn how to write a poetry write how to write like a beautiful essay but it's nice to know at least you know ABC to zip right be able to understand the basics you can use those words to to combine it into a sentence that's all I'm talking about when it comes to financial literacy we just don't know an ignorance cost us money right what you don't know will hurt you the books that you don't read will cost you money so spend a little bit of time even read a couple books on this topic go to some blog posts read on it and teach your kids don't be afraid to talk about money the dinner table don't be afraid to talk about money with a spouse don't be afraid to talk about money with your kids educate them educate yourself right give them that advantage give them a heads up right compared to everybody else so comment below out of these six money traps which one you are going to avoid in your doesn't matter if it's in your 20s in your 30s or even in your 40s and 50s which one you are going to avoid comment below and don't forget to hit the subscribe button if this is the first time you're watching our videos and you want to learn more about Finance money and wealth make sure you hit the subscribe button and turn on the notification

Channel: Dan Lok

Views: 390,887

Keywords: 6 Money Traps To Avoid In Your 30's, 6 money traps to avoid in your 30s, money traps to avoid in your 20s, money traps to avoid in your 30s, money traps to avoid, biggest money mistakes to avoid in your 30s, money mistakes to avoid in your 30s, money traps, financial mistakes to avoid, financial planning in your 30s, investing in your 30s, money mistakes in your 20s, money mistakes in your 30s, money mistakes to avoid, money mistakes, money tips, how to save money, save money

Id: 0KmtyB2SD7M

Length: 15min 59sec (959 seconds)

Published: Tue Feb 18 2020