7 Places Your Money Needs To Go (How To Save Money)

all right so this is going to be an all-inclusive video showing you the seven places that you may want to consider putting your money after you get paid now most people can't get past step number two but if you follow along and implement all seven of these different steps then you could find yourself in a much better financial position than you were previously and that is our primary goal on this channel to help people grow financially to help them save money and invest money and make more money so that they can build that better financial future so if you're new here to the channel and you want to learn more than definitely consider hitting that subscribe button and the bell notification icon so you know in this videos like this one so let's get started with this now its first important to understand why is it that so many people who are making fifty sixty seventy thousand dollars per year or more why is it that they're still struggling financially why is it that they're in large amounts of debt is it the economy pitted against them is there a massive wealth gap are we being taxed too much what's the problem here and while all of those different factors can have an effect on people's ability to pay their bills what it really comes down to the number one factor is that most people don't understand how to manage their money it's not taught in our schools it's not taught by our parents in most cases because some of our parents are in the same financial pit that other people may end up in and their kids end up in it and their grandkids end up in it so it's essentially just a system that trickles down and so hopefully we can provide some value right now in this video so it actually turns out that about 40% of Americans can't afford to pay a four hundred dollar emergency expense so four hundred hour emergency expense forty percent of Americans can't afford to pay it because they're in such a financial hole at the moment in most of their lives but their name never able to dig out of that financial hole that they may be in so hopefully we can provide some value here let's talk about the first place you want to consider putting your money once you get paid alright so the first place that we're talking about here is actually before you get paid and so number one is your retirement fund now if you're in America about sixty-five percent of the viewers on this channel live in the United States you could take advantage of something like a 401k plan that may be offered through your employer now if you don't have 401k plans there are other options as well but taking money out before you even see your paycheck through something like a 401k could certainly help you build that future that you may be looking for because one of the worst things in the world this has been quoted by many people I'm not sure how entirely true it is but it definitely holds to some truth and that is that the only thing worse than dying is running out of money before you I know like I said I would much rather be alive than dead but still at that you want to think about the idea of running out of money before you die it's certainly a depressing idea it happens to people it's really sad to see and you don't want that to happen to you so even if you're in your 20s right now and you think well I'm not gonna retire for another 40 years what's the point in saving for retirement this is the perfect time to do that so just putting away 5 to 15% of your money before you even see your paycheck into something like a 401k especially if your employer is offering to match that opportunity then that's something that you may want to consider now just keep in mind that I'm not afraid to a financial advisor and you need to understand that there are risks involved with any financial decision that you make so any investment that you're going to make there are going to be risks involved and so you need to make your own financial decisions as to what you're going to do with this but this is an idea that a lot of people do take advantage of but sadly some younger people especially when they first start their jobs they opt out of the 401k baby they opt out of some of these pre-tax retirement funds that they can invest into and they end up really hurting themselves over the long run so this is the first thing you wanna consider doing before you even get your paycheck set it up with your employer if they don't offer that there are other opportunities especially if you live outside of the United States your government may have something pretty similar to a 401k plan or something where you can get text before you actually get your paycheck or or that money goes before you actually get your paycheck into some type of retirement account or investment fund that you can get into so let's talk about the next one here which is after that money gets shaved off for your retirement fund that is when it goes into our checking account now this is going to be our hub for everything that happens ok so our paycheck goes into our checking account and like I said earlier this is as far as most people get this as far as 90% of the population gets they get to the checking account and then they pay their credit cards they pay everything out of this and that's essentially their savings they don't have anything past that but what I'm gonna show you here is that you're gonna have things coming out of your checking account in two different areas and this is what's really gonna be important you can have automatic withdrawals into various different areas different bank accounts so having just one bank account could be a mistake you want to consider having multiple for multiple different types of situations so this is step number two by putting it into your checking account and this can be your hub for everything that you do this is important okay now for some people they might not get automatic deposits into their account from their employer so maybe you get paid in cash or maybe you get in an actual physical paycheck now it's in a lot of cases gonna be optimal to actually get money directly deposited into your account because then you can automatically withdraw money you can set it up and you don't have to physically go to the bank and hand them a check and cash the check or go in there with cash and try to deposit it into the bank that just takes a lot of time and in a lot of cases it's just not worth it's better to just have it directly deposited into your account if you can set that up with your employer okay let's talk about the next one here which is going to be very important but this is essentially paying for your necessities now when I say necessities we're talking about the bare-bones necessities to keep you off the streets and to keep you alive we're not talking about a TV we're not talking about you know if you want to buy an xbox for your nephew for Christmas we're not talking about anything along those lines we're talking about the basic needs of people we're talking about food shelter transportation healthcare and utility so not getting your electricity shutoff and not getting your water shut-off and not getting evicted from your apartment so this should be depending on where you live and depending on how many kids you have depending on your current situation this shouldn't be an excessive amount of money we're talking about the basics we're talking about rent utilities and these basics here okay so paying those very important to keep yourself alive but nothing else past that at this step okay you need to understand your difference between needs and wants needs and wants very important and a lot of people can't decide for the difference between those two so you want to consider what do you need to stay alive and what do you want do you need to get McDonald's or could you find a way to lower that expense for food now healthcare is very important never skimp on health care that's something that I think is something that people will skimp on they'll skip health insurance they'll skip going to the doctor's because I'm going to save some money but that could end up really hurting you in the long run so understand your necessities pay those necessities but nothing else now on top of this you do want to consider paying those minimum payments as well on your cards and we'll talk about that later on but paying anything that's going to not affect your credit score so if you are skipping on minimum payments for credit cards or things like student loans or mortgages that's going to hurt you we'll talk about that further on but after your ssds you could think about paying those minimum payments to avoid defaulting on loans okay so let's talk about the next one here which is going to be very important and that's your emergency fund now everybody should have an emergency fund regardless of whether you have a million dollars in your bank account or a negative $100,000 to your name having an emergency fund is going to be one of the first steps to sort of alleviating some of that financial stress that you may have at the moment so this is going to be a crucial step now we put it at $2,500 this could be $500 it could be $1,000 it could be $10,000 now over time it's nice to build this up a great strategy for doing this is to just start by taking ten dollars out of every paycheck or taking 20 30 $40 out of every paycheck and putting it into a separate emergency fund that is very easily accessible you want to be accessible because this is for situations where it's a true emergency maybe you don't have any cash on you but you need to get a tooth removed because you're in a lot of pain and you can't focus on anything else because you're in so much pain that would be an emergency another emergency would be if your car breaks down and you have to use that car to get to work that's an emergency but nothing else we're not talking about if you have to buy somebody a Christmas gift we're not talking about if you just feel like going out to eat somewhere we're not talking about vacations this is strictly for emergencies and emergencies only now you want this to be liquid and you want this to be easily accessible so somewhere in maybe just a separate checking account maybe a separate savings account or checking account would probably be the best option so you can easily access it very quickly you could also consider doing it in cash but I wouldn't consider having $2,500 cash laying around but like I said you can start with a smaller amount of money start with $500 $1,000 and then build it up over time especially if you have a family made me wanna consider getting this a little bit higher maybe closer to $5,000 in case something happens maybe you have to pay some medical expenses and you have that money on hand and like I said even if you're in debt this is important to have because if you are at the zero dollar mark and you don't have an emergency fund every time there's a little expense you can have to start digging into more debt to pay off that expense so just having this is going to be a big help all right so now we're looking at number five which is paying off your debt now once you build that emergency fund once you start to get a little bit on your feet here you want to consider how actually pay off your debt now there's multiple ways to do this and depending on what type of person you are and depending on how much debt you have there's really two different strategies for actually paying off your debt now one of them is called the debt snowball method and the other one is the debt avalanche method now for a lot of people who are really struggling financially they have large amounts of debt and they're struggling to actually stay motivated to pay off this debt then you may want to consider using the debt snowball method so the debt snowball method essentially what this is going to be let's say that you have five different types of debt let's say you have a home mortgage student loans personal loan maybe credit cards and a car loan right so what you do with the debt snowball method is you're going to tackle the one that has the lowest balance so let's say that your car loan only has sixteen hundred dollars left on it so you tackle that one first regardless of the interest rate you tackle the lowest balance first and then let's say that your personal loan has the second lowest amount the second lowest balance leftover on that loan so then you tackle that one and then you go down the list tackling the one with the lowest amount of money that you owe and then essentially eradicating those different types of debt until you start to have less and less types of debt and then you have two types of debt and then you have one type of debt and it certainly is something that can make you feel better once you start eliminating those different types of debt because when you're paying five or six or seven different types of debt and paying all these different bills at the same time it's definitely something that can really be difficult to stick with but I want to cost you on something because there's some people in my family friends that I have who will take on loans maybe student loans maybe car loans maybe even a home mortgage and at some point they can't pay them or they don't want to pay them and so what happens is they try to avoid it and it's sort of like if when you were in school and you had that school project that you knew was just creeping up in your head whenever you were doing something maybe you're at a party and you're just thinking about this project or there's paper that you had to write it's just in the back of your mind at all times creeping up on you because you know that you're procrastinating people do that with loans and they try to avoid these loans maybe they'll stop taking calls from debt collectors maybe they'll stop opening the mail knowing that they are past due on some of their different loans and they defaulted on those loans and they try to just just not think about it but that is one of the worst because situations that you can put yourself in you want to confront the situation and once you confront that you're going to feel so much better once you start eliminating different types of debt now the debt Avalanche method mathematically logically makes more sense is going to save you more money but it depends on what type of person you are and it depends on how much you can actually really focus on this without kind of losing some of that logic so the debt Avalanche method same thing where if we say we have five different types of debt but instead of tackling the lowest balanced debt first you're going to tackle the highest interest rate from these different types of debts so let's say that your credit card bills you have $20,000 in credit card bills but it's up here it's it's a pretty large amount where you have maybe you know $1,600 in your car payment and something in your personal loans but $20,000 from your credit card bills while you tackle the highest interest rate because credit cards are probably going to be hot the highest interest rate then you may have close to about 20% or more in the APR for that so that's a debt Evelynn approach here you're doing the same thing but you're tackling those high interest rates first and still eradicating one debt at a time while at the same time at paying the minimum payments for all these different types of debt you don't want to default on them you don't want to miss those minimum payments because that's going to drastically hurt your credit score and end up costing you late payment fees and it's really going to buy in the butt there so step number six is going to be what I would say probably the most enjoyable step of this entire process and that is by saving up at least four to eight months of payroll so let me give you an example here now I try to keep this closer to almost a year full of payroll but let me give you a story here so Bill Gates when he started Microsoft he found that he was struggling to please investors he found that in some cases investors would be putting a lot of pressure on him so what he did is he saved up enough cash he wanted enough cash in Microsoft so that he could pay all of his employees for an entire year he had a year's payroll on hand in cash that he's able to pay all of his employees if the company wasn't making any money now the reason for this is because he realized that there's going to be times where maybe they put out a product that is not as great as what they thought it would be and maybe they're not pulling in as much money as I thought they would be and they would still be able to pay their employees while doing this so this is something that I learn about and I realized that look if you have a job and you're taking that for granted right now because we have a really good economy at the moment things can go south think about in 10 years ago think about the recession that we had about ten years ago and how many people were losing their jobs unemployment rate almost 10% especially if you're an entrepreneur if you're self-employed then you'll have to understand that there might be times where things go south where maybe your income drops pretty significantly so having some money in your bank account and not just a regular bank account where you're essentially losing money by putting in a regular Bank and we're talking about something that's going to keep up with inflation so I like to go with something like an online savings account you can get them for over two percent interest on those and that should essentially keep up with inflation it's something that is very steady and that's what I do like about this now you don't want to put too much money into this in a lot of cases and once again you make your own financial decision so you can choose to do this or to not do this but you know there are times where people lose their jobs there are times where people fall on hard times and having this is going to give you such peace of mind knowing that if you lose your job today you can live off of this money for half a year before you even get a new job so this is something I like to do and you can also consider putting money into a money market account or possibly CDs I'm not a big fan of CDs because they lock your money in there for a certain length of time but something that's keeping up with inflation but is very steady so you could also consider putting this into investments and maybe the stock market bonds but this is more steady and it's more predictable so that's what I do prefer about this now let's talk about the last one here which is going to be investing now this is how you can truly get your money to work for you for number six talking about money in that bank account that's netting you two and a half percent interest that's probably not going to make you rich it's going to be a nice thing to hold on but investing is going to potentially make you rich so we're talking about real estate stocks bonds other types of investments possibly some riskier investments possibly cryptocurrency whatever you personally are into and whatever you personally are knowledgeable on then that's something that you can consider dealing but this is something where you make your money work for you now this is step number seven there are a lot of steps before that you want to consider doing a lot of people ask should I pay off my debt first or should I invest first and you can do some of those hand-in-hand especially if you have low interest debt if you have student loans that are 4% or a home mortgage that's going to last you 30 years and it's at a four or five percent rate then you could do that simultaneously while investing but if you have large amounts of debts a credit card debt or you have debt that's going to be upwards of nine or ten or eleven percent interest on that debt then you want to consider paying that off almost entirely before you actually start investing your money because the average return of the markets about seven to ten percent per year obviously it varies quite a lot so you want to keep that in mind but those are the steps and now after these seven steps that is when you can take the money that you have left over and then spend it on travel then spend it on vacations and TVs and different types of entertainment but only after all seven of those steps you have to pay yourself first before you can start doing all these other things that you may want to do and this is a problem that I think some people run into with the money management this is why people who are making eighty thousand dollars per year are poor it's why the poor because they're not taking these seven steps but instead all of their money comes into their checking account they're not tracking it they're not running a budget they're not running themselves like a business and they just spend most of it on entertainment and leisure and travel and all kinds of different things that are not necessities and they end up really hurting themselves so pay yourself first invest money and you might find yourself in a much better financial position for the rest of your life now if you're having kind of an issue with actually saving money or getting to step number seven because some people will only get to step number three or four or five and then have no money left over they have no money to invest they have no money to build up this payroll maybe six months payroll and they say what do I do now and what you can consider doing is picking up a side job picking up a side hustle finding a way to make some extra money in your free time to then take all of that money and invest it or put it into some type of six months payroll for yourself so if you found any value in this video thanks for watching share this with somebody who you think could find some use of this video I really do appreciate all the support on this channel so we'll see everybody next time and I hope everyone has a wonderful day

Channel: Nate O'Brien

Views: 1,025,360

Rating: 4.9437671 out of 5

Keywords: personal finance, manage money, money management, save money, how to save money, nate o'brien, save money 2019, saving money, ways to save money, how to save money fast, money, financial freedom, spend money, bank accounts, money saving tips, financial tips

Id: NskNfAlD3wU

Length: 17min 28sec (1048 seconds)

Published: Tue Jun 25 2019