Do THIS When You Get Paid | 7 Steps When You Get Paid - Minority Mindset

do you know why everybody loves friday because of the weekend no because it's payday [Music] what's up everybody i am just pretty sing from the minoritymindset.com where money minds rethink rich you just got paid and now you got a pocket full of cash and the question is where do you blow this money before you drive on over to the gucci store and buy yourself a new wardrobe what are you talking about just breathe i can shop online now the first key to becoming rich or becoming wealthy or becoming financially free is to use your paycheck and to use your income the right way that way you can build your wealth first but that requires you to know how to use your paycheck this is where everybody says oh all you need to do is create a budget well lots of americans have a budget but most of those people don't actually use your budget there's a lot more to what you do with your money than just having a budget and keeping a budget that's why in this video i'm going to go through step by step the seven things you need to do with your money as soon as you get paid that way you can build your wealth first but before we get into those seven things i need you to do me a quick favor and smash that thumbs up button below because the way the youtube algorithm works if you do not smash that thumbs up button then youtube is much less likely to show you and other people our financial news and education videos the first thing you have to do is have your net income deposited directly into your checking account i call it your net income because well every dollar you earn is not every dollar you keep as soon as you make money the first thing that's gonna happen is the government is gonna take their share in taxes so whatever's left is your net as soon as you get paid the government's gonna take their share of taxes but some of you are gonna have the option to invest your money before or after your taxes depending on what kind of system you use using something like a 401k so if that's something you're using at your job this would either be right here or here if you're using a roth 401k so as soon as you pay your taxes you pay your 401k if you have one that your net income needs to be deposited directly into your checking account i used to guest teach in detroit public schools and what i learned there was they had all these kids that were working jobs but many of these kids did not have a checking account where their paychecks were deposited into instead these kids were getting physical checks and then they were taking their checks and they would go over to a liquor store and then they would pay the liquor store owner one to 10 of their paycheck to get cash for their own money so you're having to pay a liquor store owner cash to get access to your own money and then once they have this cash half of the check is going to go to cheetos and pop on the way out you need your money deposited directly into checking account and one of the worst one of the worst things that you can do is rely on payday loans to make ends meet for two or three days the way payday loans work is for every 100 or so that you borrow your payday loan company is going to charge you somewhere between 10 and 30 dollars now this 10 or 30 fee might not seem like a lot of money but compared to how much money you're borrowing and that 10 or 30 interest that you have to pay is just for borrowing money for a month that's why if you amortize the real cost of your payday loans over the course of a year these payday loans are actually costing you somewhere between 300 apr and 500 apr okay payday loans are destroying your wealth so create a calendar know when your money's coming in that way you can rely on your actual income and not the payday loan the second thing you have to do is save two thousand dollars in a separate savings account as fast as possible this two thousand dollars that you wanna save needs to go in a separate savings account because this is emergency money this is money if your car breaks down or if something really bad happens you can rely on this cash to protect you that way you don't have to go into debt or use your credit card to finance something that you cannot afford this money needs to be saved as soon as possible because if you do not have two thousand dollars saved up for an emergency you are in financial danger okay before they used to say oh all you need is a thousand dollars to start your savings account but that was like two decades ago now if you factor in inflation and the increased price and cost of living you need at least two thousand dollars right now saved up for an emergency so you get out of this danger financial zone the reason i'm saying this needs to go into a separate savings account not the stock market or any other investment account is because this money needs to be liquid meaning in cash which means easily accessible and it needs to be predictable if you put this money in the stock market well if the stock market tanks tomorrow and you need this cash well this two thousand dollars might only be worth a thousand dollars so you need this cash somewhere in a predictable liquid account like a savings account that way you can access it whenever you need in case you need it but this is not money you should be using when apple releases a new phone so if you do not have a separate savings account or if you do not have two thousand dollars saved up right now for emergencies what you need to do is you need to open up a new savings account tomorrow and then next time you get paid you need to save as much of that paycheck as you can as fast as possible because you need to get to two thousand dollars saved as fast as humanly possible now as soon as you get paid your net salary so this is after your taxes after your 401k investment this net income that you make is going to hit your checking account automatically then what you need to do is you need to save two thousand dollars as fast as possible in a separate savings account so if you don't have two thousand dollars saved up yet you need to take as much of your net income as possible and put this money into this account that way you can save two thousand dollars because if you don't have two thousand dollars saved up you are in financial danger then it's time for step number three now we're going to pay down your high interest debts so after you have two thousand dollars saved up what you want to do is you want to pay down any high interest debt so this might be credit card debt this might be payday loans so any high interest debt that you have you want to pay this down as fast as possible right now after you save two thousand dollars because this money is skinning you alive financially this money that you're paying 15 16 17 interest on is so expensive and it is destroying your wealth it is making your credit card company wealthy it is making your hard money lender wealthy it is making this payday loan company wealthy but it is keeping you broke you need to save this two thousand dollars first because if you don't save this two thousand dollars and you start paying down your credit card debt and then your car breaks down and then you have to pay eight hundred dollars to fix your axle well now you're gonna have to go back into credit card debt to have the money to fix the car so you took a step forward and then it took two steps backward that's why you need to save some cash first while making your minimum payments and then when you have a little bit of a cushion now you need to be aggressive at paying down all of your high interest debts once you have this 2 000 cash savings and once you pay down this high interest debt and typically this is going to be anything that's not a mortgage that's not a student loan that's not your car payment so really anything that's over like six percent a year once you pay this high interest debt down now you're gonna do four five and six at the exact same time but let's start with number four number four is investing fifteen percent of your income so i'll put number four invest and what you're gonna do now is after you have this two thousand dollars saved up in a savings account and after you don't have this high interest debt anymore now what's going to happen is anytime you get this paycheck you got your net money coming and hitting your checking account you're gonna take 15 of whatever's in there so for every hundred dollars you make 15 is going to go into an investment account so there's a few different ways you can do this and it depends on what your risk tolerance is one way that you can do this is you can open up a separate checking account in your bank and anytime you get paid 15 of your paycheck can automatically be withdrawn from your checking account here and be deposited here the reason is you want to make sure this money in your investment account is going to build you wealth you don't want this money going to buy you a new tv when tvs are on sale we talk a ton about investing on our youtube channel which is why if you have not subscribed to our youtube channel you should do that but there's a few different ways that you can invest this money depending on your risk tolerance if you don't like to take a ton of risk one thing that you can do that will give you a guaranteed return on your money guaranteed is you can pay down now your remaining low interest debt so that means your mortgage your student loans you can use this extra cash to pay down your debt faster because now if you pay down your student loans one year early you're getting a guaranteed six percent return on your money because if you're paying six percent interest to your student loan lender and you paid off a year early that six percent interest you no longer have to pay to your lender when it comes to paying down your debt there's a couple of different strategies that you can use to pay down your debt quickly one's called the debt snowball and the other is the debt avalanche the debt snowball method is where now you're gonna pay down the smallest debt amount first so if you have five different debts one that's fifteen thousand dollars one that's three thousand dollars one is four hundred dollars one that's twelve thousand dollars and one that's six hundred dollars what you're gonna do is you're gonna find the smallest debt i think that was the 400 one it doesn't matter what the interest rates are you're going to pay down the smallest amount of debt first that way you can get the small wins psychologically what that tells you is wow i just knocked down one of my debts and i can go to the second debt and then third debt so you're gonna go in order from the smallest to the biggest and you're going to ignore interest rates on this because your goal is just to get the small psychological wins this is the method that dave ramsey preaches because he finds that this is what keeps people on pace to pay down the debt because now you're getting the small wins the other option is the debt avalanche method where now you're paying down your debts by the interest rates you find the debt that has the highest interest rate first and you're going to pay that one down first because that one's costing you the most money now over the long term if you can stick to both of these then the debt avalanche is going to save you more money because you're going to pay less interest but if this debt snowball method is what you can stick to then do that it doesn't matter which one you do i just want you to pay down your debt so if this one works do that if you would rather do this one then do this you can invest this money to grow your mind so that means you can use this money to buy books you can use it to buy classes to attend seminars things that will enhance your mind enhance your financial education that way you can make better decisions with your money maybe earn more money or if you don't have any debt or you want to be more of an aggressive investor you can use this money to invest directly into the stock market or into real estate one of the most effective ways to invest this money into the stock market is to create an automatic passive investment but now instead of creating a separate checking account for this what you can do is create a brokerage account that will automatically invest your money every week or every month whenever you get paid and anytime you get paid so you could tell the brokerage how much money to take out 15 of your paycheck is going to automatically be invested for you every single pay period so whether it's every week or every two weeks every month you can decide this and now this money is automatically invested you're not even going to see it anytime you get paid this money is automatically going to go into the stock market and this is going to build another investment account for you that's going to be working to build your wealth without you physically having to do anything because it's all passive if you want to learn more about how to do this our team has written articles about this on our website the minoritymindset.com and i'll also link an article for you up here and in the description below by the way this type of investing is called passive investing or you can use this money to invest in real estate and when i say real estate i don't mean a home that you're going to live in yourself i mean an investment property that you're going to rent out to somebody else the other option if you want to be more of an active investor is you can put this money into a separate checking account and then whenever an investment deal comes your way maybe it's the business idea like maybe it's real estate maybe it's a specific stock that you want to invest in when this money comes away then you can deploy this cash as an investment but it needs to go into a separate account that way you know not to accidentally touch this money and use it to buy a new tv or use it to buy airpods because it's in a separate account that's only going to be used to invest and build you wealth as you are doing this what you're also going to be doing consecutively is number five saving some money because now what's going to happen you have 15 of your paycheck going over here you also want 10 of your paycheck going here to your savings account remember the savings account is money that you're using for emergencies only okay and once you have this two thousand dollar cushion built up that's a small cushion but you need to build that bigger you ideally wanna have three to six months worth of expenses saved so if you're spending three thousand dollars a month you want to have a minimum a very minimum of nine thousand dollars saved up and if you really want to be a big saver you can save a year's worth of expenses but i don't recommend really saving more than that because after that inflation is really just eating away at your savings but in order to build the savings account you need to build a system where now some of your money here 10 of your income is going directly to your savings account anytime you get paid so again this is a separate savings account and anytime you get paid for every dollar you get paid 10 cents is going to go directly into the savings account so if you make 100 10 goes here because now you're going to automatically be saving money without even thinking about it and you need this cushion to protect you from any sort of emergency that will happen that way you can sleep easier knowing that if something bad were to happen you don't have to go into debt because you have the savings cushion built remember how i said the four five and six happen at the same time well you're going to be investing this money at the same time you're going to be putting this money away for your savings at the same time and you're also gonna be doing number six which is spending at the exact same time so what's gonna happen now is in this account you're checking account you're now going to be left with 75 of your remaining net pay so i guess you can call this your net net pay because this net pay was after your taxes and your 401k another 75 is after you paid yourself it's after you invested your money to build your wealth and it's after you saved your money to protect you but this is where you have to be careful because now you need to know the difference between a need and a want when it comes to spending your money this is going to sound like common sense but as we all know common sense isn't very common when it comes to the spending money you want to make sure you spend your money on needs before before you spend your money on wants now what you need to do is you really need to understand the difference between a need and a want because that might seem obvious but people's financial decisions speak very differently you need a car to get to and from work but you just want the newest bmw you need a phone you just want the newest iphone you need guacamole you just want to pay the store five dollars for an extra side of guacamole i want you to be able to buy and afford all the wants that you want the wants that you want but you need to make sure you can afford them first which is why you need to prioritize your needs before your wants because if you don't prioritize your needs before you wants what you're going to say is oh just breathe how do you expect me to save 10 of my income and invest 15 of my income but then at the same time you have 450 going to your car payment every single month you're spending 100 a month on your cell phone and you're paying 120 a month on your monthly massage membership you need to know what your needs are and your wants are right now you need to become wealthy which is why you want to make sure you're paying yourself first by investing your money and saving your money now based off of this money that's left you need to live off of this money and the only way that you can do that the right way is by knowing what you need and what you want your car your cell phone eating out and buying drinks outside are some of the biggest wants that people are turning into needs i get it you need a car you need a phone you need food but you don't need a beamer you don't need the newest phone and you don't need to be eating out five times a week those are wants that are turning into needs and that's destroying your ability to build future wealth everybody gives the example of how much money you could save if you just made your coffee at home instead of going to starbucks well i don't drink coffee so i can't relate to that but i drink tea i like nice teas and if i want to drink a nice tea it's going to cost me something like 25 cents to 35 cents and we're talking nice teas for making a glass of tea at home if i bought the same tea outside somewhere at the coffee shop or at a tea shop it is going to cost me at least at least three dollars for the same tea now if you're also eating lunch outside which i know a lot of you are it is going to cost you or something eating healthy 14 to get a wrap and soup if you made that same wrap and soup at home assuming we're using nice healthy products it's gonna cost you something like four dollars so ten dollars here and another two dollars and fifty cents here twelve dollars and fifty cents you can save every single day five days a week just by making your tea at home and just by making your wrap at home instead of treating this want as a need and if you just calculate out how much money this would save you over the course of a year because there's a lot of people that are eating out for lunch every single day and there's a lot of people that are buying their tea or coffee from outside every single day that's two dollars and some change plus ten dollars and some change let's say twelve dollars and twenty five cents times five days a week times fifty two weeks a year that's more than thirty one hundred dollars a year that you could save to put towards your investments towards your savings just by understanding the difference between a need and a want this one's pretty simple to understand but what about those impulse purchases you're going on amazon and you see a special deal on a new coffee maker or you see a brand new deal on a new massage gun what about that well one of the things that you can do to help understand the difference between a need and a want and really think about these purchases before you actually spend money that you don't want to spend is using something called the 24 hour rule the 24 hour rule just says that before you make one of these impulse decisions breathe and tell yourself you're going to wait 24 hours before you make that purchasing decision you are going to find that you're going to stop yourself from buying a whole bunch of unnecessary crap that you're never going to use just by thinking about it for one day alright so i just cleaned this up for you so it's easier to understand you started by getting your net income after paying your taxes and your 401k money once you get that the first thing you want to do is save two thousand dollars in a separate savings account once you get that two thousand dollars saved up then we're getting rid of all the high interest debt once you got this high interest debt taken care of then you're going to be investing 15 of this money this money is going to build your wealth whether it's through education or paying down your debt or investing your money into stocks or real estate something that's going to help build your wealth and your financial freedom as you're doing that 10 of your money is also going to be saved in this separate savings account that way you have a cushion to protect you from any sort of financial emergency that way you can sleep easier knowing that even if something bad happens financially you are going to be okay because you have savings and then you are going to keep 75 of your income in this checking account as you're spending money but you're gonna understand the difference between a need and a want and you're gonna spend your money on needs before you spend your money on wants that way you don't come over here and say oh just please how do you expect me to invest my money when all of my money is going into my beemer now it's time for number seven to buy your time back listen at the end of the day it doesn't matter how much money you have or how good your financial system is if you don't have the time to actually enjoy your life and to enjoy your money okay this whole time so far we've been talking about how to build the system that way you can use your money as soon as you get paid to build this financial freedom but now you also need to be thinking in the back of your mind how do you actually enjoy your life and the way you do that is by buying your time back that way you can do more of the things that you love because now you're gonna have the money to do it because not only are you going to know what's the need or what's i want but you're also going to be earning more money because your investments are going to be working to build your wealth so now as you're building this financial freedom you need to know how you can actually enjoy your life this is where you have to figure out where your time is getting the best roi the best return on investment okay at the end of the day we can always make more money but we cannot get more time the amount of time we have on this earth is limited so you want to make sure that you're using your time in the best way possible so you want to start by figuring out what things do you hate doing and what things do you wish you do not have to do anymore is it cooking is it cleaning is it getting groceries because guess what these things you can outsource you can hire somebody to cook for you you can hire somebody to clean for you you can hire somebody to get your groceries for you you just have to make sure it's worth your time right if you're making twenty dollars an hour and you can get somebody to clean your house for ten dollars an hour and that would save you four hours a week well you can just buy your time back by hiring somebody to do that is the same with cooking and it's the same with getting groceries find the things that you hate doing and now as you're building your wealth start to use your money to buy your time back that way you have the time to do more of the things that you love plus on the flip side once you have the system now you can start calculating okay it's going to take me 35 years to where i want to be financially but if i want to shorten that time what do i got to do well one thing you can do is get a better return on your money or the alternative thing that you can do is earn more money because if you're putting more money towards your investments towards building this wealth then you can reach that financial goal quicker and so if you want to earn more money now you can think okay you can either work harder at your job to get more hours you can get a promotion or a raise to make more money or you can look for a new side hustle start a business take on a side job there's a lot of different ways that you can earn more money but in order for any of this to be possible you need to have a clear picture of how your money is being used that way you can get the best return out of your money and your paycheck if you enjoyed this video here's a video that i think you'll love and while you're at it subscribe to our youtube channel and join our free finance and business newsletter and as always keep hustling so now you have no money but you have a shirt this time if you go to the counter and you give them the sweatshirt and you say you know what you keep the sweatshirt and i'll keep my money now you don't have a shirt but you got money

Channel: Minority Mindset

Views: 683,343

Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, rethink rich, financial education, financial literacy, do this when you get paid, 7 steps when you get paid, 5 steps when you get paid, payday hacks, what to do with your money when you get paid, payday, build wealth, wealth, investing, saving money, money management, building wealth, financial system, budgeting, create a budget, payday hack, personal finance, manage money, do this on payday, what to do on payday

Id: qwkU6TPk80A

Length: 21min 20sec (1280 seconds)

Published: Sat Dec 12 2020